BEST
Annual Report 2023

Plain-text annual report

Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 1 of 248 Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON, D.C. 20549FORM 20-F☐REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934 OR☒ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2023. OR☐TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 OR☐SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.For the transition period from to Commission file number 001-38198BEST Inc.(Exact name of Registrant as specified in its charter) Cayman Islands(Jurisdiction of incorporation or organization) 2nd Floor, Block A, Huaxing Modern Industry Park No. 18 Tangmiao Road, Xihu District, Hangzhou Zhejiang Province 310013 People’s Republic of China(Address of principal executive offices) Ms. Gloria Fan, Chief Financial Officer Telephone: +86-571-88995656 Email: ir@best-inc.com 2nd Floor, Block A, Huaxing Modern Industry Park No. 18 Tangmiao Road, Xihu District, Hangzhou Zhejiang Province 310013 People’s Republic of China* (Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person) Securities registered or to be registered pursuant to Section 12(b) of the Act.Title of each classTrading Symbol(s)Name of each exchange on which registeredClass A ordinary shares, par value $0.01 per share*American Depositary Shares, each representing twenty (20) Class A ordinary sharesBESTNew York Stock Exchange, Inc.* Not for trading, but only in connection with the registration of American Depositary Shares representing such Class A ordinary shares pursuant to the requirements of the Securities andExchange Commission.Securities registered or to be registered pursuant to Section 12(g) of the Act. NoneSecurities for which there is a reporting obligation pursuant to Section 15(d) of the Act. NoneIndicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. 261,648,452 Class A ordinary shares were outstanding as of December 31, 2023 (including5,692,393 Class A ordinary shares issued to the depositary bank of the Issuer and reserved forfuture issuances of ADSs upon exercise or vesting of awards granted under the Issuer’s shareincentive plans) 94,075,249 Class B ordinary shares were outstanding as of December 31, 2023 47,790,698 Class C ordinary shares were outstanding as of December 31, 2023Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.☐ Yes ☒ NoIf this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.☐ Yes ⌧ NoNote — Checking the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 from their obligations under thoseSections.Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for suchshorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.⌧ Yes ☐ NoIndicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter)during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).⌧ Yes ☐ NoIndicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See the definitions of “large accelerated filer,”“accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act. (Check one):Large accelerated filer☐Accelerated filer☐Non-accelerated filer☒Emerging growth company ☐If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period forcomplying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act. ☐† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 2 of 248 Table of ContentsIndicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☐If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error topreviously issued financial statements. ☐Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive officersduring the relevant recovery period pursuant to §240.10D-1(b). ☐Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:U.S. GAAP ⌧International Financial Reporting Standards as issued by the International Accounting Standards Board ☐Other ☐If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow.◻ Item 17 ◻ Item 18If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).☐ Yes ⌧ No(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to thedistribution of securities under a plan confirmed by a court.☐ Yes ☐ No Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 3 of 248 Table of ContentsiBEST INC.FORM 20-F ANNUAL REPORTFISCAL YEAR ENDED DECEMBER 31, 2023 PagePART I1Item 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS1Item 2.OFFER STATISTICS AND EXPECTED TIMETABLE1Item 3.KEY INFORMATION1Item 4.INFORMATION ON THE COMPANY44ITEM 4A.UNRESOLVED STAFF COMMENTS81Item 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS81Item 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES118Item 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS130Item 8.FINANCIAL INFORMATION132Item 9.THE OFFER AND LISTING133Item 10.ADDITIONAL INFORMATION133Item 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK141Item 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES142PART II144Item 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES144Item 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS144Item 15.CONTROLS AND PROCEDURES144Item 16.145ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERT145ITEM 16B.CODE OF ETHICS146ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES146ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES146ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS146ITEM 16F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT146ITEM 16G.CORPORATE GOVERNANCE147ITEM 16H.MINE SAFETY DISCLOSURE147ITEM 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS147ITEM 16J.INSIDER TRADING POLICIES147ITEM 16K.CYBERSECURITY148PART III149Item 17.FINANCIAL STATEMENTS149Item 18.FINANCIAL STATEMENTS149Item 19.EXHIBITS149 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 4 of 248 Table of ContentsiiConventions that Apply to this Annual Report on Form 20-FIn this annual report, unless otherwise indicated:●“2008 equity and performance incentive plan” are to our equity and performance incentive plan adopted in 2008, asamended;●“2017 equity incentive plan” are to BEST Inc. 2017 Equity Incentive Plan adopted in September 2017;●“2024 Convertible Notes” are to the 1.75% convertible senior notes due 2024 in an aggregate principal amount of US$200million that we offered and sold in September 2019 in the United States to qualified institutional buyers pursuant to Rule144A and to non-U.S. persons outside the United States in reliance on Regulation S under the Securities Act of 1933;●“2025 Convertible Notes” are to the 4.50% convertible senior notes due 2025 in an aggregate principal amount of US$150million that we issued and sold in June 2020 to Alibaba.com Hong Kong Limited, an entity affiliated with Alibaba;●“ADRs” are to the American depositary receipts, which, if issued, evidence our ADSs;●“ADSs” are to our American depositary shares, each of which represents twenty (20) Class A ordinary shares;●“AGVs” are to automated guided vehicles;●“Alibaba” are to Alibaba Group Holding Limited and its consolidated subsidiaries and affiliated consolidated entities, two ofwhich (Alibaba Investment Limited and Cainiao Smart Logistics Investment Limited) are record shareholders of us;●“Alibaba China” are to Alibaba.com China Limited;●“B2B” are to business-to-business, or commercial transactions between businesses;●“B2C” are to business-to-consumers, or commercial transactions between businesses and consumers;●“Cainiao Network” are to Cainiao Smart Logistics Network Limited, a consolidated subsidiary of Alibaba Group HoldingLimited as of March 31, 2023, as disclosed in the annual report on Form 20-F filed with the SEC by Alibaba Group HoldingLimited on July 21, 2023, and its consolidated subsidiaries and affiliated consolidated entities, one of which (Cainiao SmartLogistics Investment Limited) is a record shareholder of us;●“China” and the “PRC” are to the People’s Republic of China, including Taiwan, the Hong Kong Special AdministrativeRegion and the Macao Special Administrative Region; “mainland China” are to the People’s Republic of China, excludingTaiwan, the Hong Kong Special Administrative Region and the Macao Special Administrative Region;●“Cloud OFC” or “OFC” are to our cloud-based order fulfillment centers through which we take full responsibility for theoptimal allocation of our customers’ inventory;●“Early Redemption Rights” are to the holders may require the Company to repurchase all or a portion of the 2025Convertible Notes for cash within a period of ninety days starting from June 3, 2023 at a repurchase price equal to 100% ofthe principal amount of the 2025 Convertible Notes to be repurchased, plus accrued and unpaid interest to, but excluding, therepurchase date.”●“franchisee partners” are to our direct business partners that operate our Cloud OFCs for BEST Supply Chain Managementor service stations on our supply chain service network for BEST Freight and provide related services under our brands;●“freight” are to full-truckload and less-than-truckload road transportation services; Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 5 of 248 Table of Contentsiii●“freight volume” in any given period are to the tonnage of freight cargo collected by us or our franchisee partners using ourwaybills in that period;●“FTL” are to full-truckload freight services;●“hubs” are to large logistics facilities located in major cities in the PRC that are connected by line-haul transportation tomost of our other hubs;●“LTL” are to less-than-truckload freight services;●“membership stores” as of any date are to convenience stores that have registered on our B2B platform Dianjia.com as ofthat date;●“New Retail” are to the seamless integration of online and offline retail to offer a consumer-centric, omni-channel and globalshopping experience through digitization and just-in-time delivery;●“orders fulfilled” in any given period are to the number of orders processed by our self-operated or franchised OFCs, asapplicable, which were delivered to intended recipients in that period;●“ordinary shares” are to, collectively, our Class A ordinary shares, Class B ordinary shares and Class C ordinary shares, parvalue US$0.01 per share;●“parcel volume” in any given period are to the number of parcels collected by us or our franchisee partners using ourwaybills in that period;●“RMB” or “Renminbi” are to the legal currency of the PRC;●“Smart Supply Chain” are to a supply chain built upon a technology infrastructure that is designed to analyze massiveamounts of data to provide the customization, productivity and efficiency needed in the New Retail era, which can bedefined by characteristics including data and information visibility to all participants, timely predictions and real-timeresponses, flexibility, efficiency and integration of supply chain services;●“SMEs” are to small and medium enterprises;●“sortation centers” are to generally smaller-scale logistics facilities compared to hubs, primarily connected to nearby hubsand other sortation centers by feeder services;●“store orders fulfilled” in any given period are to the number of orders placed through Dianjia.com and fulfilled in thatperiod;●“swap bodies” are to standard freight containers that can be conveniently mounted on tractors for road transportation;●“US$,” “U.S. dollars,” or “dollars” are to the legal currency of the United States;●“U.S. GAAP” are to accounting principles generally accepted in the United States;●“variable interest entities” or “VIEs” are to Hangzhou BEST Information Technology Services Co., Ltd. (formerly known asHangzhou Baisheng Investment Management Co., Ltd.), or Hangzhou BEST IT, and Hangzhou Baijia Business ManagementConsulting Co., Ltd., or Hangzhou Baijia, which are PRC entities owned by PRC legal persons, and are consolidated intoour consolidated financial statements in accordance with U.S. GAAP as if they were our wholly-owned subsidiaries; wedisposed of Hangzhou BEST Network as part of our sale and transfer of BEST Express to J&T Express China, which salewas completed in December 2021; Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 6 of 248 Table of Contentsiv●“we,” “us,” “our company,” “our” and “BEST” are to BEST Inc., our Cayman Islands holding company, its subsidiaries,and, in the context of describing our operations and consolidated financial information, the variable interest entities inmainland China, including, but not limited to, Hangzhou BEST Information Technology Services Co., Ltd. or BESTInformation Technology, Hangzhou Baijia Business Management Consulting Co., Ltd. or Hangzhou Baijia and all of thevariable interest entities are domestic companies incorporated in mainland China in which we do not have any equityownership but whose financial results have been consolidated into our consolidated financial statements based solely oncontractual arrangements in accordance with U.S. GAAP. See “Item 4. Information on the Company—C. OrganizationalStructure” for an illustrative diagram of our corporate structure; and●“CAGR” are to compound annual growth rate;●“WOWO” are to Sichuan Wowo Supermarket Chain Co., Ltd., which we acquired in May 2017 and disposed in November2021.This annual report includes our audited consolidated financial statements for the years ended December 31, 2021, 2022 and 2023,and as of December 31, 2022 and 2023.Our ADSs, each representing twenty (20) Class A ordinary shares, are listed on the New York Stock Exchange under the symbol“BEST.” Before February 19, 2019, our ADSs were listed on the same stock exchange under the symbol “BSTI.” Before May 20, 2022,each of our ADSs represented one of our Class A ordinary shares. Before April 4, 2023, each of our ADSs represented five of our Class Aordinary shares.In December 2021, we completed the sale of BEST Express, our express delivery business in China, and since then we havestarted to reflect the historical financial results of BEST Express for the periods prior to the sale in our consolidated financial statements asdiscontinued operations. Unless otherwise stated, the results presented in this annual report do not include the results of BEST Express.Currency Translation and Exchange RateWe have translated certain Renminbi, or RMB, amounts included in this annual report into U.S. dollars for the convenience of thereaders. The rate we used for the translations was RMB7.0999 = US$1.00, which was the noon buying rate on December 29, 2023 in NewYork for cable transfers in Renminbi as set forth in the H.10 weekly statistical release of the Federal Reserve Board. The translation doesnot mean that RMB could actually be converted into U.S. dollars at that rate.Special Note Regarding Forward-Looking StatementsThis annual report contains forward-looking statements that involve risks and uncertainties, including statements based on ourcurrent expectations, assumptions, estimates and projections about us and our industry. These statements involve known and unknownrisks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from thoseexpressed or implied by the forward-looking statements. In some cases, these forward-looking statements can be identified by words orphrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “potential,” “continue,” “is/are likelyto” or other similar expressions. The forward-looking statements included in this annual report relate to, among others:●our goals and growth strategies;●our future business development, financial condition and results of operations;●trends in the logistics and supply chain industry in China and globally;●competition in our industry;●fluctuations in general economic and business conditions in China and other regions where we operate;●the regulatory environment in which we and companies integral to our ecosystem operate; Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 7 of 248 Table of Contentsv●conditions and events that raise doubt about our ability to continue as a going concern; and●assumptions underlying or related to any of the foregoing.This annual report also contains market data relating to the logistics and supply chain industry in China, including marketposition, market size, and growth rates of the markets in which we operate, that are based on industry publications and reports. Statisticaldata in these publications and reports also include projections based on a number of assumptions. The logistics and supply chain industryin China may not grow at the rates projected by market data, or at all. The failure of these markets to grow at the projected rates may havea material adverse effect on our business and the market price of our ADSs. If any one or more of the assumptions underlying the marketdata turns out to be incorrect, actual results may differ from the projections based on these assumptions. In addition, projections,assumptions and estimates of our future performance and the future performance of the industry in which we operate is necessarily subjectto a high degree of uncertainty and risk due to a variety of factors, including those described in “Item 3. Key Information—D. RiskFactors” and elsewhere in this annual report. You should not place undue reliance on these forward-looking statements.The forward-looking statements made in this annual report relate only to events or information as of the date on which thestatements are made in this annual report. Except as required by law, we undertake no obligation to update any forward-looking statementsto reflect events or circumstances after the date on which the statements are made or to reflect the occurrence of unanticipated events. Youshould read this annual report and the documents that we have referred to in this annual report and have filed as exhibits to this annualreport, completely and with the understanding that our actual future results may be materially different from what we expect. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 8 of 248 Table of Contents1PART IITEM 1.IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERSNot required.ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLENot required.ITEM 3.KEY INFORMATIONA. ReservedB. Capitalization and IndebtednessNot required.C. Reasons for the Offer and Use of ProceedsNot required.D. Risk FactorsSummary of Risk FactorsAn investment in our ADSs involves significant risks. Below is a summary of material risks we face, organized under relevantheadings. These risks are discussed more fully below in “Item 3. Key Information—D. Risk Factors.”Risks Related to Doing Business in the People’s Republic of China●We face various legal and operational risks and uncertainties as a company based in and primarily operating in China.●Changes in the political and economic policies of the PRC government may materially and adversely affect our business,financial condition and results of operations and may result in our inability to sustain our growth and expansion strategies.●There are uncertainties with respect to the PRC legal system, including uncertainties regarding the interpretation andenforcement of PRC laws, rules and regulations, and sudden or unexpected changes in policies, laws, rules and regulations inthe PRC that could adversely affect us.Risks Related to Our Corporate Structure●If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not complywith PRC regulations, or if these regulations change or are interpreted differently in the future, we could be subject to severepenalties or be forced to relinquish our interests in the operations of the VIEs.●Our contractual arrangements with the VIEs may result in adverse tax consequences to us.●We rely on contractual arrangements with the VIEs and their shareholders for our China operations, which may not be aseffective as direct ownership in providing operational control and otherwise have a material adverse effect as to our business. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 9 of 248 Table of Contents2Risks Relating to Our Business and Industry●We have fallen below the continued listing requirements of the New York Stock Exchange, and if we are unable to regaincompliance in time, our ADSs may be delisted and the liquidity and the trading price of our ADSs would be materially andadversely affected.●We are highly reliant on our proprietary technology infrastructure in our business operations, and failure to continue toimprove and effectively utilize our technology infrastructure or successfully develop new technologies could harm ourbusiness operations, reputation and prospects.●We may not be able to maintain and enhance our ecosystem, which could negatively affect our business and prospects.●If we are unable to continue to innovate, meet evolving market trends, adapt to changing customer demands and maintainour culture of innovation, our ability to sustain and grow our business may suffer.●We operate in a competitive industry, and if we fail to compete effectively, our business could suffer.●Our business and growth are significantly affected by the emergence of New Retail, the continued development of e-commerce in China and elsewhere and related demand for integrated supply chain solutions.●We have a history of net losses and negative cash flows from operating activities, which may continue or occur again in thefuture. While we believe we can continue our business as a going concern and have prepared our consolidated financialstatements on that basis, we cannot assure you that we will be able to continue as a going concern in light of the adverseconditions we are facing.Risks Related to Our ADSs●The trading price of our ADSs has been and may continue to be volatile, which could result in substantial losses to you.●If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, themarket price for our ADSs and trading volume could decline.●Techniques employed by short sellers may drive down the market price of our ADSs.Risks Related to Doing Business in the People’s Republic of ChinaWe face various legal and operational risks and uncertainties as a company based in and primarily operating in China.We face various legal and operational risks and uncertainties as a company based in and primarily operating in China. The PRCgovernment has significant authority to exert influence on the ability of a China-based company, like us, to conduct its business, acceptforeign investments or list on a U.S. stock exchange. For example, we face risks associated with regulatory approvals of offshoreofferings, anti-monopoly regulatory actions, cybersecurity and data privacy, as well as the lack of inspection from the U.S. PublicCompany Accounting Oversight Board, or PCAOB, on our auditors. The PRC government may also intervene with or influence ouroperations as the government deems appropriate to further regulatory, political and societal goals. The PRC government has publishedpolicies that significantly affected the internet industry, and we cannot rule out the possibility that it will in the future release regulations orpolicies regarding our industry that could adversely affect our business, financial condition and results of operations. See “—There areuncertainties with respect to the PRC legal system, including uncertainties regarding the interpretation and enforcement of PRC laws, rulesand regulations, and sudden or unexpected changes in policies, laws, rules and regulations in the PRC that could adversely affect us.” Anysuch action, once taken by the PRC government, could cause the value of our securities, including our ADSs, to significantly decline orbecome worthless. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 10 of 248 Table of Contents3Changes in the political and economic policies of the PRC government may materially and adversely affect our business, financialcondition and results of operations and may result in our inability to sustain our growth and expansion strategies.Substantially all of our operations are conducted in the PRC and substantially all of our revenue is sourced from the PRC.Accordingly, our financial condition and results of operations are affected to a significant extent by economic, political and legaldevelopments in the PRC.The PRC economy differs from the economies of most developed countries in many respects, including the extent of governmentinvolvement, level of development, growth rate, and control of foreign exchange and allocation of resources. Although the PRCgovernment has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownershipof productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productiveassets in China is still owned by the government. In addition, the PRC government continues to play a significant role in regulatingindustry development by imposing industrial policies. The PRC government also exercises significant control over China’s economicgrowth by allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, regulatingfinancial services and institutions and providing preferential treatment to particular industries or companies.While the PRC economy has experienced significant growth in the past, growth has been uneven, both geographically and amongvarious sectors of the economy. The PRC government has implemented various measures to encourage economic growth and guide theallocation of resources. Some of these measures may benefit the overall PRC economy, but may also have a negative effect on us. Ourfinancial condition and results of operations could be materially and adversely affected by government control over capital investments orchanges in tax regulations that are applicable to us. The PRC government also has significant authority to exert influence on the ability ofan issuer with substantial operations in China, such as our company, to conduct securities offerings overseas and/or allow any foreigninvestments in issuers with substantial operations in China. The PRC government may intervene or influence the operations of an issuerwith substantial operations in China, such as our company, at any time, which could result in a material change in our operations and/orthe value of our ADSs. In particular, there have been recent statements by the PRC government indicating an intent to exert more oversightand control over offerings that are conducted overseas and/or foreign investment in China-based issuers with substantial operations inChina. Any such regulatory oversight or control could significantly limit or completely hinder our ability to offer or continue to offersecurities to investors and cause the value of our securities, including our ADSs, to significantly decline or become worthless. See “—There are uncertainties with respect to the PRC legal system, including uncertainties regarding the interpretation and enforcement of PRClaws, rules and regulations, and sudden or unexpected changes in policies, laws, rules and regulations in the PRC that could adverselyaffect us.” In addition, the PRC government has implemented in the past certain measures to control the pace of economic growth. Thesemeasures may cause decreased economic activity, which in turn could lead to a reduction in demand for our services and consequentlyhave a material adverse effect on our businesses, financial condition and results of operations.There are uncertainties with respect to the PRC legal system, including uncertainties regarding the interpretation and enforcement ofPRC laws, rules and regulations, and sudden or unexpected changes in policies, laws, rules and regulations in the PRC that couldadversely affect us.Substantially all of our operations are conducted in the PRC, and are governed by PRC laws, rules and regulations. Our PRCsubsidiaries are subject to laws, rules and regulations applicable to foreign investment in China. The PRC legal system is a civil lawsystem based on written statutes. Unlike the common law system, prior court decisions may be cited for reference but have limitedprecedential value.In 1979, the PRC government began to promulgate a comprehensive system of laws, rules and regulations governing economicmatters in general. The overall effect of legislation over the past four decades has significantly enhanced the protections afforded tovarious forms of foreign investment in China. However, China has not developed a fully integrated legal system, and enacted laws, rulesand regulations may not sufficiently cover all aspects of economic activities in China or may be subject to significant degrees ofinterpretation by PRC regulatory agencies. In particular, because these laws, rules and regulations are relatively new, and because of thelimited number of published decisions and the nonbinding nature of such decisions, and because the laws, rules and regulations often givethe relevant regulator significant discretion in how to enforce them, the interpretation and enforcement of these laws, rules and regulationsinvolve uncertainties and can be inconsistent and unpredictable. In addition, the PRC legal system is based in part on government policiesand internal rules, some of which are not published on a timely basis or at all, and which may have a retroactive effect. As a result, we maynot be aware of our violation of these policies and rules until after the occurrence of the violation. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 11 of 248 Table of Contents4Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resourcesand management attention. Since PRC administrative and court authorities have significant discretion in interpreting and implementingstatutory and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level oflegal protection we enjoy than in more developed legal systems. These uncertainties may impede our ability to enforce the contracts wehave entered into and could materially and adversely affect our business, financial condition and results of operations.The PRC government has significant oversight and discretion over the conduct of our business and may intervene with orinfluence our operations as the government deems appropriate to further regulatory, political and societal goals. The PRC government haspublished policies that significantly affected the internet industry, and we cannot rule out the possibility that it will in the future releaseregulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations. See“—We face various legal and operational risks and uncertainties as a company based in and primarily operating in China.” Furthermore,the PRC government has also indicated an intent to exert more oversight and control over securities offerings and other capital marketsactivities that are conducted overseas and foreign investment in China-based companies like us. For example, on July 6, 2021, the relevantPRC government authorities made public the Opinions on Strictly Cracking Down Illegal Securities Activities in Accordance with theLaw, or the Opinions. The Opinions emphasized the need to strengthen the administration over illegal securities activities and thesupervision on overseas listings by Chinses companies and proposed to take effective measures, such as promoting the construction ofrelevant regulatory systems to deal with the risks and incidents faced by overseas-listed Chinese companies, enhancing cross-borderregulatory cooperation, and improving relevant regulations to specify responsibilities of overseas-listed Chinese companies with respect todata security and information security. There are great uncertainties with respect to the interpretation and implementation of the Opinions.See “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Regulations Relating to Overseas Listing andM&A Rules.” If the relevant PRC regulatory agencies later promulgate new rules or explanations requiring that we obtain their approvalsfor our future offshore offerings, we may be unable to obtain such approvals in a timely manner, or at all, and such approvals may berescinded even if obtained. Any such action, once taken by the PRC government, could significantly limit or completely hinder our abilityto offer or continue to offer securities to investors and cause the value of our securities, including our ADSs, to significantly decline orbecome worthless.Our business operations are extensively impacted by the policies and regulations of the PRC government. Any policy or regulatorychange may cause us to incur significant compliance costs.We are subject to extensive national, provincial and local governmental regulations, policies and controls. Central governmentalauthorities and provincial and local authorities and agencies regulate many aspects of Chinese industries, including, among others and inaddition to specific industry-related regulations, the following aspects: (i) operation of logistics and supply chain services; (ii) traffic andtransport-related services; (iii) provision of supply chain solutions, transport services, financial services, retail services and operation ofhigh technology businesses; (iv) environmental laws and regulations; (v) security laws and regulations; (vi) establishment of or changes inshareholder of foreign investment enterprises; (vii) foreign exchange; (viii) taxes, duties and fees; (ix) customs; and (x) land planning andland use rights, including establishment of urban transformation initiatives.The liabilities, costs, obligations and requirements associated with these laws and regulations may cause interruptions to ouroperations or impact our financial position and results of operations. Failure to comply with the relevant laws and regulations in ouroperations may result in various penalties, including, among others the suspension of our operations and thus adversely and materiallyaffect our business, prospects, financial condition and results of operations. Additionally, there can be no assurance that the relevantgovernment agencies will not change such laws or regulations or impose additional or more stringent laws or regulations. Compliance withsuch laws or regulations may require us to incur material capital expenditures or other obligations or liabilities.The successful operation of our business depends upon the performance and reliability of the Internet infrastructure in China andother countries in which we operate.Our business depends on the performance and reliability of the Internet infrastructure in China and other countries in which weoperate. Almost all access to the Internet in China is maintained through state-owned telecommunication operators under theadministrative control and regulatory supervision of the MIIT. In addition, the national networks in China are connected to the Internetthrough state-owned international gateways, which are the only channels through which a domestic user can connect to the Internet outsideof China. We may not have access to alternative networks in the event of disruptions, failures or other problems with the Internetinfrastructure in China or elsewhere. In addition, the Internet infrastructure in the countries in which we operate may not support thedemands associated with continued growth in Internet usage. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 12 of 248 Table of Contents5The failure of telecommunications network operators to provide us with the requisite bandwidth could also interfere with thespeed and availability of our websites. We have no control over the costs of the services provided by the telecommunications operators. Ifthe prices that we pay for telecommunications and Internet services rise significantly, our gross margins could be adversely affected. Inaddition, if Internet access fees or other charges to Internet users increase, activities in our ecosystem may decrease, which in turn maysignificantly decrease our revenue.Certain PRC regulations establish more complex procedures for acquisitions conducted by foreign investors that could make it moredifficult for us to grow through acquisitions.On August 8, 2006, six PRC regulatory agencies, including the MOFCOM, the State-Owned Assets Supervision andAdministration Commission, or the SASAC, the State Administration of Taxation, the State Administration for Industry and Commerce,the predecessor of the State Administration for Market Regulation, the CSRC, and the SAFE, jointly adopted the Regulations on Mergersand Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, which came into effect on September 8, 2006 andwere amended on June 22, 2009. The M&A Rules include, among other things, provisions that purport to require that an offshore specialpurpose vehicle formed for the purpose of an overseas listing of securities in a PRC company obtain the approval of the CSRC prior to thelisting and trading of such special purpose vehicle’s securities on an overseas stock exchange. On September 21, 2006, the CSRCpublished on its official website procedures regarding its approval of overseas listings by special purpose vehicles. However, substantialuncertainty remains regarding the scope and applicability of the M&A Rules to offshore special purpose vehicles.While the application of the M&A Rules remains unclear, we believe, based on the advice of our PRC counsel, King & WoodMallesons, that the CSRC approval is not required in the context of our initial public offering because (i) our PRC subsidiaries wereincorporated as foreign-invested enterprises by means of foreign direct investments at the time of their incorporation, and (ii) we did notacquire any equity interests or assets of a PRC company owned by its controlling shareholders or beneficial owners who are PRCcompanies or individuals, as such terms are defined under the M&A Rules. There can be no assurance that the relevant PRC governmentagencies, including the CSRC, would reach the same conclusion as our PRC counsel. If the CSRC or other PRC regulatory bodysubsequently determines that we need to obtain the CSRC’s approval for our initial public offering or if the CSRC or any other PRCgovernment authorities promulgates any interpretation or implements rules before our listing that would require us to obtain CSRC orother governmental approvals for our initial public offering, we may face adverse actions or sanctions by the CSRC or other PRCregulatory agencies. In any such event, these regulatory agencies may impose fines and penalties on our operations in China, limit ouroperating privileges in China, delay or restrict the repatriation of the proceeds from our initial public offering into the PRC or take otheractions that could have a material adverse effect on our business, financial condition, results of operations, reputation and prospects.In addition, the Anti-Monopoly Law, which was most recently revised on June 24, 2022, requires that the anti-trust governmentalauthority, such as Anti-monopoly Bureau of the SAMR, shall be notified in advance of any concentration of undertaking if certainthresholds are triggered. The Anti-monopoly Committee of the State Council published the Anti-Monopoly Guidelines for the InternetPlatform Economy Sector on February 7, 2021, which specifically provides that concentration of undertakings involving VIEs shall besubject to anti-monopoly review. If a concentration of undertakings meets the criteria for declaration as stipulated by the State Council, theentity conducting the concentration shall report such concentration to the anti-monopoly law enforcement agency under the State Councilin advance. On November 15, 2021, we received from the SAMR an administrative penalty decision imposing a fine of RMB500,000 onus as a result of our failure to report concentration of undertaking in connection with Hangzhou BEST Network’s acquisition of shares ofWOWO in 2017. We have made full payment of the penalty and we do not expect further penalty from the SAMR in connection with thismatter. However, our other prior concentration of undertaking (whether by ourselves, our subsidiaries or through the VIEs) that meet thecriteria for declaration may be subject to a reporting requirement, and in the future we may be subject to penalties including but not limitedto fines if we fail to comply with such requirement. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 13 of 248 Table of Contents6The new regulations, such as Measures for the Security Review of Foreign Investment, also established additional procedures andrequirements that are expected to make merger and acquisition activities in China by foreign investors more time-consuming and complex,including requirements in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which aforeign investor takes control of a PRC domestic enterprise, or that the approval from the MOFCOM be obtained in circumstances whereoverseas companies established or controlled by PRC enterprises or residents acquire affiliated domestic companies. We may grow ourbusiness in part by acquiring other companies operating in our industry. Complying with the requirements of the new regulations tocomplete such transactions could be time-consuming, and any required approval processes, including approval from the MOFCOM orAnti-monopoly Bureau of the SAMR, may delay or inhibit our ability to complete such transactions, which could affect our ability toexpand our business or maintain our market share. See “Item 4. Information on the Company—B. Business Overview—RegulatoryMatters—Regulations Relating to Overseas Listing and M&A Rules” and “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Regulations Relating to Foreign Investment—Foreign Investment Security Review.”PRC regulations relating to investments in offshore companies by PRC residents may subject our PRC-resident beneficial owners orour PRC subsidiaries to liability or penalties, limit our ability to inject capital into our PRC subsidiaries or limit our PRC subsidiaries’ability to increase their registered capital or distribute profits.SAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ OffshoreInvestment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, whichreplaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005. SAFE Circular 37requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of anoffshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests indomestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such asincrease or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material events. In theevent that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRCsubsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying outsubsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additionalcapital into its PRC subsidiary. Moreover, failure to comply with the various SAFE registration requirements described above could resultin liability under PRC law for evasion of foreign exchange controls. According to the Notice on Further Simplifying and ImprovingPolicies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015 by SAFE, qualified local banks willexamine and handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration andamendment registration, under SAFE Circular 37 from June 1, 2015.We have notified our substantial beneficial owners who we know are PRC residents of their obligations of applications, filingsand amendments as required under SAFE Circular 37 and other related rules. Nevertheless, we may not be aware of the identities of all ofour beneficial owners who are PRC residents. We do not have control over our beneficial owners and there can be no assurance that all ofour PRC-resident beneficial owners will comply with SAFE Circular 37, its implementation rules and other applicable foreign exchangerules, and there is no assurance that the registration under SAFE Circular 37 and any amendment will be completed in a timely manner, orwill be completed at all. The failure of our beneficial owners who are PRC residents to register or amend their foreign exchangeregistrations in a timely manner pursuant to SAFE Circular 37, its implementation rules and other applicable foreign exchange rules, or thefailure of future beneficial owners of our company who are PRC residents to comply with these registration requirements, may subjectsuch beneficial owners or our PRC subsidiaries to fines and legal sanctions. Failure to register or comply with relevant requirements mayalso limit our ability to contribute additional capital to our PRC subsidiaries and limit our PRC subsidiaries’ ability to distribute dividendsto our company, or we may be penalized by SAFE. These risks may have a material adverse effect on our business, financial condition andresults of operations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 14 of 248 Table of Contents7PRC regulation of loans to and direct investment in PRC entities by offshore holding companies and governmental control of currencyconversion may delay or prevent us from using the proceeds of our initial public offering and convertible senior notes issuances tomake loans to or make additional capital contributions to our PRC subsidiaries, which could materially and adversely affect ourliquidity and our ability to fund and expand our business.We are an offshore holding company conducting our operations in China through our PRC subsidiaries, the VIEs and theirsubsidiaries. Any funds we transfer to our PRC subsidiaries, either as a shareholder loan or as an increase in registered capital, are subjectto approval by or registration with relevant governmental authorities in China. According to the relevant PRC regulations on foreign-invested enterprises, or FIEs, in China, capital contributions to our PRC subsidiaries are subject to the filing with the MOFCOM or itslocal branches and registration with other governmental authorities in China. In addition, (i) any foreign loan procured by our PRCsubsidiaries is required to be registered with the State Administration of Foreign Exchange, or the SAFE, or its local branches, and (ii)each of our PRC subsidiaries may not procure loans which exceed the difference between its registered capital and its total investmentamount as approved. Any medium or long term loan to be provided by us to the VIEs must be filed with the National Development andReform Commission, or the NDRC, and the SAFE or its local branches in advance. We may not obtain these governmental approvals orcomplete such registrations on a timely basis, if at all, with respect to future capital contributions or foreign loans by us to our PRCsubsidiaries. If we fail to receive such approvals or complete such registrations, our ability to use the proceeds of our initial public offeringand convertible senior notes issuances and to capitalize our PRC operations may be negatively affected, which could adversely affect ourliquidity and our ability to fund and expand our business.On March 30, 2015, the SAFE promulgated the Circular on Reforming the Management Approach Regarding the ForeignExchange Capital Settlement of Foreign-Invested Enterprises, or SAFE Circular 19. SAFE Circular 19 took effect as of June 1, 2015 andwas last amended on March 23, 2023. SAFE Circular 19 launched a nationwide reform of the administration of the settlement of theforeign exchange capitals of FIEs and allows FIEs to settle their foreign exchange capital at their discretion, but continues to prohibit FIEsfrom using the Renminbi fund converted from their foreign exchange capitals for expenditure beyond their business scopes. SAFEpromulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the Foreign ExchangeSettlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016, which reiterates some of the rules setforth in SAFE Circular 19, but changes the prohibition against using RMB capital converted from foreign currency-denominatedregistered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition against using such capital to issue loans tonon-associated enterprises. Additionally, the Notice for Further Advancing the Facilitation of Cross-border Trade and Investment, or theSAFE Circular 28, was promulgated by the SAFE on October 23, 2019 and last amended on December 4, 2023. SAFE Circular 28, amongother things, allows FIEs to use Renminbi converted from foreign currency-denominated capital for equity investments in China so long asthe equity investment complies with the then-effective Special Administrative Measures for Access of Foreign Investment (Negative List)and is genuine and legitimate.Violations of SAFE Circular 19 and SAFE Circular 16 could result in administrative penalties. SAFE Circular 19, SAFE Circular16 and other relevant rules and regulations may significantly limit our ability to transfer any foreign currency we hold, including the netproceeds from our initial public offering and convertible senior notes issuances, to our PRC subsidiaries, which may adversely affect ourliquidity and our ability to fund and expand our business in the PRC. SAFE Circular 19, SAFE Circular 16 and other relevant rules andregulations may significantly limit our ability to transfer to and use in China the net proceeds from our initial public offering andconvertible senior notes issuances, which may adversely affect our business, financial condition and results of operations.In light of the various requirements imposed by PRC regulations on loans to, and direct investment in, PRC entities by offshoreholding companies, we cannot assure you that we will be able to complete the necessary government registrations or obtain the necessarygovernment approvals on a timely basis, if at all, with respect to future loans or capital contributions by us to our PRC subsidiaries or theVIEs. If we fail to complete such registrations or obtain such approvals, our ability to use the proceeds we receive from our initial publicoffering and convertible senior notes issuances and to capitalize or otherwise fund our PRC operations may be negatively affected, whichcould materially and adversely affect our liquidity and our ability to fund and expand our business. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 15 of 248 Table of Contents8Any failure to comply with PRC regulations regarding our employee share incentive plans may subject the PRC plan participants or usto fines and other legal or administrative sanctions.Pursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companiesdue to their position as director, senior management or employees of the PRC subsidiaries of the overseas companies may submitapplications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purpose companies. Ourdirectors, executive officers and other employees who are PRC residents or who are non-PRC residents residing in China for a continuousperiod of not less than one year, subject to limited exceptions, and who have been granted options may follow SAFE Circular 37 to applyfor the foreign exchange registration before our company becomes an overseas listed company. As a U.S. public company, we and ourdirectors, executive officers and other employees who are PRC residents and who have been granted options are subject to the Notice onIssues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plan of OverseasPublicly Listed Company, issued by SAFE in February 2012, according to which, employees, directors, supervisors and other managementmembers participating in any stock incentive plan of an overseas publicly listed company who are PRC residents or who are non-PRCresidents residing in China for a continuous period of not less than one year, subject to limited exceptions, are required to register withSAFE through a domestic qualified agent, which could be a PRC subsidiary of such overseas listed company, and complete certain otherprocedures. We are making efforts to comply with these requirements. However, there can be no assurance that they can successfullyregister with SAFE in full compliance with the rules. Failure to complete the SAFE registrations may subject them to fines and legalsanctions and may also limit the ability to make payment under our share incentive plans or receive dividends or sales proceeds relatedthereto, or our ability to contribute additional capital into our wholly-foreign owned enterprises in China and limit our wholly-foreignowned enterprises’ ability to distribute dividends to us. We also face regulatory uncertainties that could restrict our ability to adoptadditional share incentive plans for our directors and employees under PRC law.The enforcement of the PRC Labor Contract Law, and other labor-related regulations in the PRC may increase our labor costs andlimit our flexibility to use labor. Our failure to comply with PRC labor-related laws may expose us to penalties.On June 29, 2007, the Standing Committee of the National People’s Congress of China enacted the PRC Labor Contract Law,which became effective on January 1, 2008 and was amended on December 28, 2012. The PRC Labor Contract Law introduces specificprovisions related to fixed-term employment contracts, part-time employment, probation, consultation with labor unions and employeeassemblies, employment without a written contract, dismissal of employees, severance, and collective bargaining, which together representenhanced enforcement of labor laws and regulations. According to the PRC Labor Contract Law, an employer is obliged to sign anunfixed-term labor contract with any employee who has worked for the employer for 10 consecutive years. Further, if an employeerequests or agrees to renew a fixed-term labor contract that has already been entered into twice consecutively, the resulting contract musthave an unfixed term, with certain exceptions. The employer must pay economic compensation to an employee where a labor contract isterminated or expires in accordance with the PRC Labor Contract Law, except for certain situations which are specifically regulated. As aresult, our ability to terminate employees is significantly restricted. In addition, the government has issued various labor-relatedregulations to further protect the rights of employees. According to such laws and regulations, employees are entitled to annual leaveranging from five to 15 days and are able to be compensated for any untaken annual leave days in the amount of three times their dailysalary, subject to certain exceptions. In the event that we decide to change our employment or labor practices, the PRC Labor ContractLaw and its implementation rules may also limit our ability to effect those changes in a manner that we believe to be cost-effective. Inaddition, as the interpretation and implementation of these new regulations are still evolving, our employment practices may not be at alltimes deemed in compliance with the new regulations. If we are subject to severe penalties or incur significant liabilities in connectionwith labor disputes or investigations, our business and financial conditions may be adversely affected. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 16 of 248 Table of Contents9Companies operating in China are required to participate in various government sponsored employee benefit plans, includingcertain social insurance, housing funds and other welfare-oriented payment obligations, and contribute to the plans in amounts equal tocertain percentages of salaries, including bonuses and allowances, of their employees up to a maximum amount specified by the localgovernment from time to time. The requirement to maintain employee benefit plans has not been implemented consistently by localgovernments in China given the different levels of economic development in different locations. We did not pay, or were not able to pay,certain past social security and housing fund contributions in strict compliance with the relevant PRC regulations for and on behalf of ouremployees due to differences in local regulations and inconsistent implementation or interpretation by local authorities in the PRC andvarying levels of acceptance of the housing fund system by our employees. We may be subject to fines and penalties for our failure tomake payments in accordance with the applicable PRC laws and regulations. We may be required to make up the contributions for theseplans as well as to pay late fees and fines. We have not made any accruals for the interest on underpayments and penalties that may beimposed by the relevant PRC government authorities in the financial statements. If we are subject to penalties, late fees or fines in relationto the underpaid employee benefits, our financial condition and results of operations may be adversely affected.We rely to a significant extent on dividends and other distributions on equity paid by our principal operating subsidiaries to fundoffshore cash and financing requirements. Any limitation on the ability of our operating subsidiaries to make payments to us couldhave a material and adverse impact on our ability to operate our business.We are a holding company and rely to a significant extent on dividends and other distributions on equity paid by our principaloperating subsidiaries and on remittances from the VIEs, for our offshore cash and financing requirements, including the funds necessaryto pay dividends and other cash distributions to our shareholders, fund inter-company loans, service any debt and interest we may incuroutside of China and pay our expenses. When our principal operating subsidiaries or the VIEs incur additional debt, the instrumentsgoverning the debt may restrict their ability to pay dividends or make other distributions or remittances to us. Furthermore, the laws, rulesand regulations applicable to our PRC subsidiaries and certain other subsidiaries permit payments of dividends only out of their retainedearnings, if any, determined in accordance with applicable accounting standards and regulations.Under PRC laws, rules and regulations, each of our subsidiaries incorporated in China is required to set aside at least 10% of itsnet income each year to fund certain statutory reserves until the cumulative amount of such reserves reaches 50% of its registered capital.These reserves, together with the registered capital, are not distributable as cash dividends. As a result of these laws, rules and regulations,our subsidiaries incorporated in China are restricted in their ability to transfer a portion of their respective net assets to their shareholdersas dividends, loans or advances.In response to the persistent capital outflow in China and RMB’s depreciation against U.S. dollar in the fourth quarter of 2016,the PBOC and the SAFE have implemented a series of capital control measures over recent months, including stricter vetting proceduresfor China-based companies to remit foreign currency for overseas acquisitions, dividend payments and shareholder loan repayments. Forinstance, on January 26, 2017, SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Review ofAuthenticity and Compliance to Further Promote Foreign Exchange Control, or the SAFE Circular 3, which stipulates several capitalcontrol measures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under theprinciple of genuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing recordsand audited financial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting theprofits. The PRC government may continue to strengthen its capital controls, and more restrictions and substantial vetting process may beput in place by SAFE for cross-border transactions falling under both the current account and the capital account. Limitations on theability of VIEs to make remittances to wholly-foreign owned enterprises and on the ability of our subsidiaries to pay dividends to us couldlimit our ability to access cash generated by the operations of those entities, including to make investments or acquisitions that could bebeneficial to our businesses, pay dividends to our shareholders, service debt and interest, or otherwise fund and conduct our business. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 17 of 248 Table of Contents10We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore besubject to PRC income tax on our global income.Under the PRC Enterprise Income Tax Law and its implementing rules, enterprises established under the laws of jurisdictionsoutside of China with “de facto management bodies” located in China may be considered PRC tax resident enterprises for tax purposesand may be subject to the PRC enterprise income tax at the rate of 25% on their global income. “De facto management body” refers to amanaging body that exercises substantive and overall management and control over the production and business, personnel, accountingbooks and assets of an enterprise. The State Administration of Taxation issued the Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprises as PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or SATCircular 82, on April 22, 2009. SAT Circular 82 provides certain specific criteria for determining whether the “de facto managementbody” of a Chinese-controlled offshore-incorporated enterprise is located in China. Although SAT Circular 82 only applies to offshoreenterprises controlled by PRC enterprises, not those controlled by foreign enterprises or individuals, the determining criteria set forth inSAT Circular 82 may reflect the State Administration of Taxation’s general position on how the “de facto management body” test shouldbe applied in determining the tax resident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises. Ifwe were to be considered a PRC resident enterprise, we would be subject to PRC enterprise income tax at the rate of 25% on our globalincome. In such case, our profitability and cash flow may be materially reduced as a result of our global income being taxed under theEnterprise Income Tax Law. We believe that none of our entities outside of China is a PRC resident enterprise for PRC tax purposes.However, the tax resident status of an enterprise is subject to determination by the PRC tax authorities and uncertainties remain withrespect to the interpretation of the term “de facto management body.”Dividends payable to our foreign investors and gains on the sale of our ADSs or Class A ordinary shares by our foreign investors maybecome subject to PRC tax.Under the PRC Enterprise Income Tax Law and its implementing rules issued by the State Council, a 10% PRC withholding tax,subject to any reduction or exemption set forth in applicable tax treaties or under applicable tax arrangements between jurisdictions, isapplicable to dividends payable to investors that are non-resident enterprises, which do not have an establishment or place of business inthe PRC or which have such establishment or place of business but the dividends are not effectively connected with such establishment orplace of business, to the extent such dividends are derived from sources within the PRC. Similarly, any gain realized on the transfer ofADSs or Class A ordinary shares by such investors is also subject to PRC tax at a current rate of 10%, subject to any reduction orexemption set forth in applicable tax treaties or under applicable tax arrangements between jurisdictions, if such gain is regarded asincome derived from sources within the PRC. If we are deemed a PRC resident enterprise, dividends paid on our Class A ordinary sharesor ADSs, and any gain realized from the transfer of our Class A ordinary shares or ADSs, would be treated as income derived fromsources within the PRC and would as a result be subject to PRC taxation. Furthermore, if we are deemed a PRC resident enterprise,dividends payable to individual investors who are non-PRC residents and any gain realized on the transfer of ADSs or Class A ordinaryshares by such investors may be subject to PRC tax at a current rate of 20%, subject to any reduction or exemption set forth in applicabletax treaties or under applicable tax arrangements between jurisdictions. If we or any of our subsidiaries established outside China areconsidered a PRC resident enterprise, it is unclear whether holders of our ADSs or Class A ordinary shares would be able to claim thebenefit of income tax treaties or agreements entered into between China and other countries or areas. If dividends payable to our non-PRCinvestors, or gains from the transfer of our ADSs or Class A ordinary shares by such investors, are deemed as income derived fromsources within the PRC and thus are subject to PRC tax, the value of your investment in our ADSs or Class A ordinary shares may declinesignificantly. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 18 of 248 Table of Contents11We and our shareholders face uncertainties with respect to indirect transfers of equity interests in PRC resident enterprises, assetsattributed to a PRC establishment of a non-Chinese company, or real property located in China owned by non-Chinese companies.On February 3, 2015, the State Administration of Taxation issued the Bulletin on Issues of Enterprise Income Tax on IndirectTransfers of Assets by Non-PRC Resident Enterprises, or Bulletin 7, which was last amended on December 29, 2017. Pursuant to thisBulletin, an “indirect transfer” of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may berecharacterized and treated as a direct transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purposeand was established for the purpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirecttransfer may be subject to PRC enterprise income tax. According to Bulletin 7, “PRC taxable assets” include assets attributed to anestablishment or place of business in China, real properties located in China, and equity investments in PRC resident enterprises, in respectof which gains from their transfer by a direct holder, being a non-PRC resident enterprise, would be subject to PRC enterprise incometaxes. When determining whether there is a “reasonable commercial purpose” of the transaction arrangement, features to be taken intoconsideration include: whether the main value of the equity interest of the relevant offshore enterprise derives from PRC taxable assets;whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income mainlyderives from China; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have realcommercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model andorganizational structure; the foreign income tax liabilities arising from the indirect transfer of PRC taxable assets; the replicability of thetransaction by direct transfer of PRC taxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similararrangements. In respect of an indirect offshore transfer of assets of a PRC establishment or place of business, the resulting gain is to beincluded with the enterprise income tax filing of the PRC establishment or place of business being transferred, and would consequently besubject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the real properties located in China or toequity investments in a PRC resident enterprise, which is not related to a PRC establishment or place of business of a non-residententerprise, a PRC enterprise income tax of 10% would apply, subject to available preferential tax treatment under applicable tax treaties orsimilar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. Where the payor failsto withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority by itself within the statutory time limit.Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquiredfrom a transaction through a public stock exchange. On October 17, 2017, the SAT issued the Bulletin on Issues Concerning theWithholding of Non-resident Enterprise Income Tax at Source, or Bulletin 37, which, among others, repeals certain rules related totreatment of situations where a payor has failed to timely withhold tax as stipulated in Bulletin 7. In particular, Bulletin 37 provides thatwhen a payor as the withholding agent fails to or is unable to perform its withholding duty, on the condition that the relevant non-PRCresident enterprise voluntarily makes payment before being ordered to do so in a timely manner or within a time limit prescribed byrelevant tax authorities, the tax shall be deemed as having been timely paid. The Bulletin 37 further specifies and clarifies tax withholdingmethods applicable to income of non-PRC resident enterprises.There is uncertainty as to the application of Bulletin 7. Bulletin 7 may be determined by the tax authorities to be applicable to ouroffshore restructuring transactions or sale of our ordinary shares or preferred shares, or those of our offshore subsidiaries, where non-resident enterprises, being the transferors, were involved. We thereby may be subject to the tax filing and withholding or tax paymentobligation, while our PRC subsidiaries may be requested to assist in the filing. Furthermore, we, our non-resident enterprises and PRCsubsidiaries may be required to spend valuable resources to comply with Bulletin 7 or to establish that we and our non-resident enterprisesshould not be taxed under Bulletin 7, for our previous and future restructuring or disposal of shares of our offshore subsidiaries, whichmay have a material adverse effect on our financial condition and results of operations.The PRC tax authorities have the discretion under Bulletin 7 to make adjustments to the taxable capital gains based on thedifference between the fair value of the taxable assets transferred and the cost of investment. If the PRC tax authorities make adjustmentsto the taxable income of the transactions under Bulletin 7, our income tax costs associated with such potential acquisitions or disposalscould increase, which may have an adverse effect on our financial condition and results of operations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 19 of 248 Table of Contents12Restrictions on currency exchange may limit our ability to utilize our cash effectively.Substantially all of our revenue is denominated in Renminbi. The Renminbi is currently convertible under the “current account,”which includes dividends, trade and service-related foreign exchange transactions, but not under the “capital account,” which includesforeign direct investment and loans, including loans we may secure from or for our onshore subsidiaries or the VIEs. Currently, certain ofour PRC subsidiaries may purchase foreign currency for settlement of “current account transactions,” including payment of dividends tous, without the approval of SAFE by complying with certain procedural requirements. However, the relevant PRC governmentalauthorities may limit or eliminate our ability to purchase foreign currencies in the future for current account transactions. Foreignexchange transactions under the capital account remain subject to limitations and require approvals from, or registration with, SAFE andother relevant PRC governmental authorities. Since a significant amount of our future revenue will be denominated in Renminbi, anyexisting and future restrictions on currency exchange may limit our ability to utilize cash generated in Renminbi to fund our businessactivities outside of the PRC or pay dividends in foreign currencies to our shareholders, including holders of our ADSs, and may limit ourability to obtain foreign currency through debt or equity financing for our subsidiaries and the VIEs.The audit reports included in this annual report are prepared by an auditor which the U.S. Public Company Accounting OversightBoard was unable to inspect and investigate completely before 2022 and, as such, our investors have been deprived of the benefits ofsuch inspection in the past, and may be deprived of the benefits of such inspections again in the future.Our independent registered public accounting firm that issues the audit reports included in this annual report, as auditors ofcompanies that are traded publicly in the U.S. and a firm registered with the U.S. Public Company Accounting Oversight Board, or thePCAOB, is required by the laws of the U.S. to undergo regular inspections by the PCAOB to assess its compliance with the laws of theU.S. and professional standards. According to Article 177 of the PRC Securities Law which became effective in March 2020, no overseassecurities regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC.Accordingly, without the consent of the competent PRC securities regulators and relevant authorities, no organization or individual mayprovide the documents and materials relating to securities business activities to overseas parties. In 2021, PCAOB made determinationsthat the positions taken by PRC authorities prevented the PCAOB from inspecting and investigating firms headquartered in mainlandChina and Hong Kong completely. On August 26, 2022, the PCAOB signed a Statement of Protocol with the China Securities RegulatoryCommission and the Ministry of Finance of the PRC, taking the first step toward opening access for the PCAOB to inspect and investigatecompletely registered public accounting firms headquartered in mainland China and Hong Kong including our auditor. According to itsannouncement, the PCAOB sent staff to conduct on-site inspections and investigations in Hong Kong from September to November 2022and conducted inspection field work and investigative testimony in a manner consistent with the PCAOB’s methodology and approach toinspections and investigations in the U.S. and globally. The PCAOB inspections have identified numerous deficiencies in the audit firms inChina, which are consistent with the types and number of findings the PCAOB has encountered in other first-time inspections around theworld. If audit firms in China had been subject to such inspections in the past, such deficiencies may have been identified earlier and theseaudit firms, including our auditor, may have taken remedial measures to address any such deficiencies, and the historical inability of thePCAOB to inspect audit firms in China has deprived our investors of the benefits of such inspections. Because our auditor was not subjectto such inspections before 2022, we cannot assure you that it will have sufficient time to fully address any deficiency that may beidentified as part of the inspection process to improve future audit quality. The inability of the PCAOB to conduct complete inspections ofauditors in China before 2022 may have made it more difficult to evaluate the effectiveness of our auditor’s audit procedures or qualitycontrol procedures as compared to auditors outside of China that are subject to PCAOB inspections, which could cause investors orpotential investors in our ADSs to lose confidence in the quality of our consolidated financial statements.In addition, while the PCAOB announced in December 2022 that it secured complete access to inspect and investigate registeredpublic accounting firms headquartered in China, we cannot assure you that the PCAOB will continue to have such access in the future. Ifthe PCAOB is not able to inspect and investigate completely auditors in China for any reason, such as any change in the position of thegovernmental authorities in China in the future, our investors may be deprived of the benefits of such inspections again. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 20 of 248 Table of Contents13If the PCAOB determines that it is unable to inspect or investigate completely our auditor at any point in the future, our ADSs may beprohibited from trading in the United States under the Holding Foreign Companies Accountable Act, as amended, or the HFCA Act,and any such trading prohibition on our ADSs or threat thereof may materially and adversely affect the price of our ADSs and value ofyour investment.The HFCA Act was signed into law on December 18, 2020 and amended pursuant to the Consolidated Appropriations Act, 2023on December 29, 2022. Under the HFCA Act and the rules issued by the SEC and the PCAOB thereunder, if we have retained a registeredpublic accounting firm to issue an audit report where the registered public accounting firm has a branch or office that is located in aforeign jurisdiction and the PCAOB has determined that it is unable to inspect or investigate completely because of a position taken by anauthority in the foreign jurisdiction, the SEC will identify us as a “covered issuer”, or SEC-identified issuer, shortly after we file with theSEC a report required under the Securities Exchange Act of 1934, or the Exchange Act (such as our annual report on Form 20-F) thatincludes an audit report issued by such accounting firm; and if we were to be identified as an SEC-identified issuer for two consecutiveyears, the SEC would prohibit our securities (including our shares or ADSs) from being traded on a national securities exchange or in theover-the-counter trading market in the United States.In December 2021, the PCAOB made its determinations, or the 2021 determinations, pursuant to the HFCA Act that it wasunable to inspect or investigate completely registered public accounting firms headquartered in mainland China or Hong Kong includingour auditor, Ernst & Young Hua Ming LLP. After we filed our annual report on Form 20-F for the fiscal year ended December 31, 2021that included an audit report issued by Ernst & Young Hua Ming LLP on April 18, 2022, the SEC conclusively identified us as an SEC-identified issuer on May 13, 2022. As such, we are required to satisfy additional disclosure requirement for SEC-identified issuers that arealso foreign issuers in this annual report. See “Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.”Following the Statement of Protocol signed between the PCAOB and the China Securities Regulatory Commission and theMinistry of Finance of the PRC in August 2022 and the on-site inspections and investigations conducted by the PCAOB staff in HongKong from September to November 2022, the PCAOB Board voted in December 2022 to vacate the previous 2021 determinations, and asa result, our auditor, Ernst & Young Hua Ming LLP, is no longer a registered public accounting firm that the PCAOB is unable to inspector investigate completely as of the date of this annual report or at the time of issuance of the audit report included herein. As such, wewere not identified as an SEC-identified issuer in 2023 and we do not expect to be so identified in 2024 either. However, the PCAOB maychange its determinations under the HFCA Act at any point in the future. In particular, if the PCAOB finds its ability to completely inspectand investigate registered public accounting firms headquartered in mainland China or Hong Kong is obstructed by the PRC authorities inany way in the future, the PCAOB may act immediately to consider the need to issue new determinations consistent with the HFCA Act.We cannot assure you that the PCAOB will always have complete access to inspect and investigate our auditor, or that we will not beidentified as an SEC-identified issuer again in the future.If we are identified as an SEC-identified issuer again in the future, we cannot assure you that we will be able to change ourauditor or take other remedial measures in a timely manner, and if we were to be identified as an SEC-identified issuer for two consecutiveyears, we would be delisted from the NYSE and our securities (including our shares and ADSs) will not be permitted for trading “over-the-counter” either. If our securities are prohibited from trading in the United States, there is no certainty that we will be able to list on anon-U.S. exchange or that a market for our shares will develop outside of the United States. Such a prohibition or any threat thereof wouldsubstantially impair your ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated withdelisting would have a negative impact on the price of our ADSs. Also, such a prohibition or any threat thereof would significantly affectour ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financialcondition, and prospects. Moreover, the implementation of the HFCA Act and other efforts to increase the U.S. regulatory access to auditinformation could cause investor uncertainty as to China-based issuers’ ability to maintain their listings on the U.S. national securitiesexchanges and the market price of the securities of China-based issuers, including us, could be adversely affected. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 21 of 248 Table of Contents14If additional remedial measures are imposed on the “big four” China-based accounting firms, including our independent registeredpublic accounting firm, in administrative proceedings brought by the SEC alleging such firms’ failure to meet specific criteria set bythe SEC with respect to requests for the production of documents, we could be unable to timely file future financial statements incompliance with the requirements of the Exchange Act.In December 2012, the SEC instituted proceedings under Rule 102(e)(1)(iii) of the SEC’s Rules of Practice against five China-based accounting firms, including our independent registered public accounting firm, alleging that these firms had violated the U.S.securities laws and the SEC’s rules and regulations thereunder by failing to provide to the SEC the firms’ work papers related to theiraudits of certain China-based companies that are publicly traded in the U.S. Rule 102(e)(1)(iii) grants the SEC the authority to deny to anyperson, temporarily or permanently, the ability to practice before the SEC who is found by the SEC, after notice and opportunity for ahearing, to have willfully violated any such laws or rules and regulations. On January 22, 2014, an initial administrative law decision wasissued, censuring these accounting firms and suspending four of the five firms from practicing before the SEC for a period of six months.Four of these China-based accounting firms appealed to the SEC against this decision and, on February 6, 2015, each of the four China-based accounting firms agreed to a censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability topractice before the SEC. The firms’ ability to continue to serve all their respective clients is not affected by the settlement. The settlementrequires the firms to follow detailed procedures to seek to provide the SEC with access to Chinese firms’ audit documents via the ChinaSecurities Regulatory Commission. If the firms do not follow these procedures, the SEC could impose penalties such as suspensions, or itcould restart the administrative proceedings. The settlement did not require the firms to admit to any violation of law and preserves thefirms’ legal defenses in the event the administrative proceeding is restarted. Our audit committee is aware of the policy restriction and hasregularly communicated with our independent auditor to ensure compliance. If additional remedial measures are imposed on the China-based “big four” accounting firms, including our independent registered public accounting firm, in administrative proceedings brought bythe SEC alleging the firms’ failure to meet specific criteria set by the SEC with respect to requests for the production of documents, wecould be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, companies listed in the U.S.with major Chinese operations may find it difficult or impossible to retain auditors in respect of their operations in China, which couldresult in financial statements being determined to not be in compliance with the requirements of the Exchange Act, including possibledelisting. Moreover, any negative news about any such future proceedings against these audit firms may cause investor uncertaintyregarding China-based, U.S.-listed companies and the trading price of our ADSs may be adversely affected.If our independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and wewere unable to timely find another registered public accounting firm to audit and issue an opinion on our financial statements, ourfinancial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination couldultimately lead to the delisting of the ADSs representing our Class A ordinary shares from the New York Stock Exchange or deregistrationfrom the SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the U.S.Risks Related to Our Corporate StructureIf the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with PRCregulations, or if these regulations change or are interpreted differently in the future, we could be subject to severe penalties or beforced to relinquish our interests in the operations of the VIEs.Under current PRC laws and regulations, foreign enterprises or individuals may not invest in or operate domestic mail deliveryservices and tobacco retail business and foreign ownership of Internet information services is subject to restrictions. According to theInterim Measures for the Operation and Administration of Road Freight Transport based on Internet Platforms promulgated by theMinistry of Transport and the State Taxation Administration in 2019, enterprises that operate an internet platform for road freight transportmust satisfy legal requirements regarding operational internet information service such as obtaining their own ICP licenses. Foreigninvestors are generally not permitted to own more than 50% of the equity interests in a value-added telecommunication service provider(other than business of e-commerce, domestic multiparty communication, store-and-forward business and call center). See “Item 4.Information on the Company—B. Business Overview—Regulatory Matters—Regulations Relating to Foreign Investment—ForeignInvestment in Telecommunication Businesses.” Also, foreign investors are forbidden to invest in wholesale or retail business of tobaccoleaves, cigarettes, redried tobacco leaves or other tobacco products. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 22 of 248 Table of Contents15We are a Cayman Islands company and our PRC subsidiaries wholly owned by us are considered wholly-foreign ownedenterprises. Accordingly, none of these subsidiaries are eligible to operate domestic mail delivery services, value-addedtelecommunications business and tobacco retail business in China, including operation of an internet platform for road freight transport. Itis also practically and economically not possible to separate the delivery of mail from the delivery of non-mail items in our day-to-dayservices. To ensure compliance with the PRC laws and regulations, we conducted such domestic mail delivery services and value-addedtelecommunications business in connection with BEST UCargo, before the business was wound down by the end of 2022, throughHangzhou BEST Information Technology Services Co., Ltd., the VIE, and its subsidiaries. Our company and BEST Logistics Technology(China) Co., Ltd., or BEST Logistics China, our wholly-owned subsidiary in China, have entered into a series of contractual arrangementswith Hangzhou BEST Information Technology Services Co., Ltd. and its shareholders, and our company and BEST Store Network(Hangzhou) Co., Ltd., or BEST Store Network, our wholly-owned subsidiary in China, have entered into a series of contractualarrangements with Hangzhou Baijia Business Management Consulting Co., Ltd. and its shareholders, which enable us to (i) receivesubstantially all of the economic benefits of the VIEs and are also obligated to absorb the expected losses of the VIEs, and (ii) have anexclusive option to purchase all or part of the equity interests and assets in the VIEs when and to the extent permitted by PRC law. As aresult of these contractual arrangements, we have control over and are the primary beneficiary of the VIEs and hence consolidate theirfinancial results as the VIEs under U.S. GAAP.If the PRC government determines that the contractual arrangements constituting part of the VIE structure do not comply with itsrestrictions on foreign investment in value-added telecommunications business or tobacco retail business, if such restrictions change or areinterpreted differently in the future, or if the PRC government otherwise finds that we, the VIEs, or any of its subsidiaries are in violationof PRC laws or regulations or lack the necessary permits or licenses to operate our business, we could be subject to severe penalties or beforced to relinquish our interests in the operations of the VIEs. The relevant PRC regulatory authorities would have broad discretion indealing with such violations or failures, including, without limitation: (i) revoking the business licenses and/or operating licenses of theseentities; (ii) discontinuing or placing restrictions or onerous conditions on our operation through any transactions between our PRCsubsidiaries and VIEs; (iii) imposing fines, confiscating the income from our PRC subsidiaries or VIEs, or imposing other requirementswith which such entities may not be able to comply; (iv) requiring us to restructure our ownership structure or operations, includingterminating the contractual arrangements with the VIEs and deregistering the equity pledges of the VIEs, which in turn would affect ourability to consolidate, or to receive substantially all of the economic benefits from, the VIEs; or (v) restricting or prohibiting our use of theproceeds of our initial public offering and convertible senior notes issuances to finance our business and operations in China.Any of these actions would cause significant disruption to our business operations and severely damage our reputation, whichwould in turn materially and adversely affect our business, financial condition and results of operations. The enforceability of theagreements under the contractual arrangements has not been tested in a court of law, and new PRC laws, rules and regulations may beintroduced to impose additional requirements that may impose additional challenges to our corporate structure and contractualarrangements. In addition, relevant PRC regulatory authorities could disallow the VIE structure. If any of the foregoing were to occur, andas a result we were unable to direct the activities of the VIEs, receive the economic benefits from the VIEs and/or claim our contractualcontrol rights over the assets of the VIEs and their subsidiaries that conduct substantially all of our operations in China, we may not beable to consolidate the entities in our consolidated financial statements in accordance with U.S. GAAP, which would likely materially andadversely affect our financial condition and results of operations, and cause the value of our securities, including our ADSs, tosignificantly decline or become worthless.Our contractual arrangements with the VIEs may result in adverse tax consequences to us.Under applicable PRC laws and regulations, arrangements and transactions among related parties may be subject to audit orchallenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that ourcontractual arrangements with the VIEs were not made on an arm’s length basis and adjust our income and expenses for PRC tax purposesby requiring a transfer pricing adjustment. A transfer pricing adjustment could adversely affect us by (i) increasing the tax liabilities of theVIEs without reducing the tax liability of our PRC subsidiaries, which could further result in late payment fees and other penalties to theVIEs for underpaid taxes; or (ii) limiting the ability of the VIEs to obtain or maintain preferential tax treatments and other financialincentives. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 23 of 248 Table of Contents16We rely on contractual arrangements with the VIEs and their shareholders for our China operations, which may not be as effective asdirect ownership in providing operational control and otherwise have a material adverse effect as to our business.We rely on contractual arrangements with the VIEs and their shareholders to operate our business in China. For a description ofthese contractual arrangements, see “Item 4. Information on the Company—Variable Interest Entity Contractual Arrangements.” In 2021,2022 and 2023, 27%, 5% and 7% of our total revenue from continuing operations, respectively, was attributed to the VIEs. Thesecontractual arrangements may not be as effective as direct ownership in providing us with control over the VIEs. If the VIEs or theirshareholders fail to perform their respective obligations under these contractual arrangements, we may have to incur substantial costs andexpend significant resources to enforce such arrangements in reliance on legal remedies under PRC law as we will only have indirectrecourse to the assets held by the VIEs. These remedies may not always be effective, particularly in light of uncertainties in the PRC legalsystem. Furthermore, in connection with litigation, arbitration or other judicial or dispute resolution proceedings, assets under the name ofany of the record holders of equity interest in the VIEs, including such equity interest, may be put under court custody. As a consequence,we cannot be certain that the equity interest will be disposed of pursuant to the contractual arrangements or ownership by the record holderof the equity interest.All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through litigation in thePRC. Accordingly, these contracts would be interpreted in accordance with PRC laws and any disputes would be resolved in accordancewith PRC legal procedures. The legal environment in the PRC is not as developed as in other jurisdictions, such as the U.S. As a result,uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. In the event that we are unable toenforce these contractual arrangements, or if we suffer significant time delays or other obstacles in the process of enforcing thesecontractual arrangements, it would be very difficult to exert effective control over the VIEs for accounting purposes, and our ability toconduct our business and our financial condition and results of operations may be materially and adversely affected. See “—Risks Relatedto Doing Business in the People’s Republic of China—There are uncertainties regarding the interpretation and enforcement of PRC laws,rules and regulations.”The shareholders of the VIEs may have conflicts of interest with us, which may materially and adversely affect our business andfinancial condition.In connection with our operations in China, we rely on the shareholders of the VIEs to abide by the obligations under suchcontractual arrangements. Hangzhou BEST IT and Hangzhou Baijia, the two VIEs of ours, is each 50% owned by Wei Chen, a PRCindividual who is a relative of Mr. Shao-Ning Johnny Chou, and 50% owned by Lili He, another PRC individual who is a relative of Mr.Shao-Ning Johnny Chou. The interests of Wei Chen, Lili He and Hangzhou Ali Venture Capital Co., Ltd. in their own capacities as theshareholders of the VIEs, as applicable, may differ from the interests of our company as a whole, as what is in the best interests of theVIEs, including matters such as whether to distribute dividends or to make other distributions to fund our offshore requirement, may notbe in the best interests of our company. There can be no assurance that when conflicts of interest arise, any or all of these shareholders willact in the best interests of our company, or that conflicts of interest will be resolved in our favor. In addition, these shareholders maybreach or cause the VIEs to breach or refuse to renew the existing contractual arrangements with us.We currently do not have arrangements to address potential conflicts of interest the shareholders of the VIEs may encounter. Webelieve that we can, at all times, exercise our option under the exclusive call option agreement to cause these shareholders of the VIEs totransfer all of their equity ownership in the VIEs to a PRC entity or individual designated by us as permitted by then applicable PRC laws.In addition, if such conflicts of interest arise, we could also, in the capacity of attorney-in-fact of the then-existing shareholders ofthe VIEs as provided under the shareholder voting rights proxy agreement, directly appoint new directors of the VIEs. If we cannot resolveany conflicts of interest or disputes between us and the shareholders of the VIEs, we would have to rely on legal proceedings, which couldresult in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 24 of 248 Table of Contents17We may lose the ability to use, or otherwise benefit from, the licenses, approvals and assets held by the VIEs, which could severelydisrupt our business, render us unable to conduct some or all of our business operations and constrain our growth.As part of our contractual arrangements with the VIEs, the VIEs and their subsidiaries hold certain assets, licenses and permitsthat are material to our business operations, including courier service operation permits, ICP licenses and road transportation operationpermits. The contractual arrangements contain terms that specifically obligate VIE equity holders to ensure the valid existence of the VIEsand restrict the disposal of material assets of the VIEs. However, in the event the VIE equity holders breach the terms of these contractualarrangements and voluntarily liquidate the VIEs, or the VIEs declare bankruptcy and all or part of their assets become subject to liens orrights of third-party creditors, or are otherwise disposed of without our consent, we may be unable to conduct some or all of our businessoperations or otherwise benefit from the assets held by the VIEs, which could have a material adverse effect on our business, financialcondition and results of operations. Furthermore, if the VIEs undergo a voluntary or involuntary liquidation proceeding, its equity holdersor unrelated third-party creditors may claim rights to some or all of the assets of the VIEs, thereby hindering our ability to operate ourbusiness as well as constrain our growth.Our corporate actions are significantly influenced by our principal shareholders, including our founder, chairman and chief executiveofficer, Mr. Shao-Ning Johnny Chou, and Alibaba (including Cainiao Network), which have the ability to exert significant influenceover important corporate matters that require approval of shareholders, which may deprive you of an opportunity to receive a premiumfor your ADSs and materially reduce the value of your investment.Our outstanding share capital consists of Class A ordinary shares, Class B ordinary shares and Class C ordinary shares. EachClass A ordinary share is entitled to one vote, each Class B ordinary share is entitled to 15 votes, and each Class C ordinary share isentitled to 30 votes at general meetings of our shareholders. As of February 29, 2024, Alibaba (including Cainiao Network) beneficiallyowned, in aggregate, 3.8% of our Class A ordinary shares and 100% of our Class B ordinary shares, representing approximately 45.7% ofthe aggregate voting power of our issued and outstanding share capital, and Mr. Shao-Ning Johnny Chou beneficially owned 100% of theClass C ordinary shares issued and outstanding, representing approximately 46.3% of the aggregate voting power of our issued andoutstanding share capital. Our amended and restated memorandum and articles of association that are currently in effect also provide thatall matters submitted to our shareholders for approval should be decided by a special resolution, which requires at least two-thirds of thevotes cast by shareholders who are present in person or by proxy at a general meeting of our company, unless a greater majority isrequired. Therefore, our shareholders will not be able to pass any resolution without the affirmative votes of Mr. Shao-Ning Johnny Chouor Alibaba (including Cainiao Network) if one or more of them continue to hold more than one-third of the aggregate voting power of ourissued and outstanding share capital. In addition, Mr. Shao-Ning Johnny Chou has nominated two directors to our board of directors;Alibaba (including Cainiao Network) has nominated two directors to our board of directors; and they generally have the right to appointreplacements of these directors unless they do not hold any of our shares.This concentration of ownership and the protective provisions in our amended and restated memorandum and articles ofassociation may discourage, delay or prevent a change in control of our company, which could have the dual effect of depriving ourshareholders of an opportunity to receive a premium for their shares as part of a sale of our company and reducing the price of the ADSs.As a result of the foregoing, the value of your investment could be materially reduced.If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill theirresponsibilities, or misappropriate or misuse these assets, our business and operations may be materially and adversely affected.Under PRC law, legal documents for corporate transactions that our business relies on are executed using the chop or seal of thesigning entity or with the signature of a legal representative whose designation is registered and filed with the relevant local branch of theState Administration for Market Regulation.The chops of our PRC subsidiaries and VIEs are generally held by the relevant entities so that documents can be executed locally.Although we usually utilize chops to execute contracts, the registered legal representatives of our PRC subsidiaries and VIEs have theapparent authority to enter into contracts on behalf of such entities without chops, unless such contracts set forth otherwise. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 25 of 248 Table of Contents18In order to maintain the physical security of our chops, we generally have them stored in secured locations accessible only to thedesignated key employees of our legal, administrative or finance departments. Although we have approval procedures in place andmonitor our key employees, including the designated legal representatives of our PRC subsidiaries and the VIEs, the procedures may notbe sufficient to prevent all instances of abuse or negligence. There is a risk that our key employees or designated legal representativescould abuse their authority, for example, by binding our PRC subsidiaries and the VIEs with contracts against our interests, as we wouldbe obligated to honor these contracts if the other contracting party acts in good faith in reliance on the apparent authority of our chops orsignatures of our legal representatives. If any designated legal representative obtains control of the chop in an effort to obtain control overthe relevant entity, we would need to have a shareholder or board resolution to designate a new legal representative and to take legal actionto seek the return of the chop, apply for a new chop with the relevant authorities, or otherwise seek legal remedies for the legalrepresentative’s misconduct. If any of the designated legal representatives obtains and misuses or misappropriates our chops and seals orother controlling intangible assets for whatever reason, we could experience disruption to our normal business operations. We may have totake corporate or legal action, which could involve significant time and resources to resolve while distracting management from ouroperations, and our business and operations may be materially and adversely affected.Our current corporate structure and business operations may be affected by the newly enacted Foreign Investment Law.On March 15, 2019, the National People’s Congress of China approved the Foreign Investment Law, which took effect onJanuary 1, 2020. Since it is relatively new, uncertainties exist with respect to its interpretation and implementation. The ForeignInvestment Law does not specify whether VIEs that are controlled through contractual arrangements would be deemed as foreign-investedenterprises if they are ultimately “controlled” by foreign investors. However, it has a catch-all provision under its definition of “foreigninvestment” that includes investments made by foreign investors in China through other means as provided by laws, administrativeregulations or the State Council. As such, there is still leeway for future laws, administrative regulations or provisions of the State Councilto classify contractual arrangements as a form of foreign investment. Therefore, there can be no assurance that our control over the VIEsthrough contractual arrangements will not be deemed as foreign investment in the future.The Foreign Investment Law grants national treatment to foreign-invested entities, except for those foreign-invested entities thatoperate in industries specified as either “restricted” or “prohibited” to foreign investment in a “negative list”. On December 27, 2021, theMOFCOM and the NDRC jointly promulgated the Negative List 2021. If, in the future, our control over the VIEs through contractualarrangements were deemed as foreign investment, and if the VIEs are engaged in any business which is “restricted” or “prohibited” toforeign investment under the then-effective “negative list”, we may be deemed to be in violation of the Foreign Investment Law, thecontractual arrangements that allow us to have control over the VIEs may be deemed as invalid and illegal, and we may be required tounwind such contractual arrangements and/or restructure our business operations, any of which may have a material adverse effect on ourbusiness operations.Furthermore, if future laws, administrative regulations or provisions mandate further actions to be taken by companies withrespect to existing contractual arrangements, we may face substantial uncertainties as to whether we can complete such actions in a timelymanner, or at all. Any failure on our part to take timely and appropriate measures to cope with any of these or similar regulatorycompliance challenges could materially and adversely affect our current corporate structure and business operations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 26 of 248 Table of Contents19We could be adversely affected by political tensions between the United States and China.Political tensions between the U.S. and China have escalated in recent years due to, among other things, the trade war betweenthe two countries since 2018, the COVID-19 outbreak, the PRC National People’s Congress’ passage of Hong Kong national securitylegislation, the imposition of U.S. sanctions on certain Chinese officials from China’s central government and the Hong Kong SpecialAdministrative Region by the U.S. government, the imposition of sanctions on certain individuals from the U.S. by the Chinesegovernment, various executive orders issued by former U.S. President Donald J. Trump, such as the one issued in August 2020 thatprohibits certain transactions with two major Chinese internet technology companies and their respective subsidiaries, the executive orderissued in November 2020 that prohibits U.S. persons from transacting publicly traded securities of certain “Communist Chinese militarycompanies” named in such executive order, and the executive order issued in January 2021 that prohibits such transactions as areidentified by the U.S. Secretary of Commerce with certain “Chinese connected software applications,” as well as the Rules onCounteracting Unjustified Extra-territorial Application of Foreign Legislation and Other Measures promulgated by China’s Ministry ofCommerce, or the MOFCOM, on January 9, 2021, which will apply to Chinese individuals or entities that are purportedly barred by aforeign country’s law from dealing with nationals or entities of a third country. Such rules provide, among others, that Chinese individualsor entities are required to report to the MOFCOM within 30 days if they are prohibited or restricted from engaging in normal businessactivities with third-party countries or their nationals or entities due to foreign laws or measures; and the MOFCOM may issue prohibitionorders contravening such non-Chinese laws or measures after confirmed by a designated working mechanism. Disobedience with suchprohibition orders may be subject to warning, order to rectify and fines. Rising political tensions between China and the U.S. could reducelevels of trade, investments, technological exchanges and other economic activities between the two major economies, which would havea material adverse effect on global economic conditions and the stability of global financial markets. The measures taken by the U.S. andChinese governments may have the effect of restricting our ability to transact or otherwise do business with entities within or outside ofChina and may cause investors to lose confidence in Chinese companies and counterparties, including us. If we were unable to conductour business as it is currently conducted as a result of such regulatory changes, our business, results of operations and financial conditionwould be materially and adversely affected.Furthermore, there have been recent media reports on deliberations within the U.S. government regarding potentially limiting orrestricting China-based companies from accessing U.S. capital markets, and delisting China-based companies from U.S. national securitiesexchanges. In January 2021, after reversing its own delisting decision, the NYSE ultimately resolved to delist three toptelecommunications companies in China in compliance with the executive order issued in November 2020, after receiving additionalguidance from the U.S. Department of Treasury and its Office of Foreign Assets Control. These delistings have introduced greaterconfusion and uncertainty about the status and prospects of Chinese companies listed on the U.S. stock exchanges. If any further suchdeliberations were to materialize, the resulting legislation may have a material and adverse impact on the stock performance of China-based issuers listed in the United States such as us, and we cannot assure you that we will be able to maintain the listing of our ADSs on anational stock exchange in the U.S., such as the NYSE or the NASDAQ Stock Market, or that you will be allowed to continue to trade ourshares or ADSs.Risks Relating to Our Business and IndustryWe have fallen below the continued listing requirements of the New York Stock Exchange, and if we are unable to regain compliancein time, our ADSs may be delisted and the liquidity and the trading price of our ADSs would be materially and adversely affected.We received a letter from the New York Stock Exchange, or the NYSE, in October 2023, notifying our company that we were notin compliance with applicable price criteria in the NYSE’s continued listing standards because our average total market capitalization wasless than US$50 million over a consecutive 30 trading-day period, and our last reported stockholders’ equity as of June 30, 2023 was lessthan US$50 million. We submitted to the NYSE a business plan as to how we intend to regain compliance with the stockholders’ equitycriteria within the next 18 months, by April 2025; the NYSE accepted the business plan in March 2024, and we are now subject to semi-annual monitoring for compliance with the plan.If we fail to regain compliance with NYSE’s continued listing standards before April 2025, our ADSs will be delisted from theNYSE. There can be no assurance that the NYSE will not commence suspension and delisting procedures for our ADSs earlier and beforethe expiration of the 18-month cure period. If our ADSs were delisted from the NYSE, the liquidity and the trading price of our ADSswould be materially and adversely affected. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 27 of 248 Table of Contents20We are highly reliant on our proprietary technology infrastructure in our business operations, and failure to continue to improve andeffectively utilize our technology infrastructure or successfully develop new technologies could harm our business operations,reputation and prospects.Technology is critical to our integrated solutions, connecting our systems with those of our ecosystem participants. While wehave continuously enhanced our proprietary technology infrastructure, we may not be able to continue to improve our technologyinfrastructure and develop new technologies to meet the future needs of our business. If we are unable to maintain, improve and effectivelyutilize our technology infrastructure or to realize the expected results from our technology investments, our business, financial condition,results of operations and prospects, as well as our reputation, could be materially and adversely affected. Any problem with thefunctionality and effectiveness of our software or platforms could also result in unanticipated system disruptions, slower response times,impaired user experiences, delays in reporting accurate operating and financial information and inefficient management of our systems. Inaddition, enhancing our technology infrastructure requires significant investments of time and financial and managerial resources,including recruiting and training new technology personnel, adding new hardware and updating software and strengthening research anddevelopment. If our technology investments are unsuccessful, our business could suffer and we may be unable to recover the resources wecommit to such initiatives.We may not be able to maintain and enhance our ecosystem, which could negatively affect our business and prospects.Our ability to maintain a healthy and rich ecosystem that creates strong network effects among our ecosystem participants iscritical to our success. While our ecosystem provides synergies and economies of scale across service lines and among our ecosystemparticipants, the extent to which we are able to maintain and strengthen the attractiveness of our ecosystem depends on our ability to offera mutually beneficial platform for all participants, maintain the quality of our services and solutions, develop attractive services andsolutions that meet the evolving needs of our ecosystem participants, reinforce the scope and scale of our ecosystem, and retain ourparticipants. We must also provide sufficient geographic coverage to cement the effectiveness of our service network, continue to utilizedata to improve service quality and operational efficiency of all ecosystem participants and maintain and improve our technologyinfrastructure as part of our single interoperable system to ensure seamless operations.In addition, our ecosystem participants may compete with one another, which may complicate the management of our ecosystem.Further, changes made to enhance our ecosystem or balance the interests of participants may be viewed positively by one participant butmay have negative effects upon another. If we fail to balance the interests of all participants in our ecosystem, we may fail to further attractand retain additional ecosystem participants, which could adversely impact our business and financial condition.If we are unable to continue to innovate, meet evolving market trends, adapt to changing customer demands and maintain our cultureof innovation, our ability to sustain and grow our business may suffer.The ongoing success of our business depends on our ability to continue to introduce innovative solutions and services to meetevolving market trends and satisfy changing customer demands. We must continue to adapt by continuing innovation, improving ourservices and modifying our strategies, which could cause us to incur substantial costs. We may not be able to continue to innovate or adaptto changing market and customer needs in a timely and cost-effective manner, if at all. This could adversely impact our ability to embracethe changes brought by the New Retail era, expand our ecosystem and grow our business. Failure to develop new services to meetevolving market demands through innovation could cause us to lose current and potential customers and harm our operating results andfinancial condition.In addition, we may not be able to maintain our culture of innovation, which has been critical to our success and has helped uscreate value for our shareholders, succeed as a leader in our industry and attract, retain and motivate employees and other ecosystemparticipants. Among other challenges, we may not be able to identify and promote people in leadership positions who share our cultureand can always focus on technology and innovation. Competitive pressure may also cause us to move in directions that may divert us fromour mission, vision and values. If we cannot maintain our culture of innovation, our long-term business prospects could be materially andadversely affected. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 28 of 248 Table of Contents21We operate in a competitive industry, and if we fail to compete effectively, our business could suffer.We compete with total supply chain solution providers. As our operations encompass a broad range of areas, certain service linesmay also face competition from other service providers in China, including supply chain management service providers, freight serviceproviders, SaaS software service providers and logistics brokers. As we continue to expand our local express delivery and other services incertain Southeast Asian countries, we also face intense competition from both international and local service providers. In addition toestablished players, we face competition from new market entrants. Increased competition may lead to a loss of market share, increasingdifficulty in launching new service offerings, reduction in revenue or increase in loss, any one of which could harm our business, financialcondition and results of operations.Our competitors may have a broader service or network coverage, more advanced technology infrastructure, stronger brandrecognition and greater capital resources than we do. In addition, our competitors may reduce their rates to gain business, especially duringtimes of reduced economic growth, and such reductions may limit our ability to maintain or increase our rates, maintain our operatingmargins or achieve growth in our business.The establishment by our competitors of cooperative relationships or competing networks to increase their ability to address theneeds of our customers and other ecosystem participants could also negatively impact us. We may not be able to successfully competeagainst current or future competitors, and competitive pressures may have a material and adverse effect on our business, financialcondition and results of operations.Our business and growth are significantly affected by the emergence of New Retail, the continued development of e-commerce inChina and elsewhere and related demand for integrated supply chain solutions.We serve merchants that conduct business in the retail industry in China, and these merchants rely on our services to fulfill ordersplaced by consumers. As we focus on providing integrated supply chain solutions for the New Retail era, our future business opportunitiesdepend upon the continued integration of online and offline retail channels and the adoption of the New Retail paradigm by an increasingnumber of merchants in China and elsewhere, both in terms of large platforms and brands as well as small and medium enterprises, orSMEs, and micro-merchants.The future development and landscape of the retail industry in China and elsewhere are affected by a number of factors, many ofwhich are beyond our control. These factors include the consumption power and disposable income of consumers, as well as changes indemographics and consumer preferences. The development of the retail industry is also subject to the selection, price and popularity ofproducts offered through online and offline retail channels of original brand manufacturers and changes in the availability, reliability andsecurity of such channels. Further, the emergence of alternative channels or business models that better suit the needs of consumers and thedevelopment of online-to-offline supply chain integration by retailers can also affect the development of the retail industry. Anotherimportant factor is the development of fulfillment, payment and other ancillary services associated with the retail industry. Macroeconomicconditions, particularly as retail spending tends to decline during recessions and other economic factors affecting consumer confidence,including inflation and deflation, fluctuation of currency exchange rates, volatility of stock and property markets, interest rates, tax ratesand changes in unemployment rates, can also impact the development of the retail industry in China and elsewhere. Finally, other factors,such as changes in government policies, laws and regulations, in particular those that govern the retail industry, as well as changes indomestic and international politics, including military conflicts, economic disputes, political turmoil and social instability, can alsoinfluence the development of the retail industry in China and elsewhere. It is difficult to predict how market forces, or China or U.S.government policy, in particular, the outbreak of a trade war between China and the U.S. and the imposition starting in 2018 of additionaltariffs on bilateral imports, trade bans and trade restrictions, may continue to impact China’s economy, the retail industry, e-commerce inChina and the U.S., as well as related demand for integrated supply chain solutions going forward. If New Retail, the e-commerce industryin China and elsewhere and their respective demand for integrated supply chain solutions fail to develop as we expect, our business andgrowth could be harmed. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 29 of 248 Table of Contents22We have a history of net losses and negative cash flows from operating activities, which may continue or occur again in the future.While we believe we can continue our business as a going concern and have prepared our consolidated financial statements on thatbasis, we cannot assure you that we will be able to continue as a going concern in light of the adverse conditions we are facing.We recorded a net income of RMB209.6 million, a net loss of RMB1,503.3 million and a net loss of RMB893.4 million(US$125.8 million) in 2021, 2022 and 2023, respectively, including net loss of RMB1,263.9 million RMB1,464.8 million and RMB908.6million (US$127.9 million) from our continuing operations and net income of RMB1,473.5 million, net loss of RMB38.5 million and netincome of RMB15.2 million (US$2.1 million) from our discontinued operations comprising BEST Express, which we sold in late 2021,and our Store+ business, which we wound down by the end of 2020. In addition, we do not have a stable history of positive cash flowsfrom operating activities. We used net cash in operating activities (including continuing and discontinued operations) in the amounts ofRMB2,804.0 million, RMB1,117.8 million and RMB545.1 million (US$76.8 million) in 2021, 2022 and 2023, respectively, primarily dueto the decrease in net loss (including continuing and discontinued operations) in 2022 and 2023, after excluding gains on disposal fromdiscontinued operations. In addition, holder of our 2025 Convertible Notes have the right to require us to repurchase their notes within 90days after June 3, 2023, at a repurchase price equal to 100% of the principal amount of the notes to be repurchased, plus accrued andunpaid interest, if any. As of the date of this annual report, an aggregate principal amount of US$75 million of our 2025 Convertible Noteswere outstanding. In April 2023, we and Alibaba.com Hong Kong Limited, the holder of our 2025 Convertible Notes, agreed thatAlibaba.com Hong Kong limited would not require us to repurchase all of their notes in 2023, and would instead require us to repurchaseone half of their notes, or US$75 million aggregate principal amount, in 2023. In December 2023, all of the 2025 Convertible Notes weretransferred by Alibaba HK to Alibaba China. In 2023, we repurchased US$75 million aggregate principal amount of the 2025 ConvertibleNotes, and the repurchased notes were canceled accordingly. On April 22, 2024, we and Alibaba China entered into an agreement toamend the Early Redemption Rights of the 2025 Convertible Notes, pursuant to which Alibaba China will require us to repurchase US$15million (RMB106.2 million) aggregate principal amount of 2025 Convertible Notes with accrued interest before August 30, 2024, andrepurchase the remaining US$60 million (RMB425.0 million) aggregate principal amount with accrued interest on May 10, 2025. All ofthe foregoing adverse conditions may indicate there is substantial doubt about our ability to continue as a going concern.Our management has developed the following plans to improve these conditions, including, to (i) realign our businesses to adaptto the evolving, competitive market conditions and execute additional measures to manage and reduce our costs and expenditures to betterimprove operating cash flows; and (ii) seek other strategic alternatives in certain business segments or raise additional financing in thenear term. However, there is uncertainty as to whether, and there can be no assurance that our strategic refocusing plan and other aforesaidplans, even if they are successfully executed, will generate sufficient operating cash flow to remove the substantial doubt about our abilityto continue as a going concern. Although we achieved encouraging initial results from the execution of our strategic refocusing plan andreduced our costs and expenditures in 2022 and 2023 for certain business segments, if we are unsuccessful in our efforts or are unable toseek other strategic alternatives or raise additional financing in the near term, we may be required to further reduce or scale back ouroperations significantly, in addition to the winding down of BEST Store+ in late 2020, the sale of BEST Express in late 2021 and thewinding down of BEST UCargo and BEST Capital by the end of 2022. For more details about our liquidity and cash position, see “Item 5.Operating and Financial Review and Prospects—B. Liquidity and Capital Resources.” The consolidated financial statements includedelsewhere in this annual report have been prepared assuming that we will continue to operate as a going concern. However, in light of theaforesaid adverse conditions, and despite our plans to address or improve these conditions, there can be no assurance that we will be ableto continue as a going concern.In addition, we expect our costs and expenses to decrease in absolute amounts due to (i) the implementation of cost savingplan;and (ii) the improvement of operating efficiency.Our ability to achieve and maintain profitability also depends on our ability to enhance our market position, maintain competitivepricing, leverage technology and business model innovation to expand and enhance our service offerings, and increase our operationalefficiency. Our ability to achieve and maintain profitability are also affected by many factors which may be beyond our control, such as theoverall demand for supply chain services and general economic conditions, including levels of consumption, as well as global pandemicssuch as COVID-19 that started in late 2019. If we are unable to achieve profitability, we may have to cut down the scale of our operation,which may impact our business growth and adversely affect our financial condition and results of operations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 30 of 248 Table of Contents23Our historical growth rates may not be indicative of our future growth, and if we are unable to manage our growth or execute ourstrategies effectively, our business and prospects may be materially and adversely affected.Our past growth rates may not be indicative of future growth and our planned growth initiatives may not be successful. Our totalrevenue from continuing operations decreased from RMB11,425.8 million in 2021 to RMB7,744.1 million in 2022, but increased toRMB8,315.8 million (US$1,171.3 million) in 2023.Our rapid growth has placed, and will continue to place significant demands on our management and our technologyinfrastructure, as well as our administrative, operational and financial systems. We intend to achieve growth by continuing innovation,expanding market share, growing our service lines, broadening value-added services, expanding global reach, enhancing operationalefficiency and quality, as well as growing through mergers, acquisitions and strategic alliances. There can be no assurance that we will beable to effectively manage our growth. If our growth initiatives fail, our businesses and prospects may be materially and adverselyaffected.We are affected by seasonality experienced in the consumer retail and logistics and supply chain industries.Our businesses are affected by seasonality experienced in the consumer retail and logistics and supply chain industries. Wetypically experience a seasonal surge in sales in our freight e-commerce parcel operations during the fourth quarter of each year as a resultof stronger sales in connection with the Singles’ Day and December 12 promotions, which may impose challenging resource and capacitydemands on our business operations. Activity levels across our business lines are typically lower around Chinese national holidays,including Chinese New Year in the first quarter of each year, as consumer spending levels and shipment levels tend to be weaker.Seasonality also makes it challenging to forecast demand for our services, as freight and supply chain management sales volumescan vary significantly and unexpectedly. We make planning and spending decisions, including capacity expansion, procurementcommitments, personnel needs and other resource requirements based on our estimates of demand. Failure to meet demand associated withthe seasonality in a timely manner may adversely affect our financial condition and results of operations.Our success depends to a substantial degree upon our senior management, including Mr. Shao-Ning Johnny Chou and other keypersonnel, and our business operations would be negatively affected if we fail to attract and retain highly competent seniormanagement.We depend to a significant degree on the continued service of Mr. Shao-Ning Johnny Chou, our founder, chairman and chiefexecutive officer, our experienced senior management and other key personnel. If members of our senior management team or other keypersonnel resign, join a competitor or form a competing company, it could negatively impact our business operations and createuncertainty as we search for and integrate a replacement and could have an adverse effect on our financial condition and results ofoperations.We have entered into employment and confidentiality agreements with our senior management and other key personnel.However, these employment and confidentiality agreements do not ensure the continued service of these senior management and keypersonnel, and we may not be able to enforce these agreements. In addition, we do not maintain key man life insurance for any of thesenior members of our management team or other key personnel.We utilize franchisee partners to conduct certain aspects of our business, and face risks associated with these relationships, theiremployees and other personnel.We utilize franchisee partners to conduct certain aspects of our business. We have franchisee partners in both China and certainSoutheast Asian countries where we operate local express delivery networks, such as Thailand, Vietnam and Singapore. Many of ourfranchisee partners sub-contract part of their businesses to sub-franchisees. Our control over franchisee partners and their sub-franchiseesmay not be as effective as if we had directly owned these partners’ businesses, which could potentially make it difficult for us to managethem. Particularly, as we do not enter into agreements with sub-franchisees of our franchisee partners, we are unable to exert a significantdegree of influence over them. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 31 of 248 Table of Contents24Our franchisee partners, sub-franchisees and their employees directly interact with merchants and consumers in our ecosystem,and their performance directly affects our reputation and brand image. If our service personnel or those of our franchisee partners or sub-franchisees fail to satisfy the needs of our ecosystem participants, respond effectively to their complaints, which we have received fromtime to time, or provide services in a reliable, safe and secure manner, our reputation and the loyalty of our ecosystem participants couldbe negatively affected. As a result, we may lose ecosystem participants or experience a decrease in our business volume, which could havea material adverse effect on our business, financial condition and results of operations. We do not directly supervise the services providedby our franchisee partners and may not be able to successfully maintain and improve the quality of their services. Our franchisee partnersmay also fail to implement sufficient control over the pick-up and delivery personnel who work at the service stations in connection withtheir conduct, such as proper collection and handling of the items we transport and delivery service fees, adherence to privacy standardsand timely delivery. As a result, we may suffer financial losses, incur liabilities and suffer reputational damages in the event of theft or latedelivery of the items we ship, embezzlement of delivery service fees or mishandling of private information. In addition, while violation oflaws and regulations by franchisee partners had not led to any material claim against us in the past, we cannot assure you that such claimwill not arise in the future which may harm our brand or reputation or have other adverse impacts.Further, suspension or termination of a franchisee partner’s services in a particular geographic area may cause interruption to orfailure in our services in the corresponding geographic area. A franchisee partner may suspend or terminate its services voluntarily orinvoluntarily due to various reasons, including disagreement or dispute with us, failure to make a profit, failure to maintain requisiteapprovals, licenses or permits or to comply with other governmental regulations, and events beyond our or its control, such as inclementweather, natural disasters, epidemics, transportation interruptions or labor unrest or shortage. Due to the intense competition in thelogistics and supply chain industry in China and Southeast Asian countries, our existing franchisee partners may also choose todiscontinue their cooperation with us and work with our competitors instead. We may not be able to promptly replace our franchiseepartners or find alternative ways to provide services in a timely, reliable and cost-effective manner, or at all. As a result of any servicedisruptions associated with our franchisee partners, satisfaction, brand, reputation, operations and financial performance of our ecosystemparticipants may be materially and adversely affected.Our BEST Global service line has a limited operating history.We have a limited history in providing BEST Global services, which was launched or significantly expanded in the last few years.While this service line has experienced rapid expansion, we cannot assure you that we will be able to continue its expansion orsuccessfully address any future problems or issues, nor can we assure you that it will ultimately become profitable. To reduce cashoutflows and reallocate resources to our core businesses, by the end of 2020, we wound down our BEST Store+ business and have sincethen started to account for BEST Store+ as discontinued operations. In addition, in 2021 we suspended the provision of certain fleet andequipment lease services under BEST Capital for the foreseeable future. Furthermore, by the end of 2021, we sold BEST Express;accordingly, BEST Express has been deconsolidated from our company, and its historical financial results are reflected in our consolidatedfinancial statements as discontinued operations. We expect to continue to adjust our existing operating model and explore new operatingmodels for our BEST Global service line which may subject us to further uncertainties and negative effects on our overall business andresults of operations. As we intend to grow the scale of this service line, we may incur significant ramp-up costs to support such growth,which may negatively affect our profitability, particularly if we are unable to achieve economies of scale. We may not be able to recoup allor any of our investments made in this business. In addition to organically growing this service line, we may seek to expand it throughstrategic acquisitions, which would subject us to additional risks. See “—Any difficulties in identifying, consummating and integratingacquisitions, investments or alliances may expose us to potential risks and have an adverse effect on our business, results of operations orfinancial condition.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 32 of 248 Table of Contents25Macroeconomic and other factors that reduce demand for supply chain services, in China or globally, could have a material adverseimpact on our business.The global logistics and supply chain industry has historically experienced cyclical fluctuations in financial performance due toeconomic recessions, reductions in per capita disposable income and levels of consumer spending, downturns in the business cycles ofcustomers, interest rate fluctuations and economic factors beyond our control. During economic downturns, whether in China or globally,reduced overall demand for supply chain services will likely reduce demand for our services and solutions and exert downward pressureson our rates and margins. As we focus on providing integrated supply chain solutions in the New Retail era, if the online and offline retailchannel integration trend or any other trend required for the emergence of New Retail does not develop as we expect, our businessprospect may be adversely affected. In periods of strong economic growth, demand for limited transportation resources can also result inincreased network congestion and operating inefficiencies. In addition, any deterioration in the economic environment subjects ourbusiness to various risks that may have a material impact on our operating results and future prospects. For instance, some of ourcustomers may face economic difficulties and may not be able to pay us, and some may go out of business. These customers may notcomplete their payments as quickly as they have in the past, causing our working capital needs to increase.In an economic downturn, we may not be able to appropriately adjust our expenses to changing market demands and it may bemore difficult to match our staffing levels to our business needs. In addition, we have certain significant fixed expenses and other variableexpenses that are fixed for a period of time, which we may not be able to adequately adjust in a period of rapid change in market demand.We have started to recognize a substantial amount of share-based compensation expense upon the completion of our initial publicoffering, which will have a significant impact on our results of operations.We adopted our 2008 equity and performance incentive plan in June 2008 pursuant to which we were permitted grant options topurchase up to 20,934,684 of our ordinary shares, and our 2017 equity incentive plan in September 2017 pursuant to which we may grantequity-based awards representing initially 10,000,000 Class A ordinary shares, which number automatically increases by a maximum of2% of our total outstanding shares at the end of preceding calendar year on January 1, 2019 and on every January 1 thereafter for eightyears (subject to certain limitations). As of February 29, 2024, we had in aggregate outstanding options with respect to 2,324,500 ordinaryshares and outstanding restricted share units with respect to 4,396,940 ordinary shares that have been granted to our employees, directorsand consultants under the 2008 equity and performance incentive plan and the 2017 equity incentive plan. We are required to account forshare options and restricted share units granted to our employees, directors and consultants in accordance with Codification of AccountingStandards, or ASC 718, “Compensation—Stock Compensation” and ASC 505-50, “Equity, Equity-Based Payments to Non-Employees”prior to 2018 and we early adopted ASU 2018-07: Compensation — Stock Compensation (Topic 718): Improvements to NonemployeeShare-Based Payment Accounting in fiscal 2018. We classify share options and restricted share units granted to our employees, directorsand consultants as equity awards and recognize share-based compensation expense based on the fair value of such share options andrestricted share units, with the share-based compensation expense recognized over the period in which the recipient is required to provideservice in exchange for the equity award. Because the exercisability of the share options granted by us before our initial public offeringwas conditional upon completion of our initial public offering or, in case we had waived such restriction, our obligation to issue ordinaryshares pursuant to any exercise of the options was conditional upon the completion of our initial public offering, we did not recognize anyshare-based compensation expense relating to these share options granted by us before the completion of our initial public offering. Uponthe completion of our initial public offering in September 2017, we immediately recognized a substantial amount of share-basedcompensation expense associated with vested option awards.To better incentivize contribution to the growth our BEST Global business, in December 2020, BEST Asia Inc., our wholly-owned Cayman Islands subsidiary that holds our Southeast Asian business, adopted the 2020 Equity Incentive Plan, or the BEST AsiaPlan, pursuant to which BEST Asia Inc. may issue a certain maximum number of ordinary shares pursuant to awards granted thereunder.As of February 29, 2024, we had issued options to purchase 43,150,010 ordinary shares of BEST Asia Inc. to certain employees under theBEST Asia Plan. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 33 of 248 Table of Contents26We will incur additional share-based compensation expenses in the future as we continue to grant share-based awards to ouremployees, directors and consultants. We believe the granting of share-based awards is important for us to attract and retain talentedemployees, directors and consultants. As a result, our expense associated with share-based compensation may increase, which may havean adverse effect on our results of operations. For further information on our share incentive plans and information on our recognition ofrelated expenses, please see “Item 5. Operating and Financial Review and Prospects—A. Operating Results—Components of Results ofOperations—Share—Based Compensation” and “Item 6. Directors, Senior Management and Employees—B. Compensation—ShareIncentive Plans.”We have been deriving a significant portion of our revenue from consumer activity on a limited number of prominent e-commerceplatforms, and a reduction of demand from these platforms may negatively affect our business.A significant portion of our revenue has been derived from a number of major e-commerce platforms in China, such as TaobaoMarketplace and Tmall. If these platforms are to suffer a decline in their usage or if our relationships with them are to be harmed, it couldmaterially and negatively impact our business and operating results and financial condition. We generally do not have long-termcontractual relationships with e-commerce platforms, and instead individual merchants on such platforms select us as their shipping andother supply chain service provider. If we are unable to remain a preferred service provider for the merchants on these e-commerceplatforms, our business volume may decrease significantly, which could adversely affect our business and results of operations.If our customers are able to reduce their logistics and supply chain costs or increase utilization of their internal solutions, our businessand operating results may be materially and adversely affected.A major driver for merchants and other customers to use third-party logistics and supply chain service providers is the high costand degree of difficulty associated with developing in-house logistics and supply chain expertise and operational efficiencies. If, however,our customers are able to develop their own logistics and supply chain solutions, increase utilization of their in-house supply chain, reducetheir logistics spending, or otherwise choose to terminate our services, our logistics and supply chain management business and operatingresults may be materially and adversely affected. In addition, certain of our major e-commerce platform partners may develop their ownlogistics capabilities, which could reduce the scope of services we provide to users on their platforms.Decreased availability or increased costs of key logistics and supply chain inputs, including third-party transportation, equipment andmaterials could impact our cost of operations and our profitability across business lines.We depend on reliable access to third-party transportation, supplies of equipment, including vehicles and the sorting machines,conveyor systems and Automated Guided Vehicles, or AGVs, used at our Cloud OFCs and other network facilities, replacement parts andmaterials such as packing. The supplier base providing logistics equipment is relatively consolidated, which has resulted in a limitednumber of suppliers for certain types of equipment and supplies. Conversely, the market for third-party transportation services isfragmented with a large number of service providers, and it can be difficult to find reliable partners whose performance and reliabilitymeet our standards at the scale our operations require. Any significant reduction in availability or increase in cost of any logistics andsupply chain inputs could adversely affect our operations and increase our costs, which could adversely affect our operating results andcash flows.Overall tightening of the labor market, increases in labor costs or any labor unrest, including strikes, may affect our business as weoperate in a labor-intensive industry.Our business requires a substantial number of personnel. Labor costs comprised 13.5%, 16.1% and 14.8% of our total cost ofrevenue from continuing operations in 2021, 2022 and 2023, respectively. Any failure to retain stable and dedicated labor by us, ourfranchisee partners or service providers may lead to disruptions to or delays in our services. We, our franchisee partners and serviceproviders often hire additional or temporary workers to handle the significant increase in freight volumes during peak periods of e-commerce activities. We have observed an overall tightening labor market. We have experienced increase in labor costs, and expect toimprove labor efficiency to cope with seasonal labor shortages. We, our franchisee partners and service providers compete with othercompanies for labor, and we may not be able to offer competitive salaries and benefits compared to them. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 34 of 248 Table of Contents27We, our franchisee partners and service providers have been subject to labor disputes from time to time in the ordinary course ofbusiness, although none of them, individually or in the aggregate, has had a material adverse impact on us. We expect to continue to besubject to various legal or administrative proceedings related to labor disputes in the ordinary course of our business, due to the magnitudeof the labor force involved in our service network. Any labor unrest or strikes directed against us, our franchisee partners or serviceproviders could directly or indirectly prevent or hinder our normal operating activities, and if not resolved in a timely manner, lead todelays in fulfilling our customer orders. We, our franchisee partners and service providers are not able to predict or control any laborunrest, especially those involving labor not directly employed by us. Further, labor unrest may affect general labor market conditions orresult in changes to labor laws, which in turn could materially and adversely affect our business, financial condition and results ofoperations.We engage outsourcing firms to provide outsourced personnel for our operations and have limited control over these personnel andmay be liable for violations of applicable PRC labor laws and regulations.We engage outsourcing firms who send large numbers of their employees to work at our network facilities. As of December 31,2023, over 15,831 outsourced personnel were active in our operations. We enter into agreements with the outsourcing firms only and donot have any contractual relationship with these outsourced workers. Since these outsourced personnel are not directly employed by us,our control over them is more limited as compared to our own employees. If any outsourced personnel fail to operate in accordance withour instructions, policies and business guidelines, our market reputation, brand image and results of operations could be materially andadversely affected.Our agreements with the outsourcing firms provide that we are not liable to the outsourced personnel if the outsourcing firms failto fulfill their duties to these personnel. However, if the outsourcing firms violate any relevant requirements under the applicable PRClabor laws, regulations or their employment agreements with the personnel, such personnel may claim compensation from us as theyprovide their services at our network facilities. As a result, we may incur legal liability, and our market reputation, brand image as well asour business, financial condition and results of operations could be materially and adversely affected.Our business depends on our reputation and brand image, and any damage to them or any failure to effectively adjust our brandingstrategy in our international expansion could adversely impact our business.Our brand name in Chinese, “百世,” means hundreds of generations. We believe that our BEST brand name and our other brandsstand for long-term commitment, comprehensive and high-quality service, reliability and efficiency, and are part of our most important andvaluable assets. We have registered our major trademarks critical to our business in Chinese with the relevant PRC authorities, including“百世” (BEST), “百世物流” (BEST Logistics), “百世供应链” (BEST Supply Chain), “百世快运” (BEST Freight), “百世国际” (BESTGlobal), “百世云” (BEST Cloud) and “百世软件”(BEST SOFTWARE). We have also used and registered our various trademarks in otherjurisdictions. Our brands and reputation are significant sales and marketing tools, and we devote substantial resources to promoting andprotecting them. Adverse publicity (whether or not justified) such as accidents, customer service mishaps or noncompliance with lawsrelating to activities by our franchisee partners, service providers, contractors or agents, could tarnish our reputation and reduce the valueof our brand. With the increased use of social media outlets, adverse publicity can be disseminated quickly and broadly, making itincreasingly difficult for us to effectively respond.As we continue our international expansion, we may need to adjust our branding strategy in new countries and regions that weenter into. For example, our existing brands may be viewed as similar to brands used by existing players in the local markets that providesimilar services. As such, we may need to adopt a new brand name in these markets and our efforts in establishing the reputation of thenew brand in a new market may not be successful and could lead to brand disruption and harm our operations in these markets. Existingplayers in the local markets may also claim that our brands are similar to theirs and thereby bring claims against us for infringement upontheir brand names or trademark rights, which may cause harm to our reputation and disrupt our branding strategy in the relevant localmarket. In addition, we may experience difficulty or prolonged delay in registering our trademarks in local countries due to regulatoryuncertainties and malicious third-party trademark registrations. Damage to our reputation and loss of brand equity could reduce demandfor our services and thus have an adverse effect on our financial condition, liquidity and results of operations, as well as require additionalresources to rebuild our reputation and restore the value of our brand. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 35 of 248 Table of Contents28We may not be able to attract and retain the qualified and skilled employees needed to support our business.We believe our success depends on the efforts, effectiveness and talent of our employees, including research and development,supply chain management, operations, engineering, risk management, and sales and marketing personnel. Our future success depends onour continued ability to attract, develop, motivate and retain qualified and skilled employees. Competition for highly skilled personnel isextremely intense. We may not be able to hire and retain these personnel at compensation levels consistent with our existing compensationand salary structure. Some of the companies with which we compete for experienced employees have greater resources than we have andmay be able to offer more attractive terms of employment.In addition, we invest significant time and resources in training our employees, which increases their value to competitors whomay seek to recruit them. If we fail to retain our employees, we could incur significant expenses in hiring and training their replacements,and the quality of our services and our ability to serve our customers could diminish, resulting in a material adverse effect to our business.A significant system disruption could adversely affect the operations of us and our ecosystem participants, which could severely impactour business and prospects.We rely on our technology infrastructure to process, transmit and store digital information, and to manage or support a variety ofbusiness processes and activities. In addition, the provision of service to our customers and the operation of our service networkinfrastructure involves the storage and transmission of proprietary information and sensitive or confidential data, including business andpersonal information of our ecosystem participants, who are reliant on the use of our technology infrastructure to manage their businessprocesses and activities. Our technology infrastructures and those of our customers and our franchisee partners are connected throughvarious interfaces. Some of these infrastructures are managed by third parties and are susceptible to damage, disruptions or shutdowns dueto failures during the process of upgrading or replacing software, databases or components thereof, power outages, hardware failures,computer viruses, malicious insiders, telecommunication failures, user errors or other catastrophic events. Hackers, acting individually orin coordinated groups, may also launch distributed denial of service attacks or other coordinated attacks that may cause service outages orother interruptions in our business.The techniques used to obtain unauthorized access, disable or degrade service or sabotage systems change frequently, may bedifficult to detect and often are not recognized until launched against a target. As a result, we may be unable to anticipate these techniquesor to implement adequate preventative measures. If our systems were to suffer an operational failure, it could harm our reputation and havea material adverse effect on our business and prospects.Our business generates and processes a large quantity of data, and improper handling of or unauthorized access to such data mayadversely affect our business.We face risks related to complying with applicable laws, rules and regulations relating to the collection, use, disclosure andsecurity of personal information, as well as any requests from regulatory and government authorities relating to such data. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 36 of 248 Table of Contents29The PRC regulatory and enforcement regime with regard to data security and data protection has continued to evolve. There areuncertainties on how certain laws and regulations will be implemented in practice. PRC regulators have been increasingly focused onregulating data security and data protection. We expect that these areas will receive greater attention from regulators, as well as attractpublic scrutiny and attention going forward. This greater attention, scrutiny and enforcement, including more frequent inspections, couldincrease our compliance costs and subject us to heightened risks and challenges associated with data security and protection. For example,the PRC Data Security Law, which was promulgated by the Standing Committee of the National People’s Congress on June 10, 2021, andcertain other rules and regulations (i.e. the Regulations on the Protection of the Security of Critical Information Infrastructure, whichbecame effective on September 1, 2021) impose data security and privacy obligation on entities involved in data activities, which mayvary based upon the importance of data and the harm it may cause. We mainly engage in logistics and ancillary business and our businessoperation generally involve data related to logistics business operation. Such data have not been specifically categorized as important dataor core data as by the PRC Data Security Law. As of the date of this annual report, we are not the operator of critical informationinfrastructure under the Regulations on the Protection of the Security of Critical Information Infrastructure. We believe that the PRC DataSecurity Law would not impose any substantial difficulties on us. However, we could not rule out the possibility that our data may bedeemed as important data/core data or we may be deemed to be a critical information infrastructure operator, which would subject us toadditional supervisory requirements. Any incompliance on such additional supervisory requirements may subject us to fines, order torectify, suspension of users registration, revocation of business certificate and other penalties, which may have material adverse effect onour business, operations and financial condition as well as the price of our securities. For further details please see “Item 4. Information onthe Company—B. Business Overview—Regulatory Matters—Regulations Relating to Internet Information Security and PrivacyProtection.”In addition, we could become subject to enhanced cybersecurity review or investigations launched by PRC regulators in thefuture. The PRC Data Security Law provides that the state shall establish a data security review mechanism on data processing activitiesthat do or may affect national security. Cybersecurity Review is conducted by an office under the Cyberspace Administration of China, orthe CAC, pursuant to the Cybersecurity Review Measures, which became effective on June 1, 2020. Any failure or delay in the completionof the cybersecurity review procedures or any other non-compliance with the cybersecurity related laws and regulations may result in finesor other penalties, including suspension of business, website closure, removal of app from the relevant app stores, and revocation ofprerequisite licenses, as well as reputational damage or legal proceedings or actions against us, which may have material adverse effect onour business, financial condition or results of operations. On December 28, 2021, the CAC, the NDRC, the SAMR, the MIIT and certainother PRC governmental authorities, jointly released the revised Cybersecurity Review Measures, which took effect on February 15, 2022.The revised Cybersecurity Review Measures provides that operators of critical information infrastructure that intend to purchase networkproducts and services that affect or may affect national security shall file for cybersecurity review with the Cybersecurity Review Officeunder the CAC. As of the date of this annual report, we have not been informed by any PRC governmental authority of any requirementthat we file for a cybersecurity review. We have not been involved in any investigations on cybersecurity review initiated by the CAC orother competent authorities nor do we expect that current PRC laws on cybersecurity or data security would have a material adverseimpact on our business operations, and we have not received any inquiry, notice, warning, or sanction in such respect. However, the scopeof network products or data processing activities that affect or may affect national security is still unclear, and there remains significantuncertainty in the interpretation and enforcement of relevant PRC cybersecurity laws and regulations. For further details please see “Item4. Information on the Company—B. Business Overview—Regulatory Matters—Regulations Relating to Internet Information Security andPrivacy Protection.”On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal InformationProtection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect onNovember 1, 2021. The Personal Information Protection Law sets forth detailed rules on processing personal information, clarifies therelevant rights of the individuals and the obligations of the personal information processors, and further strengthens the liabilities forillegal process of personal information. We do not collect any sensitive personal information or other excessive personal information thatis not related to the corresponding business services. We update our privacy policies from time to time to meet the latest regulatoryrequirements of the CAC and other authorities and adopt technical measures to protect data and ensure cybersecurity in a systematic way.Nonetheless, the Personal Information Protection Law raises the protection requirements for processing personal information, and manyspecific requirements of the Personal Information Protection Law remain to be clarified by the CAC, other regulatory authorities, andcourts in practice. We may be required to make further adjustments to our business practices to comply with the personal informationprotection laws and regulations. For further details please see “Item 4. Information on the Company—B. Business Overview—RegulatoryMatters—Regulations Relating to Internet Information Security and Privacy Protection.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 37 of 248 Table of Contents30We believe that we are in compliance with the regulations and policies that have been issued by the CAC and other competentPRC regulatory authorities on cybersecurity as of the date of this annual report. However, as uncertainties remain regarding theinterpretation and implementation of applicable PRC laws and regulations, we cannot assure you that we will comply with such laws andregulations in all respects and we may be ordered to rectify or terminate any actions that are deemed illegal by regulatory authorities. Wemay also become subject to fines and/or other sanctions which may have material adverse effect on our business, operations and financialcondition as well as price of our securities. If we are unable to manage these risks, our reputation and results of operations could bematerially and adversely affected. For further details please see “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Regulations Relating to Internet Information Security and Privacy Protection.”We also grant limited access to specified data on our technology platform to certain other ecosystem participants. These thirdparties face the same challenges and risks inherent in handling and protecting large volumes of data. Any system failure or security breachor lapse on our part or on the part of any of such third parties that results in the release of user data could harm our reputation and brandand, consequently, our business, in addition to exposing us to potential legal liability.In addition, we are subject to additional laws in other jurisdictions in which we operate and where our ecosystem participants arelocated. The laws, rules and regulations of other jurisdictions, such as the U.S., Europe and Southeast Asian countries, may impose morestringent or conflicting requirements and penalties than those in China, compliance with which could require significant resources andcosts. Our policies and practices concerning the collection, use and disclosure of user data are posted on our websites. Any failure, orperceived failure, by us to comply with any regulatory requirements or privacy protection-related laws, rules and regulations could resultin proceedings or actions against us by governmental entities or others. These proceedings or actions could subject us to significantpenalties and negative publicity, require us to change our business practices, increase our costs and severely disrupt our business.We face risks associated with the items we deliver and the contents of shipments and inventories handled through our service network.We handle a large volume of shipments and inventories across our service network, and face challenges with respect to theprotection and control of these items. Shipments and inventories in our service network may be stolen, damaged or lost for variousreasons, and we, our franchisee partners and service providers may be perceived or found to be liable for such incidents. In addition, wemay fail to screen shipments and inventories and detect unsafe or prohibited/restricted items. Unsafe items, such as flammables andexplosives, toxic or corrosive items and radioactive materials, may damage other items or facilities in our service network, injurerecipients and harm our personnel and assets or those of our franchisee partners and service providers. Furthermore, if we fail to preventprohibited or restricted items from entering into our service network and if we participate in the transport and delivery of such items, wemay be subject to administrative or even criminal penalties, and if any personal injury or property damage is concurrently caused, we maybe further liable for civil compensation.Our delivery operations also involve inherent risks. We constantly have a large number of vehicles and personnel intransportation and a large number of items in storage facilities that we rent, and are therefore subject to risks associated with storage andtransportation safety. The insurance maintained by us may not fully cover the damages caused by transportation-related injuries or loss.From time to time, our vehicles and personnel may be involved in accidents, and the items they transport may be lost or damaged. Inaddition, frictions or disputes may occasionally arise from the personal interactions between our pick-up and delivery personnel andsenders or recipients and those of our franchisees partners and service providers. Personal injury or property damage may occur inconnection with such incidents.Any of the foregoing could disrupt our services, cause us to incur substantial expenses and divert the time and attention of ourmanagement. We, our franchisee partners and service providers may face claims and incur significant liabilities if found liable or partiallyliable for any injuries, damages or losses. Claims against us may exceed the amount of our insurance coverage, or may not be covered byinsurance at all. Governmental authorities may also impose significant fines on us or require us to adopt costly preventive measures.Furthermore, if our services are perceived to be insecure or unsafe by our ecosystem participants, our business volume may besignificantly reduced, and our business, financial condition and results of operations may be materially and adversely affected. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 38 of 248 Table of Contents31We have limited ability to protect our intellectual property rights, including our brand and our proprietary information technologyplatform, and unauthorized parties may infringe upon or misappropriate our intellectual property.Our success depends in part upon our proprietary technology infrastructure, including certain methodologies, practices, tools andtechnical expertise we utilize in designing, developing, implementing and maintaining applications and processes used in providing ourservices. We rely on a combination of patent, copyright, trademark, trade secrets and other intellectual property protections, confidentialityagreements with our key personnel, customers and other relevant persons and other measures to protect our intellectual property, includingour brand and our proprietary technology infrastructure. Nevertheless, it may be possible for third parties to obtain and use our intellectualproperty without authorization. The unauthorized use of intellectual property is common in China and certain Southeast Asian countriesand enforcement of intellectual property rights by regulatory agencies may not be as consistent as in more developed countries. As aresult, litigation may be necessary to enforce our intellectual property rights. Litigation could result in substantial costs and diversion ofour management’s attention and resources, and could disrupt our business, as well as have a material adverse effect on our financialcondition and results of operations. There is no guarantee that we would be able to halt any unauthorized use of our intellectual propertythrough litigation.We may be accused of infringing the intellectual property rights of others.Our success depends in part on the use of our proprietary intellectual property and the intellectual property of other ecosystemparticipants, including technology, software products, business policies, plans, and trade secrets. Many of our contracts with third partiesrequire us not to engage in the unauthorized use of such intellectual property or information, and to indemnify such third parties for anyresulting loss. The steps taken by us in this regard may not be adequate to safeguard such intellectual property and confidentialinformation. Moreover, most of our contracts do not include any limitation on our liability with respect to our infringement or breach ofour obligation to keep confidential the intellectual property or confidential information. In addition, we may not always be aware ofintellectual property registrations or applications relating to trademarks, source codes, software products or other intellectual property ofsuch third parties, whether in China or other jurisdictions. As a result, if the proprietary rights of our ecosystem participants or other thirdparties are misappropriated by us or our employees, we may be liable for damages or other compensation.Assertions of infringement of intellectual property or misappropriation of confidential information against us, if successful, couldhave a material adverse effect on our business, financial condition and results of operations. Protracted litigation could divert ourmanagement’s attention and our resources and also result in existing or potential customers deferring or limiting their procurement or useof our services until the resolution of such litigation. Even if such assertions against us are unsuccessful, they may cause us to lose existingand future business and incur reputational harm and substantial legal fees.Any difficulties in identifying, consummating and integrating acquisitions, investments or alliances may expose us to potential risksand have an adverse effect on our business, results of operations or financial condition.We have in the past made and may in the future seek to make acquisitions and investments and enter into strategic alliances tofurther expand our business. We acquired a local express delivery company in Vietnam in July 2019 and a local express delivery companyin Malaysia in April 2020. If we are presented with appropriate opportunities, we may acquire additional businesses, services, resources,or assets, including supply chain service providers and transport solution providers that are accretive to our core business. We cannotassure you that we will always be able to complete such acquisitions successfully or on terms acceptable to us. Integration of entities orassets we acquire into our business may not be successful and may prevent us from expanding into new services, customer segments oroperating locations. This could significantly affect the expected benefits of these acquisitions. Moreover, the integration of any acquiredentities or assets into our operations could require significant attention from our management. The diversion of our management’sattention and any difficulties encountered in any integration process could have an adverse effect on our ability to manage our business.Our possible future acquisitions, investments or strategic alliances may also expose us to other potential risks, including risksassociated with unforeseen or hidden liabilities, the diversion of resources from our existing businesses and technologies, our inability togenerate sufficient revenue to offset the costs, expenses of acquisitions and potential loss of, or harm to, relationships with employees andcustomers as a result of our integration of new businesses. In addition, we may recognize impairment losses on goodwill arising from ouracquisitions. The occurrence of any of these events could have a material and adverse effect on our ability to manage our business, ourfinancial condition and our results of operations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 39 of 248 Table of Contents32Our international expansion exposes us to significant risks.We provide inbound and outbound cross-border supply chain management services and plan to continue to expand our footprintinternationally as part of our growth strategy. In addition to China, we currently operate Cloud OFCs in the U.S. and Thailand, and havecoverage in Malaysia, Vietnam and Singapore through partners, and expect to open additional foreign facilities and hire employees towork at these offices in order to reach new customers and expand the reach of our service network. We started to provide local expressdelivery services in Thailand in late 2018, Vietnam in July 2019, Malaysia in April 2020, and Singapore in July 2020. Operating ininternational markets requires significant resources and management attention and will subject us to regulatory, economic and politicalrisks in addition to those we already face in China. Because of our limited experience with international operations as well as developingand managing operations in international markets, our international expansion efforts may not produce the results we expect.In addition, we will face risks in doing business internationally that could adversely affect our business. For instance, we facedifficulties managing and staffing international operations and the increased operating, travel, infrastructure and legal compliance costsassociated with international business. We must comply with laws and regulations in foreign jurisdictions, particularly in the areas of dataprivacy and customs. We must also comply with technical and environmental standards in these jurisdictions. In addition, we must offercustomer service in various languages, cater to local cultures, adapt and localize our service offerings for specific countries, appropriatelyprice our products and services and work with overseas merchants, partners and other third parties, such as local transportation serviceproviders. We are also subject to general risks inherent in international operations, such as fluctuations in exchange rates, changes in tradepolicies, tariff regulations, embargoes and customer clearances, or other trade restrictions, as well political or social unrest or economicinstability in regions in which we operate.Our failure to manage any of these risks successfully could harm our international operations, and adversely affect our business,results of operations and financial condition.We may not be able to obtain sufficient capital to fund our business expansion.Our business expansion requires a substantial amount of capital. In 2021, 2022 and 2023, we incurred capital expenditures for ourcontinuing operations of RMB160.0 million, RMB143.3 million and RMB129.5 million (US$18.2 million), respectively, representingpurchases of property and equipment. We have incurred substantial costs to launch and ramp-up new service offerings as well as to expandgeographically and we may only be able to recover such costs over the long term. The continued improvement and upgrade of our supplychain service network may also require a substantial amount of capital investments, such as purchasing equipment, funding leaseholdimprovements at our hubs, sortation centers and Cloud OFCs. Further, we may encounter development delays and excess developmentcosts.We have historically funded our operations by issuance of equity or equity-linked securities (including convertible senior notes),redeemable convertible preferred shares, asset-backed securities and short-term and long-term bank borrowings. There can be noassurance that we will be able to generate sufficient cash from our operations to fund our capital requirements or raise additional fundsthrough equity or debt financings on satisfactory terms or at all, in which case we may be required to prioritize projects or curtail capitalexpenditures, and our results of operations could be adversely affected. On the other hand, if we raise funds through debt financings, wemay also become subject to restrictive covenants that could limit our future capital raising activities and other financial and operationalmatters. If we raise funds through further issuances of equity or equity-linked securities, our existing shareholders could suffer significantdilution in their percentage ownership of our company. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 40 of 248 Table of Contents33We may not have the ability to raise the funds necessary to repurchase our convertible senior notes on the repurchase date or upon theoccurrence of a fundamental change, and our future debt may contain limitations on our ability to pay cash upon required repurchaseor redemption of the notes.In April 2023, we and Alibaba.com Hong Kong Limited agreed that Alibaba.com Hong Kong Limited would not require us torepurchase all of their notes in 2023, and would instead require us to repurchase one half of their notes, or US$75 million aggregateprincipal amount, in 2023. In December 2023, all of the 2025 Convertible Notes were transferred by Alibaba HK to Alibaba China. OnApril 22, 2024, we and Alibaba China entered into an agreement to amend the Early Redemption Rights of the 2025 Convertible Notes,pursuant to which Alibaba China will require us to repurchase US$15 million (RMB106.2 million) aggregate principal amount of 2025Convertible Notes with accrued interest before August 30, 2024 and to repurchase the remaining portion, or US$60 million (RMB 425.0million) aggregate principal amount with accrued interest on May 10, 2025. However, we may not have enough available cash or be ableto obtain financing at the time we are required to make repurchases of notes surrendered therefor or redeem the notes. In addition, ourability to repurchase or redeem the notes may be limited by law, by regulatory authority or by agreements governing our current or futureindebtedness. Our failure to repurchase notes or pay the tax redemption price at a time when the repurchase or such payment is required bythe convertible note instrument governing the 2025 Convertible Notes would constitute a default under the note instrument. A defaultunder the note instrument or the fundamental change itself would also lead to a default under agreements governing our existingindebtedness and could also lead to a default under agreements governing our future indebtedness. If the repayment of the relatedindebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay theindebtedness and repurchase or redeem the notes.Failure of us or our franchisee partners to obtain, maintain or update necessary licenses and permits may have a material adverseeffect on our business, financial condition and results of operations.We and our franchisee partners are required to hold a number of licenses and permits in connection with our business operationincluding, but not limited to, with respect to our China businesses, road transportation operation permit and the value-addedtelecommunication service license concerning Internet information service, or the ICP license.Under PRC laws, an enterprise engaging in road freight transportation is required to obtain a road transportation operation permitfrom the relevant county-level transportation department, unless such enterprise is engaging in general cargo transportation with a generalcargo vehicle weighing 4,500 kilograms or less. If an enterprise engaging in road freight transportation intends to establish a branch, it isrequired to make a filing with the local transportation department where the branch is to be established. While two of our PRC subsidiariesare engaging in road freight transportation, and both subsidiaries have obtained their road transportation operation permits, we are in theprocess of renewing the filings for some of the branches, and if we cannot complete the renewal in a timely manner, these branches may besubject to business suspension and other penalties.New laws and regulations that are enforced from time to time may require additional licenses and permits other than those we andour franchisee partners currently have. If the PRC government or the government of any country in which we operate a franchised logisticsnetwork considers us or our franchisee partners to be operating without the proper approvals, licenses or permits or promulgates new lawsand regulations that require additional approvals or licenses, it has the authority, among other things, to levy fines, confiscate our income,revoke our business licenses, and require us to discontinue our relevant business or impose restrictions on the affected portion of ourbusiness. Any of these actions by the PRC or other government may have a material and adverse effect on our results of operations.Failure to comply with PRC laws and regulations by us or our franchisee partners may materially and adversely impact our business,financial condition and results of operations.Our business is subject to governmental supervision and regulation by the relevant PRC governmental authorities, including butnot limited to the State Post Bureau and the Ministry of Transport. Together, these governmental authorities promulgate and enforceregulations that cover many aspects of our day-to-day operations, and we may fail to fully comply with these regulations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 41 of 248 Table of Contents34Pursuant to the Administrative Regulations on Commercial Franchising Operation promulgated by the State Council in February2007 and Provisions on Administration of the Record Filing of Commercial Franchises issued by the MOFCOM in December 2011, orcollectively the Regulations and Provisions on Commercial Franchising, commercial franchising refers to the business activities where anenterprise that possesses the registered trademarks, enterprise logos, patents, proprietary technology or any other business resources allowssuch business resources to be used by another business operator through a contract and the business operator follows the uniform businessmodel to conduct business operations and pay franchising fees according to the contract. Therefore, if the relationship between us and ourfranchisee partners and other ecosystem participants constitute such regulated commercial franchising, we will be subject to theseregulations and will be required to file such franchising arrangements with the MOFCOM or its local counterparts and update the filingswhen there are changes to relevant information. While we had completed such filings with respect to our BEST Freight and Cloud OFCservices as of December 31, 2023, we cannot assure you that we can update such filings in a timely manner or our relationships with otherexisting and future ecosystem participants will not be found to constitute such regulated commercial franchising in the future. As ofDecember 31, 2023, we had not received any request from any governmental authorities to make any of such filings. If relevant authoritiesdetermine that we failed to make any filing with respect to any regulated commercial franchising activity in the future, we may be subjectto an order to rectify or fines ranging from RMB10,000 to RMB50,000, and if we fail to rectify within the rectification period determinedby competent government authorities, we may be subject to an additional fine ranging from RMB50,000 and RMB100,000 as well aspublic reprimand.In addition, our franchisee partners have full discretion over their daily operations and make localized decisions with respect totheir facilities, vehicles and hiring and pricing strategies. Their operations are regulated by various PRC laws and regulations, includinglocal administrative rulings, orders and policies that are pertinent to their localized freight delivery business and retail business. Forexample, local regulations may specify the models or types of vehicles to be used in pickup and delivery services or require the franchiseepartners to implement heightened safety screening procedures, which could materially drive up the operating costs and impact the deliveryefficiency of the pickup and delivery outlets.We are also subject to a number of retail industry regulations including, but not limited to, regulations relating to pricing,consumer protection, product quality, food safety and public safety. Local regulatory authorities conduct periodic inspections,examinations and inquiries in respect of our compliance with relevant regulatory requirements. If we fail to comply with these laws andregulations, we may be exposed to penalties, fines, the suspension or revocation of our licenses or permits to conduct business,administrative proceedings and litigation.New laws and regulations may be enforced from time to time and substantial uncertainties exist regarding the interpretation andimplementation of current and any future PRC laws and regulations applicable to our businesses. If the PRC government promulgates newlaws and regulations that impose additional restrictions on our daily operations, it has the authority, among other things, to levy fines,confiscate income, revoke business licenses, and require us to discontinue our relevant business or impose restrictions on the affectedportion of our business. Any of these actions by the PRC government may have a material and adverse effect on our results of operations.If our franchisee partners are found to be in violation of any applicable law or regulation then in effect, such franchisee partners may besubject to similar penalties or administrative orders and may not be able to continue to deliver satisfactory services or at all. As a result,our business, reputation, financial condition and results of operations may be materially and adversely affected.We face risks related to the termination and renewal of leases on which we rely for our operations.Substantially all of our Cloud OFCs, hubs and sortation centers are located in properties for which we have entered into long-termoperating leases. In some instances, we may negotiate an option to renew the lease according to the terms and conditions under therelevant lease agreements. However, upon the expiration of such leases, we may not be able to renew these leases on commerciallyreasonable terms, if at all. Under certain lease agreements, the lessor may terminate the agreement by giving prior notice and payingdefault penalties to us. Such default penalties nonetheless may not be sufficient to cover our losses. Even though the lessors for most ofour Cloud OFCs, hubs and sortation centers do not have the right of unilateral early termination unless they provide the required notice,the lease may nonetheless be terminated early if we are in material breach of the lease agreements. We may assert claims for compensationagainst the landlords if they elect to terminate a lease agreement early and without due cause. If the leases for our Cloud OFCs, hubs orsortation centers were terminated prior to their expiration dates, notwithstanding any compensation we may receive for early terminationof such leases, or if we are not able to renew such leases, we may have to incur significant cost related to relocation. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 42 of 248 Table of Contents35Our use of certain leased properties could be challenged by third parties or governmental authorities, which may cause interruptions toour business operations.As of December 31, 2023, some lessors of our leased properties in China have not provided us with their property ownershipcertificates or any other documentation proving their right to lease those properties to us. If our lessors are not the owners of the propertiesand they have not obtained consents from the owners or their lessors or permits from the relevant governmental authorities, our leasescould be invalidated. If this occurs, we may have to renegotiate the leases with the owners or other parties who have the right to lease theproperties, and the terms of the new leases may be less favorable to us. Although we may seek damages from such lessors, such leasesmay be void and we may be forced to relocate. Any relocation would require us to locate and secure additional facilities, expenditures ofadditional funds in connection with the relocation and preparation of replacement facilities. This could affect our ability to provideuninterrupted services to our customers and harm our reputation. As of December 31, 2023, we had not incurred expenditures associatedwith the relocation and preparation of replacement facilities. In addition, a substantial portion of our leasehold interests in leasedproperties have not been registered with the relevant PRC governmental authorities as required by relevant PRC laws. The failure toregister leasehold interests may expose us to potential warnings and penalties.In addition, some of our leased properties in China may not have filed the fire-control registration as required by relevant PRClaws and as a result, our use of the leased property may be affected. In the event that our use of properties is successfully challenged by theregulators or due to fire incidents, we may be forced to relocate from the affected operations.Our failure or alleged failure to comply with China’s anti-corruption laws or the U.S. Foreign Corrupt Practices Act could result inpenalties, which could harm our reputation and have an adverse effect on our business, results of operations and financial condition.We are subject to PRC laws and regulations related to anti-corruption, which prohibit bribery to government agencies, state orgovernment-owned or controlled enterprises or entities, to government officials or officials that work for state or government-ownedenterprises or entities, as well as bribery to non-government entities or individuals. As a U.S. public company, we are also subject to theU.S. Foreign Corrupt Practices Act, or the FCPA, which generally prohibits companies and any individuals or entities acting on theirbehalf from offering or making improper payments or providing benefits to foreign officials for the purpose of obtaining or keepingbusiness, along with various other anti-corruption laws. Our existing policies prohibit any such conduct and we continually refine andupdate our policies and procedures to keep up with business and regulatory developments. We also provide ongoing training to ouremployees, franchisee partners and other third parties in order to ensure that we comply with PRC anti-corruption laws and regulations,the FCPA and other anti-corruption laws to which we are subject. There is, however, no assurance that such policies or procedures willwork effectively all the time or protect us against liability under the FCPA or other anti-corruption laws. There is no assurance that ouremployees, franchisee partners and other third parties would always obey our policies and procedures. Further, there is uncertainty inconnection with the implementation of PRC anti-corruption laws. We could be held liable for actions taken by our employees, franchiseepartners and other third parties with respect to our business or any businesses that we may acquire. In addition to the PRC, we also operateCloud OFCs in the U.S. and Thailand, and have coverage in Malaysia, Vietnam and Singapore through partners. We also provide localexpress delivery services in Thailand, Vietnam, Malaysia and Singapore. This puts us in frequent contact with persons who may beconsidered “foreign officials” under the FCPA, resulting in an elevated risk of potential FCPA violations. If we are found not to be incompliance with PRC anti-corruption laws, the FCPA and other applicable anti-corruption laws, we may be subject to criminal,administrative, and civil penalties and other remedial measures, which could have an adverse impact on our business, results of operationsand financial condition. Any investigation of any potential violations of the FCPA or other anti-corruption laws by the U.S. or foreignauthorities, including Chinese authorities, could adversely impact our reputation, cause us to lose customer relationships and lead to otheradverse impacts on our business, results of operations and financial condition.We are subject to various claims and lawsuits in the ordinary course of business, and increases in the amount or severity of theseclaims and lawsuits could adversely affect us.We are exposed to various claims and litigation related to commercial disputes, personal injury, property damage, labor disputesand other matters in the ordinary course of our business. Developments in regulatory, legislative or judicial standards, material changes tolitigation trends, or a catastrophic accident or series of accidents, including accidents that affect our franchisee partners or serviceproviders, involving any or all of commercial disputes, property damage, personal injury, and labor disputes could have a material adverseeffect on our operating results, financial condition and reputation. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 43 of 248 Table of Contents36We may not have sufficient insurance coverage.We maintain various insurance policies to safeguard against risks and unexpected events. We have purchased certain lifeinsurance, such as group accident insurance; property loss insurance, such as cargo transportation insurance and all-risk propertyinsurance; and liability insurance, such as non-motor vehicle liability insurance, public liability insurance and logistics liability insurance.Some of our insurance also covers fire or other damages. We also provide social security insurance, including pension insurance,unemployment insurance, work-related injury insurance and medical insurance for our full-time employees. We are not legally required tomaintain insurance for the items we ship. We do not maintain business interruption insurance or general third-party liability insurance, nordo we maintain key-man life insurance. We cannot assure you that our insurance coverage is sufficient to prevent us from any losses orthat we will be able to successfully claim for losses under our current insurance policies on a timely basis, or at all. If we incur losses thatare not covered by our insurance policies, or if the amount reimbursed is significantly less than our actual losses, our business, financialcondition and results of operations could be materially and adversely affected.Fluctuations in exchange rates could result in foreign currency exchange losses, which may adversely affect our financial condition,results of operations and cash flows.We have in the past raised significant funds in U.S. dollars and have received net proceeds in U.S. dollars from our initial publicoffering and convertible senior notes issuances. We have historically incurred substantial short-term borrowings in Renminbi to fund ourworking capital requirement in the PRC while holding significant U.S. dollar balances. As such, any appreciation in the value of Renminbiagainst U.S. dollar and other currencies would have a negative impact on our financial position and results of operations. In addition,while we currently incur only a small portion of our expenses and generate only a small portion of our revenue in currencies other thanRenminbi, we may incur more of such expenses and generate more of such revenues in the future as we continue our internationalexpansion. As a result, we may be subject to increased foreign exchange rate risk in the future.The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is affected by, among other things,changes in political and economic conditions and the foreign exchange policy adopted by the PRC and other governments. Specifically inthe PRC, on July 21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S. dollar. In 2016, theRenminbi depreciated approximately 6.7% against the U.S. dollar. In 2017, however, the RMB appreciated approximately 6.7% againstthe U.S. dollar. While the RMB appreciated approximately 2.3% against the U.S. dollar in 2021, the RMB depreciated approximately9.2% and 2.9% against the U.S. dollar in 2022 and 2023, respectively. It remains unclear what further fluctuations may occur or whatimpact this will have on our results of operations.It is difficult to predict how market forces or PRC, U.S. or other government policies may impact the exchange rate between theRenminbi, U.S. dollar and other currencies in the future. There remains significant international pressure on the PRC government to adopta more flexible currency policy, which could result in greater fluctuation of the Renminbi against the U.S. dollar. Substantially all of ourrevenue and costs are currently denominated in Renminbi, and a large portion of our financial assets and a portion of our financialliabilities are denominated in U.S. dollars. To the extent that we need to convert U.S. dollars into Renminbi for our operations,appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we would receive. Conversely,if we decide to convert our Renminbi into U.S. dollars for other business purposes, appreciation of the U.S. dollar against the Renminbiwould have a negative effect on the U.S. dollar amount we would receive. We cannot predict the impact of foreign currency fluctuations,and foreign currency fluctuations in the future may adversely affect our financial condition, results of operations and cash flows.If we fail to maintain proper and effective internal controls, our ability to produce accurate financial statements on a timely basis couldbe impaired.As a U.S. public company, we are subject to the reporting requirements of the U.S. Securities Exchange Act of 1934, as amended,or the Exchange Act, the Sarbanes-Oxley Act and the rules and regulations of the New York Stock Exchange. The Sarbanes-Oxley Actrequires, among other things, that we maintain effective disclosure controls and procedures and internal controls over financial reporting.As required by Section 404 of the Sarbanes-Oxley Act, we must perform system and process evaluation and testing of our internal controlsover financial reporting to allow management to report on the effectiveness of our internal controls over financial reporting in our Form20-F filing for that year. In addition, our independent registered public accounting firm must attest to and report on the effectiveness of ourinternal control over financial reporting. Our management has concluded that our internal control over financial reporting was effective asof December 31, 2023. See “Item 15. Controls and Procedures—Management’s Annual Report on Internal Control over FinancialReporting.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 44 of 248 Table of Contents37However, our internal control over financial reporting may not prevent or detect all errors and all fraud. A control system, nomatter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will bemet. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatementsdue to error or fraud will not occur or that all control issues and instances of fraud will be detected.If we are not able to comply with the requirements of Section 404 of the Sarbanes-Oxley Act in a timely manner, or if we areunable to maintain proper and effective internal controls, we may not be able to produce timely and accurate financial statements. This willrequire that we incur substantial additional professional fees and internal costs to expand our accounting and finance functions and that weexpend significant management efforts. In addition, the trading price of our ADSs could decline and we could be subject to sanctions orinvestigations by the New York Stock Exchange, SEC or other regulatory authorities.Risks Related to Our ADSsThe trading price of our ADSs has been and may continue to be volatile, which could result in substantial losses to you.The trading price of our ADSs has been and is likely to remain volatile and fluctuate widely due to factors beyond our control.This may happen because of broad market and industry factors, such as global and China’s economic and geopolitical conditions, as wellas the performance and fluctuation in the market prices or the underperformance or deteriorating financial results of other listed companiesbased in China. The securities of some of the listed companies based in China have experienced significant volatility since their initialpublic offerings, including, in some cases, substantial declines in the trading prices of their securities. The trading performances of otherChinese companies’ securities after their offerings, including Internet and e-commerce companies, may affect the attitudes of investorstoward Chinese companies listed in the U.S., which consequently may impact the trading performance of our ADSs, regardless of ouractual operating performance. In addition, any negative news or perceptions about inadequate corporate governance practices or fraudulentaccounting, corporate structure or matters of other Chinese companies may also negatively affect the attitudes of investors towardsChinese companies in general, including us, regardless of whether we have conducted any inappropriate activities. In addition, securitiesmarkets may from time to time experience significant price and volume fluctuations that are not related to our operating performance, suchas the large decline in share prices in the U.S., China and other jurisdictions in late 2008, early 2009, the second half of 2011 and in 2015,which may have a material and adverse effect on the trading price of our ADSs.In addition to the above factors, the price and trading volume of our ADSs may be highly volatile due to multiple factors, such asannouncements by us or our competitors of new product and service offerings, acquisitions, strategic relationships, joint ventures, capitalraisings or capital commitments, additions or departures by our senior management and by actual or anticipated fluctuations in ourquarterly results of operations and changes or revisions of our expected results. The trading price and volume of our ADSs may also beaffected by studies and reports relating to the quality of our service offerings or those of our competitors and reports by securities researchanalysts. Other factors include regulatory developments affecting us or our industry, customers or suppliers, as well as changes in themarket for our services and the economic performance or market valuations of other companies offering supply chain services may affecttrading in our ADSs. Further, the trading price and volume of our ADSs may also be influenced by fluctuations of exchange rates betweenthe RMB and the U.S. dollar, or restrictions on our outstanding shares or ADSs and sales or perceived potential sales of additional Class Aordinary shares or ADSs.If securities or industry analysts do not publish research or publish inaccurate or unfavorable research about our business, the marketprice for our ADSs and trading volume could decline.The trading market for our ADSs will depend in part on the research and reports that securities or industry analysts publish aboutus or our business. If research analysts do not establish and maintain adequate research coverage or if one or more of the analysts whocovers us downgrades our ADSs or publishes inaccurate or unfavorable research about our business, the market price for our ADSs wouldlikely decline. If one or more of these analysts cease coverage of our company or fail to publish reports on us regularly, we could losevisibility in the financial markets, which, in turn, could cause the market price or trading volume for our ADSs to decline. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 45 of 248 Table of Contents38Techniques employed by short sellers may drive down the market price of our ADSs.Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with theintention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in thevalue of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects topay less in that purchase than it received in the sale. As it is in the short seller’s interest for the price of the security to decline, many shortsellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order tocreate negative market momentum and generate profits for themselves after selling a security short. These short attacks have, in the past,led to selling of shares in the market.Public companies that have substantially all of their operations in China have been the subject of short selling. Much of thescrutiny and negative publicity has centered on allegations of a lack of effective internal control over financial reporting resulting infinancial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in manycases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into theallegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.It is not clear what effect such negative publicity could have on us. If we were to become the subject of any unfavorableallegations, whether such allegations are proven to be true or untrue, we could have to expend a significant amount of resources toinvestigate such allegations and/or defend ourselves. While we would strongly defend against any such short seller attacks, we may beconstrained in the manner in which we can proceed against the relevant short seller by principles of freedom of speech, applicable statelaw or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract our management fromgrowing our business. Even if such allegations are ultimately proven to be groundless, allegations against us could severely impact ourbusiness operations and stockholders equity, and any investment in our ADSs could be greatly reduced or rendered worthless.Because we do not expect to pay dividends in the foreseeable future, you must rely on price appreciation of our ADSs for return onyour investment.We currently intend to retain most, if not all, of our available funds and any future earnings to fund the development and growthof our business. As a result, we do not expect to pay any cash dividends in the foreseeable future. See “Item 8. Financial Information—A.Consolidated Statements and Other Financial Information—Dividend Policy and Distributions.” Therefore, you should not rely on aninvestment in our ADSs as a source for any future dividend income.Our board of directors has complete discretion as to whether to distribute dividends, subject to certain requirements of CaymanIslands law. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premium account,provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as they fall duein the ordinary course of business. Even if our board of directors decides to declare and pay dividends, the timing, amount and form offuture dividends, if any, will depend on, among other things, our future results of operations and cash flow, our capital requirements andsurplus, the amount of distributions, if any, received by us from our subsidiaries, our financial condition, contractual restrictions and otherfactors deemed relevant by our board of directors. Accordingly, the return on your investment in our ADSs will likely depend entirelyupon any future price appreciation of our ADSs. There is no guarantee that our ADSs will appreciate in value or even maintain the price atwhich you purchased the ADSs. You may not realize a return on your investment in our ADSs and you may even lose your entireinvestment in our ADSs. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 46 of 248 Table of Contents39Substantial future sales or perceived potential sales of our ADSs in the public market could cause the price of our ADSs to decline.Substantial sales of our ADSs in the public market, or the perception that these sales could occur, could cause the market price ofour ADSs to decline significantly. As of February 29, 2024, we had 403,514,399 ordinary shares outstanding, comprising 261,648,452Class A ordinary shares (including 5,037,713 Class A ordinary shares issued to our depositary bank and reserved for future issuances ofADSs upon exercise or vesting of awards granted under our share incentive plans), 94,075,249 Class B ordinary shares and 47,790,698Class C ordinary shares, including 197,364,353 Class A ordinary shares represented by ADSs (including 5,037,713 Class A ordinaryshares held by our depositary bank for our account and reserved for future issuances of ADSs upon exercise or vesting of awards grantedunder our share incentive plans). All ADSs representing our Class A ordinary shares are freely transferable by persons other than our“affiliates” without restriction or additional registration under the U.S. Securities Act of 1933, as amended, or the Securities Act. All of theother Class A ordinary shares outstanding are available for sale in the public market subject to volume and other restrictions as applicableunder Rules 144 and 701 under the Securities Act. In addition, as of the date of this annual report, our 2025 Convertible Notes areconvertible into 617,899 ADSs representing a total of 12,357,979 Class A ordinary shares at any time at the option of the holders thereof,and our remaining 2024 Convertible Notes are convertible into 78 ADSs representing a total of 1,560 Class A ordinary shares at any timeat the option of the holders thereof. Subject to applicable Rule 144 restrictions or additional registration under the Securities Act, theADSs converted from the convertible notes may be freely traded in the public market. The affiliate of Alibaba who is the current holder ofthe 2025 Convertible Notes has registration rights with respect to the ADSs or Class A ordinary shares convertible from the 2025Convertible Notes in accordance with the terms of the 2025 Convertible Notes.Certain major holders of our ordinary shares have the right to cause us to register under the Securities Act the sale of their shares.Registration of these shares under the Securities Act would result in ADSs representing these shares becoming freely tradable withoutrestriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the form ofADSs in the public market could cause the price of our ADSs to decline significantly.We have adopted share incentive plans under which we have the discretion to grant a broad range of equity-based awards toeligible participants. We have registered all ordinary shares that we may issue under these share incentive plans. Since these ordinaryshares have been registered, they can be freely sold in the public market in the form of ADSs upon issuance, subject to volume limitationsapplicable to affiliates. If a large number of our ordinary shares or securities convertible into our ordinary shares are sold in the publicmarket in the form of ADSs after they become eligible for sale, the sales could reduce the trading price of our ADSs and impede ourability to raise future capital. In addition, any ordinary shares that we issue under our share incentive plans would dilute the percentageownership held by our investors.Any conversion of our convertible senior notes will dilute the ownership interest of existing ordinary shareholders and holders of ourADSs, including holders who have previously converted their notes.The conversion of some or all of the US$75 million aggregate principal amount of our 2025 Convertible Notes currentlyoutstanding, and of the US$11,000 aggregate principal amount of our 2024 Convertible Notes currently outstanding, will dilute theownership interests of existing ordinary shareholders and holders of the ADSs. Any sales of the ADSs issuable upon such conversioncould adversely affect prevailing trading prices of the ADSs. In addition, the anticipated conversion of the notes into ADSs could depressthe trading price of the ADSs. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 47 of 248 Table of Contents40As a holder of ADSs, you have fewer rights than holders of our ordinary shares and must act through the depositary to exercise thoserights.Holders of ADSs do not have the same rights as our registered shareholders. As a holder of our ADSs, you will not have anydirect right to attend general meetings of our shareholders or to cast any votes at such meetings. You will only be able to exercise thevoting rights which attach to the underlying Class A ordinary shares represented by your ADSs indirectly by giving voting instructions tothe depositary in accordance with the provisions of the deposit agreement. Upon receipt of your voting instructions, the depositary will try,as far as is practicable, to vote the underlying Class A ordinary shares in accordance with your instructions. You will not be able toexercise directly any right to vote with respect to the underlying Class A ordinary shares unless you withdraw the shares and become theregistered holder of such shares prior to the record date for the general meeting. Under our ninth amended and restated articles ofassociation currently in effect, the minimum notice period required to be given by our company to our registered shareholders to convene ageneral meeting will be 10 calendar days. When a general meeting is convened, you may not receive sufficient notice of the meeting toenable you to withdraw the Class A ordinary shares represented by your ADSs and become the registered holder of such shares to allowyou to attend the general meeting or to cast your vote directly with respect to any specific matter or resolution to be considered and votedupon at the general meeting. In addition, under our ninth amended and restated articles of association currently in effect, for the purposesof determining those shareholders who are entitled to attend and vote at any general meeting, our directors may close our register ofmembers and/or fix in advance a record date for such meeting, and such closure of our register of members or the setting of such a recorddate may prevent you from withdrawing the underlying Class A ordinary shares represented by your ADSs and becoming the registeredholder of such shares prior to the record date, so that you would not be able to attend the general meeting or to vote directly. Where anymatter is to be put to a vote at a general meeting, we will make all reasonable efforts to cause the depositary to notify you of the upcomingvote and to deliver our voting materials to you in a timely manner, but there can be no assurance that you will receive the voting materialsin time to ensure that you can instruct the depositary to vote the Class A ordinary shares underlying your ADSs. Furthermore, thedepositary and its agents will not be responsible for any failure to carry out any instructions to vote, for the manner in which any vote iscast or for the effect of any such vote. As a result, you may not be able to exercise your right to direct how the underlying Class A ordinaryshares represented by your ADSs are voted, and you may lack recourse if the underlying Class A ordinary shares represented by yourADSs are not voted as you requested. In addition, in your capacity as an ADS holder, you will not be able to call a shareholders’ meeting.Your right to participate in any future rights offerings may be limited, which may cause dilution to your holdings.We may from time to time distribute rights to our shareholders, including rights to acquire our securities. However, we cannotmake rights available to you in the U.S. unless we register both the rights and the securities to which the rights relate under the SecuritiesAct or an exemption from the registration requirements is available. Under the deposit agreement, the depositary will not make rightsavailable to you unless both the rights and the underlying securities to be distributed to ADS holders are either registered under theSecurities Act or exempt from registration under the Securities Act. We are under no obligation to file a registration statement with respectto any such rights or securities or to endeavor to cause such a registration statement to be declared effective and we may not be able toestablish a necessary exemption from registration under the Securities Act. Accordingly, you may be unable to participate in our rightsofferings and may experience dilution in your holdings.You may not receive cash dividends if the depositary decides it is impractical to make them available to you.The depositary will pay cash dividends on the ADSs only to the extent that we decide to distribute dividends on our ordinaryshares or other deposited securities, and we do not have any present plan to pay any cash dividends in the foreseeable future. See “Item 8.Financial Information—A. Consolidated Statements and Other Financial Information—Dividend Policy and Distributions.” To the extentthat our company pays any cash dividends or other distributions to our shareholders, we will pay such distributions which are payable inrespect of our Class A ordinary shares (or other deposited securities) represented by ADSs to the depositary of our ADSs or the custodian(as the registered holder of such Class A ordinary shares or other deposited securities), and the depositary has agreed to pay the cashdividends or other distributions it or the custodian receives on our Class A ordinary shares or other deposited securities after deducting itsfees and expenses, to the holders of the ADSs. You will receive these distributions in proportion to the number of Class A ordinary sharesyour ADSs represent. However, the depositary may, at its discretion, decide that it is inequitable or impractical to make a distributionavailable to any holders of ADSs. For example, the depositary may determine that it is not practicable to distribute certain propertythrough the mail, or that the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary maydecide not to distribute such property to you. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 48 of 248 Table of Contents41You may be subject to limitations on transfer of your ADSs.Your ADSs are transferable on the books of the depositary. However, the depositary may close its transfer books at any time orfrom time to time when it deems expedient in connection with the performance of its duties. In addition, the depositary may refuse todeliver, transfer or register transfers of ADSs generally when our books or the books of the depositary are closed, or at any time if we orthe depositary deems it advisable to do so because of any requirement of law or of any government or governmental body, or under anyprovision of the deposit agreement, or for any other reason.Our ordinary shares and ADSs are equity securities of a Cayman Islands holding company rather than equity securities of oursubsidiaries and the VIEs that have substantive business operations in China. As a result, certain judgments obtained against us byour shareholders may not be enforceable.We are an exempted company incorporated under the laws of the Cayman Islands with no business operations. Substantially all ofour assets are located outside the U.S. Our business is mainly conducted through our wholly-foreign owned enterprises and the VIEs in thePRC. We do not and are not, and holders of our ordinary shares and ADSs do not and are not, legally permitted to have any, or more thanthe permitted percentage of, equity interest in the VIEs as current PRC laws and regulations restrict foreign ownership and investment in,among other areas, domestic mail delivery services, value-added telecommunication business as well as tobacco retail business. As aresult, we provide the services that may be subject to such restrictions in the PRC through the VIEs, and we operate our businesses in thePRC through certain contractual arrangements with the VIEs. For a summary of such contractual arrangements, see “Item 4. Informationon the Company—Variable Interest Entity Contractual Arrangements.” Our ordinary shares and ADSs are equity securities of a CaymanIslands holding company rather than equity securities of our subsidiaries and the VIEs. In addition, all of our directors and executiveofficers and the experts named in this annual report reside outside the U.S., and most of their assets are located outside the U.S. As aresult, it may be difficult or impossible for you to bring an action against us or against them in the U.S. in the event that you believe thatyour rights have been infringed under the U.S. federal securities laws or otherwise. Even if you are successful in bringing an action of thiskind, the laws of the Cayman Islands, China or other relevant jurisdiction may render you unable to enforce a judgment against our assetsor the assets of our directors and officers.You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited,because we are incorporated under Cayman Islands law.We are an exempted company limited by shares incorporated under the laws of the Cayman Islands. Our corporate affairs aregoverned by our memorandum and articles of association, the Companies Act (As Revised) of the Cayman Islands and the common law ofthe Cayman Islands. The rights of shareholders to take action against our directors, actions by our minority shareholders and the fiduciaryduties of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. Thecommon law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as fromthe common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the CaymanIslands. The rights of our shareholders and the fiduciary duties of our directors under Cayman Islands law are not as clearly established asthey would be under statutes or judicial precedent in some jurisdictions in the U.S. In particular, the Cayman Islands has a less developedbody of securities laws than the U.S. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies ofcorporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivativeaction in a federal court of the U.S.Shareholders of Cayman Islands exempted companies like us have no general rights under Cayman Islands law to inspectcorporate records (other than copies of our memorandum and articles of association, our register of mortgages and charges, and anyspecial resolutions passed by our shareholders) or to obtain copies of lists of shareholders of these companies. Our directors havediscretion under our ninth amended and restated articles of association currently in effect to determine whether or not, and under whatconditions, our corporate records may be inspected by our shareholders, but are not obliged to make them available to our shareholders.This may make it more difficult for you to obtain the information needed to establish any facts necessary for a shareholder resolution or tosolicit proxies from other shareholders in connection with a proxy contest.As a result of all of the above, our public shareholders may have more difficulty in protecting their interests in the face of actionstaken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a companyincorporated in the U.S. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 49 of 248 Table of Contents42Our articles of association contain anti-takeover provisions that could discourage a third party from acquiring us, which could limitour shareholders’ opportunity to sell their shares, including Class A ordinary shares represented by our ADSs, at a premium. Thefundamental change repurchase feature of our convertible senior notes may delay or prevent an otherwise beneficial takeover attemptof our company.Our ninth amended and restated articles of association currently in effect contain provisions that limit the ability of others toacquire control of our company or cause us to engage in change-of-control transactions. These provisions could have the effect ofdepriving our shareholders of an opportunity to sell their shares at a premium over prevailing market prices by discouraging third partiesfrom seeking to obtain control of our company in a tender offer or similar transaction. For example, our board of directors has theauthority, without further action by our shareholders, to issue preferred shares in one or more series and to fix their designations, powers,preferences, privileges, and relative participating, optional or special rights and the qualifications, limitations or restrictions, includingdividend rights, conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater thanthe rights associated with our ordinary shares, in the form of ADS or otherwise. Preferred shares could be issued quickly with termscalculated to delay or prevent a change in control of our company or make removal of management more difficult. If our board of directorsdecides to issue preferred shares, the price of our ADSs may fall and the voting and other rights of the holders of our ordinary shares andADSs may be materially and adversely affected.These provisions could have the effect of depriving our shareholders of an opportunity tosell their shares at a premium over prevailing market prices by discouraging third parties from seeking to obtain control of our company ina tender offer or similar transaction.Furthermore, the convertible note instrument governing our 2025 Convertible Notes requires us to repurchase the notes for cashupon the occurrence of a fundamental change.A takeover of our company may trigger the requirement that we purchase the notes and/or increase the conversion rate, whichcould make it more costly for a potential acquirer to engage in a combinatory transaction with us. Such additional costs may have theeffect of delaying or preventing a takeover of our company that would otherwise be beneficial to investors.We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certainprovisions applicable to U.S. domestic public companies.Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securitiesrules and regulations in the U.S. that are applicable to U.S. domestic issuers, including: (i) the rules under the Exchange Act requiring thefiling with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K; (ii) the sections of the Exchange Act regulating thesolicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act; (iii) the sections of theExchange Act requiring insiders to file public reports of their stock ownership and trading activities and liability for insiders who profitfrom trades made in a short period of time; and (iv) the selective disclosure rules by issuers of material nonpublic information underRegulation FD.We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we intend topublish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the New York Stock Exchange.Press releases relating to financial results and material events will also be furnished to the SEC on Form 6-K. However, the information weare required to file with or furnish to the SEC will be less extensive and less timely compared to that required to be filed with the SEC byU.S. domestic issuers. As a result, you may not be afforded the same protections or information that would be made available to you wereyou investing in a U.S. domestic issuer.As a foreign private issuer, we are permitted to adopt certain practices of our home country, the Cayman Islands, in relation tocorporate governance matters that differ significantly from the New York Stock Exchange corporate governance listing standards;these practices afford less protection to shareholders than they would enjoy if we complied fully with the New York Stock Exchangecorporate governance listing standards.Our ADSs are listed on the New York Stock Exchange. The New York Stock Exchange Listed Company Manual permits aforeign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices inthe Cayman Islands, which is our home country, may differ significantly from the New York Stock Exchange corporate governance listingstandards. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 50 of 248 Table of Contents43For instance, we are not required to: (i) have a majority of the board be independent; (ii) have a compensation committee or acorporate governance and nominating committee consisting entirely of independent directors; (iii) have regularly scheduled executivesessions with only independent directors each year; or (iv) have a minimum of three members on our audit committee. We rely on some ofthese exemptions. As a result, you may not be provided with the benefits of certain corporate governance requirements of the New YorkStock Exchange.We believe that we will be classified as a passive foreign investment company, or PFIC, which will result in adverse United States taxconsequences to United States investors.A non-United States corporation will be a passive foreign investment company for United States federal income tax purposes forany taxable year if either (i) at least 75% of its gross income for such year is passive income or (ii) at least 50% of the value of its assets(generally determined based on an average of the quarterly values of the assets) during such year is attributable to assets that produce orare held for the production of passive income. Based on the past and projected composition of our income and assets, and the valuation ofour assets, including goodwill (which we have determined based on the trading price of our ADSs), we believe that we were a PFIC inprior taxable years, we will be a PFIC for the current taxable year, and that we will continue to be a PFIC in future taxable years. Thedetermination of whether we are a PFIC is made annually. Accordingly, changes in our asset or income composition may affect our PFICstatus. For these purposes, fluctuations in the market price of our ADSs (which may be volatile) may affect the value of our goodwill, andthus the composition of our assets, and accordingly, may affect our PFIC status.If we are a PFIC for any taxable year during which a United States person holds ADSs or Class A ordinary shares, certain adverseUnited States federal income tax consequences will apply to such United States person. For example, if we are a PFIC, our United Statesinvestors may become subject to increased tax liabilities under United States federal income tax laws and regulations and will becomesubject to burdensome reporting requirements. See “Item 10. Additional Information — E. Taxation — Certain United States FederalIncome Tax Considerations—Passive Foreign Investment Company.”We will continue to incur increased costs as a result of being a public company.As a U.S. public company, we incur significant legal, accounting and other expenses that we did not incur as a private company.The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and the New York Stock Exchange, imposevarious requirements on the corporate governance practices of public companies. These rules and regulations increase our legal andfinancial compliance costs and make some corporate activities more time-consuming and costly. We expect to continue to incur significantexpenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 of the Sarbanes-Oxley Act of 2002 and the other rules and regulations of the SEC. For example, as a result of becoming a public company, we haveincreased the number of independent directors and adopted policies regarding internal controls and disclosure controls and procedures. Wealso expect that operating as a public company will continue to make it more difficult and more expensive for us to obtain director andofficer liability insurance, and we may be required to accept reduced policy limits and coverage or incur substantially higher costs toobtain the same or similar coverage. In addition, we incur additional costs associated with our public company reporting requirements. Itmay also be more difficult for us to find qualified persons to serve on our board of directors or as executive officers.In the past, shareholders of a public company often brought securities class action suits against the company following periods ofinstability in the market price of that company’s securities. If we were involved in a class action suit, it could divert a significant amount ofour management’s attention and other resources from our business and operations, which could harm our results of operations and requireus to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation andrestrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to paysignificant damages, which could have a material adverse effect on our financial condition and results of operations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 51 of 248 Table of Contents44ITEM 4.INFORMATION ON THE COMPANYOur Corporate StructureThe following diagram illustrates our corporate structure as of the date of this annual report. It omits certain entities that areimmaterial to our results of operations, business and financial condition. Unless otherwise indicated, equity interests depicted in thisdiagram are held as to 100%.We disposed of Hangzhou BEST Network as part of our sale and transfer of BEST Express to J&T Express China, which salewas completed in December 2021.The relationship between us and the VIEs as illustrated in this diagram is governed by contractual arrangements and does notconstitute equity ownership.Notes:(1)Two PRC individuals, Wei Chen and Lili He, who are relatives of Mr. Shao-NingJohnny Chou, hold 50%, and 50%, respectively, equity interest in the VIEs.(2)Primarily involved in the provision of BEST Cloud services.(3)Primarily involved in the provision of BEST Supply Chain Management andBEST Freight.(4)Primarily involved in the provision of BEST Supply Chain Managementservices.(5)Shareholders’ Voting Rights Proxy Agreement; Exclusive Call OptionAgreement.(6)Shareholders’ Voting Rights Proxy Agreement; Exclusive Call OptionAgreement.(7)Shareholders’ Voting Rights Proxy Agreement; Exclusive Call OptionAgreement.(8)Loan Agreements; Exclusive Call Option Agreement; Shareholders’ VotingRights Proxy Agreement; Equity Pledge Agreement.(9)Exclusive Technical Services Agreement; Exclusive Call Option Agreement;Shareholders’ Voting Rights Proxy Agreement; Equity Pledge Agreement. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 52 of 248 Table of Contents45Variable Interest Entity Contractual ArrangementsDue to PRC legal restrictions on foreign ownership and investment in, among other areas, domestic mail delivery services, value-added telecommunication business as well as tobacco retail business, we, similar to all other entities with foreign-incorporated holdingcompany structures operating in our industry in the PRC, provide the services that may be subject to such restrictions in the PRC throughHangzhou BEST IT Information Technology Services Co., Ltd., or Hangzhou BEST IT, and Hangzhou Baijia Business ManagementConsulting Co., Ltd., or Hangzhou Baijia, the VIEs, all of which are incorporated in the PRC and 100% owned by PRC legal persons. TwoPRC individuals, Wei Chen and Lili He, who are relatives of Mr. Shao-Ning Johnny Chou, each holds 50% equity interest in each ofHangzhou BEST IT and Hangzhou Baijia.The currently effective contractual arrangements by and among us, our wholly-owned PRC subsidiaries, the VIEs, and the VIEs’shareholders include (i) certain equity pledge agreements, shareholders’ voting rights proxy agreements, exclusive call option agreementsand certain loan agreements, which provide us with effective control over the VIEs; (ii) certain exclusive technical services agreements,which allow us to receive substantially all of the economic risks and benefits generated from the operations of the VIEs and theirsubsidiaries. As a result of our contractual arrangements with the VIEs and their shareholders, we are the primary beneficiary of the VIEs,and, therefore, include the financial results of the VIEs and their subsidiaries in our consolidated financial statements in accordance withU.S. GAAP as if they were our wholly-owned subsidiaries.These contractual arrangements may not be as effective as direct ownership in providing us with control over the VIEs. If theVIEs or their shareholders fail to perform their respective obligations under these contractual arrangements, our recourse to the assets heldby the VIEs is indirect and we may have to incur substantial costs and expend significant resources to enforce such arrangements inreliance on legal remedies under PRC law. These remedies may not always be effective, particularly in light of uncertainties regarding theinterpretation and enforcement of the relevant laws and regulations. The enforceability of the agreements under the contractualarrangements has not been tested in a court of law. Furthermore, in connection with litigation, arbitration or other judicial or disputeresolution proceedings, assets under the name of any record holder of equity interest in the VIEs, including such equity interest, may beput under court custody. As a consequence, we cannot be certain that the equity interest will be disposed pursuant to the contractualarrangement or ownership by the record holder of the equity interest.Certain subsidiaries of Hangzhou BEST IT have obtained ICP licenses that would allow them to provide value-addedtelecommunication services.We generated 7% of our revenue from continuing operations through the VIEs for the year ended December 31, 2023. Thefollowing is a summary of the currently effective contractual arrangements among VIEs, VIEs’ shareholders and BEST Inc. that enable usto receive substantially all of the economic benefits from their operations.The following is a summary of the material provisions of the contractual arrangements relating to BEST Logistics China,Hangzhou BEST IT and BEST Inc.Loan AgreementBEST Logistics China entered into a loan agreement with Wei Chen and Lili He in 2020, which replaced the original loanagreement entered into in 2019. Pursuant to this loan agreement, BEST Logistics China has granted an interest-free loan to each ofHangzhou BEST IT’s equity holders, which may only be used for the purpose of a capital contribution to Hangzhou BEST IT. BESTLogistics China agreed not to ask the Hangzhou BEST IT’s equity holders to repay the loans unless the relevant equity holder violates itsundertakings provided in the loan agreements. Hangzhou BEST IT’s equity holders undertook, among others, not to transfer any of itsequity interests in Hangzhou BEST IT to any third party. The loans are repayable by such equity holders through a transfer of their equityinterests in Hangzhou BEST IT to BEST Logistics China or its designated party, in proportion to the amount of the loans to be repaid. Theloan agreements remain effective until the relevant loans are repaid in full or BEST Logistics China relinquishes its rights under therelevant loan agreements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 53 of 248 Table of Contents46Exclusive Call Option AgreementPursuant to the exclusive call option agreement among us, BEST Logistics China, Hangzhou Baisheng Investment ManagementCo., Ltd. (later renamed as Hangzhou BEST IT) and its equity holders, dated October 23, 2019, Hangzhou BEST IT’s equity holders havegranted BEST Logistics China and us, or a party designated by us or BEST Logistics China, the exclusive and irrevocable call optionrights to purchase part or all of their equity interests in Hangzhou BEST IT at an exercise price equal to the minimum price as permittedby applicable PRC laws. Hangzhou BEST IT has further granted BEST Logistics China and us, or a party designated by us or BESTLogistics China, an exclusive call option to purchase part or all of its assets also at an exercise price equal to the minimum price aspermitted by applicable PRC laws. At our sole discretion, we have the right to decide whether the option and other rights granted under theagreement will be exercised by us, BEST Logistics China or a party designated by us. Each of Hangzhou BEST IT’s equity holders maynot, among other things, transfer any part of their equity interests to any party other than to us or BEST Logistics China, or a partydesignated by us or BEST Logistics China, pledge or create or permit any security interest or similar encumbrance to be created on all orany part of its equity interests, increase or decrease the registered capital of Hangzhou BEST IT, terminate or cause to terminate anymaterial contracts of Hangzhou BEST IT, or cause Hangzhou BEST IT to declare or distribute profits, bonuses or dividends. We areobligated, to the extent permitted by PRC laws, to provide financing support to Hangzhou BEST IT in order to meet the cash flowrequirements of its ordinary operations and to offset any loss from such operations. We and BEST Logistics China are not entitled torequest repayment if Hangzhou BEST IT or its equity holders are unable to repay such financial support. The exclusive call optionagreement remains in effect until all the equity interests or assets that are the subject of the agreement are transferred to us or BESTLogistics China, or a party designated by us or BEST Logistics China, or if we or BEST Logistics China unilaterally terminate theagreement with 30 days’ prior written notice. Unless otherwise provided by law, Hangzhou BEST IT and its equity holders are not entitledto unilaterally terminate this agreement under any circumstances.Shareholders’ Voting Rights Proxy AgreementPursuant to the shareholders’ voting rights proxy agreement among us, BEST Logistics China, Hangzhou Baisheng InvestmentManagement Co., Ltd. (later renamed as Hangzhou BEST IT) and its equity holders, dated October 23, 2019, each of Hangzhou BESTIT’s equity holders has irrevocably authorized any person designated by BEST Logistics China, with our consent, to exercise its rights asan equity holder of Hangzhou BEST IT in a manner approved by us, including but not limited to the rights to attend and vote at equityholders’ meetings and appoint directors and senior management. The proxy agreement remains effective until such time as the relevantequity holder no longer holds any equity interest in Hangzhou BEST IT.Equity Pledge AgreementPursuant to the equity pledge agreement among BEST Logistics China, Hangzhou Baisheng Investment Management Co., Ltd.(later renamed as Hangzhou BEST IT) and its equity holders, dated October 23, 2019, the relevant equity holders of Hangzhou BEST IThave pledged all of their equity interests in Hangzhou BEST IT as a continuing first priority security interest in favor of BEST LogisticsChina to secure the outstanding amounts advanced under the relevant loan agreements described above and to secure the performance ofobligations by Hangzhou BEST IT and/or its equity holders under the other contractual arrangements. BEST Logistics China is entitled toexercise its right to dispose of the pledged interests held by Hangzhou BEST IT’s equity holders in the equity of Hangzhou BEST IT andhas priority in receiving payment by the application of proceeds from the auction or sale of such pledged interests, in the event of anybreach or default under the loan agreements or other contractual arrangements, if applicable. All of the equity pledges have been registeredwith the relevant office of the Administration for Market Regulation in China. The equity pledge agreement will expire when allobligations under this equity pledge agreement or under the aforementioned loan agreement, exclusive call option agreement,shareholders’ voting rights proxy agreement and exclusive technical services agreement have been satisfied. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 54 of 248 Table of Contents47Exclusive Technical Services AgreementOn October 23, 2019, Hangzhou Baisheng Investment Management Co., Ltd. (later renamed as Hangzhou BEST IT) entered intoan exclusive technical services agreement with BEST Logistics China, pursuant to which BEST Logistics China provides exclusivetechnical services to Hangzhou BEST IT. In exchange, Hangzhou BEST IT pays a service fee to BEST Logistics China that is based on apredetermined formula based on the financial performance of Hangzhou BEST IT. During the term of this agreement, BEST LogisticsChina is entitled to adjust the service fee at its sole discretion without the consent of Hangzhou BEST IT. BEST Logistics China willexclusively own any intellectual property arising from the performance of this agreement. This exclusive technical services agreement hasan initial contract term of 20 years and may be automatically renewed for another 20 years unless BEST Logistics China notifiesHangzhou BEST IT of its intent not to renew with at least three months’ prior notice. BEST Logistics China is entitled to terminate theagreement unilaterally with 30 days’ prior written notice, while Hangzhou BEST IT is not entitled to unilaterally terminate this agreementunder any circumstances.The following is a summary of the material provisions of the contractual arrangements relating to BEST Store Network,Hangzhou Baijia and BEST Inc.Loan AgreementBEST Store Network entered into a loan agreement with Wei Chen and Lili He in 2020, which agreement was terminated inNovember 2021 to facilitate the sale of WOWO. After we completed the sale of WOWO, BEST Store Network then reentered into thesame form of loan agreement with Wei Chen and Lili He in December 2021. Pursuant to this loan agreement, BEST Store Network hasgranted an interest-free loan to each of Hangzhou Baijia’s equity holders, which may only be used for the purpose of a capital contributionto Hangzhou Baijia. BEST Store Network agreed not to ask Hangzhou Baijia’s equity holders to repay the loans unless the relevant equityholder violates its undertakings provided in the loan agreements. Hangzhou Baijia’s equity holders undertook, among others, not totransfer any of its equity interests in Hangzhou Baijia to any third party. The loans are repayable by such equity holders through a transferof their equity interests in Hangzhou Baijia to BEST Store Network or its designated party, in proportion to the amount of the loans to berepaid. The loan agreements remain effective until the relevant loans are repaid in full or BEST Store Network relinquishes its rights underthe relevant loan agreements.Exclusive Call Option AgreementPursuant to the exclusive call option agreement among us, BEST Store Network, Hangzhou Baijia and its equity holders, datedDecember 15, 2021, Hangzhou Baijia’s equity holders have granted BEST Store Network and us, or a party designated by us or BESTStore Network, the exclusive and irrevocable call option rights to purchase part or all of their equity interests in Hangzhou Baijia at anexercise price equal to the minimum price as permitted by applicable PRC laws. Hangzhou Baijia has further granted BEST StoreNetwork and us, or a party designated by us or BEST Store Network, an exclusive call option to purchase part or all of its assets also at anexercise price equal to the minimum price as permitted by applicable PRC laws. At our sole discretion, we have the right to decidewhether the option and other rights granted under the agreement will be exercised by us, BEST Store Network or a party designated by us.Each of Hangzhou Baijia’s equity holders may not, among other things, transfer any part of their equity interests to any party other than tous or BEST Store Network, or a party designated by us or BEST Store Network, pledge or create or permit any security interest or similarencumbrance to be created on all or any part of its equity interests, increase or decrease the registered capital of Hangzhou Baijia,terminate or cause to terminate any material contracts of Hangzhou Baijia, or cause Hangzhou Baijia to declare or distribute profits,bonuses or dividends. We are obligated, to the extent permitted by PRC laws, to provide financing support to Hangzhou Baijia in order tomeet the cash flow requirements of its ordinary operations and to offset any loss from such operations. We and BEST Store Network arenot entitled to request repayment if Hangzhou Baijia or its equity holders are unable to repay such financial support. The exclusive calloption agreement remains in effect until all the equity interests or assets that are the subject of the agreement are transferred to us or BESTStore Network, or a party designated by us or BEST Store Network, or if we or BEST Store Network unilaterally terminate the agreementwith 30 days’ prior written notice. Unless otherwise provided by law, Hangzhou Baijia and its equity holders are not entitled to unilaterallyterminate this agreement under any circumstances. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 55 of 248 Table of Contents48Shareholders’ Voting Rights Proxy AgreementPursuant to the shareholders’ voting rights proxy agreement among us, BEST Store Network, Hangzhou Baijia and its equityholders, dated December 15, 2021, each of Hangzhou Baijia’s equity holders has irrevocably authorized any person designated by BESTStore Network, with our consent, to exercise its rights as an equity holder of Hangzhou Baijia in a manner approved by us, including butnot limited to the rights to attend and vote at equity holders’ meetings and appoint directors and senior management. The proxy agreementremains effective until such time as the relevant equity holder no longer holds any equity interest in Hangzhou Baijia.Equity Pledge AgreementPursuant to the equity pledge agreement among BEST Store Network, Hangzhou Baijia and its equity holders, dated December15, 2021, the relevant equity holders of Hangzhou Baijia have pledged all of their equity interests in Hangzhou Baijia as a continuing firstpriority security interest in favor of BEST Store Network to secure the outstanding amounts advanced under the relevant loan agreementsdescribed above and to secure the performance of obligations by Hangzhou Baijia and/or its equity holders under the other contractualarrangements. BEST Store Network is entitled to exercise its right to dispose of the pledged interests held by Hangzhou Baijia’s equityholders in the equity of Hangzhou Baijia and has priority in receiving payment by the application of proceeds from the auction or sale ofsuch pledged interests, in the event of any breach or default under the loan agreements or other contractual arrangements, if applicable. Allof the equity pledges have been registered with the relevant office of the Administration for Market Regulation in China. The equitypledge agreement will expire when all obligations under this equity pledge agreement or under the aforementioned loan agreement,exclusive call option agreement, shareholders’ voting rights proxy agreement and exclusive technical services agreement have beensatisfied.Exclusive Technical Services AgreementOn May 13, 2020, Hangzhou Baijia entered into an exclusive technical services agreement with BEST Store Network, whichagreement was terminated in November 2021 to facilitate the sale of WOWO. After we completed the sale of WOWO, BEST StoreNetwork then re-entered into the same form of exclusive technical services agreement with Wei Chen and Lili He in December 2021.Pursuant to this agreement, BEST Store Network provides exclusive technical services to Hangzhou Baijia. In exchange, Hangzhou Baijiapays a service fee to BEST Store Network that is based on a predetermined formula based on the financial performance of HangzhouBaijia. During the term of this agreement, BEST Store Network is entitled to adjust the service fee at its sole discretion without theconsent of Hangzhou Baijia. BEST Store Network will exclusively own any intellectual property arising from the performance of thisagreement. This exclusive technical services agreement has an initial contract term of 20 years and may be automatically renewed foranother 20 years unless BEST Store Network notifies Hangzhou Baijia of its intent not to renew with at least three months’ prior notice.BEST Store Network is entitled to terminate the agreement unilaterally with 30 days’ prior written notice, while Hangzhou Baijia is notentitled to unilaterally terminate this agreement under any circumstances.We have been advised by our PRC legal counsel that there are substantial uncertainties regarding the interpretation andapplication of current and future PRC laws, rules and regulations. Accordingly, the PRC regulatory authorities may in the future take aview that is contrary to the opinion of our PRC legal counsel. We have been further advised by our PRC legal counsel that if the PRCgovernment finds that the agreements that establish the structure for operating our domestic mail delivery services, Internet related value-added business and tobacco retail business do not comply with PRC government restrictions on foreign investment in the aforesaidbusiness we engage in, we could be subject to severe penalties including being prohibited from continuing operations. See “Item 3. KeyInformation—D. Risk Factors—Risks Related to Our Corporate Structure.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 56 of 248 Table of Contents49A.History and Development of the CompanyOur founder established Eight Hundred Logistics Technologies Corporation, or BEST BVI, a British Virgin Islands company, andits wholly owned subsidiary in Hong Kong, BEST Logistics Technologies Limited, or BEST HK, in May 2007. In March 2008, BESTLogistics Technologies Limited was established under the laws of the Cayman Islands, which became our current ultimate holdingcompany. In June 2017, the name of BEST Logistics Technologies Limited was changed to BEST Inc. In December 2017, we establishedBEST Capital Inc., a Cayman Islands company, and its wholly owned subsidiaries, namely BEST Capital Holding Limited, a BritishVirgin Islands company, and BEST Capital Management Limited, a Hong Kong company.In March 2018, Xinyuan Financial Leasing (Zhejiang) Co., Ltd., which operated our BEST Capital business before it was wounddown by the end of 2022, was transferred from BEST Logistics Technologies Limited to BEST Capital Management Limited. We conductour businesses mainly through our wholly-foreign owned enterprises and the VIEs in China. See “—Contractual Arrangements with OurAffiliated Consolidated Entities.”We have a track record of successful organic growth and strategic acquisitions, as evidenced by the following corporatemilestones:●In 2007, BEST was founded in Hangzhou;●In 2008, we launched BEST Supply Chain Management;●In 2010, we launched BEST Express through the acquisition of Huitong Express;●In 2012, we launched BEST Freight through the acquisition of Quanjitong;●In 2013, we launched BEST Capital;●In 2015, we launched BEST Global and BEST Store+; and●In 2016, we launched BEST UCargo.Each of these service lines serves to expand the scope and scale of our supply chain service network while harnessing ourtechnology infrastructure and service network to provide integrated solutions.On September 20, 2017, our ADSs began trading on the New York Stock Exchange under the ticker symbol “BSTI.” Our tickersymbol on the New York Stock Exchange changed from “BSTI” to BEST” effective at the start of trading on February 19, 2019.To reduce cash outflows and reallocate capital to our core businesses, by the end of 2020, we had wound down our BEST Store+business and have since then started to account for BEST Store+ as discontinued operations.In March 2021, as an initial step to the establishment of a strategic partnership with a third party, we sold RMB603.6 millionworth of assets pertaining to the external B2C truck leasing business of BEST Capital to the third party.In October 2021, we agreed to sell BEST Express to J&T Express Co., Ltd, or J&T Express China. The sale closed and wascompleted in December 2021. Since then, BEST Express has been deconsolidated from the Company, and its historical financial resultsare reflected in our consolidated financial statements as discontinued operations.To further reduce cash outflows and increase capital allocations to our core businesses, by the end of 2022, we had wound downour BEST UCargo and BEST Capital businesses. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 57 of 248 Table of Contents50Principal OfficesOur principal executive offices are located at 2nd Floor, Block A, Huaxing Modern Industry Park, No. 18 Tangmiao Road, XihuDistrict, Hangzhou, Zhejiang Province 310013, People’s Republic of China. Our telephone number at this address is +86- 571-8899-5656.Our registered office in the Cayman Islands is located at the offices of Maples Corporate Services Limited, PO Box 309, Ugland House,Grand Cayman KY1-1104, Cayman Islands. Our agent for service of process in the United States is Law Debenture Corporate ServicesInc., located at 801 2nd Avenue, Suite 403, New York, New York 10017.Offering and Issuance of 2024 Convertible NotesOn September 17, 2019, we completed our offering of US$200 million aggregate principal amount of 1.75% convertible seniornotes due 2024 (including full exercise of the initial purchasers’ option to purchase additional notes) in the United States to qualifiedinstitutional buyers pursuant to Rule 144A and to non U.S. persons outside the United States in reliance on Regulation S under theSecurities Act of 1933, raising US$194.5 million in net proceeds to us after deducting underwriting discounts and commissions and otheroffering expenses.In 2022, we repurchased substantially all of our US$200 million aggregate principal amount of our 1.75% convertible seniornotes due 2024, and the repurchased notes were canceled accordingly. Of these repurchases, (i) approximately US$95 million principalamount of notes were repurchased in multiple transactions pursuant to definitive agreements that were privately negotiated and enteredinto by us and certain holders of the notes, and (ii) approximately US$105 million principal amount of notes were repurchased pursuantthe holders’ right to require us to repurchase all of their notes or any portion thereof that is an integral multiple of US$1,000 principalamount for cash on September 30, 2022 pursuant to the relevant indenture dated as of September 17, 2019. Notes in the principal amountof approximately US$11,000 remain outstanding after such repurchases.Share Repurchase ProgramIn March 2023, we announced the adoption of a share repurchase program in an aggregate amount of up to US$20 million worthof our outstanding ADSs from time to time over a period of 12 months. As previously announced on November 23, 2023, our company’sboard of directors terminated the share repurchase program, effective as of September 25, 2023. Prior to the program’s termination andduring the year ended December 31, 2023, we repurchased a total of 1,265,685 ADSs, representing 27,029,700 Class A ordinary shares.Private Placement and Issuance of 2025 Convertible NotesOn June 3, 2020, we completed the issuance and sale of US$150 million aggregate principal amount of 4.50% convertible seniornotes due 2025 to Alibaba.com Hong Kong Limited, an entity affiliated with Alibaba, one of our principal shareholders, outside the UnitedStates in reliance on Regulation S under the Securities Act.Holder of the notes may require us to repurchase all or part of their notes within 90 days after June 3, 2023 and upon theoccurrence of a fundamental change, in each case at a repurchase price equal to 100% of the principal amount of the notes to berepurchased, plus accrued and unpaid interest, if any. In April 2023, we and Alibaba.com Hong Kong Limited (“Alibaba HK”) agreed thatAlibaba HK would require us to repurchase one half of their notes, or US$75 million aggregate principal amount, in 2023. In 2023, werepurchased US$75 million aggregate principal amount of our 4.50% convertible senior notes due 2025, and the repurchased notes werecanceled accordingly. In December 2023, all of the 2025 Convertible Notes were transferred by Alibaba HK to Alibaba China. On April22, 2024, we and Alibaba China entered into an agreement to amend the Early Redemption Rights of the 2025 Convertible Notes, pursuantto which Alibaba China will require us to repurchase US$15 million (RMB106.2 million) aggregate principal amount of 2025 ConvertibleNotes with accrued interest before August 30, 2024 and to repurchase the remaining portion, or US$60 million (RMB425.0 million)aggregate principal amount with accrued interest on May 10, 2025. See “Item 3. Key Information—D. Risk Factors—Risks Relating toOur Business and Industry—We have a history of net losses and negative cash flows from operating activities, which may continue oroccur again in the future. While we believe we can continue our business as a going concern and have prepared our consolidated financialstatements on that basis, we cannot assure you that we will be able to continue as a going concern in light of the adverse conditions we arefacing.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 58 of 248 Table of Contents51Sale of WOWOIn November 2021, we completed the sale of WOWO by Hangzhou Baijia Business Management Consulting Co., Ltd., a variableinterest entity, to Chongqing Lawson Convenience Store Co., Ltd., for a cash consideration of RMB250 million.Sale of BEST ExpressIn October 2021, we agreed to sell BEST Express, our express delivery business in China, to J&T Express Co., Ltd., or J&TExpress China, at approximately RMB6.8 billion enterprise value. The sale did not include any of our other businesses, namely, SupplyChain Management, Freight and Global. The sale closed and was completed in December 2021, following approval by relevant regulatoryagencies of the definitive agreement entered into by the parties. The final transaction was completed pursuant to the terms of theagreement, and BEST Express was transferred to J&T Express China. Since December 2021, BEST Express has been deconsolidated fromour company, and its historical financial results are reflected in our consolidated financial statements as discontinued operations. The shareand asset purchase agreement entered into by the parties has been incorporated by reference in this annual report as exhibit 4.26.B.Business OverviewOverviewWe are a leading integrated Smart Supply Chain service provider in China. Our multi-sided platform combines integratedlogistics and supply chain services, last-mile services, value-added services and proprietary technology infrastructure. Our integratedlogistics and supply chain services encompass B2B and B2C supply chain management, less-than-truckload delivery, cross-border supplychain management, Southeast Asia local delivery, and a real-time bidding platform to source truckload capacity. Our last -mile servicesinclude online merchandise sourcing and store management for convenience stores as well as B2C services. In addition, we provide value-added services to support our ecosystem participants and help them grow. BEST Cloud, our proprietary technology platform thatseamlessly connects our systems with those of our ecosystem participants, is the backbone that powers our integrated services andsolutions.We believe we are well positioned to transform the logistics and supply chain industry in China and capture growth opportunitiesin the New Retail era, which is the seamless integration of online and offline retail to offer a consumer-centric, omni-channel and globalshopping experience through digitization and just-in-time delivery.In December 2021, we completed the sale of BEST Express, our express delivery business in China, and since then we havestarted to reflect the historical financial results of BEST Express for the periods prior to the sale in our consolidated financial statements asdiscontinued operations. Unless otherwise stated, the results presented in this annual report do not include the results of BEST Express.Our Integrated Logistics and Supply Chain Services and SolutionsBEST Freight: We achieved a 33.75% CAGR in freight volume between 2014 and 2023. Our nationwide freight network covers100% of China’s provinces and 100% of China’s cities as of December 31, 2023.BEST Supply Chain Management: Since its establishment, BEST Supply Chain has always integrated the “gene” of scientificand technological innovation into the development of enterprises, constantly innovating business models, using information technology,artificial intelligence and big data to build comprehensive online and offline logistics services and supply chain service capabilities. We arecommitted to establishing a more intelligent and efficient supply chain through the innovation of technology and business model in orderto provide our customers with full-link digital and intelligent solutions and landing services from the finished product to the end delivery.BEST Global: We offer door-to-door integrated cross-border supply chain services to and from China, including internationalexpress, LTL, fulfillment and freight forwarding through our own network and global transportation and warehouse partners. We operateCloud OFCs in the U.S. and Thailand, and have coverage in Malaysia, Vietnam, and Singapore through partners. We also provide localexpress delivery services in Thailand, Vietnam, Malaysia and Singapore. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 59 of 248 Table of Contents52Our Technology InfrastructureBEST Cloud is our proprietary technology platform. It enables our ecosystem participants to operate their businesses effectivelythrough a diverse range of SaaS-based applications. We utilize big data analytics, machine learning, artificial intelligence, or AI, andmobile technologies to efficiently design, manage and operate complex supply chain services and solutions for our ecosystem. We applyour technologies to a diverse range of applications, such as network and route optimization, swap bodies, sorting line automation, smartwarehouses and store management to enhance operational efficiency and service quality.Our EcosystemMerchants, consumers, franchisee partners, transportation service providers and other suppliers are participants in our ecosystem,which is strategically designed to benefit from its inherent network effect. As our platform grows and our suite of solutions and servicesexpands, our ecosystem will continue to attract new participants. The growing number of participants in our ecosystem enlarges our scaleand extends our reach, which drives network density and improves its overall efficiency.Our Technology InfrastructureBEST Cloud, our proprietary technology platform, is the backbone that powers our integrated solutions. It seamlessly connectsour systems with those of our ecosystem participants. We utilize big data analytics, machine learning, AI, and mobile technologies toefficiently design, manage and operate complex supply chain systems for our ecosystem. Our technology allows us to provide end-to-endsupport for our customers and enables our ecosystem participants to grow and prosper. We have also built a large and experiencedtechnology team of over 449 professionals including software engineers and other technology specialists.We believe BEST Cloud and our strong technology team are our key competitive advantages.Fundamental System ArchitectureThe system architecture of BEST Cloud differs from traditional information systems. While traditional information systems focuson monitoring, controlling and coordinating business processes individually, BEST Cloud focuses on connecting all endpoints in ourecosystem, including those of our own service lines, facilities, equipment and employees and those of our customers and business partners.We believe this offers the following advantages:●We are able to weave services from different networks to create new solutions for our customers.●We are able to rapidly develop and launch new applications which can be deployed across the network.●Our network users benefit from technology improvements instantly as they all have access to our centrally hosted systems.Single Interoperable SystemBEST Cloud connects all of our ecosystem participants by establishing millions of interlinkages among endpoints in our network.These endpoints include human interfaces, such as web portals and mobile apps, our customers’ information systems and our own smartdevices and logistics equipment.We plan to continue to increase the scale of our endpoints through development of more software and application interfaces andexpand the scope of our service offerings and attract more participants into our ecosystem. This will allow us to collect and analyze anincreasing amount and variety of data to provide better and more innovative services. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 60 of 248 Table of Contents53The key points or highlights of the research and development work for 2023Enterprise DigitalizationOur research and development team has been focusing their efforts on digital transformation in 2023. Highlights of digitalizationare:●Digitalization of Freight operation management: The basic construction of a fine-grained, real-time operational data analysissystem has been completed, which automatically identifies operational and managerial improvement points and risk pointsbased on data, helping Freight delivery businesses achieve precise, rapid, and effective operational management. Below arethe key points:a.Fine-grained: Operational analysis down to the smallest operational units (route level, branch level, sorting level).b.Real-time: Daily level.c.Operational data analysis: Reorganizing the data processing chain from the perspective of operational managers basedon decision options available to them.d.Automatic identification of operational and managerial improvement points and risk points: Building a “Yuan Fang”system platform to automatically identify fine-grained issues from various aspects of operations and management data,including monitoring of branch price policy setting and execution, discovery of opportunities for route planningimprovement, identification of abnormal vehicle loading rates, and monitoring of issues related to route timelinesscompliance.●Digitalization of franchise-based express delivery network management in Southeast Asia BEST is almost the solefranchise-based express delivery network in Southeast Asian countries. Targeting the unique cultures and businessenvironments of Southeast Asian nations, we have rebuilt the management system for express delivery services in theregion. This overhaul enables seamless management from headquarters to frontline couriers. With the support of this newsystem, headquarters can overcome barriers of language, culture, and geography. It allows real-time awareness of the overallbusiness situation while also providing direct insight into the operations of frontline network managers, branches, and evencouriers. When necessary, tasks can be directly assigned for execution.●Digitization of operations and online management for cross-border business operations To support the development of cross-border business, we have essentially completed the online operation of the entire business chain. Simultaneously, we havebuilt an operational analysis system that allows for precise, real-time monitoring of the profitability of each route, eachcontainer, and even each shipment. This provides assurance for business operation management.Applications of large language modelsIn 2023, large language models (LLMs), represented by GPT, sparked an AI craze. Research and development have been activelyfollowing up to explore the application of large language models in business systems. Currently, LLMs have been introduced into cross-border customer service management and Freight customer service management for tasks such as customer service quality inspection andcustomer intent recognition. Customer service chatbots based on large language models have already undergone testing in productionenvironments.Progress on cloud warehousing business in Southeast AsiaAs of the end of 2023, over 450 customer warehouses globally are operating business using the BEST warehousing system,marking a 113% increase compared to the end of 2022. The external guidance for warehouse operations is completed by the SAAS team(including warehouse planning, equipment selection/purchasing, system deployment, and operational process design). The business coverscountries such as Thailand, Vietnam, Malaysia, the Philippines, Indonesia, and the United States. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 61 of 248 Table of Contents54Relationship with Our Franchisee PartnersAs of December 31, 2023, we had approximately 20,114 franchisee partners in China. We believe our relationships withfranchisee partners are mutually beneficial. Our technology infrastructure and supply chain service network empower our franchiseepartners to increase operating efficiency and improve their service quality. Our franchisee partners are also our marketing champions forcustomer acquisition, which significantly reduces the need for a large centralized sales force. The success of our franchisee partners in turncontributes to the success of our network, allowing us to provide a broader range of services, and attracts more participants to ourecosystem.We carefully evaluate potential franchisee partners before they are allowed to join our network. Once approved, we enter intoagreements to govern our relationships with franchisee partners. Pursuant to these agreements:●We grant franchisee partners the right to provide service under our brand name in a specific geographic region during theterm of the agreements. We support franchisee partners with technology infrastructure, facilitating their integration into ourbroader ecosystem. Franchisee partners are not allowed to provide similar services under their own names or the brandnames of other parties and are not allowed to assign their rights under the agreement to any third party without our consent.●Franchisee partners are required to provide services that meet our quality standards as stipulated in our comprehensiveoperating manual which covers every aspect of their operations. We also regularly provide training to the franchiseepartners’ employees. We have the right to inspect their service quality, demand correction, impose fines on them, orunilaterally terminate the contract if their service quality cannot satisfy our standards within a remedial period.●Our franchisee partners are required to pay a one-off fee as well as a performance deposit. The performance deposit may beforfeited if they breach the agreement such as when their service quality does not meet our standards. We also provide themwith guidelines on the various fees they will pay us for use of our network.As of December 31, 2023, we had a team of 785 local managers based across China, directly interacting with our franchiseepartners on a daily basis to ensure that our quality standards are followed and to help our franchisee partners solve problems and improveand expand their services.Our Service OfferingsThrough our leading proprietary technology infrastructure and extensive supply chain service network, we offer comprehensiveservices and solutions that include the following major categories:Service Line Description ● BEST FreightDoor-to-door, LTL and FTL freight services● BEST Supply Chain ManagementIntegrated, customizable supply chain management services● BEST GlobalInternational supply chain, cross-border logistics services and local express deliveryservices in Thailand, Vietnam, Malaysia, and Singapore● BEST CloudProprietary technology powering our services and solutionsBEST FreightOur total freight volume increased from 8,392 thousand tonnes in 2020 to 9,280 thousand tonnes in 2023, representing a CAGRof 3.41%. Our nationwide freight network covers 100% of China’s cities as of December 31, 2023.BEST Freight servicesBEST Freight’s core business involves LTL transportation. Through BEST Freight’s comprehensive network across Chinaspanning pick-up, distribution, transportation and delivery, we transport parcels and other goods generally weighing 15 kg or more. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 62 of 248 Table of Contents55BEST Freight provides door-to-door freight services for B2B and B2C shippers. Historically, the majority of items transported byBEST Freight were shipped by B2B sellers to other businesses. As online sales of large consumer products, such as home appliances andfurniture, have significantly increased in recent years, shipments of these large consumer products directly to consumers from online andoffline B2C sellers comprise a greater proportion of the items we ship. In addition, BEST Freight provides value-added services includingpre-shipment inspection, cargo insurance, oversized item delivery, COD facilitation, evidence of delivery, and upstairs delivery services.BEST Freight also provides freight services that support BEST Supply Chain Management’s fulfillment operations. We believe thatconsumption upgrade and increased sales of large items through e-commerce will accelerate the development of LTL market, which iscurrently the focus of development for BEST Freight.Freight service processWhile the goods shipped through BEST Freight are larger and heavier and thereby require different equipment, facilities andvehicles to sort and deliver, the major steps in the transportation process are essentially the same. In addition, as we do not directly operateendpoint service stations for freight services, operations before the goods are sent to our sortation centers and/or hubs and after the goodshave left the destination sortation centers and/or hubs are normally provided by our franchisee partners. However, BEST Freight also hascertain direct merchant customers for which we directly provide door-to-door services that include first-mile pick-up and last-miledelivery.Freight service pricingSubstantially all of our endpoint service stations for freight services are operated by franchisee partners and we derive the vastmajority of our freight service revenue from franchisee partners that operate our service stations. Starting in 2017, in order to enhance thefreight delivery experience and our control over service quality throughout our network, we revised our arrangements with franchiseepartners and the scope of our service. As a result, we became the principal that is directly responsible for last-mile delivery of all goodssent through our network, and we are liable to senders for damage to or loss of goods in connection with last-mile delivery. Inconsideration of such expanded service scope and increased responsibilities, we increased the fee that we charge to pick-up franchisedservice stations. We provide the last-mile delivery service mainly through destination franchised service stations under our supervision andare responsible for paying service fees to them for the provision of last-mile delivery services.We determine and periodically evaluate and adjust our fee levels based on prevailing market conditions, our operating costs andservice quality.BEST Supply Chain ManagementThe table below sets forth information regarding the scale of our supply chain management services in China as of and for theperiods indicated:As of and for the year ended December 31, 2021 2022 2023Number of Cloud OFCs:Self-Operated 78 65 53Franchised 350 339 342Total 428 404 395GFA of Cloud OFCs (‘000 sq m) 3,221 2,848 2,804Number of total orders fulfilled (‘000)(1) 448,202 373,673 379,629Self-Operated 179,925 133,686 133,272Franchised 268,276 239,987 263,354Note:(1)Includes orders fulfilled by franchised Cloud OFCs. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 63 of 248 Table of Contents56BEST Supply Chain Management servicesBEST Supply Chain has a full-scenario integrated logistics service system, which can integrate omni-channel supply chainmanagement, warehousing services, LTL and vehicle express, terminal distribution, cross-border e-commerce logistics, and supply chaininformation services. We provide customers with comprehensive digital, intelligent, customized, one-stop integrated supply chainsolutions, and are a reliable provider of intelligent supply chain solutions and services.BEST Supply Chain Management services include the following categories:●Digitalization.We insist on using technology to promote the transformation of logistics and supply chain industries. After more than tenyears of development and accumulation, we have created a digital and intelligent supply chain system cluster “Skynet” (EM,OMS, TMS, WMS and other logistics systems) with omni-channel coverage, and a “ground network” consists of CloudOFCs, cloud transportation network and freight network. We target to provide customers with efficient digital informationservices and full-link digital solutions, relying on “information technology + network service”.For the logistics operation layer, we can realize digital operations and real-time data collection of the whole process; for theoperation management layer, the omni-channel management system is opened to realize data interactive application; for thedecision-making layer, we can use big data and algorithm models to realize the scientific layout of the supply chain, improveforecasting and planning accuracy, and improve production and sales coordination. Based on big data analysis, we can alsoprovide customers with more intelligent decision, which can meet the personalized needs of enterprises and merchants in allscenarios, and help enterprises to achieve intelligent management in all aspects of production, distribution and marketing.Invention patent was granted for Blockchain application in 2023, which provides digital transformation for end-to-end supplychain management solutions. This is also the unique invention patent awarded in third-party logistic companies of China.●The application of advanced technology in logistics industry-supply chain (transportation) paperless blockchain solutionTo solve the problem of fetching paper documents slowly and of difficulty in settlement in the process of transportationbusiness, BEST Supply Chain builds up the BEST Supply Chain blockchain certification platform by taking the advantagesof the fully-developed TMS system combined with blockchain technology so that BEST Supply Chain can achieve the goalto apply the paperless transactions through the whole chain and to provide top-notch customer service. The supply chain(transportation) blockchain solution greatly reduces the printing cost and makes transportation management environmentallyfriendly, green, convenient and efficient; with that said, we endeavor to achieve carbon peak and carbon neutrality practice.BEST Supply Chain plays a role model for the development of green logistics in the supply chain industry. As the firstcompany to apply blockchain technology to logistics scenarios domestically, we have applied for related patents of thistechnology.●BEST Cloud WarehouseBEST Cloud Warehouse is a professional warehouse and distribution integrated service brand under BEST Supply Chain. Itmainly relies on the nationwide warehouse and distribution network system, integrates and manages transportation andexpress resources, and applies the self-developed digital supply chain system to provide customers with omni-channelintegrated logistics services for all-scenario warehousing and distribution. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 64 of 248 Table of Contents57As the core product of BEST Supply Chain, BEST Cloud Warehouse has been deeply involved in beauty, shoes and apparel,fast-moving consumer goods and other industries for many years since its establishment in 2013, and continue to deepen thelayout of the warehouse network across the country, to provide customers with warehouse services such as self-operatedwarehouses, franchised warehouses, and collaborative warehouses to meet the needs of warehouse distribution services indifferent scenarios and levels. With the support of cloud-based WMS, TMS systems and big data analysis applications, BESTCloud Warehouse has also derived intelligent applications such as intelligent warehouse division, intelligent order division,intelligent wave, intelligent scheduling, intelligent customer service, etc., which can fully meet the personalized needs ofenterprise merchants, small and medium-sized merchants, B2B, and B2C businesses in all scenarios.Whether it is considered from the dimensions of order complexity, process complexity, digitalization degree or supply chainplanning capability, BEST Cloud Warehouse has reached the true level of “smart supply chain”. At present, Best CloudWarehouse has provided smart supply chain services for more than 3,000 brand enterprises. With the increasingdiversification of business formats, the transformation of traditional distribution supply chains into digital and integratedsupply chains is the general trend of the market. In the next ten years, Best Cloud Warehouse will continue to consolidate theconstruction of the underlying warehouse network, complete the cloud warehouse network coverage in third- and fourth-tiercities, deepen the integrated digital network, and build an industry-leading digital service platform for warehouse anddistribution integration to serve more customers. Industry customers provide omni-channel and omni-scenariocomprehensive logistics services.In recent year, we have been focusing on the networking aspect within the realm of warehousing and logistics, below are thekey highlights:a.Rapid Growth in the Number of Cloud Warehouses: The rapid growth in our Cloud Warehouses shift towards more agile andscalable storage solutions. This growth could be attributed to various factors such as the increasing demand for e-commerceservices, globalization of supply chains, and advancements in cloud technology making remote access and management ofwarehouses more efficient.b.Decrease of Self - operated Warehouses to Achieve Cost Reduction: Traditionally, companies would operate their ownwarehouses, incurring costs related to maintenance, staffing, and infrastructure. However, with the intention to cut cost, weare opting to decrease our self - operated warehouses to reduce costs. By leveraging external facilities, we can benefit fromeconomies of scale, specialized expertise, and flexible pricing models, ultimately leading to cost savings.c.Building Up Networks via Cloud Warehouses: Our Cloud Warehouses not only serve as storage spaces but also act as hubsfor networking and collaboration within supply chains. By connecting various sources such as suppliers, manufacturers,distributors, and retailers through a centralized cloud-based platform, we can streamline communication, data sharing, anddecision-making processes. This interconnected network enables real-time visibility into inventory levels, order statuses, andtransportation routes, facilitating faster response times and improved efficiency across the entire supply chain system.●BEST Cloud DeliveryBEST Cloud Delivery is a professional B2B delivery network within the provinces under BEST Supply Chain. The networkprovides customers with “one-day delivery” in provincial capital cities and “next-day delivery” in other cities in sameprovinces, with the advantage of trunk transport resources and destination landing sites. We are committed to being a newchoice for regional B2B distribution services in the footwear and apparel industry.BEST Cloud Delivery currently serves nearly 18,000 stores per day, with an average monthly shipment of 980,000 pieces,and its business scope has expanded to 18 provinces across the country. At the same time, with the strong technicaladvantages of BEST and the Beidou satellite positioning system, it has realized the operational visibility, stability andcontrollable trajectory throughout the whole process. BEST supply chain can meet tailored made demand from key accountsand help them to achieve their business goal with lower cost and higher efficiency. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 65 of 248 Table of Contents58BEST GlobalIn order to meet the strong demand for cross-border e-commerce transactions, we provide inbound and outbound door-to-doorintegrated cross-border supply chain services, including international express, LTL, fulfillment and freight forwarding through our ownnetwork and global transportation and warehouse partners. We provide direct mail and bonded warehouses, customs clearance andfulfillment to overseas merchants offering goods into China. We also provide full supply chain services, including local fulfillment, as wellas other market advisory services to Chinese merchants selling into overseas markets.We operate Cloud OFCs in the U.S., and Thailand, occupying approximately 2,202,000 square feet of space. We also offercoverage through our partners in Malaysia, Vietnam and Singapore. We also manage five bonded Cloud OFCs in China, including one ofthe largest cross-border bonded warehouses that fulfills orders generated on Tmall Global. In addition, our Urumqi Frontier Cloud OFCfacilitates shipments to destinations in Central Asia, Russia and other destinations using land transport links across Eurasia. We contractwith third-party transportation service providers for transportation services, including transportation within China, international air and seafreight providers, and local fulfillment companies. In China, we may also provide transportation services through our other service lines,such as BEST Freight. Pricing of services is primarily determined by prevailing market rates.To further expand our footprint and capture growth opportunities in Southeast Asia, BEST Global launched its express deliveryservices in Thailand’s Greater Bangkok area in the fourth quarter of 2018. The service has been expanded nationwide to provide flexible,fast and high-quality delivery services across Thailand with operation centers in Bangkok, Khon Kaen, Phitsanulok and Suratthani. In July2019, we started to operate a local express network in Vietnam after acquiring a local express delivery company. In April 2020, we furtherexpanded our local express delivery services to Malaysia through a strategic acquisition of a local express delivery company. In July 2020,we officially launched our local express delivery services in Singapore.As of December 31, 2023, BEST Global had ten hubs and sortation centers in Thailand, twelve hubs and sortation centers inVietnam, ten hubs and sortation centers in Malaysia, and one hub in Singapore. We directly operate all of these hubs and sortation centersas they are critical to ensuring the service quality of our network.In the year of 2023, our express delivery services have made a huge progress. In Vietnam, Vietnam’s express delivery volume ison the rise, with successful reforms in distribution fees, indicating an improvement in supply chain operations; as in Malaysia, althoughthere isn’t a clear business model, the express delivery industry is still steadily developing.BEST Cross-border ServiceIn addition to domestic market, we also actively expand the international market to provide supply chain cross-border e-commerce services, taking solid steps in globalization. By now, we operate our business overseas such as the United States, Thailand,Malaysia, Vietnam, and Singapore, providing one-stop all-round smart supply chain solutions and landing services for customers at homeand abroad.Since 2018, we began to deploy warehousing and express delivery networks in Southeast Asia. At the beginning of 2019, wehave successively completed the layout of local express delivery networks in five countries: Thailand, Vietnam, Malaysia, and Singapore.At the end of 2020, we launched a full-scenario “door-to-door” delivery service between China and five Southeast Asian countries.Among them, B2B and B2C businesses focus on providing cross-border e-commerce customers with omni-channel, door-to-door, andintegrated cross-border logistics services, to fully promote Chinese brands to the international market.BEST CloudOur proprietary BEST Cloud service platform powers the technology solutions and applications for our ecosystem. Ourfranchisee partners use BEST Cloud to run their operations, including to manage franchised Cloud OFCs and BEST Freight operations.Our best-in-class technology and big data analytics capabilities drive operational excellence and enhance value creation across ourecosystem. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 66 of 248 Table of Contents59BEST Cloud offers integrated web and mobile portals, which we refer to as our network endpoints, for merchants, consumers,franchisee partners and employees, providing access to a wide range of applications and services, such as SMS, OMS, TMS, WMS, billingand payment settlement, CRM and customer data tracking and analytics. We refer to these applications and services as the applicationlayer. Applications may be integrated with the data and systems of our customers, such as their ERP, messaging, payment gateway andbusiness intelligence. The application layer is supported by the technology layer, which consists of a robust set of tools such as AI, bigdata analytics, geographic information system, address mapping, performance monitoring, mobile apps and others. In the data integrationlayer, we weave information collected through millions of endpoints and from the application and technology layers with the capabilitiesavailable across our ecosystem to create smart solutions.Our Supply Chain Service NetworkWe have established a nationwide, integrated supply chain service network. The seamless integration of this network with ourtechnology infrastructure has laid the foundation for our service offerings and our rich and growing ecosystem. We are asset-light as welease facilities used in our operations and outsource the majority of our transportation needs to third-party service providers.Network FacilitiesOur network facilities include Cloud OFCs, hubs and sortation centers, service stations and convenience stores.Order Fulfillment Centers (BEST Cloud Warehouse)BEST Cloud Warehouse are warehouses with direct order fulfillment functions, which allow us to manage inventory for ourcustomers and dispatch products from warehouse directly to our customers.BEST Cloud DeliveryAcross the country, our landing distribution network covers 18 provinces, over 250 prefecture-level cities, and 100% of over1,900 districts and counties.Hubs and Sortation CentersAll of our hubs and sortation centers can collect, sort and dispatch parcels or goods to hubs and sortation centers in other regionsand cities.Our hubs are generally large logistics facilities located in major cities in China. Each of our hubs is connected to most of ourother hubs by line-haul transportation and therefore can dispatch parcels and goods directly to most other regions in China.Our sortation centers are generally smaller-scale logistics facilities compared to hubs and each of them is primarily connected tonearby hubs and/or other sortation centers by feeder services. They can dispatch parcels and goods to other regions through nearby hub ordirectly to nearby cities and regions. When a sortation center reaches critical mass, we will connect it directly to hubs and sortation centersin other regions by line-haul transportation.As of December 31, 2023, BEST Freight had 48 hubs and 49 sortation centers. We directly operate all of these hubs and sortationcenters as they are critical to ensuring the service quality of our network. We continue to optimize our hubs and sortation centers as ourvolume grows.Service StationsService stations are responsible for developing relationships with senders within its coverage area and picking up parcels andother goods from senders for delivery through our network. They also handle last-mile delivery of parcels and other goods sent throughour network to recipients located within their coverage areas.As of December 31, 2023, we had over 20,654 BEST Freight service stations. BEST Freight service stations cover 100% ofChina’s provinces, 100% of China’s cities and 100% of China’s districts and counties. As of December 31, 2023, substantially all of ourBEST Freight service stations were operated by franchisee partners. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 67 of 248 Table of Contents60Transportation FleetLine-Haul and Feeder ServicesWe generally use line-haul services for long-distance, cross-region transportation and feeder services for shorter-distance, inter-region transportation.We are responsible for arranging all of the line-haul transportation in our network. As of December 31, 2023, our network hadover 2,159 BEST Freight line-haul routes.We are also responsible for arranging feeder services between our hubs and sortation centers as well as between our differentsortation centers. We also arrange feeder services between our self-operated Cloud OFCs and our hubs or sortation centers. In addition, wealso arrange feeder services between our directly-served customers and our self-operated Cloud OFCs, hubs and sortation centers.Our franchisee partners are responsible for arranging feeder services from their service stations to our sortation centers or hubs.They also arrange transportation for their directly-served customers and franchised Cloud OFCs.Operating Efficiency and CapacityWe have continuously expanded the capacity and improved the operating efficiency of our Cloud OFCs, hubs, sortation centersand service stations through optimization of our operating processes as well as the increased adoption of automation and AI.As of December 31, 2023, four of our Cloud OFCs used 172 AGVs, which have increased the order fulfillment capacity of theseCloud OFCs while increasing efficiency and accuracy and reducing labor costs.We utilize big data analytics, AI and machine learning to optimize our network operations, route planning and line-haul routes toreduce costs. We also capitalize on synergies from our different services.We continue to introduce technological enhancements to improve our capabilities and increase efficiency. BEST Cloud integratesconvenience stores’ POS and membership rewards program with Store and Supply Chain Management for full data visibility. It alsointegrates BEST Freight’s dynamic routing calculation, which is expected to further reduce transportation costs. In addition, BEST Cloudhas started a pilot simulation process in Cloud OFCs to analyze and optimize personnel resources planning in order to increase laborutilization efficiency.Our Ecosystem ParticipantsWe have built a rich and growing ecosystem with various types of participants. Many of our ecosystem participants not onlyreceive but also provide services to us and therefore are both our customers and suppliers. Our ecosystem participants also provideservices to other ecosystem participants. Our technology infrastructure and supply chain service network enable us and our ecosystemparticipants to provide better services and improve operating efficiency, which ultimately benefit all participants in our ecosystem.MerchantsMerchants in our ecosystem include (i) brands, (ii) distributors, (iii) large online and offline retailers, and (iv) other sellers onvarious e-commerce platforms, or online sellers, most of which are SMEs and individuals.We provide BEST Supply Chain Management services to brands, large online and offline retailers and an increasing number ofonline sellers. We also offer BEST Cloud services and cross-sell BEST Freight and BEST Global services to them as part of our integratedsolution. In such transactions, these merchants are our customers.Merchants are our direct customers when they use BEST Freight and Cloud OFC services directly through us. Merchants arecustomers of our franchisee partners when they use BEST Freight and Cloud OFC services through our franchisee partners. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 68 of 248 Table of Contents61After more than 10 years of development and accumulation, our business has expanded rapidly and has served more than 3,000domestic brand enterprises and top 500 foreign enterprises, including COFCO, Unilever, L’Oreal, 3M, Johnson & Johnson, Procter &Gamble, Schneider, bilibili, BYD, CHINA FAW GROUP, CONTINENTAL, etc., involving FMCG, shoes and clothing, daily chemicals,internet electronics, telecommunications, electrical and other industries. Our largest merchant customers include brands such as 3M, LiNing, hotwind, bilibili, BYD, Geely, Cainiao Network and other large online and offline retailers. Additionally, many of our merchantclients conduct business in China’s major e-commerce platforms.ConsumersWhen individual consumers make a purchase at our self-operated convenience stores, or order goods from overseas through ourplatform, they are our direct customers. For most of our other services and solutions, we serve consumers indirectly through merchantsand our franchisee partners.Franchisee partnersFranchisee partners for BEST Freight and our Cloud OFCs are our customers. We may also provide additional services, such asfeeder services connecting franchised service stations and our hubs and sortation centers, to our franchisee partners in the future.Prior to 2017, we were not responsible for last-mile delivery of parcels or freight items unless we directly operated the destinationservice stations, and therefore franchisee partners were directly liable to franchised service stations for their delivery service charges.Starting in 2017, all of our franchisee partners for BEST Freight also provide last-mile delivery services to us and therefore are oursuppliers.Other ecosystem participantsOther participants in our ecosystem include transportation service providers and other suppliers.Transportation service providers have traditionally been our suppliers as we use them for line-haul transportation and feederservices that connect our network.Given the variety of participants and transactions in our ecosystem, we rely on many other suppliers to provide products andservices to us and our ecosystem participants. These include other capacity carriers such as airlines and shipping companies that providecross-border transportation services, truck and logistics equipment manufacturers from which transportation service providers and ourfranchisee partners procure trucks and other equipment using our financial services, landlords from which we and our franchisee partnerslease premises for our network facilities, insurance providers from which we procure insurance products for various ecosystemparticipants, and financial institutions from which we may obtain financing.As we continue to grow our ecosystem and expand our service offerings, we expect to attract an increasing number and variety ofparticipants into our ecosystem.Marketing and SalesWe have established our brand awareness through continuous innovation and high service quality. While we have mainly reliedon word-of-mouth referrals, we also utilize various advertising channels to increase our brand awareness among potential customers.Marketing and sales of our supply chain solutions and transportation services was led by a team of 282 personnel as of December31, 2023. Our senior management is also significantly involved in building relationships with customers, especially current and potentialmajor partners. In addition, from time to time, we initiate promotions to expand our customer base and build familiarity with our brand. Aswe have multiple service lines, there are many opportunities for cross-selling across our platform as we seek to introduce customers to ourother service offerings in addition to the service line with which they engage initially. We also believe our strong reputation is a factor inretaining and attracting customers.In addition to our centralized marketing efforts, we empower our franchisee partners to promote BEST services. Successfulinitiatives will increase demand for services in their franchised areas across our entire network. Our marketing team assists franchiseepartners in the identification of new marketing leads and coordination of new initiatives. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 69 of 248 Table of Contents62Customer ServiceThe quality of our service directly affects our customer loyalty and brand image. We directly operate the critical parts of ournetwork and selectively franchise out services to franchisee partners. To maintain consistent standards within our network, we provideperiodical training to our franchisee partners’ employees and regularly inspect franchisee partners’ service quality.We have established a customer relationship management system, or CRM, that allows us to effectively manage service qualityissues and promptly address customer inquiries. Customers can access the system by phone or online channels. Our call centerrepresentatives provide real-time assistance from 8:00 a.m. to 8:00 p.m., seven days a week. Our call system automatically forwards eachincoming call to an available representative from one of the call centers. After the submission of each enquiry, we ask the customer to ratethe quality of our customer service, and we follow up on instances where customers are not completely satisfied. For each complaint, westrive to provide an initial response within 24 hours, and to resolve the issue within three days.In the process of providing customer service, we implement our corporate culture of “customer respect” and “adherence toresponsibility”, emphasize the integration, guidance, and management of data and intelligence of core supply chain service, andcontinuously improve our own services. We provide customers with efficient, high-quality, cost-reducing logistics services, and haveearned recognition from many customers in our industry.Intellectual PropertyWe regard our trademarks, trade secrets, domain names, copyrights, patents, know-how, proprietary technologies and similarintellectual property as critical to our business. As of December 31, 2023, we had 536 trademark registrations in China, including those of“百世” and “百世物流” and were in the process of making one trademark application in China. As of December 31, 2023, we had 94trademark registrations outside China and were in the process of making 100 trademark applications outside China. We have also beengranted 113 copyrights in China in respect of our proprietary information systems. We are the registered holder of 194 domain names,including best-inc.com. We have 415 issued patents and 238 publicly filed patents under application in China. We also rely onconfidentiality and invention assignment provisions in the employment agreements that we enter into with key employees engaged inresearch and development. We have implemented a data security system which strictly controls access to our technology and informationsystems.In December 2021, we completed the sale of BEST Express, our express delivery business in China, and we are still in theprocess of transferring ownership of intellectual properties relating to BEST Express according to the share and asset purchase agreement.Such agreement has been incorporated by reference in this annual report as exhibit 4.26.Security and SafetyWe have integrated safety policies and procedures across our businesses. Our key safety measures include:Operational security and SafetyWe have enacted a full range of operational security measures to ensure the safety of our employees, customers and partners. Wescreen all items processed through our network for dangerous and prohibited materials, enforce handling procedures across hubs andsortation centers, service stations and at each level of our network and raise transportation safety awareness among our workers and others.Each worksite in our network is required to conduct a general safety assessment with regard to onsite activities, including maintenance aswell as non-routine tasks. We train our employees as well as those of our franchisee partners and service providers and use periodicfollow-up training to maintain skills and safety awareness. We have further improved our safety management system by setting up safetymanagement teams at each worksite. These teams provide comprehensive onsite safety management training including operational safety,work health and safety, daily transportation safety, goods safety and security checks. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 70 of 248 Table of Contents63TechnologyWe and our partners operate trucks configured with GPS tracking as well as integrated safety features such as ESP body stabilitysystems, VDS dynamic steering systems, EBS electronically controlled braking systems, hydraulic brakes, ramp-assist starters and ABSanti-lock braking systems. We are able to provide updates and alerts to drivers, warehouse employees and others involved in ouroperations as needed. In addition, we utilize advanced equipment at our facilities to reduce risks to workers involved in sorting andmoving goods as well as loading and offloading items from vehicles. We also employ digital workforce management technology tomonitor employee work hours to ensure compliance with regulations and reduce fatigue-related risks. Using BEST Cloud, we are able tomonitor vehicles and goods as they move across our network and system and can leverage BEST Cloud’s insights to identify risk areas andaddress them proactively.EmployeesAs of December 31, 2021, 2022 and 2023, we had a total of 4,381, 3,628 and 3,572 employees, respectively. We believe we havea good working relationship with our employees and have not experienced any significant labor disputes in the past. The majority of ouremployees are based in China, and we also have employees in certain other countries. The following table sets forth details of ouremployees as of December 31, 2023 by function: Number of FunctionEmployees% of Total BEST Supply Chain Management 722 20.21%BEST Freight 1,070 29.96%BEST Global 772 21.61%Technology 449 12.57%Management, Administration and Others(1) 559 15.65%Total3,572 100.0%(1)Includes management and administration personnel at headquarters and local level and discontinued operations.In addition to our own employees, we engage outsourcing firms that provide large numbers of their employees to work at ourfacilities. As of December 31, 2023, over 15,831 outsourced personnel were active in our operations, including approximately 15,653 forour continuing operations. Our franchisee partners and service providers engage their own employees in connection with their operations.In order to maintain a high standard of performance, reliability and safety across our network, we conduct training for ouremployees as well as those of our franchisee partners and service providers. We provide these trainings through a variety of programs ledby our internal BEST University initiative, which includes specialized programs for individuals of each job type and level of seniority.Many of our technology professionals have received training and certifications from globally-recognized technology service organizations.As required by PRC regulations, we participate in various government statutory employee benefit plans, including socialinsurance funds, namely a pension contribution plan, a medical insurance plan, an unemployment insurance plan, a work-related injuryinsurance plan, a maternity insurance plan (which shall be consolidated into the medical insurance) and a housing provident fund. We arerequired under PRC law to make contributions to employee benefit plans at specified percentages of the salaries, bonuses and certainallowances of our employees up to a maximum amount specified by the local government from time to time.PropertiesAs part of our asset-light strategy, we currently lease all of the facilities that we occupy from independent third parties. Ourheadquarters are located at 2nd Floor, Block A, Huaxing Modern Industrial Park, No. 18 Tangmiao Road, Xihu District, Hangzhou,Zhejiang Province 310013, People’s Republic of China. As of December 31, 2023, our headquarters had an aggregate gross area ofapproximately 8,689.27 square meters.We believe that the facilities that we currently lease are adequate to meet the needs of our current operations, and that we will beable to obtain adequate facilities to accommodate our future expansion plans. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 71 of 248 Table of Contents64InsuranceWe have in place insurance coverage up to a level which we consider to be reasonable and typical for companies in our industryin China. Our insurance broadly falls under the following categories: life insurance, such as group accident insurance; property lossinsurance, such as cargo transportation insurance; all-risk property insurance; and liability insurance, such as non-motor vehicle liabilityinsurance, public liability insurance and logistics liability insurance. We also provide benefits to our employees pursuant to local socialinsurance laws, including pension insurance, unemployment insurance, work-related injury insurance, maternity insurance (which shall beconsolidated into the medical insurance) and medical insurance.CompetitionOur extensive supply chain solutions encompass a wide range of operational areas, and as a result we may compete with a broadrange of companies, including supply chain management service providers, freight delivery service providers, B2B platforms forconvenience stores, SaaS software service providers and logistics brokers.We compete with total supply chain solution providers, such as JD Logistics and SF Holdings. Certain service lines may also facecompetition from other service providers, such as P.G. Logistics and Annto Logistics for supply chain management services; DEPPONLogistics and ANE Logistics for freight services; and Kerry Express and J&T Express for our BEST Global business. In addition, ourother services may face competition from companies that provide similar or competing services.Legal ProceedingsWe may become subject to legal proceedings, investigations, claims and administrative fines incidental to the conduct of ourbusiness from time to time. We are not currently a party to, nor are we aware of, any legal proceeding, investigation or claim which, in theopinion of our management, is likely to have a material adverse effect on our business, financial condition or results of operations.Regulatory MattersThe following is a summary of the most significant rules and regulations that affect our business activities in China or ourshareholders’ rights to receive dividends and other distributions from us.Regulations Relating to Foreign InvestmentIndustry Catalogue and Negative List Relating to Foreign Investment. Investment activities in China by foreign investors areprincipally governed by the Special Administrative Measures for Entrance of Foreign Investment (Negative List) (2021 Version), or theNegative List 2021, and the Encouraged Foreign Investment Catalogue (2022 version), or the Encouraged Industry Catalogue 2022, bothof which were promulgated by the NDRC and the MOFCOM and took effect in January 2022 and January 2023 respectively.Pursuant to the Encouraged Industry Catalogue 2022 and the Negative List 2021, foreign-invested projects are categorized asencouraged, restricted and prohibited. Industries that are not listed in either of the Negative List 2021 and Encouraged Industry Catalogue2022 are permitted areas for foreign investments, and are generally open to foreign investment unless specifically restricted by other PRCregulations. Foreign investment activities in China are subject to the special administrative measures prescribed in the Negative List 2021.Pursuant to the Negative List 2021, foreign investments in tobacco retail business are prohibited, and foreign investments invalue-added telecommunications services (other than business of e-commerce, domestic multiparty communication, store-and-forwardbusiness and call center) are subject to special administrative measures including restriction on foreign shareholding. Therefore, in Chinawe provided value-added telecommunications services in connection with our BEST UCargo business, before the business was wounddown by the end of 2022, through Hangzhou BEST IT, the VIE, and its subsidiaries in China.Our PRC subsidiaries also operate in certain industries which are industries listed in the Encouraged Industry Catalogue 2022,such as road transportation and software development. Most of our PRC subsidiaries mainly engage in software development, technicalservices and consultations, which are industries listed in the Encouraged Industry Catalogue 2022. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 72 of 248 Table of Contents65Under current PRC law, the establishment of a foreign-invested enterprise is no longer subject to the approval of the MOFCOMor its local counterparts. The foreign investors or foreign-invested enterprise shall report investment information to competent authority ofcommerce through enterprise registration system and Enterprise Credit Information Disclosure System.Foreign Investment Law. On March 15, 2019, the National People’s Congress of China approved the Foreign Investment Law,which took effect on January 1, 2020 and replace three existing laws on foreign investments in China, namely, the Sino-Foreign EquityJoint Venture Enterprise Law, the Sino-Foreign Cooperative Joint Venture Enterprise Law and the Foreign Owned Enterprise Law,together with their implementation rules and ancillary regulations. The Foreign Investment Law embodies an expected PRC regulatorytrend to rationalize its foreign investment regulatory regime in line with prevailing international practice and legislative efforts to unifycorporate legal requirements for both foreign and domestic invested enterprises in China. The Foreign Investment Law establishes a basicframework for the access to, and the promotion, protection and administration of foreign investments with a view to investment protectionand fair competition.According to the Foreign Investment Law, “foreign investment” refers to investment activities directly or indirectly conducted byone or more natural persons, business entities, or other organizations of a foreign country (collectively referred to as “foreign investors”)within China, and such investment activities include the following situations: (i) a foreign investor, individually or collectively with otherinvestors, establishes a foreign-invested enterprise within China; (ii) a foreign investor acquires stock shares, equity shares, shares inassets, or other similar rights and interests of an enterprise within China; (iii) a foreign investor, individually or collectively with otherinvestors, invests in a new project within China; and (iv) investments in other means as provided by laws, administrative regulations, orthe State Council. As such, there is still leeway for future laws, administrative regulations or provisions of the State Council to classifycontractual arrangements as a form of foreign investment. Therefore, there can be no assurance that our control over the VIEs throughcontractual arrangements will not be deemed as foreign investment in the future. See “Item 3. Key Information—D. Risk Factors—RisksRelated to Our Corporate Structure—Our current corporate structure and business operations may be affected by the newly enactedForeign Investment Law.”In addition, according to the Foreign Investment Law, the State Council will publish, or approve to publish, a catalogue forspecial administrative measures, or the “negative list.” The Foreign Investment Law grants national treatment to foreign-invested entities,except for those foreign-invested entities that operate in industries deemed to be either “restricted” or “prohibited” in the “negative list.”On December 26, 2019, the State Council promulgated the Implementation Rules to the Foreign Investment Law, which tookeffect on January 1, 2020. The implementation rules further clarified that the state encourages and promotes foreign investment, protectsthe lawful rights and interests of foreign investors, regulates foreign investment administration, continues to optimize foreign investmentenvironment, and advances a higher-level opening.As required by the State Council, the MOFCOM, the NDRC and the Ministry of Justice are leading the abolishment or revisionsof other foreign investment related laws, which are inconsistent with the Foreign Investment Law. It may be anticipated that furtherrevisions to regulations relating to foreign investment would be promulgated.Foreign Investment Security Review. On December 19, 2020, the NDRC and the MOFCOM jointly promulgated the Measuresfor the Security Review of Foreign Investment, which became effective on January 18, 2021. The NDRC and the MOFCOM will establisha working mechanism office in charge of conducting a security review of foreign investment. Any foreign investment that has or may havean impact on state security shall be subject to such security review. A foreign investor or a party concerned in China shall take theinitiative to make a declaration to the working mechanism office prior to making the investment in certain key areas with bearing onnational security, such as important cultural products and services, important information technology and internet services and products,key technologies and other important areas with bearing on national security which results in the acquisition of de facto control of investeecompanies. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 73 of 248 Table of Contents66Foreign Investment in Road Transportation Businesses. According to the Administrative Provisions for Foreign Investment inthe Road Transportation Industry, promulgated in November 2014 by the Ministry of Transport and the MOFCOM, and its supplementsand implementing rules, investment in a road transportation business (including, among other things, road freight transportation, andflitting, loading, unloading and storage of road cargo) by a foreign investor is subject to the approval of the relevant provincialcounterparts of the Ministry of Transport, and the newly established foreign-invested enterprise must obtain a road transportation operationpermit from the relevant provincial counterparts of the Ministry of Transport after the completion of other foreign investment registrationprocedures. The incorporation of any direct or indirect subsidiary of a foreign-invested enterprise that intends to engage in roadtransportation business is subject to the same approval procedure. The Administrative Provisions for Foreign Investment in the RoadTransportation Industry were abolished by the Ministry of Transport and the MOFCOM on October 25, 2018 for the purpose of reducingregulation.Foreign Investment in Telecommunication Businesses. Foreign direct investment in telecommunications companies in China isgoverned by the Regulations for the Administration of Foreign-Invested Telecommunications Enterprises, which was promulgated by theState Council on December 11, 2001 and last amended on March 29, 2022. According to the Regulations for the Administration ofForeign-Invested Telecommunications Enterprises, a foreign investor’s beneficial equity ownership in an entity providing value-addedtelecommunications services in China is not permitted to exceed 50%, unless otherwise stipulated by the government. In addition, themain foreign investor who invests in a foreign-invested value-added telecommunications enterprise operating the value-addedtelecommunications business in China, and who is a major one among the foreign investors, will be no longer required to mustdemonstrate a good track record and experience in operating a value-added telecommunications business. However, foreign investors thatmeet the requirements shall still obtain approvals from the Ministry of Industry and Information Technology, or the MIIT, and theMOFCOM, or their authorized local counterparts, which retain considerable discretion in granting approvals, for its commencement ofvalue-added telecommunications business in China.The MIIT’s Notice Regarding Strengthening Administration of Foreign Investment in Operating Value-AddedTelecommunication Businesses, or the MIIT Notice, issued on July 13, 2006 prohibits holders of these services licenses from leasing,transferring or selling their licenses in any form, or providing any resources, sites or facilities, to any foreign investors intending toconduct such businesses in China.Based on the Notice regarding the Strengthening of Ongoing and Post Administration of Foreign Investment TelecommunicationEnterprises issued by the MIIT on October 15, 2020, the MIIT will no longer issue Examination Letter for Foreign Investment inTelecommunication Business. Foreign invested enterprises will need to submit relevant foreign investment materials to the MIIT for theestablishment or change of telecommunication operating permits.Regulations Relating to Road TransportationPursuant to the Regulations on Road Transportation promulgated by the State Council in April 2004 and last amended in July2023 and the Provisions on Administration of Road Freight Transportation and Stations (Sites) issued by the Ministry of Transport in June2005 and last amended in November 2023, or the Road Freight Provisions, the business operations of road freight transportation refer tocommercial road freight transportation activities that provide public services. The road freight transportation includes general road freighttransportation, special road freight transportation, road transportation of large articles, and road transportation of dangerous cargos. Specialroad freight transportation refers to freight transportation using special vehicles such as vehicles with containers, refrigeration equipment,or tank containers. The Road Freight Provisions set forth detailed requirements with respect to vehicles and drivers.Under the Road Freight Provisions, except those engaging in general cargo transportation with a general cargo vehicle weighing4,500 kilograms or less, anyone engaging in the business of operating road freight transportation must obtain a road transportationoperation permit from the local county-level transportation department, and each vehicle used for road freight transportation must have aroad transportation certificate from the same authority. Anyone engaging in the business of operating road freight stations (sites) shall filewith the local county-level transportation department no later than 15 days after starting the relevant business activities. The incorporationof a subsidiary of a road freight transportation operator that intends to engage in road transportation business is subject to the sameapproval procedure. If a road freight transportation operator intends to establish a branch, it should file with the local transportationdepartment where the branch is to be established. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 74 of 248 Table of Contents67Although the road transportation operation permits have no limitation with respect to geographical scope, several provincialgovernments in China, including Shanghai and Beijing, promulgated local rules on administration of road transportation, stipulating thatpermitted operators of road freight transportation registered in other provinces should also make filing with the local transportationdepartment where it carries out its business. The requirement to obtain operation permits with respect to operating road freight stations(sites) was abolished by the State Council on February 27, 2019.Interim Measures for the Operation and Administration of Road Freight Transport based on Internet Platforms was promulgatedby the Ministry of Transport and the State Taxation Administration on September 6, 2019 and came into effect on January 1, 2020. Anoperator of an internet platform for road freight transport is defined as entity which consolidates and allocates resources using an internetplatform as its basis, undertakes responsibility of transportation for the whole course as carrier, and appoints the actual carrier and entersinto a transport contract with it to undertake the road freight transport mission. Merely providing information intermediary or deal makingservices will not be deemed as internet freight transport. Such operator may apply for a road transportation certificate specifying thebusiness scope as “internet freight transport”. Such entities shall comply with the ICP measures and other relevant laws and regulationsregarding operational internet information service and be equipped with corresponding online service capabilities. The operator of suchinternet freight transport should set up corresponding mechanisms and undertake corresponding measures as required by the SafeProduction Law of the People’s Republic of China, the E-commerce Law of the People’s Republic of China, the Law on theAdministration of Tax Collection of the People’s Republic of China, the Network Security Law of the People’s Republic of China andcertain other laws, regulations and standards.BEST Logistics Technologies (China) Co., Ltd., one of our PRC subsidiaries, has obtained a road transportation operation permitto operate general road freight transportation while BEST Chi Cheng (Hangzhou) Logistics Service Co., Ltd., another one of our PRCsubsidiaries, has also obtained a general road transportation operation permit. See “Item 3. Key Information—D. Risk Factors—RisksRelating to Our Business and Industry—Failure of us or our franchisee partners to obtain, maintain or update necessary licenses andpermits may have a material adverse effect on our business, financial condition and results of operations.”Regulations on Cargo VehiclesPursuant to the Administrative Provisions concerning the Running of Cargo Vehicles with Out-of-Gauge Goods promulgated bythe Ministry of Transport, which took effect on September 21, 2016 and was amended on August 11, 2021, cargo vehicles running onpublic roads shall not carry cargo weighing more than the limits prescribed by this regulation and their dimensions shall not exceed thoseas set forth in the same regulation. Vehicle operators who violate this regulation may be subject to a fine of up to RMB30,000 for eachviolation. In the event of repeated violations, the regulatory authority may suspend the operating license of the vehicle operator and/orrevoke the business operation registration of the relevant vehicle.We rely on trucks and other vehicles owned and operated by third-party trucking companies, while the operation of our fleet issubject to this new regulation. We have an obligation to educate and manage vehicle operators as well as to urge them to comply with thisregulation. We weigh each cargo truck as they enter and leave our hubs and sortation centers to ensure their compliance with thisregulation in terms of cargo weight. If any truck is not in compliance with this regulation, we may be required to replace it with anothervehicle that complies with this regulation. Otherwise, we may be subject to penalties under this regulation if we continue to operate thosetrucks that exceed the limits set forth in the regulation.Regulations Relating to International Freight Forwarding BusinessRegulations on Management of International Freight Forwarders promulgated by the Ministry of Foreign Trade and EconomicCooperation (now known as the MOFCOM) in 1995 and its detailed rules regulate the business of international freight forwarding.According to the provisions and its detailed rules, the minimum amount of registered capital must be RMB5 million for an internationalfreight forwarder by sea, RMB3 million for an international freight forwarder by air and RMB2 million for an international freightforwarder by land or for an entity operating international express delivery services. Additionally, an international freight forwarder must,when applying for setting up its branches, increase its registered capital (or the excess amount over its minimum registered capital) byRMB500,000. Furthermore, under the Provisional Measures on Filing of International Freight Forwarders announced by the MOFCOM inMarch 2005 and last amended in August 2016, all international freight forwarders and their branches registered with the state industrialand commercial administration must be filed with the MOFCOM or its authorized agencies. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 75 of 248 Table of Contents68BEST Logistics Technologies (China) Co., Ltd., one of our PRC subsidiaries, is engaged in the international freight forwardingbusiness and has made a filing with the relevant agency for carrying out such business.Regulations Relating to Commercial FranchisingPursuant to the Administrative Regulations on Commercial Franchising Operation promulgated by the State Council in February2007 and Provisions on Administration of the Record Filing of Commercial Franchises issued by the MOFCOM in December 2011,collectively the Regulations and Provisions on Commercial Franchising, commercial franchising refers to the business activities where anenterprise that possesses the registered trademarks, enterprise logos, patents, proprietary technology or any other business resources allowssuch business resources to be used by another business operator through contract and the franchisee follows the uniform business model toconduct business operations and pays franchising fees according to the contract. We and our franchisee partners are therefore subject toregulations on commercial franchising. Under the Regulations and Provisions on Commercial Franchising, within 15 days of the firstconclusion of franchising contract, the franchisor must carry out record-filing with the MOFCOM or its local counterparts and must reportthe current status of its franchising contracts in the first quarter of each year after record-filing. The MOFCOM announces the names offranchisors who have completed filing on the government website and makes prompt updates. If the franchisor fails to comply with theseRegulations and Provisions on Commercial Franchising, the MOFCOM or its local counterparts have the discretion to take administrativemeasures against the franchisor, including fines and public announcements. The Regulations and Provisions on Commercial Franchisingalso set forth requirements on the contents of franchising contracts.We have completed the requisite filings with respect to our BEST Freight and Cloud OFC services. We cannot assure you that wecan update such filing in a timely manner or that our relationships with other existing and future ecosystem participants will not be foundto constitute such regulated commercial franchising in the future. As of the date of this annual report, we have not received any order fromany governmental authorities to make such filing. See “Item 3. Key Information—D. Risk Factors— Risks Relating to Our Business andIndustry—Failure to comply with PRC laws and regulations by us or our franchisee partners may materially and adversely impact ourbusiness, financial condition and results of operations.”Regulations Relating to Telecommunications and Internet Information ServicesRegulations Relating to Telecommunication BusinessesUnder the Telecommunications Regulations of the PRC, or the Telecommunications Regulations, promulgated by the StateCouncil on September 25, 2000 and last amended on February 6, 2016, a telecommunication services provider in China must obtain anoperating license from the MIIT or its provincial counterparts. The Telecommunications Regulations categorize all telecommunicationservices in China as either basic telecommunications services or value-added telecommunications services. Our online and mobilecommerce businesses are classified as value-added telecommunications services. The Administrative Measures for TelecommunicationsBusiness Operating Licensing, which was promulgated by the MIIT and last amended on July 3, 2017, further regulate thetelecommunications business licensing.In addition to restricting dealings with foreign investors, the MIIT Notice contains a number of detailed requirements applicableto holders of value-added telecommunications services licenses, including that license holders or their shareholders must directly own thedomain names and trademarks used in their daily operations and each license holder must possess the necessary facilities for its approvedbusiness operations and maintain such facilities in the regions covered by its license, including maintaining its network and providingInternet security in accordance with the relevant regulatory standards. The MIIT or its provincial counterpart has the power to requirecorrective actions after it discovers any non-compliance of the license holders, and where such license holders fail to take such steps, theMIIT or its provincial counterpart has the power to revoke the value-added telecommunications services licenses.Regulations Relating to Internet Information ServicesAs a subsector of the telecommunications industry, Internet information services are regulated by the Administrative Measures onInternet Information Services, or the ICP Measures, promulgated on September 25, 2000 by the State Council and amended on January 8,2011. “Internet information services” are defined as services that provide information to online users through the Internet. Internetinformation services providers, also called Internet content providers, or ICPs, that provide commercial services are required to obtain anoperating license from the MIIT or its provincial counterpart. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 76 of 248 Table of Contents69To the extent the Internet information services provided relate to certain matters, including news, publication, education ormedical and health care (including pharmaceutical products and medical equipment), approvals must also be obtained from the relevantindustry regulators in accordance with the laws, rules and regulations governing those industries.The PRC government has promulgated measures relating to Internet content through various ministries and agencies, includingthe MIIT, the News Office of the State Council, the Ministry of Culture and Tourism and the National Radio and TelevisionAdministration. In addition to various approval and license requirements, these measures specifically prohibit Internet activities that resultin the dissemination of any content which is found to contain pornography, promote gambling or violence, instigate crimes, underminepublic morality or the cultural traditions of the PRC or compromise state security or secrets. ICPs must monitor and control theinformation posted on their websites. If any prohibited content is found, they must remove such content immediately, keep a record of itand report to the relevant authorities. If an ICP violates these measures, the PRC government may impose fines and revoke any relevantbusiness operation licenses.In June 2020, the MIIT promulgated the Notice regarding Strengthening the Management of Call Center Business, which hasstrengthened management of the admittance, codes, accessing, operation activities and certain other aspects of call centers.We conduct our value-added telecommunications business through the VIE, Hangzhou Baijia, which has obtained the requisitelicenses. Certain subsidiaries of the VIE, Hangzhou BEST IT, have obtained such requisite licenses as well.Regulations Relating to Internet Information Security and Privacy ProtectionThe Criminal Law of the People’s Republic of China, promulgated by the National People’s Congress of China on July 6, 1979and last amended on December 26, 2020, imposes a number of Internet security requirements on Internet service providers. Theserequirements are mainly provided in the Ninth Amendment to the Criminal Law of the People’s Republic of China, or the NinthAmendment. According to the Ninth Amendment, an Internet service provider who does not perform its duties of security management oninformation network may be subject to criminal punishment, if such non-performance results in certain serious consequences.The Decision in Relation to Protection of the Internet Security, enacted by the Standing Committee of the National People’sCongress of China on December 28, 2000 and amended on August 27, 2009, provides that certain activities, including but not limited tothe following, conducted through the Internet are subject to criminal punishment: (i) gaining improper entry into a computer or system ofstrategic importance; (ii) bringing out abnormal operation of Internet by cultivating or transmitting computer virus or interrupting networkwithout authorization; (iii) disseminating politically disruptive information or obscenities; (iv) leaking State secrets; (v) spreading falsecommercial information; (vi) infringing intellectual property rights; (vii) providing information concerning pornography; or (viii) violatinglawful rights of any other national person, legal person or other institution.The Regulations of the People’s Republic of China on the Security Protection of Computer Information System, promulgated bythe State Council on February 18, 1994 and amended on January 8, 2011, require that no entity or individual may make use of computerinformation systems to engage in activities jeopardizing the interests of the state or collectives or the legitimate rights of the citizens, orendanger the security of computer information systems. A user of a computer information system shall establish and improve a securitymanagement system for its computer information system. A user of a computer information system is also required to take other securityprotection measures, such as reporting any incidents arising from the computer system to the public authority of the local government at orabove the county level within 24 hours.On December 28, 2012, the Standing Committee of the National People’s Congress of China promulgated the Decision onStrengthening Network Information Protection to enhance the legal protection of information security and privacy on the Internet. On July16, 2013, the MIIT promulgated the Provisions on Protection of Personal Information of Telecommunication and Internet Users to regulatethe collection and use of users’ personal information in the provision of telecommunication services and Internet information services inChina. Personal information includes a user’s name, birth date, identification card number, address, phone number, account name,password and other information that can be used for identifying a user.On July 1, 2015, the Standing Committee of the National People’s Congress of China promulgated the New National SecurityLaw which took effect on the same date and replaced the former National Security Law promulgated in 1993. According to the NewNational Security Law, the state shall ensure that the information system and data in important areas are secure and controllable. There areuncertainties on how the New National Security Law will be implemented in practice. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 77 of 248 Table of Contents70The Network Security Law of the People’s Republic of China, which was promulgated by the Standing Committee of theNational People’s Congress of China on November 7, 2016 and became effective on June 1, 2017, provides that network operators shallcomply with laws and regulations and fulfill their obligations to safeguard security of the network when conducting business andproviding services. Those who provide services through networks shall take technical measures and other necessary measures pursuant tolaws, regulations and compulsory national requirements to safeguard the safe and stable operation of the networks, respond to networksecurity incidents effectively, prevent illegal and criminal activities, and maintain the integrity, confidentiality and usability of networkdata.On April 11, 2017, the CAC announced the Measures for the Security Assessment of Personal Information and Important Data tobe Transmitted Abroad (consultation draft), or the Consultation Draft of Security Assessment Measures. The Consultation Draft ofSecurity Assessment Measures requires network operators to conduct security assessments and obtain consents from owners of personalinformation prior to transmitting personal information and other important data abroad. Moreover, under the Consultation Draft ofSecurity Assessment Measures, the network operators are required to apply to the relevant regulatory authorities for security assessmentsunder several circumstances, including but not limited to: (i) if data to be transmitted abroad contains personal information of more than500,000 users in aggregate; (ii) if the quantity of the data to be transmitted abroad is more than 1,000 gigabytes; (iii) if data to betransmitted abroad contains information regarding nuclear facilities, chemical biology, national defense or military projects, populationand health, or relates to large-scale engineering activities, marine environment issues or sensitive geographic information; (iv) if data to betransmitted abroad contains network security information regarding system vulnerabilities or security protection of critical informationinfrastructure; (v) if key information infrastructure network operators transmit personal information and important data abroad; or (vi) ifany other data to be transmitted abroad contains information that might affect national security or public interest and are required to beassessed as determined by the relevant regulatory authorities. On June 13, 2019, the CAC further announced the Measures for the SecurityAssessment of Personal Information to be Transmitted Abroad (consultation draft). Both drafts are still under consultation.On June 10, 2021, the Standing Committee of the National People’s Congress promulgated the Data Security Law, which tookeffect on September 1, 2021. The Data Security Law introduces a data classification and hierarchical protection system based on the levelof importance of the data in economic and social development, as well as the degree of harm it will cause to national security, publicinterests, or legitimate rights and interests of individuals or organizations when such data is tampered with, destroyed, leaked, or illegallyacquired or used. The appropriate level of protection measures is required to be taken for each respective category of data. For example, aprocessor of important data shall designate the personnel and the management body responsible for data security, carry out riskassessments for its data processing activities and file the risk assessment reports with the competent authorities. In addition, the DataSecurity Law provides a national security review procedure for those data activities which affect or may affect national security andimposes export restrictions on certain data and information. No entity or individual within the territory of the PRC may provide foreignjudicial or law enforcement authorities with the data stored within the territory of the PRC without the approval of the competent PRCauthorities.On April 13, 2020, the CAC and several other administrations jointly promulgated the Cybersecurity Review Measures, whichbecame effective on June 1, 2020. The Cybersecurity Review Measures establish the basic framework for national security reviews ofnetwork products and services, and provide the principal provisions for undertaking cybersecurity reviews. On December 28, 2021, theCAC, the NDRC, the SAMR, the MIIT and certain other PRC governmental authorities, jointly released the revised Cybersecurity ReviewMeasures, which took effect on February 15, 2022. The revised Cybersecurity Review Measures provide, among others, that operators ofcritical information infrastructure that intend to purchase network products and services that affect or may affect national security shall filefor cybersecurity review with the Cybersecurity Review Office under the CAC. The cybersecurity review will evaluate, among others, (i)the risk of critical information infrastructure being illegally controlled, interfered, or destructed, (ii) the risk of core data, important data, ora large amount of personal information being stolen, disclosed, damaged, or illegally used or exported, and (iii) the risk of criticalinformation infrastructure, core data, important data, or a large amount of personal information being influenced, controlled, ormaliciously used by foreign governments after public listing, and cyber information security risk. However, the scope of network productsor data processing activities that affect or may affect national security is still unclear, and there remains significant uncertainty in theinterpretation and enforcement of relevant PRC cybersecurity laws and regulations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 78 of 248 Table of Contents71On July 30, 2021, the State Council promulgated the Regulations on the Protection of the Security of Critical InformationInfrastructure, which took effect on September 1, 2021. The Critical Information Infrastructure Regulations supplement and specify theprovisions on the security of critical information infrastructure as stated in the revised Cybersecurity Review Measures. The regulationsprovide that, among others, critical information infrastructure, or the CII, means important network facilities and information systems inimportant industries such as public communications and information services, energy, transportation, water conservancy, finance, publicservices, e-government, defense technology industry and others that may seriously harm national security, national economy, people’slivelihood and public interests once damaged, disabled or its data leaked. Operators shall, based on leveled system for cybersecurityprotection, adopt technical protection measures and other necessary measures to deal with cybersecurity security events, defend againstcyber - attack and criminal activities, to ensure the safe and stable operation of CII, maintain data integrity, confidentiality, and availabilitypursuant to relevant laws, regulations and the mandatory requirements of national standards. Moreover, the competent supervisorydepartments of relevant important industries abovementioned shall organize the recognition of the CII and promptly notify the operatorsand Public Security Department of the State Council of the results of the identification.On August 20, 2021, the Standing Committee of the National People’s Congress of China promulgated the Personal InformationProtection Law, which integrates the scattered rules with respect to personal information rights and privacy protection and took effect onNovember 1, 2021. The Personal Information Protection Law sets forth detailed rules on processing personal information, clarifies therelevant rights of the individuals and the obligations of the personal information processors, and further strengthens the liabilities forillegal process of personal information. In addition to other rules and principles of personal information processing, the PersonalInformation Protection Law specifically provides rules for processing sensitive personal information. Sensitive personal information refersto personal information that, once leaked or illegally used, could easily lead to the infringement of human dignity or harm to the personalor property safety of an individual, including biometric recognition, religious belief, specific identity, medical and health, financialaccount, personal whereabouts and other information of an individual. Only where there is a specific purpose and sufficient necessity, andunder circumstances where strict protection measures are taken, may personal information processors process sensitive personalinformation. A personal information processor shall inform the individual of the necessity of processing such sensitive personalinformation and the impact thereof on the individual’s rights and interest. Nonetheless, the Personal Information Protection Law raises theprotection requirements for processing personal information, and many specific requirements of the Personal Information Protection Lawremain to be clarified by the CAC, other regulatory authorities, and courts in practice.On July 7, 2022, the CAC released the Data Outbound Transfer Security Assessment Measures (the “Security AssessmentMeasures”) which came into effect on September 1, 2022. The Security Assessment Measures provide that, among others, data processorsshall apply to competent authorities for security assessment prior to transferring any data abroad if the transfer involves (i) important data;(ii) personal information transferred overseas by an operator of CII and a data processor that has processed personal information of morethan one million individuals; (iii) personal information transferred overseas by a data processor who has already provided personalinformation of 100,000 persons or sensitive personal information of 10,000 persons overseas since January 1 of the previous year; or (iv)other circumstances as requested by the CAC. Furthermore, on August 31, 2022, the CAC promulgated the Guidelines for filing theOutbound Data Transfer Security Assessment (Version 1), which provides that acts of outbound data transfer include (i) overseastransmission and storage by data processors of data generated during domestic operations; (ii)inquiry, access to, download or export of thedata by overseas institutions, organizations or individuals with such data being collected and generated by data processors and stored inmainland China; and (iii) other acts as specified by the CAC. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 79 of 248 Table of Contents72On November 14, 2021, the CAC published for public comment the Regulations on Network Data Security Management (Draftfor Comments) (the “Draft Network Data Security Regulations”), which applies to activities relating to the use of networks to carry outdata processing activities within the territory of the PRC. In accordance with the Draft Network Data Security Regulations, data processorsshall apply for a cybersecurity review for the following activities: (i) merger, reorganization or division of Internet platform operators thathave acquired a large number of data resources related to national security, economic development or public interests to the extent thataffects or may affect national security; (ii) overseas listing of data processors which process over one million users’ personal information;(iii) the listing of data processors in Hong Kong which affects or may affect national security; or (iv) other data processing activities thataffect or may affect national security. The Draft Network Data Security Regulations also provide that operators of large internet platformsthat set up headquarters, operation centers or R&D centers overseas shall report to the national cyberspace administration and competentauthorities. In addition, the Draft Regulations also require that data processors processing important data or going public overseas shallconduct an annual data security self-assessment or entrust a data security service institution to do so, and submit the data securityassessment report of the previous year to the local branch of CAC before January 31 each year. As of the date of this annual report, theDraft Network Data Security Regulations have not been formally adopted and their final content, interpretation, implementation andeffective date may be subject to change with substantial uncertainty.On December 8, 2022, the MIIT published the Administrative Measures for Data Security in the Field of Industry andInformation Technology (Trial) (the “Industry and Information Technology Measures”), which took effect on January 1, 2023. TheIndustry and Information Technology Measures are aimed to regulate the data processing activities in the field of industry and informationtechnology conducted by relevant data processors in mainland China. The Industry and Information Technology Measures apply to, amongothers, industrial enterprises, software and information technology service companies, and companies holding licenses for operation oftelecommunications services that collect, store, use, process, transfer, provide, and disclose data in the field of industry and informationtechnology. Such data includes industrial data, telecommunication data, and radio data generated and collected during the operation ofrelevant services. Pursuant to the Industry and Information Technology Measures, relevant data processors shall further implement dataclassification and hierarchical management, take necessary measures to ensure that data remains effectively protected and being lawfullyapplied and conduct data security risk monitoring.On July 10, 2023, the CAC, together with other relevant authorities, released the Interim Measures on Generative AI Services, orthe Interim Generative AI Measures, which took effect on August 15, 2023 and mainly impose compliance requirements on providers ofgenerative AI services. According to the Interim Generative AI Measures, individuals or organizations that provide AI services whichgenerate text, image, audios, videos and other content shall be responsible as the producers of such network information content and as thepersonal information processors for protecting any personal information involved. Providers of generative AI services shall enter intoservice agreements with users registering for their generative AI services and shall adopt effective measures to prevent minor users frombecoming overly reliant upon or addicted to generative AI services. In the event illegal content or users engaging in illegal activities usinggenerative AI services are discovered, the generative AI services providers are required to take appropriate measures, including stoppingthe generation of such illegal content and suspending or terminating the provision of services, undergo rectifications, keep relevant recordsand report to the competent authority. Providers of generative AI services may be subject to penalties for non - compliance, includingwarning, public denouncement, rectification orders and suspension of the provision of relevant services.In March 22, 2024, the CAC issued the Provisions on Promoting and Regulating Cross - border Data Flows, which requiredsecurity assessment the following types of cross - border data transfers, (i) for critical information infrastructure operators, the outboundtransfer of personal information or important data, and (ii) for data processors that are not critical information infrastructure operators, theoutbound transfer of important data, or the outbound transfer of the personal information cumulative of over one million people or thesensitive personal information cumulative of over 10,000 people within one calendar year. These provisions also stipulate that, when dataprocessors that are not critical information infrastructure operators engage in the outbound transfer of the personal information cumulativeof over 10,000 people but less than one million people or the sensitive personal information cumulative of less than 10,000 people withinone calendar year, the data processors must enter into a standard contract for cross - border transfer of personal information with the datarecipient or obtain a certification for the protection of personal information. Furthermore, these provisions clarify that data processors donot need to treat any data as “important data”, the outbound transfer of which requires security assessments, if government authorities havenot declared or notified them that the data is “important data”. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 80 of 248 Table of Contents73Regulations Relating to Finance LeasingCBIRC issued the Interim Measures for Supervision and Administration of the Finance Leasing Companies, or the InterimFinance Leasing Measures, on May 26, 2020. Finance leasing companies may conduct businesses as prescribed in the Interim FinanceLeasing Measure and shall not conduct businesses or activities prohibited therein. The Interim Finance Leasing Measures further providecertain regulatory indicators for finance leasing companies, including that the proportion of finance leasing and other leasing assets offinance leasing companies shall be no less than 60% of their total assets. Finance leasing companies established before the introduction ofthe Interim Finance Leasing Measures shall comply with prescribed requirements within a transition period as provided by the provincialfinancing regulators which shall be no longer than three years unless prolonged.Xinyuan Financial Leasing (Zhejiang) Co., Ltd., one of our PRC subsidiaries, has obtained an approval to conduct financing leasebusiness from the competent regulatory authority in the PRC.Regulations Relating to Retail IndustryRegulations Relating to Consumer ProtectionUnder the Law on the Protection of the Rights and Interests of Consumers, which was promulgated by the Standing Committee ofthe National People’s Congress on October 31, 1993, became effective on January 1, 1994 and was last amended on October 25, 2013, abusiness operator providing a commodity or service to a consumer is subject to a number of requirements, including the following:●to ensure that commodities and services meet with certain safety requirements;●to disclose serious defects of a commodity or a service and adopt preventive measures against damage occurrence;●to provide consumers with true information and to refrain from conducting false advertising;●not to set unreasonable or unfair terms for consumers or alleviate or release itself from civil liability for harming the legalrights and interests of consumers by means of standard contracts, circulars, announcements, shop notices or other means; and●not to insult or slander consumers or to search the person of, or articles carried by, a consumer or to infringe upon thepersonal freedom of a consumer.Business operators may be subject to civil liabilities for failing to fulfill the obligations discussed above. These liabilities includerestoring the consumer’s reputation, eliminating the adverse effects suffered by the consumer, and offering an apology and compensationfor any losses incurred. The following penalties may also be imposed upon business operators for the infraction of these obligations:issuance of a warning, confiscation of any illegal income, imposition of a fine, an order to cease business operations, revocation of itsbusiness license or imposition of criminal liabilities under circumstances that are specified in laws and statutory regulations.Regulations Relating to Product QualityPursuant to the Product Quality Law of the PRC, or the Product Quality Law, which was promulgated by the Standing Committeeof the National People’s Congress on February 22, 1993, became effective on September 1, 1993, and was last amended on December 29,2018, business operators, including manufacturers and sellers, are required to assume certain obligations in respect of product quality.Violations of the Product Quality Law may result in the imposition of fines. In addition, a company in violation of the Product QualityLaw may be ordered to suspend its operations and its business license may be revoked. Criminal liability may be incurred in serious cases.A consumer or other victim who suffers injury or property losses due to product defects may demand compensation from the manufactureras well as from the seller. Where the responsibility lies with the manufacturer, the seller shall, after settling compensation with theconsumer, have the right to recover such compensation from the manufacturer, and vice versa. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 81 of 248 Table of Contents74Regulations Relating to PricingIn China, the prices of a very small number of products and services are guided or fixed by the government. According to thePricing Law, which was promulgated by Standing Committee of the National People’s Congress on December 29, 1997 and becameeffective on May 1, 1998, business operators must, as required by the government departments in charge of pricing, mark the pricesexplicitly and indicate the service items, charging standards and other related particulars clearly. Business operators may not charge anyfees that are not explicitly indicated. Business operators must not commit unlawful pricing activities, such as colluding with others tomanipulate the market price, using false or misleading prices to deceive consumers to transact, or conducting price discrimination againstother business operators. Failure to comply with the Pricing Law may subject business operators to administrative sanctions such aswarning, ceasing unlawful activities, compensation, confiscating illegal gains and fines. The business operators may be ordered to suspendbusiness for rectification, or have their business licenses revoked if the circumstances are severe. We are subject to the Pricing Law as aservice provider and believe that our pricing activities are currently in compliance with the law in all material aspects.Regulations Relating to LeasingWe currently lease all of the facilities that we occupy from independent third parties. Pursuant to the Law on Administration ofUrban Real Estate which took effect in January 1995 with the latest amendment in August 2019, lessors and lessees are required to enterinto a written lease contract, containing such provisions as the term of the lease, the use of the premises, liability for rent and repair, andother rights and obligations of both parties. Both lessor and lessee are also required to register the lease with the real estate administrationdepartment. Pursuant to implementing rules stipulated by certain provinces or cities, such as Tianjin, if the lessor and lessee fail to gothrough the registration procedures, both lessor and lessee may be subject to warnings, rectifications and/or other penalties.According to the PRC Civil Code which took effect in January 2021, the lessee may sublease the leased premises to a third party,subject to the consent of the lessor. Where the lessee subleases the premises, the lease contract between the lessee and the lessor remainsvalid. The lessor is entitled to terminate the lease contract if the lessee subleases the premises without the consent of the lessor. In addition,if the lessor transfers the premises, the lease contract between the lessee and the lessor will still remain valid.The PRC Civil Code further provides that if a mortgagor leases and occupies the mortgaged property before the mortgagecontract is executed, the previously established leasehold interest will not be affected by the subsequent mortgage. The Supreme People’sCourt has revised a judicial interpretation regarding disputes over lease contracts on urban buildings, which took effect in January 2021,providing that if the ownership of the leased premises changes during the term of lessee’s occupation in accordance with the lease contract,and the lessee requests the assignee of such premises to continue to perform the original lease contract, the PRC court shall support suchrequest unless the mortgage right has been established before the leasing and the ownership changes due to the mortgagee’s realization ofthe mortgage right.Regulations Relating to Intellectual Property RightsThe PRC government has adopted comprehensive legislation governing intellectual property rights, including copyrights, patents,trademarks and domain names.Copyright. Copyright in China, including copyrighted software, is principally protected under the Copyright Law and itsimplementation rules. Under the Copyright Law, the term of protection for copyrighted software is 50 years.Patent. The Patent Law provides for patentable inventions, utility models and designs, which must meet three conditions: novelty,inventiveness and practical applicability. The National Intellectual Property Administration is responsible for examining and approvingpatent applications. The duration of a patent right is either 10 years or 20 years from the date of application, depending on the type ofpatent right.Trademark. The Trademark Law and its implementation rules protect registered trademarks. The PRC Trademark Office ofNational Intellectual Property Administration is responsible for the registration and administration of trademarks throughout China. TheTrademark Law has adopted a “first-to-file” principle with respect to trademark registration. Where registration is sought for a trademarkthat is identical or similar to another trademark which has already registered or given preliminary examination and approval for use in thesame or similar category of commodities or services, the application for registration of such trademark may be rejected. Trademarkregistration is effective for a renewable ten-year period, unless otherwise revoked. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 82 of 248 Table of Contents75Domain Name. Domain names are protected under the Administrative Measures on the Internet Domain Names promulgated bythe MIIT. The MIIT is the major regulatory body responsible for the administration of the PRC Internet domain names, under supervisionof which the China Internet Network Information Center is responsible for the daily administration of “.cn” domain names and Chinesedomain names. Domain name registration is handled through domain name service agencies established under the relevant regulations,and applicants become domain name holders upon successful registration.Regulations Relating to EmploymentPursuant to the Labor Law, which was promulgated by National People’s Congress in January 1995 and amended in December2018, and the Labor Contract Law, promulgated by Standing Committee of the National People’s Congress in June 2007 and amended inDecember 2012, employers must execute written labor contracts with full-time employees. If an employer fails to enter into a writtenemployment contract with an employee within one year from the date on which the employment relationship is established, the employermust rectify the situation by entering into a written employment contract with the employee and pay the employee twice the employee’ssalary for the period from the day following the lapse of one month after the date of establishment of the employment relationship to theday prior to the execution of the written employment contract. All employers must comply with local minimum wage standards. Violationof the Labor Law and the Labor Contract Law may result in the imposition of fines and other administrative and criminal liability in thecase of serious violation.In December 2012, the Labor Contract Law was amended to impose more stringent requirements on the use of employees oftemp agencies, who are known in China as “dispatched workers.” Dispatched workers are entitled to equal pay with full-time employeesfor equal work. Employers are only allowed to use dispatched workers for temporary, auxiliary or substitutive positions, and the number ofdispatched workers may not exceed 10% of the total number of employees.Enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans, including socialinsurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a work-related injury insurance planand a maternity insurance plan (which, as provided in Opinions of the General Office of the State Council on Comprehensively AdvancingCombined Implementation of Maternity Insurance and Basic Medical Insurance for Employees which was promulgated on March 6, 2019,shall be consolidated into the medical insurance), and a housing provident fund, and contribute to the plans or funds in amounts equal tocertain percentages of salaries, including bonuses and allowances, of the employees as specified by the local government from time to timeat locations where they operate their businesses or where they are located. According to the PRC Social Insurance Law, which waspromulgated by the Standing Committee of the National People’s Congress on October 28, 2010 and became effective on July 1, 2011 andlast amended on December 29, 2018, an employer that fails to make social insurance contributions may be ordered to rectify the non-compliance and pay the required contributions within a stipulated deadline and be subject to a late fee of up to 0.05% or 0.2% per day, asthe case may be. If the employer still fails to rectify the failure to make social insurance contributions within the stipulated deadline, itmay be subject to a fine ranging from one to three times the amount overdue. According to the Regulations on Management of HousingFund, which was promulgated by the State Council on April 3, 1999 and last amended on March 24, 2019, an enterprise that fails to makehousing fund contributions may be ordered to rectify the noncompliance and pay the required contributions within a stipulated deadline;otherwise, an application may be made to a local court for compulsory enforcement. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the People’s Republic of China—The enforcement of the Labor Contract Law of the People’s Republicof China, or the PRC Labor Contract Law, and other labor-related regulations in the PRC may increase our labor costs, impose limitationson our labor practices and adversely affect our business and our results of operations, and our failure to comply with PRC labor-relatedlaws may expose us to penalties.”Regulations Relating to Foreign ExchangeThe principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations,last amended in August 2008. Payments of current account items, such as profit distributions and trade and service-related foreignexchange transactions, can usually be made in foreign currencies without prior approval from the SAFE, by complying with certainprocedural requirements. By contrast, approval from or registration with appropriate governmental authorities is required where Renminbiis to be converted into foreign currency and remitted out of China to pay capital expenses such as the repayment of foreign currency-denominated loans. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 83 of 248 Table of Contents76On March 30, 2015, SAFE issued the Circular of the State Administration of Foreign Exchange on Reforming the ManagementApproach regarding the Settlement of Foreign Exchange Capital of Foreign-invested Enterprises, or SAFE Circular 19. Pursuant to SAFECircular 19, the foreign exchange capital of foreign-invested enterprises is subject to the discretional foreign exchange settlement, whichmeans the foreign exchange capital in the capital account of foreign-invested enterprises upon the confirmation of rights and interests ofmonetary contribution by the local foreign exchange bureau (or the book-entry registration of monetary contribution by the banks) may besettled at the banks based on the actual operation needs of the enterprises. The proportion of discretionary settlement of foreign exchangecapital of foreign-invested enterprises is currently 100%. SAFE can adjust such proportion in due time based on the circumstances ofinternational balance of payments. SAFE promulgated the Notice of the State Administration of Foreign Exchange on Reforming andStandardizing the Foreign Exchange Settlement Management Policy of Capital Account, or SAFE Circular 16, effective on June 9, 2016,which reiterates some of the rules set forth in SAFE Circular 19, but changes the prohibition against using RMB capital converted fromforeign currency-denominated registered capital of a foreign-invested company to issue RMB entrusted loans to a prohibition againstusing such capital to issue loans to non-associated enterprises. Violations of SAFE Circular 19 or SAFE Circular 16 could result inadministrative penalties.On January 26, 2017, SAFE issued the Notice of State Administration of Foreign Exchange on Improving the Review ofAuthenticity and Compliance to Further Promote Foreign Exchange Control, or SAFE Circular 3, which stipulates several capital controlmeasures with respect to the outbound remittance of profit from domestic entities to offshore entities, including (i) under the principle ofgenuine transaction, banks shall check board resolutions regarding profit distribution, the original version of tax filing records and auditedfinancial statements; and (ii) domestic entities shall hold income to account for previous years’ losses before remitting the profits.Moreover, pursuant to SAFE Circular 3, domestic entities shall make detailed explanations of the sources of capital and utilizationarrangements, and provide board resolutions, contracts and other proof when completing the registration procedures in connection with anoutbound investment.The Notice for Further Advancing the Facilitation of Cross-border Trade and Investment, or the SAFE Circular 28, waspromulgated by the SAFE on October 23, 2019 and last amended on December 4, 2023. SAFE Circular 28, among other things, allowsFIEs to use Renminbi converted from foreign currency-denominated capital for equity investments in China so long as the equityinvestment complies with the then-effective Special Administrative Measures for Access of Foreign Investment (Negative List) and isgenuine and legitimate.According to the Notice on Optimizing Foreign Exchange Administration to Support the Development of Foreign-relatedBusiness, which was promulgated by the SAFE on April 10, 2020, the reform on facilitating the payments of incomes under the capitalaccounts shall be promoted nationwide. On the condition that the use of funds is authentic and complies with the regulatory provisions onuse of income from capital account, enterprises which satisfy given criteria are allowed to use income under the capital account, such ascapital funds, foreign debt and overseas listing, for domestic payment, without the need to provide proof materials for authenticity to thebank prior to each transaction.Regulations Relating to Dividend DistributionThe principal laws, rules and regulations governing dividend distribution by foreign-invested enterprises in the PRC are theCompany Law of the PRC, as amended, the Foreign Investment Law and its implementation regulations. Under these laws, rules andregulations, foreign-invested enterprises may pay dividends only out of their accumulated profit, if any, as determined in accordance withPRC accounting standards and regulations. Both PRC domestic companies and wholly-foreign owned PRC enterprises are required to setaside as general reserves at least 10% of their after-tax profit each year, until the cumulative amount of such reserves reaches 50% of theirregistered capital. A PRC company is not permitted to distribute any profits until any losses from prior fiscal years have been offset.Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 84 of 248 Table of Contents77Regulations Relating to Offshore FinancingSAFE promulgated the Circular on Relevant Issues Concerning Foreign Exchange Control on Domestic Residents’ OffshoreInvestment and Financing and Roundtrip Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, whichreplaced the former circular commonly known as “SAFE Circular 75” promulgated by SAFE on October 21, 2005. SAFE Circular 37requires PRC residents to register with local branches of SAFE in connection with their direct establishment or indirect control of anoffshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests indomestic enterprises or offshore assets or interests, referred to in SAFE Circular 37 as a “special purpose vehicle.” SAFE Circular 37further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such asincrease or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material events. In theevent that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRCsubsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying outsubsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in its ability to contribute additionalcapital into its PRC subsidiary. Moreover, failure to comply with the various SAFE registration requirements described above could resultin liability under PRC law for evasion of foreign exchange controls. According to the Notice on Further Simplifying and ImprovingPolicies for the Foreign Exchange Administration of Direct Investment released on February 13, 2015 by SAFE, local banks will examineand handle foreign exchange registration for overseas direct investment, including the initial foreign exchange registration and amendmentregistration, under SAFE Circular 37 from June 1, 2015.We have notified substantial beneficial owners of ordinary shares who we know are PRC residents of their obligations ofapplications, filings and amendments as required under SAFE Circular 37 and other related rules. Nevertheless, we may not be aware ofthe identities of all of our beneficial owners who are PRC residents. We do not have control over our beneficial owners and there can be noassurance that all of our PRC-resident beneficial owners will comply with SAFE Circular 37, its implementation rules and other applicableforeign exchange rules, and there is no assurance that the registration under SAFE Circular 37 and any amendment will be completed in atimely manner, or will be completed at all. The failure of our beneficial owners who are PRC residents to register or amend their foreignexchange registrations in a timely manner pursuant to SAFE Circular 37, its implementation rules and other applicable foreign exchangerules, or the failure of future beneficial owners of our company who are PRC residents to comply with these registration requirements maysubject such beneficial owners or our PRC subsidiaries to fines and legal sanctions. Failure to register or comply with relevantrequirements may also limit our ability to contribute additional capital to our PRC subsidiaries and limit our PRC subsidiaries’ ability todistribute dividends to our company, or we may be penalized by SAFE.Regulations Relating to Employee Stock Incentive Plan of Overseas Publicly-Listed CompanyPursuant to SAFE Circular 37, PRC residents who participate in share incentive plans in overseas non-publicly-listed companiesmay submit applications to SAFE or its local branches for the foreign exchange registration with respect to offshore special purposecompanies. In addition, under the Notices on Issues concerning the Foreign Exchange Administration for Domestic IndividualsParticipating in Share Incentive Plans of Overseas Publicly-Listed Companies, or the Share Option Rules, issued by SAFE on February 15,2012, PRC residents who are granted shares or share options by companies listed on overseas stock exchanges under share incentive plansare required to (i) register with SAFE or its local branches, (ii) retain a qualified PRC agent, which may be a PRC subsidiary of theoverseas listed company or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration and otherprocedures with respect to the share incentive plans on behalf of the participants, and (iii) retain an overseas institution to handle mattersin connection with their exercise of share options, purchase and sale of shares or interests and funds transfers. We are making efforts tocomply with these requirements.The State Administration of Taxation, or SAT, has issued certain circulars concerning employee share options or restricted shares.Under these circulars, our employees working in China who exercise share options or are granted restricted shares will be subject to PRCindividual income tax. Our PRC subsidiaries have obligations to file documents related to employee share options or restricted shares withrelevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees failto pay or we fail to withhold their income taxes according to relevant laws and regulations, we may face sanctions imposed by the taxauthorities or other PRC governmental authorities. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 85 of 248 Table of Contents78Regulations Relating to TaxUnder the PRC Enterprise Income Tax Law, or the EIT Law, which became effective on January 1, 2008 and was last amended onDecember 29, 2018, an enterprise established outside the PRC with its “de facto management body” within the PRC is considered a“resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on itsworldwide income. The Implementing Rules of the Enterprise Income Tax Law further define the term “de facto management body” as themanagement body that exercises substantial and overall management and control over the business, personnel, accounts and properties ofan enterprise. In 2009, the SAT issued the Notice Regarding the Determination of Chinese-Controlled Offshore-Incorporated Enterprisesas PRC Tax Resident Enterprises on the Basis of De Facto Management Bodies, or SAT Circular 82, which provides certain specificcriteria for determining whether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located inChina. Further to SAT Circular 82, in 2011, the SAT issued the Administrative Measures for Enterprise Income Tax of Chinese-ControlledOffshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, to provide more guidance on the implementation of SAT Circular82.According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group willbe considered a PRC resident enterprise by virtue of having its “de facto management body” in China and will be subject to PRCenterprise income tax on its worldwide income only if all of the following conditions are met: (i) the senior management and coremanagement departments in charge of its daily operations function have their presence mainly in the PRC; (ii) its financial and humanresources decisions are subject to determination or approval by persons or bodies in the PRC; (iii) its major assets, accounting books,company seals, and minutes and files of its board of directors and shareholders’ meetings are located or kept in the PRC; and (iv) morethan half of the enterprise’s directors or senior management with voting rights habitually reside in the PRC.Although SAT Circular 82 and SAT Bulletin 45 only apply to offshore-incorporated enterprises controlled by PRC enterprises orPRC enterprise groups and not those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflectthe SAT’s general position on how the term “de facto management body” could be applied in determining the tax resident status ofoffshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.We do not believe that we meet all of the conditions under SAT Circular 82. We believe that BEST Inc. and our offshoresubsidiaries should not be treated as a “resident enterprise” for PRC tax purposes if the criteria for “de facto management body” as setforth in SAT Circular 82 were deemed applicable to us. However, as the tax residency status of an enterprise is subject to determination bythe PRC tax authorities and uncertainties remain with respect to the interpretation of the term “de facto management body” as applicable toour offshore entities, we may be treated as a resident enterprise for PRC tax purposes under the EIT Law, and we may therefore be subjectto PRC income tax on our global income. We are actively monitoring the possibility of “resident enterprise” treatment for the applicabletax years and are evaluating appropriate organizational changes to avoid this treatment, to the extent possible.In the event that BEST Inc. or any of our offshore subsidiaries is considered to be a PRC resident enterprise: BEST Inc. or ouroffshore subsidiaries, as the case may be, may be subject to the PRC enterprise income tax at the rate of 25% on our worldwide taxableincome; dividend income that BEST Inc. or our offshore subsidiaries, as the case may be, received from our PRC subsidiaries may beexempt from the PRC withholding tax; and dividends paid to our overseas shareholders or ADS holders who are non-PRC residententerprises as well as gains realized by such shareholders or ADS holders from the transfer of our shares or ADSs may be regarded asPRC-sourced income and as a result be subject to PRC withholding tax at a rate of up to 10%, subject to any reduction or exemption setforth in relevant tax treaties, and similarly, dividends paid to our overseas shareholders or ADS holders who are non-PRC residentindividuals, as well as gains realized by such shareholders or ADS holders from the transfer of our shares or ADSs, may be regarded asPRC-sourced income and as a result be subject to PRC withholding tax at a rate of 20%, subject to any reduction or exemption set forth inrelevant tax treaties. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the People’s Republic of China—We may be treated as a resident enterprise for PRC tax purposes under the PRC Enterprise Income Tax Law, and we may therefore besubject to PRC income tax on our global income” and “Item 3. Key Information—D. Risk Factors— Risks Related to Doing Business inthe People’s Republic of China—Dividends payable to our foreign investors and gains on the sale of our ADSs or Class A ordinary sharesby our foreign investors may become subject to PRC tax.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 86 of 248 Table of Contents79On February 3, 2015, the SAT issued the Bulletin on Issues of Enterprise Income Tax on Indirect Transfers of Assets by Non-PRC Resident Enterprises, or Bulletin 7, which was last amended on December 29, 2017. Pursuant to this Bulletin, an “indirect transfer”of assets, including equity interests in a PRC resident enterprise, by non-PRC resident enterprises may be recharacterized and treated as adirect transfer of PRC taxable assets, if such arrangement does not have a reasonable commercial purpose and was established for thepurpose of avoiding payment of PRC enterprise income tax. As a result, gains derived from such indirect transfer may be subject to PRCenterprise income tax. According to Bulletin 7, “PRC taxable assets” include assets attributed to an establishment or place of business inChina, immovable properties located in China, and equity investments in PRC resident enterprises, in respect of which gains from theirtransfer by a direct holder, being a non-PRC resident enterprise, would be subject to PRC enterprise income taxes. When determiningwhether there is a “reasonable commercial purpose” of the transaction arrangement, features to be taken into consideration include:whether the main value of the equity interest of the relevant offshore enterprise derives directly or indirectly from PRC taxable assets;whether the assets of the relevant offshore enterprise mainly consists of direct or indirect investment in China or if its income mainlyderives from China; whether the offshore enterprise and its subsidiaries directly or indirectly holding PRC taxable assets have realcommercial nature which is evidenced by their actual function and risk exposure; the duration of existence of the business model andorganizational structure; the foreign income tax liabilities arising from the indirect transfer of PRC taxable assets; the replicability of thetransaction by direct transfer of PRC taxable assets; and the tax situation of such indirect transfer and applicable tax treaties or similararrangements. In respect of an indirect offshore transfer of assets of a PRC establishment or place of business, the resulting gain is to beincluded with the enterprise income tax filing of the PRC establishment or place of business being transferred, and would consequently besubject to PRC enterprise income tax at a rate of 25%. Where the underlying transfer relates to the immovable properties located in Chinaor to equity investments in a PRC resident enterprise, which is not related to a PRC establishment or place of business of a non-residententerprise, a PRC enterprise income tax of 10% would apply, subject to available preferential tax treatment under applicable tax treaties orsimilar arrangements, and the party who is obligated to make the transfer payments has the withholding obligation. Where the payor failsto withhold any or sufficient tax, the transferor shall declare and pay such tax to the tax authority by itself within the statutory time limit.Bulletin 7 does not apply to transactions of sale of shares by investors through a public stock exchange where such shares were acquiredfrom a transaction through a public stock exchange. On October 17, 2017, the SAT issued the Bulletin on Issues Concerning theWithholding of Non resident Enterprise Income Tax at Source, or Bulletin 37, which, among others, repeals certain rules related totreatment of situations where a payor has failed to timely withhold tax as stipulated in Bulletin 7. In particular, Bulletin 37 provides thatwhen a payor as the withholding agent fails to or is unable to perform its withholding duty, on the condition that the relevant non-PRCresident enterprise voluntarily makes payment before being ordered to do so in a timely manner or within a time limit prescribed byrelevant tax authorities, the tax shall be deemed as having been timely paid. The Bulletin 37 further specifies and clarifies tax withholdingmethods applicable to income of non-PRC resident enterprises. There is uncertainty as to the application of Bulletin 7. Especially asBulletin 7 is lately promulgated, it is not clear how it will be implemented. Bulletin 7 may be determined by the tax authorities to beapplicable to our offshore restructuring transactions or sale of our ordinary shares or preferred shares, or those of our offshore subsidiarieswhere non-resident enterprises, being the transferors, were involved.Under the Circular on Comprehensively Promoting the Pilot Program of the Collection of Value-added Tax to Replace BusinessTax, or Circular 36, which was promulgated by the Ministry of Finance and the SAT on March 23, 2016 and became effective on May 1,2016, entities and individuals engaging in the sale of services, intangible assets or fixed assets within the territory of the PRC are requiredto pay value-added tax, or VAT, instead of business tax. According to the Circular 36, our PRC subsidiaries and VIEs are subject to VAT, ata rate of 6% to 17% (13% after April 1, 2019, pursuant to the Announcement on Policies for Deepening the VAT Reform promulgated bythe Ministry of Finance, the SAT and the General Administration of Customs on March 20, 2019) on proceeds received from customers,and are entitled to a refund for VAT already paid or borne on the goods purchased by it and utilized in the production of goods orprovisions of services that have generated the gross sales proceeds.Regulations Relating to Overseas Listing and M&A RulesOn July 6, 2021, the relevant PRC government authorities made public the Opinions on Strictly Cracking Down Illegal SecuritiesActivities in Accordance with the Law, or the Opinions. The Opinions emphasized the need to strengthen the administration over illegalsecurities activities and the supervision on overseas listings by Chinses companies and proposed to take effective measures, such aspromoting the construction of relevant regulatory systems to deal with the risks and incidents faced by overseas-listed Chinese companies,enhancing cross-border regulatory cooperation, improving relevant regulations to specify responsibilities of overseas-listed Chinesecompanies with respect to data security and information security, etc. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 87 of 248 Table of Contents80There are substantial uncertainties with respect to the interpretation and implementation of the Opinions. Furthermore, onDecember 24, 2021, the China Securities Regulatory Commission, or the CSRC, released Provisions of the State Council on theAdministration of Overseas Securities Offering and Listing by Domestic Enterprises (Draft for Comments) and the AdministrativeMeasures for the Filing of Overseas Securities Offering and Listing by Domestic Enterprises (Draft for Comments), which are open forpublic comments. On February 17, 2023, the CSRC officially adopted the Trial Measures for the Administration of Overseas SecuritiesOffering and Listing by Domestic Enterprises and corresponding guidelines (the “Trail Measures”), which took effect on March 31, 2023,together with the Circular on Administrative Arrangements for the Filing of Overseas Offering and Listing by Domestic Enterprises (the“Circular on Administrative Arrangements for the Filing”) released on February 17, 2023.The Trail Measures and the Circular on Administrative Arrangements for the Filing lay out a new filing-based regime to regulateoverseas offerings and listings by domestic enterprises. According to the Trail Measures and the Circular on Administrative Arrangementsfor the Filing, an overseas offering and listing by a domestic enterprise, whether directly or indirectly, shall be filed with the CSRC. Toclarify, the Circular on Administrative Arrangements for the Filing stipulated that domestic enterprises which have obtained the approvalof the application for indirect overseas offering and listing by overseas regulators or overseas stock exchanges before the implementationof the Trail Measures and have completed the overseas listing before September 30, 2023 are defined as “stock enterprises”. Pursuant tothe Circular on Administrative Arrangements for the Filing Stock enterprises, “stock enterprises” are not required to file with the CSRCimmediately for its prior offerings but shall fulfill their filing obligations and report relevant information to the CSRC, as the case may be,for its follow-on offering and other equivalent offering activities in overseas markets within three business days after conducting suchfollow-on offering activities. The Trail Measures also list a number of circumstances where overseas offering is prohibited, includingwhere (i) the offering is prohibited by PRC laws, (ii) the offering may endanger national security, (iii) in the recent three years, thecompany’s Chinese operating entities and their controlling shareholders and actual controllers have committed certain criminal offenses,(iv) the company’s Chinese operating entities are currently under investigations for suspicion of criminal offenses or major violations, or(v) there are major disputes over ownership of the issuer’s equity held by the controlling shareholders or the shareholders controlled by thecontrolling shareholders or the actual controllers. According to the Trail Measures, if we fail to comply with the filing obligations with theCSRC for any of our follow-on offerings or fall within any of the above circumstances where our follow-on offering is prohibited, ourfollow-on offering application, if any, may be discontinued and we may be subject to fines, sanctions and penalties on the relevantdomestic enterprises. In severe circumstances, we may be ordered to suspend our businesses and our business licenses and operationpermits may be revoked. Furthermore, the controlling shareholder, actual controllers, and other responsible persons may be warned orfined either individually or collectively.On February 24, 2023, the CSRC, together with certain other PRC governmental authorities, issued the Provisions onStrengthening Confidentiality and Archives Administration of Overseas Securities Offering and Listing by Domestic Enterprises, or theRevised Confidentiality and Archives Administration Provisions, to revise the currently effective Provisions on StrengtheningConfidentiality and Archives Administration of Overseas Securities Offering and Listing. The new regulation took effect on March 31,2023. According to the Revised Confidentiality and Archives Administration Provisions, Chinese companies, which include both PRC-incorporated joint-stock companies that offer and list securities directly in overseas markets and the PRC operating entities of companiesindirectly listed in overseas markets, shall strictly abide by the relevant laws and regulations on confidentiality when providing or publiclydisclosing, either directly or through their overseas listed entities, documents and materials to domestic and overseas securities companies,securities services providers and overseas regulators in the process of their overseas offering and listing. In the event such documents ormaterials contain state secrets or government work secrets, the Chinese companies shall first obtain approval from competent authoritieswith the power of examination and approval according to law, and file with the secrecy administrative department at the same level; in theevent that such documents or materials, if divulged, will jeopardize national security or public interest, the Chinese companies shallstrictly fulfill relevant procedures stipulated by applicable national regulations. The Chinese companies shall also provide a writtenstatement of the specific state secrets and sensitive information provided when providing documents and materials to securities companiesand securities service providers, and the securities companies and securities service providers shall properly retain such written statementsfor inspection. Since the Revised Confidentiality and Archives Administration Provisions have just been released recently, theirinterpretation and implementation remain substantially uncertain.The Regulations on Mergers and Acquisitions of Domestic Enterprises by Foreign Investors, or the M&A Rules, issued by sixPRC governmental and regulatory agencies, including the MOFCOM and the CSRC, on August 8, 2006 and amended on June 22, 2009,require that an SPV formed for listing purposes and controlled directly or indirectly by PRC companies or individuals must obtain theapproval of the CSRC in the event that the SPV acquires equity interests in the PRC companies in exchange for the shares of offshorecompanies. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 88 of 248 Table of Contents81The application of the M&A Rules remains unclear. Our PRC counsel, King & Wood Mallesons, has advised us that, undercurrent PRC laws, rules and regulations and the M&A Rules, prior approval from the CSRC is not required under the M&A Rules for ourinitial public offering because (i) our PRC subsidiaries were incorporated as foreign-invested enterprises by means of foreign directinvestments at the time of their incorporation, and (ii) we did not acquire any equity interests or assets of a PRC company owned by itscontrolling shareholders or beneficial owners who are PRC companies or individuals, as such terms are defined under the M&A Rules.However, as there has been no official interpretation or clarification of the M&A Rules, there is uncertainty as to how these rules will beimplemented in practice. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in the People’s Republic ofChina—Certain PRC regulations establish more complex procedures for acquisitions conducted by foreign investors that could make itmore difficult for us to grow through acquisitions.”C.Organizational StructurePlease refer to “Item 4. Information on the Company—Our Corporate Structure” for our corporate structure diagram and “Item 4.Information on the Company—Variable Interest Entity Contractual Arrangements” for a discussion of the VIE contractual arrangements.Subsidiaries of BEST Inc.An exhibit containing a list of our significant subsidiaries has been filed with this annual report.D.Property, Plants and EquipmentPlease refer to “B. Business Overview—Properties” for a discussion of our property, plants and equipment.ITEM 4A.UNRESOLVED STAFF COMMENTSNone.ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTSUnless otherwise stated, the discussion and analysis of our financial condition and results of operation in this section apply to ourfinancial information as prepared according to U.S. GAAP. You should read the following discussion and analysis of our financialcondition and operating results in conjunction with our consolidated financial statements and the related notes included elsewhere in thisannual report. The following discussion contains forward-looking statements based upon current expectations that involve risks anduncertainties. Our actual results and the timing of selected events may differ materially from those anticipated in these forward-lookingstatements as a result of various factors, including those set forth under “Item 3. Key Information—D. Risk Factors.”In December 2021, we completed the sale of BEST Express, our express delivery business in China. As a result, our Chinaexpress business has been deconsolidated from our company, and its historical financial results are reflected in our consolidated financialstatements as discontinued operations. Unless otherwise stated, the results presented in this annual report do not include the results ofBEST Express.A.Operating ResultsOverviewOur Chairman and Chief Executive Officer, Mr. Shao-Ning Johnny Chou, founded BEST in 2007, in the belief that technologyand business model innovation can disrupt and transform the inefficient logistics and supply chain industry in China. We are focused onmaximizing long-term value propositions to businesses and consumers in our ecosystem through comprehensive integrated services andenhanced experiences driven by technology and service quality. Our multi-sided platform combines technology, integrated logistics andsupply chain services, last-mile services and value-added services. We believe we are well positioned to transform the logistics and supplychain industry in China and capture growth opportunities in the New Retail era. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 89 of 248 Table of Contents82Our total revenue from continuing operations decreased from RMB11,425.8 million in 2021 to RMB7,744.1 million in 2022, andincreased by 7.4% to RMB8,315.8 million (US$1,171.3 million) in 2023. We had net losses from continuing operations of RMB1,263.9million, RMB1,464.8 million and RMB908.6 million (US$128.0 million) in 2021, 2022 and 2023, respectively. Our gross margin forcontinuing operations decreased from negative 1.7% in 2021 to negative 3.4% in 2022, and increased to 3.0% in 2023.Our Business PhilosophyOur brand name in Chinese, “百世”means hundreds of generations. Our business philosophy is to build and invest for the long-term. Since inception, we have focused on building a platform to meet evolving market demands with Smart Supply Chain solutions. Weare committed to continuing investment in and enhancement of our platform, which we believe will generate long-term benefits.Platform Infrastructure. We have invested in and established our proprietary technology infrastructure, which is the backboneof the integrated solutions we offer, as well as our integrated supply chain service network, which has significant scale and density. Withthe platform infrastructure in place, we expect to continue to reap the benefits of our investments.Comprehensive Solutions. Leveraging our platform, we have successfully launched multiple services, which allow customers toenjoy comprehensive solutions from a single source. We believe this gives us a strong competitive advantage, especially over monolineservice providers. Our platform also allows us to introduce additional innovative solutions and services, capture more cross-sellingopportunities and generate strong network effects, driving further growth.Operating Leverage. Our business enjoys significant operating leverage, and as our business continues to expand, we expect toenjoy greater economies of scale. In addition, we will leverage our technology and synergies across our different services to increaseoperational efficiency.Asset-Light Business Model. Our business model allows us to scale quickly while optimizing our levels of capital investmentand enables us to maintain effective control over our network and service quality that will cultivate customer stickiness. See also“Business—Our Competitive Strengths—Flexible asset-light business model for control and scale” and “Business—Asset-Light BusinessModel.”Guided by our business philosophy, we believe our platform will enable us to continue driving growth, increasing operatingleverage and generating long-term value to our ecosystem participants and our shareholders.Our Scale and GrowthWe have achieved significant scale and growth in our business. The following table illustrates the growth in key operating metricsof our major service lines:For the three months endedMar. 31,Jun. 30,Sep. 30,Dec. 31,Mar. 31,Jun. 30,Sep. 30,Dec. 31,Mar. 31,Jun. 30,Sep. 30,Dec. 31,202120212021202120222022202220222023202320232023BEST Supply Chain Management Number of orders fulfilled by self-operated CloudOFCs (in thousands) (1) 47,981 47,349 35,662 48,933 33,291 35,040 29,418 35,938 28,360 34,322 23,798 29,795Number of orders fulfilled by franchised CloudOFCs (in thousands) 52,804 73,121 67,975 74,376 54,056 58,920 58,870 68,141 59,053 67,741 56,337 64,722BEST Freight Freight volume (tonnage in thousands) (1) 1,945 2,438 2,427 2,408 1,683 2,223 2,527 2,226 1,769 2,383 2,557 2,571Note:(1)Includes services performed for external customers both directly and indirectly through our other segments. For discussion of our totalsegment revenue, which includes both external revenue and intersegment revenue, please see “—Segment Financial Information.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 90 of 248 Table of Contents83Selected Operating DataThe table below sets forth the selected operating data for the periods indicated:For the year ended December 31, 2021 2022 2023BEST Supply Chain ManagementNumber of orders fulfilled by self-operated Cloud OFCs (in thousands)(1) 179,925 133,686 116,275Number of orders fulfilled by franchised Cloud OFCs (in thousands) 268,276 239,987 247,853BEST FreightFreight volume (tonnage in thousands)(1) 9,218 8,659 9,280Note:(1)Includes services performed for external customers both directly and indirectly through our other segments. For discussion of our totalsegment revenue, which includes both external revenue and intersegment revenue, please see “—A. Operating Results—SegmentFinancial Information.”Key Factors Affecting Our Results of OperationsWe believe that our results of operations are directly affected by the following key factors.Macroeconomic Trends and Consumption in Our MarketsOur results of operations and financial condition are affected by the general factors driving the economies, the retail industries,and logistics and supply chain markets of China and other countries and regions in which we operate our business. These factors includelevels of per capita disposable income, levels of consumer spending, rate of Internet and mobile penetration, and other general economicconditions in China and our other markets that affect consumption and business activities in general. Our results of operations are alsoaffected by seasonal patterns. For example, the fourth quarter has historically been our strongest quarter by volume, led by the Singles’Day and December 12 promotion periods. As our customers reduce activity in connection with Chinese holidays, such as Chinese NewYear, the first quarter historically has been a low volume quarter.In particular, we anticipate additional growth from the trend toward a New Retail paradigm, which is the seamless integration ofonline and offline retail enabled by Smart Supply Chain. The emergence of New Retail and transformation of the logistics and supplychain industry affect the demand for our services and our business opportunities.Competitive LandscapeWe are able to provide comprehensive, integrated supply chain solutions leveraging our technology infrastructure and supplychain service network, which differentiates us from monoline service providers. Our ability to strengthen our market position as a leadingcomprehensive supply chain solution provider and offer innovative services in the New Retail era will continue to affect our results ofoperations.Each of our service lines is also subject to trends specific to such services, including market demand and competitive landscape.Therefore, we also compete with companies providing similar services, especially with respect to more standard services such as freightservices. This will affect the pricing of our services, our ability to acquire customers for such services and our results of operation.Service OfferingsWe provide a variety of services to meet the needs of our customers. We plan to continue leveraging technology and businessmodel innovation to expand and enhance our service offerings.Each of our service offerings may have different revenue sources, cost structures and customer bases and may face differentmarket conditions. Therefore, the ability to adjust our service offerings to adapt to changing market conditions may impact our results ofoperations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 91 of 248 Table of Contents84Our consolidated results of operations may also be affected by the timing of the launch of new service offerings. We may incurstart-up costs in the early stages. A certain amount of time may be needed to ramp up operations. The timing and trend in revenue growthand profitability of new services may vary over time.Our ability to cross-sell various service offerings to existing and new customers will also affect our results of operations.Operating Leverage and EfficiencyOur ability to control costs, increase operating efficiencies and scale our business effectively may affect our results of operations.Costs to operate our businesses, including transportation, labor, lease and other costs are subject to factors such as fluctuations infuel prices, increases in wage rates and leasing costs, among other things. These factors will affect our ability to control costs.Our results of operations are also affected by our ability to (i) utilize latest technology to improve efficiencies across our businessand data insights to drive optimization in our services, and (ii) take full advantage of our asset-light business model to expand our businessoperations in a cost-effective manner, leverage the resources and operating capabilities of our franchisee partners and transportationservice providers, and dynamically adjust our network design and capacity.The growth of our business and expansion of our market share will impact our ability to benefit from economies of scale,including optimization of our supply chain service network, reduction of unit costs and the strengthening of our bargaining power withsuppliers and service providers.Technology and TalentWe have made investments in developing our proprietary technology infrastructure. We believe the further enhancement of ourtechnology infrastructure is important to our future performance. We expect to continue to make investments for development andimplementation of new technologies. We will continue to hire, train and retain our talent to reinforce our culture of innovation. We have inthe past granted and will in the future grant share-based awards to incentivize and retain talent.Strategic Acquisitions and InvestmentsWe may selectively pursue acquisitions, investments, joint ventures and partnerships that we believe are strategic andcomplementary to our operations and technology. These acquisitions, investments, joint ventures and partnerships may affect our results ofoperations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 92 of 248 Table of Contents85Components of Results of OperationsRevenueThe following table sets forth our revenue from different service lines and as a percentage of our total revenue for the periodsindicated:For the year ended December 31, 202120222023 % of % of % of RMBRevenueRMBRevenueRMBUS$Revenue (in thousands)Revenue:Freight 8,244,435 72.2% 4,888,278 63.2% 5,404,395 761,193 65.0%Supply chain management 1,815,104 15.9% 1,822,075 23.5% 1,858,629 261,782 22.4%Global 1,193,855 10.4% 916,907 11.8% 946,513 133,314 11.4%Others(1) 172,442 1.5% 116,812 1.5% 106,307 14,973 1.2%Total revenue(2) 11,425,836 100% 7,744,072 100% 8,315,844 1,171,262 100.0%Note:(1)“Others” Segment primarily represents SaaS software service and Capital business units. Results from UCargo’s legacy contracts withexternal customers are now reported under “Freight” segment and prior period segment information were retrospectively revised toconform to current period presentation.(2)Revenue in the table above represents revenue from external customers.FreightWe have historically derived most of our freight service revenue from franchisee partners which operate substantially all of theservice stations in our freight network, with a small amount derived from our direct customers for whom we provide door-to-door freightservices.Starting in 2017, in order to enhance the freight delivery experience and our control over service quality throughout our network,we revised our arrangements with franchisee partners and the scope of our service. As a result, we became the principal that is directlyresponsible for last-mile delivery of all goods processed through our network, and we are liable to senders for damage to or loss of goodsin connection with last-mile delivery. Therefore, in consideration of such expanded scope of services and increased responsibilities, weincreased the fee that we charge to pick-up service stations. We provide the last-mile delivery service through destination franchisedservice stations under our supervision and are responsible for paying service fees to such destination franchised service stations for theprovision of last-mile delivery services, which are recorded in our cost of revenue. We also generate freight service revenue from value-added services such as pre-shipment inspection, cargo insurance, COD facilitation, evidence of delivery, upstairs delivery and installationservices.Our freight service revenue is primarily driven by our freight volume and the fees we collect from our franchisee partners. Wedetermine and periodically evaluate and adjust our fee levels based on prevailing market conditions, our operating costs and servicequality.Supply Chain ManagementWe generate supply chain management service revenue primarily from order fulfillment services and transportation services. Ourorder fulfillment service revenue is mainly generated from service fees paid by our customers for order fulfillment services offeredthrough our self-operated Cloud OFCs. We also generate a small amount of order fulfillment service revenue from service system usagefee for each order processed through our network and other fees charged to franchisee partners operating Cloud OFCs. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 93 of 248 Table of Contents86Order fulfillment service revenue of our self-operated Cloud OFCs is generated from various service fees charged on a volumebasis in connection with various order fulfillment services, which include warehouse management, in-warehouse processing, orderfulfillment, transportation services and value-added services. Transportation from our self-operated Cloud OFCs is included in orderfulfillment service revenue.Transportation service revenue is generated from transportation of goods to and from locations designated by our customers, suchas their factories, warehouses, distributors, stores, end-customers or consumers, including to our Cloud OFCs.Our supply chain management service revenue is primarily driven by the number of orders fulfilled, the volume of the goods weprocess and the fees we negotiate with our customers. The fees we charge primarily depend on the scope of services they require, their sizeand scale, and the estimated amount of business volume.GlobalWe generate BEST Global revenue primarily from international logistics services provided in multiple countries and regionsacross North America, Europe and Asia, such as cross-border logistic coordination service and local express delivery services outsideChina.OthersOthers mainly represent SaaS software business and Capital business we provided to customers.For SaaS software business, we serve as a proprietary technology platform to provide solution services to the ecosystemparticipants. We are the principal to the transaction for these services and revenue from these transactions is recognized on a gross basis.For Capital business, we generate BEST Capital revenue primarily from providing tailored financing solutions to our ecosystemparticipants, such as fleet and equipment financing lease service and factoring service. The fee we charge our customers is based on thefinancing amount and interest rate in the respective financing periods.Cost of RevenueOur cost of revenue primarily consists of costs of transportation, labor, lease and materials, operating costs for hubs and sortationcenters, depreciation and other costs. The following table presents our costs of revenue by service lines for the periods indicated:For the year ended December 31,202120222023RMBRMBRMBUS$(in thousands)Cost of revenue Freight 8,506,738 5,114,937 5,206,967 733,386Supply chain management 1,741,832 1,711,818 1,700,467 239,506Global 1,258,511 1,081,587 1,131,484 159,366Others 118,143 99,288 26,489 3,731Total cost of revenue 11,625,224 8,007,630 8,065,407 1,135,989 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 94 of 248 Table of Contents87FreightCost of revenue for our freight services mainly consists of (i) transportation costs paid to third-party service providers operatingthe routes in our network mainly connecting our hubs and sortation centers, (ii) labor costs for our hub and sortation center operations,including costs paid to outsourced workers, (iii) lease costs for our hubs and sortation centers and self-operated service stations, and (iv)starting from January 1, 2017, costs related to last-mile delivery services. Starting in 2017, in order to enhance the freight deliveryexperience and our control over service quality throughout our network, we revised our arrangements with franchisee partners and thescope of our service to provide that we are directly responsible for last-mile delivery services. Other cost of revenue for freight servicesincludes costs for materials, depreciation of property and equipment, and utility and maintenance payments related to our operations.Cost of revenue for our freight services is comprised of fixed costs, such as lease costs, other facility costs and equipment costs,as well as variable costs, such as outsourced labor costs and materials used in our operations. As operational scale increases over time, wewill generally be able to reduce unit fixed costs. Transportation costs are variable in nature but we are able to enjoy scale benefits byincreasing capacity utilization of fleet for our core routes connecting our hubs and sortation centers and by employing larger vehicles tosatisfy greater delivery volumes to drive lower unit transportation costs.Supply Chain ManagementCost of revenue for our supply chain management services primarily consists of costs associated with our self-operated CloudOFCs and transportation costs paid to transportation service providers. Costs associated with our self-operated Cloud OFCs primarilyinclude labor costs, lease costs, equipment depreciation, costs of materials, such as for labeling and packing, utility and maintenancepayments.Some of these costs are relatively fixed in nature, such as lease and equipment costs. Other costs are more variable in nature, suchas transportation, outsourced labor and materials costs. The launch of new self-operated Cloud OFCs or new projects will generally incurstart-up costs in the early stages and requires time to ramp-up business volume. As operational scale increases over time, we will generallybe able to reduce unit fixed costs.GlobalCost of revenue for our BEST Global services generally corresponds to the cost components of our express delivery serviceswhen we provide express service in Southeast Asia. For the cross-border logistic coordination service, cost of revenue mainly consists ofthe transportation cost paid to third-party service providers.Operating ExpensesOur operating expenses consist of selling expenses, general and administrative expenses, and research and development expenses.The following table sets forth a breakdown of our operating expenses for the periods indicated:For the year ended December 31,202120222023RMBRMBRMBUS$(in thousands)Selling expenses 260,219 237,918 256,621 36,144General and administrative expenses 881,498 889,345 737,775 103,913Research and development expenses 180,204 144,181 115,917 16,327Impairment of long-lived assets — — 94,699 13,338Other operating income, net (58,337) (108,817) (2,658) (374)Total operating expenses 1,263,584 1,162,627 1,202,354 169,348 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 95 of 248 Table of Contents88Selling ExpensesOur selling expenses primarily consist of (i) salaries and benefit expenses for our network management personnel responsible formanaging relationships with our franchisee partners, our customer service personnel and other sales and marketing personnel, and (ii)travel, marketing and advertising expenses. Our selling expenses are expected to decrease due to the implementation of strategicrefocusing plan and effective cost control measurement.General and Administrative ExpensesOur general and administrative expenses consist primarily of salaries and benefit expenses for management and administrativepersonnel, depreciation and amortization expenses, office expenses, travel expenses, legal, accounting and other professional fees, accruedprovision on certain trade receivables and losses on disposal of fixed assets. We expect general and administrative expenses to decrease aswe continue to implement strategic refocusing plan and improve the efficiency to control expenses.Research and Development ExpensesResearch and development expenses consist primarily of salaries and benefits for our research and development personnel anddepreciation of property and equipment. We expect research and development expenses to decrease in the future due to the implementationof strategic refocusing plan and effective cost control measurement.Other operating income, netOther operating income consist primarily of government subsidy and tax refund arise from normal operating business.Share-Based CompensationWe account for share options granted to our employees, directors and consultants in accordance with ASC 718 prior to 2018 andASU 2018-07: “Compensation — Stock Compensation (Topic 718): Improvements to Nonemployee Share-Based Payment Accounting”starting in 2018. We are required to classify share options and restricted share units granted to our employees, directors and consultants asequity awards and recognize share-based compensation expense based on the fair value of such equity awards with the share-basedcompensation expense recognized over the period in which the recipient is required to provide service in exchange for the equity awards.You may find additional information on our share incentive plans as well as our options granted as of the date of this annualreport in the section entitled “Management—Share Incentive Plans.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 96 of 248 Table of Contents89Results of OperationsThe following table sets forth our consolidated statements of loss data for the years indicated. This information should be readtogether with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in anyperiod are not necessarily indicative of the results you may expect for future periods.For the year ended December 31, 202120222023RMBRMBRMBUS$(in thousands)Revenue Freight 8,244,435 4,888,278 5,404,395 761,193Supply chain management 1,815,104 1,822,075 1,858,629 261,782Global 1,193,855 916,907 946,513 133,314Others 172,442 116,812 106,307 14,973Total revenue 11,425,836 7,744,072 8,315,844 1,171,262Cost of revenue Freight (8,506,738) (5,114,937) (5,206,967) (733,386)Supply chain management (1,741,832) (1,711,818) (1,700,467) (239,506)Global (1,258,511) (1,081,587) (1,131,484) (159,366)Others (118,143) (99,288) (26,489) (3,731)Total cost of revenue (11,625,224) (8,007,630) (8,065,407) (1,135,989)Gross (loss)/profit (199,388) (263,558) 250,437 35,273Selling expenses (260,219) (237,918) (256,621) (36,144)General and administrative expenses (881,498) (889,345) (737,775) (103,913)Research and development expenses (180,204) (144,181) (115,917) (16,327)Impairment of long-lived assets — — (94,699) (13,338)Other operating income, net 58,337 108,817 2,658 374Loss from operations (1,462,972) (1,426,185) (951,917) (134,075)Interest income 49,658 80,361 83,810 11,805Interest expense (142,751) (89,058) (64,283) (9,055)Foreign exchangegain/(loss) 44,556 (132,730) (14,010) (1,974)Other income, net 265,82231,6776,613931(Loss)/Gain on changes in the fair value of derivative assets/liabilities (14,918) 71,619 32,322 4,553Loss before income tax and share of net loss of equity investees (1,260,605) (1,464,316) (907,465) (127,815)Income tax expense (3,198) (511) (1,141) (161)Loss before share of net loss of equity investees (1,263,803) (1,464,827) (908,606) (127,976)Share of net loss of equity investees (58) — — —Net loss from continuing operations (1,263,861) (1,464,827) (908,606) (127,976)Net income/(loss) from discontinued operations 1,473,489 (38,464) 15,222 2,144Net income/(loss) 209,628 (1,503,291) (893,384) (125,832)Net loss from continuing operations attributable to non-controlling interests (52,279) (39,980) (78,982) (11,124)Net income/(loss) attributable to BEST Inc. 261,907 (1,463,311) (814,402) (114,708) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 97 of 248 Table of Contents90Non-GAAP MeasuresWe use EBITDA and adjusted EBITDA, non-GAAP financial measures, in the evaluation of our operating results and in ourfinancial and operational decision-making. We believe that EBITDA and adjusted EBITDA help us to identify underlying trends in ourbusiness that could otherwise be distorted by the effect of certain expenses and income that we include in net loss. We believe thatEBITDA and adjusted EBITDA provide useful information about our operating results, enhance the overall understanding of our pastperformance and future prospects, and allow for greater visibility with respect to key metrics used by our management in its financial andoperational decision-making.EBITDA and adjusted EBITDA should not be considered in isolation or construed as an alternative to net loss or any othermeasure of performance or as an indicator of our operating performance. Investors are encouraged to review the historical non-GAAPfinancial measures to the most directly comparable GAAP measures. EBITDA and adjusted EBITDA presented here may not becomparable to similarly titled measures presented by other companies. Other companies may calculate similarly titled measuresdifferently, limiting their usefulness as comparative measures to our data. We encourage investors and others to review our financialinformation in its entirety and not rely on a single financial measure.EBITDA represents net loss plus depreciation, amortization, interest expense and income tax expense and minus interest income.Adjusted EBITDA represents EBITDA before share-based compensation expenses and fair value change of equity investments,Impairment of long - lived assets, if any.The table below sets forth a reconciliation of our net loss to EBITDA and adjusted EBITDA for the periods indicated:For the year ended December 31,202120222023 RMB RMB RMB US$(in thousands)Net loss from continuing operations (1,263,861) (1,464,827) (908,606) (127,976)Add: Depreciation and amortization 191,365 189,387 189,197 26,648Interest expense 142,751 89,058 64,283 9,055Income tax expense 3,198 511 1,141 161Subtract: Interest income (49,658) (80,361) (83,810) (11,805)EBITDA from continuing operations (976,205) (1,266,232) (737,795) (103,917)Add Share-based compensation expenses 107,681 72,096 48,344 6,809Impairment of long-lived assets — — 94,699 13,338Subtract: Fair value change of equity investments (58,643) 12,312 — —Adjusted EBITDA from continuing operations (927,167) (1,181,824) (594,752) (83,770)Year-over-Year Comparisons of Results of OperationsThe results presented below exclude discontinued operations related to each of BEST Store+ and BEST Express.Year Ended December 31, 2023 Compared to Year Ended December 31, 2022RevenueOur revenue increased by 7.4% to RMB8,315.8 million (US$1,171.3 million) in 2023 from RMB7,744.1 million in 2022primarily due increased revenue for all business lines. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 98 of 248 Table of Contents91Freight. Our freight service revenue increased by 10.6% to RMB5,404.4 million (US$761.2 million) in 2023 from RMB4,888.3million in 2022. This increase in revenue was primarily resulting from increases in both freight volume and average selling price pertonne.Supply Chain Management. Our supply chain management service revenue increased by 2.0% to RMB1,858.6 million (US$261.8million) in 2023 from RMB1,822.1 million in 2022.Global. Revenue from our BEST Global services increased by 3.2% to RMB946.5 million (US$133.3 million) in 2023 fromRMB916.9 million in 2022, primarily due to volume growth in Vietnam, Malaysia and cross-border business, partially offset by thedecrease of parcel volume in Thailand.Cost of RevenueOur cost of revenue increased by 0.7% to RMB8,065.4 million (US$1,136.0 million) in 2023 from RMB8,007.6 million in 2022.The increase was primarily attributable to increase in cost of revenue in our Freight and Global, as discussed below. Cost of revenue as apercentage of revenue decreased to 97.0% in 2023 from 103.4% in 2022, which was primarily due to reduced unit cost of Freight businessand improved operating efficiency and optimized customer mix of Supply Chain Management business.Freight. Cost of revenue for our freight services increased by 1.8% to RMB5,207.0 million (US$733.4 million) in 2023 fromRMB5,114.9 million in 2022. This increase in cost of revenue was primarily attributable to increased freight volume, which increased by7.2% to 9.3 million tonnes from 8.7 million tonnes in 2022. Cost of revenue as a percentage of revenue from our freight services decreasedto 96.3% in 2023 from 104.6% in 2022, primarily due to reduced unit cost.Supply Chain Management. Cost of revenue for our supply chain management services decreased by 0.7% to RMB1,700.5million (US$239.5 million) in 2023 from RMB1,711.8 million in 2022. Cost of revenue as a percentage of revenue from our supply chainmanagement services decreased to 91.5% in 2023 from 93.9% in 2022, primarily due to improved operating efficiency and optimizedcustomer mix.Global. Cost of revenue for our BEST Global services increased by 4.6% to RMB1,131.5 million (US$159.4 million) in 2023from RMB1,081.6 million in 2022 primarily due to lower parcel volume of Thailand.Operating ExpensesOperating expenses increased by 3.4% to RMB1,202.4 million (US$169.4 million) in 2023 from RMB1,162.6 million in 2022.Operating expenses as a percentage of our total revenue decreased to 14.5% in 2023 from 15.0% in 2022.Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by 11.8% to RMB994.4million (US$140.0 million) in 2023 from RMB1,127.3 million in 2022. This decrease was primarily attributable to reduced headcount.Research and Development Expenses. Research and development expenses decreased by 19.6% to RMB115.9 million (US$16.3million) in 2023 from RMB144.2 million in 2022 primarily due to reduced headcount.Other operating income, net. Other operating income decreased to RMB2.7 million (US$0.4 million) in 2023 from RMB108.8million in 2022.Interest IncomeOur interest income increased by 4.3% to RMB83.8 million (US$11.8 million) in 2023 from RMB80.4 million in 2022, primarilydue to the changes in average short-term investments balance during 2023 compared with 2022. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 99 of 248 Table of Contents92Interest ExpenseOur interest expenses decreased by 27.8% to RMB64.3 million (US$9.1 million) in 2023 from RMB89.1 million in 2022,primarily due to the repurchase of US$75.0 million (equivalent to RMB542.0 million) aggregate principal amount of existing ConvertibleSenior Notes due 2024.Foreign Exchange (Loss)/GainWe recorded a foreign exchange loss of RMB14.0 million (US$2.0 million) in 2023 as compared to RMB132.7 million in 2022,which mainly reflected the fluctuation in exchange rates between Renminbi and U.S. dollars during the respective years.Other Income, netOther income, net decreased to RMB6.6 million (US$1.0 million) in 2023 from RMB31.7 million in 2022.(Loss)/Gain on changes in the fair value of derivative assets/liabilitiesWe recorded a gain on changes in the fair value of derivative assets/liabilities of RMB 32.3 million (US$ 4.6 million) in 2023 ascompared to RMB71.6 million in 2022, which mainly reflected the fluctuation in exchange rates between Renminbi and U.S. dollarsduring the respective years.Income Tax ExpenseIncome tax expense increased to RMB1.1 million (US$0.2 million) in 2023 from RMB0.5 million in 2022, reflecting increasedtaxable income from certain of our PRC subsidiaries.Net Loss from continuing operationsAs a result of the foregoing, net loss from continuing operations decreased to RMB908.6 million (US$128.0 million) in 2023from RMB1,464.8 million in 2022.Net LossNet Loss was RMB 893.4 million (US$ 125.8 million) in 2023, compared to RMB1,503.3 million in 2022.Year Ended December 31, 2022 Compared to Year Ended December 31, 2021RevenueOur revenue decreased by 32.2% to RMB7,744.1 million (US$1,122.8 million) in 2022 from RMB11,425.8 million in 2021primarily due to the wind-down of the BEST UCargo business and decreased volume in Freight and Global.Freight. Our freight service revenue decreased by 40.7% to RMB4,888.3 million (US$708.7 million) in 2022 from RMB8,244.4million in 2021. This decrease in revenue was primarily due to the wind-down of the BEST UCargo business and 6.1% decrease in freightvolume.Supply Chain Management. Our supply chain management service revenue increased by 0.4% to RMB1,822.1 million (US$264.2million) in 2022 from RMB1,815.1 million in 2021. Such increase was primarily due to newly signed customers with high unit economicsfollowing discontinuation of certain low margin legacy accounts, as well as improved service capability.Global. Revenue from our BEST Global services decreased by 23.2% to RMB916.9 million (US$132.9 million) in 2022 fromRMB1,193.9 million in 2021, primarily due to decreased parcel volumes in Southeast Asia.Others. Revenue from our others services decreased by 32.3% to RMB116.8 million (US$16.9 million) in 2022 from RMB172.4million in 2021, primarily due to the decreased volume of financing amount provided to ecosystem customers. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 100 of 248 Table of Contents93Cost of RevenueOur cost of revenue decreased by 31.1% to RMB8,007.6 million (US$1,161.0 million) in 2022 from RMB11,625.2 million in2021. The decrease was primarily attributable to decrease in cost of revenue in our Freight, Global and Others service, as discussed below.Cost of revenue as a percentage of revenue increased to 103.4% in 2022 from 101.7% in 2021, which was primarily due to lower parcelvolume from BEST Global business.Freight. Cost of revenue for our freight services decreased by 39.9% to RMB5,114.9 million (US$741.6 million) in 2022 fromRMB8,506.7 million in 2021. This decrease in cost of revenue was primarily attributable to the wind-down of the BEST UCargo businessand decreased freight volume, which decreased by 6.1% to 8.7 million tonnes from 9.2 million tonnes in 2021. Cost of revenue as apercentage of revenue from our freight services increased to 104.6% in 2022 from 103.2% in 2021, primarily due to lower volume inFreight business.Supply Chain Management. Cost of revenue for our supply chain management services decreased by 1.7% to RMB1,711.8million (US$248.2 million) in 2022 from RMB1,741.8 million in 2021. Cost of revenue as a percentage of revenue from our supply chainmanagement services decreased to 93.9% in 2022 from 96.0% in 2021, primarily due to effective cost control measures and customerstructure optimization.Global. Cost of revenue for our BEST Global services decreased by 14.1% to RMB1,081.6 million (US$156.8 million) in 2022from RMB1,258.5 million in 2021 primarily due to decreased parcel volume in Southeast Asia.Others. Cost of revenue for our others services decreased by 16.0% to RMB99.3 million (US$14.4 million) in 2022 fromRMB118.1 million in 2021. Cost of revenue as a percentage of revenue increased to 85.0% in 2022 from 68.5% in 2021, primarily due todecreased volume of financing amount provided to ecosystem customers.Operating ExpensesOperating expenses decreased by 8.0% to RMB1,162.6 million (US$168.6 million) in 2022 from RMB1,263.6 million in 2021.Operating expenses as a percentage of our total revenue increased to 15.0% in 2022 from 11.1% in 2021.Selling, General and Administrative Expenses. Selling, general and administrative expenses decreased by 1.3% to RMB1,127.3million (US$163.4 million) in 2022 from RMB1,141.7 million in 2021. This decrease was primarily attributable to reduced employeeheadcount.Research and Development Expenses. Research and development expenses decreased by 20.0% to RMB144.2 million (US$20.9million) in 2022 from RMB180.2 million in 2021. This decrease was primarily due to reduced employee headcount.Other operating income, net. Other operating income increased to RMB108.8 million (US$15.8 million) in 2022 from RMB58.3million in 2021, primarily due to the increase of government subsidies.Interest IncomeOur interest income increased by 61.8% to RMB80.4 million (US$11.7 million) in 2022 from RMB49.7 million in 2021,primarily due to the changes in average short-term investments balance during 2022 compared with 2021.Interest ExpenseOur interest expenses decreased by 37.6% to RMB89.1 million (US$12.9 million) in 2022 from RMB142.8 million in 2021,primarily a result of decreased bank loan in 2022 compared with 2021, as well as the repurchase of US$199,989 (equivalent toRMB1,379,364) aggregate principal amount of the 2024 Convertible Notes issued in September 2019. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 101 of 248 Table of Contents94Foreign Exchange (Loss)/GainWe recorded a foreign exchange loss of RMB132.7 million (US$19.2 million) in 2022 as compared to exchange income ofRMB44.6 million in 2021, which mainly reflected the fluctuation in exchange rates between Renminbi and U.S. dollars during therespective years.Other Income, netOther income, net decreased to RMB31.7 million (US$4.6 million) in 2022 from RMB265.8 million in 2021, primarily due to therealized gain of selling our certain equity investments of RMB 241.6 million in 2021.(Loss)/Gain on changes in the fair value of derivative assets/liabilitiesWe recorded a gain on changes in the fair value of derivative assets/liabilities of RMB71.6 million (US$10.4 million) in 2022 ascompared to loss of RMB14.9 million in 2021, which mainly reflected the fluctuation in exchange rates between Renminbi and U.S.dollars during the respective years.Income Tax ExpenseIncome tax expense decreased to RMB0.5 million (US$0.1 million) in 2022 from RMB3.2 million in 2021, reflecting decreasedtaxable income from certain of our PRC subsidiaries.Net Loss from continuing operationsAs a result of the foregoing, net loss from continuing operations increased to RMB1,464.8 million (US$212.4 million) in 2022from net loss from continuing operations of RMB1,263.9 million in 2021.Net (Loss)/IncomeNet Loss was RMB1,503.3 million (US$218.0 million) in 2022, compared to net income of RMB209.6 million in 2021. Thedecrease was primarily due to the gain related to the sale of our China express business in 2021.Variable Interest Entity Financial InformationSet forth below is the selected consolidated statements of operations and cash flows information for the fiscal years endedDecember 31, 2021, 2022 and 2023, and selected consolidated balance sheet information as of December 31, 2022 and 2023 showingfinancial information for parent company Best Inc., non-VIE subsidiaries, the VIEs and VIEs’ subsidiaries, eliminating entries andconsolidated information (RMB in thousands). In the tables below, the column headings correspond to the following entities in theorganizational diagram on page 45.-“Parent” refers to BEST Inc., a Cayman company, which is an investment holding company and the primary beneficiary ofthe VIEs.-“Other subsidiaries” refer to the sum of non-VIE subsidiaries, which mainly include holding companies in Cayman, BVI andHong Kong, the overseas subsidiaries providing global business, and the wholly foreign owned enterprises (“WFOE”) of theVIEs and other WFOEs, such as (1) Zhejiang BEST Technology Co., Ltd., an entity providing technology support to theGroup and the WFOE of Hangzhou BEST Network Technologies Co., Ltd. (2) BEST Logistics Technologies (China) Co.,Ltd., an entity providing freight and supply chain management business and the WFOE of Hangzhou BEST InformationTechnology Services Co., Ltd. (3) BEST Store Network (Hangzhou) Co., Ltd., an entity providing Store+ business and theWFOE of Hangzhou Baijia Commercial consulting Co., Ltd, and (4) Xinyuan Financial Leasing (Zhejiang) Co., Ltd., anentity providing capital business and the primary beneficiary of the Plans. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 102 of 248 Table of Contents95-“VIEs and VIEs’ subsidiaries” refer to the sum of (1) Hangzhou BEST Network Technologies Co., Ltd., one of the VIEsproviding the express delivery business and its subsidiaries, which was discontinued in 2021; (2) Hangzhou BESTInformation Technology Services Co., Ltd., one of the VIEs that provided the UCargo business, before the business waswound down by the end of 2022, and its subsidiaries; and (3) Hangzhou Baijia Commercial consulting Co., Ltd, one of theVIEs providing Store+ business and its subsidiaries, which was discontinued in 2020. (4) Xinyuan Leasing Asset BackedSpecial Plan I and Plan II (collectively the “ABS Plans”) as well as the Yunnan Trust Plan created by Yunnan InternationalTrust Co., Ltd., (the “Trust Plan”) which are vehicles holding securitized lease rental and other financing receivablestransferred by Xinyuan Financial Leasing (Zhejiang) Co., Ltd., one of our subsidiaries and the primary beneficiary of thePlans.The following tables set forth the Selected Condensed Consolidated Statements of operations for our company, non-VIEsubsidiaries, the VIEs and VIEs’ subsidiaries, and eliminations, for the years ended December 31, 2021, 2022 and 2023. For the year ended December 31, 2023Parent（Primary BeneficiaryOtherVIEs and VIEs’Consolidatedof VIEs) subsidiaries subsidiaries Eliminations TotalRevenue from third parties Freight delivery — 5,314,447 — — 5,314,447Supply chain management — 1,824,984 — — 1,824,984Global — 783,952 — — 783,952Others — 101,296 5,011 — 106,307 — 8,024,679 5,011 — 8,029,690Revenue from related parties Freight delivery — 89,948—— 89,948Supply chain management — 33,645 — — 33,645Global — 162,561 — — 162,561Inter-company revenues (1) — 34,546 585,780 (620,326) —Total revenue — 8,345,379 590,791 (620,326) 8,315,844Cost of revenue Freight delivery — (5,206,967) — — (5,206,967)Supply chain management — (1,700,467) — — (1,700,467)Global — (1,131,484) — — (1,131,484)Others — (22,923) (3,566) — (26,489)Inter-company cost (1) — (39,892) (580,434) 620,326 —Total cost of revenue — (8,101,733) (584,000) 620,326 (8,065,407)Operating expenses (52,260) (1,142,590) (7,504) — (1,202,354)(Loss)/income from non-operations (34,906) 94,046 (14,688) — 44,452Loss from VIEs and VIEs’ subsidiaries (2) (15,409) — — 15,409 —Loss from subsidiaries (2) (727,049) — — 727,049 —Income tax expense — (1,133) (8) — (1,141)Net loss from continuing operations (829,624) (806,031) (15,409) 742,458 (908,606)Operating expenses Income/(loss) from non-operations — 15,222 — — 15,222Income from subsidiaries (2) 15,222—— (15,222)—Net Income/(Loss) from discontinued operations 15,222 15,222 — (15,222) 15,222Net (Loss)/Income (814,402) (790,809) (15,409) 727,236 (893,384)Net loss from continuing operations attributable to non-controlling interests — (78,982) — — (78,982)Net (Loss)/Income attributable to BEST Inc. (814,402) (711,827) (15,409) 727,236 (814,402) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 103 of 248 Table of Contents96 For the year ended December 31, 2022Parent（Primary BeneficiaryOtherVIEs and VIEs’Consolidated of VIEs) subsidiaries subsidiaries Eliminations TotalRevenue from third parties Freight delivery — 4,812,190 30,931 — 4,843,121Supply chain management — 1,678,619 — — 1,678,619Global — 708,745 — — 708,745Others — 85,214 31,598 — 116,812 — 7,284,768 62,529 — 7,347,297Revenue from related parties Freight delivery — 45,157— — 45,157Supply chain management — 143,456 — — 143,456Global — 208,162 — — 208,162Inter-company revenues (1) — 114,778 349,427 (464,205) —Total revenue — 7,796,321 411,956 (464,205) 7,744,072Cost of revenue Freight delivery — (5,090,673) (24,264) — (5,114,937)Supply chain management — (1,711,818) — — (1,711,818)Global — (1,081,587) — — (1,081,587)Others — (97,663) (1,625) — (99,288)Inter-company cost (1) — (73,550) (390,655) 464,205 —Total cost of revenue — (8,055,291) (416,544) 464,205 (8,007,630)Operating expenses (40,747) (1,108,866) (13,014) — (1,162,627)(Loss)/income from non-operations (51,040) 16,252 (3,343) — (38,131)Loss from VIEs and VIEs’ subsidiaries (2) (20,957) — — 20,957 —Loss from subsidiaries (2) (1,312,103) — — 1,312,103 —Income tax expense — (499) (12) — (511)Net loss from continuing operations (1,424,847) (1,352,083) (20,957) 1,333,060 (1,464,827)Operating expenses — (31,617) — — (31,617)Income/(loss) from non-operations — (6,847) — — (6,847)Income from subsidiaries (2) (38,464) — — 38,464 —Net (Loss)/Income from discontinued operations (38,464) (38,464) — 38,464 (38,464)Net (Loss)/Income (1,463,311) (1,390,547) (20,957) 1,371,524 (1,503,291)Net loss from continuing operations attributable to non-controlling interests — (39,980) — — (39,980)Net (Loss)/Income attributable to BEST Inc. (1,463,311) (1,350,567) (20,957) 1,371,524 (1,463,311) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 104 of 248 Table of Contents97 For the year ended December 31, 2021Parent（Primary BeneficiaryOtherVIEs and VIEs’Consolidatedof VIEs) subsidiaries subsidiaries Eliminations TotalRevenue from third parties Freight delivery — 5,662,525 2,581,910 — 8,244,435Supply chain management — 1,476,743 — — 1,476,743Global — 992,518 — — 992,518Others — 92,413 80,029 — 172,442 — 8,917,219 2,661,939 — 10,886,138Revenue from related parties Supply chain management — 338,361 — — 338,361Global — 201,337 — — 201,337Inter-company revenues (1) — 153,399 534,689 (688,088) —Total revenue — 9,184,234 3,196,628 (688,088) 11,425,836Cost of revenue Freight delivery — (5,884,888) (2,621,850) — (8,506,738)Supply chain management — (1,741,832) — — (1,741,832)Global — (1,258,511) — — (1,258,511)Others — (92,531) (25,612) — (118,143)Inter-company cost (1) — (114,188) (573,900) 688,088 —Total cost of revenue — (9,091,950) (3,221,362) 688,088 (11,625,224)Operating expenses (44,897) (1,157,365) (61,322) — (1,263,584)(Loss)/income from non-operations (80,044) 295,861 (13,450) — 202,367Loss from VIEs and VIEs’ subsidiaries (2) (99,506) — — 99,506 —Loss from subsidiaries (2) (987,135) — — 987,135 —Income tax expense — (3,198) — — (3,198)Share of net loss of equity investees — (58) — — (58)Net loss from continuing operations (1,211,582) (1,039,414) (99,506) 1,086,641 (1,263,861)Revenue from third parties Express delivery — 25,728 15,618,517 — 15,644,245Store+ — 5,598 534,896 — 540,494 — 31,326 16,153,413 — 16,184,739Revenue from related parties Express delivery — — 149,624 — 149,624Inter-company revenues — — 183,770 (183,770) —Revenue from discontinued operations 31,326 16,486,807 (183,770) 16,334,363Express delivery — — (16,949,375) — (16,949,375)Store+ — (5,943) (357,789) — (363,732)Inter-company cost (1) — — (285,244) 285,244 —Total cost of revenue from discontinued operations — (5,943) (17,592,408) 285,244 (17,313,107)Operating expenses — 34,652 (636,648) (101,474) (703,470)Income/(loss) from non-operations — 136,646 (160,266) — (23,620)Loss from VIEs and VIEs’ subsidiaries (2) (1,936,791) —— 1,936,791 —Income from subsidiaries (2) 196,681—— (196,681)—Gains/(Losses) on disposal, net of tax 3,213,599 — (34,276) — 3,179,323Net Income/(Loss) from discontinued operations 1,473,489 196,681 (1,936,791) 1,740,110 1,473,489Net Income/(Loss) 261,907 (842,733) (2,036,297) 2,826,751 209,628Net loss from continuing operations attributable to non-controlling interests — (52,279)— — (52,279)Net Income/(Loss) attributable to BEST Inc. 261,907 (790,454) (2,036,297) 2,826,751 261,907 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 105 of 248 Table of Contents98The following tables set forth the Selected Condensed Consolidated cash flows for our company, non-VIE subsidiaries, the VIEs andVIEs’ subsidiaries, and eliminations, for the years ended December 31, 2021, 2022 and 2023. For the year ended December 31, 2023Parent(Primary BeneficiaryOtherVIEs and VIEs’Consolidatedof VIEs) subsidiaries subsidiaries Eliminations TotalNet cash used in continuing operating activities (95,847) (572,058) 122,813 — (545,092)Net cash generated from/(used in) discontinued operating activities — — — ——Net cash generated from/(used in) continuing investing activities 618,412 (38,383) (6,857) 55,803 628,975Loans to VIEs and VIEs’ subsidiaries (4) — (86,303) — 86,303—Repayment of loans to VIEs and VIEs’ subsidiaries (4) — 30,500 — (30,500)—Other investing activities 618,412 17,420 (6,857) — 628,975Net cash used in discontinued investing activities — — — ——Loans to VIEs and VIEs’ subsidiaries (4) — — — ——Repayment of loans to VIEs and VIEs’ subsidiaries (4) — — — ——Other investing activities — — — ——Net cash generated from/ (used in) continuing financing activities (527,126) 291,320 (61,877) (55,803) (353,486)Borrowings of VIEs and VIEs’ subsidiaries from Group companies (4) — — 86,303 (86,303)—Repayment of borrowings of VIEs and VIEs’ subsidiaries from Group companies (4) — — (30,500) 30,500—Other financing activities (527,126) 291,320 (117,680) — (353,486)Net cash (used in)/generated from discontinued financing activities — — — ——Borrowings of VIEs and VIEs’ subsidiaries from Group companies (4) — — — ——Repayment of borrowings of VIEs and VIEs’ subsidiaries from Group companies (4) — — — ——Other financing activities — — — —— For the year ended December 31, 2022Parent(Primary BeneficiaryOtherVIEs and VIEs’Consolidatedof VIEs) subsidiaries subsidiaries Eliminations TotalNet cash used in continuing operating activities (119,115) (1,106,415) 173,868 — (1,051,662)Net cash generated from/(used in) discontinued operating activities— (66,174)— — (66,174)Net cash generated from/(used in) continuing investing activities 1,492,777 (1,255,743) 156,660 (242,938) 150,756Loans to VIEs and VIEs’ subsidiaries (4)— (812,902)— 812,902—Repayment of loans to VIEs and VIEs’ subsidiaries (4)— 1,055,840— (1,055,840)—Other investing activities 1,492,777 (1,498,681) 156,660 — 150,756Net cash used in discontinued investing activities——— ——Loans to VIEs and VIEs’ subsidiaries (4)——— ——Repayment of loans to VIEs and VIEs’ subsidiaries (4)——— ——Other investing activities——— ——Net cash generated from/ (used in) continuing financing activities (1,373,764) (337,885) (479,656) 242,938 (1,948,367)Borrowings of VIEs and VIEs’ subsidiaries from Group companies (4)—— 812,902 (812,902)—Repayment of borrowings of VIEs and VIEs’ subsidiaries from Group companies (4)—— (1,055,840) 1,055,840—Other financing activities (1,373,764) (337,885) (236,718) — (1,948,367)Net cash (used in)/generated from discontinued financing activities——— ——Borrowings of VIEs and VIEs’ subsidiaries from Group companies (4)——— ——Repayment of borrowings of VIEs and VIEs’ subsidiaries from Group companies (4)——— ——Other financing activities——— —— For the year ended December 31, 2021Parent(Primary BeneficiaryOtherVIEs and VIEs’Consolidatedof VIEs) subsidiaries subsidiaries Eliminations TotalNet cash used in continuing operating activities (111,208) (567,230) (212,697) — (891,135)Net cash generated from/(used in) discontinued operating activities— 25,628 (1,938,454) — (1,912,826)Net cash generated from/(used in) continuing investing activities 82,099 4,921,416 (582,998) 570,217 4,990,734Loans to VIEs and VIEs’ subsidiaries (4)— (1,118,676)— 1,118,676—Repayment of loans to VIEs and VIEs’ subsidiaries (4)— 1,009,120— (1,009,120)—Other investing activities 82,099 5,030,972 (582,998) 460,661 4,990,734Net cash used in discontinued investing activities— (2,199,038) (448,016) 2,199,038 (448,016)Loans to VIEs and VIEs’ subsidiaries (4)— (4,882,089)— 4,882,089—Repayment of loans to VIEs and VIEs’ subsidiaries (4)— 2,683,051— (2,683,051)—Other investing activities—— (448,016) — (448,016)Net cash generated from/ (used in) continuing financing activities 2,604 (28,655) 358,346 (570,217) (237,922)Borrowings of VIEs and VIEs’ subsidiaries from Group companies (4)—— 1,118,676 (1,118,676)—Repayment of borrowings of VIEs and VIEs’ subsidiaries from Group companies (4)—— (1,009,120) 1,009,120—Other financing activities 2,604 (28,655) 248,790 (460,661) (237,922)Net cash (used in)/generated from discontinued financing activities— (274,999) 2,136,199 (2,199,038) (337,838)Borrowings of VIEs and VIEs’ subsidiaries from Group companies (4)—— 4,882,089 (4,882,089)—Repayment of borrowings of VIEs and VIEs’ subsidiaries from Group companies (4)—— (2,683,051) 2,683,051—Other financing activities (274,999) (62,839) — (337,838) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 106 of 248 Table of Contents99The following tables set forth the balance sheets depicting the financial position for our company, non-VIE subsidiaries, the VIEs andVIEs’ subsidiaries, and eliminations, as of December 31, 2022 and 2023. As at December 31, 2023Parent （Primary Beneficiary Other VIEs and VIEs’ Consolidatedof VIEs) subsidiaries subsidiaries Eliminations TotalASSETS Current assets: Cash and cash equivalents 2,142 413,946 9,888 — 425,976Restricted cash — 1,008,318— — 1,008,318Accounts and notes receivables, net — 788,035 41,767 — 829,802Inventories — 7,776 18 — 7,794Prepayments and other current assets 3,186 645,282 25,632 — 674,100Short-term investments — 35,888— — 35,888Lease rental receivables — 47,925— — 47,925Amounts due from related parties — 60,394— — 60,394Amount due from Group companies (3) — 404,371 302,018 (706,389)—Total current assets 5,328 3,411,935 379,323 (706,389) 3,090,197Non-current assets: Restricted cash — 810,911 1,460 — 812,371Property and equipment, net — 506,187 118,018 — 624,205Intangible assets, net — 93,173— — 93,173Goodwill — 54,135— — 54,135Long-term investments — 156,859— — 156,859Non-current deposits — 81,869— — 81,869Operating lease right-of-use assets — 1,293,526— — 1,293,526Lease rental receivables — 314— — 314Amount due from Group companies (3) — 321,759— (321,759)—Investment in subsidiaries and VIEs (2) 750,869—— (750,869)—Other non-current assets — 46,913— — 46,913Total non-current assets 750,869 3,365,646 119,478 (1,072,628) 3,163,365Total assets 756,197 6,777,581 498,801 (1,779,017) 6,253,562 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 107 of 248 Table of Contents100 As at December 31, 2023Parent （Primary Beneficiary Other VIEs and VIEs’ Consolidatedof VIEs) subsidiaries subsidiaries Eliminations TotalLIABILITIES Current liabilities: Short-term bank loans — 257,000 144,755 — 401,755Long-term borrowings-current portion — 721— — 721Long-term bank loan-current— 794,679— — 794,679Accounts and notes payable — 1,595,145 45,719 — 1,640,864Accrued expenses and other liabilities 1,333 1,057,006 33,234 — 1,091,573Customer advances and deposits and deferred revenue — 288,150 34 — 288,184Operating lease liabilities — 523,790— — 523,790Financing lease liabilities — 418— — 418Convertible senior notes held by a related party-current 106,240—— — 106,240Convertible senior notes held by third parties-current 78—— — 78Amounts due to related parties — 1,119— — 1,119Amount due to Group companies (3) — 302,018 404,371 (706,389)—Income tax payable — 2,757 20 — 2,777Liabilities held for sale ——— ——Total current liabilities 107,6514,822,803628,133 (706,389)4,852,198Non-current liabilities: Convertible senior notes held by a related party 424,962—— — 424,962Operating lease liabilities — 862,514— — 862,514Financing lease liabilities — 861 370 — 1,231Amount due to Group companies (3) 321,736— 23 (321,759)—Long-term bank loan — 159,729— — 159,729Long-term borrowings ——— ——Other non-current liabilities — 5,491 17,346 — 22,837Total non-current liabilities 746,698 1,028,595 17,739 (321,759) 1,471,273Total liabilities 854,349 5,851,398 645,872 (1,028,148) 6,323,471Total mezzanine equity — 191,865— — 191,865BEST Inc. shareholders’ equity (98,152) 897,940 (147,071) (750,869) (98,152)Non-controlling interests — (163,622)— — (163,622)Total shareholders’ equity (2) (98,152) 734,318 (147,071) (750,869) (261,774)Total liabilities, mezzanine equity and shareholders’equity 756,197 6,777,581 498,801 (1,779,017) 6,253,562 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 108 of 248 Table of Contents101As at December 31, 2022Parent（Primary BeneficiaryOtherVIEs and VIEs’Consolidatedof VIEs) subsidiaries subsidiaries Eliminations TotalASSETS Current assets: Cash and cash equivalents 6,703 515,174 11,604 — 533,481Restricted cash— 399,337— — 399,337Accounts and notes receivables, net— 649,967 41,357 — 691,324Inventories— 16,436 44 — 16,480Prepayments and other current assets 3,420 723,449 50,973 — 777,842Short-term investments— 725,043— — 725,043Lease rental receivables— 43,067— — 43,067Amounts due from related parties— 76,368— — 76,368Amount due from Group companies (3)— 447,845 268,909 (716,754)—Total current assets 10,123 3,596,686 372,887 (716,754) 3,262,942Non-current assets:Restricted cash — 1,544,131 1,474 — 1,545,605Property and equipment, net — 656,060 128,672 — 784,732Intangible assets, net — 75,553— — 75,553Goodwill — 54,135— — 54,135Long-term investments — 156,859— — 156,859Non-current deposits — 50,767— — 50,767Operating lease right-of-use assets — 1,743,798— — 1,743,798Lease rental receivables — 40,188— — 40,188Amount due from Group companies (3) — 408,118 — (408,118) —Investment in subsidiaries and VIEs (2) 2,135,384 — — (2,135,384) —Other non-current assets 719 74,947 —— 75,666Total non-current assets 2,136,103 4,804,556 130,146 (2,543,502) 4,527,303Total assets 2,146,226 8,401,242 503,033 (3,260,256) 7,790,245 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 109 of 248 Table of Contents102 As at December 31, 2022Parent（Primary BeneficiaryOtherVIEs and VIEs’Consolidatedof VIEs) subsidiaries subsidiaries Eliminations TotalLIABILITIESCurrent liabilities: Short-term bank loans — 73,128 110,142 — 183,270Long-term borrowings-current portion — 79,148— — 79,148Accounts and notes payable — 1,407,625 22,379 — 1,430,004Accrued expenses and other liabilities — 1,124,913 20,741 — 1,145,654Customer advances and deposits and deferred revenue — 277,737— — 277,737Operating lease liabilities — 543,886 376 — 544,262Financing lease liabilities — 1,490 10,383 — 11,873Convertible senior notes held by a related party-current 522,744——— 522,744Convertible senior notes held by third parties-current 77——— 77Amounts due to related parties — 1,315— — 1,315Amount due to Group companies (3) — 268,909 447,845 (716,754)—Income tax payable — 1,563— — 1,563Liabilities held for sale ——— ——Total current liabilities 522,821 3,779,714 611,866 (716,754) 4,197,647Non-current liabilities: Convertible senior notes held by a related party 522,744—— — 522,744Operating lease liabilities — 1,292,057— — 1,292,057Financing lease liabilities — 1,322 24,702 — 26,024Amount due to Group companies (3) 403,652— 4,466 (408,118)—Long-term bank loan — 928,894— — 928,894Long-term borrowings— 381—— 381Other non-current liabilities — 18,314 438 — 18,752Total non-current liabilities 926,396 2,240,968 29,606 (408,118) 2,788,852Total liabilities 1,449,217 6,020,682 641,472 (1,124,872) 6,986,499Total mezzanine equity — 191,865— — 191,865BEST Inc. shareholders’ equity 697,009 2,273,823 (138,439) (2,135,384) 697,009Non-controlling interests — (85,128)— — (85,128)Total shareholders’ equity (2) 697,009 2,188,695 (138,439) (2,135,384) 611,881Total liabilities, mezzanine equity and shareholders’equity 2,146,226 8,401,242 503,033 (3,260,256) 7,790,245(1)It represents the elimination of the intercompany service charge at the consolidation level.(2)It represents the elimination of the investment among the Parent, other subsidiaries, VIEs and VIEs’ subsidiaries and the Plans.(3)It represents the elimination of intercompany balances among the Parent, other subsidiaries, VIEs and VIEs’ subsidiaries and thePlans.(4)It represents the elimination of the cash support from the other subsidiaries to VIEs and VIEs’ subsidiaries and the repayment fromVIEs and VIEs’ subsidiaries through our inter-company cash pool. For the years ended December 31, 2021, 2022 and 2023,subsidiaries of our company provided cash support to the VIEs in the amounts of RMB6,000.8 million, RMB812.9 million andRMB86.3 million, respectively, through our inter-company cash pool. During the same periods, the VIEs made repayments to certainsubsidiaries in the amounts of RMB3,692.2 million, RMB1,055.8 million and RMB30.5 million (US$4.3 million), respectively,through the inter-company cash pool. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 110 of 248 Table of Contents103B.Liquidity and Capital ResourcesOur primary sources of liquidity have been issuance of equity securities, redeemable convertible preferred shares, convertiblesenior notes and short-term borrowings, which historically were sufficient to meet our working capital and capital expenditurerequirements.As of December 31, 2023, we had cash and cash equivalents of RMB426.0 million (US$60.0 million) and restricted cash (currentportion) of RMB1,008.3 million (US$142.0 million). As of December 31, 2023, we had short-term bank loans of RMB401.8 million(US$56.6 million), all of which were cash-collateralized. The weighted average interest rate for the outstanding short-term bank loans asof December 31, 2023 was 1.64%. We also had borrowing from third party financing lease companies of RMB1.6 million (US$0.2million), long-term borrowings of RMB795.4 million (US$112.0 million) as well as convertible senior notes of RMB531.3 million(US$74.8 million), among which RMB106.3 million (US$15.0 million) are due within the next 12 months as of December 31, 2023, andthe remaining portion, or RMB425.0 million (US$60.0 million) are due in 2025.The continuous negative impact of intense market competition had an adverse impact on our business operations and liquidity.We have incurred net losses from continuing operations of RMB908.6 million (US$128.0 million) and generated negative cash flow fromcontinuing operating activities of RMB545.1 million (US$76.8 million) during the year ended December 31, 2023. As of December 31,2023, we have a total cash position of RMB1,470.2 million (US$207.1 million) which included cash and cash equivalents, currentrestricted cash and short-term investments, a working capital deficiency of RMB1,762.0 million (US$248.2 million) and an accumulateddeficit of RMB19,749.3 million (US$2,781.6 million) which included accumulated losses from operations of RMB10,255.5 million(US$1,444.5 million) and accumulated accretion to redemption value and deemed dividend in relation to redeemable convertible preferredshares issued and outstanding prior to our initial public offering of RMB9,493.8 million (US$1,337.1 million). These adverse conditionsindicate that there is substantial doubt about our ability to continue as a going concern.Our management has implemented cost saving plans to reduce discretionary operational expenses and secure additional financingincluding, but not limited to, obtaining additional credit facilities from banks in the normal course of business, and re-financing certainexisting notes payables.In the first quarter of 2024, we have successfully obtained new financing of RMB220,000 (US$30,986) short-termbank loans on credit maturing in one year, which allows us to enhance liquidity.Although based on our current level of operations and available cash, and on the assumption that we are able to successfullyexecute the above-said plans to improve our liquidity and cash position, we believe that our cash and cash equivalents, cash generatedfrom our operations will provide sufficient liquidity to fund our current obligations, projected working capital requirements, debt servicerequirements and capital spending requirements for at least the next 12 months, the substantial doubt of the Company’s ability to continueas a going concern cannot be fully alleviated. The Company plans to raise additional capital to fund our operations and capitalexpenditures for the next twelve months from the date of issuance of these consolidated financial statement and beyond.In addition, we may require additional cash resources due to other changing business conditions or future developments,including any investments or acquisitions we may decide to selectively pursue. When we seek additional financing, we may seek to sellequity or equity-linked securities, debt securities or borrow from banks. We cannot assure you that financing will be available in theamounts we need or on terms acceptable to us, if at all. The sale of additional equity securities, including convertible debt securities,would result in additional dilution to our shareholders. The incurrence of indebtedness and issuance of debt securities would result in debtservice obligations and could result in operating and financial covenants that restrict our operations and our ability to pay dividends to ourshareholders. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 111 of 248 Table of Contents104Material Cash Requirements. Our material cash requirements include: (1) capital expenditures for construction of warehouse andequipment for our freight delivery, global logistic service and supply change management service (see Note 25 of the Notes to theFinancial Statements); (2) rental payment to landlord for our hubs, sortation centers and warehouses under operating lease agreements(seeNote 9 of the Notes to the Financial Statements) ; (3) payment to our fleet suppliers for transportation services and payment to laborsuppliers for outsource personnel needed in our normal business practice;(4) repayments of short-term and long-term bank loans(see Note12 of the Notes to the Financial Statements); (5) repayment of long-term borrowings, including asset backed plans(see Note 14 of theNotes to the Financial Statements); (6) repayment of convertible senior notes, including 2025 Convertible Notes and 2024 ConvertibleNotes (see Note 15 of the Notes to the Financial Statements). In addition, subject to approval by our Board of Directors, shareholderdistributions in the form of dividend payments and/or a share repurchase program may require the expenditure of a material amount ofcash. Moreover, we may be subject to additional material cash requirements that are contingent upon the occurrence of certain events, e.g.,legal contingencies, uncertain tax positions, and other matters.Tabular Disclosure of Contractual ObligationsThe following table sets forth our contractual obligations and commercial commitments as of December 31, 2023:Payment due by period Total Less than 1 year More than 1 yearIn thousands of RMBShort-term bank loans 401,755 401,755—Long-term bank loan 954,408 794,679 159,729Convertible senior notes 531,280 106,318 424,962Capital expenditure commitments 36,347 36,347—Operating lease obligations 1,689,408 604,939 1,084,469Long-term borrowings 721 721—Borrowings from third party financing lease companies 1,752 862 890Total 3,615,671 1,945,621 1,670,050As a holding company with no material operations of our own, we are a corporation separate and apart from our subsidiaries andthe VIEs and, therefore, must provide for our own liquidity. We conduct our operations in China primarily through our PRC subsidiariesand VIEs. As a result, our ability to pay dividends and to finance any debt we may incur depends upon dividends paid by our subsidiaries.If our PRC subsidiaries or any newly formed PRC subsidiaries incur debt on their own behalf in the future, the instruments governing theirdebt may restrict their ability to pay dividends to us. In addition, our PRC subsidiaries are permitted to pay dividends to us only out oftheir respective retained earnings, if any, as determined in accordance with Chinese accounting standards and regulations. Underapplicable PRC laws and regulations, our PRC subsidiaries are each required to set aside a portion of its after-tax profits each year to fundcertain statutory reserves, and funds from such reserves may not be distributed to us as cash dividends except in the event of liquidation ofsuch subsidiaries. These statutory limitations affect, and future covenant debt limitations might affect, our PRC subsidiaries’ ability to paydividends to us. We currently believe that such limitations will not impact our ability to meet our ongoing short-term cash obligationsalthough we cannot assure you that such limitations will not affect our ability in the future to meet our short-term cash obligations and todistribute dividends to our shareholders. See “Item 3. Key Information—D. Risk Factors—Risks Related to Doing Business in thePeople’s Republic of China—We rely to a significant extent on dividends and other distributions on equity paid by our principal operatingsubsidiaries to fund offshore cash and financing requirements. Any limitation on the ability of our operating subsidiaries to makepayments to us could have a material and adverse impact on our ability to operate our business” and “—Statutory Reserves.”Our main sources of cash funding for the VIEs have included short-term loans from local banks and financial institutions, cashgenerated from operations, and inter-company loans provided by other subsidiaries of our company. As of December 31, 2022 and 2023,the VIEs held cash and cash equivalents of RMB11.6 million and RMB9.9 million (US$1.4 million), respectively.For the years ended December 31, 2021, 2022 and 2023, subsidiaries of our company provided cash support to the VIEs in theamounts of RMB6,000.8 million, RMB812.9 million and RMB86.3 million, respectively, through our inter-company cash pool. During thesame periods, the VIEs made repayments to certain subsidiaries in the amounts of RMB3,692.2 million, RMB1,055.8 million andRMB30.5 million (US$4.3 million), respectively, through the inter-company cash pool. Other than the aforementioned cash transfers, therewas no other asset transfer between our subsidiaries, the VIEs and our company. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 112 of 248 Table of Contents105No dividend or distribution was made through the VIEs to our company during the years ended December 31, 2021, 2022 and2023.During the years ended December 31, 2021, 2022 and 2023, there was no restriction or limitation on our company’s ability toreceive earnings from our subsidiaries or to distribute them to U.S. investors. Likewise, there was no restriction or limitation on the VIEsto settle obligations under the VIE contractual arrangements. Historically, no distribution of earnings has been made due to the fact that amajority of our subsidiaries and the VIEs were still in a cumulative loss financial position.We have established stringent cash management policies and procedures for cash flows within our organization. Each transfer offunds among our Cayman Islands holding company, our subsidiaries and the VIE is subject to internal approval. In general, transfer offunds is required to be effected through online banking system. Cash is transferred through our organization primarily in the manner asfollows: (i) BEST may transfer funds to the WFOE, BEST Logistics Technology (China) Co., Ltd., , through its Hong Kong subsidiary,BEST Logistics Technologies Limited (Hong Kong), by additional capital contributions or shareholder loans, as the case may be, (ii) theWFOE may provide loans to the VIE, subject to statutory limits and restrictions, (iii) the VIE may repay loans to the WFOE at a fixedannual rate, and (iv) the WFOE may make dividends or other distributions to BEST through BEST Logistics Technologies Limited (HongKong). Our management is directly supervising cash management. The VIE initiates a cash request by putting forward a cash demandplan, which explains the specific amount and timing of cash requested, and submitting it to the finance department. The cashier specialistsof our financial department examine the needs of cash and submit it to the director of financial department or the CEO of the Company forfinal approval. To ensure the liquidity, there is no limit on the amount of cash that can be transferred through our organization. However,the annual cash flow plan between the VIE and the WFOE will be determined based on our annual business objectives approved by theboard of directors and approved by the CEO. In addition, we monitor our cash balance on a daily basis and conduct periodic review on ourcash holdings.The following table sets forth a summary of the movements of our cash and cash equivalents for the periods indicated: For the year ended December 31,202120222023 RMB RMB RMB US$(in thousands)Net cash generated used in operating activities for continuing operations (891,135) (1,051,662) (545,092) (76,777)Net cash used in operating activities for discontinued operations (1,912,826) (66,174) — —Net cash used in operating activities (2,803,961) (1,117,836) (545,092) (76,777)Net cash generated from investing activities for continuing operations 4,990,734 150,756 628,975 88,589Net cash used in investing activities for discontinued operations (448,016) — — —Net cash generated from investing activities 4,542,718 150,756 628,975 88,589Net cash generated used in financing activities for continuing operations (237,922) (1,948,367) (353,486) (49,787)Net cash used in financing activities for discontinued operations (337,838) — — —Net cash used in financing activities (575,760) (1,948,367) (353,486) (49,787)Effect of exchange rate changes on cash, cash equivalents and restricted cash (55,970) 77,722 37,845 5,332Net increase/(decrease) in cash, cash equivalents and restricted cash 1,107,027 (2,837,725) (231,758) (32,643)Cash, cash equivalents and restricted cash at the beginning of the year 4,209,121 5,316,148 2,478,423 349,079Cash, cash equivalents and restricted cash at the end of the year 5,316,148 2,478,423 2,246,665 316,436Operating ActivitiesNet cash used in operating activities for continuing operations was RMB545.1 million (US$76.8 million) in 2023, compared toRMB1,051.7 million used in operating activities for continuing operations in 2022. This decrease was primarily due to the decrease ofRMB556.2 million (US$78.3 million) in net loss from continuing operations.Net cash used in operating activities for continuing operations was RMB1,051.7 million in 2022, compared to RMB891.1 milliongenerated from operating activities for continuing operations in 2021. This increase was primarily due to the increase of RMB201.0million in net loss from continuing operations, which was mainly attributable to the competitive market dynamics and pricing lag. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 113 of 248 Table of Contents106Investing ActivitiesNet cash generated from investing activities for continuing operations was RMB629.0 million (US$88.6 million) in 2023, whichwas primarily due to (i) payments for purchase of property and equipment of RMB129.5 million (US$18.2 million), which property andequipment were used in the expansion and optimization of our freight service and global logistics services in Southeast Asia; (ii) receipt ofrepayment on lease rental and other financing receivables—principal portion in an aggregate amount of RMB36.5 million (US$5.1million); (iii) a net change in short-term investments of RMB738.7 million (US$104.0 million), which were proceeds from maturities ofshort-term investments of RMB1,782.5 million (US$251.1 million) offset by purchase of short-term investments of RMB1,043.8 million(US$147.0 million).Net cash generated from investing activities for continuing operations was 150.8 million in 2022, which was primarily due to (i)payments for purchase of property and equipment of RMB143.3 million, which property and equipment were used in the expansion andoptimization of our freight service and global logistics services in Southeast Asia; (ii) receipt of repayment on lease rental and otherfinancing receivables—principal portion in an aggregate amount of RMB557.5 million;(iii) a net change in short-term investments ofRMB428.8 million, which were proceeds from maturities of short-term investments of RMB1,804.3 million offset by purchase of short-term investments of RMB2,233.1 million, and (iv) origination of factoring receivables of RMB230.5 million, mainly for factoring serviceprovided to certain third-party suppliers who transfer their rights to future cash receipts from accounts receivable with recourse, partiallyoffset by receipt of repayment on factoring receivables—principal portion in an aggregate amount of RMB391.0 million.Financing ActivitiesNet cash used in financing activities for continuing operations was RMB353.5 million (US$49.8 million) in 2023, which wasmainly due to (i) repayment of 2025 Convertible Notes of RMB503.3 million (US$70.9 million); (ii) proceeds from short-term bank loansof RMB415.7 million (US$58.5 million), partially offset by repayment of short-term bank loans of RMB200.2 million (US$28.2 million),and (iii) repayment of long-term borrowings of RMB27.0 million (US$3.8 million).Net cash used in financing activities for continuing operations was RMB1,948.4 million in 2022, which was mainly due to (i)repayment of 2024 Convertible Notes of RMB1,363.9 million; (ii) proceeds from short-term and long-term bank loans of RMB248.8million, partially offset by repayment of short-term and long-term bank loans of RMB531.4 million, and (iii) repayment of long-termborrowings of RMB301.8 million.Convertible Senior NotesIn September 2019, we completed an offering of US$200 million aggregate principal amount of 1.75% convertible senior notesdue 2024 (including full exercise of the initial purchasers’ option to purchase additional notes), including US$100 million principalamount of notes sold to an entity affiliated with Alibaba Group Holding Limited. These convertible senior notes were offered to qualifiedinstitutional buyers in reliance on the exemption from registration provided by Rule 144A under the Securities Act, and to certain non-U.S. persons in offshore transactions in reliance on Regulation S under the Securities Act. The notes will mature on October 1, 2024.Holders may convert their notes at their option at any time prior to the close of business on the second scheduled trading day immediatelypreceding the maturity date. Upon conversion, we will cause to be delivered, for each US$1,000 principal amount of converted notes, anumber of ADSs equal to the conversion rate. The notes may be converted into our ADSs at an initial conversion rate of 7.0922 ADSs perUS$1,000 principal amount of notes (equivalent to an initial conversion price of approximately US$141.00 per ADS), which rate is subjectto adjustment in some events but will not be adjusted for any accrued and unpaid interest. In 2022, we repurchased approximately US$200million aggregate principal amount of our 1.75% convertible senior notes due 2024, and the repurchased notes were canceled accordingly.Of these repurchases, (i) approximately US$95 million principal amount of notes were repurchased in multiple transactions pursuant todefinitive agreements that were privately negotiated and entered into by us and certain holders of the notes, and (ii) approximately US$105million principal amount of notes were repurchased pursuant the holders’ right to require us to repurchase all of their notes or any portionthereof that is an integral multiple of US$1,000 principal amount for cash on September 30, 2022 pursuant to the relevant indenture datedas of September 17, 2019. Notes in the principal amount of approximately US$0.011 million remain outstanding after such repurchases. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 114 of 248 Table of Contents107In June 2020, we completed a private placement of US$150 million aggregate principal amount of 4.5% convertible senior notesdue 2025 to Alibaba.com Hong Kong Limited, an entity affiliated with Alibaba, one of our principal shareholders. These convertiblesenior notes were issued and sold outside the United States in an offshore transaction in reliance on the exemption from registrationprovided by Regulation S under the Securities Act. The notes will mature on June 3, 2025. Holders may convert their notes at their optionat any time prior to the close of business on the second business day immediately preceding the maturity date. Upon conversion, we willcause to be delivered, for each US$100,000 principal amount of converted notes, a number of Class A ordinary shares equal to theconversion rate. The notes may be converted into our Class A ordinary shares at an initial conversion price of approximately US$121.40per ADS, which rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaid interest. In April 2023, weand Alibaba.com Hong Kong Limited agreed that Alibaba.com Hong Kong Limited would require us to repurchase one half of the 2025Convertible Notes in 2023. In 2023, we repurchased US$75 million aggregate principal amount of the 2025 Convertible Notes, and therepurchased notes were canceled accordingly. In December 2023, all of the 2025 Convertible Notes were transferred by Alibaba HK toAlibaba China. On April 22, 2024, we and Alibaba China entered into an agreement to amend the Early Redemption Rights of the 2025Convertible Notes, pursuant to which Alibaba China will require us to repurchase US$15 million (RMB106.2 million) aggregate principalamount of 2025 Convertible Notes with accrued interest before August 30, 2024 and to repurchase the remaining portion, or US$60million (RMB425.0 million) aggregate principal amount with accrued interest on May 10, 2025. However, we may not have enoughavailable cash or be able to obtain financing at the time we are required to make repurchases of notes surrendered therefor or redeem thenotes. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—We may not have the ability toraise the funds necessary to repurchase our convertible senior notes on the repurchase date or upon the occurrence of a fundamentalchange, and our future debt may contain limitations on our ability to pay cash upon required repurchase or redemption of the notes.”Segment Financial InformationThe table below provides a summary of our operating segment results for the years ended December 31, 2021, 2022 and 2023,which have been derived from the notes to our consolidated financial statements included elsewhere in this annual report.With the exception of the below, all segment information in this annual report is presented after inter-segment eliminations:For the year ended December 31, 202120222023RMBRMBRMBUS$(in thousands)Revenue: Freight 8,353,703 4,890,823 5,412,204 762,293Supply Chain Management 1,820,239 1,852,153 1,857,429 261,613Global 1,194,146 963,505 949,738 133,768Others 172,447 116,859 106,393 14,985Inter-segment eliminations (114,699) (79,268) (9,920) (1,397)Consolidated revenue 11,425,836 7,744,072 8,315,844 1,171,262Gross (loss)/profit:Freight (262,303) (226,659) 197,429 27,807Supply Chain Management 73,272 110,257 158,162 22,276Global (64,656) (164,680) (184,970) (26,052)Others 54,299 17,524 79,816 11,242Consolidated gross (loss)/profit (199,388) (263,558) 250,437 35,273Since January 1, 2021, together with the strategic refocusing plan executed from late 2020, we grouped Capital service andUCargo service into “Others” segment. Also after the disposal of Express business in December 2021, we report our financial results infour operating segments: (i) freight delivery services, or the Freight segment, (ii) supply chain management services, or the Supply ChainManagement segment, (iii) Global logistics services, or the Global segment, (iv) Other segment. This change in segment reporting alignswith the manner in which we currently receive and use financial information to allocate resource and evaluate the performance of ouroperating segments. As the financial results from our (i) Store+ services, and (ii) Express services, each formerly reported as a separatereportable segment, are now disclosed as discontinued operations, they are not reflected in the segment disclosures above. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 115 of 248 Table of Contents108Since January 1, 2022, due to the winding down of UCargo, the Company reported UCargo services together with Freightdelivery services, and prior year’s comparative figures related to UCargo services revenue of RMB2,519,919 and RMB2,809,081 under“Revenue - Others” for the years ended December 31, 2020 and 2021, respectively, have been reclassified to “Revenue - Freight delivery”to conform to the current year’s presentation. We continue to report our financial results in four operating segments: (1) Freight delivery,or the Freight segment, (2) Supply chain management, or the Supply Chain Management segment, (3) Global logistics, or the Globalsegment, (4) Others segment.The inter-segment eliminations for the periods indicated above mainly consisted of (i) segment revenue of the Freight segmentprovided to the Supply Chain Management segment, and (ii) segment revenue of the Global segment provided to our Supply ChainManagement segment, all of which were eliminated as intergroup transactions as a result of consolidation.The table below provides a summary of the principal markets in which we compete, including a breakdown of total revenues bycategory of activity and geographic market for the years ended December 31, 2021, 2022 and 2023, which have been derived from thenotes to our consolidated financial statements included elsewhere in this annual report. For the years ended December 31,202120222023 RMB RMB RMB US$(in thousands)PRC 10,231,981 6,827,165 7,369,331 1,037,948Non-PRC 1,193,855 916,907 946,513 133,314 11,425,836 7,744,072 8,315,844 1,171,262Year Ended December 31, 2023 Compared to Year Ended December 31, 2022Revenue by SegmentSegment revenue of our Freight segment, Supply Chain Management segment increased from 2022 to 2023 primarily due to anincrease in segment revenue from external customers. Segment revenue of our Global segment and Other segments decreased from 2022to 2023 primarily due to a decrease in segment revenue from external customers. For additional information regarding these trends, pleasesee “—Year-over-Year Comparisons of Results of Operations—Year Ended December 31, 2023 Compared to Year Ended December 31,2022.”Year Ended December 31, 2022 Compared to Year Ended December 31, 2021Revenue by SegmentSegment revenue of our Supply Chain Management segment increased from 2021 to 2022 primarily due to an increase insegment revenue from external customers. Segment revenue of our Freight segment, Global segment and Other segments decreased from2021 to 2022 primarily due to a decrease in segment revenue from external customers. For additional information regarding these trends,please see “—Year-over-Year Comparisons of Results of Operations—Year Ended December 31, 2022 Compared to Year EndedDecember 31, 2021.”Statutory ReservesUnder applicable PRC laws and regulations, our PRC subsidiaries are required to provide for certain statutory reserves. Pursuantto such laws and regulations, we may pay dividends only out of our after-tax profits, if any, determined in accordance with Chineseaccounting standards and regulations. Further, we are required to allocate at least 10% of our after-tax profits to fund the general reserveuntil such reserve has reached 50% of our registered capital. In addition, we may also set aside, at our or our Board’s discretion, a portionof our after-tax profits to fund the employee welfare and bonus fund. These reserves may only be used for specific purposes and are notdistributable to us in the form of loans, advances, or cash dividends.As of December 31, 2021, 2022 and 2023, our PRC subsidiaries had appropriated an aggregate of RMB167, nil and nil,respectively, in their statutory reserves. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 116 of 248 Table of Contents109Recent Accounting PronouncementsPlease see Note 2 to our consolidated financial statements included elsewhere in this annual report.C.Research and Development, Patents and Licenses, etc.Technology and Service Offering DevelopmentSee “Item 4. Information on the Company—B. Business Overview—Our Technology Infrastructure” and “Item 4. Information onthe Company—B. Business Overview—Our Service Offerings.”Intellectual PropertySee “Item 4. Information on the Company—B. Business Overview—Intellectual Property.”D.Trend InformationPlease refer to “—A. Results of Operations” for a discussion of the most recent trends in our services, sales and marketing as ofthe end of 2022. In addition, please refer to discussions included in such Item for a discussion of known trends, uncertainties, demands,commitments or events that we believe are reasonably likely to have a material effect on our net sales and operating revenues, incomefrom continuing operations, profitability, liquidity or capital resources, or that would cause reported financial information to be notnecessarily indicative of our future operating results or financial condition.E.Critical Accounting Policies and EstimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires us to make estimates andassumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheetdates and the reported amounts of revenue and expenses during the reporting periods. We consider an accounting estimate to be critical if:(1) the accounting estimate requires us to make assumptions about matters that were highly uncertain at the time the accounting estimatewas made, and (2) changes in the estimate that are reasonably likely to occur from period to period, or use of different estimates that wereasonably could have used in the current period, would have a material impact on our financial condition or results of operations. Inaddition, there are other items within our financial statements that require estimation, but are not deemed critical as defined above.Changes in estimates used in these and other items could have a material impact on our financial statements.We base our estimates on historical experience and various other assumptions that are believed to be reasonable, the results ofwhich form the basis for making judgments about the carrying values of assets and liabilities. Our actual results could materially differfrom those estimates.The selection of critical accounting policies, the judgments and other uncertainties affecting application of those policies and thesensitivity of reported results to changes in conditions and assumptions are factors that should be considered when reviewing our financialstatements. For further information on our critical accounting policies, see Note 2 to our consolidated financial statements. We believe thefollowing accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements.GoodwillWe assess goodwill for impairment in accordance with ASC 350-20, Intangibles—Goodwill and Other: Goodwill (“ASC 350-20”), which requires that goodwill be tested for impairment at the reporting unit level at least annually and more frequently upon theoccurrence of certain events. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 117 of 248 Table of Contents110We have determined it has four reporting units (that also represent operating segments) in 2021, which excludes the formerStore+ reporting unit and BEST Express which were reported as discontinue operations in the consolidated statements of comprehensiveincome/(loss) and the corresponding goodwill allocated to the Store+ reporting unit and BEST Express was classified as assets held forsale on the consolidated balance sheets (Note 4) before the subsidiaries disposal. Goodwill was allocated to two reporting units includingFreight delivery reporting unit and Global unit as of December 31, 2020 and 2021. We have the option to assess qualitative factors first todetermine whether it is necessary to perform the quantitative test in accordance with ASC 350-20. In the qualitative assessment, weconsider primary factors such as industry and market considerations, overall financial performance of the reporting unit, and other specificinformation related to the operations. If we believe, as a result of the qualitative assessment, that it is more-likely-than-not that the fairvalue of the reporting unit is less than its carrying amount, the quantitative impairment test described above is required. Otherwise, nofurther testing is required. The quantitative impairment test compares the fair value of the reporting unit with its carrying amount,including goodwill. If the carrying amount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amountequal to that excess.Methodologies and significant estimates utilized in determining the fair value of reporting unitsThe fair value of each reporting unit was estimated using a discounted cash flow methodology. The discounted cash flow analysisrequires significant estimates, including projections of future operating results and cash flows of each reporting unit that are based oninternal budgets and strategic plans, expected long-term growth rates, terminal values, weighted average cost of capital and the effects ofexternal factors and market conditions. Changes in these estimates and assumptions could materially affect the estimated fair value of eachreporting unit that could result in an impairment charge to reduce the carrying value of goodwill, which could be material to our financialposition and results of operations.The sensitivity analyses on the future cash flows and WACC assumptions are described below. These key assumptions utilized inthe discounted cash flow valuation methodology require significant management judgment:Future cash flow assumptions - The projections for future cash flows utilized in the models are derived from historical experience andassumptions regarding future growth and profitability of each reporting unit. These projections are consistent with our operating budgetand strategic plan. Cash flows for the five years subsequent to the date of the quantitative goodwill impairment test were utilized in thedetermination of the fair value of each reporting unit. The growth rates assumed a gradual increase in revenue based on new customeracquisition and market expansion. Beyond five years a terminal value was determined using a perpetuity growth rate based on inflationand real GDP growth rates. A sensitivity analysis of the revenue growth rates, gross profit and operating expenses were performed on allreporting units. For each reporting unit analyzed, a 10% reduction in the revenue growth rates used, or a 10% increase in operatingexpense, or 10% reduction in gross profit respectively would not have resulted in its carrying value exceeding its estimated fair value.WACC - The WACC is the rate used to discount each reporting unit’s estimated future cash flows. The WACC is calculated based on theproportionate weighting of the cost of debt and equity. The cost of equity is based on a risk-free interest rate and an equity risk factor,which is derived from public companies similar to the reporting unit and which captures the perceived risks and uncertainties associatedwith the reporting unit’s cash flows. The cost of debt component is calculated as the weighted average cost associated with all of theCompany’s outstanding borrowings as of the date of the impairment test and was immaterial to the computation of the WACC. The cost ofdebt and equity is weighted based on the debt to market capitalization ratio of publicly traded companies with similarities to the reportingunit being tested. The WACC for Global reporting unit is 15% as of December 31, 2022 and 2023 A sensitivity analysis of the WACC wasperformed as of December 31, 2022 and 2023. An increase in the WACC of ten percentage would not result in the carrying value of thereporting unit exceeding its fair value.Impairment of long-lived assets held for use other than goodwillWe evaluate our long-lived assets, including fixed assets, intangible assets with finite lives and operating lease right-of-use assets,for impairment whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impactthe future use of the assets, indicate that the carrying amount of an asset may not be fully recoverable. When these events occur, weevaluate the recoverability of long-lived assets by comparing the carrying amount of the assets to the future undiscounted cash flowsexpected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flows is less thanthe carrying amount of the assets, we recognize an impairment loss based on the excess of the carrying amount of the assets over their fairvalue. Impairment losses are included in Impairment of long-lived assets” in the consolidated statements of comprehensive income (loss). Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 118 of 248 Table of Contents111The calculation of cash flow analysis requires significant estimates and judgement, in particular, these estimates are sensitive tosignificant assumptions, including revenue growth rate, operating margin and operating expenses, which can be affected by expectationsabout internal budgets and strategic plans and expected long-term growth rates, and WACC, which captures the perceived risks anduncertainties associated with the Compay. Changes in these estimates and assumptions could materially affect the estimated futureundiscounted cash flows expected to result from the use of the assets and their eventual disposition, which could result in an impairmentcharge to reduce the carrying value of long-lived assets, and could be material to our financial position and results of operations.The sensitivity analyses on the future cash flows are described below. These key assumptions utilized in the undiscounted cashflow valuation methodology require significant management judgment:Future cash flow assumptions - The projections for future cash flows utilized in the models are derived from historical experienceand assumptions regarding future growth and profitability of long lived asset group. These projections are consistent with our operatingbudget and strategic plan. We also make assumptions about our cost levels (e.g., capacity utilization, cost performance in various volumelevel) based on our historical operating results to drive our future operating margin. Cash flows for estimated useful lives of the long livedasset group subsequent to the balance sheet date of the impairment test were utilized in the determination of recoverability of long livedasset group. The growth rates assumed a gradual increase in revenue based on new customer acquisition and market expansion. Asensitivity analysis of the revenue growth rates, gross profit margin and operating expenses were performed on all asset groups. For eachasset group analyzed, a 10% reduction in the revenue growth rates used or gross profit margin, or a 10% increase in operating expenserespectively would not have resulted in its carrying value exceeding its estimated fair value. We completed our impairment analysis anddetermined that the carrying value of the Global asset group exceeded its fair value as of December 31, 2023, the date of our evaluation.As a result, we have recognized an impairment loss of RMB94.7 million for the year ended December 31, 2023, to write down theproperty and equipment of the asset group to its fair market value, the charge for which we have included in “Impairment of long-livedassets“ within our consolidated statements of operations as part of our Global segment.Accounts receivable and notes receivable, and allowance for credit lossesWe maintain an allowance for credit losses and records the allowance for credit losses as an offset to accounts receivable andcontract assets and the estimated credit losses charged to the allowance is classified as “General and administrative expenses” in theconsolidated statements of comprehensive (loss)/income. We assesse collectability by reviewing accounts receivable and contract assets ona collective basis where similar characteristics exist, primarily based on similar business line, service or product offerings and on anindividual basis when we identify specific customers with known disputes or collectability issues. In determining the amount of theallowance for credit losses, we consider historical collectability based on past due status, the age of the accounts receivable balances andcontract assets balances, credit quality of our customers based on ongoing credit evaluations, current economic conditions, reasonable andsupportable forecasts of future economic conditions, and other factors that may affect our ability to collect from customers.We estimate the allowance for credit losses for receivables that share similar risk characteristics based on a collective assessmentusing a combination of measurement models and management judgment. The models consider factors such as historical trends in creditlosses, recent portfolio performance, and forward-looking macroeconomic conditions. If we do not believe the models reflect lifetimeexpected credit losses for the portfolio, an adjustment is made to reflect management judgment regarding qualitative factors includingeconomic uncertainty, observable changes in portfolio performance, and other relevant factors.Assumptions Used. Our allowance for credit losses is based on its assumptions regarding:●Probability of default. The expected probability of payment and time to default, which include assumptions aboutmacroeconomic factors and recent performance; and●Loss given default. The percentage of the expected balance due at default that is not recoverable. The loss given defaulttakes into account expected collateral value and future recoveries. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 119 of 248 Table of Contents112Fair value measurement of equity investments without readily determinable fair valueFor equity securities accounted for under the measurement alternative, when there are observable price changes in orderlytransactions for identical or similar investments of the same issuer, the investments are re-measured to fair value. The non-recurring fairvalue measurements to the carrying amount of an investment usually requires management to estimate a price adjustment for the differentrights and obligations between a similar instrument of the same issuer with an observable price change in an orderly transaction and theinvestment held by us. These non-recurring fair value measurements were measured as of the observable transaction dates. The valuationmethodologies involved require management to use the observable transaction price at the transaction date and other unobservable inputs(level 3) such as expected volatility and probability of exit events as it relates to liquidation and redemption preferences. When there isimpairment of equity securities accounted for under the measurement alternative and equity method investments, the non-recurring fairvalue measurements are measured at the date of impairment. Estimating the fair value of investees without observable market prices ishighly judgmental due to the subjectivity of the unobservable inputs (level 3) used in the valuation methodologies used to determine fairvalue, especially considering the increased market volatility in the global financial markets after the COVID-19 outbreak. The fair valueinformation is sensitive to changes in the unobservable inputs used to determine fair value and such changes could result in the fair valueat the reporting date to be different from the fair value presented. When our assessment indicates that an impairment exists, we write downthe investment to its fair value.Income taxWe follow the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes (“ASC 740”). Underthis method, deferred tax assets and liabilities are determined based on the difference between the financial reporting and tax bases ofassets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected to reverse. We record avaluation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion,or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rate is recognized in tax expense in theperiod that includes the enactment date of the change in tax rate.We accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties arising from underpayment ofincome taxes shall be computed in accordance with the related PRC tax law. The amount of interest expense is computed by applying theapplicable statutory rate of interest to the difference between the tax position recognized and the amount previously taken or expected tobe taken in a tax return. Interest and penalties recognized in accordance with ASC 740 are classified in the consolidated statements ofcomprehensive (loss)/income as income tax expense.We recognize in its consolidated financial statements the impact of a tax position if a tax return position or future tax position is“more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likely than not”recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of being realizedupon settlement. Our estimated liability for unrecognized tax benefits included in “Other noncurrent liabilities” in the accompanyingconsolidated balance sheets is periodically assessed for adequacy and may be affected by changing interpretations of laws, rulings by taxauthorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. The actual benefitsultimately realized may differ from the Company’s estimates. As each audit is concluded, adjustments, if any, are recorded in theCompany’s consolidated financial statements. Additionally, in future periods, changes in facts, circumstances, and new information mayrequire the Company to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognitionand measurement estimates are recognized in the period in which the changes occur.Revenue recognitionRevenue is recognized when control of promised goods or services is transferred to our customers in an amount of considerationto which an entity expects to be entitled to in exchange for those goods or services. We present value-added taxes as a reduction fromrevenues. We do not disclose the value of unsatisfied performance obligations for (i) contracts with an original expected length of one yearor less and (ii) contracts for which we recognize revenue at the amount to which it has the right to invoice for services performed. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 120 of 248 Table of Contents113Our revenue recognition policies are as follows:Freight delivery servicesWe provide freight services that comprise of sorting, line-haul and feeder transportation services mainly to our franchisees, whichare also our customers. We offer an integrated service to franchisee service stations that includes last-mile delivery service to endrecipients and acts as the principal that is directly responsible for all shipments sent through its network, from the point when customersdrop off the shipments at our first hub or sortation center all the way through to the point when the shipments are delivered to endrecipients.Customers are required to prepay for freight delivery services and we record such amounts as “Customer advances and depositsand deferred revenue” in the consolidated balance sheets. The transaction price we earn from its customers are based on the shipment’sweight and route to the end recipient’s destination. In addition, we provide certain discounts, incentives and rebates based on explicitlyagreed upon terms with ourcustomers that can decrease the transaction price and estimates variable consideration based on the most likelyamount to be provided. The amount of variable consideration included in the transaction price is limited to the amount that will not resultin a significant revenue reversal. We review the estimate of variable consideration and updates the transaction price at the end of eachreporting period as necessary. Uncertainties related to the estimates of variable consideration are resolved in a short time frame.Adjustments to variable consideration are recognized in the period the adjustments are identified and were insignificant for the periodspresented.Our freight delivery services contracts with customers include only one performance obligation. Performance obligations aregenerally short-term in nature with transit days being a week or less for each shipment. We recognize revenue over time as customersreceive the benefit of our services as the goods are shipped from one location to another. As such, freight delivery services revenue isrecognized proportionally as a shipment moves from origin to destination and the related costs are recognized as incurred. We use anoutput method of progress based on time-in-transit as it best depicts the transfer of control to the customer.Freight delivery services revenue also includes initial non-refundable franchise fees. The initial non-refundable franchise fees arerecognized over the franchise period due to the franchisees’ rights to access our logos and brand names which are considered symbolicintellectual properties. The initial non-refundable franchise fees are negotiated under a separate agreement and represent a very smallpercentage of revenue for all periods presented.Supply chain management servicesWe provide warehouse management, order fulfillment services and transportation services to our offline and online enterprisecustomers (“enterprise customers”). We enter into supply chain warehouse management service agreements with these customers toprovide warehouse management and order fulfillment services through our self-operated order fulfillment centers and transportationservices agreements for transportation services. The majority of the contracts have an effective term of one year. Order fulfillment servicerevenue is generated from various service fees charged on a volume basis in connection with various order fulfillment services, which mayinclude in-warehouse processing, order fulfillment, freight delivery and other value-added services. Pursuant to the warehousemanagement service agreements and transportation services agreements, enterprise customers have the right to terminate the contracts byproviding one month’s advance notice. Therefore, even though the contract term for the majority of the contracts is one year, due to thetermination rights provided to enterprise customers, warehouse management service agreements and transportation services agreementsare considered month-to-month service contracts. Enterprise customers are billed on a monthly basis and make payments according totheir granted credit terms which ranges from 5 to 240 days.Under some situations, enterprise customers may request to add a transportation route or increase the warehouse rental space byentering into a separate contract with us. The additional services are considered distinct and the service fees are priced at their standaloneselling prices, i.e. they cannot be purchased at a significant or incremental discount. Therefore, we account for this type of contractmodification as a separate contract and the revenue recognized to date on the original contract is not adjusted.The warehouse management service agreements comprise various service offerings that can be purchased at the option of thecustomer. Although the service options are interrelated, none of the services modify the other services and they are not integrated toprovide a combined output. Each of the service options is substantive and the enterprise customers cannot purchase each additional serviceat a significant and incremental discount. Therefore, each service is accounted for as a separate performance obligation. We are theprimary obligor and do not outsource any portion of the order fulfillment services to supply chain franchisee partners. We recognizewarehouse management and order fulfillment services revenue upon completion of the services as that is when we transfer control of theservices and have right to payment. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 121 of 248 Table of Contents114For transportation services, we provide the service of arranging transportation and coordinating shipments to and from locationsdesignated by our enterprise customers. Each transportation order for delivery of goods from origin to destination is considered aperformance obligation. Performance obligations are generally short-term in nature with transit days being a week or less for eachshipment. We recognize transportation services revenue over time as customers receive the benefit of our services as the goods are shippedfrom origin to destination. As such, transportation service revenue is recognized proportionally as a shipment moves from origin todestination and the related costs are recognized as incurred. We use an output method of progress based on time-in-transit as it best depictsthe transfer of control to the customer.A small percentage of revenue is also earned from supply chain franchisee partners that can access our supply chain network.These franchisee partners pay an initial non-refundable fee for a comprehensive operating manual and orientation training, as well as anagreed system usage fee for each order processed through our supply chain network. The initial non-refundable fees and system usage feeswere insignificant for all periods presented.Global logistics servicesWe provide international logistics services in multiple countries and regions across North America, Europe and Asia, such ascross-border logistic coordination service as well as international and local express delivery services outside China. Revenue for ourglobal logistics services is primarily recognized proportionally as a shipment moves from origin to destination using an output method ofprogress based on time-in-transit while the related costs are recognized as incurred.Other servicesOther services are mainly represent SaaS software service and Capital service the Company provided to customers.SaaS software serviceWe services as a proprietary technology platform to provide solution services to the ecosystem participants. We are the principalto the transaction for these services and revenue from these transactions is recognized on a gross basis. Revenue is recognized ratably overthe contract period and is initially recorded as “Customer advances and deposits and deferred revenue”.Capital serviceWe serve as a financing platform to provide tailored financing solutions to our ecosystem participants, such as fleet andequipment financing lease service and factoring services. Revenue generated from provision of capital services primarily consists ofinterest income on lease rental and other financing receivables, which is recognized as revenue using the effective interest rate method.Express delivery services (now disclosed as discontinued operations)We provide express services that comprise sorting, line-haul and feeder transportation services to our franchisee service stations,which are also our customers, when parcels (under 15 kg) are dropped off by our franchisee service station customers at our first hub orsortation center.We offer an integrated service to the franchised service stations that includes last-mile delivery service to end recipients and weact as the principal that is directly responsible for all parcels sent through our network, from the point when customers drop off the parcelsat our first hub or sortation center all the way through to the point when the parcels are delivered to end recipients. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 122 of 248 Table of Contents115Customers are required to prepay for express delivery services and we record such amounts as “customer advances and depositsand deferred revenue” in the balance sheet. The transaction price we earn from our customers are based on the parcel’s weight and route tothe end recipient’s destination. In addition, we provide certain discounts, incentives and rebates based on explicitly agreed upon terms withour customers that can decrease the transaction price and estimates variable consideration based on the most likely amount to be provided.The amount of variable consideration included in the transaction price is limited to the amount that will not result in a significant revenuereversal. We review the estimate of variable consideration and updates the transaction price at the end of each reporting period asnecessary. Uncertainties related to the variable consideration for transactions are resolved in a short time frame. Adjustments to variableconsideration are recognized in the period the adjustments are identified and were insignificant for the periods presented.Our express delivery services contracts with customers include only one performance obligation. Performance obligations aregenerally short-term in nature and with transit days being a week or less for each parcel. We recognize revenue over time as customersreceive the benefit of our services as the goods are delivered from one location to another. As such, express delivery services revenue isrecognized proportionally as a parcel moves from origin to destination and the related costs are recognized as incurred. We use an outputmethod of progress based on time-in-transit as it best depicts the transfer of control to the customer.A minor percentage of our express delivery services are performed by our self-operated service stations for direct customers(“direct customers express delivery services”) who are the senders of the parcels. We are directly responsible for the parcel from the pointit is received from the senders all the way through the point when the parcels are delivered to end recipients. Direct customer expressdelivery services revenue is recognized proportionally as parcels are transported to end recipients and the related costs are recognized asincurred.Express delivery services revenue also includes initial non-refundable franchise fees. The initial non-refundable franchise fees arerecognized over the franchise period due to the franchisees’ rights to access our logos and brand names which are considered symbolicintellectual properties. The initial non-refundable franchise fees are negotiated under a separate agreement and represent a very smallpercentage of revenue for all periods presented.LeasesWe determine whether an arrangement is or contains a lease at inception. Our accounting policy effective on the adoption date ofASU 2016-02 is as follows:Sales-type, direct financing and operating leases as LessorWe classify a lease as a sales-type lease when the lease meets any one of the following criteria at lease commencement:a.The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.b.The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.c.The lease term is for a major part of the remaining economic life of the underlying asset.d.The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not alreadyreflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset.e.The underlying asset is of such a specialized nature that it is expected to have no alternative use to our company at the end ofthe lease term.For sales-type leases, when collectability is probable at lease commencement, we derecognize the underlying asset and recognizethe net investment in the lease which is the sum of the lease receivable. Initial direct costs are expensed, at the commencement date, if thefair value of the underlying asset is different from its carrying amount. Interest income is recognized in financing income over the leaseterm using the interest method.When none of the criteria above are met, we classify a lease as either a direct financing lease or an operating lease. We willclassify the lease as a direct financing lease if (i) the present value of the sum of lease payments and any residual value guaranteed by thelessee and any other third party unrelated to us equals or exceeds substantially all the fair value of the underlying asset; and (ii) it isprobable that we will collect the lease payments plus any amount necessary to satisfy a residual value guarantee. If both of the criteriaabove are not met, we will classify the lease as an operating lease. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 123 of 248 Table of Contents116The new standard requires lessors within the scope of ASC 942, Financial Services – Depository and Lending, to classifyprincipal payments received from sales-type and direct financing leases in investing activities in the statement of cash flows. We continueto present cash receipts from sales-type and direct financing leases as an investing cash inflow.Sale-leaseback transactions as LessorWhen we enter into sale-leaseback transactions as lessor, we assess whether a contract exists and whether the seller-lesseesatisfies a performance obligation by transferring control of an asset when determining whether the transfer of an asset shall be accountedfor as a sale of the asset. If the seller-lessee transfers the control of the leased asset to us, it accounts for the purchase of the leased asset inaccordance with ASC360. The subsequent leaseback of the asset is accounted for in accordance with ASC842 in the same manner as anyother lease. If the seller-lessee does not transfer the control of the leased asset to us, it is a failed sales-leaseback transaction which isaccounted for as a financing. We do not recognize the transferred asset and record the amounts paid as other financing receivables forwhich the current portion is included in “Prepayments and other current assets” and the non-current portion is included in “Other non-current assets” in our consolidated balance sheets.Financing lease and operating lease as LesseeWe classify a lease as a financing lease when the lease meets any one of the criteria specified as (a) to (e) in the “Sales-type,direct financing and operating leases as Lessor” policy at lease commencement. When none of the criteria are met, we classify a lease asan operating lease.For both operating and financing leases, we record a lease liability and corresponding right-of-use (ROU) asset at leasecommencement. Lease terms are based on the non-cancellable term of the lease and may contain options to extend the lease when it isreasonably certain that we will exercise the option. Lease liabilities represent the present value of the lease payments not yet paid,discounted using the discount rate for the lease at lease commencement.We estimate its incremental borrowing rate for its leases at the commencement date to determine the present value of future leasepayments when the implicit rate is not readily determinable in the lease. In estimating its incremental borrowing rate, we consider its creditrating and publicly available data of borrowing rates for loans of similar amount, currency and term as the lease.Operating leases are presented as “Operating lease ROU assets” and “Operating lease liabilities”. Lease liabilities that becomedue within one year of the balance sheet date are classified as current liabilities. At lease commencement, operating lease ROU assetsrepresent the right to use underlying assets for their respective lease terms and are recognized at amounts equal to the lease liabilitiesadjusted for any lease payments made prior to the lease commencement date, less any lease incentives received and any initial direct costsincurred by us.After lease commencement, operating lease liabilities are measured at the present value of the remaining lease payments using thediscount rate determined at lease commencement. Operating lease ROU assets are measured at the amount of the lease liabilities andfurther adjusted for prepaid or accrued lease payments, the remaining balance of any lease incentives received, unamortized initial directcosts and impairment of the ROU assets, if any. Operating lease expense is recognized as a single cost on a straight-line basis over thelease term.Financing lease ROU assets are included in “Property and equipment” and “Financing lease liabilities” on the consolidatedbalance sheet. Lease liabilities that become due within one year of the balance sheet date are classified as current liabilities. Financinglease ROU assets are amortized on a straight-line basis from the lease commencement date. After initial measurement, the carrying valueof financing lease liabilities are increased to reflect interest at a constant rate and reduced to reflect any lease payments made during theperiod.Leases that have a term of 12 months or less at the commencement date (“short-term leases”) are not included in operating leaseROU assets and operating lease liabilities. Lease expense for the short-term leases are recognized on a straight-line basis over the leaseterm. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 124 of 248 Table of Contents117Sale-leaseback transactions as LesseeWhen we enter into sale-leaseback transactions as a seller-lessee, it applies the requirements in ASC 606 by assessing whether acontract exists and whether it satisfies a performance obligation by transferring control of an asset when determining whether the transferof an asset shall be accounted for as a sale of the asset. If we transfer the control of an asset to the buyer-lessor, it accounts for the transferof the asset as a sale and recognizes a corresponding gain or loss on disposal. The subsequent leaseback of the asset is accounted for inaccordance with ASC842 in the same manner as any other lease. If we do not transfer the control of an asset to the buyer-lessor, the failedsale-leaseback transaction is accounted for as a financing. We do not derecognize the transferred asset and accounts for proceeds receivedas borrowings for which the current portion is included in “Accrued expenses and other liabilities” and the non-current portion is includedin “Other non-current liabilities” in the consolidated balance sheets.Going ConcernThe intense market competition continues to have an adverse impact on the Company’s business operations and liquidity. Wehave incurred net losses from continuing operations of RMB908.6 million (US$128.0 million) and generated negative cash flows fromcontinuing operating activities of RMB545.1 million (US$76.8 million) during the year ended December 31, 2023, and had anaccumulated deficit of RMB19,749.3 million (US$2,781.6 million) and a working capital deficiency of RMB1,762.0 million (US$248.2million) as of December 31, 2023. As of December 31, 2023, the balance of our total cash and cash equivalents, current restricted cash andshort-term investments was RMB1,470.2 million (US$207.1 million).These adverse conditions indicate that there is substantial doubt about our ability to continue as a going concern. Ourmanagement has implemented cost saving plans to reduce discretionary operational expenses and secure additional financing including,but not limited to, obtaining additional credit facilities from banks in the normal course of business, and re-financing certain existing notespayables. In the first quarter of 2024, we have successfully obtained new financing of RMB220,000 (US$30,986) short-term bank loans oncredit maturing in one year, which allows us to enhance liquidity. Although we have achieved encouraging initial results from our plans toreduce our costs and expenditures in the first quarter of 2024 for certain business segments, if we are unsuccessful in our efforts or areunable to raise additional financing in the near term, we may be required to significantly reduce or scale back our operations. There areuncertainties as to whether, and there can be no assurance that the aforesaid plans can be successfully executed. The accompanyingconsolidated financial statements have been prepared assuming we will continue to operate as a going concern, which contemplates therealization of assets and the settlement of liabilities in the normal course of business. The consolidated financial statements do not includeany adjustments related to the recoverability and classification of assets or the amounts and classifications of liabilities that may benecessary should we be unable to continue as a going concern.Other EstimatesIn addition to the critical accounting estimates described above, there are other accounting estimates within our consolidatedfinancial statements. Management believes the current assumptions and other considerations used to estimate amounts reflected in ourconsolidated financial statements are appropriate. However, if actual experience differs from the assumptions and other considerationsused in estimating amounts reflected in our consolidated financial statements, the resulting changes could have a material adverse effect onour consolidated results of operations or financial condition. See Note 2 to the consolidated financial statements for further information onsignificant accounting policies that impact us. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 125 of 248 Table of Contents118ITEM 6.DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEESA.Directors and Senior ManagementThe following table sets forth certain information relating to our current directors, executive officers and senior management as ofthe date of this annual report:Name Age Position/TitleShao-Ning Johnny Chou 62 Director, chairman and chief executive officerChen Shen 41 DirectorXiao Hu 44 DirectorGeorge Chow 56 Director, chief strategy and investment officerWenbiao Li 57 DirectorYing Wu 64 DirectorKlaus Anker Petersen 51 DirectorGloria Fan 59 Chief financial officerMangli Zhang 67 Senior vice president, general manager of supply chain management service lineXiaoqing Wang 43 Vice president, general manager of global service lineTao Liu 47Senior vice president, general manager of freight service lineYanbing Zhang 48 Senior vice president of engineering, general manager of cloud service lineJimei Liu 52 Senior vice president of human resources and administrationMr. Shao-Ning Johnny Chou is our founder, and has served as our chairman and chief executive officer since 2007. Prior tofounding our company, he served as a global vice president and Greater China president of Google with responsibility for Google’s salesand marketing in Greater China from 2005 to 2006. From 1996 to 2005, Mr. Chou served as president of UTStarcom China withresponsibility for China operations. From 1986 to 1996, Mr. Chou served as a director of wireless software and system development withAT&T Bell Laboratory. From 1978 to 1980, Mr. Chou studied computer science at Fudan University. Mr. Chou earned a bachelor’s degreein science, specializing in electrical engineering, from City College of New York, a master’s degree in science, specializing in engineeringscience, from Princeton University, and an MBA from Rutgers University. Mr. Chou was nominated by himself as a Founder Directorunder our amended and restated memorandum and articles of incorporation.Ms. Chen Shen has been a director of our company since May 2023. Ms. Shen is a director of Strategic Investments at AlibabaGroup Holding Limited. She joined Alibaba in 2018. Previously she served as senior investment officer in International FinanceCorporation at World Bank Group from 2017 to 2018. She was associate from 2010 to 2012 and then vice president of CDH from 2013 to2016. She also served as an investment analyst and then associate at China International Capital Corporation Limited from 2004 to 2008.Ms. Shen holds an MBA degree from Columbia University and a bachelor’s degree from Fudan University.Ms. Xiao Hu has been a director of our company since February 2022. Ms. Hu is a managing director of Strategic Investments atAlibaba Group Holding Limited. She joined Alibaba in 2017 and previously served as an investment director of Strategic Investments. Sheserved as vice president and then director at Merrill Lynch (Asia Pacific) Limited from 2012 to 2017 and associate and then vice presidentat Citigroup Global Markets Asia Limited from 2008 to 2012. She also served as an assistant equity research analyst at China InternationalCapital Corporation Limited from 2003 to 2006 and an auditor with KPMG Huazhen LLP from 2002 to 2003. Ms. Hu holds an MBAdegree from the Hong Kong University of Science and Technology and a bachelor’s degree from Peking University.Mr. George Chow joined as our chief strategy and investment officer in 2017 and has served as our director sinceSeptember 2017. Mr. Chow brings with him over 22 years of experience in investment banking, trading and risk management. From 2004to 2017, he served as a managing director at Credit Suisse, having held several senior positions in securities and investment bankingdivision, including most recently the Co-Head of Investment Banking and Capital Markets for Greater China. He also worked for UBS andMerrill Lynch. Mr. Chow received an MBA in finance from the Stern School of Business at New York University. He is Mr. Shao-NingJohnny Chou’s brother. Mr. Chow was nominated by Mr. Shao-Ning Johnny Chou as a Founder Director under our amended and restatedmemorandum and articles of incorporation. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 126 of 248 Table of Contents119Mr. Wenbiao Li has served as our independent director since September 2017. Mr. Li has served as a managing director ofWalden International since 2008 and as a managing partner of Kaiwu Walden Capital, L.P. since 2013. From 2004 to 2007, Mr. Li servedas a director of mobile engineering at Google. From 2000 to 2003, Mr. Li served as a vice president of engineering with Skire, Inc. From1997 to 1999, Mr. Li served as a director of engineering at Internet Image, Inc. Mr. Li received a bachelor’s degree in computerengineering from Huazhong University of Science and Technology, a master’s degree in computer science from the University of SanFrancisco, and an EMBA degree from Golden Gate University.Mr. Ying Wu has served as our independent director since May 2022. Mr. Wu currently serves as a global board member of TheNature Conservancy (TNC), and a board member of TNC China. Ying also serves as a founding board member of the Future Forum inChina. He has been the president of China Capital Management Limited since October 2008. Mr. Wu is currently the chairman of ZJBCInformation Technology Co., Ltd. (SZSE: 000889), an independent non-executive director of JD Health International Inc. (HKSE: 6618),an independent non-executive director of Zall Smart Commerce Group Ltd. (HKSE: 2098), and chairman of the board of supervisors ofHuayi Brothers Media Corporation Ltd. (SZSE: 300027). Mr. Wu was an independent non-executive director of Zhong An Online P&CInsurance Co., Ltd, (HKSE: 6060), a director of HyUnion Holdings Co., Ltd. (SZSE: 002537), an independent director of TCLCorporation Ltd. (SZSE: 000100), a director of Joyoung Co., Ltd. (SZSE: 002242), and an independent director of Guangzhou TechLongPackaging Machinery Co., Ltd. (SZSE: 002209). Mr. Wu was also the co-founder of UTStarcom (NASDAQ: UTSI), a globaltelecommunication infrastructure business and served as Chairman and CEO of UTStarcom China for twelve years. He obtained abachelor’s degree in electronic engineering from Beijing Institute of Technology, a master’s degree in science and a doctor’s degree(honoris causa) from New Jersey Institute of Technology.Mr. Klaus Anker Petersen has served as our independent director since May 2022. Mr. Petersen is currently the chairman andowner of Lane House Limited, a multi-brand specialty retailer that supports Western and Chinese companies develop retail presence inChina. He is also the CEO and co-founder of Green Planet Foods, an innovator of plant-based food and beverage products, as well as a co-founder and investor in Brandhouse Group, a cross-border e-commerce parcel delivery business that focuses on Scandinavian markets.From 2014 to 2015, Mr. Petersen was a managing director of Sunshine Insurance Group, an insurance, healthcare and asset managementservices provider. From 2004 to 2014 he held various roles as associate, vice president and executive director at Morgan Stanley inLondon and Beijing. From 1998 to 2003, he worked as an associate and engagement manager with McKinsey & Company. Mr. Petersenearned a master’s degree in science in engineering and applied mathematics from the Technical University of Denmark, and an MBA fromINSEAD in 2003.Ms. Gloria Fan currently services as our chief financial officer. Prior to joining us in November 2019, she served as CFO ofCorporate Visions, Inc., a software as a service company, from September 2015. Previously Ms. Fan spent nearly 10 years as CFO for anumber of clean technology companies, including Bridgelux, Inc. and ClearEdge Powers, Inc. From 1999 to 2006, Ms. Fan worked atUTStarcom Inc. where she held senior management roles including Vice President of Finance and Global Business Operations andoversaw the company’s listing on the NASDAQ. Ms. Fan passed the U.S. CPA exam, and she holds a Master of Science degree fromPurdue University.Ms. Mangli Zhang currently serves as the senior vice president and general manager of our supply chain management serviceline, and served as our vice president of operations from 2007 to 2011. Prior to joining us in 2007, Ms. Zhang held various positions withUTStarcom China as manager of the contract execution department, director of business operations, and vice president of businessoperations in China from 1996 to 2007. From 1993 to 1996, Ms. Zhang served as a department manager of Zhejiang Province Economicand Construction Development Consulting Company. From 1982 to 1993, Ms. Zhang served as a product development engineer in thetechnology division, and served as vice president of the quality management division, of Hangzhou Wireless Equipment Factory.Ms. Zhang received a bachelor’s degree in wireless electronic engineering from Zhejiang University.Mr. Xiaoqing Wang currently serves as the vice president and general manager of our global service line. Prior to that, he hadbeen general manager of our express service line since the end of 2020, general manager of our company’s Jiangsu province branch since2009, spearheading BEST Express and other service lines in Jiangsu province, China. From 2004 to 2009, Mr. Wang was senior salesmanager of the Nanjing branch of UTStarcom China. Mr. Wang received a bachelor’s degree in economics and management from NanjingAgricultural University and an EMBA degree from the University of Texas. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 127 of 248 Table of Contents120Mr. Tao Liu currently serves as the senior vice president and general manager of our freight service line. Before that, between2009 and 2017, he had held various positions with our company as deputy general manager of our freight service line, general manager ofour Shanghai branch, and general manager of our Shandong branch. Prior to joining us, Mr. Liu served as a deputy general manager atShandong Zitong International Logistics Company from 2007 to 2009. From 2000 to 2004, Mr. Liu held various positions with ZhilianLogistics (a group company of China Kejian Co., Ltd.) as assistant to general manager, general manager of its Jinan branch, generalmanager of the Northern China region, and then general manager of Shandong Zhongtie Modern Logistics and Technology Co. Ltd., ajoint venture established by Zhilian Logistics and China Railway Jinan Group. Mr. Liu received a bachelor’s degree in internationalbusiness administration from Shandong University of Finance and Economics.Mr. Yanbing Zhang currently serves as our senior vice president of engineering and the general manager of our cloud serviceline. Prior to joining us, Mr. Zhang served as a senior project manager at the IT department of UTStarcom China from 2004 to 2007. From2003 to 2004, Mr. Zhang served as a project manager at China TravelSky Holding Company. Mr. Zhang received a bachelor’s degree incomputer science from the National University of Defense Technology and a master’s degree in computer science from the University ofKarlsruhe (now known as the Karlsruhe Institute of Technology).Ms. Jimei Liu currently serves as our senior vice president of human resources and administration. Prior to joining us, Ms. Liuserved as the director of human resources at UTStarcom China from 2000 to 2007. From 1996 to 2000, Ms. Liu served as the trainingsupervisor at Ting Hsin International Group. Ms. Liu received a bachelor’s degree in machinery design and manufacturing from CentralSouth University and an executive master of business administration degree from the University of Texas at Arlington.B.CompensationFor the year ended December 31, 2023, we paid an aggregate of approximately US$5.38 million in cash to our executive officersand directors. Our PRC subsidiaries and consolidated affiliated entities are required by law to make contributions equal to certainpercentages of each employee’s salary for his or her pension insurance, medical insurance, housing fund, unemployment insurance andother statutory benefits. Other than the above-mentioned statutory contributions mandated by applicable PRC law, we have not set aside oraccrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors. No executive officer isentitled to any severance benefits upon termination of his or her employment with our company except as required under applicable PRClaw.Share Incentive Plans2008 Equity and Performance Incentive PlanOur 2008 equity and performance incentive plan provides for the grant of options or restricted share units, which we refer tocollectively as awards. Up to 20,934,684 ordinary shares upon exercise of awards may be granted under the 2008 equity and performanceincentive plan. We believe that the 2008 equity and performance incentive plan will aid us in attracting, motivating and retainingemployees, non-employee directors, officers and consultants through the granting of awards.AdministrationThe 2008 equity and performance incentive plan is administered by our board of directors or our compensation committee or anyperson to whom the board shall delegate any of its authority under the plan. The plan administrator is authorized to interpret the plan andto determine the provisions of each award. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 128 of 248 Table of Contents121Change in ControlIn the event of a change in control or another transaction having a similar effect, then the plan administrator may, in its solediscretion, adjust the number of ordinary shares subject to options then held by a participant in the plan as needed to prevent dilution orenlargement of the participant’s rights that otherwise would result from such event. The plan administrator may also, in its sole direction,provide in substitution for the participant’s rights such alternative consideration as it may determine to be equitable in the circumstances.A “change of control” under the 2008 equity and performance incentive plan is defined as (i) a sale of our company for cash considerationapproved by our shareholders, (ii) our company is merged into or with another entity, resulting in our original shareholders, namely,Mr. Shao-Ning Johnny Chou, Mr. George Chow, Mr. Shaohan Joe Chou, Mr. David Hsiaoming Ting and The 2012 MKB Irrevocable Trustceasing to own, collectively with their affiliates, the largest percentage of the outstanding securities of our company, (iii) the sale ortransfer of all or substantially all of our assets to another entity, other than one of our subsidiaries, resulting in our original shareholders,namely, Mr. Shao-Ning Johnny Chou, Mr. George Chow, Mr. Shaohan Joe Chou, Mr. David Hsiaoming Ting and The 2012 MKBIrrevocable Trust ceasing to own, collectively with their affiliates, the largest percentage of the outstanding securities of our company, or(iv) our shareholders approve the liquidation or dissolution of our company.TermThe 2008 equity and performance incentive plan expired in June 2018. Awards made under the plan on or prior to the date of itstermination will continue in effect subject to the terms of the plan and the award.Vesting ScheduleIn general, the plan administrator determines, or the award agreement specifies, the vesting schedule.Amendment and Termination of PlanOur board of directors may at any time amend, alter or discontinue the 2008 equity and performance incentive plan, subject tocertain exceptions.Granted OptionsAs of February 29, 2024, we had outstanding options with respect to 2,489,430 ordinary shares that have been granted to ourdirectors, officers, employees and consultants, or the option holders, under the 2008 equity and performance incentive plan.The table below summarizes, as of February 29, 2024, the options we had granted to our directors and executive officers underthe 2008 equity and performance incentive plan: Number of shares underlying Exercise priceName options granted(US$ per share)Grant dateExpiration dateGeorge Chow* 0.75 June 30, 2017 June 30, 2032Mangli Zhang* 0.75 Various dates from June 30,2008 to September 30, 2017 Various dates from June 30,2018 to September 30, 2032Xiaoqing Wang* 0.50 or 0.75 Various dates from December31, 2009 to September 30, 2017 Various dates from December31, 2024 to September 30, 2032Tao Liu*0.50 or 0.75Various dates from June 30,2009 to September 30, 2017Various dates from June 30,2024 to September 30, 2032Jimei Liu* 0.01 or 0.75 Various dates from June 30,2008 to September 30, 2017 Various dates from June 30,2023 to September 30, 2032Ying Wu* 0.75 September 30, 2017 September 30, 2032* Less than 1% of our total ordinary shares outstanding on an as-converted basis. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 129 of 248 Table of Contents122All of our option grant agreements under the 2008 equity and performance incentive plan provide that the options may not beexercised before the first date on which the ADSs are publicly traded on the New York Stock Exchange, or the listing date. In July 2017,we granted a conditional, one-time waiver of this restriction for certain option holders, and pursuant to this waiver, vested options withrespect to an aggregate of 12,599,520 ordinary shares were exercised by their holders in July 2017. These option holders have paid theexercise price to us in full.2017 Equity Incentive PlanIn September 2017, we adopted our 2017 equity incentive plan, pursuant to which equity-based awards may be granted to eligibleparticipants. The purpose of the 2017 equity incentive plan is to attract and retain the services of key personnel and to provide means fordirectors, officers, employees, consultants and advisors to acquire and maintain an interest in us, which interest may be measured byreference to the value of Class A ordinary shares.The 2017 equity incentive plan provides for an aggregate amount of no more than 10,000,000 Class A ordinary shares to beissued pursuant to equity-based awards granted under the plan. In addition, the number of Class A ordinary shares available for issuanceunder the 2017 equity incentive plan automatically increased by a maximum of 2% of the total number of Class A ordinary shares issuedand outstanding at the end of preceding calendar year on January 1, 2019 and will automatically be increased on every January 1 thereafterfor eight years, provided that the maximum aggregate number of Class A ordinary shares which may be subject to awards granted underthe plan does not exceed 10% of the total number of Class A ordinary shares issued and outstanding at the end of the preceding calendaryear. As a result, as of January 1, 2022, the maximum aggregate number of Class A ordinary shares which may be issued pursuant to allawards under the 2017 equity incentive plan has been increased to 25,564,845. No more than 10,000,000 Class A ordinary shares may beissued upon the exercise of incentive stock options. Generally, if any award (or portion thereof) under the 2017 equity incentive planterminates, expires, lapses or is cancelled for any reason without being vested or exercised, as applicable, the Class A ordinary sharessubject to such award will again be available for future grant.Granted Restricted Share UnitsAs of February 29, 2024, we had outstanding restricted share units with respect to 4,396,940 ordinary shares that have beengranted to our directors, officers, employees and consultants under the 2017 equity incentive plan. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 130 of 248 Table of Contents123The table below summarizes, as of February 29, 2024, the share-based awards we had granted to our directors and executiveofficers under the 2017 equity incentive plan, which were all restricted share units: Number of restricted share unitsName grantedGrant date Expiration dateShao-Ning Johnny Chou* Various dates from June 1, 2018 to January 1,2024 Various dates from June 1, 2028 to January 1,2034George Chow* Various dates from March 1, 2018 to March 1,2023 Various dates from March 1, 2028 to March 1,2033Wenbiao Li* Various dates from February 1, 2018 toFebruary 1, 2024 Various dates from February 1, 2028 toFebruary 1, 2034Ying Wu* Various dates from July 31, 2022 to February1, 2024 Various dates from July 31, 2032 to February1, 2034Klaus Anker Petersen* Various dates from July 31, 2022 to February1, 2024 Various dates from July 31, 2032 to February1, 2034Gloria Fan* Various dates from November 30, 2019 toMarch 1, 2023 Various dates from November 30, 2029 toMarch 1, 2033Mangli Zhang* Various dates from March 1, 2018 to March 1,2023 Various dates from March 1, 2028 to March 1,2033Xiaoqing Wang* Various dates from March 1, 2018 to March 1,2023 Various dates from March 1, 2028 to March 1,2033Tao Liu*Various dates from March 1, 2018 to March 1,2023Various dates from March 1, 2028 to March 1,2033Yanbing Zhang* Various dates from March 1, 2018 to March 1,2023 Various dates from March 1, 2028 to March 1,2033Peng Chen* Various dates from March 1, 2018 to March 1,2022 Various dates from March 1, 2028 to March 1,2032Jimei Liu*Various dates from March 1, 2018 to March 1,2023Various dates from March 1, 2028 to March 1,2033* Less than 1% of our total ordinary shares outstanding on an as-converted basis.AdministrationThe 2017 equity incentive plan will be administered by our board of directors, our compensation committee, or any othercommittee of board of directors or any member(s) of the board of directors or officer(s) who have been delegated any authority pursuant tothe 2017 equity incentive plan. The plan administrator is authorized to interpret the plan and to determine the provisions of each awardincluding the number of shares covered, the type of award, the exercise price, if applicable, and the vesting schedule. In addition, the planadministrator may (i) select the recipients of awards, (ii) prescribe the forms of award agreements and amend any award agreement(subject to certain limitations), (iii) allow a participant to satisfy minimum tax withholding obligations by withholding shares to be issuedpursuant to an award and (iv) to make other decisions and determinations as provided in the 2017 equity incentive plan. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 131 of 248 Table of Contents124Change in ControlIn the event of a change in control, the plan administrator may, in its sole discretion, (i) adjust the number and kind of shares andprices subject to awards then held by a participant in the 2017 equity incentive plan in connection with the assumption, conversion orreplacement of any award (as the plan administrator determines to be reasonable, equitable and appropriate) (ii) accelerate the vesting, inwhole or in part, of any award, or (iii) purchase any award for an amount of cash or shares (in accordance with the terms of the 2017equity incentive plan). In the event a successor or surviving company refuses to assume, convert or replace an award, then the outstandingawards shall fully vest. A “change of control” under the 2017 equity incentive plan is defined as (i) an amalgamation, arrangement,merger, consolidation or scheme of arrangement in which our company is not the surviving entity, except for a transaction the principalpurpose of which is to change the jurisdiction in which our company is incorporated or which following such transaction the holders of ourcompany’s voting shares immediately prior to such transaction own more than fifty percent (50%) of the voting shares of the survivingentity; (ii) the sale, transfer or other disposition of all or substantially all of the assets of our company (other than to one of oursubsidiaries); (iii) the completion of a voluntary or insolvent liquidation or dissolution of our company; (iv) any takeover, reverse takeover,scheme of arrangement, or series of related transactions culminating in a reverse takeover or scheme of arrangement (including, but notlimited to, a tender offer followed by a takeover or reverse takeover) in which our company survives but (A) the shares of our companyoutstanding immediately prior to such transaction are converted or exchanged by virtue of the transaction into other property, whether inthe form of shares, securities, cash or otherwise, or (B) the shares carrying more than 50% of the total combined voting power of ourcompany’s then issued and outstanding shares are transferred to a person or persons different from those who held such sharesimmediately prior to such transaction culminating in such takeover, reverse takeover or scheme of arrangement, or (C) our company issuesnew voting shares in connection with any such transaction such that holders of our company’s voting shares immediately prior to thetransaction no longer hold more than 50% of the voting shares of our company after the transaction; or (v) the acquisition in a single orseries of related transactions by any person or related group of persons (other than employees of our company or any of its affiliates orentities established for the benefit of the employees of our company or any of its affiliates) of (A) control of our board of directors or theability to appoint a majority of the members of our board of directors, or (B) beneficial ownership (within the meaning of Rule 13d-3under the Exchange Act) of shares carrying more than 50% of the total combined voting power of our company’s then issued andoutstanding shares.TermUnless terminated earlier, the 2017 equity incentive plan will expire ten years from the date the 2017 equity incentive planbecomes effective. Awards made under the 2017 equity incentive plan on or prior to the date of its termination will continue in effectsubject to the terms of the 2017 equity incentive plan and the applicable award agreement.Vesting ScheduleIn general, the plan administrator determines the vesting schedule of each award as evidenced by an award agreement. The planadministrator may accelerate the vesting of any award.Amendment and Termination of PlanOur board of directors, in its sole discretion, may at any time amend, alter or discontinue the 2017 equity incentive plan, subjectto certain exceptions.BEST Asia PlanTo better incentivize contribution to the growth our BEST Global business, in December 2020, BEST Asia Inc., our wholly-owned Cayman Islands subsidiary that holds our Southeast Asian business, adopted the 2020 Equity Incentive Plan, or the BEST AsiaPlan, pursuant to which BEST Asia Inc. may issue a certain maximum number of ordinary shares pursuant to awards granted thereunder.The BEST Asia Plan is administered by the board of directors of BEST Asia Inc. or a committee or a member of the board of directorsdesignated by the board of directors of BEST Asia Inc., which shall determine the participants to receive awards, the type and number ofawards to be granted to each participant, and the terms and conditions of each grant. Under the BEST Asia Plan, BEST Asia Inc. maygrant dividend equivalents, options, restricted shares, restricted share units, share appreciation rights or share payments to the eligibleparticipants, including employees, directors and consultants of BEST Asia Inc. and its subsidiaries, parents and “related entities” asdefined in the BEST Asia Plan. The term of the awards granted under the BEST Asia Plan may not exceed ten years from the date ofgrant, unless extended by the board of directors of BEST Asia Inc. As of February 29, 2024, we had issued options to purchase ordinaryshares of BEST Asia Inc. to certain employees, including certain of our directors and executive officers, under the BEST Asia Plan. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 132 of 248 Table of Contents125BEST CloudSoft PlanTo better incentivize contribution to the growth our SaaS software service business, in March 2022, BEST CloudSoft Inc., ourwholly-owned Cayman Islands subsidiary that holds our SaaS software service business, adopted the 2022 Equity Incentive Plan, or theBEST CloudSoft Plan, pursuant to which BEST CloudSoft Inc. may issue a certain maximum number of ordinary shares pursuant toawards granted thereunder. The BEST CloudSoft Plan is administered by the board of directors of BEST Inc. or the compensationcommittee or a member of the board of directors designated by the board of directors of BEST Inc., which shall determine the participantsto receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each grant. Under theBEST CloudSoft Plan, BEST CloudSoft Inc. may grant options, restricted shares, restricted share units, dividend equivalents, shareappreciation rights and share payments to eligible participants, including employees, consultants and directors of BEST CloudSoft Inc. andits subsidiaries, parents and “related entities” as defined in the BEST CloudSoft Plan. The term of the awards granted under the BESTCloudSoft Plan may not exceed ten years from the date of grant, unless extended by the board of directors of BEST Inc. As of February29, 2024, we had issued options to purchase ordinary shares of BEST CloudSoft Inc. to certain employees, including certain of ourdirectors and executive officers, under the BEST CloudSoft Plan.C.Board PracticesBoard of DirectorsPursuant to our ninth amended and restated articles of association currently in effect, our board of directors currently consists ofseven directors, including (i) Mr. Shao-Ning Johnny Chou and Mr. George Chow, or the Founder Directors, who were nominated by ourfounder, Mr. Shao-Ning Johnny Chou; (ii) Ms. Chen Shen and Ms. Xiao Hu, or collectively, the Alibaba Directors, who were nominatedby Alibaba (including Cainiao Network); and (iii) Mr. Wenbiao Li, Mr. Ying Wu and Mr. Klaus Anker Petersen, who are independentdirectors. As long as Mr. Shao-Ning Johnny Chou is a director, he will serve as the chairman of the board.Unless otherwise determined by our shareholders in a general meeting, our board will consist of not less than three directors.There is no requirement for our directors to own any shares in our company in order for them to qualify as a director.Committees of the Board of DirectorsOur board of directors has established an audit committee, a compensation committee, and a corporate governance andnominating committee. As a foreign private issuer, we are permitted to follow home country corporate governance practices under theCorporate Governance Rules of the New York Stock Exchange.Audit CommitteeOur audit committee consists of Mr. Ying Wu, Mr. Klaus Anker Petersen and Mr. Wenbiao Li. Mr. Ying Wu is the chairman ofour audit committee. Mr. Ying Wu satisfies the criteria of an audit committee financial expert as set forth under the applicable rules of theSEC. Each of Mr. Ying Wu, Mr. Klaus Anker Petersen and Mr. Wenbiao Li satisfies the requirements for an “independent director” withinthe meaning of Section 303A of the Corporate Governance Rules of the New York Stock Exchange, or the NYSE, and meets the criteriafor independence set forth in Rule 10A-3 of the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act. Our auditcommittee consists solely of independent directors.The audit committee oversees our accounting and financial reporting processes and the audits of our financial statements. Ouraudit committee is responsible for, among other things:●selecting, and evaluating the qualifications, performance and independence of, the independent auditor;●pre-approving or, as permitted, approving auditing and non-auditing services permitted to be performed by the independentauditor;●considering the adequacy of our internal accounting controls and audit procedures;●reviewing with the independent auditor any audit problems or difficulties and management’s response; Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 133 of 248 Table of Contents126●reviewing and approving related party transactions between us and our directors, senior management and other personsspecified in Item 7B of Form 20-F;●reviewing and discussing the quarterly financial statements and annual audited financial statements with management andthe independent auditor;●establishing procedures for the receipt, retention and treatment of complaints received from our employees regardingaccounting, internal accounting controls or auditing matters and the confidential, anonymous submission by our employeesof concerns regarding questionable accounting or auditing matters;●meeting separately, periodically, with management, internal auditors and the independent auditor; and●reporting regularly to the full board of directors.Compensation CommitteeOur compensation committee consists of Mr. Ying Wu, Ms. Xiao Hu and Mr. George Chow. Mr. Ying Wu is the chairman of ourcompensation committee. Mr. Ying Wu satisfies the requirements for an “independent director” within the meaning of Section 303A of theNYSE Corporate Governance Rules.Our compensation committee is responsible for, among other things:●reviewing, evaluating and, if necessary, revising our overall compensation policies;●reviewing and evaluating the performance of our directors and executive officers and determining the compensation of ourdirectors and executive officers;●reviewing and approving our executive officers’ employment agreements with us;●determining performance targets for our executive officers with respect to our annual bonus plan and share incentive plans;●administering our share incentive plans in accordance with the terms thereof; and●carrying out such other matters that are specifically delegated to the compensation committee by our board of directors fromtime to time.Corporate Governance and Nominating CommitteeOur corporate governance and nominating committee consists of Mr. Shao-Ning Johnny Chou, Ms. Xiao Hu and Mr. Wenbiao Li.Mr. Shao-Ning Johnny Chou is the chairman of our corporate governance and nominating committee. Mr. Wenbiao Li satisfies therequirements for an “independent director” within the meaning of Section 303A of the NYSE Corporate Governance Rules.Our corporate governance and nominating committee is responsible for, among other things:●selecting the board nominees for election by the shareholders or appointment by the board;●periodically reviewing with the board the current composition of the board with regards to characteristics such asindependence, knowledge, skills, experience and diversity;●making recommendations on the frequency and structure of board meetings and monitoring the functioning of thecommittees of the board; and Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 134 of 248 Table of Contents127●advising the board periodically with regards to significant developments in corporate governance law and practices as wellas our compliance with applicable laws and regulations, and making recommendations to the board on corporate governancematters.Duties of DirectorsUnder Cayman Islands law, all of our directors owe fiduciary duties to our company, including a duty of loyalty, a duty to acthonestly and a duty to act in good faith and in a manner they believe to be in our best interests. Our directors must also exercise theirpowers only for a proper purpose. Our directors also owe to our company a duty to act with skill and care. It was previously consideredthat a director need not exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from aperson of his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective standardwith regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands. In fulfilling their duty ofcare to us, our directors must ensure compliance with our memorandum and articles of association, as amended and restated from time totime. Our company has the right to seek damages if a duty owed by any of our directors is breached. In limited exceptional circumstances,a shareholder may have the right to seek damages in our name if a duty owed by our directors is breached.A director who is in any way, whether directly or indirectly, interested in a contract or proposed contract with our company isrequired to declare the nature of his interest at a meeting of our directors. Subject to the rules of the New York Stock Exchange anddisqualification by the chairman of the relevant board meeting, a director may vote in respect of any contract, proposed contract, orarrangement notwithstanding that he may be interested therein, and if he does so his vote shall be counted and he may be counted in thequorum at any meeting of our directors at which any such contract or proposed contract or arrangement is considered. Our directors mayexercise all the powers of our company to borrow money, and to mortgage or charge its undertaking, property and assets (present andfuture) and uncalled capital or any part thereof, and issue debentures, debenture stock, bonds or other securities whenever outright or ascollateral security for any debt, liability or obligation of the company or of any third party.Terms of Directors and OfficersMr. Shao-Ning Johnny Chou may remove any Founder Director from office by written notice to us; Alibaba may remove anyAlibaba Director from office by written notice to us; and our shareholders may remove any of our directors from office by a specialresolution. In addition, a director will cease to be a director if he or she becomes bankrupt or makes any arrangement or composition withhis or her creditors, dies or is found to be or becomes of unsound mind, resigns, or is absent from meetings of the board for threeconsecutive meetings without special leave of absence from the board and the board resolves that his or her office be vacated.If a Founder Director ceases to be a director for any reason, Mr. Shao-Ning Johnny Chou will have the right to appoint anotherFounder Director as long as Mr. Shao-Ning Johnny Chou and his affiliates hold any of our shares. If an Alibaba Director ceases to be adirector for any reason, Alibaba will have the right to appoint another Alibaba Director as long as Alibaba (including Cainiao Network)and their affiliates hold any of our shares. If the aggregate number of shares held by Alibaba (including Cainiao Network) and theiraffiliates represent less than 10% of our total outstanding shares, Alibaba will not be able to exercise such appointment right if there is oneremaining Alibaba Director on our board, and Alibaba may be required to remove one Alibaba Director if there are two Alibaba Directorson our board.By special resolution, our shareholders may appoint any person to be a director, either to fill a vacancy resulting from the removalof a director by special resolution or as an addition to the existing board. Our board may, by the affirmative vote of a simple majority ofthe remaining directors present and voting at a board meeting, appoint any person as a director in order to fill a vacancy other than as aresult of the removal of a director by our shareholders, Mr. Shao-Ning Johnny Chou or Alibaba.D.EmployeesSee “Item 4. Information on the Company—B. Business Overview—Employees.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 135 of 248 Table of Contents128E.Share OwnershipThe following table sets forth information with respect to the beneficial ownership, within the meaning of Rule 13d-3 under theExchange Act, of our ordinary shares, as of February 29, 2024 by:●each of our directors and executive officers;●our directors and executive officers as a group; and●each person known to us to own beneficially 5.0% or more of our ordinary shares.Beneficial ownership is determined in accordance with the rules of the SEC and includes voting or investment power with respectto the securities. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we haveincluded shares that the person has the right to acquire within 60 days, including through the exercise of any option or other right or theconversion of any other security.The calculations in the table below are based on (i) 252,010,824 Class A ordinary shares, (ii) 94,075,249 Class B ordinary shares,and (iii) 47,790,698 Class C ordinary shares, that were issued and outstanding as of February 29, 2024. The aforesaid 256,610,739 Class Aordinary shares excludes the 5,037,713 Class A ordinary shares issued to our depositary bank as of February 29, 2024 and reserved forfuture issuances of ADSs upon exercise or vesting of awards granted under our share incentive plans that are not deemed outstanding forthe purpose of calculating percentage ownership and voting power in this annual report.Class AClass BClass C Number Percentage Number Percentage Number Percentage Voting Power****Shao-Ning Johnny Chou 4,309,300 1.6 — — 47,790,698 100.0 46.3Chen Shen — — — — — — —Xiao Hu — — — — — — —George Chow 6,875,407 2.6 — — — — **Wenbiao Li* * — — — — **Ying Wu* * — — — — **Klaus Anker Petersen* * — — — — **Gloria Fan* * — — — — **Mangli Zhang* * — — — — **Xiaoqing Wang* * — — — — **Tao Liu* * — — — — **Yanbing Zhang* * — — — — **Jimei Liu* * — — — — **Chen Peng * * — — — — **Directors and Executive officers as aGroup 14,162,557 5.4 — — 47,790,698 100.0 46.6Alibaba Group Holding Limited(1) 22,357,979 8.2 94,075,249 100.0—— 46.0Shao-Ning Johnny Chou 4,309,300 1.6—— 47,790,698 100.0 46.3BJ Russell Holdings Limited(2) 33,548,304 12.8 — — — — 1.1The Goldman Sachs Group, Inc.(3) 12,443,429 4.8 — — — — 0.4*Beneficially owns less than 1% of our total ordinary shares outstanding on an as-converted basis.**Holds less than 1% of voting power of our total ordinary shares outstanding.***The business address for our directors and executive officers is 2nd Floor, Block A, Huaxing Modern Industry Park, No. 18 TangmiaoRoad, Xihu District, Hangzhou, Zhejiang Province 310013, People’s Republic of China. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 136 of 248 Table of Contents129****For each person and group included in this column, percentage of voting power is calculated by dividing the voting powerbeneficially owned by such person or group by the voting power of all of our Class A, Class B and Class C ordinary shares as a singleclass. In respect of matters requiring a shareholder vote, each Class A ordinary share is entitled to one vote, each Class B ordinaryshare is entitled to 15 votes, and each Class C ordinary share is entitled to 30 votes. Each Class B ordinary share or Class C ordinaryshare is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible intoClass B ordinary shares or Class C ordinary shares, Class B ordinary shares are not convertible to Class C ordinary shares, andClass C ordinary shares are not convertible into Class B ordinary shares under any circumstances.(1)The number of ordinary shares beneficially owned was reported in an Amendment No. 3 to Schedule 13D filed by Alibaba GroupHolding Limited, Alibaba Investment Limited and other reporting persons on June 3, 2020, and consists of (i) 10,000,000 Class Aordinary shares represented by ADSs held by Alibaba Investment Limited, (ii) 75,831,692 Class B ordinary shares held by AlibabaInvestment Limited, (iii) 18,243,557 Class B ordinary shares held by Cainiao Smart Logistics Investment Limited, and (iv)24,000,000 Class A ordinary shares convertible at any time from the 2025 Convertible Notes in the principal amount ofUS$150,000,000 after 30 consecutive trading days after May 27, 2020 at the option of Alibaba.com Hong Kong Limited, the holder ofsuch senior notes issued by us in June 30, 2020, subject to the adjustment as provided under the 2025 Convertible Notes. Wesubsequently determined that, upon the aforesaid adjustment, a total of 24,715,957 Class A ordinary shares will be convertible fromthe 2025 Convertible Notes in the principal amount of US$150,000,000. Alibaba Group Holding Limited is a public company listedon the New York Stock Exchange. Alibaba Investment Limited is a British Virgin Islands company wholly owned by Alibaba GroupHolding Limited. Cainiao Smart Logistics Investment Limited is a British Virgin Islands company wholly owned by Cainiao SmartLogistics Network Limited, a company incorporated under the laws of the Cayman Islands. Alibaba Group Holding Limited owned a66% equity interest in Cainiao Smart Logistics Network Limited as of March 31, 2020 as disclosed in the annual report on Form 20-Ffiled with the SEC by Alibaba Group Holding Limited on July 9, 2020. Beneficial ownership of the Class B ordinary shares held byCainiao Smart Logistics Investment Limited is attributed to Alibaba Group Holding Limited as a result of its ownership of the 66%equity interest in Cainiao Smart Logistics Network Limited. Alibaba.com Hong Kong Limited is a Hong Kong company whollyowned by Alibaba Group Holding Limited. The registered address of Alibaba Group Holding Limited is the offices of Trident TrustCompany (Cayman) Limited, Fourth Floor, One Capital Place, P.O. Box 847, George Town, Grand Cayman, Cayman Islands.(2)The number of ordinary shares beneficially owned was reported in the Schedule 13G filed by BJ Russell Holdings Limited and otherreporting persons on July 26, 2023 and consists of 33,548,304 Class A ordinary shares held beneficially by BJ Russell HoldingsLimited (“BJ Russell”). Hung Chris Hui owns 100% of the share capital of BJ Russell and may be deemed to own beneficially all ofthe shares held by BJ Russell. Yahong Liang is the sole director of BJ Russell and may also be deemed to beneficially own all of theshares held BJ Russell, but hereby disclaims beneficial ownership of any of such shares. BJ Russell is a limited liability companyestablished in the British Virgin Islands. The address of the principal business office of each of BJ Russell, Hung Chris Hui andYahong Liang is Mandar House, 3rd Floor, Johnson’s Ghut, Tortola, British Virgin Islands.(3)The number of ordinary shares beneficially owned was reported in the Amendment No. 1 to Schedule 13G filed by The GoldmanSachs Group, Inc. and other reporting persons on February 9, 2021 and consists of an aggregate of 12,443,429 Class A ordinary sharesowned by Broad Street Principal Investments, L.L.C., Bridge Street 2014, L.P., Stone Street 2014, L.P., MBD 2014, L.P., Bridge Street2014 Offshore, L.P., Stone Street 2014 Offshore, L.P. and MBD 2014 Offshore, L.P. (collectively, the “GS Stockholders”), and areowned, or may be deemed to, or to have been beneficially owned, by Goldman Sachs & Co. LLC (“Goldman Sachs”) and TheGoldman Sachs Group, Inc. (“GS Group”). MBD Advisors, L.L.C. is a wholly-owned subsidiary of GS Group and is the generalpartner of MBD 2014, L.P. and MBD 2014 Offshore, L.P., and Bridge Street Opportunity Advisors, L.L.C. is a wholly-ownedsubsidiary of GS Group and is the general partner of the other GS Investing Entities. Goldman Sachs is a subsidiary of GS Group.Goldman Sachs owns certain of the shares on behalf of managed accounts and is the investment manager of the GS Stockholders.Each of the GS Group, Broad Street Principal Investments, L.L.C., MBD Advisors, L.L.C. and Bridge Street Opportunity Advisors,L.L.C. is a limited liability company incorporated in Delaware. Each of MBD 2014, L.P., Bridge Street 2014, L.P. and Stone Street2014, L.P. is a Delaware limited partnership. Goldman Sachs is a limited liability company incorporated in New York. Each of BridgeStreet 2014 Offshore, L.P., Stone Street 2014 Offshore, L.P. and MBD 2014 Offshore, L.P. is a Cayman Islands limited partnership. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 137 of 248 Table of Contents130To our knowledge, as of February 29, 2024, 198,238,035 Class A ordinary shares or 75.8% of our outstanding Class A ordinaryshares were held by six record holders in the United States, including our ADS depositary bank, which held 192.326.640 Class A ordinaryshares or 73.5% of our outstanding Class A ordinary shares (excluding 5,037,713 Class A ordinary shares issued and reserved for futureissuances of ADSs upon exercise or vesting of awards granted under our share incentive plans). Because many of these shares are held bybrokers or other nominees, we cannot ascertain the exact number of beneficial shareholders with addresses in the United States. As ofFebruary 29, 2024, 47,790,698 Class C ordinary shares representing all of our outstanding Class C ordinary shares were held by onerecord holder in the United States, namely, Shao-Ning Johnny Chou, our founder, chairman and chief executive officer.We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.F.Disclosure of a registrant’s action to recover erroneously awarded compensationNone.ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONSA.Major ShareholdersSee “Item 6. Directors, Senior Management and Employees—E. Share Ownership”B.Related Party TransactionsContractual Arrangements with our Variable Interest Entity and its ShareholdersSee “Item 4. Information on the Company—C. Organizational Structure—Variable Interest Entity Contractual Arrangements.”Offering of Convertible Senior NotesIn September 2019, we completed an offering of US$200 million aggregate principal amount of 1.75% convertible senior notesdue 2024 (including full exercise of the initial purchasers’ option to purchase additional notes), including US$100 million principalamount of notes sold to an entity affiliated with Alibaba Group Holding Limited. The notes will mature on October 1, 2024. Holders mayconvert their notes at their option into our ADSs at an initial conversion rate of 7.0922 ADSs per US$1,000 principal amount of notes(equivalent to an initial conversion price of approximately US$141.00 per ADS), which rate is subject to adjustment in some events butwill not be adjusted for any accrued and unpaid interest.Private Placement of Convertible Senior NotesIn June 2020, we completed a private placement of US$150 million aggregate principal amount of 4.5% convertible senior notesdue 2025 to Alibaba.com Hong Kong Limited, an entity affiliated with Alibaba, one of our principal shareholders. The notes will matureon June 3, 2025. Holders may convert their notes at their option into our Class A ordinary shares at an initial conversion price ofapproximately US$121.40 per ADS, which rate is subject to adjustment in some events but will not be adjusted for any accrued and unpaidinterest.In April 2023, we and Alibaba.com Hong Kong Limited agreed that Alibaba.com Hong Kong Limited would not require us torepurchase all of their notes in 2023, and would instead require us to repurchase one half of their notes, or US$75 million aggregateprincipal amount. In December 2023, all of the 2025 Convertible Notes were transferred by Alibaba HK to Alibaba China. On April 22,2024, we and Alibaba China entered into an agreement to amend the Early Redemption Rights of the 2025 Convertible Notes, pursuant towhich Alibaba China will require us to repurchase US$15 million (RMB106.2 million) aggregate principal amount of 2025 ConvertibleNotes with accrued interest before August 30, 2024 and to repurchase the remaining portion, or US$60 million (RMB425.0 million)aggregate principal amount with accrued interest on May 10, 2025. However, we may not have enough available cash or be able to obtainfinancing at the time we are required to make repurchases of notes surrendered therefor or redeem the notes. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business and Industry—We may not have the ability to raise the funds necessary to repurchaseour convertible senior notes on the repurchase date or upon the occurrence of a fundamental change, and our future debt may containlimitations on our ability to pay cash upon required repurchase or redemption of the notes.” Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 138 of 248 Table of Contents131Shareholders AgreementOn April 5, 2016, we, our subsidiaries, and all of our then-existing shareholders entered into the shareholders agreement, asamended on September 6, 2017, which replaced and superseded our previous shareholders agreements. The shareholders agreementaddresses certain matters in relation to shareholder rights, corporate governance arrangements and other related obligations. Except for ournon-compete undertaking to Alibaba Investment Limited, or AIL, and certain registration rights, all other rights and obligations of us andthe shareholders under the shareholders agreement terminated upon completion of our initial public offering.Sale of Equity in YizhanIn July 2021, our subsidiary, BEST Logistics Technologies (China) Co., Ltd. transferred 1% equity interest in 浙江驿栈网络科技有限公司 (“Yizhan”) to Zhejiang Cainiao Supply Chain Management Co. Ltd, an affiliate of Alibaba, for a cash consideration ofRMB219,999,955.Bridge Loan from AlibabaIn August 2021, BEST Logistics technologies (China) Co., Ltd. entered into a facility agreement with Alibaba (China) NetworkTechnology Co., Ltd, a company affiliated with Alibaba and drew down a bridge loan in the principal amount of RMB600,000,000 fromsuch company. The bridge loan was repaid in December 2021 in accordance with the terms of the facility agreement.Other Transactions with Certain Directors and AffiliatesSee “Item 6. Directors, Senior Management and Employees—B. Compensation.”Share Incentive PlansSee “Item 6. Directors, Senior Management and Employees—B. Compensation—Share Incentive Plans.”Other Transactions with Related PartiesWe provided supply chain management services to Cainiao Network, and the related service fees amounted to RMB418.8 million,RMB237.0 and RMB161.0 million (US$22.7 million) for the years ended December 31, 2021, 2022 and 2023, respectively. As ofDecember 31, 2022 and 2023, we had balances of RMB45.4 million and RMB34.4 million (US$4.8 million), respectively, due fromCainiao Network, which represent service fees payable to us.We provided supply chain management services to Zhejiang Xinyi Supply Chain Management Co. Ltd, and the related servicefees amounted to nil, 11.1 million and RMB19.4 million, (US$2.7 million) for the years ended December 31, 2021, 2022 and 2023,respectively. We sold assets to Zhejiang Xinyi Supply Chain Management Co. Ltd, and the related proceeds amounted to nil, 16.0 millionand RMB12.7 million, (US$1.8 million) for the years ended December 31, 2021, 2022 and 2023, respectively. As of December 31, 2022and 2023, we had balances of 5.7 million and RMB5.1 million (US$0.7 million), respectively, due from Zhejiang Xinyi Supply ChainManagement Co. Ltd, which represent service fees payable to usCainiao Network leased warehouses to us resulting in rental expense of nil for the years ended December 31, 2021, 2022 and2023, respectively. As of December 31, 2022 and 2023, we had a balance of RMB0.2 million and nil, respectively, due to CainiaoNetwork.Alibaba Cloud Computing Co. Ltd., or Ali Cloud, an affiliate of Alibaba, provided certain cloud services to us resulting in serviceexpense incurred by us of RMB13.6 million, RMB9.0 million and RMB6.8 million (US$1.0 million) for the years ended December 31,2021, 2022 and 2023, respectively. Ali Cloud also paid on our behalf certain operating costs of nil,nil and nil for the years endedDecember 31, 2021, 2022 and 2023, respectively. As of December 31, 2022 and 2023, we had a balance of RMB0.4 million and RMB0.5million (US$0.08 million), respectively, due from Ali Cloud, which represents service fees prepaid to Ali Cloud; and we had a balance ofRMB0.4 million and RMB1.0 million (US$0.1 million), respectively, due to Ali Cloud, which represents service fees payable by us. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 139 of 248 Table of Contents132We provided express delivery service to Lazada Express Limited, or Lazada, an affiliate of Alibaba, and the related service feesamounted to RMB120.9 million, RMB148.6 million and RMB105.8 million (US$14.9 million) for the years ended December 31, 2021,2022 and 2023, respectively. Lazada introduced customers to us and we incurred commission fees of nil, RMB2.5 million and nil toLazada for the years ended December 31, 2021, 2022 and 2023, respectively. As of December 31, 2022 and 2023, we had a balance ofRMB24.9 million and RMB20.4 million (US$2.9 million), respectively, due from Lazada, which represents service fees payable to us; andwe had a balance of RMB0.5 million and nil, respectively, due to Lazada, which represents service fees payable by us.C.Interests of Experts and CounselNot applicable.ITEM 8.FINANCIAL INFORMATIONA.Consolidated Statements and Other Financial InformationPlease refer to Item 18 for a list of our annual consolidated financial statements filed as part of this annual report on Form 20-F.Legal ProceedingsSee “Item 4. Information on the Company—B. Business Overview—Legal Proceedings.”Dividend Policy and DistributionsSince our inception, we have not declared or paid any dividends on our shares. We do not have any present plan to pay anydividends on our ordinary shares or ADSs in the foreseeable future. We intend to retain most, if not all, of our available funds and anyfuture earnings to operate and expand our business.Any future determination to pay dividends will be made at the discretion of our board of directors, subject to certain requirementsof Cayman Islands law. Under Cayman Islands law, a Cayman Islands company may pay a dividend out of either profit or share premiumaccount, provided that in no circumstances may a dividend be paid if this would result in the company being unable to pay its debts as theyfall due in the ordinary course of business. Even if our directors decide to pay dividends, the form, frequency and amount of dividends willbe based on a number of factors, including our future operations and earnings, capital requirements and surplus, general financialcondition, contractual restrictions and other factors that the board of directors may deem relevant. If we pay any dividends on our ordinaryshares, we will pay those dividends which are payable in respect of the underlying Class A ordinary shares represented by our ADSs to thedepositary, as the registered holder of such Class A ordinary shares, and the depositary then will pay such amounts to our ADS holders inproportion to the underlying Class A ordinary shares represented by the ADSs held by such ADS holders, subject to the terms of thedeposit agreement, including the fees and expenses payable thereunder. Cash dividends on our Class A ordinary shares, if any, will be paidin U.S. dollars.We are a holding company incorporated in the Cayman Islands. In order for us to distribute any dividends to our shareholders andADS holders, we rely on dividends distributed by our subsidiaries in China and other jurisdictions. Distributions from our subsidiaries tous may be subject to various local taxes, such as withholding tax. In addition, regulations in China currently permit payment of dividendsof a Chinese company only out of accumulated distributable after-tax profits as determined in accordance with its articles of associationand the accounting standards and regulations in China.B.Significant ChangesWe have not experienced any significant changes since the date of our audited consolidated financial statements included in thisannual report. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 140 of 248 Table of Contents133ITEM 9.THE OFFER AND LISTINGA.Offer and Listing DetailsOur ADSs have been listed on the New York Stock Exchange since September 20, 2017. Our ticker symbol on the New YorkStock Exchange changed from “BSTI” to BEST” effective at the start of trading on February 19, 2019. The ratio of our ADSs to our ClassA ordinary shares changed from one (1) ADS to one (1) Class A ordinary share, to one (1) ADS to five (5) Class A ordinary shares,effective at the start of trading on May 20, 2022. The ratio of our ADSs to our Class A ordinary shares changed from one (1) ADS to five(5) Class A ordinary shares, to one (1) ADS to twenty (20) Class A ordinary shares, effective at the start of trading on April 4, 2023.B.Plan of DistributionNot applicable.C.MarketsOur ADSs have been trading on the New York Stock Exchange since September 20, 2017.From September 20, 2017 to February 18, 2019, our ticker symbol on the New York Stock Exchange was “BSTI.” Our tickersymbol on the New York Stock Exchange changed from “BSTI” to BEST” effective at the start of trading on February 19, 2019.From September 20, 2017 to May 19, 2022, each of our ADSs represented one (1) of our Class A ordinary shares. The ratio ofour ADSs to our Class A ordinary shares changed from one (1) ADS to one (1) Class A ordinary share, to one (1) ADS to five (5) Class Aordinary shares, effective at the start of trading on May 20, 2022.From May 20, 2022 to April 3, 2023, each of our ADSs represented five (5) of our Class A ordinary shares. The ratio of ourADSs to our Class A ordinary shares changed from one (1) ADS to five (5) Class A ordinary shares, to one (1) ADS to twenty (20) ClassA ordinary shares, effective at the start of trading on April 4, 2023.D.Selling ShareholdersNot applicable.E.DilutionNot applicable.F.Expenses of the IssueNot applicable.ITEM 10.ADDITIONAL INFORMATIONA.Share CapitalNot applicable.B.Memorandum and Articles of AssociationWe incorporate by reference into this annual report the description of our ninth amended and restated memorandum and articlesof association contained in our Form F-1 registration statement (File No. 333-218959), as amended, initially filed with the Securities andExchange Commission on June 26, 2017. Our shareholders adopted our ninth amended and restated memorandum and articles ofassociation on September 6, 2017 which became effective immediately prior to the completion of the initial public offering of ourcompany’s ADSs representing its Class A ordinary shares. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 141 of 248 Table of Contents134C.Material ContractsIn the past three fiscal years, we have not entered into any material contracts other than in the ordinary course of business andother than those described in “Item 4. Information on the Company” or elsewhere in this annual report.D.Exchange ControlsSee “Item 4. Information on the Company—B. Business Overview—Regulatory Matters—Regulations Relating to ForeignExchange.”E.TaxationCayman Islands TaxationThe Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciationand there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes likely to be material to us levied by theGovernment of the Cayman Islands except for stamp duties which may be applicable on instruments executed in, or after executionbrought within, the jurisdiction of the Cayman Islands. The Cayman Islands is not a party to any double tax treaties which are applicableto any payments made to or by our company. There are no exchange control regulations or currency restrictions in the Cayman Islands.Payments of dividends and capital in respect of our ordinary shares and ADSs will not be subject to taxation in the CaymanIslands and no withholding will be required on the payment of dividends or capital to any holder of our ordinary shares or ADSs, nor willgains derived from the disposal of our ordinary shares or ADSs be subject to Cayman Islands income or corporation tax. No stamp duty ispayable in respect of the issue of our ordinary shares or on an instrument of transfer in respect of our ordinary shares.Pursuant to Section 6 of the Tax Concessions Act (As Revised) of the Cayman Islands, we have obtained an undertaking from theGovernor in Cabinet:(1) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits, income, gains orappreciation shall apply to us or our operations; and(2) in addition, that no tax to be levied on profits, income, gains or appreciation or which is in the nature of estate dutyor inheritance tax shall be payable on or in respect of our shares, debentures or other obligations, or by way of the withholding inwhole or in part of any relevant payment as defined in Section 6(3) of the Tax Concessions Act (As Revised).The undertaking for us is for a period of twenty years from March 18, 2008.People’s Republic of China TaxationIn March 2007, the National People’s Congress of China enacted the Enterprise Income Tax Law, which became effective onJanuary 1, 2008 and was last amended on December 29, 2018. The Enterprise Income Tax Law provides that enterprises organized underthe laws of jurisdictions outside China with their “de facto management bodies” located within China may be considered China residententerprises and therefore subject to Chinese enterprise income tax at the rate of 25% on their worldwide income. The ImplementingRules of the Enterprise Income Tax Law further defines the term “de facto management body” as the management body that exercisessubstantial and overall management and control over the business, personnel, accounts and properties of an enterprise. In April 2009, theState Administration of Taxation issued a circular, known as SAT Circular 82, which provides certain specific criteria for determiningwhether the “de facto management body” of a PRC-controlled enterprise that is incorporated offshore is located in China. Further to SATCircular 82, in 2011, the State Administration of Taxation issued the Administrative Measures for Enterprise Income Tax of Chinese-Controlled Offshore Incorporated Resident Enterprises (Trial), or SAT Bulletin 45, to provide more guidance on the implementation ofSAT Circular 82. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 142 of 248 Table of Contents135According to SAT Circular 82, an offshore incorporated enterprise controlled by a PRC enterprise or a PRC enterprise group willbe considered a PRC tax resident by virtue of having its “de facto management body” in China and will be subject to PRC enterpriseincome tax on its worldwide income only if all of the following conditions are met: (i) the senior management and core managementdepartments in charge of its daily operations function have their presence mainly in the PRC; (ii) its financial and human resourcesdecisions are subject to determination or approval by persons or bodies in the PRC; (iii) its major assets, accounting books, company seals,and minutes and files of its board of directors and shareholders’ meetings are located or kept in the PRC; and (iv) more than half of theenterprise’s directors or senior management with voting rights habitually reside in the PRC.Although SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRCenterprise groups, not those controlled by PRC individuals or foreigners, the determination criteria set forth therein may reflect the StateAdministration of Taxation’s general position on how the “de facto management body” test could be applied in determining the taxresident status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, individuals or foreigners.Although a substantial majority of the members of our management team are located in the PRC, we believe that BEST Inc. is nota PRC resident enterprise for PRC tax purposes. BEST Inc. is not controlled by a PRC enterprise or PRC enterprise group and we do notbelieve that BEST Inc. meets all of the conditions above. BEST Inc. is a company incorporated outside the PRC. As a holding company,its key assets are its ownership interests in its subsidiaries, which are located outside the PRC. However, the tax resident status of anenterprise is subject to determination by the PRC tax authorities and uncertainties remain with respect to the interpretation of the term “defacto management body.”If the PRC tax authorities determine that BEST Inc. is a PRC resident enterprise for enterprise income tax purposes, we may berequired to withhold a 10% withholding tax from dividends we pay to our shareholders that are non-resident enterprises, including theholders of our ADSs. In addition, non-resident enterprise shareholders (including our ADS holders) may be subject to a 10% PRC tax ongains realized on the sale or other disposition of ADSs or ordinary shares, if such income is treated as sourced from within the PRC.Furthermore, if we are deemed a PRC resident enterprise, dividends payable to our non-PRC individual shareholders (including our ADSholders) and any gain realized on the transfer of ADSs or ordinary shares by such shareholders may be subject to PRC tax at a rate of 20%unless a reduced rate is available under an applicable tax treaty. It is also unclear whether non-PRC shareholders of BEST Inc. would beable to claim the benefits of any tax treaties between their country of tax residence and the PRC in the event that BEST Inc. is treated as aPRC resident enterprise.Certain United States Federal Income Tax ConsiderationsThe following discussion describes certain United States federal income tax consequences of the purchase, ownership anddisposition of our ADSs and Class A ordinary shares.This discussion deals only with ADSs and Class A ordinary shares that are held as capital assets by a United States Holder (asdefined below).As used herein, the term “United States Holder” means a beneficial owner of our ADSs or Class A ordinary shares that is, forUnited States federal income tax purposes, any of the following:●an individual citizen or resident of the United States;●a corporation (or other entity treated as a corporation for United States federal income tax purposes) created or organized inor under the laws of the United States, any state thereof or the District of Columbia;●an estate the income of which is subject to United States federal income taxation regardless of its source; or●a trust if it (1) is subject to the primary supervision of a court within the United States and one or more United States personshave the authority to control all substantial decisions of the trust or (2) has a valid election in effect under applicable UnitedStates Treasury regulations to be treated as a United States person. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 143 of 248 Table of Contents136This discussion is based upon provisions of the Internal Revenue Code of 1986, as amended, or the Code, and regulations, rulingsand judicial decisions thereunder as of the date hereof. Those authorities may be changed, perhaps retroactively, so as to result in UnitedStates federal income tax consequences different from those summarized below. In addition, this discussion assumes that the depositagreement, and all other related agreements, will be performed in accordance with their terms.This discussion does not represent a detailed description of the United States federal income tax consequences applicable to youif you are subject to special treatment under the United States federal income tax laws, including if you are:●a dealer or broker in securities or currencies;●a financial institution;●a regulated investment company;●a real estate investment trust;●an insurance company;●a tax-exempt organization;●a person holding our ADSs or Class A ordinary shares as part of a hedging, integrated or conversion transaction, aconstructive sale or a straddle;●a trader in securities that has elected the mark-to-market method of accounting for your securities;●a person liable for alternative minimum tax;●a person who owns or is deemed to own 10% or more of our stock by vote or value;●a partnership or other pass-through entity for United States federal income tax purposes;●a person required to accelerate the recognition of any item of gross income with respect to our ADSs or Class A ordinaryshares as a result of such income being recognized on an applicable financial statement; or●a person whose “functional currency” is not the United States dollar.If an entity or other arrangement treated as a partnership for United States federal income tax purposes holds our ADSs or ClassA ordinary shares, the tax treatment of a partner will generally depend upon the status of the partner and the activities of the partnership. Ifyou are a partner of a partnership holding our ADSs or Class A ordinary shares, you should consult your tax advisors.As discussed below under “Passive Foreign Investment Company,” we believe that we were classified as a passive foreigninvestment company, or PFIC, for prior taxable years, that we will be classified as a PFIC for the current taxable year, and that we willcontinue to be a PFIC in future taxable years. Accordingly, United States Holders are urged to review the discussion below under “PassiveForeign Investment Company,” and to consult with their tax advisors regarding the tax consequences to them if we were classified as aPFIC for prior taxable years, or are classified as a PFIC in our current taxable year or future taxable years. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 144 of 248 Table of Contents137This discussion does not contain a detailed description of all the United States federal income tax consequences to you inlight of your particular circumstances and does not address the Medicare tax on net investment income, United States federalestate and gift taxes or the effects of any state, local or non-United States tax laws. If you are considering the purchase of our ADSsor Class A ordinary shares, you should consult your tax advisors concerning the particular United States federal income taxconsequences to you of the purchase, ownership and disposition of our ADSs or Class A ordinary shares, as well as theconsequences to you arising under other United States federal tax laws and the laws of any other taxing jurisdiction.ADSsIf you hold ADSs, for United States federal income tax purposes, you generally will be treated as the owner of the underlyingClass A ordinary shares that are represented by such ADSs. Accordingly, deposits or withdrawals of Class A ordinary shares for ADSswill not be subject to United States federal income tax.Passive Foreign Investment CompanyBased on our financial statements and the composition of our income and assets and the valuation of our assets, we believe thatwe were a PFIC in prior taxable years, we will be a PFIC for the current taxable year, and that we will continue to be a PFIC in futuretaxable years.In general, we will be a PFIC for any taxable year in which:●at least 75% of our gross income is passive income, or●at least 50% of the value (generally determined based on a quarterly average) of our assets is attributable to assets thatproduce or are held for the production of passive income.For this purpose, passive income generally includes dividends, interest, gains from the sale or exchange of investment property,royalties and rents (other than royalties and rents derived in the active conduct of a trade or business and not derived from a relatedperson). Cash and other assets readily convertible into cash are generally treated as an asset that produces or is held for the production ofpassive income. If we own at least 25% (by value) of the stock of another corporation, for purposes of determining whether we are a PFIC,we will be treated as owning our proportionate share of the other corporation’s assets and receiving our proportionate share of the othercorporation’s income. However, there is uncertainty as to the treatment of our corporate structure and ownership of the VIEs for UnitedStates federal income tax purposes. For United States federal income tax purposes, we consider ourselves to own the equity of the VIEs. Ifit is determined, contrary to our view, that we do not own the equity of the VIEs for United States federal income tax purposes (forinstance, because the relevant PRC authorities do not respect these arrangements), we are more likely to be treated as a PFIC (as discussedbelow).Based on the past and projected composition of our income and assets, and the valuation of its assets, including goodwill (whichwe have determined based on trading price of our ADSs), we believe that we were a PFIC in prior taxable years, we will be a PFIC for thecurrent taxable year, and that we will continue to be a PFIC in future taxable years. The determination of whether we are a PFIC is madeannually. Accordingly, changes in our asset or income composition may affect our PFIC status. For these purposes, fluctuations in themarket price of our Class A ordinary shares and ADSs (which may be volatile) may affect the value of our goodwill, and thus thecomposition of its assets, and accordingly, may affect our PFIC status. The composition of our assets and income may also be affected byhow, and how quickly, we use the cash and liquid assets that we currently hold. If we are a PFIC for any taxable year during which youhold our ADSs or Class A ordinary shares, you will be subject to special tax rules discussed below. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 145 of 248 Table of Contents138If we are a PFIC for any taxable year during which you hold our ADSs or Class A ordinary shares and you do not make a timelymark-to-market election, as described below, you will be subject to special tax rules with respect to any “excess distribution” received andany gain realized from a sale or other disposition, including a pledge and a deemed sale discussed in the following paragraph, of ADSs orClass A ordinary shares. Distributions received in a taxable year, other than the taxable year in which your holding period in the ADSs orClass A ordinary shares begins, will be treated as excess distributions to the extent that they are greater than 125% of the average annualdistributions received during the shorter of the three preceding taxable years or the portion of your holding period for the ADSs or Class Aordinary shares that preceded the taxable year of the distribution. Under these special tax rules:●the excess distribution or gain will be allocated ratably over your holding period for the ADSs or Class A ordinary shares,●the amount allocated to the current taxable year, and any taxable year prior to the first taxable year in which we were a PFIC,will be treated as ordinary income, and●the amount allocated to each other year will be subject to tax at the highest tax rate in effect for individuals or corporations,as applicable, for that year and the interest charge generally applicable to underpayments of tax will be imposed on theresulting tax attributable to each such year.Although the determination of whether we are a PFIC is made annually, if we are a PFIC for any taxable year in which you holdour ADSs or Class A ordinary shares, you will generally be subject to the special tax rules described above for that year and for eachsubsequent year in which you hold the ADSs or Class A ordinary shares (even if we do not qualify as a PFIC in such subsequent years).However, if we cease to be a PFIC, you can avoid the continuing impact of the PFIC rules by making a special election to recognize gainas if your ADSs or Class A ordinary shares had been sold on the last day of the last taxable year during which we were a PFIC. You areurged to consult your tax advisor about this election.In lieu of being subject to the special tax rules discussed above, you may make a mark-to-market election with respect to yourADSs or Class A ordinary shares provided such ADSs or Class A ordinary shares are treated as “marketable stock.” The ADSs or Class Aordinary shares generally will be treated as marketable stock if the ADSs or Class A ordinary shares are regularly traded on a “qualifiedexchange or other market” (within the meaning of the applicable Treasury regulations). The ADSs are listed on the NYSE, whichconstitutes a qualified exchange, although there can be no assurance that the ADSs will be “regularly traded” for purposes of the mark-to-market election.If you make an effective mark-to-market election, for each taxable year that we are a PFIC you will include as ordinary incomethe excess of the fair market value of your ADSs at the end of the year over your adjusted tax basis in the ADSs. You will be entitled todeduct as an ordinary loss in each such year the excess of your adjusted tax basis in the ADSs over their fair market value at the end of theyear, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. Your adjusted taxbasis in the ADSs will be increased by the amount of any income inclusion and decreased by the amount of any deductions under themark-to-market rules. In addition, upon the sale or other disposition of your ADSs in a year that we are a PFIC, any loss will be treated asordinary loss, but only to the extent of the net amount of previously included income as a result of the mark-to-market election, and anygain will be treated as ordinary income. If you make a mark-to-market election, any distributions that we make would generally be subjectto the tax rules discussed below under “—Taxation of Dividends.”If you make a mark-to-market election, it will be effective for the taxable year for which the election is made and all subsequenttaxable years unless the ADSs are no longer regularly traded on a qualified exchange or other market, or the Internal Revenue Service, orthe IRS, consents to the revocation of the election. You are urged to consult your tax advisor about the availability of the mark-to-marketelection, and whether making the election would be advisable in your particular circumstances.Alternatively, U.S. taxpayers can sometimes avoid the special tax rules described above by electing to treat a PFIC as a “qualifiedelecting fund” under Section 1295 of the Code. However, this option is not available to you because we do not intend to prepare or provideyou with the tax information necessary to permit you to make this election. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 146 of 248 Table of Contents139If we are a PFIC for any taxable year during which you hold our ADSs or Class A ordinary shares and any of our non-UnitedStates subsidiaries is also a PFIC, you will be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC forpurposes of the application of the PFIC rules. You will not be able to make the mark-to-market election described above in respect of anylower-tier PFIC. You are urged to consult your tax advisors about the application of the PFIC rules to any of our subsidiaries.You will generally be required to file IRS Form 8621 if you hold our ADSs or Class A ordinary shares in any year in which weare a PFIC. You are urged to consult your tax advisors concerning the United States federal income tax consequences of holding ADSs orClass A ordinary shares if we are a PFIC for any taxable year.Taxation of DividendsSubject to the discussion under “—Passive Foreign Investment Company” above, the gross amount of distributions on the ADSsor Class A ordinary shares (including any amounts withheld to reflect PRC withholding taxes, as discussed above under “—E. Taxation —People’s Republic of China Taxation”) will be taxable as dividends to the extent paid out of our current or accumulated earnings andprofits, as determined under United States federal income tax principles. To the extent that the amount of any distribution exceeds ourcurrent and accumulated earnings and profits for a taxable year, the distribution will first be treated as a tax-free return of capital, causing areduction in the tax basis of the ADSs or Class A ordinary shares, and to the extent the amount of the distribution exceeds your tax basis,the excess will be taxed as capital gain recognized on a sale or exchange. We do not, however, expect to determine earnings and profits inaccordance with United States federal income tax principles. Therefore, you should expect that a distribution will generally be reported asa dividend.Any dividends that you receive (including any withheld taxes) will be includable in your gross income as ordinary income on theday actually or constructively received by you, in the case of Class A ordinary shares, or by the depositary, in the case of ADSs. Suchdividends will not be eligible for the dividends received deduction allowed to corporations under the Code.Subject to applicable limitations (including a minimum holding period requirement), dividends received by non-corporate UnitedStates Holders from a qualified foreign corporation may be treated as “qualified dividend income” that is subject to reduced rates oftaxation. A foreign corporation generally is treated as a qualified foreign corporation (i) if it is eligible for the benefits of a comprehensiveincome tax treaty with the United States which the United States Treasury Department determines to be satisfactory for these purposes andwhich includes an exchange of information provision or (ii) with respect to dividends paid by that corporation on shares (or ADSs backedby such shares) that are readily tradable on an established securities market in the United States. United States Treasury Departmentguidance indicates that our ADSs (which are listed on the NYSE), but not our Class A ordinary shares, are readily tradable on anestablished securities market in the United States. Therefore, we do not believe that dividends that we pay on our Class A ordinary sharesthat are not represented by ADSs currently meet the conditions required for these reduced rates of taxation. In addition, dividends receivedfrom us by non-corporate United States Holders will not be treated as “qualified dividend income” that is subject to reduced rates oftaxation if we are a PFIC in the taxable year in which such dividends are paid or in the preceding taxable year. As discussed above under“—Passive Foreign Investment Company,” we believe that we were a PFIC in prior taxable years, we will be a PFIC for the currenttaxable year, and that we will continue to be a PFIC in future taxable years. Therefore, if you are a non-corporate United States Holder,you should not assume that any dividends will be taxed at a preferential rate. You should consult your tax advisors regarding theapplication of these rules given your particular circumstances.Subject to certain conditions and limitations (including a minimum holding period requirement), any PRC withholding taxes ondividends will generally be treated as foreign taxes eligible for credit against your United States federal income tax liability. For purposesof calculating the foreign tax credit, dividends paid on the ADSs or Class A ordinary shares will generally be treated as income fromsources outside the United States and will generally constitute passive category income. The rules governing the foreign tax credit arecomplex. You are urged to consult your tax advisors regarding the availability of the foreign tax credit under your particularcircumstances. Instead of claiming a foreign tax credit, you may, at your election, deduct such otherwise creditable PRC withholding taxesin computing your taxable income, but only for a taxable year in which you elect to do so with respect to all foreign income taxes andsubject to generally applicable limitations under United States law.Distributions of ADSs, Class A ordinary shares or rights to subscribe for ADSs or Class A ordinary shares that are received aspart of a pro rata distribution to all of our shareholders generally will not be subject to United States federal income tax. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 147 of 248 Table of Contents140Sale, Exchange or Other Disposition of ADSs or Class A Ordinary SharesFor United States federal income tax purposes, you will recognize taxable gain or loss on any sale, exchange or other dispositionof the ADSs or Class A ordinary shares in an amount equal to the difference between the amount realized for the ADSs or Class Aordinary shares and your tax basis in the ADSs or Class A ordinary shares, both determined in U.S. dollars. Subject to the discussion under“—Passive Foreign Investment Company” above, such gain or loss will generally be capital gain or loss and will generally be long-termcapital gain or loss if you have held the ADSs or Class A ordinary shares for more than one year. Long-term capital gains of non-corporateUnited States Holders (including individual) are eligible for reduced rates of taxation. The deductibility of capital losses is subject tolimitations. Any gain or loss recognized by you will generally be treated as United States source gain or loss. However, if PRC tax isimposed on any gain (for instance, because we are treated as a PRC resident enterprise for PRC tax purposes), and if you are eligible forthe benefits of the income tax treaty between the United States and the PRC, or the Treaty, you may elect to treat such gain as PRC sourcegain under the Treaty. If you are not eligible for the benefits of the Treaty or if you fail to make the election to treat any gain as PRCsource, then you generally would not be eligible for a foreign tax credit for any PRC tax imposed on the disposition of ADSs or Class Aordinary shares unless such credit can be applied (subject to applicable limitations) against tax due on other income derived from foreignsources. However, pursuant to recently issued Treasury regulations that apply to taxes paid or accrued in taxable years beginning on orafter December 28, 2021, if you do not claim the benefits of the Treaty, any such PRC tax would generally not be a foreign income taxeligible for a foreign tax credit (regardless of any other income that you may have that is derived from foreign sources). You are urged toconsult your tax advisors regarding the availability of the foreign tax credit under your particular circumstances.Information Reporting and Backup WithholdingIn general, information reporting will apply to distributions in respect of our ADSs or Class A ordinary shares and the proceedsfrom the sale, exchange or other disposition of our ADSs or Class A ordinary shares that are paid to you within the United States (and incertain cases, outside the United States), unless you establish that you are an exempt recipient. A backup withholding tax may apply tosuch payments if you fail to provide a taxpayer identification number and a certification of exempt status or (in the case of dividendpayments) if you fail to certify that you are not subject to backup withholding or fail to report in full dividend and interest income.Backup withholding is not an additional tax and any amounts withheld under the backup withholding rules will be allowed as arefund or a credit against your United States federal income tax liability provided the required information is timely furnished to the IRS.Certain United States Holders are required to report information relating to our ADSs or Class A ordinary shares, subject tocertain exceptions (including an exception for ADSs or Class A ordinary shares held in accounts maintained by certain financialinstitutions), by attaching a complete IRS Form 8938, Statement of Specified Foreign Financial Assets, with their tax return for each yearin which they hold the ADSs or Class A ordinary shares. You are urged to consult your tax advisors regarding information reportingrequirements relating to your ownership of our ADSs or Class A ordinary shares.F.Dividends and Paying AgentsNot applicable.G.Statement by ExpertsNot applicable. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 148 of 248 Table of Contents141H.Documents on DisplayWe have filed this annual report on Form 20-F, including exhibits, with the SEC. As allowed by the SEC, in Item 19 of thisannual report, we incorporate by reference certain information we filed with the SEC. This means that we can disclose importantinformation to you by referring you to another document filed separately with the SEC. The information incorporated by reference isconsidered to be part of this annual report.You may read and copy this annual report, including the exhibits incorporated by reference in this annual report, at the SEC’sPublic Reference Room at 100 F Street, N.E., Washington, D.C. 20549 and at the SEC’s regional offices in New York, New York, andChicago, Illinois. You can also request copies of this annual report, including the exhibits incorporated by reference in this annual report,upon payment of a duplicating fee, by writing to the SEC’s Public Reference Room for information.The SEC also maintains a website that contains reports, proxy statements and other information about issuers, such as us, who fileelectronically with the SEC. The address of that website is http://www.sec.gov. The information on that website is not a part of this annualreport.I.Subsidiary InformationNot applicable.J.Annual Report to Security HoldersNot applicable.ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKInterest Rate RiskOur exposure to interest rate risk primarily relates to interest expenses incurred in respect of bank borrowings, capital leaseobligations and interest income generated by excess cash, which is mostly held in interest-bearing bank deposits. We have not significantlyused derivative financial instruments in our investment portfolio. Interest earning instruments and interest-bearing obligations carry adegree of interest rate risk. We have not been exposed to, nor do we anticipate being exposed to, material risks due to changes in marketinterest rates. However, our future interest income and interest expenses may fluctuate due to changes in market interest rates.Foreign Exchange RiskSubstantially all of our revenue and expenses are denominated in Renminbi. We do not believe that we currently have anysignificant direct foreign exchange risk and have not used any derivative financial instruments to hedge exposure to such risk. Although ingeneral our exposure to foreign exchange risks should be limited, the value of your investment in our ADSs will be affected by theexchange rate between the U.S. dollar and the Renminbi because the value of our business is effectively denominated in Renminbi, whileour ADSs will be traded in U.S. dollars.The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the PBOC. The Chinesegovernment allowed the Renminbi to appreciate by more than 20% against the U.S. dollar between July 2005 and July 2008. BetweenJuly 2008 and June 2010, the exchange rate between the Renminbi and the U.S. dollar had been stable and traded within a narrow band.Since June 2010, the Chinese government has allowed the Renminbi to appreciate slowly against the U.S. dollar, though there have beenperiods when the Renminbi has depreciated against the U.S. dollar. In particular, on August 11, 2015, the PBOC allowed the Renminbi todepreciate by approximately 2% against the U.S. dollar. It is difficult to predict how long the current situation may last and when and howthe relationship between the Renminbi and the U.S. dollar may change again. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 149 of 248 Table of Contents142We have historically incurred short-term borrowings in Renminbi to fund our working capital requirements in the PRC whileholding significant U.S. dollar balances. To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciationof the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we receive from the conversion.Conversely, if we decide to convert Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary sharesor ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect on the U.S.dollar amounts available to us.InflationSince our inception, inflation in China has not materially affected our results of operations. According to the National Bureau ofStatistics of China, the year-over-year percent changes in the consumer price index were increases of 0.9%, 2.0% and 0.2% in 2021, 2022and 2023, respectively. Although we have not been materially affected by inflation in the past, we may be affected if China experienceshigher rates of inflation in the future.Commodity Price RiskOur exposure to commodity price risk primarily relates to the fuel price in connection with our transportation network. The priceand availability of fuel are subject to fluctuations due to changes in the level of global oil production, seasonality, weather, global politicsand other factors. Historically, fluctuations in the price of fuel, especially gasoline, have been the commodity with the greatest impact onour results of operations. Despite the recent decline in fuel prices, there is a risk that fuel prices could rise in future periods. In the event ofsignificant fuel price rise, our transportation expenses may rise and our gross income may decrease if we are unable to adopt any effectivecost control-measures or pass on the incremental costs to our customers in the form of service surcharges.We are also exposed to a lesser degree to the price of paper used in packing of the parcels and other goods we ship and the priceof electricity that powers our technology and that is used in our facilities.ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIESA.Debt SecuritiesNot applicable.B.Warrants and RightsNot applicable.C.Other SecuritiesNot applicable.D.American Depositary SharesIn September 2017, we appointed Citibank, N.A., or Citibank, as the depositary bank for our ADR program. We entered into adeposit agreement with Citibank, as depositary, and all holders from time to time of our ADRs on September 22, 2017. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 150 of 248 Table of Contents143Fees and ChargesAs an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement:Service Fees ● Issuance of ADSs (e.g., an issuance of ADS upon adeposit of Class A ordinary shares, upon a change inthe ADS(s)-to-Class A ordinary share(s) ratio, or forany other reason), excluding ADS issuances as aresult of distributions of Class A ordinary sharesUp to U.S. 5¢ per ADS issued● Cancellation of ADSs (e.g., a cancellation of ADSsfor delivery of deposited property, upon a change inthe ADS(s)-to-Class A ordinary share(s) ratio, or forany other reason)Up to U.S. 5¢ per ADS cancelled● Distribution of cash dividends or other cashdistributions (e.g., upon a sale of rights and otherentitlements)Up to U.S. 5¢ per ADS held● Distribution of ADSs pursuant to (i) stock dividendsor other free stock distributions, or (ii) exercise ofrights to purchase additional ADSsUp to U.S. 5¢ per ADS held● Distribution of securities other than ADSs or rights topurchase additional ADSs (e.g., upon a spin-off)Up to U.S. 5¢ per ADS held● ADS ServicesUp to U.S. 5¢ per ADS held on the applicable recorddate(s) established by the depositary bankAs an ADS holder you will also be responsible to pay certain charges such as:●taxes (including applicable interest and penalties) and other governmental charges;●the registration fees as may from time to time be in effect for the registration of Class A ordinary shares on the share registerand applicable to transfers of Class A ordinary shares to or from the name of the custodian, the depositary bank or anynominees upon the making of deposits and withdrawals, respectively;●certain cable, telex and facsimile transmission and delivery expenses;●the expenses and charges incurred by the depositary bank in the conversion of foreign currency;●the fees and expenses incurred by the depositary bank in connection with compliance with exchange control regulations andother regulatory requirements applicable to Class A ordinary shares, ADSs and ADRs; and●the fees and expenses incurred by the depositary bank, the custodian, or any nominee in connection with the servicing ordelivery of deposited property. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 151 of 248 Table of Contents144ADS fees and charges payable upon (i) the issuance of ADSs, and (ii) the cancellation of ADSs are charged to the person towhom the ADSs are issued (in the case of ADS issuances) and to the person whose ADSs are cancelled (in the case of ADS cancellations).In the case of ADSs issued by the depositary bank into DTC, the ADS issuance and cancellation fees and charges may be deducted fromdistributions made through DTC, and may be charged to the DTC participant(s) receiving the ADSs being issued or the DTCparticipant(s) holding the ADSs being cancelled, as the case may be, on behalf of the beneficial owner(s) and will be charged by the DTCparticipant(s) to the account of the applicable beneficial owner(s) in accordance with the procedures and practices of the DTC participantsas in effect at the time. ADS fees and charges in respect of distributions and the ADS service fee are charged to the holders as of theapplicable ADS record date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from thefunds being distributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, holders as of the ADS record date willbe invoiced for the amount of the ADS fees and charges and such ADS fees and charges may be deducted from distributions made toholders of ADSs. For ADSs held through DTC, the ADS fees and charges for distributions other than cash and the ADS service fee maybe deducted from distributions made through DTC, and may be charged to the DTC participants in accordance with the procedures andpractices prescribed by DTC and the DTC participants in turn charge the amount of such ADS fees and charges to the beneficial ownersfor whom they hold ADSs.In the event of refusal to pay the depositary bank fees, the depositary bank may, under the terms of the deposit agreement, refusethe requested service until payment is received or may set off the amount of the depositary bank fees from any distribution to be made tothe ADS holder. Certain of the depositary fees and charges (such as the ADS services fee) may become payable shortly after the closing ofthe ADS offering. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by thedepositary bank. You will receive prior notice of such changes. The depositary bank may reimburse us for certain expenses incurred by usin respect of the ADR program, by making available a portion of the ADS fees charged in respect of the ADR program or otherwise, uponsuch terms and conditions as we and the depositary bank agree from time to time.Payments by DepositaryDuring and for the year 2023, we did not receive any payment from Citibank, the depositary bank for our ADR program, forreimbursement of investor relations expenses and other program-related expenses.PART IIITEM 13.DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIESNoneITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDSA.Modifications of RightsSee “Item 10. Additional Information—B. Memorandum and Articles of Association” for a description of the rights of securitiesholders, which remain unchanged.E.Use of ProceedsNot applicable.ITEM 15.CONTROLS AND PROCEDURESDisclosure Controls and ProceduresWe maintain disclosure controls and procedures designed to provide reasonable assurance that information required to bedisclosed in reports filed under the Exchange Act is recorded, processed, summarized and reported within the specified time periods andaccumulated and communicated to our management, including our principal executive officer and principal accounting officer, asappropriate, to allow timely decisions regarding required disclosure. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 152 of 248 Table of Contents145Our management, under the supervision and with the participation of our principal executive officer and our principal accountingofficer, evaluated the effectiveness of our disclosure controls and procedures, as defined in Rules 13a-15(e) or 15d-15(e) promulgatedunder the Exchange Act, as of December 31, 2023. Based on that evaluation, our principal executive officer and principal accountingofficer have concluded that our disclosure controls and procedures are effective in ensuring that material information required to bedisclosed in this annual report is recorded, processed, summarized and reported to them for assessment, and required disclosure is madewithin the time period specified in the rules and forms of the Commission.Management’s Annual Report on Internal Control over Financial ReportingOur management is responsible for establishing and maintaining adequate internal control over financial reporting as defined inRules 13a-15(f) and 15d-15(f) under the Exchange Act. As required by Rule 13a-15(c) of the Exchange Act, our management conductedan evaluation of our company’s internal control over financial reporting as of December 31, 2023 based on the framework in InternalControl — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based onthis evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2023.Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,projections of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risks thatcontrols may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures maydeteriorate.Because our company is a non-accelerated filer, this annual report does not include an attestation report of our registered publicaccounting firm regarding internal control over financial reporting.Changes in Internal Control over Financial ReportingThere were no changes in our internal controls over financial reporting that occurred during the period covered by this annualreport that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.ITEM 16.ITEM 16A.AUDIT COMMITTEE FINANCIAL EXPERTOur Board of Directors has determined that Mr. Ying Wu, who is an independent director, qualifies as an audit committeefinancial expert as defined in Item 16A of the instruction to Form 20-F. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 153 of 248 Table of Contents146ITEM 16B.CODE OF ETHICSWe have adopted a code of business conduct and ethics which applies to our directors, employees, advisors and officers,including our Chief Executive Officer and Chief Financial Officer. No changes have been made to the code of business conduct and ethicssince its adoption and no waivers have been granted therefrom to our directors or employees. We have filed our code of business conductas an exhibit to our F-1 registration statement (File No. 333-218959), as amended, initially filed with the Securities and ExchangeCommission on June 26, 2017, and a copy is available to any shareholder upon request. This code of business conduct and ethics is alsoavailable on our website at ir.best-inc.com.ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICESThe following table sets forth the aggregate fees by categories specified below in connection with certain professional servicesrendered by Ernst & Young Hua Ming LLP, for the years indicated.For the Years EndedDecember 31, 2022 2023(In thousands of US dollars)Audit Fees(1) 2,029 1,403Tax Fees(2) 78 33Total 2,107 1,436(1)“Audit Fees” represents the aggregate fees billed for each of the fiscal years listed for professional services rendered by our principalauditors for the audit of our annual financial statements and assistance with and review of documents filed with the SEC and otherstatutory and regulatory filings.(2)“Tax Fees” represents the fees for tax compliance, tax advice and tax planning.Pre-Approval Policies and ProceduresOur audit committee is responsible for the oversight of our independent accountants’ work. The policy of our audit committee isto pre-approve all audit and non-audit services provided by Ernst & Young Hua Ming LLP, including audit services as described above,other than those for de minimis services which are approved by the audit committee prior to the completion of the audit.ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEESNone.ITEM 16E.PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERSIn March 2023, we announced the adoption of a share repurchase program in an aggregate amount of up to US$20 million worthof our outstanding ADSs from time to time over a period of 12 months. As previously announced on November 23, 2023, our company’sboard of directors terminated the share repurchase program, effective as of September 25, 2023. Prior to the program’s termination andduring the year ended December 31, 2023, we repurchased a total of 1,265,685 ADSs, representing 27,029,700 Class A ordinary shares.ITEM 16F.CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANTNot applicable. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 154 of 248 Table of Contents147ITEM 16G.CORPORATE GOVERNANCEWe are a “foreign private issuer” (as such term is defined in Rule 3b-4 under the Exchange Act), and our ADSs, each representingtwenty (20) Class A ordinary shares, are listed on the New York Stock Exchange. Under Section 303A of the New York Stock ExchangeListed Company Manual, New York Stock Exchange listed companies that are foreign private issuers are permitted to follow homecountry practice in lieu of the corporate governance provisions specified by the New York Stock Exchange with limited exceptions. Thefollowing summarizes some significant ways in which our corporate governance practices differ from those followed by domesticcompanies under the listing standards of the New York Stock Exchange.●In respect of independent directors on our board of directors: As our home country practice does not require a majority ofour board of directors to be independent, only three of our seven directors are independent.●In respect of the oversight of our executive officer compensation and director nominations matters: As our home countrypractice does not require independent director oversight of executive officer compensation and director nomination matters,our compensation and corporate governance and nominating committees are not comprised solely of independent directors.ITEM 16H.MINE SAFETY DISCLOSURENot applicable.ITEM 16I.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONSNot applicable.Our company is incorporated in the Cayman Islands. The VIEs and other operating entities being consolidated in our financialstatements, or the consolidated foreign operating entities, are incorporated or otherwise organized in the PRC, the British Virgin Islands,Hong Kong, the Cayman Islands, Thailand, Vietnam, Malaysia, or Singapore.To the best of our knowledge, no governmental entity in any of the PRC, the British Virgin Islands, Hong Kong, the CaymanIslands, Thailand, Vietnam, Malaysia, Singapore or Cambodia owns any shares of our company or any of the consolidated foreignoperating entities.To the best of our knowledge, no governmental entity in the PRC has a controlling financial interest with respect to our companyor any of the consolidated foreign operating entities.No member of the board of directors of our company or any of the consolidated foreign operating entities is any official of theChinese Communist Party.Neither the memorandum and articles of association of our company nor the articles of incorporation (or equivalent organizingdocument) of any of the consolidated foreign operating entities contains any charter of the Chinese Communist Party.ITEM 16J.INSIDER TRADING POLICIES(a) We have adopted insider trading policies and procedures governing the purchase, sale, and other dispositions of our securitiesby directors, senior management, and employees that are reasonably designed to promote compliance with applicable insider trading laws,rules and regulations, and listing standards applicable to us.(b) Please see our Statement of Policies Governing Material, Non-public Information and the Prevention of Insider Trading,which has been filed as Exhibit 11.2 to this annual report. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 155 of 248 Table of Contents148ITEM 16K.CYBERSECURITYRisk management and strategyAs of the date of this annual report, we have not experienced any cybersecurity incidents that have materially affected or arereasonably likely to materially affect us, our business strategy, results of operations, or financial condition; such risks are referred to belowas “material risks from cybersecurity threats”.We identify, assess and manage any material risks from cybersecurity threats through the following countermeasures:●cybersecurity threat defense system that addresses both internal and external threats;●network, host and application security; and●sensitive information protection methods, including:otechnical safeguards;oprocedural requirements;omonitoring program on our corporate network;ocontinuous testing of our security posture both internally and with outside vendors;oincident response program;osecurity system effectiveness reviews with reference to applicable security standards; andoregular cybersecurity awareness training for employees.Our abovementioned countermeasures for identifying, assessing and managing any material risks from cybersecurity threats, havebeen integrated into our overall risk management system.We do not engage any assessors, consultants, auditors, or other third parties in connection with any of our Cybersecurity RiskManagement Processes.GovernanceThe audit committee of our board of directors is ultimately responsible for the oversight of risks from cybersecurity threats.Our board of directors and its audit committee have delegated an important leadership role in assessing and managing anymaterial risks from cybersecurity threats to Mr. Yanbing Zhang, senior vice president of engineering. Mr. Zhang leads our CybersecurityRisk Management Team, a dedicated unit within our Information Technology (IT) Department. Mr. Zhang has the following relevantexpertise and experience with cybersecurity risk management: Mr. Zhang received a bachelor’s degree in computer science from theNational University of Defense Technology and a master’s degree in computer science from the University of Karlsruhe (now known asthe Karlsruhe Institute of Technology). Mr. Zhang led the establishment of BEST’s cybersecurity management system as well as thecybersecurity department. Mr. Zhang is also experienced in dealing with cybersecurity incidents.Our Cybersecurity Risk Management Team, led by Mr. Yanbing Zhang, continually monitors our IT apps, platforms andinfrastructure to prevent, detect, quickly respond to, mitigate, and remediate any potential material risks from cybersecurity threats or anypotential cybersecurity incidents. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 156 of 248 Table of Contents149PART IIIITEM 17.FINANCIAL STATEMENTSThe Registrant has elected to provide the financial statements and related information specified in Item 18.ITEM 18.FINANCIAL STATEMENTSThe consolidated financial statements of BEST Inc. are included at the end of this annual report.ITEM 19.EXHIBITSExhibitNumber Description of Exhibits1.1Ninth Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by reference to Exhibit 3.2to our Registration Statement on Form F-1 (File No. 333-218959), initially filed with the Securities and Exchange Commission onJune 26, 2017).2.1Registrant’s Form of American Depositary Receipt evidencing American Depositary Shares (incorporated by reference to Exhibit(a) to our Registration Statement on Form F-6 (File No. 333-220361) filed with the Securities and Exchange Commission onSeptember 6, 2017 with respect to American depositary shares representing our Class A ordinary shares).2.2Registrant’s Specimen of Ordinary Share Certificate (incorporated by reference Exhibit 4.1 to our Registration Statement on FormF-1 (File No. 333-218959), initially filed with the Securities and Exchange Commission on June 26, 2017).2.3Form of Deposit Agreement between the Registrant and Citibank, N.A., as depositary (incorporated by reference to Exhibit (a) toour Registration Statement on Form F-6 (File No. 333-220361) filed with the Securities and Exchange Commission on September6, 2017 with respect to American depositary shares representing our Class A ordinary shares).*2.4Description of Securities Registered under Section 12 of the Securities Exchange Act of 19344.1Seventh Amended and Restated Shareholders Agreement among the Registrant, its then shareholders, subsidiaries and variableinterest entity, dated April 5, 2016 (incorporated by reference to Exhibit 4.4 to our Registration Statement on Form F-1 (File No.333-218959), initially filed with the Securities and Exchange Commission on June 26, 2017).4.2Amendment No. 1 to Seventh Shareholders Agreement, as adopted by shareholder resolutions on September 6, 2017 (incorporatedby reference to Exhibit 4.5 to our Registration Statement on Form F-1 (File No. 333-218959), initially filed with the Securities andExchange Commission on June 26, 2017).4.3Loan Agreement between Zhejiang BEST Technology Co., Ltd., Wei Chen and Lili He, dated October 12, 2011 (EnglishTranslation) (incorporated by reference to Exhibit 10.1 to our Registration Statement on Form F-1 (File No. 333-218959), initiallyfiled with the Securities and Exchange Commission on June 26, 2017).4.4Loan Agreement between Zhejiang BEST Technology Co., Ltd. and Hangzhou Ali Venture Capital Co., Ltd., dated February 15,2015 (English Translation) (incorporated by reference to Exhibit 10.2 to our Registration Statement on Form F-1 (File No. 333-218959), initially filed with the Securities and Exchange Commission on June 26, 2017).4.5BEST Logistics Technologies Limited Series G Preferred Share Purchase Agreement, among the Registrant, its then shareholders,subsidiaries and variable interest entity and certain investors named therein, dated January 18, 2016 (incorporated by reference toExhibit 10.7 to our Registration Statement on Form F-1 (File No. 333-218959), initially filed with the Securities and ExchangeCommission on June 26, 2017).4.6BEST Logistics Technologies Limited Series G-2 Preferred Share Purchase Agreement, among the Registrant, its thenshareholders, subsidiaries and variable interest entity and certain investors named therein, dated April 5, 2016 (incorporated byreference to Exhibit 10.8 to our Registration Statement on Form F-1 (File No. 333-218959), initially filed with the Securities andExchange Commission on June 26, 2017).4.7Share Repurchase Agreement, among the Registrant and certain selling shareholders named therein, dated April 5, 2016(incorporated by reference to Exhibit 10.9 to our Registration Statement on Form F-1 (File No. 333-218959), initially filed with theSecurities and Exchange Commission on June 26, 2017). Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 157 of 248 Table of Contents150ExhibitNumber Description of Exhibits4.8Form of Indemnification Agreement between the Registrant and its directors and executive officers (incorporated by reference toExhibit 10.10 to our Registration Statement on Form F-1 (File No. 333-218959), initially filed with the Securities and ExchangeCommission on June 26, 2017).4.9Form of Employment Agreement between the Registrant and its executive officers who are not PRC citizens (incorporated byreference to Exhibit 10.11 to our Registration Statement on Form F-1 (File No. 333-218959), initially filed with the Securities andExchange Commission on June 26, 2017).4.10Form of Employment Agreement between the Registrant and its executive officers who are PRC citizens (English Translation)(incorporated by reference to Exhibit 10.12 to our Registration Statement on Form F-1 (File No. 333-218959), initially filed withthe Securities and Exchange Commission on June 26, 2017).4.11Form of Letter of Commitment and Non-Compete between the Registrant and its executive officers who are PRC citizens(incorporated by reference to Exhibit 10.13 to our Registration Statement on Form F-1 (File No. 333-218959), initially filed withthe Securities and Exchange Commission on June 26, 2017).4.12BEST Logistics Technologies Limited 2008 Equity and Performance Incentive Plan (incorporated by reference to Exhibit 10.14 toour Registration Statement on Form F-1 (File No. 333-218959), initially filed with the Securities and Exchange Commission onJune 26, 2017).4.13BEST Inc. 2017 Equity Incentive Plan (incorporated by reference to Exhibit 10.15 to our Registration Statement on Form F-1 (FileNo. 333-218959), initially filed with the Securities and Exchange Commission on June 26, 2017).4.14Indenture, dated September 17, 2019, between the Registrant and Citicorp International Limited, as Trustee, relating to the issuanceof the Registrant’s 1.75% Convertible Senior Notes due 2024 in the aggregate principal amount of US$200 million (incorporatedby reference to Exhibit 4.18 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2019, initially filed withthe Securities and Exchange Commission on April 17, 2020).4.15Loan Agreement between BEST Logistics Technology (China) Co., Ltd., Wei Chen and Lili He, dated October 23, 2019 (EnglishTranslation) (incorporated by reference to Exhibit 4.19 to our Annual Report on Form 20-F for the fiscal year ended December 31,2019, initially filed with the Securities and Exchange Commission on April 17, 2020).4.16Exclusive Technical Services Agreement between Hangzhou Baisheng Investment Management Co., Ltd. (later renamed asHangzhou BEST Information Technology Services Co., Ltd.) and BEST Logistics Technology (China) Co., Ltd., dated October 23,2019 (English Translation) (incorporated by reference to Exhibit 4.20 to our Annual Report on Form 20-F for the fiscal year endedDecember 31, 2019, initially filed with the Securities and Exchange Commission on April 17, 2020).4.17Equity Pledge Agreement concerning Hangzhou Baisheng Investment Management Co., Ltd. (later renamed as Hangzhou BESTInformation Technology Services Co., Ltd.), among Wei Chen, Lili He, BEST Logistics Technology (China) Co., Ltd. andHangzhou Baisheng Investment Management Co., Ltd. (later renamed as Hangzhou BEST Information Technology Services Co.,Ltd.), dated October 23, 2019 (English Translation) (incorporated by reference to Exhibit 4.21 to our Annual Report on Form 20-Ffor the fiscal year ended December 31, 2019, initially filed with the Securities and Exchange Commission on April 17, 2020).4.18Shareholders’ Voting Rights Proxy Agreement concerning Hangzhou Baisheng Investment Management Co., Ltd. (later renamed asHangzhou BEST Information Technology Services Co., Ltd.), among Wei Chen, Lili He, BEST Inc., BEST Logistics Technology(China) Co., Ltd. and Hangzhou Baisheng Investment Management Co., Ltd. (later renamed as Hangzhou BEST InformationTechnology Services Co., Ltd.), dated October 23, 2019 (English Translation) (incorporated by reference to Exhibit 4.22 to ourAnnual Report on Form 20-F for the fiscal year ended December 31, 2019, initially filed with the Securities and ExchangeCommission on April 17, 2020).4.19Exclusive Call Option Agreement concerning Hangzhou Baisheng Investment Management Co., Ltd. (later renamed as HangzhouBEST Information Technology Services Co., Ltd.), among Wei Chen, Lili He, BEST Inc., BEST Logistics Technology (China) Co.,Ltd. and Hangzhou Baisheng Investment Management Co., Ltd. (later renamed as Hangzhou BEST Information TechnologyServices Co., Ltd.), dated October 23, 2019 (English Translation) (incorporated by reference to Exhibit 4.23 to our Annual Reporton Form 20-F for the fiscal year ended December 31, 2019, initially filed with the Securities and Exchange Commission on April17, 2020). Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 158 of 248 Table of Contents151ExhibitNumber Description of Exhibits4.20Convertible Note Purchase Agreement, dated May 28, 2020, between the Registrant, Alibaba.com Hong Kong Limited and Mr.Shao-Ning Johnny Chou, relating to the issuance of the Registrant’s 4.5% Convertible Senior Notes due 2025 in the aggregateprincipal amount of US$150 million (incorporated by reference to Exhibit 4.24 to our Annual Report on Form 20-F for the fiscalyear ended December 31, 2020, initially filed with the Securities and Exchange Commission on April 16, 2021).4.21Convertible Note Instrument, dated June 3, 2020, between the Registrant and Alibaba.com Hong Kong Limited, relating to theissuance of the Registrant’s 4.5% Convertible Senior Notes due 2025 in the aggregate principal amount of US$150 million(incorporated by reference to Exhibit 4.25 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2020,initially filed with the Securities and Exchange Commission on April 16, 2021).4.22Facility Agreement, between Alibaba (China) Technology Co., Ltd. and BEST Logistics Technologies (China) Co., Ltd., datedAugust 19, 2021, in respect of two facilities in an aggregate principal amount of RMB600,000,000 (English Translation)(incorporated by reference to Exhibit 4.22 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2021,initially filed with the Securities and Exchange Commission on April 18, 2022).4.23Letter of Undertaking, to Alibaba (China) Technology Co., Ltd., from Zhejiang BEST Technology Co., Ltd., dated August 19, 2021(English Translation) (incorporated by reference to Exhibit 4.23 to our Annual Report on Form 20-F for the fiscal year endedDecember 31, 2021, initially filed with the Securities and Exchange Commission on April 18, 2022).4.24Share Pledge Agreement, among BEST Freight Network Technology Management Limited, BEST Chi Cheng (Hangzhou)Logistics Service Co., Ltd. and Alibaba (China) Technology Co., Ltd., dated August 19, 2021 (English Translation) (incorporatedby reference to Exhibit 4.24 to our Annual Report on Form 20-F for the fiscal year ended December 31, 2021, initially filed withthe Securities and Exchange Commission on April 18, 2022).4.25Share Pledge Agreement, among BEST Logistics Technologies Limited, BEST Logistics Technology (China) Co., Ltd. and Alibaba(China) Technology Co., Ltd., dated August 19, 2021 (English Translation) (incorporated by reference to Exhibit 4.25 to ourAnnual Report on Form 20-F for the fiscal year ended December 31, 2021, initially filed with the Securities and ExchangeCommission on April 18, 2022).4.26Share and Asset Purchase Agreement, among BEST Inc., J&T Global Express Limited and other parties thereto, dated October 29,2021 (English Translation) (incorporated by reference to Exhibit 10.1 to our Current Report on Form 6-K for the month ofDecember 2021, initially filed with the Securities and Exchange Commission on December 17, 2021).4.27Loan Agreement between BEST Store Network (Hangzhou) Co., Ltd., Wei Chen and Lili He, dated December 15, 2021 (EnglishTranslation) (incorporated by reference to Exhibit 4.27 to our Annual Report on Form 20-F for the fiscal year ended December 31,2021, initially filed with the Securities and Exchange Commission on April 18, 2022).4.28Exclusive Services Agreement between Hangzhou Baijia Business Management Consulting Co., Ltd. and BEST Store Network(Hangzhou) Co., Ltd., dated December 15, 2021 (English Translation) (incorporated by reference to Exhibit 4.28 to our AnnualReport on Form 20-F for the fiscal year ended December 31, 2021, initially filed with the Securities and Exchange Commission onApril 18, 2022).4.29Equity Pledge Agreement for Hangzhou Baijia Business Management Consulting Co., Ltd., among Wei Chen, Lili He, BEST StoreNetwork (Hangzhou) Co., Ltd. and Hangzhou Baijia Business Management Consulting Co., Ltd., dated December 15, 2021(English Translation) (incorporated by reference to Exhibit 4.29 to our Annual Report on Form 20-F for the fiscal year endedDecember 31, 2021, initially filed with the Securities and Exchange Commission on April 18, 2022).4.30Shareholders’ Voting Rights Proxy Agreement for Hangzhou Baijia Business Management Consulting Co., Ltd., among Wei Chen,Lili He, BEST Inc., BEST Store Network (Hangzhou) Co., Ltd. and Hangzhou Baijia Business Management Consulting Co., Ltd.,dated December 15, 2021 (English Translation) (incorporated by reference to Exhibit 4.30 to our Annual Report on Form 20-F forthe fiscal year ended December 31, 2021, initially filed with the Securities and Exchange Commission on April 18, 2022).4.31Exclusive Call Option Agreement for Hangzhou Baijia Business Management Consulting Co., Ltd., among Wei Chen, Lili He,BEST Inc., BEST Store Network (Hangzhou) Co., Ltd. and Hangzhou Baijia Business Management Consulting Co., Ltd.,December 15, 2021 (English Translation) (incorporated by reference to Exhibit 4.31 to our Annual Report on Form 20-F for thefiscal year ended December 31, 2021, initially filed with the Securities and Exchange Commission on April 18, 2022).*8.1List of Subsidiaries. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 159 of 248 Table of Contents152ExhibitNumber Description of Exhibits11.1Code of Business Conduct of the Registrant (incorporated by reference to Exhibit 99.1 to our Registration Statement on Form F-1(File No. 333-218959), initially filed with the Securities and Exchange Commission on June 26, 2017).*11.2Registrant’s Statement of Policies Governing Material, Non-public Information and the Prevention of Insider Trading*12.1Certification of our Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002*12.2Certification of our Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002**13.1Certification of our Principal Executive Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002**13.2Certification of our Principal Financial Officer pursuant to 18 U.S.C. Section 1350 as adopted pursuant to Section 906 of theSarbanes-Oxley Act of 2002*15.1Consent of Independent Registered Public Accounting Firm*15.2Consent of King and Wood Mallesons* 97.1Incentive Compensation Clawback Policy of the Registrant*101.INSXBRL Instance Document.*101.SCHXBRL Taxonomy Extension Schema Document.*101.CALXBRL Taxonomy Extension Calculation Linkbase Document.*101.DEFXBRL Taxonomy Extension Definition Linkbase Document.*101.LABXBRL Taxonomy Extension Labels Linkbase Document.*101.PREXBRL Taxonomy Extension Presentation Linkbase Document.*104Cover Page Interactive Data File (embedded within the Inline XBRL document)* Filed herewith** Furnished herewith Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 160 of 248 Table of Contents153SIGNATURESThe registrant hereby certifies that it meets all of the requirements for filing on Form 20-F and that it has duly caused andauthorized the undersigned to sign this annual report on its behalf.BEST Inc.By:/s/ Shao-Ning Johnny ChouName:Shao-Ning Johnny ChouTitle:Chairman and Chief Executive OfficerDate: April 30, 2024 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 161 of 248 Table of ContentsF-1BEST INC.INDEX TO CONSOLIDATED FINANCIAL STATEMENTS PageReports of Independent Registered Public Accounting Firm (PCAOB ID: 1408)F-2 - F-3Consolidated Balance Sheets as of December 31, 2022 and 2023F-4 - F-5Consolidated Statements of Comprehensive Income (Loss) for the Years Ended December 31, 2021, 2022 and 2023F-6 - F-6Consolidated Statements of Cash Flows for the Years Ended December 31, 2021, 2022 and 2023F-7 - F-9Consolidated Statements of Changes in Shareholders’ Equity (Deficit) for the Years Ended December 31, 2021, 2022and 2023F-10 – F-12Notes to the Consolidated Financial StatementsF-13 – F-88 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 162 of 248 Table of ContentsF-2REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMTo the Shareholders and the Board of Directors of BEST Inc.Opinion on the Financial StatementsWe have audited the accompanying consolidated balance sheets of BEST Inc. (the “Company”) as of December 31, 2023 and 2022, therelated consolidated statements of comprehensive income (loss), shareholders’ equity (deficit) and cash flows for each of the three years inthe period ended December 31, 2023, and the related notes (collectively referred to as the “consolidated financial statements”). In ouropinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December31, 2023 and 2022, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2023,in conformity with U.S. generally accepted accounting principles.The Company’s Ability to Continue as a Going ConcernThe accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. Asdiscussed in Note 2 to the consolidated financial statements, the Company has suffered recurring losses from operations and had a workingcapital deficiency. There is substantial doubt about the Company’s ability to continue as a going concern which has not been alleviated forthe next twelve months from the date of issuance of these consolidated financial statements. Management’s evaluation of the events andconditions and management’s plans regarding these matters are also described in Note 2. The consolidated financial statements do notinclude any adjustments that might result from the outcome of this uncertainty. As explained below, auditing the Company’s evaluation ofits ability to continue as a going concern was a critical audit matter.Basis for OpinionThese financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on theCompany’s financial statements based on our audits. We are a public accounting firm registered with the Public Company AccountingOversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance with the U.S.federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit toobtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. TheCompany is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of ouraudits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing anopinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error orfraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding theamounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significantestimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our auditsprovide a reasonable basis for our opinion.Critical Audit MatterThe critical audit matter communicated below is a matter arising from the current period audit of the financial statements that wascommunicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material tothe financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of the criticalaudit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, bycommunicating the critical audit matter below, providing a separate opinion on the critical audit matters or on the accounts or disclosuresto which they relate. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 163 of 248 Table of ContentsF-3Going concernDescription of the MatterAs discussed in Note 2 to the consolidated financial statements, the intense market competition continuesto have an adverse impact on the Company’s business operations and liquidity. The Company incurred netlosses from continuing operations of RMB909 million and generated negative cash flows from continuingoperating activities of RMB545 million during the year ended December 31, 2023, and had anaccumulated deficit of RMB19,749 million and a working capital deficit of RMB1,762 million as ofDecember 31, 2023. The Company has implemented cost saving plans to reduce discretionary operationalexpenses and secure additional financing including, but not limited to, obtaining additional credit facilitiesfrom banks in the normal course of business and re-financing certain existing notes payables. There areuncertainties as to whether, and there can be no assurance that the aforesaid plans can be successfullyexecuted. Accordingly, the substantial doubt of the Company’s ability to continue as a going concern hasnot been alleviated for the next twelve months from the date of issuance of these consolidated financialstatements.Auditing management’s evaluation of whether their plans to alleviate the substantial doubt regarding itsability to continue as a going concern is complex and involves subjective auditor judgment whenassessing (i) the reasonableness of the cash flow forecasts and (ii) whether it is probable thatmanagement’s plans will be effectively implemented and alleviate substantial doubt.How We Addressed theMatter in Our AuditTo test the Company’s assessment regarding its ability to continue as a going concern, we performed auditprocedures that included, among others, evaluating the reasonableness of management’s cash flowforecasts by making inquiries with management, comparing the forecasts used by management againsthistorical performance and budgets and to current industry and economic trends. We also performedsensitivity analyses of significant assumptions to evaluate the change in the cash flow forecasts that wouldresult from changes in these assumptions. We considered the impact of subsequent events on theCompany’s going concern assessment, and the Company’s financing arrangements in place as of thereport date. In addition, we assessed the adequacy of the Company’s disclosures of the going concernuncertainty included in Note 2 to the consolidated financial statements./s/ Ernst & Young Hua Ming LLPWe have served as the Company’s auditor since 2016.Shanghai, The People’s Republic of ChinaApril 30, 2024 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 164 of 248 Table of ContentsF-4BEST INC.CONSOLIDATED BALANCE SHEETS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares and per share data)As at December 31 Notes 2022 2023 2023RMBRMBUS$ASSETS Current assets: Cash and cash equivalents (including cash and cash equivalents of the consolidated VIEs that can be used only tosettle obligations of the consolidated VIEs of RMB5,042 and RMB27 (US$4) as of December 31, 2022 and 2023,respectively) 533,481 425,976 59,997Restricted cash 399,337 1,008,318 142,019Short-term investments725,04335,8885,055Accounts and notes receivable, net of allowance of RMB263,956 and RMB250,104 (US$35,226) as of December 31,2022 and 2023, respectively 5 691,324 829,802 116,875Prepayments and other current assets (including prepayments and other current assets of the consolidated VIEs thatcan be used only to settle obligations of the consolidated VIEs of RMB17,909 and nil as of December 31, 2022 and2023, respectively) 6 777,842 674,100 94,945Lease rental receivables943,06747,9256,750Amounts due from related parties 22 76,368 60,394 8,506Inventories16,4807,7941,098Total current assets 3,262,942 3,090,197 435,245Non-current assets: Restricted cash 1,545,605 812,371 114,420Non-current deposits50,76781,86911,531Operating lease right-of-use assets91,743,7981,293,526182,189Lease rental receivables940,18831444Long-term investments10156,859156,85922,093Property and equipment, net7784,732624,20587,917Intangible assets, net875,55393,17313,123Goodwill1154,13554,1357,625Other non-current assets75,66646,9136,608Total non-current assets 4,527,303 3,163,365 445,550Total assets 7,790,245 6,253,562 880,795LIABILITIES AND SHAREHOLDERS’ EQUITY Current liabilities: Accounts and notes payable (including accounts and notes payable of the consolidated VIEs without recourse to theprimary beneficiary of RMB22,379 and RMB45,719 (US$6,456) as of December 31, 2022 and 2023, respectively) 1,430,004 1,640,864 231,110Accrued expenses and other liabilities (including accrued expenses and other liabilities of the consolidated VIEswithout recourse to the primary beneficiary of RMB20,741 and RMB33,230 (US$4,690) as of December 31, 2022and 2023, respectively) 13 1,145,654 1,091,573 153,745Customer advances and deposits and deferred revenue (including customer advances and deposits and deferredrevenue of the consolidated VIEs without recourse to the primary beneficiary of nil and RMB34 (US$5) as ofDecember 31, 2022 and 2023, respectively) 277,737 288,184 40,590Operating lease liabilities (including operating lease liabilities of the consolidated VIEs without recourse to theprimary beneficiary of RMB376 and nil as of December 31, 2022 and 2023, respectively) 9 544,262 523,790 73,774Financing lease liabilities (including financing lease liabilities of the consolidated VIEs without recourse to theprimary beneficiary of RMB10,383 and RMB20 (US$3) as of December 31, 2022 and 2023, respectively)911,87341859Amounts due to related parties 22 1,315 1,119 158Income tax payable 16 1,563 2,777 391Short-term bank loans (including short-term bank loans of the consolidated VIEs without recourse to the primarybeneficiary of RMB110,142 and RMB144,755(US$20,438) as of December 31, 2022 and 2023, respectively)12183,270401,75556,586Long-term bank loan - current portion12—794,679111,928Long-term borrowings - current portion1479,148721102Convertible senior notes held by a related party-current15, 22522,744106,24014,964Convertible senior notes held by third parties-current15777811Total current liabilities 4,197,647 4,852,198 683,418The accompanying notes are an integral part of the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 165 of 248 Table of ContentsF-5BEST INC.CONSOLIDATED BALANCE SHEETS (CONTINUED)(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares and per share data)As at December 31 Notes 2022 2023 2023RMBRMBUS$Non-current liabilitiesOperating lease liabilities91,292,057862,514121,483Financing lease liabilities (including financing lease liabilities of the consolidated VIEs without recourse to the primarybeneficiary of RMB24,702 and RMB370(US$52) as of December 31, 2022 and 2023, respectively)926,0241,231173Long-term bank loans12928,894159,72922,497Long-term borrowings14381——Convertible senior notes held by a related party15, 22522,744424,96259,855Other non-current liabilities (including other non-current liabilities of the consolidated VIEs without recourse to theprimary beneficiary of RMB438 and RMB17,346 (US$2,449) as of December 31, 2022 and 2023, respectively)18,75222,8373,216Total non-current liabilities2,788,8521,471,273207,224Total liabilities 6,986,499 6,323,471 890,642Commitments and contingencies25Mezzanine Equity:Convertible non-controlling interests21, 22191,865191,86527,024Total mezzanine equity191,865191,86527,024Shareholders’ equity (deficit):Class A ordinary shares (par value of US$0.01 per share as of December 31, 2022 and 2023; 1,858,134,053 sharesauthorized as of December 31, 2022 and 2023; 255,648,452 and 261,648,452 shares issued and outstanding as ofDecember 31, 2022 and 2023, respectively)2016,53216,5322,328Class B ordinary shares (par value of US$0.01 per share as of December 31, 2022 and 2023; 94,075,249 sharesauthorized, issued and outstanding as of December 31, 2022 and 2023, respectively)206,1786,178870Class C ordinary shares (par value of US$0.01 per share as of December 31, 2022 and 2023; 47,790,698 sharesauthorized, issued and outstanding as of December 31, 2022 and 2023, respectively)203,2783,278462Treasury shares 20 —(23,853) (3,360)Additional paid-in-capital19,481,41719,529,8062,750,715Accumulated deficit(18,934,860)(19,749,262)(2,781,625)Accumulated other comprehensive income 27 124,464119,169 16,785BEST Inc. shareholders’ equity (deficit)697,009(98,152)(13,825)Non-controlling interests (85,128)(163,622) (23,046)Total shareholders’ equity (deficit)611,881(261,774)(36,871)Total liabilities, mezzanine equity and shareholders’ equity (deficit)7,790,2456,253,562880,795The accompanying notes are an integral part of the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 166 of 248 Table of ContentsF-6BEST INC.CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (LOSS)(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares and per share data)For the Years ended December 31, Notes2021202220232023 RMB RMB RMB US$Revenue from third parties Freight delivery 8,244,435 4,843,121 5,314,447 748,524Supply chain management1,476,7431,678,6191,824,984257,043Global992,518708,745783,952110,418Others172,442116,812106,30714,973 10,886,138 7,347,297 8,029,690 1,130,958Revenue from related parties Freight delivery22 — 45,157 89,948 12,669Supply chain management22 338,361 143,456 33,645 4,739Global22201,337208,162162,56122,896 539,698 396,775 286,154 40,304Total revenue 11,425,836 7,744,072 8,315,844 1,171,262Cost of revenue Freight delivery(8,506,738)(5,114,937)(5,206,967)(733,386)Supply chain management (1,741,832) (1,711,818) (1,700,467) (239,506)Global(1,258,511)(1,081,587)(1,131,484)(159,366)Others(118,143)(99,288)(26,489)(3,731)Total cost of revenue (11,625,224) (8,007,630) (8,065,407) (1,135,989)Gross (loss) profit (199,388) (263,558) 250,437 35,273Selling expenses (260,219) (237,918) (256,621) (36,144)General and administrative expenses (including operating costs paid to a related party of RMB13,608, RMB9,041and RMB6,845 (US$964) for the years ended December 31, 2021, 2022 and 2023, respectively)22 (881,498) (889,345) (737,775) (103,913)Research and development expenses (180,204) (144,181) (115,917) (16,327)Impairment of long-lived assets7——(94,699)(13,338)Other operating income, net 58,337 108,817 2,658 374Total operating expenses (1,263,584) (1,162,627) (1,202,354) (169,348)Loss from operations (1,462,972)(1,426,185)(951,917)(134,075)Interest income 49,65880,36183,81011,805Interest expense (including interest expense to related parties of RMB63,561, RMB62,192 and RMB35,108(US$4,945) for the years ended December 31, 2021, 2022 and 2023, respectively)22 (142,751)(89,058)(64,283)(9,055)Foreign exchange gain (loss) 44,556(132,730)(14,010)(1,974)Other income, net 265,82231,6776,613931(Loss) Gain on change in fair value of derivative assets and derivative liabilities(14,918)71,61932,3224,553Loss before income taxes and share of net loss of equity investees (1,260,605)(1,464,316)(907,465)(127,815)Income tax expense 16 (3,198)(511)(1,141)(161)Loss before share of net loss of equity investees (1,263,803)(1,464,827)(908,606)(127,976)Share of net loss of equity investees (58)—— —Net loss from continuing operations(1,263,861)(1,464,827)(908,606)(127,976)Net income (loss) from discontinued operations, net of tax41,473,489(38,464)15,2222,144Net income (loss) 209,628 (1,503,291) (893,384) (125,832)Net loss from continuing operations attributable to non-controlling interests(52,279)(39,980)(78,982)(11,124)Net income (loss) attributable to BEST Inc.261,907(1,463,311)(814,402)(114,708)Net earnings (loss) per Class A, Class B and Class C ordinary share: Basic and diluted Continuing operations18(3.12)(3.63)(2.18)(0.31)Discontinued operations183.80(0.10)0.040.01Basic and diluted net earnings (loss) per share attributable to Class A, Class B and Class C ordinary shareholders180.68(3.73)(2.14)(0.30)Net earnings (loss) per ADS (1 ADS equals 20 Class A ordinary shares)Basic and diluted net earnings (loss) per ADS18, 2013.60(74.60)(42.70)(6.01)Shares used in net earnings (loss) per share computation: Class A ordinary shares:Basic18246,207,464250,326,701239,563,290239,563,290Diluted18388,073,411392,192,648381,429,237381,429,237Class B ordinary shares:Basic1894,075,24994,075,24994,075,24994,075,249Diluted1894,075,24994,075,24994,075,24994,075,249Class C ordinary shares:Basic1847,790,69847,790,69847,790,69847,790,698Diluted1847,790,69847,790,69847,790,69847,790,698Other comprehensive (loss) income, net of tax of nil Foreign currency translation adjustments (44,298) 17,085 (5,295) (746)Comprehensive loss from continuing operations(1,308,159)(1,447,742)(913,901)(128,722)Comprehensive income (loss) from discontinued operations41,473,489(38,464)15,2222,144Comprehensive loss from continuing operations attributable to non-controlling interests(52,279)(39,980)(78,982)(11,124)Comprehensive income (loss) attributable to BEST Inc. 217,609 (1,446,226) (819,697) (115,454)The accompanying notes are an integral part of the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 167 of 248 Table of ContentsF-7BEST INC.CONSOLIDATED STATEMENTS OF CASH FLOWS(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)For the Years ended December 31,Notes2021202220232023 RMB RMB RMB US$CASH FLOWS FROM OPERATING ACTIVITIES Net income (loss) 209,628 (1,503,291) (893,384) (125,832)Less: Net income (loss) from discontinued operations, net of tax1,473,489(38,464)15,2222,144Net loss from continuing operations (1,263,861) (1,464,827) (908,606) (127,976)Adjustments to reconcile net loss to net cash used in operating activities: Share of net loss of equity investees58———Fair value change of equity investments without readily determinable fairvalues under the measurement alternative10(58,643)———Change in fair value change of derivative assets and derivative liabilities14,918(71,619)(32,322)(4,552)Impairment of long-term investments1010,69112,312——Gain on disposal of a subsidiary——(939)(132)Depreciation and amortization191,365188,910189,19726,648Lease expense to reduce operating lease right-of -use assets769,005713,799486,76768,560Share-based compensation19107,68172,09648,3446,809Accretion (reversal) on secured bank borrowings and convertible senior notes held by third parties 81,290 51,445 (44,123) (6,215)Accretion on convertible senior notes held by a related party5,9491,3421,453205Allowance for credit losses 64,366 201,155 76,911 10,833Loss (gain) on disposal of property and equipment10,386(6,919)9,1411,287Gain on disposal of long-term investments10(247,145)———Impairment of long-lived assets7, 8——94,69913,338Gain from the repurchase of convertible senior notes 15 — (17,356) — —Foreign exchange (gain) loss(44,556)132,73014,0101,974Changes in operating assets and liabilities:Accounts and notes receivable(2,796,772)93,451(143,357)(20,191)Inventories 2,647 9,142 8,686 1,223Prepayments and other current assets (1,391,552) 20,404 (74,485) (10,491)Amounts due from related parties 57,211 50,211 14,612 2,058Non-current deposits 3,850 — (31,102) (4,381)Other non-current assets 11,166 (49,223) 14,923 2,102Lease rental receivables - interest portion(10,885)4,748(291)(41)Accounts and notes payable 2,697,827 76,854 212,578 29,941Income tax payable(13,963)9761,214171Customer advances and deposits and deferred revenue17,672(20,616)10,4471,471Accrued expenses and other liabilities1,626,075(352,380)(6,041)(852)Amounts due to related parties(972)(1,448)(196)(28)Other non-current liabilities — — (17,194) (2,422)Operating lease liabilities(734,943)(696,849)(469,418)(66,116)Net cash used in continuing operating activities(891,135)(1,051,662)(545,092)(76,777)Net cash used in discontinued operating activities(1,912,826)(66,174)——Net cash used in operating activities(2,803,961)(1,117,836)(545,092)(76,777)The accompanying notes are an integral part of the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 168 of 248 Table of ContentsF-8BEST INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”) For the Years ended December 31,Note2021202220232023 RMB RMB RMB US$CASH FLOWS FROM INVESTING ACTIVITIESPurchase of property and equipment (160,012) (143,276) (129,510) (18,241)Origination of lease rental and other financing receivables (45,671) — — —Receipt of repayment on lease and other financing receivables-principal portion 1,165,834 554,195 36,466 5,136Disposal of property and equipment and intangible assets to thirdparties17,91325,27317,0052,395Disposal of property and equipment and intangible assets to a relatedparty22—16,01314,0151,974Cash paid for business acquisitions (net of cash acquired of nil, for theyear ended December 31, 2021)(1,749)———Acquisition of intangible assets (19,355) (32,505) (34,224) (4,820)Disposal of long-term investments 10 354,018 — — —Acquisition of long-term investments (50,000) — — —Proceeds from disposal of subsidiaries (net of cash disposed ofRMB3,550,235, nil, andRMB445(US$63) for the year endedDecember 31, 2021, 2022 and 2023, respectively)3,550,235—(445)(63)Proceeds from maturities of short-term investments425,1201,804,3291,782,502251,060Purchase of short-term investments (349,212) (2,233,094) (1,043,834) (147,021)Other investing activities, net 103,613 159,821 (13,000) (1,831)Net cash generated from continuing investing activities 4,990,734 150,756 628,975 88,589Net cash used in discontinued investing activities (448,016) — — —Net cash generated from investing activities4,542,718150,756628,97588,589CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from short-term bank loans 906,341 110,142 415,690 58,549Proceeds from long-term bank loans701,085138,635——Repayment of short-term bank loans (2,245,093) (530,495) (200,270) (28,207)Repayment of long-term bank loans (2,797) (932) — —Proceeds from loan from a related party22600,000———Repayment of loan from a related party22(600,000)———Proceeds from other financing activities2,4401,722——Principal repayment of financing lease liabilities(1,481)(1,772)(1,193)(168)Proceeds from issuance of series A preferred shares of a subsidiary, netof issuance cost191,865———Proceeds from long-term borrowings, net of issuance costs14585,529———Principal repayment of long-term borrowings14(378,829)(301,765)(27,045)(3,809)Redemption of convertible senior notes held by a related party15, 22—(746,538)(503,318)(70,891)Redemption of convertible senior notes held by third parties15—(617,368)——Principal repayment of other financing activities——(13,542)(1,907)Contributions from non-controlling interest shareholders415———Proceeds from the exercise of share options2,6034456Repurchase of ordinary shares 20——(23,853)(3,360)Net cash used in continuing financing activities(237,922)(1,948,367)(353,486)(49,787)Net cash used in discontinued financing activities(337,838)———Net cash used in financing activities(575,760)(1,948,367)(353,486)(49,787)Exchange rate effect on cash, cash equivalents and restricted cash(55,970)77,72237,8455,332Net increase (decrease) in cash, cash equivalents and restricted cash1,107,027(2,837,725)(231,758)(32,643)Cash, cash equivalents and restricted cash at the beginning of the year 4,209,121 5,316,148 2,478,423 349,079Cash, cash equivalents and restricted cash at the end of the year 5,316,148 2,478,423 2,246,665 316,436The accompanying notes are an integral part of the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 169 of 248 Table of ContentsF-9BEST INC.CONSOLIDATED STATEMENTS OF CASH FLOWS (CONTINUED)(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”)Reconciliation of cash, cash equivalents and restricted cash: For the Years ended December 31,2021202220232023 RMB RMB RMB US$Cash and cash equivalents 3,571,745 533,481 425,976 59,997Restricted cash – current 675,159 399,337 1,008,318 142,019Restricted cash – non-current 1,069,244 1,545,605 812,371 114,420Total cash, cash equivalents and restricted cash shown in the statement of cashflows 5,316,148 2,478,423 2,246,665 316,436 For the Years ended December 31,Notes2021202220232023 RMB RMB RMB US$Supplemental disclosures of cash flow information: Income taxes paid 17,161 — — —Interest expense paid 152,348 87,387 102,840 14,485Supplemental disclosures of non-cash investing and financing activities: Purchase of property and equipment included in accrued expenses and otherliabilities 13 29,545 71,234 70,015 9,861Acquisition of property and equipment through financing leases 3,972 37,897 64391The accompanying notes are an integral part of the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 170 of 248 Table of ContentsF-10BEST INC.CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT)(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares) Attributable to BEST Inc. AccumulatedOrdinary SharesAdditionalotherNon-TotalNumber ofTreasurypaid-inStatutorycomprehensiveAccumulatedcontrollingshareholders’shares Amount shares capital Reserves income deficit interests equityRMBRMBRMBRMBRMBRMBRMBRMBBalance as of December 31, 2020 386,119,349 25,988(211,352) 19,487,232 8,038 151,677 (17,710,964) (26,015) 1,724,604Net income (loss) for the year——————261,907(21,749)240,158Other comprehensive loss — —— — — (44,298) — — (44,298)Reversal of statutory reserves————(7,871)—7,871——Share-based compensation———134,926————134,926Adjustment of convertible non-controlling interests——————(30,530)—(30,530)Purchase from non-controlling interest shareholders———(4,269)———1,262(3,007)Contributions from non-controlling interest shareholders———————541541Newly deposited and issued to depository bank-Citibank, N.A. (“Citi”)5,000,000————————Settlement of exercised share options and vested restricted shares withshares held by Citi(170,492)————————Settlement of exercised share options and vested restricted shares withtreasury shares(2,974,987)—98,321(98,321)—————Exercise of share options and vesting of restricted shares3,145,479——2,605————2,605Balance as of December 31, 2021 391,119,349 25,988(113,031) 19,522,173 167 107,379 (17,471,716) (45,961)2,024,999The accompanying notes are an integral part of the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 171 of 248 Table of ContentsF-11BEST INC.CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (CONTINUED)(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares)Attributable to BEST Inc. Accumulated Ordinary SharesAdditionalotherNon- TotalNumber ofTreasurypaid-inStatutorycomprehensiveAccumulatedcontrollingshareholders’sharesAmountsharescapitalReservesincomedeficitinterestsequityRMBRMBRMBRMBRMBRMBRMBRMBBalance as of December 31, 2021 391,119,349 25,988 (113,031)19,522,173167 107,379 (17,471,716) (45,961)2,024,999Net loss for the year — — ——— — (1,463,311) (39,980)(1,503,291)Other comprehensive income — — ——— 17,085 — —17,085Reversal of statutory reserves————(167)—167——Share-based compensation———72,096————72,096Purchase from non-controlling interest shareholders———(1,547)———813(734)Gain from early redemption of convertible senior notes———1,721————1,721Settlement of exercised share options and vested restrictedshares with shares held by Citi(694,872)————————Settlement of exercised share options and vested restrictedshares with treasury shares(3,420,063)—113,031(113,031)—————Exercise of share options and vesting of restricted shares4,114,935——5————5Balance as of December 31, 2022391,119,34925,988 —19,481,417— 124,464 (18,934,860) (85,128)611,881The accompanying notes are an integral part of the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 172 of 248 Table of ContentsF-12BEST INC.CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY (DEFICIT) (CONTINUED)(Amounts in thousands of Renminbi (“RMB”) and U.S. dollars (“US$”), except for number of shares) Attributable to BEST Inc. Accumulated Ordinary SharesAdditionalotherNon- TotalNumber ofTreasurypaid-incomprehensiveAccumulatedcontrollingshareholders’sharesAmountsharescapitalincomedeficitinterests(deficit) equityRMBRMBRMBRMBRMBRMBRMBBalance as of December 31, 2022391,119,349 25,988 —19,481,417 124,464 (18,934,860) (85,128)611,881Net loss for the year — — —— — (814,402) (78,982)(893,384)Other comprehensive loss — — —— (5,295) — —(5,295)Share-based compensation———48,344———48,344Purchase of ordinary shares (Note 20)27,029,700—(23,853)————(23,853)Disposal of subsidiaries——————488488Newly deposited and issued to depository bank-Citibank, N.A.(“Citi”)6,000,000———————Settlement of exercised share options and vested restricted shares withshares held by Citi(4,569,335)———————Exercise of share options and vesting of restricted shares4,569,335——45———45Balance as of December 31, 2023 424,149,04925,988(23,853)19,529,806119,169(19,749,262)(163,622)(261,774)Balance as of December 31, 2023 in US$ 3,660 (3,360)2,750,715 16,785 (2,781,625) (23,046)(36,871)The accompanying notes are an integral part of the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 173 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-131.ORGANIZATION AND BASIS OF PRESENTATIONThe Company is a limited liability company incorporated in the Cayman Islands on March 3, 2008.The Company does not conduct any substantive operations on its own but instead conducts its primary business operationsthrough its subsidiaries, variable interest entities (the “VIEs”) and VIEs’ subsidiaries, which are mainly located in the People’s Republic ofChina (the “PRC”). The accompanying consolidated financial statements include the financial statements of the Company, its subsidiaries,VIEs and VIEs’ subsidiaries. The Company, its subsidiaries, VIEs and VIEs’ subsidiaries are hereinafter collectively referred to as the“Group”.On September 20, 2017, the Company completed its initial public offering (“IPO”) on the New York Stock Exchange.Prior to December 2021, the Group was principally engaged in the business of providing express delivery services, freightdelivery services, supply chain management services, Store+ services, global logistic services and other value-added services. The Group’sprincipal geographic market is in the PRC.In November 2020, the Company approved a disposal plan to wind down its Dianjia.com services business by the end ofDecember 31, 2020 and committed to a plan to sell its Wowo convenience stores (“Store+ disposal plan”) in order to increase focus on theCompany’s core businesses. In November 2021, the Company completed the disposal transaction of Sichuan Wowo Supermarket ChainCo., Ltd. (“Sichuan Wowo”).In October 2021, the Company entered into a series of agreements with J&T Global Express Limited (“J&T”), a PRC limitedliability company and a logistics services provider in China to sell its express delivery business in China. On December 9, 2021, thedisposal was completed and Hangzhou BEST Network Technologies Co., Ltd. (“BEST Network”) and its subsidiaries were sold to J&T.As a result, the related historical financial results of Store+ services and BEST Express delivery services (“BEST Express”) arereflected in the Company’s consolidated statements of comprehensive income (loss) as discontinued operations. See additional disclosuresregarding the discontinued operation in Note 4 to the consolidated financial statements.Subsequent to December 2021, the Group is principally engaged in the business of providing freight delivery services, supplychain management services, global logistic services and other value-added services.On November 6, 2023, The Company announces its receipt of a preliminary non-binding proposal to acquire all of theoutstanding ordinary shares of the Company. The privatization is still in process. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 174 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-141.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)Details of the Company’s principal subsidiaries, VIEs and VIEs’ subsidiaries as of December 31, 2023 are as follows: Place of Percentage of incorporation,equity interest registration andDate ofattributable Name of Companybusinessincorporation/acquisitionto the CompanyPrincipal activitiesSubsidiaries: Eight Hundred Logistics Technologies CorporationBritish Virgin IslandsMay 22, 2007100% Investment holding(“BEST BVI”) (“BVI”) BEST Logistics Technologies LimitedHong KongMay 29, 2007100% Investment holding(“BEST HK”) (“HK”) BEST Capital Inc (“BEST Capital”)Cayman IslandsDecember 13, 2017100% Investment holdingBEST Capital Holding LimitedBVIDecember 13, 2017100% Investment holding(“BEST Capital BVI”)BEST Store Network Limited (“Store Cayman”)Cayman IslandsJuly 24, 2017100%Investment holdingBEST Store Network Holding LimitedBVINovember 13, 2018100%Investment holding(“Store BVI”)BEST Store Network Management LimitedHKNovember 16, 2018100%Investment holding(“Store HK”)BEST Capital Management LimitedHKDecember 20, 2017100% Investment holding(“BEST Capital HK”)BEST Logistics Technologies (China) Co., Ltd.PRCApril 23, 2008100% Freight delivery and Supplychain(“BEST China”) management servicesBEST Store Network (Hangzhou) Co., Ltd.PRCMay16, 2013100% Store + services(“BEST Store”) Zhejiang BEST Technology Co., Ltd.PRCJuly 26, 2007100% Logistics technical services(“BEST Technology”) Xinyuan Financial Leasing (Zhejiang) Co., Ltd.PRCJanuary 15, 2015100% Financial services(“BEST Finance”) BEST Logistics Technologies (Ningbo Free Trade Zone)Co., Ltd. (“BEST Ningbo”)PRCMay 22, 2015100% Supply chain management servicesVIEs Hangzhou BEST Information Technology Services Co.,Ltd. (“BEST Information Technology”)PRCOctober 23, 2019NilUCargo transportation servicesHangzhou Baijia Business Management Consulting Co.,Ltd. (“Hangzhou Baijia”)PRCDecember 20, 2019NilConvenience store operationsYunnan Trust Plan (“Trust Plan”)PRCMarch 11, 2021NilTrust PlanVIEs’ subsidiaries:BEST UCargo Technologies (Hangzhou) Co., LtdPRCSeptember 8, 2017NilUCargo transportation services(“BEST UCargo”) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 175 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-151.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)To comply with PRC legal restrictions on foreign ownership and investment in, among other areas, domestic mail deliveryservices, value-added telecommunication business as well as tobacco retail business, the Company provides the services that may besubject to such restrictions in the PRC through the VIEs, namely BEST Network (prior to the disposal in December 2021), BESTInformation Technology, and Hangzhou Baijia, which are all incorporated in the PRC and 100% owned by PRC individuals (the “nomineeshareholders”).BEST Network holds a courier service operation permit that allows it to provide domestic mail delivery services in addition toparcel delivery services and an ICP license that allows it to provide value-added telecommunication services, all of which may constitutepart of the Company’s comprehensive service offerings. Certain subsidiaries of BEST Information Technology have obtained ICP licensesthat would allow them to provide value-added telecommunication services in connection with the BEST UCargo business. Sichuan Wowo,a subsidiary of Hangzhou Baijia, has obtained the tobacco monopoly retail license that would allow it to conduct tobacco retail business inconnection with BEST Store+ business.The contractual arrangements entered into among the Company, the wholly-owned PRC subsidiaries, the VIEs, and the VIEs’shareholders include (i) certain equity pledge agreements, shareholders’ voting rights proxy agreements, exclusive call option agreementsand certain loan agreements, which provide the Company the power to direct the activities that most significantly affect the economicperformance of the VIEs and to acquire the equity interests in the VIEs when permitted by the laws of mainland China, respectively; and(ii) certain exclusive technical services agreements, which allow the Company to receive substantially all of the economic risks andbenefits generated from the operations of the VIEs and their subsidiaries (the “Contractual Agreements”). As a result of these ContractualAgreements, the Company has the power to direct the activities of the VIEs and their subsidiaries that most significantly impact theireconomic performance and is entitled to substantially all of the economic benefits from their operations. Therefore, the Company is theprimary beneficiary of the VIEs and consolidates the VIEs and their subsidiaries in accordance with SEC Regulation SX-3A-02 andAccounting Standards Codification (“ASC”) 810-10, Consolidation: Overall.The following is a summary of the Contractual Agreements.BEST NetworkThe following is a summary of the material provisions of the contractual arrangements relating to BEST Technology, BESTNetwork and BEST Inc.Loan AgreementsBEST Technology entered into loan agreements with the nominee shareholders of BEST Network on October 12, 2011 andFebruary 15, 2015 respectively. Pursuant to this loan agreement, BEST Technology has granted an interest-free loans with an aggregateamount of RMB13,780 to the nominee shareholders of BEST Network, which may only be used for the purpose of a capital injection ofBEST Network. The nominee shareholders of BEST Network undertook, among others, not to transfer any of its equity interests in BESTNetwork to any third party. The loans are only repayable by the nominee shareholders through a transfer of their equity interests in BESTNetwork to BEST Technology or its designated party unless the nominee shareholders are in breach of the agreements, in which BESTTechnology can request immediate repayment of the loans. The loan agreements are effective until full repayment of the loans or BESTTechnology agrees to waive the loan. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 176 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-161.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)Exclusive Call Option AgreementPursuant to the exclusive call option agreement among BEST Technology, BEST Network and nominee shareholders of BESTNetwork dated June 21, 2017, the nominee shareholders of BEST Network have granted BEST Technology (i) an exclusive option topurchase, when and to the extent permitted under PRC laws, all or part of the equity interests in BEST Network or all or part of the assetsheld by BEST Network and (ii) an exclusive right to cause the nominee shareholders to transfer their equity interest in BEST Network toBEST Technology or any designated third party. BEST Technology has the sole discretion to decide when to exercise the option, whetherin part or full. The exercise price of the option to purchase all or part of the equity interests in BEST Network or assets held by BESTNetwork will be the minimum amount of consideration permitted under the then-applicable PRC laws. Any proceeds received by thenominee shareholders from the exercise of the option exceeding the loan amount, distribution of profits or dividends, shall be remitted toBEST Technology, to the extent permitted under PRC laws. The exclusive call option agreement will remain in effect until all the equityinterests or the assets held by BEST Network are transferred to BEST Technology or its designated party. BEST Technology mayterminate the exclusive call option agreement at their sole discretion, whereas under no circumstances may BEST Network or its nomineeshareholders terminate this agreement.To ensure that the cash flow requirements of BEST Network’s daily operations are met and/or to set off any losses that may beincurred, the Company is obliged, only to the extent permissible under PRC laws, to provide financial support to BEST Network, whetheror not BEST Network actually incurs any such operational loss. The Company will not request repayment if BEST Network or its nomineeshareholders are unable to do so. Without the Company’s prior consent, BEST Network and its nominee shareholders shall not enter intoany material agreements outside of the ordinary course of business. The Company, at its sole discretion, has the right to decide whether theoption and other rights granted under the agreement will be exercised by the Company, BEST Technology or its designated party.Shareholders’ Voting Rights Proxy AgreementPursuant to the shareholders’ voting rights proxy agreement among BEST Technology, BEST Network and its nomineeshareholders dated June 21, 2017, each of BEST Network’s shareholders agreed to entrust all the rights to exercise their voting power tothe person designated by BEST Technology. The nominee shareholders irrevocably authorize the person designated by BEST Technologyas its attorney-in-fact (“AIF”) to exercise on such nominee shareholder’s behalf any and all rights that such shareholder has in respect ofits equity interests in BEST Network. BEST Technology has the right to replace the authorized AIF at any time upon written notice but notconsent from the other parties. The appointment of any individuals to exercise the powers and rights assigned pursuant to the shareholders’voting rights proxy agreement requires the approval of the Company. All the activities in relation to such powers and rights assigned aredirected and approved by the Company. The shareholders’ voting rights proxy agreement is valid as long as the nominee shareholdersremain shareholders of BEST Network. The nominee shareholders may not terminate the shareholders’ voting rights proxy agreement orrevoke the appointment of the AIF without BEST Technology’s prior written consent. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 177 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-171.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)Equity Pledge AgreementPursuant to the equity pledge agreement among BEST Technology, BEST Network and its nominee shareholders dated June 21,2017, the nominee shareholders of BEST Network have pledged all of their equity interests in BEST Network in favor of BESTTechnology to secure the performance by BEST Network and its nominee shareholders under the various contractual agreements,including the exclusive technical service agreement, loan agreements and exclusive call option agreement. The nominee shareholdersfurther undertake that they will remit any distributions as a result in connection with such shareholder’s equity interests in BEST Networkto BEST Technology, to the extent permitted by PRC laws. If BEST Network or any of their respective nominee shareholders breach anyof their respective contractual obligations under the above agreements, BEST Technology, as pledgee, will be entitled to certain rights,including the right to sell, transfer or dispose the pledged equity interest. The nominee shareholders of BEST Network agree not to createany encumbrance on or otherwise transfer or dispose of their respective equity interest in BEST Network, without the prior consent ofBEST Technology. All of the equity pledges have been registered with the relevant office of the Administration for Market Regulation inChina. The equity pledge agreement will expire when all obligations under this equity pledge agreement or under the aforementioned loanagreement, exclusive call option agreement, shareholders’ voting rights proxy agreement and exclusive technical services agreement havebeen satisfied.Exclusive Technical Service AgreementPursuant to the exclusive technical service agreement between BEST Technology and BEST Network dated June 21, 2017, BESTTechnology has the exclusive right to provide services to BEST Network related to BEST Network’s business, including but not limited tothe management, development and maintenance of software, databases and websites, training and recruitment of employees and otherservices required by BEST Network. In return, BEST Network agrees to pay a service fee that is based on a predetermined formula basedon the financial performance of BEST Network. BEST Technology has the right to unilaterally adjust the service fee. The ExclusiveTechnical Service Agreement is valid for 20 years and will be automatically renewed on an annual basis unless terminated by BESTTechnology at its sole discretion, whereas under no circumstances may BEST Network terminate this agreement.Through the design of the contractual agreements, the nominee shareholders of BEST Network effectively assigned their fullvoting rights to the Company, which gives the Company the power to direct the activities that most significantly impact BEST Network’seconomic performance. In addition, BEST Technology is entitled to substantially all of the economic benefits from BEST Network. TheCompany and BEST Technology, as a group of related parties, hold all of the variable interests of BEST Network. The Company has beendetermined to be most closely associated with BEST Network within the group of related parties. As a result of these contractualAgreements, the Company is determined to be the primary beneficiary of BEST Network.On December 9, 2021, the Company closed the sale of the BEST Network to J&T. BEST Network was no longer the VIE of theCompany and the related contractual agreements were terminated as of December 8, 2021. The operation results and cashflows of BESTNetwork and its subsidiaries prior to the disposal date on December 9, 2021 are reflected as discontinued operations (Note 4) in theconsolidated statements of comprehensive income (loss) and cash flows for all periods presented. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 178 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-181.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)BEST Information TechnologyTo comply with changes to PRC laws and regulations that became effective in 2020 which prohibit foreign ownership of morethan 50% of the equity interests in companies that engage in value-added telecommunication services, the Group effected a restructuringof its UCargo transportation services business. In October 2019, BEST China, the nominee shareholders of BEST Information Technologyand the Company signed a series of contractual arrangements, through which, the Company obtained the power to direct the activities ofBEST Information Technology that most significantly impact its economic performance and, is entitled to substantially all of the economicbenefits from BEST Information Technology through BEST China. As a result, the Company is the primary beneficiary of BESTInformation Technology and consolidates the entity in accordance with ASC 810-10. At the same time, BEST China transferred its equityinterests in BEST UCargo and its subsidiaries to BEST Information Technology. As the restructuring transaction to transfer the assets andliabilities relating to the UCargo transportation services business described above are between entities under common control and do notchange the control at the ultimate parent level, the transaction was accounted for as a common control transaction based on the carryingamount of the net assets transferred.The following is a summary of the material provisions of the contractual arrangements relating to BEST China, BESTInformation Technology and BEST Inc.Loan AgreementsBEST China entered into loan agreements with the nominee shareholders of BEST Information Technology in 2020, whichreplaced the original loan agreement entered into in 2019. Pursuant to this loan agreement, BEST China has granted an interest-free loanto each of BEST Information Technology’s nominee shareholders, which may only be used for the purpose of a capital contribution toBEST Information Technology. BEST China agreed not to ask the BEST Information Technology’s nominee shareholders to repay theloans unless the relevant nominee shareholder violates its undertakings provided in the loan agreements. BEST Information Technology’sequity holders undertook, among others, not to transfer any of its equity interests in BEST Information Technology to any third party. Theloans are repayable by such equity holders through a transfer of their equity interests in BEST Information Technology to BEST China orits designated party, in proportion to the amount of the loans to be repaid. The loan agreements remain effective until the relevant loans arerepaid in full or BEST China relinquishes its rights under the relevant loan agreements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 179 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-191.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)Exclusive Call Option AgreementPursuant to the exclusive call option agreement among the Company, BEST China, Hangzhou Baisheng Investment ManagementCo., Ltd. (later renamed as BEST Information Technology) and its equity holders, dated October 23, 2019, BEST InformationTechnology’s equity holders have granted BEST China and the Company, or a party designated by the Company or BEST China, theexclusive and irrevocable call option rights to purchase part or all of their equity interests in BEST Information Technology at an exerciseprice equal to the minimum price as permitted by applicable PRC laws. BEST Information Technology has further granted BEST Chinaand the Company, or a party designated by the Company or BEST China, an exclusive call option to purchase part or all of its assets alsoat an exercise price equal to the minimum price as permitted by applicable PRC laws. At the Company’s sole discretion, the Company hasthe right to decide whether the option and other rights granted under the agreement will be exercised by the Company, BEST China or aparty designated by the Company. Each of BEST Information Technology’s equity holders may not, among other things, transfer any partof their equity interests to any party other than the Company or BEST China, or a party designated by the Company or BEST China,pledge or create or permit any security interest or similar encumbrance to be created on all or any part of its equity interests, increase ordecrease the registered capital of BEST Information Technology, terminate or cause to terminate any material contracts of BESTInformation Technology, or cause BEST Information Technology to declare or distribute profits, bonuses or dividends. The Company isobligated, to the extent permitted by PRC laws, to provide financing support to BEST Information Technology in order to meet the cashflow requirements of its ordinary operations and to offset any loss from such operations. The Company and BEST China are not entitled torequest repayment if BEST Information Technology or its equity holders are unable to repay such financial support. The exclusive calloption agreement remains in effect until all the equity interests or assets that are the subject of the agreement are transferred to theCompany or BEST China, or a party designated by the Company or BEST China, or if the Company or BEST China unilaterally terminatethe agreement with 30 days’ prior written notice. Unless otherwise provided by law, BEST Information Technology and its equity holdersare not entitled to unilaterally terminate this agreement under any circumstances.Shareholders’ Voting Rights Proxy AgreementPursuant to the shareholders’ voting rights proxy agreement among the Company, BEST China, Hangzhou Baisheng InvestmentManagement Co., Ltd. (later renamed as BEST Information Technology) and its equity holders, dated October 23, 2019, each of BESTInformation Technology’s equity holders has irrevocably authorized any person designated by BEST China, with the Company’s consent,to exercise its rights as an equity holder of BEST Information Technology in a manner approved by the Company, including but notlimited to the rights to attend and vote at equity holders’ meetings and appoint directors and senior management. The proxy agreementremains effective until such time as the relevant equity holder no longer holds any equity interest in BEST Information Technology. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 180 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-201.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)Equity Pledge AgreementPursuant to the equity pledge agreement among BEST China, Hangzhou Baisheng Investment Management Co., Ltd. (laterrenamed as BEST Information Technology) and its equity holders, dated October 23, 2019, the relevant equity holders of BESTInformation Technology have pledged all of their equity interests in BEST Information Technology as a continuing first priority securityinterest in favor of BEST China to secure the outstanding amounts advanced under the relevant loan agreements described above and tosecure the performance of obligations by BEST Information Technology and/or its equity holders under the other contractualarrangements. BEST China is entitled to exercise its right to dispose of the pledged interests held by BEST Information Technology’sequity holders in the equity of BEST Information Technology and has priority in receiving payment by the application of proceeds fromthe auction or sale of such pledged interests, in the event of any breach or default under the loan agreements or other contractualarrangements, if applicable. The equity pledge agreement will expire when all obligations under this equity pledge agreement or under theaforementioned loan agreement, exclusive call option agreement, shareholders’ voting rights proxy agreement and exclusive technicalservices agreement have been satisfied.Exclusive Technical Services AgreementOn October 23, 2019, Hangzhou Baisheng Investment Management Co., Ltd. (later renamed as BEST Information Technology)entered into an exclusive technical services agreement with BEST China, pursuant to which BEST China provides exclusive technicalservices to BEST Information Technology. In exchange, BEST Information Technology pays a service fee to BEST China that is based ona predetermined formula based on the financial performance of BEST Information Technology. During the term of this agreement, BESTChina is entitled to adjust the service fee at its sole discretion without the consent of BEST Information Technology. BEST China willexclusively own any intellectual property arising from the performance of this agreement. This exclusive technical services agreement hasan initial contract term of 20 years and may be automatically renewed for another 20 years unless BEST China notifies BEST InformationTechnology of its intent not to renew with at least three months’ prior notice. BEST China is entitled to terminate the agreementunilaterally with 30 days’ prior written notice, while BEST Information Technology is not entitled to unilaterally terminate this agreementunder any circumstances.Through the design of the contractual agreements, the nominee shareholders of BEST Information Technology effectivelyassigned their full voting rights to the Company, which gives the Company the power to direct the activities that most significantly impactBEST Information Technology’s economic performance. In addition, BEST China is entitled to substantially all of the economic benefitsfrom BEST Information Technology. The Company and BEST China, as a group of related parties, hold all of the variable interests ofBEST Information Technology. The Company has been determined to be most closely associated with BEST Information Technologywithin the group of related parties. As a result of these contractual agreements, the Company is determined to be the primary beneficiaryof BEST Information Technology.Hangzhou BaijiaTo comply with changes to PRC laws and regulations which prohibit foreign ownership of the equity interests in companies thatengage in tobacco business, the Group effected a restructuring of its convenience store business. In April 2020, BEST Store, the nomineeshareholders of Hangzhou Baijia and the Company signed a series of contractual arrangements, through which, the Company obtained thepower to direct the activities of Hangzhou Baijia that most significantly impact its economic performance and, is entitled to substantiallyall of the economic benefits from Hangzhou Baijia through BEST Store. As a result, the Company is the primary beneficiary of HangzhouBaijia and consolidates the entity in accordance with ASC810-10. At the same time, BEST Network transferred its equity interests inSichuan Wowo and Shanxi Wowo Supermarket Chain Co., Ltd. (“Shanxi Wowo”) to Hangzhou Baijia. BEST Store, together with SichuanWowo and Shanxi Wowo, constituted the former Store+ reporting unit. As the restructuring transaction are between entities under commoncontrol and do not change the control at the ultimate parent level, the transaction was accounted for as a common control transaction basedon the carrying amount of the net assets transferred. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 181 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-211.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)The following is a summary of the material provisions of the contractual arrangements relating to BEST Store, HangzhouBaijia and BEST Inc.Loan AgreementBEST Store entered into a loan agreement with the nominee shareholders of Hangzhou Baijia in 2020. Pursuant to this loanagreement, BEST Store has granted an interest-free loan to each of Hangzhou Baijia’s nominee shareholders, which may only be used forthe purpose of a capital contribution to Hangzhou Baijia. BEST Store agreed not to ask Hangzhou Baijia’s equity holders to repay theloans unless the relevant equity holder violates its undertakings provided in the loan agreements. Hangzhou Baijia’s nominee shareholdersundertook, among others, not to transfer any of its equity interests in Hangzhou Baijia to any third party. The loans are repayable by suchequity holders through a transfer of their equity interests in Hangzhou Baijia to BEST Store or its designated party, in proportion to theamount of the loans to be repaid. The loan agreements remain effective until the relevant loans are repaid in full or BEST Storerelinquishes its rights under the relevant loan agreements.Exclusive Call Option AgreementPursuant to the exclusive call option agreement among the Company, BEST Store, Hangzhou Baijia and its nomineeshareholders, dated May 13, 2020, Hangzhou Baijia’s nominee shareholders have granted BEST Store and the Company, or a partydesignated by the Company or BEST Store, the exclusive and irrevocable call option rights to purchase part or all of their equity interestsin Hangzhou Baijia at an exercise price equal to the minimum price as permitted by applicable PRC laws. Hangzhou Baijia has furthergranted BEST Store and the Company, or a party designated by the Company or BEST Store, an exclusive call option to purchase part orall of its assets also at an exercise price equal to the minimum price as permitted by applicable PRC laws. At the Company’s solediscretion, the Company has the right to decide whether the option and other rights granted under the agreement will be exercised by theCompany, BEST Store or a party designated by the Company. Each of Hangzhou Baijia’s nominee shareholders may not, among otherthings, transfer any part of their equity interests to any party other than to the Company or BEST Store, or a party designated by theCompany or BEST Store, pledge or create or permit any security interest or similar encumbrance to be created on all or any part of itsequity interests, increase or decrease the registered capital of Hangzhou Baijia, terminate or cause to terminate any material contracts ofHangzhou Baijia, or cause Hangzhou Baijia to declare or distribute profits, bonuses or dividends. The Company is obligated, to the extentpermitted by PRC laws, to provide financing support to Hangzhou Baijia in order to meet the cash flow requirements of its ordinaryoperations and to offset any loss from such operations. The Company and BEST Store are not entitled to request repayment if HangzhouBaijia or its equity holders are unable to repay such financial support. The exclusive call option agreement remains in effect until all theequity interests or assets that are the subject of the agreement are transferred to the Company or BEST Store, or a party designated by theCompany or BEST Store, or if the Company or BEST Store unilaterally terminate the agreement with 30 days’ prior written notice. Unlessotherwise provided by law, Hangzhou Baijia and its equity holders are not entitled to unilaterally terminate this agreement under anycircumstances.Shareholders’ Voting Rights Proxy AgreementPursuant to the shareholders’ voting rights proxy agreement among the Company, BEST Store, Hangzhou Baijia and its equityholders, dated May 13, 2020, each of Hangzhou Baijia’s nominee shareholders has irrevocably authorized any person designated by BESTStore, with the Company’s consent, to exercise its rights as an equity holder of Hangzhou Baijia in a manner approved by the Company,including but not limited to the rights to attend and vote at equity holders’ meetings and appoint directors and senior management. Theproxy agreement remains effective until such time as the relevant equity holder no longer holds any equity interest in Hangzhou Baijia. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 182 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-221.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)Equity Pledge AgreementPursuant to the equity pledge agreement among BEST Store, Hangzhou Baijia and its equity holders, dated May 13, 2020, therelevant equity holders of Hangzhou Baijia have pledged all of their equity interests in Hangzhou Baijia as a continuing first prioritysecurity interest in favor of BEST Store to secure the outstanding amounts advanced under the relevant loan agreements described aboveand to secure the performance of obligations by Hangzhou Baijia and/or its nominee shareholders under the other contractualarrangements. BEST Store is entitled to exercise its right to dispose of the pledged interests held by Hangzhou Baijia’s nomineeshareholders in the equity of Hangzhou Baijia and has priority in receiving payment by the application of proceeds from the auction or saleof such pledged interests, in the event of any breach or default under the loan agreements or other contractual arrangements, if applicable.All of the equity pledges have been registered with the relevant office of the Administration for Market Regulation in China. The equitypledge agreement will expire when all obligations under this equity pledge agreement or under the aforementioned loan agreement,exclusive call option agreement, shareholders’ voting rights proxy agreement and exclusive technical services agreement have beensatisfied.Exclusive Technical Services AgreementOn May 13, 2020, Hangzhou Baijia entered into an exclusive technical services agreement with BEST Store, pursuant to whichBEST Store provides exclusive technical services to Hangzhou Baijia. In exchange, Hangzhou Baijia pays a service fee to BEST Store thatis based on a predetermined formula based on the financial performance of Hangzhou Baijia. During the term of this agreement, BESTStore is entitled to adjust the service fee at its sole discretion without the consent of Hangzhou Baijia. BEST Store will exclusively ownany intellectual property arising from the performance of this agreement. This exclusive technical services agreement has an initialcontract term of 20 years and may be automatically renewed for another 20 years unless BEST Store notifies Hangzhou Baijia of its intentnot to renew with at least three months’ prior notice. BEST Store is entitled to terminate the agreement unilaterally with 30 days’ priorwritten notice, while Hangzhou Baijia is not entitled to unilaterally terminate this agreement under any circumstances.On November 19, 2021 and December 8, 2021, the Company completed the disposal of Sichuan Wowo and legally deregisteredShanxi Wowo, the subsidiaries of Hangzhou Baijia, respectively. As a result, Sichuan Wowo and Shanxi Wowo were no longer the VIE’ssubsidiaries of the Company as of December 31, 2021. The operation results and cashflows of Sichuan Wowo prior to the disposal date onNovember 19, 2021 for all periods presented are now reflected as discontinue operations (Note 4) in the consolidated statements ofcomprehensive income (loss) and cash flows for all periods presented. To facilitate the disposal, the Company cancelled the equity pledgeof Sichuan Wowo, terminated the aforementioned original contractual arrangements and resigned a new set of contractual arrangements onDecember 15, 2021 with no changes in the key terms. The Company is still the primary beneficiary of Hangzhou Baijia.Through the design of the contractual agreements, the nominee shareholders of Hangzhou Baijia effectively assigned their fullvoting rights to the Company, which gives the Company the power to direct the activities that most significantly impact HangzhouBaijia’s economic performance. In addition, BEST Store is entitled to substantially all of the economic benefits from Hangzhou Baijia.The Company and BEST Store, as a group of related parties, hold all of the variable interests of Hangzhou Baijia. The Company hasbeen determined to be most closely associated with Hangzhou Baijia within the group of related parties. As a result of these contractualAgreements, the Company is determined to be the primary beneficiary of Hangzhou Baijia.In the opinion of the Company’s management and legal counsel, (i) the ownership structure of the Group, including itssubsidiaries and the VIEs, is not in violation with any applicable PRC laws and regulations; (ii) each of the VIE agreements is legal, valid,binding and enforceable to each party of such agreements in accordance with its terms and applicable PRC Laws and (iii) Shareholder’sVoting Rights Proxy Agreement is not, conflict with or result in a breach of the terms or provisions of the Caymans Islands Law. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 183 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-231.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)The carrying amounts of the assets, liabilities and the results of operations of the VIEs and VIEs’ subsidiaries are presented inaggregate due to the similarity of the purpose and design of the VIEs and VIEs’ subsidiaries, the nature of the assets in these VIEs andVIEs’ subsidiaries and the type of the involvement of the Company in these VIEs and VIEs’ subsidiaries. The carrying amounts of theassets, liabilities and the results of operations of the VIEs and VIEs’ subsidiaries included in the Company’s consolidated balance sheetsand statements of comprehensive income (loss) are as follows:As at December 31 2022 2023 2023RMBRMBUS$ASSETS Current assets: Cash and cash equivalents 6,562 9,861 1,392Accounts and notes receivable, net 41,357 41,767 5,897Prepayments and other current assets 33,064 25,632 3,619Amounts due from Group companies 233,032 302,018 42,642Inventories44183Total current assets 314,059 379,296 53,553Non-current assets: Operating lease right-of-use assets———Property and equipment, net 128,672 118,018 16,663Intangible assets, net———Restricted cash1,4741,460206Total non-current assets 130,146 119,478 16,869Total assets 444,205 498,774 70,422LIABILITIES Current liabilities: Accounts and notes payable 22,379 45,719 6,456Accrued expenses and other liabilities20,39033,2304,690Customer advances and deposits and deferred revenue—345Operating lease liabilities 376 — —Financing lease liabilities10,383203Amounts due to Group companies 393,834 404,371 57,093Short-term bank loans110,142144,75520,438Total current liabilities 557,504 628,129 88,685Non-current liabilities:Financing lease liabilities24,70237052Other non-current liabilities43817,3462,449Total non-current liabilities 25,140 17,716 2,501Total liabilities 582,644 645,845 91,186 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 184 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-241.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)The revenue producing assets that are held by the VIEs comprise mainly of machinery and electronic equipment. The VIEscontributed an aggregate of 27%, 5% and 7% of the Group’s consolidated revenue for the years ended December 31, 2021, 2022 and 2023respectively, after elimination of intercompany transactions. As of December 31, 2022 and 2023, except for the VIE’s assets of Trust Planas disclosed on the face of the consolidated balance sheets, there are no other assets of the consolidated VIEs that can be used only to settleobligations of the consolidated VIEs.Other than the amounts due to related parties (which are eliminated upon consolidation) all remaining liabilities of the VIEs arewithout recourse to the primary beneficiary. The Company did not provide or intend to provide financial or other supports not previouslycontractually required to the VIEs during the years presented.For the years ended December 31, 2021 2022 2023 2023RMBRMBRMBUS$Revenue from continuing operations 3,116,599 380,358 589,084 82,971Revenue from discontinued operations16,486,807———Total revenue19,603,406380,358589,08482,971Net loss from continuing operations(104,999)(12,182)(8,707)(1,226)Net loss from discontinued operations(1,936,791)———Net cash(used in) generated from continuing operating activities(266,070)152,483158,88722,379Net cash used in discontinued operating activities (1,938,454) — — —Net cash used in continuing investing activities (349,795) (28,269) (37,916) (5,340)Net cash used in discontinued investing activities (448,016) — — —Net cash generated from (used in) continuing financing activities 242,350 (252,218) (117,680) (16,575)Net cash generated from discontinued financing activities2,136,199———Exchange rate effect on cash, cash equivalents and restricted cash incontinuing operating activities(18)176(8)— Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 185 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-251.ORGANIZATION AND BASIS OF PRESENTATION (CONTINUED)Consolidated ABS Plans and Trust PlanIn June 2019 and September 2020, BEST Finance transferred certain lease rental and other financing receivables to asecuritization vehicle through Xinyuan Leasing Asset Backed Special Plan I and Plan II (collectively the “ABS Plans”), respectively. InMarch 2021, BEST Finance transferred certain lease rental receivables to Yunnan International Trust Co., Ltd., a third party, which thencreated Yunnan Trust Plan (the “Trust Plan”). The ABS Plan I and ABS Plan II were due and repaid during the years ended December 31,2020 and 2021 respectively.The Company provides payment collection services for the underlying lease rental and other financing receivables. The Companyconsolidates the ABS Plans and Trust Plan as it has the power to direct the activities that most significantly impacts their economicperformance, the right to share residual profits and the obligation to absorb losses of the ABS Plans and Trust Plan that potentially couldbe significant to the ABS Plans and Trust Plan.The table sets forth the assets and liabilities of the consolidated ABS Plans and Trust Plan included in the Company’sconsolidated balance sheets:As at December 31, 202220232023 RMB RMB US$Cash and cash equivalents5,042274Amounts due from related parties 35,877 — —Prepayments and other current assets17,909——Total current assets 58,828 27 4Total assets 58,828 27 4Amounts due to related parties 54,011 4 1Accrued expenses and other liabilities 351 — —Total current liabilities 54,362 4 1Amounts due to related parties4,466233Total non-current liabilities 4,466 23 3Total liabilities 58,828 27 4 For the years ended December 31,2021 2022 2023 2023RMBRMBRMBUS$Revenue from third parties80,02931,5981,707240Cost of revenue64,31237,1357,8721,109Net income (loss) 5,493 (8,775) (6,702) (944) For the years ended December 31, 2021 2022 2023 2023RMBRMBRMBUS$Net cash generated from (used in) operating activities53,37321,385(36,074)(5,081)Net cash (used in) generated from investing activities (233,203) 184,929 31,059 4,375Net cash generated from (used in ) financing activities 115,996 (227,438) — — Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 186 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-262.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIESBasis of presentationThe accompanying consolidated financial statements have been prepared in accordance with United States generally acceptedaccounting principles (“U.S. GAAP”).Principles of ConsolidationThe consolidated financial statements of the Group include the financial statements of the Company, its subsidiaries, the VIEsand VIEs’ subsidiaries for which the Company is the primary beneficiary. All significant intercompany balances and transactions betweenthe Company, its subsidiaries and VIEs have been eliminated on consolidation.Going ConcernThe intense market competition continues to have an adverse impact on the Group’s business operations and liquidity. TheCompany incurred net losses from continuing operations of RMB908,606 (US$127,976) and generated negative cash flows fromcontinuing operating activities of RMB545,092 (US$76,777) during the year ended December 31, 2023, and had an accumulated deficit ofRMB19,749,262 (US$2,781,625) and a working capital deficiency of RMB1,762,001 (US$248,173) as of December 31, 2023. As ofDecember 31, 2023, the balance of the Group’s total cash and cash equivalents, current restricted cash and short-term investments wasRMB1,470,182 (US$207,071).There is substantial doubt regarding the Group’s ability to continue as a going concern. Management has implemented cost savingplans to reduce discretionary operational expenses and secure additional financing including, but not limited to, obtaining additional creditfacilities from banks in the normal course of business and re-financing certain existing notes payables. In the first quarter of 2024, theGroup successfully obtained new financing of RMB220,000 (US$30,986) short-term bank loans on credit maturing in one year, whichallows the Group to enhance liquidity. Although the Group has achieved encouraging results from its plans to reduce its costs andexpenditures during 2023 and in the first quarter of 2024 for certain business segments, the Group may be required to significantly reduceor scale back its operations if the Group is unsuccessful in its efforts or is unable to raise additional financing in the near term. There areuncertainties as to whether, and there can be no assurance that the aforesaid plans can be successfully executed. Accordingly, thesubstantial doubt of the Company’s ability to continue as a going concern has not been alleviated for the next twelve months from the dateof issuance of these consolidated financial statements. The accompanying consolidated financial statements have been prepared assumingthe Company will continue to operate as a going concern, which contemplates the realization of assets and the settlement of liabilities inthe normal course of business. The consolidated financial statements do not include any adjustments related to the recoverability andclassification of assets or the amounts and classifications of liabilities that may be necessary should the Group be unable to continue as agoing concern.Use of estimatesThe preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates andassumptions that affect the reported amounts of assets and liabilities, disclosures of contingent assets and liabilities at the balance sheetdates and the reported amounts of revenue and expenses during the reporting periods. Significant estimates and assumptions reflected inthe Group’s financial statements include, but are not limited to, allowance for credit losses, the estimated fair value less costs to sell forassets and liabilities of a business or asset group held-for-sale, cashflow projections used by the Company in its going concern assessment,fair value measurements of equity instruments without readily determinable fair values, incremental borrowing rates for operating leaseliabilities, standalone selling prices related to lease and non-lease components in the Company’s lease arrangements, useful lives of long-lived assets, impairment assessment of long-lived assets and goodwill, realization of deferred tax assets, uncertain tax positions, share-based compensation, fair value of financial instruments and contingent liabilities. Management bases the estimates on historical experienceand various other assumptions that are believed to be reasonable, the results of which form the basis for making judgments about thecarrying values of assets and liabilities. Actual results could materially differ from those estimates. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 187 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-272.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Discontinued operationsClassification and Measurement - The Company classifies the results of a component (or group of components) to be disposed(“disposal group”) as a discontinued operation when the disposal group meets the held-for-sale criteria, is disposed of by sale or isdisposed of other than by sale (e.g. abandonment) and when the disposal group represents a strategic shift that has, or will have, a majoreffect on the Company’s operations and its financial results.The Company reports the operating results and cash flows related to the disposal group as discontinued operations for all periodspresented in the consolidated statements of comprehensive income (loss) and consolidated statements of cash flows, respectively.The Company recognized the difference of sale price and carrying value allocated to the discontinued operation as disposal gainor loss in net (loss) income from discontinued operations, net of tax in the consolidated statements of comprehensive income (loss).Allocation of Interest Expense to Discontinued Operations – The Company elects to allocate the interest on debt that is to beassumed by the buyer and interest on debt that is required to be repaid as a result of a disposal transaction to discontinued operations. Theallocation of the interest expense based on the actual amount for each business during each period.Convenience translationAmounts in U.S. dollars are presented for the convenience of the reader and are translated at the noon buying rate of RMB7.0999 per US$1.00 on December 29, 2023 in the City of New York for cable transfers of RMB as certified for customs purposes by theFederal Reserve Bank of New York. No representation is made that the RMB amounts could have been, or could be, converted into US$ atsuch rate.Foreign currencyThe functional currency of the Company’s subsidiaries located outside the PRC is determined based on the criteria of ASC Topic830, Foreign Currency Matters. The Company’s subsidiaries, VIEs and VIEs’ subsidiaries located in the PRC determined their functionalcurrency to be RMB. The Company uses the RMB as its reporting currency.Each entity in the Company maintains its financial records in its own functional currency. Transactions denominated in foreigncurrencies are measured at the exchange rates prevailing on the transaction dates. Monetary assets and liabilities denominated in foreigncurrencies are remeasured at the exchange rates prevailing at the balance sheet date. Nonmonetary items that are measured in terms ofhistorical cost in foreign currency are remeasured using the exchange rates at the dates of the initial transactions. Exchange gains andlosses are included in the consolidated statements of comprehensive income (loss).The Company uses the average exchange rate for the year and the exchange rate at the balance sheet date to translate theoperating results and financial position, respectively. Translation differences are recorded in accumulated other comprehensive income, acomponent of shareholders’ equity.Cash and cash equivalentsCash and cash equivalents consist of cash on hand and demand deposits or other highly liquid investments placed with banks orother financial institutions which are unrestricted as to withdrawal and use and have original maturities of less than three months. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 188 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-282.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Restricted cashThe Company’s restricted cash mainly represents (a) deposits held in designated bank accounts for issuance of notes payable,short-term loans and long-term loans; (b) deposits held in designated bank accounts for the issuance of Trust Plan; and (c) securitydeposits required by the Company’s operating leases for sortation centers and warehouses.As of December 31, 2022 and 2023, the restricted cash related to the deposits held in designated bank accounts as pledgedsecurity of notes payable was RMB775,692 and RMB801,800 (US$112,931), respectively. As of December 31, 2022 and 2023, therestricted cash related to the deposits held in designated bank accounts for the issuance of Trust Plan was RMB16,650 and nil,respectively. As of December 31, 2022 and 2023, restricted cash related to the security deposit required by the Company’s operating leasesfor sortation centers and warehouses was RMB144,613 and RMB92,122 (US$12,975), respectively.Short-term investmentsThe Company’s short-term investments comprise primarily of cash deposits at fixed or floating rates based on daily bank depositrates with maturities ranging from three months to one year.Accounts and notes receivable, and allowance for credit lossesAccounts and notes receivables are recognized and carried at the original invoiced or note amount less an allowance of creditlosses. The Company maintains an allowance for credit losses in accordance with ASC 326, Credit Losses (“ASC 326”) and records theallowance for credit losses as an offset to accounts and notes receivable and the estimated credit losses charged to the allowance isclassified as “General and administrative expenses” in the consolidated statements of comprehensive income (loss). The Companyassesses collectability by reviewing accounts and notes receivable on a collective basis where similar characteristics exist, primarily basedon similar business line, service or product offerings and on an individual basis when the Company identifies specific customers withknown disputes or collectability issues. In determining the amount of the allowance for credit losses, the Company considers historicalcollectability based on past due status, the age of the accounts receivable balances and notes receivable balances, credit quality of theCompany’s customers based on ongoing credit evaluations, current economic conditions, reasonable and supportable forecasts of futureeconomic conditions, and other factors that may affect the Company’s ability to collect from customers. Accounts and notes receivable arewritten off after all collection efforts have ceased.Property and equipment, netProperty and equipment are stated at cost and are depreciated using the straight-line method over the estimated useful lives of theassets, as follows:Category Estimated Useful LifeMachinery and electronic equipment3-10 yearsMotor vehicles3 yearsLeasehold improvementsLesser of useful life or lease termRepair and maintenance costs are charged to expense as incurred, whereas the cost of renewals and betterments that extend theuseful lives of property and equipment are capitalized as additions to the related assets. Retirements, sales and disposals of assets arerecorded by removing the cost and accumulated depreciation from the asset and accumulated depreciation accounts with any resulting gainor loss reflected in the consolidated statements of comprehensive income (loss).Direct costs that are related to the construction of property and equipment, and incurred in connection with bringing the assets totheir intended use are capitalized as construction in progress. Construction in progress is transferred to specific property and equipment,and the depreciation of these assets commences when the assets are ready for their intended use. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 189 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-292.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Business CombinationsThe Company accounts for its business combinations using the purchase method of accounting in accordance with ASC 805,Business Combinations (“ASC 805”). The purchase method of accounting requires that the consideration transferred to be allocated to theassets, including separately identifiable assets and liabilities the Company acquired, based on their estimated fair values. The considerationtransferred in an acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred,and equity instruments issued as well as the contingent considerations and all contractual contingencies as of the acquisition date. Thecosts directly attributable to the acquisition are expensed as incurred. Identifiable assets, liabilities and contingent liabilities acquired orassumed are measured separately at their fair values as of the acquisition date, irrespective of the extent of any non-controlling interests.The excess of (i) the total cost of acquisition, fair value of the non-controlling interests and acquisition date fair value of any previouslyheld equity interest in the acquiree over (ii) the fair value of the identifiable net assets of the acquiree, is recorded as goodwill. If the costof acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in earnings.The determination and allocation of fair values to the identifiable assets acquired, liabilities assumed and non-controlling interestsis based on various assumptions and valuation methodologies requiring considerable judgment from management. The most significantvariables in these valuations are discount rates, the number of years on which to base the cash flow projections, as well as the assumptionsand estimates used to determine the cash inflows and outflows. The Company determines the discount rates to be used based on the riskinherent in the related entity’s current business model and industry comparisons.GoodwillThe Company assesses goodwill for impairment in accordance with ASC 350-20, Intangibles—Goodwill and Other: Goodwill(“ASC 350-20”), which requires that goodwill be tested for impairment at the reporting unit level at least annually and more frequentlyupon the occurrence of certain events.As of December 31, 2022 and 2023, goodwill was allocated to two reporting units including Freight delivery reporting unit andGlobal reporting unit (Note 12). The Company has the option to assess qualitative factors first to determine whether it is necessary toperform the quantitative test in accordance with ASC 350-20. In the qualitative assessment, the Company considers primary factors suchas industry and market considerations, overall financial performance of the reporting unit, and other specific information related to theoperations. If the Company believes, as a result of the qualitative assessment, that it is more-likely-than-not that the fair value of thereporting unit is less than its carrying amount, the quantitative impairment test is required. Otherwise, no further testing is required. Thequantitative impairment test compares the fair value of the reporting unit with its carrying amount, including goodwill. If the carryingamount of a reporting unit exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 190 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-302.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Intangible assetsIntangible assets with finite lives are carried at cost less accumulated amortization. All intangible assets with finite lives areamortized using the straight-line method over the estimated useful lives.Intangible assets have weighted average estimated useful lives from the date of purchase/capitalization as follows:Category Estimated Useful LifeCustomer relationships 3.89 yearsSoftware 4.09 yearsThe Company capitalizes salaries and benefits of research and development personnel and other expenses that are directlyattributable to the development of new technology system for internal use pursuant to ASC350-40, Intangibles—Goodwill and Other—Internal use software. The Company capitalizes the costs during the development of the project, when it is determined that it is probablethat the project will be completed, and the software will be used as intended. Costs related to preliminary project activities, post-implementation activities, training and maintenance are expensed as incurred. Internal use software is amortized on a straight-line basisover its estimated useful life when the assets are ready for their intended use, which is generally three to five years.Impairment of long-lived assetsThe Group’s long-lived assets include fixed assets, intangible assets with finite lives and operating lease right-of-use assets.whenever events or changes in circumstances, such as a significant adverse change to market conditions that will impact the future use ofthe assets, indicate that the carrying amount of an asset may not be fully recoverable. The Group evaluates the recoverability of its long-lived assets individually or as a group at the lowest level for which there are identifiable cash flows that are largely independent of thecash flows of the other assets and liabilities. Whenever events or changes in circumstances indicate an asset (or group of assets) may notbe recoverable, the carrying amount is compared to the sum of future undiscounted net cash flows expected to result from the use of theasset (or group of assets) and its eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amountof the asset (or group of assets), the carrying amount of the asset (or the long-lived assets in the asset group on a pro rata basis using therelative carrying amounts) is reduced to the extent not lower than the fair value of the asset. The adjusted carrying amounts after animpairment charge represent the new cost basis and is depreciated over their remaining useful lives.Fair value of the asset (or group of assets) is determined by the Group based on the income approach using the discounted cashflow associated with the underlying asset(s), which incorporated certain assumptions including revenue growth rates, operating margin andoperating expenses based on current economic condition, expectation of management and projected trends of current operating results.Considerable management judgement is used to estimate future cashflows, such as revenues expected to be generated from the usage ofthe assets and estimates of the price market participants would pay to lease the operating lease right-use assets. Actual results may varysignificantly from the estimates as they are forward-looking and include assumptions about economic and market conditions withuncertain future outcomes.No impairment was recorded for the years ended December 31, 2021 and 2022. During the year ended December 31, 2023, due tothe continued underperformances relative to the projected operating results of certain asset group in Global segment, the Group recordedan impairment loss of RMB94,699 (US$13,338) (Note 24). Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 191 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-312.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Transfer of financial assetsThe Company accounts for transfers of financial assets in accordance with ASC 860, Transfers and Servicing (“ASC 860”). For atransfer of financial assets considered as a sale, the assets would be removed from the Company’s consolidated balance sheets. If theconditions for a sale required by ASC 860 are not met, the transfer is considered to be a secured borrowing and the assets remain on theconsolidated balance sheet while the sale proceeds are recognized as a liability.Pursuant to ASC 860, the issuance of debt securities securitized by the Company’s lease rental and other financing receivablesarising from its financing lease business (Note 15) and the factoring of intercompany note receivables to domestic banks (Note 13) do notconstitute a sale of the underlying financial assets for accounting purposes due to the recourse obligations retained by the Company.Therefore, these transactions are accounted for as borrowings on the consolidated balance sheets and the financial assets are notderecognized.Fair value measurements of financial instrumentsThe Company applies ASC 820, Fair Value Measurements and Disclosures (“ASC 820”). ASC 820 defines fair value, establishesa framework for measuring fair value and expands disclosures about fair value measurements. ASC 820 requires disclosures to beprovided for fair value measurements.ASC 820 establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value as follows:Level 1—Observable inputs that reflect quoted prices (unadjusted) for identical assets or liabilities in active markets.Level 2—Includes other inputs that are directly or indirectly observable in the marketplace.Level 3—Unobservable inputs which are supported by little or no market activity.ASC 820 describes three main approaches to measuring the fair value of assets and liabilities: (1) market approach; (2) incomeapproach; and (3) cost approach. The market approach uses prices and other relevant information generated from market transactionsinvolving identical or comparable assets or liabilities. The income approach uses valuation techniques to convert future amounts to asingle present value amount. The measurement is based on the value indicated by current market expectations about those future amounts.The cost approach is based on the amount that would currently be required to replace an asset.Financial instruments include cash and cash equivalents, restricted cash, accounts and notes receivables, certain other currentassets, short-term investments, amounts due from related parties, long-term investments, certain other non-current assets, accounts andnotes payable, short-term bank loans, derivative liabilities, long-term bank loans, long-term borrowings, convertible senior notes andamounts due to related parties, certain other current liabilities and certain other non-current liabilities. The carrying values of the financialinstruments included in current assets and liabilities excluding derivative liabilities approximate their fair values due to their short-termmaturities. The carrying amount of other non-current financial assets, long-term bank loans, convertible senior notes and other non-currentfinancial liabilities approximates its fair value as the related interest rates approximate market rates for similar debt instruments ofcomparable maturities. The fair value of the Company’s derivatives assets and derivatives liabilities is determined utilizing marketobservable forward exchange rates (Note 25). Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 192 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-322.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Non-controlling interestsNon-controlling interests are recognized to reflect the portion of the equity of majority-owned subsidiaries and VIEs which is notattributable, directly or indirectly, to the controlling shareholder.Non-controlling interests are presented as a separate component of equity in the consolidated balance sheets. Consolidated netloss on the consolidated statements of comprehensive income (loss) includes the net loss attributable to non-controlling interests. Thecumulative results of operations attributable to non-controlling interests are recorded as non-controlling interests in the consolidatedbalance sheets.Convertible Non-controlling InterestsConvertible non-controlling interests are recognized to reflect the portion of the equity of majority-owned subsidiaries and VIEswhich is not attributable, directly or indirectly, to the controlling shareholder.Convertible non-controlling interests represent redeemable equity interests issued by the Company’s subsidiary to certaininvestors (Note 21) and have been classified as mezzanine equity in the consolidated balance sheets as these redeemable interests arecontingently redeemable upon the occurrence of certain conditional event, which is not solely within the control of the Company.Convertible non-controlling interests are initially measured at fair value at issuance date and recorded at issuance price, net of issuancecost. Net income (loss) of the subsidiary attributable to the convertible non-controlling interests was subsequently recorded pursuant toASC 810, Consolidation. After the attribution, the Company considers the provisions of ASC 480, Distinguish Liabilities from Equity(“ASC 480”) to determine whether any further adjustments are necessary to increase the carrying value of the convertible non-controllinginterests. Adjustments to the carrying amount of the convertible non-controlling interests are recorded through accumulated deficit.Revenue recognitionRevenue is recognized when control of promised goods or services is transferred to the Company’s customers in an amount ofconsideration to which an entity expects to be entitled to in exchange for those goods or services. The Group presents value-added taxes asa reduction from revenues. The Company does not disclose the value of unsatisfied performance obligations for (i) contracts with anoriginal expected length of one year or less and (ii) contracts for which the Company recognizes revenue at the amount to which it has theright to invoice for services performed.The Company’s revenue recognition policies are as follows:Freight delivery servicesThe Company provides freight services that comprise of sorting, line-haul and feeder transportation services mainly to itsfranchisees, which are also the Company’s customers. The Company offers an integrated service to franchisee service stations thatincludes last-mile delivery service to end recipients and acts as the principal that is directly responsible for all shipments sent through itsnetwork, from the point when customers drop off the shipments at the Company’s first hub or sortation center all the way through to thepoint when the shipments are delivered to end recipients. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 193 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-332.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Revenue recognition (continued)Freight delivery services (continued)Customers are required to prepay for freight delivery services and the Company records such amounts as “Customer advancesand deposits and deferred revenue” in the consolidated balance sheets. The transaction price the Company earns from its customers arebased on the shipment’s weight and route to the end recipient’s destination. In addition, the Company provides certain discounts,incentives and rebates based on explicitly agreed upon terms with its customers that can decrease the transaction price and estimatesvariable consideration based on the most likely amount to be provided. The amount of variable consideration included in the transactionprice is limited to the amount that will not result in a significant revenue reversal. The Company reviews the estimate of variableconsideration and updates the transaction price at the end of each reporting period as necessary. Uncertainties related to the estimates ofvariable consideration are resolved in a short time frame. Adjustments to variable consideration are recognized in the period theadjustments are identified and were insignificant for the periods presented.The Company’s freight delivery services contracts with customers include only one performance obligation. Performanceobligations are generally short-term in nature with transit days being a week or less for each shipment. The Company recognizes revenueover time as customers receive the benefit of the Company’s services as the goods are shipped from one location to another. As such,freight delivery services revenue is recognized proportionally as a shipment moves from origin to destination and the related costs arerecognized as incurred. The Company uses an output method of progress based on time-in-transit as it best depicts the transfer of controlto the customer.Freight delivery services revenue also includes initial non-refundable franchise fees. The initial non-refundable franchise fees arerecognized over the franchise period due to the franchisees’ rights to access the Company’s logos and brand names which are consideredsymbolic intellectual properties. The initial non-refundable franchise fees are negotiated under a separate agreement and represent a verysmall percentage of revenue for all periods presented.UCargo serviceThe Company services as a truckload capacity brokerage platform to provide truckload capacity sourcing solutions via real-timebidding to transportation service providers and customers. The Company is the principal to the transaction for these services and revenuefrom these transactions is recognized on a gross basis. Revenue is recognized proportionally as a shipment moves from origin todestination using an output method of progress based on time-in-transit while the related costs are recognized as incurred. Since January 1,2022, due to the winding down of UCargo, the Company reported UCargo services together with Freight delivery services. Prior year’scomparative figure related to UCargo services revenue of RMB2,809,081 under “Revenue -Others” for the year ended December 31,2021, has been reclassified to “Revenue - Freight delivery” to conform to the current year’s presentation.Supply chain management servicesThe Company provide warehouse management, order fulfillment services and transportation services to its offline and onlineenterprise customers (“enterprise customers”). The Company enters into supply chain warehouse management service agreements withthese customers to provide warehouse management and order fulfillment services through its self-operated order fulfillment centers andalso enters into transportation services agreements to provide transportation services. The majority of these contracts having an effectiveterm of one year. Order fulfillment services revenue is generated from various service fees charged on a volume basis in connection withvarious order fulfillment services, which may include in-warehouse processing, order fulfillment, express delivery, freight delivery andother value-added services. Pursuant to the warehouse management service agreements and transportation services agreements, enterprisecustomers have the right to terminate the contracts by providing a one-month advance notice. Therefore, even though the contract term forthe majority of the contracts is one year, due to the termination rights provided to enterprise customers, warehouse management serviceagreements and transportation services agreements are considered month-to-month service contracts. Enterprise customers are billed on amonthly basis and make payments according to their granted credit terms which ranges from 5 to 240 days. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 194 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-342.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Revenue recognition (continued)Supply chain management services (continued)Under some situations, enterprise customers may request to add a transportation route or increase the warehouse rental space byentering into a separate contract with the Company. The additional services are considered distinct and the service fees are priced at theirstandalone selling prices, i.e. they cannot be purchased at a significant or incremental discount. Therefore, the Company accounts for thistype of contract modification as a separate contract and the revenue recognized to date on the original contract is not adjusted.The warehouse management service agreements comprise various service offerings that can be purchased at the option of thecustomer. Although the service options are interrelated, none of the services modify the other services and they are not integrated toprovide a combined output. Each of the service options is substantive and the enterprise customers cannot purchase each additional serviceat a significant and incremental discount. Therefore, each service is accounted for as a separate performance obligation. The Company isthe primary obligor and does not outsource any portion of the order fulfillment services to supply chain franchisee partners. The Companyrecognizes warehouse management and order fulfillment services revenue upon completion of the services as that is when the Companytransfers control of the services and has right to payment.For transportation services, the Company provides the service of arranging transportation and coordinating shipments to and fromlocations designated by its enterprise customers. Each transportation order for delivery of goods from origin to destination is considered aperformance obligation. Performance obligations are generally short-term in nature with transit days being a week or less for eachshipment. The Company recognizes transportation services revenue over time as customers receive the benefit of the services as the goodsare shipped from origin to destination. As such, transportation services revenue is recognized proportionally as a shipment moves fromorigin to destination and the related costs are recognized as incurred. The Company use an output method of progress based on time-in-transit as it best depicts the transfer of control to the customer.A small percentage of revenue is also earned from supply chain franchisee partners that can access the Company’s supply chainnetwork. These franchisee partners pay an initial non-refundable fee for a comprehensive operating manual and orientation training, aswell as an agreed system usage fee for each order processed through the Company’s supply chain network. The initial non-refundable feesand system usage fees were insignificant for all periods presented.Global logistics servicesThe Company primarily provides international logistic services in multiple countries and regions across North America, Europeand Asia, such as cross-border logistic coordination services and express delivery services. Revenue is recognized proportionally as ashipment moves from origin to destination using an output method of progress based on time-in-transit while the related costs arerecognized as incurred.Other servicesOther services mainly represent SaaS software service and Capital service the Company provided to customers.SaaS software serviceThe Company serves as a proprietary technology platform to provide solution services to the ecosystem participants. TheCompany is the principal to the transaction for these services and revenue from these transactions is recognized on a gross basis. Revenueis recognized ratably over the contract period and is initially recorded as “Customer advances and deposits and deferred revenue”. For theyears ended December 31, 2021, 2022 and 2023, the revenue recognized from SaaS software service was RMB34,639, RMB41,286, andRMB58,823 (US$8,285), respectively. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 195 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-352.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Revenue recognition (continued)Capital serviceThe Company serves as a financing platform to provide tailored financing solutions to BEST’s ecosystem participants, such asfleet and equipment financing lease service and factoring services. Revenue generated from provision of capital services primarily consistsof interest income on lease rental and other financing receivables, which is recognized as revenue using the effective interest rate method.For the years ended December 31, 2021, 2022 and 2023, the revenue recognized from Capital service was RMB117,622, RMB29,899, andRMB8,609 (US$1,213), respectively.Express delivery servicesPrior to the disposal of BEST Network in December 2021, the Company provides express services in China that comprise ofsorting, line-haul and feeder transportation services to its franchisee service stations, which are also the Company’s customers, whenparcels (under 15 kg) are dropped off by the Company’s franchisee service station customers at the Company’s first hub or sortationcenter.The Company offers an integrated service to the franchised service stations that includes last-mile delivery service to endrecipients and acts as the principal that is directly responsible for all parcels sent through its network, from the point when customers dropoff the parcels at the Company’s first hub or sortation center all the way through to the point when the parcels are delivered to endrecipients.Customers are required to prepay for express delivery services and the Company records such amounts as “customer advancesand deposits and deferred revenue” in the consolidated balance sheets. The transaction price the Company earns from its customers arebased on the parcel’s weight and route to the end recipient’s destination. In addition, the Company provides certain discounts, incentivesand rebates based on explicitly agreed upon terms with its customers that can decrease the transaction price and estimates variableconsideration based on the most likely amount to be provided. The amount of variable consideration included in the transaction price islimited to the amount that will not result in a significant revenue reversal. The Company reviews the estimate of variable consideration andupdates the transaction price at the end of each reporting period as necessary. Uncertainties related to the estimates of variableconsideration are resolved in a short time frame. Adjustments to variable consideration are recognized in the period the adjustments areidentified and were insignificant for the periods presented.The Company’s express delivery services contracts with customers include only one performance obligation. Performanceobligations are generally short-term in nature and with transit days being a week or less for each parcel. The Company recognizes revenueover time as customers receive the benefit of the Company’s services as the goods are delivered from one location to another. As such,express delivery services revenue is recognized proportionally as a parcel moves from origin to destination and the related costs arerecognized as incurred. The Company uses an output method of progress based on time-in-transit as it best depicts the transfer of controlto the customer.A minor percentage of the Company’s express delivery services are performed by the Company through its integrated expressdelivery service network for direct customers (“direct customer express delivery services”), who are the senders of the parcels. TheCompany is directly responsible for the parcel from the point it is received from the senders all the way through the point when the parcelsare delivered to end recipients. Direct customer express delivery services revenue is recognized proportionally as parcels are transported toend recipients and the related costs are recognized as incurred.Express delivery services revenue also includes initial non-refundable franchise fees. The initial non-refundable franchise fees arerecognized over the franchise period due to the franchisees’ rights to access the Company’s logos and brand names which are consideredsymbolic intellectual properties. The initial non-refundable franchise fees are negotiated under a separate agreement and represent a verysmall percentage of revenue for all periods presented. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 196 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-362.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Revenue recognition (continued)Contract assets and liabilitiesThe Company enters into contracts with its customers, which may give rise to contract liabilities (deferred revenue) and contractassets (unbilled revenue). The payment terms and conditions within the Company’s contracts vary by the type of service and customers.When the timing of revenue recognition differs from the timing of payments made by customers, the Company recognizes either unbilledrevenue (its performance precedes the billing date) or deferred revenue (customer payment is received in advance of performance).Contract assets represent unbilled amounts resulting from provision of transportation services as the Company has anunconditional right to payment only once all delivered goods reach their destination. Contract assets are classified as current and the fullbalance is reclassified to accounts receivables when the right to payment becomes unconditional. The balance of contract assets wasinsignificant as of December 31, 2022 and 2023.Contract liabilities are included in “Customer advances and deposits and deferred revenue” in the consolidated balance sheets.Contract liabilities represent the amount of consideration received upfront from customers related to in-transit shipments that has not yetbeen recognized as revenue based on our selected measure of progress and non-refundable franchise fees which are recognized over thefranchise period. The Company classifies contract liabilities as current based on the timing of when the Company expects to recognizerevenue, which typically occurs within a week after period-end.The balances of contract liabilities arising from contracts with customers as of December 31, 2022 and 2023 were as follows: Balance at Balance at Balance atDecember 31,December 31,December 31,202220232023RMBRMBUS$Contract liabilities 90,505 103,863 14,629Revenue recognized in the years ended December 31, 2021, 2022 and 2023 that was included in the contract liabilities balance atthe beginning of the period was RMB81,951, RMB80,003 and RMB70,082 (US$9,871), respectively. This revenue was driven primarilyby freight delivery performance obligations being satisfied.For contract costs associated with obtaining a contract such as commissions incurred with obtaining a contract, the Companycapitalizes the incremental contract costs and amortizes the capitalized contract costs using a straight-line basis over the term of thecontract. The capitalized contract costs as of December 31, 2022 and 2023 and the related amortization for the years ended December 31,2021, 2022 and 2023 was insignificant. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 197 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-372.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Cost of revenueCost of revenue consists primarily of transportation costs including cost of freight delivery accessories, operating costs for thedelivery platforms, hubs and sortation centers, operating costs for the supply chain management network, last-mile delivery service fees,salaries and benefits of related personnel, depreciation, rental costs, and other related operating costs.Selling expensesAdvertising costs are expensed when incurred and are included in selling expenses in the consolidated statements ofcomprehensive income (loss). For the years ended December 31, 2021, 2022 and 2023, advertising expenses were RMB16,871,RMB8,775 and RMB6,504 (USD$916), respectively.Government subsidiesGovernment subsidies primarily consist of financial subsidies received from local governments for operating a business in theirjurisdictions and compliance with specific policies promoted by the local governments. There are no defined rules and regulations togovern the criteria necessary for companies to receive such benefits, and the amount of financial subsidy is determined at the discretion ofthe relevant government authorities. For the government subsidies with no further conditions to be met, the amounts are recorded as“Other operating income” if the subsidies are of operating nature, or as non-operating income in “Other income” if the subsidies are ofnon-operating nature, or as a reduction of specific cost or expenses if such subsidies are intended to compensate such amounts. Thegovernment subsidies with certain operating conditions are recorded as liabilities when received and will be recorded as “Other operatingincome” or “Other income” or as a reduction of specific cost or expenses when the conditions are met.The Company adopted Accounting Standards Update (“ASU”) No. 2021-10, Government Assistance (Topic 832): Disclosure byBusiness Entities about Government Assistance (ASU 2021-10), which improves the transparency of government assistance received bymost business entities by requiring annual disclosures of: (1) the types of government assistance received; (2) the accounting for suchassistance; and (3) the effect of the assistance on a business entity’s financial statements. The adoption of this new standard did not have amaterial impact on the consolidated financial statements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 198 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-382.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)LeasesThe Company determines whether an arrangement is or contains a lease at inception.Sales-type, direct financing and operating leases as LessorThe Company classifies a lease as a sales-type lease when the lease meets any one of the following criteria at leasecommencement:a. The lease transfers ownership of the underlying asset to the lessee by the end of the lease term.b. The lease grants the lessee an option to purchase the underlying asset that the lessee is reasonably certain to exercise.c. The lease term is for a major part of the remaining economic life of the underlying asset.d. The present value of the sum of the lease payments and any residual value guaranteed by the lessee that is not alreadyreflected in the lease payments equals or exceeds substantially all of the fair value of the underlying asset.e. The underlying asset is of such a specialized nature that it is expected to have no alternative use to the Company at the end ofthe lease term.For sales-type leases, when collectability is probable at lease commencement, the Company derecognizes the underlying assetand recognizes the net investment in the lease which is the sum of the lease receivable. Initial direct costs are expensed, at thecommencement date, if the fair value of the underlying asset is different from its carrying amount. Interest income is recognized infinancing income over the lease term using the interest method.When none of the criteria above are met, the Company classifies a lease as either a direct financing lease or an operating lease.The Company will classify the lease as a direct financing lease if (i) the present value of the sum of lease payments and any residual valueguaranteed by the lessee and any other third party unrelated to the Company equals or exceeds substantially all the fair value of theunderlying asset; and (ii) it is probable that the Company will collect the lease payments plus any amount necessary to satisfy a residualvalue guarantee. If both of the criteria above are not met, the Company will classify the lease as an operating lease.The standard requires lessors within the scope of ASC 942, Financial Services – Depository and Lending, to classify principalpayments received from sales-type and direct financing leases in investing activities in the statement of cash flows. The Companycontinues to present cash receipts from sales-type and direct financing leases as an investing cash inflow. For the year ended December 31,2021, 2022 and 2023, total cash originations of sales-type and direct financing leases were RMB45,606, nil and nil, respectively. For theyear ended December 31, 2021, 2022 and 2023, total cash receipts from sales-type and direct financing leases were RMB546,221,RMB318,674 and RMB39,966 (US$5,629), respectively. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 199 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-392.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Leases (continued)Sale-leaseback transactions as LessorWhen the Company enters into sale-leaseback transactions as lessor, it assesses whether a contract exists and whether the seller-lessee satisfies a performance obligation by transferring control of an asset when determining whether the transfer of an asset shall beaccounted for as a sale of the asset. If the seller-lessee transfers the control of the leased asset to the Company, it accounts for the purchaseof the leased asset in accordance with ASC360. The subsequent leaseback of the asset is accounted for in accordance with ASC842 in thesame manner as any other lease. If the seller-lessee does not transfer the control of the leased asset to the Company, it is a failed sales-leaseback transaction which is accounted for as a financing. The Company does not recognize the transferred asset and records theamounts paid as other financing receivables for which the current portion is included in “Prepayments and other current assets” and thenon-current portion is included in “Other non-current assets” in the consolidated balance sheets.Financing lease and operating lease as LesseeThe Company classifies a lease as a financing lease when the lease meets any one of the criteria specified as (a) to (e) in the“Sales-type, direct financing and operating leases as Lessor” policy at lease commencement. When none of the criteria are met, theCompany classifies a lease as an operating lease.For both operating and financing leases, the Company records a lease liability and corresponding right-of-use (ROU) asset atlease commencement. Lease terms are based on the non-cancellable term of the lease and may contain options to extend the lease when itis reasonably certain that the Company will exercise the option. Lease liabilities represent the present value of the lease payments not yetpaid, discounted using the discount rate for the lease at lease commencement.The Company estimates its incremental borrowing rate for its leases at the commencement date to determine the present value offuture lease payments when the implicit rate is not readily determinable in the lease. In estimating its incremental borrowing rate, theCompany considers its credit rating and publicly available data of borrowing rates for loans of similar amount, currency and term as thelease.Operating leases are presented as “Operating lease ROU assets” and “Operating lease liabilities”. Lease liabilities that becomedue within one year of the balance sheet date are classified as current liabilities. At lease commencement, operating lease ROU assetsrepresent the right to use underlying assets for their respective lease terms and are recognized at amounts equal to the lease liabilitiesadjusted for any lease payments made prior to the lease commencement date, less any lease incentives received and any initial direct costsincurred by the Company.After lease commencement, operating lease liabilities are measured at the present value of the remaining lease payments using thediscount rate determined at lease commencement. Operating lease ROU assets are measured at the amount of the lease liabilities andfurther adjusted for prepaid or accrued lease payments, the remaining balance of any lease incentives received, unamortized initial directcosts and impairment of the ROU assets, if any. Operating lease expense is recognized as a single cost on a straight-line basis over thelease term. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 200 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-402.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Financing lease and operating lease as Lessee (continued)Financing lease are included in “Property and equipment” and “Financing lease liabilities” on the consolidated balance sheets.Lease liabilities that become due within one year of the balance sheet date are classified as current liabilities. Financing lease ROU assetsare amortized on a straight-line basis from the lease commencement date. After initial measurement, the carrying value of financing leaseliabilities are increased to reflect interest at a constant rate and reduced to reflect any lease payments made during the period.Leases that have a term of 12 months or less at the commencement date (“short-term leases”) are not included in operating leaseROU assets and operating lease liabilities. Lease expense for the short-term leases are recognized on a straight-line basis over the leaseterm.Sale-leaseback transactions as LesseeWhen the Company enters into sale-leaseback transactions as a seller-lessee, it applies the requirements in ASC 606 by assessingwhether a contract exists and whether it satisfies a performance obligation by transferring control of an asset when determining whetherthe transfer of an asset shall be accounted for as a sale of the asset. If the Company transfers the control of an asset to the buyer-lessor, itaccounts for the transfer of the asset as a sale and recognizes a corresponding gain or loss on disposal. The subsequent leaseback of theasset is accounted for in accordance with ASC842 in the same manner as any other lease. If the Company does not transfer the control ofan asset to the buyer-lessor, the failed sale-leaseback transaction is accounted for as a financing. The Company does not derecognize thetransferred asset and accounts for proceeds received as borrowings for which the current portion is included in “Accrued expenses andother liabilities” and the non-current portion is included in “Other non-current liabilities” in the consolidated balance sheets.Research and Development ExpensesResearch and development expenses primarily consist of salaries and benefits for research and development personnel anddepreciation of property and equipment. The Company expenses research and development costs as they are incurred, except for the costsincurred in the development phase for the development of internal use software that fulfill the capitalization criteria under ASC 350-40.The Company amortizes the capitalized costs over their estimated useful lives. The amount of the capitalized research and developmentexpenses during the years ended December 31, 2021, 2022 and 2023 was RMB 16,477, RMB33,252 and RMB31,881 (US$4,490),respectively, which was recorded in “Intangible Assets – net” on the consolidated balance sheets.Comprehensive income (loss)Comprehensive income (loss) is defined as the changes in equity of the Company during a period from transactions and otherevents and circumstances excluding transactions resulting from investments by owners and distributions to owners. Among otherdisclosures, ASC 220, Comprehensive Income, requires that all items that are required to be recognized under current accounting standardsas components of comprehensive loss be reported in a financial statement that is displayed with the same prominence as other financialstatements. For each of the periods presented, the Company’s comprehensive loss includes net loss and foreign currency translationadjustments and is presented in the consolidated statements of comprehensive income (loss). Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 201 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-412.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Income taxesThe Company follows the liability method of accounting for income taxes in accordance with ASC 740, Income Taxes(“ASC 740”). Under this method, deferred tax assets and liabilities are determined based on the difference between the financial reportingand tax bases of assets and liabilities using enacted tax rates that will be in effect in the period in which the differences are expected toreverse. The Company records a valuation allowance to offset deferred tax assets if based on the weight of available evidence, it is more-likely-than-not that some portion, or all, of the deferred tax assets will not be realized. The effect on deferred taxes of a change in tax rateis recognized in tax expense in the period that includes the enactment date of the change in tax rate.The Company accounted for uncertainties in income taxes in accordance with ASC 740. Interest and penalties arising fromunderpayment of income taxes shall be computed in accordance with the related PRC tax law. The amount of interest expense is computedby applying the applicable statutory rate of interest to the difference between the tax position recognized and the amount previously takenor expected to be taken in a tax return. Interest and penalties are recognized in accordance with ASC 740 as income tax expense in theconsolidated statements of comprehensive income (loss).The Company recognizes in its consolidated financial statements the impact of a tax position if a tax return position or future taxposition is “more likely than not” to prevail based on the facts and technical merits of the position. Tax positions that meet the “more likelythan not” recognition threshold are measured at the largest amount of tax benefit that has a greater than fifty percent likelihood of beingrealized upon settlement. The Company’s estimated liability for unrecognized tax benefits included in “Other non-current liabilities” in theconsolidated balance sheets is periodically assessed for adequacy and may be affected by changing interpretations of laws, rulings by taxauthorities, changes and/or developments with respect to tax audits, and expiration of the statute of limitations. The actual benefitsultimately realized may differ from the Company’s estimates. As each audit is concluded, adjustments, if any, are recorded in theCompany’s consolidated financial statements. Additionally, in future periods, changes in facts, circumstances, and new information mayrequire the Company to adjust the recognition and measurement estimates with regard to individual tax positions. Changes in recognitionand measurement estimates are recognized in the period in which the changes occur. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 202 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-422.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Share-based compensationAwards granted to employees and non-employeesThe Company had granted awards to employees and non-employees and the Company’s subsidiary had granted awards that areexercisable in the underlying entity’s ordinary shares. The Company determines whether an award should be classified and accounted foras a liability award or equity award. All the Company’s share-based awards to employees and non-employees were classified as equityawards and are recognized in the consolidated financial statements based on their grant date fair values. For awards only with serviceconditions, the Company has elected to recognize compensation expense using the straight-line method for awards granted with gradedvesting provided that the amount of compensation cost recognized at any date is at least equal to the portion of the grant date value of theoptions that are vested at that date. For awards with performance and service conditions, the Company uses the accelerated method forawards granted with graded vesting. The Company accounts for forfeitures as they occur.The Company, with the assistance of an independent third-party valuation firm, determined the fair value of the share optionsgranted to employees and non-employees. The binomial option pricing model was applied in determining the estimated fair value of theoptions granted by the Company to employees and non-employees.Modification of awardsA change in the terms or conditions of the awards is accounted for as a modification of the award. Incremental compensation costis measured as the excess, if any, of the fair value of the modified award over the fair value of the original award immediately before itsterms are modified, measured based on the fair value of the awards and other pertinent factors at the modification date. For vested awards,the Company recognizes incremental compensation cost in the period the modification occurs. For unvested awards, the Companyrecognizes over the remaining requisite service period, the sum of the incremental compensation cost and the remaining unrecognizedcompensation cost for the original award on the modification date. If the fair value of the modified award is lower than the fair value of theoriginal award immediately before modification, the minimum compensation cost the Company recognizes is the cost of theoriginal award.Long-term investmentsThe Company accounts for investments in an investee over which the Company does not have significant influence and which donot have readily determinable fair value using the measurement alternative, which is defined as cost, less impairments, adjusted byobservable price changes. The Company makes a qualitative assessment of whether the investment is impaired at each reporting date. If aqualitative assessment indicates that the investment is impaired, the Company estimates the investment’s fair value in accordance withASC 820. If the fair value is less than the investment’s carrying value, the Company recognizes an impairment loss equal to the differencebetween the carrying value and fair value.Investments in entities in which the Company can exercise significant influence and holds an investment in voting common stockor in-substance common stock (or both) of the investee but does not own a majority equity interest or control are accounted for using theequity method of accounting in accordance with ASC 323, Investments-Equity Method and Joint Ventures (“ASC 323”). Under the equitymethod, the Company initially records its investments at cost. The Company subsequently adjusts the carrying amount of the investmentsto recognize the Company’s proportionate share of each equity investee’s net income (loss) into earnings after the date of investments. TheCompany evaluates the equity method investments for impairment under ASC 323. An impairment loss on the equity method investmentsis recognized in earnings when the decline in value is determined to be other-than-temporary.The Company accounts for long-term held-to-maturity debt securities in accordance with ASC 320, Investments-Debt Securities(“ASC 320”). Long-term held-to-maturity debt securities include time deposits in financial institutions, with maturities of greater thantwelve months, that the Company has positive intent and ability to hold to maturity, which are stated at amortized cost. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 203 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-432.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Derivative InstrumentsASC 815, Derivatives and Hedging (“ASC 815”) requires all contracts that meet the definition of a derivative to be recognized onthe balance sheet as either assets or liabilities and recorded at fair value. The Group’s derivative liabilities (assets) represent freestandingforward exchange rate contracts that do not qualify for hedge accounting in accordance with ASC 815. The derivative liabilities arerecorded in “Accrued liabilities and other payables” and “Other non-current liabilities” and measured at fair value in the consolidatedbalance sheets. The derivative assets are recorded in “Prepayments and other current assets” and “Other non-current assets” and measuredat fair value in the consolidated balance sheets. Changes in the fair value of derivative liabilities and derivative assets are recognized in “(Loss) Gain on change in fair value of derivative assets and derivative liabilities” in the consolidated statements of comprehensive income(loss). The notional amount of the derivative contracts related to the forward exchange rate were US$242,500 and US$132,000 as ofDecember 31, 2022 and 2023, respectively. Changes in fair value of derivative assets and derivative liabilities were gain of RMB71,619and RMB32,322 (US$4,553) for the years ended December 31, 2022 and 2023, respectively. The fair value of the Company’s derivativeswas determined utilizing market observable forward exchange rates.Earnings (Loss) per shareIn accordance with ASC 260, Earnings Per Share (“ASC 260”), basic earning (loss) per share is computed by dividing netearnings (loss) attributable to ordinary shareholders by the weighted average number of unrestricted ordinary shares outstanding duringthe year using the two-class method. Under the two-class method, net loss is allocated between ordinary shares and other participatingsecurities based on their participating rights. The Company’s Class A, Class B and Class C ordinary shares are participating securities. Theparticipating rights (liquidation and dividend rights) of the holders of the Company’s Class A, Class B and Class C ordinary shares areidentical, except with respect to voting and conversion (Note 21). In accordance with ASC 260, the undistributed loss for each year isallocated based on the contractual participation rights of the Class A, Class B and Class C ordinary shares, respectively. As the liquidationand dividend rights are identical, the undistributed loss is allocated on a proportionate basis.Diluted earnings (loss) per share is calculated by dividing net earnings (loss) attributable to ordinary shareholders as adjusted forthe effect of dilutive ordinary equivalent shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalentshares outstanding during the period. Ordinary equivalent shares consist of the ordinary shares issuable upon the conversion of theCompany’s convertible senior notes using the if-converted method and ordinary shares issuable upon the exercise of the share options andvesting of restricted share units, using the treasury stock method. Ordinary share equivalents are excluded from the computation of dilutedloss per share if their effects would be antidilutive. Loss from continuing operations is the control number for determining whetherincluding potential common shares in the diluted EPS computation would be antidilutive. The control number applies to the denominatorfor the per-share amounts relating to discontinued operations.Preferred shares issued by the Company’s subsidiary, which are classified as convertible non-controlling interests in mezzanineequity, do not affect the Company’s basic earnings per share. The Company includes its subsidiary’s diluted earnings per share in theCompany’s diluted earnings per share only when the effect is dilutive.Segment reportingIn accordance with ASC 280, Segment Reporting, operating segments are defined as components of an enterprise for whichseparate financial information is available that is regularly evaluated by the chief operating decision maker (“CODM”), or decision makinggroup, in deciding how to allocate resources and in assessing performance. The Company’s CODM is the Chief Executive Officer andeach of its major service lines is a discrete operating and reportable segment. There were changes to the Company’s disclosure forreportable segments in 2022 and prior period segment information were retrospectively revised to conform to current period presentation(Note 24). Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 204 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-442.SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)Recent Accounting PronouncementsIn November 2023, the FASB issued ASU 2023-07, Segment Reporting: Improvements to Reportable SegmentDisclosures (“ASU 2023-07”), which focuses on improving reportable segment disclosure requirements, primarily through enhanceddisclosures about significant segment expenses. A public entity shall disclose for each reportable segment the significant expensecategories and amounts that are regularly provided to the CODM and included in reported segment profit or loss.ASU 2023-07 alsorequires public entities to provide in interim periods all disclosures about a reportable segment’s profit or loss and assets that are currentlyrequired annually. Entities are permitted to disclose more than one measure of a segment’s profit or loss if such measures are used by theCODM to allocate resources and assess performance, as long as at least one of those measures is determined in a way that is mostconsistent with the measurement principles used to measure the corresponding amounts in the consolidated financial statements. ASU2023-07 is applied retrospectively to all periods presented in financial statements, unless it is impracticable. This update will be effectivefor the Group’s fiscal years beginning after December 15, 2023, and interim periods within fiscal years beginning after December 15,2024. Early adoption is permitted. The Group is currently in the process of evaluating the disclosure impact of adopting ASU 2023-07.In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requiresdisaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxespaid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Retrospective application ispermitted. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance.The Group is currently in the process of evaluating the disclosure impact of adopting ASU 2023-09.3.CONCENTRATION OF RISKSConcentration of credit riskAssets that potentially subject the Company to significant concentration of credit risk primarily consist of cash and cashequivalents, restricted cash, short - term investments, accounts and notes receivable and lease rental and other financing receivables. As ofDecember 31, 2022 and 2023, RMB2,401,207 and RMB2,165,180 (US$304,986), respectively, of the Company’s cash and cashequivalents, restricted cash and notes receivable were primarily deposited in PRC state - owned financial institutions located in the PRC,which management believes are of high credit quality. PRC state - owned banks, such as Bank of China, are subject to a series of riskcontrol regulatory standards, and PRC financial institutions regulatory authorities are empowered to take over the operation andmanagement when any of those banks faces a material credit crisis. The Group does not foresee substantial credit risk with respect to cashand cash equivalents, restricted cash and short - term investments held at the PRC state - owned financial institutions. Meanwhile, theGroup selected reputable international financial institutions with high rating rates to place its foreign currencies. The Group regularlymonitors the rating of the international financial institutions to avoid any potential defaults. There has been no recent history of default inrelation to these financial institutions.Accounts receivable are typically unsecured and derived from revenue earned from customers mainly in the PRC, which areexposed to credit risk. Notes receivable represents notes receivable issued by PRC state-owned reputable financial institutions from whichthe Company is entitled to receive the full face amount at its maturity. The risk is mitigated by credit evaluations the Company performson its customers and its ongoing monitoring process of outstanding balances. The Company maintains reserves for estimated credit losses,which have generally been within its expectations.The Company is exposed to default risk on its lease rental and other financing receivables amounting to RMB233,786 andRMB54,994 (US$7,746) as of December 31, 2022 and 2023, respectively. The Company regularly reviews the creditworthiness and leaserental and other financing receivables are fully collateralized by assets the Company can repossess in the event of default. The Companyassesses the allowance for credit losses related to lease rental and other financing receivables on currency convertibility on a quarterlybasis, either on an individual or collective basis. The Company maintains reserves for estimated credit losses, which have generally beenwithin its expectations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 205 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-453.CONCENTRATION OF RISKS (CONTINUED)Concentration of credit risk (continued)The Company is able to take as collateral certain operating assets which it is able to monitor and repossess for rapid utilizationand/or monetization in the event of a default. In addition, as most of the parties to which the Company provides financial services are theCompany’s ecosystem participants, the Company has substantial knowledge about their business and operations and can monitor theirfinancial position and their usage of collateralized assets.Business, customer, political, social and economic risksThe Company participates in a dynamic logistics and supply chain management industry and believes that changes in any of thefollowing areas could have a material adverse effect on the Company’s future financial position, results of operations or cash flows:changes in the overall demand for services; competitive pressures due to new entrants; advances and new trends in new technologies andindustry standards; changes in certain strategic relationships or customer relationships; regulatory considerations; and risks associated withthe Company’s ability to attract and retain employees necessary to support its growth. The Company’s operations could be also adverselyaffected by significant political, economic and social uncertainties in the PRC.Business, customer, political, social and economic risks (continued)Domestic mail delivery service-related businesses and planned value-added telecommunication services in connection withUCargo business since 2020 are subject to significant restrictions under current PRC laws and regulations. Specifically, foreign investorsare not allowed to invest in any domestic mail delivery service business. Currently, the Company conducts its operations in China throughcontractual arrangements entered between the Company, its PRC subsidiaries and VIEs. The relevant regulatory authorities may find thecurrent contractual arrangements and businesses to be in violation of any existing or future PRC laws or regulations. If so, the relevantregulatory authorities would have broad discretion in dealing with such violations. In addition, if the current ownership structure of theCompany and its contractual arrangements with the VIEs are found to be in violation of any existing or future PRC laws and regulations,the Company may be required to restructure its ownership structure and operations in the PRC to comply with the changing and new PRClaws and regulations. The Company may not be able to operate or control the VIEs, which may result in deconsolidation of the VIEs.No single customer or supplier accounted for more than 10% of revenues or cost of revenues for the years ended December 31,2021, 2022 and 2023.Currency convertibility riskThe Company transacts most of its business in RMB, which is not freely convertible into foreign currencies. On January 1, 1994,the PRC government abolished the dual rate system and introduced a single rate of exchange as quoted daily by the PBOC. However, theunification of the exchange rates does not imply that the RMB may be readily convertible into United States dollars or other foreigncurrencies. All foreign exchange transactions continue to take place either through the PBOC or other banks authorized to buy and sellforeign currencies at the exchange rates quoted by the PBOC. Approval of foreign currency payments by the PBOC or other institutionsrequires submitting a payment application form together with suppliers’ invoices, shipping documents and signed contracts. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 206 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-463.CONCENTRATION OF RISKS (CONTINUED)Foreign currency exchange rate riskFrom July 21, 2005, the RMB is permitted to fluctuate within a narrow and managed band against a basket of certain foreigncurrencies. For RMB against U.S. dollars, there was appreciation of approximately 2.3%, 9.2% and 2.9% in the years ended December 31,2021, 2022 and 2023, respectively. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchangerate between the RMB and the U.S. dollars in the future.To the extent that the Company needs to convert U.S. dollars into RMB for capital expenditures and working capital and otherbusiness purposes, appreciation of RMB against the U.S. dollar would have an adverse effect on the RMB amount the Company wouldreceive from the conversion. Conversely, if the Company decides to convert RMB into U.S. dollars for the purpose of making paymentsfor dividends on ordinary shares, strategic acquisitions or investments or other business purposes, appreciation of the U.S. dollar againstRMB would have a negative effect on the U.S. dollar amount available to the Company. In addition, a significant depreciation of the RMBagainst the U.S. dollar may significantly reduce the U.S. dollar equivalent of the Company’s earnings or losses.4.DISCONTINUED OPERATIONSOn November 18, 2021, the Company completed the disposal transaction of Sichuan Wowo with a cash consideration ofRMB250,000 and recognized a corresponding loss on disposal of RMB34,276 in net income (loss) from discontinued operations in theconsolidated statements of comprehensive income (loss) for the year ended December 31, 2021.In October 2021, the Company approved a disposal plan to sell BEST Network. All of the components of the Express segmentare reported as discontinued operations in the consolidated statements of comprehensive income (loss) for the current year and allcomparative periods in accordance with ASC 210-05 as the disposal plan of the express segment represented a strategic shift that had amajor effect on the Company’s operations and financial results.On December 9, 2021, the Company completed the disposal transaction of BEST Network with cash consideration ofRMB3,876,286 and liabilities assumed by the buyer of RMB5,612,888. The Company recognized a gain on disposal of BEST Express ofRMB3,213,599 in net income (loss) from discontinued operations in the consolidated statements of comprehensive income (loss) for theyear ended December 31, 2021. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 207 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-474.DISCONTINUED OPERATIONS (CONTINUED)The following tables set forth statement of operations and cash flows of discontinued operations of Store+ services and BESTExpress (“Discontinued Operations”) which were included in the Company’s consolidated financial statements:For the years ended December 31, 2021* 2022 2023 2023RMBRMBRMBUS$Revenue16,334,363———Cost of revenue (17,313,107) — ——Gross loss (978,744) — ——Selling expenses (364,917) — ——General and administrative expenses (530,479) (31,617) ——Research and development expenses (51,465) — ——Other operating income243,391———Total operating expenses (703,470) (31,617) ——Loss from discontinued operations (1,682,214) (31,617) ——Interest income15,099———Interest expenses(32,613)———Foreign exchange loss (2,367) — ——Gains on disposal 3,179,323 — ——Other income 37,570 — 15,2222,144Other expense(41,309)(6,847)——Income (Loss) before income taxes 1,473,489 (38,464) 15,2222,144Income tax expense————Net income (loss) from discontinued operations 1,473,489 (38,464) 15,2222,144*Including the financial results of discontinued operations of Store+ and BEST express delivery services from January 1, 2021 toNovember 30, 2021 and from January 1, 2021 to December 8, 2021, respectively.During the years ended December 31, 2021, 2022 and 2023, total financial results presented in the Company’s continuingoperations from the Discontinued Operations after the disposals transactions as intra-entity transactions are as follows:For the years ended December 31, 2021 2022 20232023RMBRMBRMBUS$Revenue Freight delivery 6,271 45,664 ——Supply chain management 4,500 16,547 ——Others 42,162 20,080 ——Total revenue 52,933 82,291 ——Cost of revenue Freight delivery (4,274) (34,262) ——Supply chain management (3,390) (5,315) ——Others (4,036) (13,761) ——Total cost of revenue (11,700) (53,338) ——Interest income 4,671 — ——During the year ended December 31, 2021, 2022 and 2023, the net cash inflows received by the Company’s continuing operationsfrom the Discontinued Operations after the disposal transactions were RMB43,678, RMB246,106 and nil, respectively. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 208 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-485.ACCOUNTS AND NOTES RECEIVABLE, NETAccounts and notes receivable, net, consists of the following:As at December 31 2022 2023 2023RMBRMBUS$Accounts receivable 950,666 1,078,242 151,867Notes receivable 4,614 1,664 234Allowance for credit losses (263,956) (250,104) (35,226)Accounts and notes receivable, net 691,324 829,802 116,875The movements in the allowance for credit losses were as follows:As at December 31 2021 2022 2023 2023RMBRMBRMBUS$Balance at beginning of the year (204,124) (227,593) (263,956) (37,177)Additions (31,291) (43,295) (4,277) (602)Write-offs 7,822 6,932 18,129 2,553Balance at end of the year (227,593) (263,956) (250,104) (35,226)For the years ended December 31, 2021, 2022 and 2023, the Company has not recognized any gain or loss on the date of transferof the derecognized notes receivable. No gains or losses were recognized from the continuing involvement, both during the year orcumulatively. The endorsement has been made evenly throughout the year. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 209 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-496.PREPAYMENTS AND OTHER CURRENT ASSETSPrepayments and other current assets consist of the following: As at December 31 2022 2023 2023RMBRMBUS$Value-added taxes (“VAT”) recoverable283,001 304,683 42,914Receivables from failed sale-leaseback transactions (1)176,210 104,181 14,674Rental and other deposits88,972 52,985 7,462Fair value accounting of financial instruments49,077 10,917 1,538Factoring receivables (2)39,10552,8407,442Interest receivables28,11273,87410,405Others167,688 190,095 26,774Allowance for credit losses (3)(54,323)(115,475)(16,264)777,842 674,100 94,945(1)Failed sale-leaseback transactions as buyer-lessorThe Company has certain failed sales-leaseback transactions of certain motor vehicles and logistic equipment in which theCompany acts as buyer-lessor but the seller-lessee does not transfer the control of the leased asset to the Company. The Company useseffective interest rate method in the computation of interest income which is recorded as Capital services revenues in “Revenue – Others”in the consolidated statements of comprehensive income (loss). Interest income was insignificant for the years ended December 31, 2021,2022 and 2023. As of December 31, 2022 and 2023, the Company recorded receivables from failed sale-leaseback transactions due withinone year of RMB176,210 and RMB104,181 (US$14,674), respectively, under the “Prepayments and other current assets”. As of December31, 2022 and 2023, the Company recorded receivables from failed sale-leaseback transactions due over one year of RMB25,811 and nil,net of allowance for credit losses of RMB7,621 and nil, respectively, under “Other non-current assets”.(2)Factoring receivablesThe Company provides factoring service to provide capital as a lender to certain third-party suppliers who transfer their rights tofuture cash receipts from accounts receivable with recourse through a factoring arrangement to fund their operations and improve theircredit position within one year. The Company uses effective interest rate method in the computation of interest income which is recordedas Capital services revenues in “Revenue – Others” in the consolidated statements of comprehensive income (loss). Interest income wasRMB34,956, RMB7,536 and RMB5,058 (US$712) for the years ended December 31, 2021, 2022 and 2023, respectively. As of December31, 2022 and 2023, the allowance for credit losses of factoring receivables were nil and RMB516 (US$73), respectively.(3)Allowance for credit lossesThe movements in the allowance for credit losses were as follows: As at December 312021202220232023 RMB RMB RMB US$Balance at beginning of the year (12,196) (33,746) (54,323) (7,651)Additions (21,550) (31,358) (77,293) (10,886)Write‑offs — 10,781 16,141 2,273Balance at end of the year (33,746) (54,323) (115,475) (16,264) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 210 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-507.PROPERTY AND EQUIPMENT, NETAs at December 31 2022 2023 2023RMBRMBUS$Machinery and electronic equipment 677,471 744,126 104,808Leasehold improvements 683,804 674,716 95,032Motor vehicles 179,769 216,535 30,498Construction in progress 49,193 20,223 2,848 1,590,237 1,655,600 233,186Less: accumulated depreciation (805,505) (936,696) (131,931)Impairment—(94,699)(13,338) 784,732 624,205 87,917The Group acquired certain machinery and electronic equipment by entering into financing leases. The gross amount and theaccumulated depreciation of these machinery and electronic equipment were RMB48,336 and RMB7,772, respectively, as of December31, 2022 and RMB6,169 (US$869) and RMB3,604 (US$508), respectively, as of December 31, 2023. Future minimum lease payments aredisclosed in Note 9. Depreciation expense of property and equipment, including assets under financing leases, was RMB183,332,RMB176,341 and RMB172,404 (US$24,283) for the years ended December 31, 2021, 2022 and 2023, respectively. The Companyrecorded nil, nil and RMB94,699 (US$13,338) of impairment charges for the years ended December 31, 2021, 2022 and 2023,respectively.As of December 31, 2022 and 2023, the balances of construction in progress were RMB49,193 and RMB20,223 (US$2,848),respectively, which were related to the construction of warehouses, hubs and sortation centers and related equipment.8.INTANGIBLE ASSETS, NETAs at December 31 2022 2023 2023RMBRMBUS$Customer relationships 10,449 10,449 1,472Software 106,071 183,526 25,849Capitalized internal use software in progress44,4231,381194160,943195,35627,515Less: accumulated amortization (85,390) (102,183) (14,392) 75,553 93,173 13,123Amortization expense of intangible assets was RMB8,033, RMB12,569 and RMB16,793 (US$2,365) for the years endedDecember 31, 2021, 2022 and 2023, respectively. Estimated amortization expense relating to the existing intangible assets with finite livesfor each of the next five years is as follows: RMB US$202426,5173,7352025 20,3172,8622026 20,2842,8562027 15,4362,1742028 10,6191,49693,17313,123No impairment losses were recognized for the years ended December 31, 2021, 2022 and 2023, respectively. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 211 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-519.LEASESLeases of motor vehicles and logistic equipment as LessorThe Company provides direct financing and sales-type leases of motor vehicles and logistic equipment, primarily totransportation service providers that meet the Company’s credit assessment requirements. The lease terms range from two to ten years, donot contain contingent rental income clauses, and are fully collateralized by assets the Company can repossess in the event of default.Initial direct costs were insignificant for all periods presented. The lease agreements include lease payments that are fixed, do not containresidual value guarantees or variable lease payments. The Company generally either grants the lessee an option at the end of the lease termto purchase the underlying asset that the lessee is reasonably certain to exercise or ownership of the underlying asset transfers to the lesseefor a nominal amount.The net investment in direct financing and sales-type leases are presented as “Lease rental receivables” on the consolidatedbalance sheets as follows:As at December 31 2022 2023 2023RMBRMB US$Current assets: Direct financing leases42,29525,688 3,618Sales-type leases77222,237 3,13243,06747,9256,750Non-current assets: Direct financing leases30,682— —Sales-type leases9,506314 4440,18831444Total83,25548,239 6,794For the years ended December 31, 2021, 2022 and 2023, the Company recorded RMB45,644, RMB5,389 and RMB2,319(US$327) of interest income from direct financing and sales-type leases as a lessor in “Revenue – Others” on the consolidated statementsof comprehensive income (loss).The net investment in direct financing and sales-type leases consisted of:As at December 31 2022 2023 2023RMBRMBUS$Total minimum lease payments receivable 136,188 67,522 9,509Less: Executory costs — — —Minimum lease payments receivable 136,188 67,522 9,509Less: Allowance for credit losses (42,313) (14,937) (2,104)Net minimum lease payments receivable 93,875 52,585 7,405Unguaranteed residuals — — —Less: Unearned income (10,620) (4,346) (611)Net investment in financing leases 83,255 48,239 6,794Current portion 43,067 47,925 6,750Non-current portion 40,188 314 44 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 212 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-529.LEASE (CONTINUED)Leases of motor vehicles and logistic equipment as Lessor (continued)Future minimum lease payments to be received for the direct financing and sales-type leases for each of the five succeeding fiscalyears as of the December 31, 2023 are as follows:As at December 312023 RMB US$For the year ending December 31, 2024 52,253 7,359For the year ending December 31, 2025 332 46Thereafter — —Total minimum lease payments 52,585 7,405Unearned income(4,346)(611)Net investment in direct financing and sales-type leases48,2396,794Financing and operating leases as LesseeThe Company has operating leases for certain offices, warehouses, hub and sortation center facilities and equipment andfinancing leases for certain machinery and electronic equipment as a lessee.The Company’s lease agreements include lease payments that are fixed, do not contain material residual value guarantees orvariable lease payments. The leases have remaining lease terms of up to twenty years. Certain lease agreements include terms with optionsto extend the lease, however none of these have been recognized in the Company’s operating lease ROU assets or operating leaseliabilities since those options were not reasonably certain to be exercised. The Company’s leases do not contain restrictions or covenantsthat restrict the Company from incurring other financial obligations. The Company’s lease agreements may contain lease and non-leasecomponents. Non-lease components primarily include payments for maintenance and utilities. Consideration for lease and non-leasecomponents are allocated on a relative standalone selling price basis. For the years ended December 3120212022 2023 2023 RMBRMBRMBUS$Operating lease cost674,892671,422608,06685,644Short-term lease cost100,766116,1074,415622Financing lease cost:Amortization of ROU assets1,2932,31324234Interest1692028812Total lease cost777,120790,044612,81186,312 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 213 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-539.LEASE (CONTINUED)Financing and operating leases as Lessee (continued) For the years ended December 312021 2022 2023 2023RMBRMBRMBUS$Other informationCash paid for amounts included in the measurement of lease liabilities: Operating cash flows from operating leases 745,032770,580 612,22486,230Operating cash flows from financing leases 169202 8812Financing cash flows from financing leases 1,4811,772 1,193168ROU assets obtained in exchange for new operating lease liabilities 780,576560,056 328,59946,282ROU obtained in exchange for new finance lease liabilities 1,49338,134 64391Weighted-average remaining lease term (in years): Operating leases 5.034.58 3.46—Financing leases 2.792.99 1.60—Weighted-average discount rate: Operating leases 7.67%7.86% 7.52% Financing leases 5.19%5.67% 6.17% For the year ended December 31, 2021, total lease costs of RMB740,554, RMB1,035, and RMB34,069 were recorded in cost ofrevenue, selling expenses, general and administrative expenses, respectively.For the year ended December 31, 2022, total lease costs of RMB755,519, RMB1,616, and RMB30,394 were recorded in cost ofrevenue, selling expenses, general and administrative expenses, respectively.For the year ended December 31, 2023, total lease costs of RMB566,296 (US$80,043), RMB2,044 (US$288), and RMB42,141(US$5,935) were recorded in cost of revenue, selling expenses, general and administrative expenses, respectively.Future minimum lease payments for operating and financing leases as of December 31, 2023 are as follows: Operating Leases Financing leasesRMB US$RMB US$For the year ended December 31, 2024604,93985,203862121For the year ended December 31, 2025405,39857,09938955For the year ended December 31, 2026253,91035,76226037For the year ended December 31, 2027134,73518,97714921For the year ended December 31, 202872,14210,1619213Thereafter218,28430,745——Total minimum lease payments1,689,408237,9471,752247Less: imputed interest303,10442,69010315Total lease liability balance1,386,304195,2571,649232Minimum payments related to leases not yet commenced as of December 31, 202346,1106,494—— Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 214 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-5410.LONG-TERM INVESTMENTS As at December 31 2022 2023 2023RMBRMBUS$Equity investments without readily determinable fair value156,859 156,859 22,093Total Long-term Investments156,859 156,859 22,093The total carrying value of equity investments without readily determinable fair value as of December 31, 2022 and 2023 were asfollows: As at December 312022 2023 2023RMBRMBUS$Initial cost basis 57,24157,2418,062Cumulative unrealized gains 116,930116,93016,469Cumulative unrealized losses (including impairment) (17,312)(17,312)(2,438)Total carrying value 156,859156,85922,093There is no orderly transactions for an identical or similar investment of the same issuer identified during the years endedDecember 31, 2022 and 2023.Total unrealized and realized gains and losses of equity securities without readily determinable fair values for the years endedDecember 31, 2021, 2022 and 2023 were as follows: For the years ended December 312021 2022 2023 2023RMBRMBRMBUS$Gross unrealized gains 58,643 — — —Gross unrealized losses (including impairment) (1) (5,000) (12,312) — —Net unrealized gains (loss) on equity securities held 53,643 (12,312) — —Net realized gains on equity securities sold 247,145 — — —Total net gains (loss) recognized 300,788 (12,312) — —(1)Nil gross unrealized losses (downward adjustments excluding impairment) were recognized for the years ended December 31, 2021,2022 and 2023. In 2021 and 2022, the Company believed that there was a decline in value that was other-than-temporary and recordedimpairment of RMB5,000 and RMB12,312 in “Other expense” in the consolidated statements of comprehensive income (loss),respectively. No impairment losses were recognized for the year ended December 31, 2023. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 215 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-5510.LONG-TERM INVESTMENTS (CONTINUED)In 2021, the Company disposed partial equity interests in the equity investments without readily determinable fair value with thecarrying amount of RMB100,149 for a cash consideration of and RMB347,294 and realized a gain on disposal of RMB247,145, whichwas included in “Other income” in the consolidated statement of comprehensive income (loss) for the year ended December 31, 2021.Among which, the Company sold 1.0% share of equity investment without readily determinable fair value with the carrying amount ofRMB71,667 to Zhejiang Cainiao Supply Chain Management Co. Ltd (“Cainiao”), a related party of the Company, with cash considerationRMB220,000 and realized a gain on disposal of RMB148,333.11.GOODWILLFreight delivery Global TotalBalance as of December 31, 2022 5,58048,555 54,135Balance as of December 31, 2023 5,58048,555 54,135Balance as of December 31, 2023 (US$) 7866,839 7,625No impairment losses were recognized for the years ended December 31, 2021, 2022 and 2023.12.SHORT-TERM AND LONG-TERM BANK LOANSAs at December 31 2022 2023 2023RMBRMBUS$Short-term bank loans guaranteed by subsidiaries within the Group — 239,000 33,662Secured bank borrowings (a)110,142162,75522,924Pledged short-term bank loans (b)73,128——Total short-term bank loans 183,270 401,755 56,586Long-term bank loans pledged by deposits, current portion—794,679111,928183,2701,196,434168,514Long-term bank loans pledged by deposits928,894159,72922,497Total 1,112,164 1,356,163 191,011Short-term bank loans consisted of several bank loans denominated in RMB. The weighted average interest rate for theoutstanding bank loans as of December 31, 2022 and 2023, was 1.74% and 1.60%, respectively.(a)During the years ended 2021, 2022 and 2023, the Group factored certain intercompany notes receivables with a total facevalue of RMB475,491, RMB110,142 and 164,205 (US$23,128) to several domestic banks for total proceeds of RMB462,170,RMB108,365 and 161,455 (US$22,741), respectively, at effective interest rates ranging from 1.16% to 4.59%. As these factoring of notesreceivables was with recourse, the receivable factoring transaction did not qualify as a transfer of financial assets to be considered as a saleunder ASC 860 and was accounted for as a secured borrowing and were recognized as secured bank borrowings included in “Short-termbank loans”. The total intercompany notes receivable pledged for secured bank borrowings was RMB110,142 andRMB162,755(US$22,924) as of December 31, 2022 and 2023, respectively.(b)The total deposits in restricted cash pledged for short-term bank loans was RMB 81,150 and nil as of December 31, 2022 and2023, respectively. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 216 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-5612.SHORT-TERM AND LONG-TERM BANK LOANS (CONTINUED)Long-term bank loans were denominated in US$. The deposits in restricted cash pledged for long-term bank loans wasRMB917,650 and RMB919,320 (US$129,484) as of December 31, 2022 and 2023, respectively. Long-term bank loans amounted toRMB794,679 (US$111,928) will mature in 2024 and long-term bank loans amounted to RMB159,729 (US$22,497) will mature in 2025.The weighted average interest rate for the outstanding borrowings as of December 31, 2022 and 2023, was 1.06% and 1.32%, respectively.13.ACCRUED EXPENSES AND OTHER LIABILITIESAccrued expenses and other liabilities consist of the following:As at December 31 2022 2023 2023RMBRMBUS$Salary and welfare payable 624,166 631,772 88,983Customer deposits218,366180,94525,486Accrued expenses86,27057,6868,125Accrual for purchases of property and equipment 71,234 70,014 9,861Other tax payables 12,005 10,362 1,459Fair value accounting of financial instruments5,452——Others 128,161 140,794 19,831 1,145,654 1,091,573 153,74514.LONG-TERM BORROWINGS As at December 312022 2023 2023RMBRMBUS$Long-term borrowings-current: Secured borrowings from Houfu54,011——Secured borrowings from Chengdu Gongtou 25,137 721 102 79,148 721 102Long-term borrowings-non-current: Secured borrowings from Chengdu Gongtou 381 — — 381 — —Yunnan Trust PlanIn March 2021, BEST Finance transferred certain lease receivables with remaining lease terms ranging from 18 months to 36months originated from its finance leasing services business with future cash flows of RMB577,347 at a discount price of RMB449,671 toYunnan International Trust Co., Ltd., a third party, which then created Yunnan Trust Plan (the “Trust Plan”). The Trust Plancontemporaneously issued Senior and Junior level debt securities of RMB319,610 and RMB130,061, respectively. The annual yield of theSenior securities is 8% and was all acquired by Sinolink Yong Fu Assets management (“Sinolink”), a related party of Yunnan InternationalTrust Co., Ltd., BEST Finance acquired all the Junior securities which are exposed to all expected losses and entitled to receive all residualreturns of the Trust Plan. The Senior debt securities mature in 14 months and the Junior debt securities mature in 33 months. BESTFinance repays the cash collected from the individual lessee of the lease receivables to the Trust Plan, with the principal amount of Seniordebt securities and interest of Junior debt securities paid firstly in installments and then the principal amount of Junior debt securities ininstallments. The residual returns will be repaid to Junior debt securities holders at the end of the Trust Plan. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 217 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-5714.LONG-TERM BORROWINGS (CONTINUED)BEST Finance is responsible to provide management and collection services over the transferred lease receivable assets and theCompany provides guarantees to Yunnan Trust to secure the full repayment of the principal and interest of the holder of the Seniorsecurities and the expected interest return rate of the Trust Plan.The Company has the power to direct the activities that most significantly impacts the economic performance of the Trust Planand provides payment collection services for the underlying lease rental receivables and holds significant variable interests in the TrustPlan through the Junior debt securities and the guarantee provided, from which the Company has the obligation to absorb losses of theTrust Plan that could potentially be significant to the Trust Plan. Accordingly, the Company is considered the primary beneficiary of theTrust Plan and consolidates the Trust Plan’s assets, liabilities, results of operations, and cash flows in the consolidated financial statements.As a result of the series of transactions described above, the Senior level debt securities of the Trust Plan issued to externalinvestors were considered borrowings from external investors. During the year ended December 31, 2022, the Company made repaymentsof RMB84,365 to Yunnan Trust. The Senior level debt securities of the Trust Plan were fully repaid during 2022.Secured borrowings from HoufuConcurrently with the set-up of the Trust Plan, BEST Finance transferred the beneficial rights of another set of lease rentalreceivables with future cash flows of RMB166,149 to Ningbo Houfu Business management consulting partnership (“Houfu”), a relatedparty of Sinolink, at a discounted price of RMB133,200. The proceeds received from Houfu were used by BEST Finance to acquire theJunior debt securities of the Trust Plan. BEST Finance agreed to transfer all the benefits it received from the Junior debt securities in theTrust Plan including the principal and interest of the Junior debt securities to repay its obligations to Houfu in installments over 33 monthswith BEST Finance’s rights in Junior debt securities as collateral.Since the Company has continuing involvement with the lease receivables transferred to Houfu by providing guarantee to theperformance of the transferred lease receivables and the transferred financial assets are not legally isolated from the Company, thetransferred lease receivables were not derecognized and are accounted for as secured borrowings in the consolidated financial statements.During the years ended December 31, 2022 and 2023, the Company made principal repayments of RMB131,851 and RMB1,349(US$190) ,respectively, to Houfu. The weighted average effective interest rate for the outstanding secured borrowings from Houfu was37.27% as of December 31, 2022.The secured borrowings from Houfu were fully repaid as of December 31, 2023.Secured borrowings from Chengdu GongtouIn August 2021, BEST Finance transferred the beneficial rights of certain lease receivables with future cash flows ofRMB161,031 to Chengdu Gongtou Finance Lease Limited (“Chengdu Gongtou”) at their present value of RMB135,858.Since the Company has continuing involvement with the lease receivables transferred to Chengdu Gongtou by providingguarantee to the performance of the transferred lease receivables and the transferred financial assets are not legally isolated from theCompany, the transferred lease receivables were not derecognized and are accounted for as secured borrowings in the consolidatedfinancial statements. The Company will repay the secured borrowings to Chengdu Gongtou in installments of 33 months. During the yearended December 31, 2022 and 2023, the Company made repayments totaled RMB85,549 and RMB25,300 (US$3,563), respectively. Theweighted average effective interest rate for the outstanding secured borrowings from Gongtou was 18.85% and 18.85% as of December31, 2022 and 2023, respectively.The outstanding balance as of December 31, 2023 of RMB721(US$102) will be repaid in 2024. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 218 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-5815.CONVERTIBLE SENIOR NOTES As at December 31 202220232023 RMB RMB US$ Current liabilities: Convertible Senior Notes held by a related party-current 2025 Convertible Notes522,744106,24014,964Convertible Senior Notes held by third parties-current 2024 Convertible Notes777811 522,821 106,318 14,975Non-current liabilities: Convertible Senior Notes held by a related party-non-current 2025 Convertible Notes 522,744 424,962 59,855 522,744 424,962 59,8551) 2024 Convertible NotesOn September 17, 2019, the Company issued US$200,000 convertible senior notes (the “2024 Convertible Notes”) to severalinitial purchasers, of which US$100,000 were issued to Alibaba.com Hong Kong Limited (“Alibaba HK”), an entity affiliated withAlibaba Group Holding Limited (“Alibaba Group”), a principal shareholder of the Company and US$100,000 to third parties, respectively.The 2024 Convertible Notes are senior, unsecured obligations of the Company, and interest is payable semi-annually in arrears at a rate of1.75% per annum on April 1 and October 1 of each year, beginning on April 1, 2021. The 2024 Convertible Notes will mature on October1, 2024 unless redeemed, repurchased or converted prior to such date.The 2024 Convertible Notes holders have the right, at their option, to convert the outstanding principal amount of the 2024Convertible Notes, in whole or in part in integral multiples of $1 principal amount (i) upon satisfaction of one or more of the conversionconditions as defined in the indenture for the 2024 Convertible Notes prior to the close of business day immediately preceding October 1,2024; or (ii) anytime on or after October 1, 2024 until the close of business on the second scheduled trading day immediately precedingthe maturity date (the “Conversion Option”).The initial conversion rate for the 2024 Convertible Notes is 7.0922 of the Company’s American depositary shares (“ADSs”) perUS$1,000 principal amount of the Notes, which is equivalent to an initial conversion price of US$141.00 per ADS, subject to certain anti-dilution and make-whole fundamental change adjustments but is not adjusted for any accrued and unpaid interest. Upon conversion, theCompany is required to deliver ADSs to such converting holders and both issuer and holders have no other settlement options.The holders may require the Company to repurchase all or a portion of the 2024 Convertible Notes for cash on September 30,2022 at a repurchase price equal to 100% of the principal amount of the 2024 Convertible Notes to be repurchased, plus accrued andunpaid interest to, but excluding, the repurchase date.In 2022, the Company repurchased US$199,989 (equivalent to RMB1,379,364) aggregate principal amount of the 2024Convertible Notes requested by the holders. Following settlement of the repurchase, the repurchase amount which was fully accreted wasderecognized and US$11 (equivalent to RMB78) aggregate principal amount of the 2024 Convertible Notes remained outstanding and wasincluded in “Convertible senior notes held by third parties-current” as of December 31, 2023 as it will mature on October 1, 2024. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 219 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-5915.CONVERTIBLE SENIOR NOTES (CONTINUED)1) 2024 Convertible Notes (continued)If certain events of default, changes in tax laws of the relevant taxing jurisdiction or fundamental change as defined in theindenture for the 2024 Convertible Notes were to occur, the outstanding obligations under the 2024 Convertible Notes could beimmediately due and payable (the “Contingent Redemption Options”). The Company will pay additional interest, at its election, as the soleremedy relating to the failure to comply with certain reporting obligations as defined in the indenture of the 2024 Convertible Notes. Inaddition, the 2024 Convertible Notes provide its holders with additional interest equal to the fair value of any dividends received by theholders of the Company’s ordinary shares (the “Contingent Interest Features”).The Company evaluated the embedded conversion features contained in the 2024 Convertible Notes and determined that theConversion Option was not required to be bifurcated because it met the scope exception provided for under ASC 815-10-15-74(a).The Company also evaluated the embedded Contingent Redemption Options and Contingent Interest Features contained in the2024 Convertible Notes in accordance with ASC 815 to determine if these features require bifurcation. The Contingent RedemptionOptions were not required to be bifurcated because they are considered to be clearly and closely related to the debt host, as the 2024Convertible Notes were not issued at a substantial discount and are redeemable at par.The Contingent Interest Features are not considered to be clearly and closely related to the debt host and met the definition of aderivative. However, the fair value of the Contingent Interest Features on the issuance date and at December 31, 2022 and 2023 was notsignificant. In addition, the Company assessed whether the additional interest payments need to be accrued as a liability in accordancewith ASC 450. Since the likelihood of the occurrence of such default events is determined to be remote, the Company did not accrueadditional interest expense for the years ended December 31, 2022 and 2023. The Company will continue to assess the accrual for theseadditional interest payment liabilities at each reporting date.In connection with the issuance of the 2024 Convertible Notes, the Company also purchased capped call options on theCompany’s ADS with certain counterparties at a price of US$22,500 (equivalent to RMB159,138), which was recorded as a reduction ofthe Company’s additional paid-in capital on the consolidated balance sheet with no subsequent changes in fair value recorded. The cappedcall exercise price is equal to the 2024 Convertible Notes’ initial conversion price and the cap price is US$200.00 per ADS, subject tocertain adjustments under the terms of the capped call transactions. The capped call transactions are expected to reduce potential dilutionto existing holders of the ordinary shares and ADSs of the Company upon conversion of the 2024 Convertible Notes with such reductionsubject to a cap.The net proceeds from the issuance of the 2024 Convertible Notes were US$194,457 (equivalent to RMB1,375,355), afterdeducting underwriting discounts and offering expenses of US$5,543 (equivalent to RMB39,205) from the initial proceeds ofUS$200,000. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 220 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-6015.CONVERTIBLE SENIOR NOTES (CONTINUED)1) 2024 Convertible Notes (continued)As of December 31, 2022 and 2023, the principal amount of the 2024 Convertible Notes was RMB77 and RMB78 (US$11)respectively, unamortized debt discount was nil and nil respectively, and the net carrying amount of the 2024 Convertible Notes wasRMB77 and RMB78 (US$11) respectively.For the years ended December 31, 2022 and 2023, the amount of interest cost recognized relating to both the contractual interestcoupon and amortization of the discount on the 2024 Convertible Notes was RMB21,768 and nil, respectively. As of December 31, 2023,the 2024 Convertible Notes will be accreted up to the principal amount of US$11 (equivalent to RMB78) over a remaining period of 0.75years.2) 2025 Convertible NotesOn June 3, 2020, the Company issued US$150,000 convertible senior notes to Alibaba HK. The 2025 Convertible Notes aresenior, unsecured obligations of the Company, and interest is payable semi-annually in arrears at a rate of 4.5% per annum on July 1 andJanuary 1 of each year, beginning on January 1, 2022. The 2025 Convertible Notes will mature on June 3, 2025 unless redeemed,repurchased or converted prior to such date.The 2025 Convertible Notes holders have the right to convert all or any portion of the 2025 Convertible Notes held by it intoordinary shares, or at the sole discretion of the noteholder, into ordinary shares in the form of ADS at any time on or after the thirty-firsttrading day after May 27, 2020 up to the close of business of the second business day immediately preceding June 3, 2025 (“the 2025Convertible Notes Conversion Option”).The initial conversion rate for the 2025 Convertible Notes is 823.723 of the Company’s American depositary shares (“ADSs”) perUS$100,000 principal amount of the 2025 Convertible Notes, which is equivalent to an initial conversion price of US$121.40 per ADS,subject to certain anti-dilution and make-whole fundamental change adjustments but is not adjusted for any accrued and unpaid interest.Upon conversion, the Company is required to deliver ADSs to such converting holders and both issuer and holders have no othersettlement options.The holders may require the Company to repurchase all or a portion of the 2025 Convertible Notes for cash within a period ofninety days starting from June 3, 2023 at a repurchase price equal to 100% of the principal amount of the 2025 Convertible Notes to berepurchased, plus accrued and unpaid interest to, but excluding, the repurchase date (the “Early Redemption Rights”).If certain events of default, changes in tax laws of the relevant taxing jurisdiction or fundamental change as defined in theindenture for the 2025 Convertible Notes were to occur, the outstanding obligations under the 2025 Convertible Notes could beimmediately due and payable (the “2025 Convertible Notes Contingent Redemption Options”). The Company will pay additional interest,at its election, as the sole remedy relating to the failure to comply with certain reporting obligations as defined in the indenture of the 2025Convertible Notes. In addition, the 2025 Convertible Notes provide its holders with additional interest equal to the fair value of anydividends received by the holders of the Company’s ordinary shares (the “2025 Convertible Notes Contingent Interest Features”).The Company evaluated the embedded conversion features contained in the 2025 Convertible Notes and determined that the 2025Convertible Notes Conversion Option was not required to be bifurcated because it met the scope exception provided for under ASC 815-10-15-74(a). Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 221 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-6115.CONVERTIBLE SENIOR NOTES (CONTINUED)2) 2025 Convertible Notes (continued)The Company also evaluated the embedded 2025 Convertible Notes Contingent Redemption Options and 2025 Convertible NotesContingent Interest Features in accordance with ASC 815 to determine if these features require bifurcation. The 2025 Convertible NotesContingent Redemption Options were not required to be bifurcated because they are considered to be clearly and closely related to the debthost, as the 2025 Convertible Notes were not issued at a substantial discount and are redeemable at par. The 2025 Convertible NotesContingent Interest Features are not considered to be clearly and closely related to the debt host and met the definition of a derivative.However, the fair value of the 2025 Convertible Notes Contingent Interest Features on the issuance date and at December 31, 2022 and2023 was not significant. In addition, the Company assessed whether the additional interest payments need to be accrued as a liability inaccordance with ASC 450. Since the likelihood of the occurrence of such default events is determined to be remote, the Company did notaccrue additional interest expense for the year ended December 31, 2022 and 2023. The Company will continue to assess the accrual forthese additional interest payment liabilities at each reporting date.The net proceeds from the issuance of the 2025 Convertible Notes were US$149,340 (equivalent to RMB1,061,421), afterdeducting offering expenses of US$660 (equivalent to RMB4,689) from the initial proceeds of US$150,000 (equivalent toRMB1,066,110).As of December 31, 2022, the principal amount of the 2025 Convertible Notes was RMB1,046,074, unamortized debt discountwas RMB586 and the net carrying amount of the 2025 Convertible Notes was RMB1,045,488. As of December 31, 2023, the principalamount of the 2025 Convertible Notes was RMB531,202 (US$74,818), unamortized debt discount was nil and the net carrying amount ofthe 2025 Convertible Notes was RMB531,202 (US$74,818).On April 14, 2023, the Company signed an amendment with Alibaba HK and modified the Early Redemption Rights of the 2025Convertible Notes. The Group and Alibaba HK agreed that Alibaba HK would not require the Company to repurchase all of the 2025Convertible Notes in 2023. Alibaba HK instead required the Company to repurchase one half of the notes, or US$75,000 aggregateprincipal amount, in 2023. The Group have granted an extra repurchase option to Alibaba HK such that Alibaba HK would be able torequire the Group to repurchase the other half of the 2025 Convertible Notes, or US$75,000 aggregate principal amount, within 90 daysafter June 3, 2024. Besides, the Group and Alibaba HK also agreed that the account receivables in BEST HK due from BEST China ispledged for the 2025 Convertible Notes held by Alibaba HK. The Group accounted for the amendments to the 2025 Convertible Notes as adebt modification, which did not result in a debt extinguishment pursuant to ASC 470-50, Debt—Modifications and Exchanges (“ASC470-50”).In July 2023, the Company repurchased US$75,000 (equivalent to RMB503,318) aggregate principal amount of the 2025Convertible Notes requested by the holders. Following settlement of the repurchase, the repurchase amount which was fully accreted wasderecognized and US$75,000 (equivalent to RMB531,202) aggregate principal amount of the 2025 Convertible Notes remainedoutstanding.In December 2023, all of the 2025 Convertible Notes held by Alibaba HK was transferred to Alibaba China. In April 2024, theCompany signed an amendment term sheet with Alibaba China and further modified the Early Redemption Rights of the 2025 ConvertibleNotes (Note 29).For the years ended December 31, 2022 and 2023, the amount of interest cost recognized relating to both the contractual interestcoupon and amortization of the discount on the 2025 Convertible Notes was RMB48,708 and RMB35,395 (US$4,985), respectively. As ofDecember 31, 2023, the 2025 Convertible Notes will be accreted up to the principal amount of US$15,000 (equivalent to RMB106,240)over a remaining period of 0.42 years and the principal amount of US$60,000 (equivalent to RMB424,962) over a remaining period of1.35 years. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 222 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-6216.TAXATIONCayman IslandsUnder the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gains.British Virgin IslandsUnder the current laws of the British Virgin Islands, BEST BVI, BEST Capital BVI and Store BVI are not subject to tax onincome or capital gains. In addition, upon payments of dividends by BEST BVI, BEST Capital BVI and Store BVI to its shareholders, nowithholding tax is imposed.Hong KongThe subsidiaries incorporated in Hong Kong are subject to income tax at the rate of 16.5% on the estimated assessable profitsarising in Hong Kong. For the years ended December 31, 2021, 2022 and 2023, the Company did not make any provisions for Hong Kongprofit tax as there were no assessable profits derived from or earned in Hong Kong for any of the periods presented. Under the Hong Kongtax law, BEST HK, BEST Capital HK and Store HK are exempted from income tax on their foreign-derived income and there are nowithholding taxes in Hong Kong on remittance of dividends.PRCThe Company’s subsidiaries, VIEs and subsidiaries of the VIEs domiciled in the PRC are subject to the statutory rate of 25%, inaccordance with the Enterprise Income Tax law (the ‘‘EIT Law’’), which was effective since January 1, 2008 except for the followingentity which is eligible for a preferential tax rate.BEST Technology is qualified as High and New Technology Enterprise and is subject to a preferential statutory tax rate of 15%for three years from 2022 to 2024.Dividends, interests, rent or royalties payable by the Company’s PRC subsidiaries, to non-PRC resident enterprises, and proceedsfrom any such non-resident enterprise investor’s disposition of assets (after deducting the net value of such assets) shall be subject to 10%withholding tax, unless the respective non-PRC resident enterprise’s jurisdiction of incorporation has a tax treaty or arrangements withChina that provides for a reduced withholding tax rate or an exemption from withholding tax.The Company’s loss before income taxes and share of net loss of equity investees consists of the following:For the years ended December 31, 2021 2022 2023 2023 RMB RMB RMB US$PRC(954,592)(1,053,407)(369,844)(52,093)Non-PRC(306,013)(410,909)(537,621)(75,722)(1,260,605)(1,464,316)(907,465)(127,815) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 223 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-6316.TAXATION (CONTINUED)The current and deferred components of income tax expense appearing in the consolidated statements of comprehensive income(loss) are as follows:For the years ended December 31, 2021 2022 2023 2023RMBRMBRMBUS$Current income tax (3,198) (511) (1,141) (161)Deferred income tax — — — — (3,198) (511) (1,141) (161) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 224 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-64A reconciliation of the differences between the PRC statutory tax rate and the Company’s effective tax rate for enterprise incometax from continuing operations is as follows:For the years ended December 31, 2021 2022 2023 2023 RMBRMBRMBUS$ Loss before income taxes and share of net loss of equity investees (1,260,605) (1,464,316) (907,465)(127,815)PRC statutory income tax rate25%25%25%25%Income tax computed at the statutory tax rate 315,151 366,079 226,86631,953Non-deductible expenses (112,363) (20,250) (41,138)(5,794)Effect of different tax rates in different jurisdictions and preferential taxrate 447,053 (68,037) (42,203)(5,944)R&D expenses super-deduction 25,756 14,223 15,8682,235Non-taxable income6,5256,3954,575644Provision to return14,568(74,577)17,7522,500Deferred tax expenses(21,245)(1,462)(8,212)(1,157)Tax rate change2,890(483)8,5311,202Expired tax loss (112,725) (160,285) (18,784)(2,645)Change in valuation allowance (568,808) (62,114) (164,396)(23,155) (3,198) (511) (1,141)(161)The principal components of the deferred tax assets and liabilities are as follows:As at December 31 2022 2023 2023RMBRMBUS$Deferred tax assets, non-current Accrued expenses 278,341 298,20842,002Customer advances and deposits 10,431 7,1391,006Allowance for credit losses and inventory provision 101,187 99,32713,990Allowance for long-term investment3,0783,078434Impairment of long-lived asset—23,6753,335Loss from inter-company loan forgiveness— 128,95918,163Depreciation and amortization expense 18,961 8,4761,194Net operating losses carry forward 1,410,9031,419,440199,924Lease liabilities467,623 355,34150,049Total deferred tax assets 2,290,524 2,343,643330,097Valuation allowance* (1,818,282) (1,982,678)(279,256)Total deferred tax assets net of valuation allowance 472,242360,96450,841 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 225 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-6516. TAXATION (CONTINUED)Deferred tax (continued)*The Group operates through subsidiaries, VIEs and subsidiaries of VIEs and valuation allowance is considered for each of the entitieson an individual basis. The Group recorded valuation allowance against deferred tax assets of those entities that are in a three-yearcumulative financial loss position and are not forecasting profits in the near future as of December 31, 2022 and 2023. In making suchdetermination, the Group also evaluates a variety of factors including the Group’s operating history, accumulated deficit, existence oftaxable temporary differences and reversal periods.As at December 31 2022 2023 2023RMBRMBUS$Deferred tax liabilitiesFair value changes of equity investments(29,232)(29,232)(4,117)Accrued revenue recognition difference(3,765)(5,016)(707)Right-of-use assets(439,245)(326,716)(46,017)Total deferred tax liabilities(472,242)(360,964)(50,841)As of December 31, 2022 and 2023, the Company has net operating losses from continuing operations of RMB5,621,989 andRMB5,719,812 (US$805,619), mainly from its PRC subsidiaries and VIEs. The tax losses in the PRC can be carried forward for five yearsto offset future taxable income, and the period is extended to ten years for entities that qualify as a HNTE. The PRC subsidiaries’ netoperating losses will expire from years 2024 to 2033 if not utilized.As of December 31, 2023, the Company intends to permanently reinvest the undistributed earnings from foreign subsidiaries tofund future operations. As of December 31, 2023, the total amount of undistributed earnings from its PRC subsidiaries as well as VIEswas RMB31,642 (US$4,457). The amount of unrecognized deferred tax liabilities for temporary differences related to investments inforeign subsidiaries are not determined because such a determination is not practicable.Unrecognized tax benefitsAs of December 31, 2022 and 2023, the Company recorded an unrecognized tax benefit of RMB94,572 and RMB88,530(US$12,468) respectively, of which nil and nil, respectively, are presented on a net basis against the deferred tax assets related to tax losscarry forwards on the consolidated balance sheets. It is possible that the amount of uncertain tax position will change in the nexttwelve months; however, an estimate of the range of the possible outcomes cannot be made at this time. As of December 31, 2022 and2023, unrecognized tax benefits of RMB58,813 and RMB64,997 (US$9,155), respectively, if ultimately recognized, will impact theeffective tax rate. A rollforward of unrecognized tax benefits is as follows:As at December 31 202220232023RMBRMBUS$Beginning balance 78,800 94,57213,320Additions 15,772 6,184870Decreases — (12,226)(1,722)Ending balance 94,572 88,53012,468During the years ended December 31, 2021, 2022 and 2023, the Company did not record any interest expense or penalty accruedin relation to the unrecognized tax benefit.In general, the PRC tax authority has up to five years to conduct examinations of the Company’s tax filings. Accordingly, the taxyears ended December 31, 2018 through December 31, 2023 of the PRC subsidiaries, the VIEs and its subsidiaries remain open toexamination by the tax authorities. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 226 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-6617.RESTRICTED NET ASSETSThe Company’s ability to pay dividends is primarily dependent on the Company receiving distributions of funds from itssubsidiaries. Relevant PRC statutory laws and regulations permit payments of dividends by the Group’s PRC subsidiaries only out of itsretained earnings, if any, as determined in accordance with PRC accounting standards and regulations. The results of operations reflectedin the financial statements prepared in accordance with U.S. GAAP differ from those reflected in the statutory financial statements of theCompany’s PRC subsidiaries.In accordance with the Regulations on Enterprises with Foreign Investment of China and its Articles of Association, theCompany’s PRC subsidiaries, being a foreign-invested enterprise established in the PRC, are required to provide certain statutory reserves,namely the general reserve fund, enterprise expansion fund and staff welfare and bonus fund, all of which are appropriated from net profitas reported in its PRC statutory accounts. The Company’s PRC subsidiaries are required to allocate at least 10% of its annual after-taxprofit to the general reserve fund until such fund has reached 50% of its registered capital based on the enterprise’s PRC statutoryaccounts. Appropriations to the enterprise expansion fund and staff welfare and bonus fund are at the discretion of the Board of Directorsof the PRC subsidiaries. These reserves can only be used for specific purposes and are not transferable to the Company in the form ofloans, advances, or cash dividends.In accordance with the PRC Company Laws, the Company’s VIEs and the subsidiaries of the VIEs must make appropriationsfrom their annual after-tax profits as reported in their PRC statutory accounts to non-distributable reserve funds, namely statutory surplusfund, statutory public welfare fund and discretionary surplus fund. The VIEs and the subsidiaries of the VIEs are required to allocate atleast 10% of their after-tax profits to the statutory surplus fund until such fund has reached 50% of their respective registered capital.Appropriations to the discretionary surplus fund are made at the discretion of the Board of Directors of the VIEs and the subsidiaries of theVIEs. These reserves can only be used for specific purposes and are not transferable to the Company in the form of loans, advances, orcash dividends.For the years ended December 31, 2021, and 2022, the Company’s PRC subsidiaries had reversed RMB7,871 and RMB167 ofstatutory reserves, respectively, which are included in shareholder’s equity. The Group did not appropriate or reverse any statutory reservesfor the year ended December 31, 2023.Under PRC laws and regulations, there are restrictions on the Company’s PRC subsidiaries, the VIEs and the subsidiaries of theVIEs with respect to transferring certain of their net assets to the Company either in the form of dividends, loans, or advances. Amountsrestricted include paid-in capital and surplus reserves of the Company’s PRC subsidiaries and the VIEs and the subsidiaries of the VIEs,totaling RMB5,269,936 (US$742,255) as of December 31, 2023; therefore in accordance with Rules 504 and 4.08(e) (3) of RegulationSX, the condensed parent company only financial statements as of December 31, 2022 and 2023 and for each of the three years in theperiod ended December 31, 2023 are disclosed in Note 28.Furthermore, cash transfers from the Company’s PRC subsidiaries to its subsidiaries outside of China are subject to PRCgovernment control of currency conversion. Shortages in the availability of foreign currency may restrict the ability of the PRCsubsidiaries and consolidated VIEs to remit sufficient foreign currency to pay dividends or other payments to the Company, or otherwisesatisfy their foreign currency denominated obligations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 227 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-6718.EARNINGS (LOSS) PER SHAREBasic and diluted earnings (loss) per share for each of the years presented are calculated as follows: 202120222023Class A Class B Class C Class A Class B Class C Class A Class A Class B Class B Class C Class CRMBRMBRMBRMBRMBRMBRMBUS$RMBUS$RMBUS$Basic earnings (loss) pershare:Numerator: Net loss from continuingoperations attributable toordinary shareholders—basic (768,670) (293,707) (149,205) (909,443) (341,778) (173,626) (521,059)(73,391)(204,618)(28,820)(103,947)(14,641)Net income (loss) fromdiscontinued operations, netof tax 934,833 357,198 181,458 (24,552) (9,225) (4,687) 9,5611,3463,7545291,907269Net income (loss) attributable toordinary shareholders—basic 166,163 63,491 32,253 (933,995) (351,003) (178,313) (511,498)(72,045)(200,864)(28,291)(102,040)(14,372)Denominator: Weighted average number ofordinary shares outstanding—basic 246,207,464 94,075,249 47,790,698 250,326,701 94,075,249 47,790,698 239,563,290239,563,29094,075,24994,075,24947,790,69847,790,698Continuing operations(3.12)(3.12)(3.12)(3.63)(3.63)(3.63)(2.18)(0.31)(2.18)(0.31)(2.18)(0.31)Discontinued operations3.803.803.80(0.10)(0.10)(0.10)0.040.010.040.010.040.01Basic earnings (loss) per share 0.68 0.68 0.68 (3.73) (3.73) (3.73) (2.14)(0.30)(2.14)(0.30)(2.14)(0.30)Basic earnings (loss) per ADS:Basic earnings (loss) per ADS(1 ADS equals 20 Class Aordinary shares)13.6013.6013.60(74.60)(74.60)(74.60)(42.70)(6.01)(42.70)(6.01)(42.70)(6.01) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 228 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-6818.EARNINGS (LOSS) PER SHARE (CONTINUED)202120222023Class AClass BClass CClass AClass BClass CClass AClass AClass BClass BClass CClass C RMB RMB RMB RMB RMB RMB RMB US$ RMB US$ RMB US$Diluted loss per share:Numerator:Net loss from continuingoperations attributable toordinary shareholders—basic(768,670)(293,707)(149,205)(909,443)(341,778)(173,626)(521,059)(73,391)(204,618)(28,820)(103,947)(14,641)Net income (loss) fromdiscontinued operations, netof tax934,833357,198181,458(24,552)(9,225)(4,687)9,5611,3463,7545291,907269Net income (loss) attributable toordinary shareholders—basic166,16363,49132,253(933,995)(351,003)(178,313)(511,498)(72,045)(200,864)(28,291)(102,040)(14,372)Reallocation of net loss fromcontinuing operationsattributable to ordinaryshareholders as a result ofconversion of Class C andClass B to Class A ordinaryshares (Note 20)(442,912)——(515,404)——(308,565)(43,460)————Reallocation of net income (loss) from discontinued operations, net of tax attributable to ordinary shareholders as a result of conversion of Class C and Class B to Class A ordinary shares (Note 20)538,656——(13,912)——5,662798————Reallocation of net income (loss) attributable to ordinary shareholders as a result of conversion of Class C and Class B to Class A ordinary shares (Note 20)95,744——(529,316)——(302,903)(42,662)————Net income (loss) attributable toordinary shareholders—diluted261,90763,49132,253(1,463,311)(351,003)(178,313)(814,401)(114,707)(200,864)(28,291)(102,040)(14,372)Denominator:Weighted average number ofordinary shares outstanding—basic 246,207,464 94,075,249 47,790,698 250,326,701 94,075,249 47,790,698 239,563,290239,563,29094,075,24994,075,24947,790,69847,790,698Conversion of Class C andClass B to Class A ordinaryshares (Note 20) 141,865,947 — — 141,865,947 — — 141,865,947141,865,947————Weighted average number ofordinary shares forcontinuing operationsoutstanding - diluted 388,073,411 94,075,249 47,790,698 392,192,648 94,075,249 47,790,698 381,429,237381,429,23794,075,24994,075,24947,790,69847,790,698Weighted average number ofordinary shares fordiscontinued operationsoutstanding - diluted 388,073,411 94,075,249 47,790,698 392,192,648 94,075,249 47,790,698 381,429,237381,429,23794,075,24994,075,24947,790,69847,790,698Weighted average number ofordinary shares outstanding -diluted388,073,41194,075,24947,790,698392,192,64894,075,24947,790,698381,429,237381,429,23794,075,24994,075,24947,790,69847,790,698Continuing operations (3.12) (3.12) (3.12) (3.63) (3.63) (3.63) (2.18)(0.31)(2.18)(0.31)(2.18)(0.31)Discontinued operations 3.80 3.80 3.80 (0.10) (0.10) (0.10) 0.040.010.040.010.040.01Diluted earnings (loss) per share 0.68 0.68 0.68 (3.73) (3.73) (3.73) (2.14)(0.30)(2.14)(0.30)(2.14)(0.30)Diluted earnings (loss) pershare:Diluted earnings (loss) per ADS(1 ADS equals 20 Class Aordinary shares)13.6013.6013.60(74.60)(74.60)(74.60)(42.70)(6.01)(42.70)(6.01)(42.70)(6.01)For the years ended December 31, 2021, 2022 and 2023, the two-class method is applicable because the Company has threeclasses of ordinary shares outstanding, Class A, Class B and Class C ordinary shares, respectively (Note 20). The effects of all outstandingshare options, restricted share units, convertible senior notes were excluded from the computation of diluted loss per share relating to thecontinuing operation and discontinued operations for the years ended December 31, 2021, 2022 and 2023, as the effects would beantidilutive on the loss from continuing operations. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 229 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-6919.SHARE-BASED PAYMENTS2008 Stock Incentive Plan (the “2008 Plan”)On June 4, 2008, the shareholders and Board of Directors of the Company approved the 2008 Plan, which is administrated by theBoard of Directors and has a term of 10 years from the date of adoption. Under the 2008 Plan, the Company reserved 10,000,000 ordinaryshares of the Company to its eligible employees, directors and officers of the Group and consultants. The purpose of the 2008 Plan is toattract and retain key employees, directors, officers and consultants of outstanding ability and to motivate them to exert their best effortson behalf of the Company by providing incentives through granting awards. On October 25, 2011 and January 15, 2015, the shareholdersand Board of Directors of the Company approved a resolution to increase the share option pool under the 2008 Plan to 16,239,033 and20,934,684 ordinary shares, respectively.The options granted under the 2008 Plan have a contractual term of 15 years and will become vested (but not exercisable) either(i) immediately upon grant; or (ii) with respect to 25% of the options on the first anniversary of the vesting period, and thereafter in thirty-six equal monthly installments of 2.09% each on the last day of every month that has elapsed following the first anniversary of the vestingperiod until the options are 100% vested.The grantee can exercise vested options after the commencement date of exercise and before the earlier of: 1) its contractual term(i.e. 15 years after its grant date); or 2) 90 days after the grantee terminates their employment if the vested options have not beenexercised. The commencement date of exercise is upon the Company’s IPO.In July 2017, 12,599,520 vested options were exercised pursuant to a conditional one-time waiver of the “exercisable upon theCompany’s IPO” condition by the Company (the “early exercise”). The early exercise was not considered substantive for accountingpurposes in accordance with ASC 718-10-55-31.2017 Stock Incentive Plan (the “2017 Plan”)In September 2017, the Company’s shareholders and Board of Directors approved the 2017 Plan (the “2017 Plan”). The 2017Plan provides for an aggregate amount of no more than 10,000,000 Class A ordinary shares to be issued. In addition, the number of ClassA ordinary shares available to be issued under the 2017 Plan will automatically be increased by a maximum of 2% of the Company’s totaloutstanding shares at the end of the preceding calendar year on January 1, 2019 and on every January 1 thereafter for eight years, providedthat the aggregate amount of shares which may be subject to awards granted under the 2017 Plan does not exceed 10% of the Company’stotal outstanding shares at the end of the preceding calendar year.The options granted under the 2017 Plan have a contractual term of 10 years and will become vested with respect to 25% of theoptions on the first anniversary of the vesting period, and thereafter in thirty-six equal monthly installments of 2.09% each on the last dayof every month that has elapsed following the first anniversary of the vesting period until the options are 100% vested.The grantee can exercise vested options after the commencement date of exercise and before the earlier of: 1) its contractual term(i.e. 10 years after its grant date); or 2) 90 days after the grantee terminates their employment if the vested options have not beenexercised.The restricted Class A ordinary shares (“Restricted Shares”) granted under the 2017 Plan have the same terms as the shareoptions except that Restricted Shares do not require exercise and will become vested with respect to 25% of the Restricted Shares on thefirst, second, third and fourth anniversary of the vesting period until the Restricted Shares are 100% vested. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 230 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7019.SHARE-BASED PAYMENTS (CONTINUED)Options granted to employeesA summary of the employee share option activity under the 2008 Plan is stated below:Weighted-Weighted-averageWeighted-averageremainingAggregateNumber ofaveragegrant-datecontractualintrinsic options exercise price fair value term ValueUS$US$YearsUS$Outstanding, December 31, 2022 1,055,0420.757.029.02—Granted —————Exercised—————Forfeited/Expired (96,672)0.756.82——Outstanding, December 31, 2023 958,3700.757.048.08—Vested as at December 31, 2023 17,237,2220.672.374.71—Exercisable as at December 31, 2023 958,3700.757.048.08—The aggregate intrinsic value in the table above represents higher of the difference between the closing share price on the lasttrading day in 2023 and the option’s respective exercise price or zero. Total intrinsic value of options exercised for the years endedDecember 31, 2021, 2022 and 2023 was RMB884,679, nil and nil respectively.No share option awards were granted to employees during the years ended December 31, 2021, 2022 and 2023. The total fairvalue of the equity awards vested under 2008 Plan during the years ended December 31, 2021, 2022 and 2023 were RMB8,583, nil andnil, respectively.There were no new grants of share option awards during the years ended December 31, 2021, 2022 and 2023 , respectively. Theoptions granted have been fully vested as of December 31, 2023.As of December 31, 2023, there were no remaining unrecognized employee share-based compensation expenses. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 231 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7119.SHARE-BASED PAYMENTS (CONTINUED)Options granted to non-employeesA summary of the non-employee share option activity under the 2008 Plan is stated below: Weighted‑ Weighted‑ averageWeighted‑ averageremaining AggregateNumber of averagegrant‑date contractual intrinsicoptionsexercise price fair valuetermValueUS$US$YearsUS$Outstanding, December 31, 20221,439,177 0.70 2.47 5.65 —Granted—————Exercised(43,400)0.010.24——Forfeited (28,000)0.500.12——Outstanding, December 31, 2023 1,367,7770.732.584.91—Vested at December 31, 2023 1,838,1730.652.434.37—Exercisable at December 31, 2023 1,367,7770.732.584.91—The aggregate intrinsic value in the table above represents the difference between the closing stock price on the last trading day in2023 and the option’s respective exercise price or zero. Total intrinsic value of options exercised for the years ended December 31, 2021,2022 and 2023 was RMB20,457, nil and nil, respectively.No share option awards were granted to non-employees during the years ended December 31, 2021, 2022 and 2023.. The optionsgranted have been fully vested as of December 31, 2023.As of December 31, 2023, there were no remaining unrecognized non-employee share-based compensation expenses. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 232 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7219.SHARE-BASED PAYMENTS (CONTINUED)Restricted SharesThe following table summarizes the Company’s Restricted Shares activity under the 2017 Plan:Weighted- average Number of grant-date shares fair valueUS$Outstanding, December 31, 2022 7,133,593 2.54Granted2,449,2000.13Vested(4,419,335)1.85Forfeited(346,315)2.45Outstanding, December 31, 2023 4,817,143 1.95Vested and expected to vest as at December 31, 2023 13,480,316 The weighted average grant-date fair value of Restricted Shares granted during the year ended December 31, 2021, 2022 and2023 was US$2.17, US$0.69 and US$0.13, which was derived from the fair value of the underlying ordinary shares. As of December 31,2023, there was RMB21,300 (US$3,019) of total unrecognized share-based compensation expenses related to unvested Restricted Sharesexpected to vest which are expected to be recognized over a weighted-average period of 1.54 years. Total unrecognized compensation costmay be adjusted for actual forfeitures occurring in the future. During the year ended December 31, 2021, 2022 and 2023, the Companygranted 80,000, 160,000 and 150,000 Restricted Shares to non-employees, which were fully vested during the year.Modification of Restricted Shares related to the disposal of BEST NetworkOn November 16, 2021, the Board of Directors of the Company approved the 1,235,896 restricted shares granted but not vestedupon certain BEST Express employees shall be accelerated and to be vested all at once upon the closing of the disposal of BEST Network.There is no incremental compensation cost from the modification. The Company recognized the remaining unrecognized share-basedcompensation expenses related to these restricted shares of RMB18,181 during the year ended December 31, 2021 for the acceleratedvesting of restricted shares due to the disposal.The following table summarizes the total share-based compensation expense recognized by the Company:For the years ended December 31, 2021 2022 2023 2023RMBRMBRMBUS$Cost of revenue 345 321 19828Selling expenses9,6543,5232,084294General and administrative expenses 88,361 63,280 42,4915,984Research and development expenses9,3214,9723,571503Share-based compensation expenses from continuing operations107,68172,09648,3446,809Share-based compensation expenses from discontinued operations 27,245 — ——Total share-based compensation expenses 134,926 72,096 48,3446,809 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 233 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7319.SHARE-BASED PAYMENTS (CONTINUED)Options granted by subsidiaries2020 Equity Incentive Plan of BEST Asia Inc (the “2020 BEST Asia Plan”)On December 31, 2020, the shareholders and Board of Directors of BEST Asia Inc (“BEST Asia”) approved 2020 BEST AsiaPlan, which is administrated by the Board of Directors of BEST Asia. Under the 2020 BEST Asia Plan, BEST Asia reserved 75,000,000ordinary shares of BEST Asia to its eligible employees, directors and officers of BEST Asia and consultants. The purpose of the 2020BEST Asia Plan is to attract and retain key employees, directors and officers of outstanding ability and to motivate them to exert their bestefforts on behalf of BEST Asia by providing incentives through granting awards.The options granted under the 2020 BEST Asia Plan to purchase the ordinary shares of BEST Asia have a contractual term of 10years and will become vested either (i) immediately upon grant; or (ii) with respect to 25% of the options on the first anniversary of thevesting period, and thereafter in thirty-six equal monthly installments of 2.09% each on the last day of every month that has elapsedfollowing the first anniversary of the vesting period until the options are 100% vested. Under the 2020 BEST Asia Plan, all share optionsgranted are not exercisable until the completion of BEST Asia’s IPO.The options granted to employees are accounted for as equity awards and measured at their grant date fair values. Given that theinability of the grantees to exercise these options until the completion of the IPO constitutes a performance condition that is not consideredprobable until the IPO completion date, no share-based compensation expenses was recognized for the year ended December 31, 2021,2022 and 2023. Upon the IPO completion date, the Company will immediately recognize the deferred compensation expenses associatedwith options that are vested as the IPO completion date and recognize the remaining compensation expenses over the remaining servicerequisite period using the accelerated method.A summary of the employee equity award activity under the 2020 BEST Asia Plan is stated below:Number of options Outstanding, December 31, 2022 42,952,900Granted 10,427,000Forfeited (10,615,230)Outstanding, December 31, 2023 42,764,670Vested and expected to vest as at December 31, 2023 42,764,670Exercisable as at December 31, 2023 — Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 234 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7419.SHARE-BASED PAYMENTS (CONTINUED)Options granted by subsidiaries (continued)2022 BEST CloudSoft Plan (continued)In 2022, the shareholders and Board of Directors of the Company approved the 2022 BEST CloudSoft Plan, which isadministrated by the Board of Directors of the Company. BEST CloudSoft Inc. reserved 30,000,000 ordinary shares of BEST CloudSoftInc. to its eligible employees, directors and officers BEST CloudSoft Inc. and consultants. The purpose of the 2022 BEST CloudSoft Planis to attract and retain the services of employees, directors and consultants considered essential to the success of the Company.The options granted under the 2022 BEST CloudSoft Plan to purchase the ordinary share of BEST CloudSoft Inc. have acontractual term of 10 years and will become vested either (i) immediately upon grant; or (ii) with respect to 25% of the options on thefirst anniversary of the vesting period, and thereafter in thirty-six equal monthly installments of 2.09% each on the last day of every monththat has elapsed following the first anniversary of the vesting period until the options are 100% vested. Under the 2022 BEST CloudSoftPlan, all share options granted are not exercisable until the completion of BEST CloudSoft Inc.’s IPO.The options granted to employees are accounted for as equity awards and measured at their grant date fair values. Given that theinability of the grantees to exercise these options until the completion of the IPO constitutes a performance condition that is not consideredprobable until the IPO completion date, no share-based compensation expenses was recognized for the year ended December 31 2023.Upon the IPO completion date, the Company will immediately recognize the deferred compensation expenses associated with options thatare vested as the IPO completion date and recognize the remaining compensation expenses over the remaining service requisite periodusing the accelerated method.A summary of the employee equity award activity under the 2022 BEST CloudSoft Plan is stated below: Number ofoptionsOutstanding, December 31, 2022 12,850,000Granted 4,595,000Forfeited (267,870)Expired(58,360)Outstanding, December 31, 2023 17,118,770Vested and expected to vest as at December 31, 2023 17,118,770Exercisable as at December 31, 2023 — Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 235 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7520.SHAREHOLDERS’ EQUITYThe Company has three classes of ordinary shares, Class A, Class B and Class C. The participating rights (liquidation anddividend rights) of the Class A, Class B and Class C ordinary shares are identical, except with respect to voting and conversion rights.Holders of Class A, Class B and Class C ordinary shares shall vote together as one class on all resolutions submitted to a vote by theshareholders (except with respect to the modification of the rights of any class of ordinary shares). Each share of Class A, Class B andClass C ordinary shares entitle the holder thereof to one vote per share, fifteen votes per share and thirty votes per share on all matterssubject to vote at the Company’s general meetings, respectively, and each share of Class B and Class C ordinary share is convertible intoone Class A ordinary share at any time at the option of the holder thereof. Each holder of Class B ordinary shares or Class C ordinaryshares can exercise their conversion right by delivering a written notice to the Company that specifies the number of Class B or Class Cordinary shares they elect to convert into Class A ordinary shares. In no event shall Class A ordinary shares be convertible into Class B orClass C ordinary shares, Class B ordinary shares be convertible into Class C ordinary shares, nor shall Class C ordinary shares beconvertible into Class B ordinary shares.In November 2019, the Board of Directors of the Company authorized a share repurchase program (“2019 Share RepurchaseProgram”), pursuant to which the Company is authorized to repurchase its own issued and outstanding ADSs up to an aggregate value ofUS$100,000 from the open market over a period of 18 months in accordance with applicable securities laws from time to time. During theyear ended December 31, 2020, the Company repurchased an aggregate of 319,752.50 ADSs, representing 6,395,050 Class A ordinaryshares under the 2019 Share Repurchase Program, at an average price of US$93.80 per ADS, for RMB211,352 (US$29,768). Theserepurchased shares are intended to be used for grants under the 2017 Plan. The remaining shares are recorded as Treasury shares duringthe years ended December 31, 2021, 2022 and 2023, the Company did not repurchase any ADSs under the 2019 Share RepurchaseProgram. During the years ended December 31, 2021, 2022 and 2023, 2,974,987, 3,420,063 and nil repurchased Class A ordinary sharesare granted under 2017 Plan. As of December 31, 2022 and 2023, there were no repurchased shares outstanding under the 2019 ShareRepurchase Program.On March 10, 2023, the Board of Directors of the Company authorized a share repurchase program, under which the Companycould repurchase up to US$20,000 worth of its outstanding American Depositary Shares from the open market over a 12-month period.The Company’s board of directors has terminated the share repurchase program, effective as of September 25, 2023. Prior to the program’stermination, the Company repurchased a total of 1,265,685 ADSs, representing 27,029,700 Class A ordinary shares, at an average price ofUS$13.94 per ADS, for RMB23,853(US$3,360) under the program. These repurchased shares are intended to be used for grants under the2017 Plan. The remaining shares are recorded as Treasury shares on the consolidated balance sheets. During the years ended December 31,2023, nil repurchased Class A ordinary shares are granted under 2017 Plan. As of December 31, 2023, 27,029,700 repurchased shares ofRMB23,853 (US$3,360) are recorded as Treasury shares on the consolidated balance sheets.The ratio of the ADSs to Class A ordinary shares changed from one (1) ADS to one (1) Class A ordinary share, to one (1) ADS tofive (5) Class A ordinary shares, effective at the start of trading on May 20, 2022. The ratio of ADSs to Class A ordinary shares changedfrom one (1) ADS to five (5) Class A ordinary shares, to one (1) ADS to twenty (20) Class A ordinary shares, effective at the start oftrading on April 4, 2023. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 236 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7621.CONVERTIBLE NON-CONTROLLING INTERESTS As at December 312022 2023 2023RMBRMBUS$Balance at beginning of the year 191,865 191,865 27,024Balance at end of the year 191,865 191,865 27,024On June 30, 2021, BEST Asia, a wholly-owned subsidiary of the Company, issued 150,000,000 convertible series A preferredshares (the “BEST Asia Series A Preferred Shares”) to Taobao China Holding Limited, a related party investor, at a price of US$0.20 pershare for a total cash consideration of US$30,000 (equivalent to RMB193,803). The BEST Asia Series A Preferred Shares holder have therights, at its option, to convert the outstanding principal amount of the BEST Asia Series A Preferred Shares to the ordinary shares ofBEST Asia at any time with the initial conversion price of US$0.20 per share subject to certain anti-dilution adjustment.The BEST Asia Series A Preferred Shares are redeemable upon the occurrence of a deemed liquidation event, which is not solelywithin the control of the Company. Therefore, the BEST Asia Series A Preferred Shares are contingently redeemable and are classified asconvertible non-controlling interests in mezzanine equity. As the underlying shares of BEST Asia are not publicly traded, the embeddedconversion features do not qualify for bifurcation accounting and recognized as part of the convertible non-controlling interests.The Company initially recognized US$29,700 (equivalent to RMB191,865) of convertible non-controlling interests at issuanceprice, net of issuance costs of US$300 (equivalent to RMB1,938). Since the management determined that the conditional event is notprobable to occur, no accretion is subsequently made to the redemption value.22.RELATED PARTY TRANSACTIONSa)Related PartiesName of Related Parties Relationship with the Group Zhejiang Cainiao Supply Chain Management Co. Ltd(“Cainiao”)Entity controlled by a principal shareholder of the GroupAlibaba Cloud Computing Co. Ltd (“Ali Cloud”)Entity controlled by a principal shareholder of the GroupAlibaba.com Hong Kong Limited (“Alibaba HK”)Entity controlled by a principal shareholder of the GroupAlibaba.com China Limited (“Alibaba China”)Entity controlled by a principal shareholder of the GroupAlibaba (China) Network Technology Co., Ltd (“AlibabaTechnology”)Entity controlled by a principal shareholder of the GroupLazada Express Limited (“Lazada”)Entity controlled by a principal shareholder of the GroupTaobao China Holding Limited (“Taobao”)Entity controlled by a principal shareholder of the GroupZhejiang ALOG Supply Chain Management Co,Ltd(“ALOG”)Entity controlled by a principal shareholder of the Group Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 237 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7722.RELATED PARTY TRANSACTIONS (CONTINUED)b)The Group had the following related party transactions:For the years ended December 31, 2021 2022 2023 2023RMBRMBRMBUS$Rendering of express delivery, freight delivery and supply chainmanagement services: Cainiao 418,806 237,045 160,97722,673Lazada120,892148,628105,76614,897ALOG—11,10219,4112,734539,698396,775286,15440,304For the years ended December 31, 2021 2022 20232023RMBRMBRMBUS$Commission fee paid to related party: Lazada — 2,526 — — Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 238 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7822.RELATED PARTY TRANSACTIONS (CONTINUED)b)The Group had the following related party transactions: (continued)For the years ended December 31, 2021 2022 2023 2023 RMB RMB RMB US$Operating costs paid to related party:Ali Cloud 13,608 9,041 6,845 964 For the years ended December 31, 2021 2022 2023 2023 RMB RMB RMB US$Proceeds of the disposal of machinery and electronic equipment assets received fromrelated party: ALOG — 16,013 12,659 1,783 For the years ended December 31, 2021 2022 2023 2023 RMB RMB RMB US$Repurchase of convertible senior notes held by related party (Note 15): Alibaba HK — 746,538 503,318 70,891 For the years ended December 31, 2021 2022 2023 2023 RMB RMB RMB US$Interest expense of convertible senior notes accrued to related party (Note 15): Alibaba HK 62,887 62,192 35,015 4,932 For the years ended December 31, 2021 2022 2023 2023 RMB RMB RMB US$Borrowings received from related party: Alibaba Technology 600,000 — — — Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 239 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-7922.RELATED PARTY TRANSACTIONS (CONTINUED)b)The Group had the following related party transactions: (continued)On August 19, 2021, BEST China signed a bridge loan agreement with Alibaba (China) Network Technology Co., Ltd. (“AlibabaTechnology”) with a total principal amount of RMB600,000 with a term of one year and payable upon the completion of disposal of BESTNetwork. The effective interest rate per annum of the Bridge Loan is 0.36%. The Group repaid the borrowings on December 17, 2021. For the years ended December 31, 2021 2022 2023 2023 RMB RMB RMB US$Borrowings repaid to related party: Alibaba Technology 600,000 — — — For the years ended December 31, 2021 2022 2023 2023 RMB RMB RMB US$Interest expense of borrowings accrued to related party: Alibaba Technology 674 — — — For the years ended December 31, 2021 20222023 2023 RMB RMB RMB US$Cash proceeds from the disposal of an equity investment (Note 10): Cainiao 220,000 — — — For the years ended December 31, 2021 2022 2023 2023 RMB RMB RMB US$Issuance of BEST Asia Series A Preferred Shares to a related party (Note 21): Taobao 193,803 — — — Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 240 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-8022.RELATED PARTY TRANSACTIONS (CONTINUED)c)The Group had the following related party balances at the end of the year:As at December 31 2022 20232023RMBRMBUS$Amounts due from related parties:Cainiao45,37734,4084,846Ali Cloud37053475Lazada24,89520,3822,871ALOG5,7265,07071476,36860,3948,506As at December 31 2022 2023 2023RMBRMBUS$Amounts due to related parties:Alibaba HK1317811Ali Cloud4461,041147Cainiao241——Lazada497——1,3151,119158 As at December 31202220232023 RMB RMB US$Convertible senior notes held by a related party – current: Alibaba HK/China*522,744106,24014,964Convertible senior notes held by a related party – non-current:Alibaba HK/China 522,744 424,962 59,855* In December 2023, all of the 2025 Convertible Notes were transferred by Alibaba HK to Alibaba China.As at December 31 2022 2023 2023RMBRMBUS$Convertible non-controlling interests held by related party: Taobao 191,865 191,865 27,024 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 241 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-8123.SEGMENT REPORTINGSince January 1, 2021, the Company reported segments as five operating segments: (1) Express delivery services, (2) Freightdelivery services (“Freight delivery”), (3) Supply chain management services (“Supply chain management”), (4) Global logistic services(“Global”), (5) Other services (“Others”). Since the Express business was disposed in December 2021 and are reflected in the consolidatedfinancial statements as discontinued operations, it is not reflected in the segment disclosures. Since then, the Company reports its financialresults in four operating segments: (1) Freight delivery, or the Freight segment, (2) Supply chain management, or the Supply ChainManagement segment, (3) Global logistics, or the Global segment, (4) Others segment.Since January 1, 2022, due to the winding down of Ucargo, the Company reported Ucargo services together with Freight deliveryservices. Prior year’s comparative figure related to Ucargo services revenue of RMB2,809,081 under “Revenue – Others” for the yearended December 31, 2021 has been reclassified to “Revenue – Freight delivery” to conform to the current year’s presentation. TheCompany continues to report its financial results in four operating segments: (1) Freight delivery, or the Freight segment, (2) Supply chainmanagement, or the Supply Chain Management segment, (3) Global logistics, or the Global segment, (4) Others segment.The chief operating decision maker (“CODM”) has been identified as the Chief Executive Officer. The CODM uses multipleperformance measures in evaluating the performance of the operating segments and allocating assets but determined that gross profit/lossis the measurement principle that is most consistent with those used in measuring the corresponding amounts in the Company’sconsolidated financial statements in accordance with ASC 280-10-50-28. The Company’s reportable segments are strategic business unitsthat offer different services. They are managed separately because each business requires different technology and market strategies. Thechanges in reportable segments align with the manner in which the Company’s CODM currently receives and uses financial information toallocate resource and evaluate the performance of reporting segments. The accounting policy of the segments are the same as thosedescribed in the summary of significant accounting policies in the consolidated financial statements. Inter-segment sales are accounted foras if the sales were to third parties, that is, at current market prices.The Company currently does not allocate assets to its operating segments, as the CODM does not use such information to allocateresources to or evaluate the performance of the operating segments. The Company retrospectively revised prior period segmentinformation to conform to current period presentation. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 242 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-8223.SEGMENT REPORTING (CONTINUED)The table below provides a summary of the Company’s operating segment results for the years ended December 31, 2021, 2022and 2023:For the years ended December 31, 2021 2022 2023 2023RMBRMBRMBUS$Revenue: Freight delivery 8,353,7034,890,8235,412,204762,293Supply chain management1,820,2391,852,1531,857,429261,613Global 1,194,146963,505949,738133,768Others172,447116,859106,39314,985Inter-segment* (114,699)(79,268)(9,920)(1,397)Consolidated revenue 11,425,8367,744,0728,315,8441,171,262Gross (loss) profit: Freight delivery(262,303)(226,659)197,42927,807Supply chain management 73,272110,257158,16222,276Global(64,656)(164,680)(184,970)(26,052)Others54,29917,52479,81611,242Inter-segment* — — — —Consolidated gross (loss) profit(199,388)(263,558)250,43735,273(*)The inter segment eliminations mainly consist of services provided by Freight delivery and Global segments to the Supply chainmanagement services segment, for the years ended December 31, 2021, 2022 and 2023, respectively.The Company’s operations are primarily based in China, where the Company derives a substantial portion of their revenues. Thefollowing table presents revenues generated in domestic and overseas markets for the years ended December 31, 2021, 2022 and 2023.For the years ended December 31, 2021 2022 2023 2023RMBRMBRMBUS$PRC 10,231,981 6,827,165 7,369,331 1,037,948Non-PRC 1,193,855 916,907 946,513 133,314 11,425,836 7,744,072 8,315,844 1,171,262The following table presents the Group’s revenue from contracts with customers disaggregated by the revenue recognition time:For the years ended December 31,2021202220232023 RMB RMB RMB US$Revenue recognized at point of time 335,787 282,165 505,440 71,190Revenue recognized over time 11,090,049 7,461,907 7,810,404 1,100,072 11,425,836 7,744,072 8,315,844 1,171,262 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 243 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-8324.FAIR VALUE MEASUREMENTSThe following tables illustrate the fair value measurement hierarchy of the Company’s financial instruments:Fair value measurements as at December 31, 2022 usingQuoted prices in Significant Significant activeobservable unobservable marketsinputs inputs Fair value (Level 1) (Level 2) (Level 3)TotaladjustmentImpairmentRMB RMBRMB RMB RMB US$ RMB US$Recurring fair value measurement for: Derivative assets — 50,231 —50,231 7,283 50,2317,283——Derivative liabilities — (18,644) — (18,644) (2,703) (3,726)(540)——Non-recurring fair value measurement for: Equity investments without readily determinablefair value——156,859156,85922,742——(12,312)(1,785)—31,587156,859188,44627,32246,5056,743(12,312)(1,785)Fair value measurements as at December 31, 2023 usingQuotedSignificant Significantprices inobservable unobservable active marketsinputs inputs Fair value (Level 1) (Level 2) (Level 3)TotaladjustmentImpairment RMB RMB RMB RMB RMB US$ RMB US$Recurring fair value measurement for: Derivative assets—16,433—16,4332,31516,4332,315——Derivative liabilities—————————Non-recurring fair value measurement for:Property and equipment, net—————(94,699)(13,338)(94,699)(13,338)Equity investments without readilydeterminable fair value——156,859156,85922,093—————16,433156,859173,29224,408(78,266)(11,023)(94,699)(13,338) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 244 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-8424.FAIR VALUE MEASUREMENTS (CONTINUED)For equity securities accounted for under the measurement alternative, when there are observable price changes in orderlytransactions for identical or similar investments of the same issuer, the investments are re-measured to fair value (Note 10). The non-recurring fair value measurements to the carrying amount of an investment usually requires management to estimate a price adjustment forthe different rights and obligations between a similar instrument of the same issuer with an observable price change in an orderlytransaction and the investment held by the Company. These non-recurring fair value measurements were measured as of the observabletransaction dates. The valuation methodologies involved require management to use the observable transaction price at the transaction dateand other unobservable inputs (level 3) such as expected volatility and probability of exit events as it relates to liquidation and redemptionpreferences. When there is impairment of equity securities accounted for under the measurement alternative and equity methodinvestments, the non-recurring fair value measurements are measured at the date of impairment. Estimating the fair value of investeeswithout observable market prices is highly judgmental due to the subjectivity of the unobservable inputs (level 3) used in the valuationmethodologies used to determine fair value, especially considering the increased market volatility in the global financial markets after theCOVID-19 outbreak.The Group recognized unrealized gain of RMB58,643, nil and nil for measuring equity investments at fair value resulting fromthe observable price changes occurring in the years ended December 31, 2021, 2022 and 2023, respectively. The Group recognizedimpairment of RMB5,000, RMB12,312 and nil for equity investments at fair value in the years ended December 31, 2021, 2022 and 2023,respectively.Derivative assets and liabilities represent the Group’s freestanding forward exchange rate contracts with banks to reduce volatilityin the Company’s economic value caused by foreign currency fluctuations. The freestanding forward exchange rate contracts did notqualify for hedge accounting. The derivative assets and derivative liabilities are recorded in the consolidated statements balance sheetsmeasured at fair value. Below is the details:As at December 31 2022 2023 2023RMBRMBUS$Prepayments and other current assets 49,077 10,917 1,538Other non-current assets 1,154 5,516 777Total derivative assets 50,231 16,433 2,315Accrued expenses and other liabilities 5,452 — —Other non-current liabilities 13,192 — —Total derivative liabilities 18,644 — — Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 245 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-8525.COMMITMENTS AND CONTINGENCIESCapital expenditure commitmentsThe Group has commitments for the construction of warehouses and equipment of RMB36,347 (US$5,119) at December 312023, which are scheduled to be paid within one year.ContingenciesFrom time to time, the Group is subject to legal proceedings, investigations, and claims incidental to the conduct of its business.The Group is currently not involved in any legal or administrative proceedings that may have a material adverse impact on the Group’sbusiness, financial position or results of operations.26.EMPLOYEE DEFINED CONTRIBUTION PLANFull time employees of the Group in the PRC participate in a government mandated defined contribution plan, pursuant to whichcertain pension benefits, medical care, employee housing fund and other welfare benefits are provided to employees. Chinese laborregulations require that the Group’s PRC subsidiaries, VIEs and its subsidiaries make contributions to the government for these benefitsbased on certain percentages of the employees’ salaries. The Group has no legal obligation for the benefits beyond the contributions made.The total amounts for such employee benefits, which were expensed as incurred, were RMB181,689, RMB155,642 and RMB121,630(US$17,131) for the years ended December 31, 2021, 2022 and 2023, respectively.27.ACCUMULATED OTHER COMPREHENSIVE INCOMERMBBalance as of January 1, 2021 151,677Foreign currency translation adjustments, net of tax of nil(44,298)Balance as of December 31, 2021 107,379Foreign currency translation adjustments, net of tax of nil 17,085Balance as of December 31, 2022 124,464Foreign currency translation adjustments, net of tax of nil (5,295)Balance as of December 31, 2023 119,169Balance as of December 31, 2023 (US$)16,785There have been no reclassifications out of accumulated other comprehensive income to net loss for all the periods presented. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 246 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-8628.CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANYCondensed Balance SheetsAs at December 31 Notes 2022 2023 2023RMBRMBUS$Current assets: Cash 6,703 2,142302Prepayments and other current assets3,4203,186449Total current assets10,1235,328751Non-current assets: Other non-current assets719——Investments in subsidiaries and VIEs and subsidiaries of VIEs 2,135,384 750,869105,756Total non-current assets:2,136,103750,869105,756Total assets 2,146,226 756,197106,507Current liabilities: Accrued liabilities and other payables — 1,333186Convertible senior notes held by a related party-current15, 22522,744106,24014,964Convertible senior notes held by third parties-current15777811Total current liabilities522,821107,65115,161Non-current liabilities: Long-term payable due to subsidiaries 403,652 321,73645,316Convertible senior notes held by a related party 522,744 424,96259,855Total non-current liabilities926,396746,698105,171Total liabilities1,449,217854,349120,332As at December 31 Notes 2022 2023 2023 RMB RMB US$Shareholders’ equity Class A ordinary shares (par value of US$0.01 per share as of December 31, 2022 and 2023; 1,858,134,053 sharesauthorized as of December 31, 2022 and 2023; 255,648,452 an 261,648,452 shares issued and outstanding as ofDecember 31, 2022 and 2023, respectively) 20 16,532 16,532 2,328Class B ordinary shares (par value of US$0.01 per share as of December 31, 2022 and 2023; 94,075,249 sharesauthorized, issued and outstanding as of December 31, 2022 and 2023, respectively) 20 6,178 6,178 870Class C ordinary shares (par value of US$0.01 per share as of December 31, 2022 and 2023; 47,790,698 sharesauthorized, issued and outstanding as of December 31, 2022 and 2023, respectively) 20 3,278 3,278 462Treasury shares 20 — (23,853) (3,360)Additional paid in capital 19,481,417 19,529,806 2,750,715Accumulated deficit (18,934,860) (19,749,262) (2,781,625)Accumulated other comprehensive income 124,464 119,169 16,785Total shareholders’ equity (deficit) 697,009 (98,152) (13,825)Total liabilities and shareholders’ equity (deficit) 2,146,226 756,197 106,507 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 247 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-8728.CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY (CONTINUED)Condensed Statements of Comprehensive Income (Loss)For the years ended December 31, 2021 2022 2023 2023RMBRMBRMBUS$Operating expenses General and administrative expenses (44,897) (40,747) (52,260)(7,364)Operating loss (44,897) (40,747) (52,260)(7,364)Share of losses of subsidiaries and VIEs and subsidiaries of VIEs (2,826,751) (1,371,524) (727,236)(102,428)Gain on disposal3,213,599———Other income, net—17,329——Interest expense (80,044) (68,369) (34,906)(4,916)Net income (loss) attributable to ordinary shareholders261,907 (1,463,311) (814,402)(114,708)Other comprehensive (loss) income, net of tax of nilForeign currency translation adjustments(44,298)17,085(5,295)(746)Comprehensive income (loss) 217,609 (1,446,226) (819,697)(115,454)Condensed Statements of Cash FlowsFor the years ended December 31, 2021 2022 2023 2023RMBRMBRMBUS$Net cash used in operating activities (111,208) (119,115) (95,847)(13,500)Net cash generated from investing activities 82,099 1,492,777 618,41287,102Net cash generated from (used in) financing activities 2,604 (1,373,764) (527,126)(74,244)Net decrease in cash and cash equivalents (26,505) (102) (4,561)(642)Cash and cash equivalents at beginning of the year 33,310 6,805 6,703944Cash and cash equivalents at end of the year 6,805 6,703 2,142302Basis of presentationFor the presentation of the parent company only condensed financial information, the Company records its investments insubsidiaries and VIEs and subsidiaries of VIEs under the equity method of accounting as prescribed in ASC 323. Such investments arepresented on the condensed balance sheets as “Investments in subsidiaries and VIEs and subsidiaries of VIEs” and the subsidiaries’ andVIEs’ and subsidiaries of VIEs’ losses as “Share of losses of subsidiaries and VIEs and subsidiaries of VIEs” on the condensed statementsof comprehensive income (loss).The subsidiaries did not pay any dividends to the Company for the periods presented.The Company does not have significant commitments or long-term obligations as of the period end other than those presented.The parent company only financial statements should be read in conjunction with the Company’s consolidated financialstatements. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231x20f.htm Type: 20-F Pg: 248 of 248 Table of ContentsBEST INC.NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS(Amounts in thousands of Renminbi (“RMB”) and US dollars (“US$”) except for number of shares and per share data)F-8829.SUBSEQUENT EVENTSOn April 22, 2024, the Company and Alibaba China entered into an agreement to amend the Early Redemption Rights of the2025 Convertible Notes, pursuant to which Alibaba China will require the Company to repurchase the 2025 Convertible Notes withaggregated principal of US$ 15,000 (RMB 106,240 equivalent) and accrued interests before August 30, 2024 and to repurchase theremaining portion, or US$60,000 (RMB 424,962 equivalent) with accrued interest on May 10, 2025. Accordingly, the Company classifiedthe extended portion of the 2025 Convertible Notes as non-current liabilities as of December 31, 2023. Besides, the Group and AlibabaChina also agreed that the Company and BEST China cannot transfer or sell certain key businesses and core assets without written consentfrom Alibaba China. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 1 of 20 Exhibit 2.4DESCRIPTION OF THE REGISTRANT’S SECURITIES REGISTERED PURSUANT TO SECTION 12 OF THE SECURITIES EXCHANGE ACT OF 1934As of December 31, 2023, BEST Inc. (the “company”, “we”, “us” and “our”) had the following series of securities registered pursuant toSection 12(b) of the Exchange Act:Title of each classTrading symbolName of each exchange on which registeredClass A ordinary shares, par value US$0.01 pershare* American depositary shares,each representingtwenty (20) Class A ordinary shareBESTNew York Stock Exchange*Not for trading, but only in connection with the listing on the New York Stock Exchange of American depositary shares.Description of Ordinary Shares (Items 9.A.3, 9.A.5, 9.A.6, 9.A.7, 10.B.3, 10.B.4, 10.B.6, 10.B.7, 10.B.8, 10.B.9 and 10.B.10 ofForm 20-F)GeneralWe are an exempted company incorporated in the Cayman Islands with limited liability and our affairs are governed by our ninthamended memorandum and articles of association currently in effect, which we refer to as our articles, and the Companies Act (AsRevised) of the Cayman Islands, which we refer to as the Cayman Companies Act, and the common law of the Cayman Islands. In June2017, we changed our name to BEST Inc.Each Class A ordinary share of our company has par value of US$0.01 per share. The number of Class A ordinary shares that hadbeen issued as of December 31, 2023 is provided on the cover of our annual report on Form 20-F for the year ended December 31, 2023.All of our issued and outstanding ordinary shares are fully paid and non-assessable. Our ordinary shares are issued in registeredform, and are issued when registered in our register of members (shareholders). Our shareholders who are non-residents of the CaymanIslands may freely hold and vote their ordinary shares. Our articles prohibit us from issuing shares to bearer.DividendsThe holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors. Under the laws of theCayman Islands, our company may pay a dividend out of either profit or share premium account, provided that in no circumstances may adividend be paid if this would result in our company being unable to pay its debts as they fall due in the ordinary course of business.Voting RightsOur outstanding share capital consists of Class A ordinary shares, Class B ordinary shares and Class C ordinary shares. Holders ofClass A ordinary shares are entitled to one (1) vote per share, holders of Class B ordinary shares are entitled to fifteen (15) votes per shareand holders of Class C ordinary shares are entitled to thirty (30) votes per share, in respect of matters requiring the votes of shareholders ofour Company.Voting at any meeting of shareholders is by a show of hands, unless a poll is demanded by the chairman of the meeting or one ormore shareholders present in person or by proxy who together hold shares which carry in aggregate not less than 10% of all votesattaching to all of our shares in issue and Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 2 of 20 entitled to vote, and, unless a poll is so demanded, a declaration by the chairman of that a resolution has, on a show of hands, been carriedor carried unanimously, or by a particular majority, or lost and an entry to that effect in the minutes of the proceedings of our company,shall be conclusive evidence of the fact, without proof of the number of proportion of the votes recorded in favor of, or against thatresolution.Our articles provide that all questions submitted to our shareholders for approval at a general meeting must be decided by a specialresolution, except where a greater majority is required by our articles or by the Cayman Companies Act. A special resolution must bepassed by a majority of not less than two-thirds of the votes cast by such of our shareholders as, being entitled to do so, vote in person orby proxy at a general meeting, or alternatively may be passed by a unanimous written resolution signed by all the shareholders of ourcompany, as permitted by the Cayman Companies Act and our articles.Transfer of SharesAny of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in any usual or commonform or any other form approved by our board of directors, executed by or on behalf of the transferor.Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share that has not been fullypaid up or is subject to a company lien. Our board of directors may also decline to register any transfer of any ordinary share unless:●the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates andsuch other evidence as our board of directors may reasonably require to show the right of the transferor to make thetransfer;●the instrument of transfer is in respect of only one class of ordinary shares;●the instrument of transfer is properly stamped, if required;●the relevant fee related to the transfer has been paid to us; and●in the case of any transfer to joint holders, the transfer is not to more than four joint holders.If our directors refuse to register a transfer, they shall within one calendar month after the date on which the instrument of transferwas lodged, to send to each of the transferor and the transferee notice of such refusal.Winding UpOn the solvent winding up of our company, if the assets available for distribution amongst our shareholders shall be more thansufficient to repay the whole of the share capital at the commencement of the winding up, the surplus shall be distributed amongst ourshareholders in proportion to the par value of the shares held by them at the commencement of the winding up, subject to a deduction fromthose shares in respect of which there are monies due, of all monies payable to our company for unpaid calls or otherwise. If our assetsavailable for distribution in respect of a solvent winding up are insufficient to repay all of the paid-up capital, the assets will be distributedso that the losses are borne by our shareholders in proportion to the par value of the shares held by them. On the insolvent winding up ofour company, where the liabilities of our company exceed its assets, those assets will be distributed to creditors and the shareholders willnot receive any assets.The liquidator may, with the sanction of a special resolution of our shareholders, divide amongst the shareholders in species or inkind the whole or any part of the assets of our company, and may for such purpose set such value as the liquidator deems fair upon anyproperty to be divided as aforesaid and may determine how the division shall be carried out as between our shareholders or differentclasses of shareholders.We are an exempted company with “limited liability” incorporated under the Cayman Companies Act, and under the CaymanCompanies Act, the liability of our shareholders is limited to the amount, if Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 3 of 20 any, unpaid on the shares respectively held by them. Our memorandum of association contains a declaration that the liability of ourmembers is so limited.Redemption, Repurchase and Surrender of Ordinary SharesWe may issue shares on terms that such shares are subject to redemption, at our option or at the option of the holders thereof, onsuch terms and in such manner as may be determined by our board of directors. Our company may also repurchase any of our sharesprovided that the manner and terms of such purchase have been approved by our board of directors or by special resolution of ourshareholders (but no repurchase may be made contrary to the terms or manner recommended by our directors), or as otherwise authorizedby our articles. Under the Cayman Companies Act, the redemption or repurchase of any share may be paid out of our company’s profits orout of the proceeds of a new issue of shares made for the purpose of such redemption or repurchase, or out of capital (including sharepremium account and capital redemption reserve) if our company can, immediately following such payment, pay its debts as they fall duein the ordinary course of business. In addition, under the Cayman Companies Act no such share may be redeemed or repurchased(i) unless it is fully paid up, (ii) if such redemption or repurchase would result in there being no shares outstanding or (iii) if the companyhas commenced liquidation. In addition, our company may accept the surrender of any fully paid share for no consideration.Calls on Ordinary Shares and Forfeiture of Ordinary SharesOur board of directors may from time to time make calls upon shareholders (or any of them) for any amounts unpaid on theirordinary shares and each shareholder shall (subject to receiving at least fourteen calendar days' notice specifying the time or times ofpayment) pay to our company at the time or times so specified the amount called on such shares. The ordinary shares that have been calledupon and remain unpaid are subject to forfeiture.General Meetings of ShareholdersAs a Cayman Islands exempted company, we are not obliged by the Cayman Companies Act to call shareholders’ annual generalmeetings. Our articles provide that we may (but are not obliged to) in each year hold a general meeting as our annual general meeting inwhich case we shall specify the meeting as such in the notices calling it, and the annual general meeting shall be held at such time andplace as may be determined by our directors.Shareholders’ general meetings may be convened by a majority of our board of directors or by our chairman. Advance notice of atleast ten calendar days is required for the convening of our annual general shareholders’ meeting (if any) and any other general meeting ofour shareholders. A quorum required for any general meeting of shareholders consists of at least one shareholder present or by proxy,holding shares which carry in aggregate not less than one-third of all votes attaching to all of our shares in issue and entitled to vote.The Cayman Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provideshareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articlesof association. Our articles provide that upon the requisition of shareholders holding shares which carry in aggregate not less than one-third of the votes attaching to all issued and outstanding shares of our company entitled to vote at general meetings, our board willconvene an extraordinary general meeting and put the resolutions so requisitioned to a vote at such meeting. However, our articles do notprovide our shareholders with any right to put any proposals before annual general meetings or extraordinary general meetings not calledby such shareholders.Proceedings of Board of Directors Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 4 of 20 Our articles provide that our business is to be managed and conducted by our board of directors. The quorum necessary for boardmeetings may be fixed by the board and, unless so fixed at another number, will be a majority of the directors then in office.Our articles provide that the board may from time to time at its discretion exercise all powers of our company to raise capital orborrow money, to mortgage or charge all or any part of the undertaking, property and assets (present and future) and uncalled capital ofour company and issue debentures, bonds and other securities of our company, whether outright or as collateral security for any debt,liability or obligation of our company or of any third party.Changes in CapitalOur shareholders may from time to time by special resolution:●increase our share capital by such sum, to be divided into shares of such classes and amount, as the resolution shallprescribe;●consolidate and divide all or any of our share capital into shares of a larger amount than our existing shares;●sub-divide our existing shares, or any of them, into shares of a smaller amount; or●cancel any shares which, at the date of the passing of the resolution, have not been taken or agreed to be taken by anyperson and diminish the amount of our share capital by the amount of the shares so cancelled.Our shareholders may by special resolution, subject to confirmation by the Grand Court of the Cayman Islands on an application byour company for an order confirming such reduction, reduce our share capital or any capital redemption reserve in any manner permittedby law.Inspection of Books and RecordsHolders of our ordinary shares will have no general right under the Cayman Companies Act to inspect or obtain copies of our list ofshareholders or our corporate records (other than copies of our memorandum and articles of association, our register of mortgages andcharges, and any special resolutions passed by our shareholders). However, we will provide our shareholders with annual audited financialstatements.Exempted CompanyWe are an exempted company with limited liability duly incorporated and validly existing under the Cayman Companies Act. TheCayman Companies Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered inthe Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. Therequirements for an exempted company are essentially the same as for an ordinary company except for the exemptions and privilegeslisted below:●an exempted company does not have to file an annual return of its shareholders with the Registrar of Companies of theCayman Islands;●an exempted company’s register of members is not open to inspection;●an exempted company does not have to hold an annual general meeting;●an exempted company may issue no par value, negotiable or bearer shares;●an exempted company may obtain an undertaking against the imposition of any future taxation (such undertakings areusually given for 20 years in the first instance);●an exempted company may register by way of continuation in another jurisdiction and be deregistered in the CaymanIslands;●an exempted company may register as a limited duration company; and Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 5 of 20 ●an exempted company may register as a segregated portfolio company.”Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on thatshareholder’s shares of the company (except in exceptional circumstances, such as involving fraud, the establishment of an agencyrelationship or an illegal or improper purpose or other circumstances in which a court may be prepared to pierce or lift the corporate veil).We are subject to reporting and other informational requirements of the Exchange Act, as applicable to foreign private issuers. We followhome country practice for certain corporate governance practices which may differ from the Corporate Governance Rules of the New YorkStock Exchange. The listing requirements of the New York Stock Exchange require that every listed company hold an annual generalmeeting of shareholders. In addition, our articles allow our directors to call extraordinary general meetings of our shareholders pursuant tothe procedures set forth in our articles.Differences in Corporate LawThe Cayman Companies Act is derived, to a large extent, from the older Companies Acts of England, but does not follow recentstatutory enactments in England and accordingly there are significant differences between the Cayman Companies Act and the currentCompanies Act of England. In addition, the Cayman Companies Act differs from laws applicable to U.S. corporations and theirshareholders. Set forth below is a summary of certain significant differences between the provisions of the Cayman Companies Actapplicable to us and the laws applicable to companies incorporated in the State of Delaware.Mergers and Similar ArrangementsThe Cayman Companies Act permits mergers and consolidations between Cayman Islands companies and between Cayman Islandscompanies and non-Cayman Islands companies. For these purposes, (i) “merger” means the merging of two or more constituentcompanies and the vesting of their undertaking, property and liabilities in one of such companies as the surviving company, and (ii) a “consolidation” means the combination of two or more constituent companies into a consolidated company and the vesting of theundertaking, property and liabilities of such companies in the consolidated company. In order to effect such a merger or consolidation, thedirectors of each constituent company must approve a written plan of merger or consolidation, which must then be authorized by (i) aspecial resolution of the shareholders of each constituent company, and (ii) such other authorization, if any, as may be specified in suchconstituent company’s articles of association. The plan must be filed with the Registrar of Companies of the Cayman Islands together witha declaration with respect to, among other things, the solvency of the consolidated or surviving company, a list of the assets and liabilitiesof each constituent company and an undertaking that a copy of the certificate of merger or consolidation will be given to the members andcreditors of each constituent company and that notification of the merger or consolidation will be published in the Cayman IslandsGazette. Court approval is not required for a merger or consolidation which is effected in compliance with these statutory procedures.A merger between a Cayman Islands parent company and its Cayman Islands subsidiary or subsidiaries does not requireauthorization by a resolution of shareholders if a copy of the plan of merger is given to every member of that Cayman subsidiary to bemerged unless that member agrees otherwise. For this purpose a subsidiary is a company of which at least 90% of the issued sharesentitled to vote are owned by the parent company.The consent of each holder of a fixed or floating security interest of a constituent company is required unless this requirement iswaived by a court in the Cayman Islands.Except in certain limited circumstances, a shareholder of a Cayman Islands constituent company who dissents from the merger orconsolidation is entitled to payment of the fair value of his or her shares (which, if not agreed between the parties, will be determined bythe Grand Court of the Cayman Islands) upon dissenting from a merger or consolidation, provide the dissenting shareholder compliesstrictly with the procedures set out in the Cayman Companies Act. The exercise of such dissenter rights will preclude the Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 6 of 20 exercise by the dissenting shareholder of any other rights to which he or she might otherwise be entitled by virtue of holding shares, exceptfor the right to seek relief on the grounds that the merger or consolidation is void or unlawful.Separately from the statutory provisions relating to mergers and consolidations, the Cayman Companies Act also contains statutoryprovisions that facilitate the reconstruction and amalgamation of companies by way of schemes of arrangement, provided that thearrangement is approved by a majority in number of each class of shareholders or creditors with whom the arrangement is to be made, andwho must, in addition, represent three-fourths in value of each such class of shareholders or creditors, as the case may be, that are presentand voting either in person or by proxy at a meeting, or meetings, convened for that purpose. The convening of the meetings andsubsequently the arrangement must be sanctioned by the Grand Court of the Cayman Islands. While a dissenting shareholder has the rightto express to the court the view that the transaction ought not to be approved, the court can be expected to approve the arrangement if itdetermines that:●the statutory provisions as to the required majority vote have been met;●the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona fidewithout coercion of the minority to promote interests adverse to those of the class;●the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in respect ofhis interest; and●the arrangement is not one that would more properly be sanctioned under some other provision of the Cayman CompaniesAct.The Cayman Companies Act also contains a statutory power of compulsory acquisition which may facilitate the “squeeze out” ofdissentient minority shareholder upon a tender offer. When a tender offer is made and accepted by holders of 90% in value of the sharesaffected within four months of the offer being made, the offeror may, within a two-month period commencing on the expiration of suchfour month period, require the holders of the remaining shares to transfer such shares on the terms of the offer. An objection can be madeto the Grand Court of the Cayman Islands but this is unlikely to succeed in the case of an offer which has been so approved unless there isevidence of fraud, bad faith or collusion.If an arrangement and reconstruction is thus approved, or if a tender offer is made and accepted, a dissenting shareholder would haveno rights comparable to appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delawarecorporations, providing rights to receive payment in cash for the judicially determined value of the shares.Shareholders’ SuitsIn principle, we will normally be the proper plaintiff to sue for a wrong done to us as a company and as a general rule, a derivativeaction may not be brought by a minority shareholder. However, based on English law authorities, which would in all likelihood be ofpersuasive authority in the Cayman Islands, the Cayman Islands court can be expected to follow and apply the common law principles(namely the rule in Foss v. Harbottle and the exceptions thereto) so that a non-controlling shareholder may be permitted to commence aclass action against or derivative actions in the name of the company to challenge:●an act which is illegal or ultra vires with respect to the company and is therefore incapable of ratification by theshareholders;●an act which, although not ultra vires, requires authorization by a qualified (or special) majority (that is, more than a simplemajority) which has not been obtained; and●an act which constitutes a “fraud on the minority” where the wrongdoers are themselves in control of the company.Indemnification of Directors and Executive Officers and Limitation of Liability Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 7 of 20 The Cayman Companies Act does not limit the extent to which a company’s memorandum and articles of association may providefor indemnification of officers and directors, except to the extent any such provision may be held by the Cayman Islands courts to becontrary to public policy, such as to provide indemnification against civil fraud or the consequences of committing a crime. Our articlesprovide that we shall indemnify our officers and directors against all actions, proceedings, costs, charges, expenses, losses, damages orliabilities incurred or sustained by such directors or officer, other than by reason of such person’s dishonesty, willful default or fraud, in orabout the conduct of our company’s business or affairs (including as a result of any mistake of judgment) or in the execution or dischargeof his duties, powers, authorities or discretions, including without prejudice to the generality of the foregoing, any costs, expenses, lossesor liabilities incurred by such director or officer in defending (whether successfully or otherwise) any civil proceedings concerning ourcompany or its affairs in any court whether in the Cayman Islands or elsewhere. This standard of conduct is generally the same aspermitted under the Delaware General Corporation Law for a Delaware corporation. In addition, we have entered into indemnificationagreements with our directors and executive officers that provide such persons with additional indemnification beyond that provided in ourarticles.Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or personscontrolling us under the foregoing provisions, we have been informed that, in the opinion of the SEC, such indemnification is againstpublic policy as expressed in the Securities Act and is therefore unenforceable.Anti-Takeover Provisions in Our ArticlesSome provisions of our articles may discourage, delay or prevent a change in control of our company or management thatshareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one or moreseries and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or actionby our shareholders.However, under Cayman Islands law, our directors may only exercise the rights and powers granted to them under our articles, asamended and restated from time to time, for a proper purpose and in what they believe in good faith to be in the best interests ofour company.Directors’ Fiduciary DutiesUnder Delaware corporate law, a director of a Delaware corporation has a fiduciary duty to the corporation and its shareholders.This duty has two components: the duty of care and the duty of loyalty. The duty of care requires that a director act in good faith, with thecare that an ordinarily prudent person would exercise under similar circumstances. Under this duty, a director must inform himself of, anddisclose to shareholders, all material information reasonably available regarding a significant transaction. The duty of loyalty requires thata director acts in a manner he or she reasonably believes to be in the best interests of the corporation. He or she must not use his or hercorporate position for personal gain or advantage. This duty prohibits self-dealing by a director and mandates that the best interests of thecorporation and its shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and notshared by the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good faithand in the honest belief that the action taken was in the best interests of the corporation. However, this presumption may be rebutted byevidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a transaction by a director, a directormust prove the procedural fairness of the transaction, and that the transaction was of fair value to the corporation.As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with respect to thecompany and therefore he owes the following duties to the company—a duty to act bona fide in the best interests of the company, a dutynot to make a profit based on his or her position as director (unless the company permits him to do so), a duty not to put himself in aposition where the interests of the company conflict with his or her personal interest or his or her duty to a third party, and a duty toexercise powers for the purpose for which such powers were intended. A director of a Cayman Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 8 of 20 Islands company owes to the company a duty to act with skill and care. It was previously considered that a director need not exhibit in theperformance of his or her duties a greater degree of skill than may reasonably be expected from a person of his or her knowledge andexperience. However, English and Commonwealth courts have moved towards an objective standard with regard to the required skill andcare and these authorities are likely to be followed in the Cayman Islands.Shareholder ProposalsUnder the Delaware General Corporation Law, a shareholder has the right to put any proposal before the annual meeting ofshareholders, provided it complies with the notice provisions in the governing documents. The Delaware General Corporation Law doesnot provide shareholders an express right to put any proposal before the annual meeting of shareholders, but in keeping with common law,Delaware corporations generally afford shareholders an opportunity to make proposals and nominations provided that they comply withthe notice provisions in the certificate of incorporation or bylaws. A special meeting may be called by the board of directors or any otherperson authorized to do so in the governing documents, but shareholders may be precluded from calling special meetings.The Cayman Companies Act provides shareholders with only limited rights to requisition a general meeting, and does not provideshareholders with any right to put any proposal before a general meeting. However, these rights may be provided in a company’s articlesof association. Our articles allow our shareholders holding shares which carry in aggregate not less than one-third of the votes attaching toall issued and outstanding shares of our company entitled to vote at general meetings to requisition an extraordinary general meeting ofour shareholders, in which case our board is obliged to convene an extraordinary general meeting and to put the resolutions sorequisitioned to a vote at such meeting. Our articles provide no other right to put any proposals before annual general meetings orextraordinary general meetings. As a Cayman Islands exempted company, we are not obligated by law to call shareholders’ annual generalmeetings. However, our corporate governance guidelines require us to call such meetings every year.Cumulative VotingUnder the Delaware General Corporation Law, cumulative voting for elections of directors is not permitted unless the corporation’scertificate of incorporation specifically provides for it. Cumulative voting potentially facilitates the representation of minority shareholderson a board of directors since it permits the minority shareholder to cast all the votes to which the shareholder is entitled on a singledirector, which increases the shareholder’s voting power with respect to electing such director. Cayman Islands law does not prohibitcumulative voting, but our articles do not provide for cumulative voting. As a result, our shareholders are not afforded any less protectionsor rights on this issue than shareholders of a Delaware corporation.Removal of DirectorsUnder the Delaware General Corporation Law, a director of a corporation with a classified board may be removed only for causewith the approval of a majority of the outstanding shares entitled to vote, unless the certificate of incorporation provides otherwise. Underour articles, directors may be removed by special resolution of our shareholders.Transactions with Interested ShareholdersThe Delaware General Corporation Law contains a business combination statute applicable to Delaware public corporationswhereby, unless the corporation has specifically elected not to be governed by such statute by amendment to its certificate of incorporationor bylaws that is approved by its shareholders, it is prohibited from engaging in certain business combinations with an “interestedshareholder” for three years following the date that such person becomes an interested shareholder. An interested shareholder generally isa person or a group who or which owns or owned 15% or more of the Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 9 of 20 target’s outstanding voting stock or who or which is an affiliate or associate of the corporation and owned 15% or more of thecorporation’s outstanding voting stock within the past three years. This has the effect of limiting the ability of a potential acquirer to makea two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if, among other things,prior to the date on which such shareholder becomes an interested shareholder, the board of directors approves either the businesscombination or the transaction which resulted in the person becoming an interested shareholder. This encourages any potential acquirer ofa Delaware corporation to negotiate the terms of any acquisition transaction with the target’s board of directors.Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections afforded by theDelaware business combination statute. However, although Cayman Islands law does not regulate transactions between a company and itssignificant shareholders, the fiduciary duties owed by our directors do require that such transactions must be entered into bona fide in thebest interests of the company and for a proper corporate purpose and not with the effect of constituting a fraud on the minorityshareholders.Dissolution; Winding UpUnder the Delaware General Corporation Law, unless the board of directors approves the proposal to dissolve, dissolution must beapproved by shareholders holding 100% of the total voting power of the corporation. Only if the dissolution is initiated by the board ofdirectors may it be approved by a simple majority of the corporation’s outstanding shares. Delaware law allows a Delaware corporation toinclude in its certificate of incorporation a supermajority voting requirement in connection with dissolutions initiated by the boardof directors.Under the Cayman Companies Act, our company may be wound up by either a special resolution of our members or, if our companyis unable to pay its debts as they fall due, by an ordinary resolution of our members. In addition, a company may be wound up by an orderof the courts of the Cayman Islands. The court has authority to order winding up in a number of specified circumstances including where itis, in the opinion of the court, just and equitable to do so or if our company is insolvent.Variation of Rights of SharesUnder the Delaware General Corporation Law, a corporation may vary the rights of a class of shares with the approval of a majorityof the outstanding shares of such class, unless the certificate of incorporation provides otherwise. Under our articles, if our share capital isdivided into more than one class of shares, we may materially and adversely vary the rights attached to any class only with the consent inwriting of the holders of not less than three-fourths of the shares of that class or with the sanction of a special resolution passed at aseparate meeting of the holders of the shares of that class.Amendment of Governing DocumentsUnder the Delaware General Corporation Law, a corporation’s certificate of incorporation may be amended only if adopted anddeclared advisable by the board of directors and approved by a majority of the outstanding shares entitled to vote, and the bylaws may beamended with the approval of a majority of the outstanding shares entitled to vote and may, if so provided in the certificate ofincorporation, also be amended by the board of directors. Under the Cayman Companies Act and our articles, our articles may only beamended by special resolution of our shareholders.Rights of Non-Resident or Foreign ShareholdersThere are no limitations imposed by our articles on the rights of non-resident or foreign shareholders to hold or exercise votingrights on our shares. In addition, there are no provisions in our articles governing the ownership threshold above which shareholderownership must be disclosed. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 10 of 20 Directors’ Power to Issue SharesUnder our articles, our board of directors is empowered to issue or allot shares or grant options, restricted shares, restricted shareunits, share appreciation rights, dividend equivalent rights, warrants and analogous equity-based rights with or without preferred, deferred,qualified or other special rights or restrictions. In particular, pursuant to our articles, our board of directors has the authority, withoutfurther action by the shareholders, to issue all or any part of our capital and to fix the designations, powers, preferences, privileges, andrelative participating, optional or special rights and the qualifications, limitations or restrictions therefrom, including dividend rights,conversion rights, voting rights, terms of redemption and liquidation preferences, any or all of which may be greater than the rights of ourordinary shares. Our board of directors, without shareholder approval, may issue preferred shares with voting, conversion or other rightsthat could adversely affect the voting power and other rights of holders of our ordinary shares. Subject to the directors’ duty of acting inthe best interest of our company, preferred shares can be issued quickly with terms calculated to delay or prevent a change in control of usor make removal of management more difficult. Additionally, the issuance of preferred shares may have the effect of decreasing themarket price of the ordinary shares, and may adversely affect the voting and other rights of the holders of ordinary shares.Description of Debt Securities, Warrants and Rights and Other Securities (Items 12.A, 12.B and 12.C of Form 20-F)None.Description of American Depositary Shares (Items 12.D.1 and 12.D.2 of Form 20-F)Citibank, N.A. acts as the depositary bank for the American Depositary Shares. Citibank’s depositary offices are located at388 Greenwich Street, New York, New York 10013. The depositary bank typically appoints a custodian to safekeep the securities ondeposit. In this case, the custodian is Citibank, N.A. – Hong Kong, located at 9/F., Citi Tower, One Bay East, 83 Hoi Bun Road,Kwun Tong, Kowloon, Hong Kong.We have appointed Citibank as depositary bank pursuant to a deposit agreement. A copy of the deposit agreement is on file with theSEC under cover of a Registration Statement on Form F-6. You may obtain a copy of the deposit agreement from the SEC’s PublicReference Room at 100 F Street, N.E., Washington, D.C. 20549 and from the SEC’s website (www.sec.gov). Please refer to RegistrationNumber 333-220361 when retrieving such copy.We are providing you with a summary description of the material terms of the ADSs and of your material rights as an owner ofADSs. Please remember that summaries by their nature lack the precision of the information summarized and that the rights andobligations of an owner of ADSs will be determined by reference to the terms of the deposit agreement and not by this summary. We urgeyou to review the deposit agreement in its entirety. The portions of this summary description that are italicized describe matters that maybe relevant to the ownership of ADSs but that may not be contained in the deposit agreement.As of December 31, 2023, each ADS represented the right to receive, and to exercise the beneficial ownership interests in, twenty(20) Class A ordinary shares that are on deposit with the depositary bank and/or custodian. An ADS also represents the right to receive,and to exercise the beneficial interests in, any other property received by the depositary bank or the custodian on behalf of the owner of theADS but that has not been distributed to the owners of ADSs because of legal restrictions or practical considerations. We and thedepositary bank may agree to change the ADS-to-Class A ordinary share ratio by amending the deposit agreement. This amendment maygive rise to, or change, the depositary fees payable by ADS owners. The custodian, the depositary bank and their respective nominees holdall deposited property for the benefit of the holders and beneficial owners of ADSs. The deposited property does not constitute theproprietary assets of the depositary bank, the custodian or their nominees. Beneficial ownership in the deposited property under the termsof the deposit agreement is vested in the beneficial owners of the ADSs. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 11 of 20 The depositary bank, the custodian and their respective nominees are the record holders of the deposited property represented by the ADSsfor the benefit of the holders and beneficial owners of the corresponding ADSs. A beneficial owner of ADSs may or may not be the holderof ADSs. Beneficial owners of ADSs are able to receive, and to exercise beneficial ownership interests in, the deposited property onlythrough the registered holders of the ADSs, the registered holders of the ADSs (on behalf of the applicable ADS owners) only through thedepositary bank, and the depositary bank (on behalf of the owners of the corresponding ADSs) directly, or indirectly, through the custodianor their respective nominees, in each case upon the terms of the deposit agreement.If you become an owner of ADSs, you will become a party to the deposit agreement and therefore will be bound to its terms and tothe terms of any ADR that represents your ADSs. The deposit agreement and the ADR specify our rights and obligations as well as yourrights and obligations as owner of ADSs and those of the depositary bank. As an ADS holder you appoint the depositary bank to act onyour behalf in certain circumstances. The deposit agreement and the ADRs are governed by New York law. However, our obligations tothe holders of Class A ordinary shares continue to be governed by the laws of the Cayman Islands, which may be different from the lawsin the United States.In addition, applicable laws and regulations may require you to satisfy reporting requirements and obtain regulatory approvals incertain circumstances. You are solely responsible for complying with such reporting requirements and obtaining such approvals. Neitherthe depositary bank, the custodian, us or any of their or our respective agents or affiliates shall be required to take any actions whatsoeveron your behalf to satisfy such reporting requirements or obtain such regulatory approvals under applicable laws and regulations.As an owner of ADSs, we do not treat you as one of our shareholders and you do not have direct shareholder rights. The depositarybank holds on your behalf the shareholder rights attached to the Class A ordinary shares underlying your ADSs. As an owner of ADSs youare able to exercise the shareholders rights for the Class A ordinary shares represented by your ADSs through the depositary bank only tothe extent contemplated in the deposit agreement. To exercise any shareholder rights not contemplated in the deposit agreement you, as anADS owner, need to arrange for the cancellation of your ADSs and become a direct shareholder.The manner in which you own the ADSs (e.g., in a brokerage account vs. as registered holder, or as holder of certificated vs.uncertificated ADSs) may affect your rights and obligations, and the manner in which, and extent to which, the depositary bank’s servicesare made available to you. As an owner of ADSs, you may hold your ADSs either by means of an ADR registered in your name, through abrokerage or safekeeping account, or through an account established by the depositary bank in your name reflecting the registration ofuncertificated ADSs directly on the books of the depositary bank (commonly referred to as the “direct registration system” or “DRS”). Thedirect registration system reflects the uncertificated (book-entry) registration of ownership of ADSs by the depositary bank. Under thedirect registration system, ownership of ADSs is evidenced by periodic statements issued by the depositary bank to the holders of theADSs. The direct registration system includes automated transfers between the depositary bank and The Depository Trust Company(“DTC”), the central book-entry clearing and settlement system for equity securities in the United States. If you decide to hold your ADSsthrough your brokerage or safekeeping account, you must rely on the procedures of your broker or bank to assert your rights as ADSowner. Banks and brokers typically hold securities such as the ADSs through clearing and settlement systems such as DTC. Theprocedures of such clearing and settlement systems may limit your ability to exercise your rights as an owner of ADSs. Please consult withyour broker or bank if you have any questions concerning these limitations and procedures. All ADSs held through DTC are registered inthe name of a nominee of DTC. This summary description assumes you have opted to own the ADSs directly by means of an ADSregistered in your name and, as such, we will refer to you as the “holder.” When we refer to “you,” we assume the reader owns ADSs andwill own ADSs at the relevant time.The registration of the Class A ordinary shares in the name of the depositary bank or the custodian shall, to the maximum extentpermitted by applicable law, vest in the depositary bank or the custodian the record ownership in the applicable Class A ordinary shareswith the beneficial ownership rights and Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 12 of 20 interests in such Class A ordinary shares being at all times vested with the beneficial owners of the ADSs representing the Class Aordinary shares. The depositary bank or the custodian shall at all times be entitled to exercise the beneficial ownership rights in alldeposited property, in each case only on behalf of the holders and beneficial owners of the ADSs representing the deposited property.Dividends and DistributionsAs a holder of ADSs, you generally have the right to receive the distributions we make on the securities deposited with thecustodian. Your receipt of these distributions may be limited, however, by practical considerations and legal limitations. Holders of ADSswill receive such distributions under the terms of the deposit agreement in proportion to the number of ADSs held as of the specifiedrecord date, after deduction of the applicable fees, taxes and expenses.Distributions of CashWhenever we make a cash distribution for the securities on deposit with the custodian, we will deposit the funds with the custodian.Upon receipt of confirmation of the deposit of the requisite funds, the depositary bank will arrange for the funds received in a currencyother than U.S. dollars to be converted into U.S. dollars and for the distribution of the U.S. dollars to the holders, subject to the laws andregulations of the Cayman Islands.The conversion into U.S. dollars will take place only if practicable and if the U.S. dollars are transferable to the United States. Thedepositary bank will apply the same method for distributing the proceeds of the sale of any property (such as undistributed rights) held bythe custodian in respect of securities on deposit.The distribution of cash will be made net of the fees, expenses, taxes and governmental charges payable by holders under the termsof the deposit agreement. The depositary bank will hold any cash amounts it is unable to distribute in a non-interest bearing account for thebenefit of the applicable holders and beneficial owners of ADSs until the distribution can be effected or the funds that the depositary bankholds must be escheated as unclaimed property in accordance with the laws of the relevant states of the United States.Distributions of Class A Ordinary SharesWhenever we make a free distribution of Class A ordinary shares for the securities on deposit with the custodian, we will deposit theapplicable number of Class A ordinary shares with the custodian. Upon receipt of confirmation of such deposit, the depositary bank willeither distribute to holders new ADSs representing the Class A ordinary shares deposited or modify the ADS-to-Class A ordinary shareratio, in which case each ADS you hold will represent rights and interests in the additional Class A ordinary shares so deposited. Onlywhole new ADSs will be distributed. Fractional entitlements will be sold and the proceeds of such sale will be distributed as in the case ofa cash distribution. The distribution of new ADSs or the modification of the ADS-to-Class A ordinary share ratio upon a distribution of Class Aordinary shares will be made net of the fees, expenses, taxes and governmental charges payable by holders under the terms of the depositagreement. In order to pay such taxes or governmental charges, the depositary bank may sell all or a portion of the new Class A ordinaryshares so distributed.No such distribution of new ADSs will be made if it would violate a law (e.g., the U.S. securities laws) or if it is not operationallypracticable. If the depositary bank does not distribute new ADSs as described above, it may sell the Class A ordinary shares received uponthe terms described in the deposit agreement and will distribute the proceeds of the sale as in the case of a distribution of cash.Distributions of Rights Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 13 of 20 Whenever we intend to distribute rights to subscribe for additional Class A ordinary shares, we will give prior notice to thedepositary bank and we will assist the depositary bank in determining whether it is lawful and reasonably practicable to distribute rights tosubscribe for additional ADSs to holders.The depositary bank will establish procedures to distribute rights to subscribe for additional ADSs to holders and to enable suchholders to exercise such rights if it is lawful and reasonably practicable to make the rights available to holders of ADSs, and if we provideall of the documentation contemplated in the deposit agreement (such as opinions to address the lawfulness of the transaction). You mayhave to pay fees, expenses, taxes and other governmental charges to subscribe for the new ADSs upon the exercise of your rights. Thedepositary bank is not obligated to establish procedures to facilitate the distribution and exercise by holders of rights to subscribe for newClass A ordinary shares other than in the form of ADSs.The depositary bank will not distribute the rights to you if:●We do not timely request that the rights be distributed to you or we request that the rights not be distributed to you; or●We fail to deliver satisfactory documents to the depositary bank; or●It is not reasonably practicable to distribute the rights.The depositary bank will sell the rights that are not exercised or not distributed if such sale is lawful and reasonably practicable. Theproceeds of such sale will be distributed to holders as in the case of a cash distribution. If the depositary bank is unable to sell the rights, itwill allow the rights to lapse.Elective DistributionsWhenever we intend to distribute a dividend payable at the election of shareholders either in cash or in additional shares, we willgive prior notice thereof to the depositary bank and will indicate whether we wish the elective distribution to be made available to you. Insuch case, we will assist the depositary bank in determining whether such distribution is lawful and reasonably practicable.The depositary bank will make the election available to you only if it is reasonably practicable and if we have provided all of thedocumentation contemplated in the deposit agreement. In such case, the depositary bank will establish procedures to enable you to elect toreceive either cash or additional ADSs, in each case as described in the deposit agreement.If the election is not made available to you, you will receive either cash or additional ADSs, depending on what a shareholder in theCayman Islands would receive upon failing to make an election, as more fully described in the deposit agreement.Other DistributionsWhenever we intend to distribute property other than cash, Class A ordinary shares or rights to subscribe for additional Class Aordinary shares we will notify the depositary bank in advance and will indicate whether we wish such distribution to be made to you. If so,we will assist the depositary bank in determining whether such distribution to holders is lawful and reasonably practicable.If it is reasonably practicable to distribute such property to you and if we provide to the depositary bank all of the documentationcontemplated in the deposit agreement, the depositary bank will distribute the property to the holders in a manner it deems practicable.The distribution will be made net of fees, expenses, taxes and governmental charges payable by holders under the terms of thedeposit agreement. In order to pay such taxes and governmental charges, the depositary bank may sell all or a portion of the propertyreceived.The depositary bank will not distribute the property to you and will sell the property if: Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 14 of 20 ●We do not request that the property be distributed to you or if we request that the property not be distributed to you; or●We do not deliver satisfactory documents to the depositary bank; or●The depositary bank determines that all or a portion of the distribution to you is not reasonably practicable.The proceeds of such a sale will be distributed to holders as in the case of a cash distribution.RedemptionWhenever we decide to redeem any of the securities on deposit with the custodian, we will notify the depositary bank in advance. Ifit is practicable and if we provide all of the documentation contemplated in the deposit agreement, the depositary bank will provide noticeof the redemption to the holders.The custodian will be instructed to surrender the shares being redeemed against payment of the applicable redemption price. Thedepositary bank will convert into U.S. dollars upon the terms of the deposit agreement the redemption funds received in a currency otherthan U.S. dollars and will establish procedures to enable holders to receive the net proceeds from the redemption upon surrender of theirADSs to the depositary bank. You may have to pay fees, expenses, taxes and other governmental charges upon the redemption of yourADSs. If less than all ADSs are being redeemed, the ADSs to be retired will be selected by lot or on a pro rata basis, as the depositarybank may determine.Changes Affecting Class A Ordinary SharesThe Class A ordinary shares held on deposit for your ADSs may change from time to time. For example, there may be a change innominal or par value, split-up, cancellation, consolidation or any other reclassification of such Class A ordinary shares or arecapitalization, reorganization, merger, consolidation or sale of assets of the Company.If any such change were to occur, your ADSs would, to the extent permitted by law and the deposit agreement, represent the right toreceive the property received or exchanged in respect of the Class A ordinary shares held on deposit. The depositary bank may in suchcircumstances deliver new ADSs to you, amend the deposit agreement, the ADRs and the applicable Registration Statement(s) on Form F-6, call for the exchange of your existing ADSs for new ADSs and take any other actions that are appropriate to reflect as to the ADSs thechange affecting the Class A ordinary shares. If the depositary bank may not lawfully distribute such property to you, the depositary bankmay sell such property and distribute the net proceeds to you as in the case of a cash distribution.Issuance of ADSs Upon Deposit of Class A Ordinary SharesThe depositary bank may create ADSs on your behalf if you or your broker deposit Class A ordinary shares with the custodian. Thedepositary bank will deliver these ADSs to the person you indicate only after you pay any applicable issuance fees and any charges andtaxes payable for the transfer of the Class A ordinary shares to the custodian. Your ability to deposit Class A ordinary shares and receiveADSs may be limited by U.S. and Cayman Islands legal considerations applicable at the time of deposit.The issuance of ADSs may be delayed until the depositary bank or the custodian receives confirmation that all required approvalshave been given and that the Class A ordinary shares have been duly transferred to the custodian. The depositary bank will only issueADSs in whole numbers.When you make a deposit of Class A ordinary shares, you will be responsible for transferring good and valid title to the depositarybank. As such, you will be deemed to represent and warrant that:●The Class A ordinary shares are duly authorized, validly issued, fully paid, non-assessable and legally obtained. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 15 of 20 ●All preemptive (and similar) rights, if any, with respect to such Class A ordinary shares have been validly waived orexercised.●You are duly authorized to deposit the Class A ordinary shares.●The Class A ordinary shares presented for deposit are free and clear of any lien, encumbrance, security interest, charge,mortgage or adverse claim, and are not, and the ADSs issuable upon such deposit will not be, “restricted securities” (asdefined in the deposit agreement).●The Class A ordinary shares presented for deposit have not been stripped of any rights or entitlements.If any of the representations or warranties are incorrect in any way, we and the depositary bank may, at your cost and expense, takeany and all actions necessary to correct the consequences of the misrepresentations.Transfer, Combination and Split Up of ADRsAs an ADR holder, you will be entitled to transfer, combine or split up your ADRs and the ADSs evidenced thereby. For transfers ofADRs, you will have to surrender the ADRs to be transferred to the depositary bank and also must:●ensure that the surrendered ADR is properly endorsed or otherwise in proper form for transfer;●provide such proof of identity and genuineness of signatures as the depositary bank deems appropriate;●provide any transfer stamps required by the State of New York or the United States; and●pay all applicable fees, charges, expenses, taxes and other government charges payable by ADR holders pursuant to theterms of the deposit agreement, upon the transfer of ADRs.To have your ADRs either combined or split up, you must surrender the ADRs in question to the depositary bank with your requestto have them combined or split up, and you must pay all applicable fees, charges and expenses payable by ADR holders, pursuant to theterms of the deposit agreement, upon a combination or split up of ADRs.Withdrawal of Class A Ordinary Shares Upon Cancellation of ADSsAs a holder, you will be entitled to present your ADSs to the depositary bank for cancellation and then receive the correspondingnumber of underlying Class A ordinary shares at the custodian’s offices. Your ability to withdraw the Class A ordinary shares held inrespect of the ADSs may be limited by U.S. and Cayman Islands considerations applicable at the time of withdrawal. In order to withdrawthe Class A ordinary shares represented by your ADSs, you will be required to pay to the depositary bank the fees for cancellation ofADSs and any charges and taxes payable upon the transfer of the Class A ordinary shares. You assume the risk for delivery of all fundsand securities upon withdrawal. Once canceled, the ADSs will not have any rights under the deposit agreement. If you hold ADSs registered in your name, the depositary bank may ask you to provide proof of identity and genuineness of anysignature and such other documents as the depositary bank may deem appropriate before it will cancel your ADSs. The withdrawal of theClass A ordinary shares represented by your ADSs may be delayed until the depositary bank receives satisfactory evidence of compliancewith all applicable laws and regulations. Please keep in mind that the depositary bank will only accept ADSs for cancellation that representa whole number of securities on deposit.You will have the right to withdraw the securities represented by your ADSs at any time except for:●Temporary delays that may arise because (i) the transfer books for the Class A ordinary shares or ADSs are closed, or (ii)Class A ordinary shares are immobilized on account of a Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 16 of 20 shareholders’ meeting or a payment of dividends.●Obligations to pay fees, taxes and similar charges.●Restrictions imposed because of laws or regulations applicable to ADSs or the withdrawal of securities on deposit.The deposit agreement may not be modified to impair your right to withdraw the securities represented by your ADSs except tocomply with mandatory provisions of law.Voting RightsAs a holder, you generally have the right under the deposit agreement to instruct the depositary bank to exercise the voting rights forthe Class A ordinary shares represented by your ADSs. The voting rights of holders of Class A ordinary shares are described above underthe heading “Description of Ordinary Shares — Voting Rights.”At our request, the depositary bank will distribute to you any notice of shareholders’ meeting received from us together withinformation explaining how to instruct the depositary bank to exercise the voting rights of the securities represented by ADSs.If the depositary bank timely receives voting instructions from a holder of ADSs, it will endeavor to vote the securities (in person orby proxy) represented by the holder’s ADSs in accordance with such voting instructions as follows:●In the event of voting by show of hands, the depositary bank will vote (or cause the custodian to vote) all Class A ordinaryshares held on deposit at that time in accordance with the voting instructions received from a majority of holders of ADSswho provide timely voting instructions.●In the event of voting by poll, the depositary bank will vote (or cause the Custodian to vote) the Class A ordinary sharesheld on deposit in accordance with the voting instructions received from the holders of ADSs.In the event of voting by poll, holders of ADSs in respect of which no timely voting instructions have been received shall be deemedto have instructed the depositary bank to give a discretionary proxy to a person designated by us to vote the Class A ordinary sharesrepresented by such holders’ ADSs; provided, that no such instructions shall be deemed given and no such discretionary proxy shall begiven with respect to any matter as to which we inform the depositary bank that we do not wish such proxy to be given; provided, further,that no such discretionary proxy shall be given (x) with respect to any matter as to which we inform the depositary that (i) there existssubstantial opposition, or (ii) the rights of holders of ADSs or the shareholders of our company will be materially adversely affected, and(y) in the event that the vote is on a show of hands.Please note that the ability of the depositary bank to carry out voting instructions may be limited by practical and legal limitationsand the terms of the securities on deposit. We cannot assure you that you will receive voting materials in time to enable you to returnvoting instructions to the depositary bank in a timely manner.Fees and ChargesAs an ADS holder, you will be required to pay the following fees under the terms of the deposit agreement: Service Fees· Issuance of ADSs (e.g., an issuance of ADS upon a deposit ofClass A ordinary shares, upon a change in the ADS(s)-to-Class A ordinary Up to U.S. 5¢ per ADS issued Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 17 of 20 share(s) ratio, or for any other reason), excluding ADSissuances as a result of distributions of Class A ordinary shares · Cancellation of ADSs (e.g., a cancellation of ADSs for deliveryof deposited property, upon a change in the ADS(s)-to-Class Aordinary share(s) ratio, or for any other reason) Up to U.S. 5¢ per ADS cancelled · Distribution of cash dividends or other cash distributions(e.g., upon a sale of rights and other entitlements) Up to U.S. 5¢ per ADS held · Distribution of ADSs pursuant to (i) stock dividends or otherfree stock distributions, or (ii) exercise of rights to purchaseadditional ADSs Up to U.S. 5¢ per ADS held · Distribution of securities other than ADSs or rights to purchaseadditional ADSs (e.g., upon a spin-off) Up to U.S. 5¢ per ADS held · ADS Services Up to U.S. 5¢ per ADS held on the applicable record date(s)established by the depositary bankAs an ADS holder you will also be responsible to pay certain charges such as:●taxes (including applicable interest and penalties) and other governmental charges;●the registration fees as may from time to time be in effect for the registration of Class A ordinary shares on the shareregister and applicable to transfers of Class A ordinary shares to or from the name of the custodian, the depositary bank orany nominees upon the making of deposits and withdrawals, respectively;●certain cable, telex and facsimile transmission and delivery expenses;●the expenses and charges incurred by the depositary bank in the conversion of foreign currency;●the fees and expenses incurred by the depositary bank in connection with compliance with exchange control regulations andother regulatory requirements applicable to Class A ordinary shares, ADSs and ADRs; and●the fees and expenses incurred by the depositary bank, the custodian, or any nominee in connection with the servicing ordelivery of deposited property.ADS fees and charges payable upon (i) the issuance of ADSs, and (ii) the cancellation of ADSs are charged to the person to whomthe ADSs are issued (in the case of ADS issuances) and to the person whose ADSs are cancelled (in the case of ADS cancellations). In thecase of ADSs issued by the depositary bank into DTC, the ADS issuance and cancellation fees and charges may be deducted fromdistributions made through DTC, and may be charged to the DTC participant(s) receiving the ADSs being issued or the DTC participant(s)holding the ADSs being cancelled, as the case may be, on behalf of the beneficial owner(s) and will be charged by the DTC participant(s)to the account of the applicable beneficial owner(s) in accordance with the procedures and practices of the DTC participants as in effect atthe time. ADS fees and charges in respect of distributions and the ADS service fee are charged to the holders as of the applicable ADSrecord date. In the case of distributions of cash, the amount of the applicable ADS fees and charges is deducted from the funds beingdistributed. In the case of (i) distributions other than cash and (ii) the ADS service fee, holders as of the ADS record date will be invoicedfor the amount of the ADS fees and charges and such ADS fees and charges may be deducted from distributions made to holders of ADSs.For ADSs held through DTC, the ADS fees and charges for distributions other than cash and the ADS service fee may Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 18 of 20 be deducted from distributions made through DTC, and may be charged to the DTC participants in accordance with the procedures andpractices prescribed by DTC and the DTC participants in turn charge the amount of such ADS fees and charges to the beneficial ownersfor whom they hold ADSs.In the event of refusal to pay the depositary bank fees, the depositary bank may, under the terms of the deposit agreement, refuse therequested service until payment is received or may set off the amount of the depositary bank fees from any distribution to be made to theADS holder. Certain of the depositary fees and charges (such as the ADS services fee) may become payable shortly after the closing of theADS offering. Note that the fees and charges you may be required to pay may vary over time and may be changed by us and by thedepositary bank. You will receive prior notice of such changes. The depositary bank may reimburse us for certain expenses incurred by usin respect of the ADR program, by making available a portion of the ADS fees charged in respect of the ADR program or otherwise, uponsuch terms and conditions as we and the depositary bank agree from time to time.Amendments and TerminationWe may agree with the depositary bank to modify the deposit agreement at any time without your consent. We undertake to giveholders 30 days’ prior notice of any modifications that would materially prejudice any of their substantial rights under the depositagreement. We will not consider to be materially prejudicial to your substantial rights any modifications or supplements that arereasonably necessary for the ADSs to be registered under the Securities Act or to be eligible for book-entry settlement, in each casewithout imposing or increasing the fees and charges you are required to pay. In addition, we may not be able to provide you with priornotice of any modifications or supplements that are required to accommodate compliance with applicable provisions of law.You will be bound by the modifications to the deposit agreement if you continue to hold your ADSs after the modifications to thedeposit agreement become effective. The deposit agreement cannot be amended to prevent you from withdrawing the Class A ordinaryshares represented by your ADSs (except as permitted by law).We have the right to direct the depositary bank to terminate the deposit agreement. Similarly, the depositary bank may in certaincircumstances on its own initiative terminate the deposit agreement. In either case, the depositary bank must give notice to the holders atleast 30 days before termination. Until termination, your rights under the deposit agreement will be unaffected.After termination, the depositary bank will continue to collect distributions received (but will not distribute any such property untilyou request the cancellation of your ADSs) and may sell the securities held on deposit. After the sale, the depositary bank will hold theproceeds from such sale and any other funds then held for the holders of ADSs in a non-interest bearing account. At that point, thedepositary bank will have no further obligations to holders other than to account for the funds then held for the holders of ADSs stilloutstanding (after deduction of applicable fees, taxes and expenses).In connection with any termination of the deposit agreement, the depositary bank may make available to owners of ADSs a means towithdraw the Class A ordinary shares represented by ADSs and to direct the depositary of such Class A ordinary shares into anunsponsored American depositary share program established by the depositary bank. The ability to receive unsponsored Americandepositary shares upon termination of the deposit agreement would be subject to satisfaction of certain U.S. regulatory requirementsapplicable to the creation of unsponsored American depositary shares and the payment of applicable depositary fees.Books of DepositaryThe depositary bank will maintain ADS holder records at its depositary office. You may inspect such records at such office duringregular business hours but solely for the purpose of communicating with other holders in the interest of business matters relating to theADSs and the deposit agreement. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 19 of 20 The depositary bank will maintain in New York facilities to record and process the issuance, cancellation, combination, split-up andtransfer of ADSs. These facilities may be closed from time to time, to the extent not prohibited by law.Limitations on Obligations and LiabilitiesThe deposit agreement limits our obligations and the depositary bank’s obligations to you. Please note the following:●We and the depositary bank are obligated only to take the actions specifically stated in the deposit agreement withoutnegligence or bad faith.●The depositary bank disclaims any liability for any failure to carry out voting instructions, for any manner in which a voteis cast or for the effect of any vote, provided it acts in good faith and in accordance with the terms of the deposit agreement.●The depositary bank disclaims any liability for any failure to determine the lawfulness or practicality of any action, for thecontent of any document forwarded to you on our behalf or for the accuracy of any translation of such a document, for theinvestment risks associated with investing in Class A ordinary shares, for the validity or worth of the Class A ordinaryshares, for any tax consequences that result from the ownership of ADSs, for the credit-worthiness of any third party, forallowing any rights to lapse under the terms of the deposit agreement, for the timeliness of any of our notices or for ourfailure to give notice.●We and the depositary bank will not be obligated to perform any act that is inconsistent with the terms of the depositagreement.●We and the depositary bank disclaim any liability if we or the depositary bank are prevented or forbidden from or subject toany civil or criminal penalty or restraint on account of, or delayed in, doing or performing any act or thing required by theterms of the deposit agreement, by reason of any provision, present or future of any law or regulation, or by reason ofpresent or future provision of any provision of our Articles of Association, or any provision of or governing the securitieson deposit, or by reason of any act of God or war or other circumstances beyond our control.●We and the depositary bank disclaim any liability by reason of any exercise of, or failure to exercise, any discretionprovided for in the deposit agreement or in our Articles of Association or in any provisions of or governing the securitieson deposit.●We and the depositary bank further disclaim any liability for any action or inaction in reliance on the advice or informationreceived from legal counsel, accountants, any person presenting Class A ordinary shares for deposit, any holder of ADSs orauthorized representatives thereof, or any other person believed by either of us in good faith to be competent to give suchadvice or information.●We and the depositary bank also disclaim liability for the inability by a holder to benefit from any distribution, offering,right or other benefit that is made available to holders of Class A ordinary shares but is not, under the terms of the depositagreement, made available to you.●We and the depositary bank may rely without any liability upon any written notice, request or other document believed tobe genuine and to have been signed or presented by the proper parties.●We and the depositary bank also disclaim liability for any consequential or punitive damages for any breach of the terms ofthe deposit agreement.●No disclaimer of any Securities Act liability is intended by any provision of the deposit agreement.●Nothing in the deposit agreement gives rise to a partnership or joint venture, or establishes a fiduciary relationship, amongus, the depositary bank and you as ADS holder.●Nothing in the deposit agreement precludes Citibank (or its affiliates) from engaging in transactions in which partiesadverse to us or the ADS owners have interests, and nothing in the deposit agreement obligates Citibank to disclose thosetransactions, or any information obtained in the course of those transactions, to us or to the ADS owners, or to account for Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex2d4.htm Type: EX-2.4 Pg: 20 of 20 any payment received as part of those transactions.Pre-Release TransactionsSubject to the terms and conditions of the deposit agreement, the depositary bank may issue to broker/dealers ADSs before receivinga deposit of Class A ordinary shares or release Class A ordinary shares to broker/dealers before receiving ADSs for cancellation. Thesetransactions are commonly referred to as “pre-release transactions,” and are entered into between the depositary bank and the applicablebroker/dealer. The deposit agreement limits the aggregate size of pre-release transactions (not to exceed 30% of the Class A ordinaryshares on deposit in the aggregate) and imposes a number of conditions on such transactions (e.g., the need to receive collateral, the typeof collateral required, the representations required from brokers, etc.). The depositary bank may retain the compensation received from thepre-release transactions.TaxesYou will be responsible for the taxes and other governmental charges payable on the ADSs and the securities represented by theADSs. We, the depositary bank and the custodian may deduct from any distribution the taxes and governmental charges payable byholders and may sell any and all property on deposit to pay the taxes and governmental charges payable by holders. You will be liable forany deficiency if the sale proceeds do not cover the taxes that are due.The depositary bank may refuse to issue ADSs, to deliver, transfer, split and combine ADRs or to release securities on deposit untilall taxes and charges are paid by the applicable holder. The depositary bank and the custodian may take reasonable administrative actionsto obtain tax refunds and reduced tax withholding for any distributions on your behalf. However, you may be required to provide to thedepositary bank and to the custodian proof of taxpayer status and residence and such other information as the depositary bank and thecustodian may require to fulfill legal obligations. You are required to indemnify us, the depositary bank and the custodian for any claimswith respect to taxes based on any tax benefit obtained for you.Foreign Currency ConversionThe depositary bank will arrange for the conversion of all foreign currency received into U.S. dollars if such conversion is practical,and it will distribute the U.S. dollars in accordance with the terms of the deposit agreement. You may have to pay fees and expensesincurred in converting foreign currency, such as fees and expenses incurred in complying with currency exchange controls and othergovernmental requirements.If the conversion of foreign currency is not practical or lawful, or if any required approvals are denied or not obtainable at areasonable cost or within a reasonable period, the depositary bank may take the following actions in its discretion:●Convert the foreign currency to the extent practical and lawful and distribute the U.S. dollars to the holders for whom theconversion and distribution is lawful and practical.●Distribute the foreign currency to holders for whom the distribution is lawful and practical.●Hold the foreign currency (without liability for interest) for the applicable holders.Governing LawThe deposit agreement and the ADRs are interpreted in accordance with the laws of the State of New York. The rights of holders ofClass A ordinary shares (including Class A ordinary shares represented by ADSs) are governed by the laws of the Cayman Islands. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex8d1.htm Type: EX-8.1 Pg: 1 of 1 Exhibit 8.1List of Significant Subsidiaries and Consolidated Variable Interest Entity ofBEST Inc. (as of December 31, 2023)Subsidiaries Jurisdiction of IncorporationEight Hundred Logistics Technologies CorporationBritish Virgin IslandsBEST Logistics Technologies LimitedHong KongZhejiang BEST Technology Co., Ltd.* 浙江百世技术有限公司PRCBEST Logistics Technologies (China) Co., Ltd.* 百世物流科技（中国）有限公司PRCBEST Logistics Technologies (Ningbo Free Trade Zone) Co., Ltd.* 百世物流科技（宁波保税区）有限公司PRCBEST Capital Inc.Cayman IslandsBEST Capital Holding LimitedBritish Virgin IslandsBEST Capital Management LimitedHong KongXinyuan Financial Leasing (Zhejiang) Co., Ltd.* 信远融资租赁（浙江）有限公司BEST Store Network LimitedBEST Store Network Holding Limited.BEST Store Network Management Limited.BEST Store Network (Hangzhou) Co., Ltd.PRCCayman IslandsBritish Virgin IslandsHong KongPRCConsolidated Variable Interest EntityJurisdiction of IncorporationHangzhou BEST Information Technology Services Co., Ltd.* 杭州百世信息技术服务有限公司Hangzhou Baijia Business Management Consulting Co., Ltd. * 杭州百加商业管理咨询有限公司PRCPRC*The English name of this subsidiary or consolidated Variable Interest Entity, as applicable, has been translated from its Chinese name. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex11d2.htm Type: EX-11.2 Pg: 1 of 8 Exhibit 11.2BEST INC.(THE “COMPANY”)STATEMENT OF POLICIESGOVERNING MATERIAL, NON-PUBLIC INFORMATION ANDTHE PREVENTION OF INSIDER TRADINGAdopted on September 6, 2017 and effective immediately upon commencement of the trading of the Americandepositary shares (the “ADSs”) representing Class A ordinary shares (the “Ordinary Shares”) of the Company onthe New York Stock Exchange (the “NYSE”)This Statement of Policies Governing Material, Non-Public Information and the Prevention of InsiderTrading (this “Statement”) of the Company consists of three sections: Section I provides an overview; Section IIsets forth the Company’s policies prohibiting insider trading; and Section III explains insider trading.I.SUMMARYThe Company’s ADSs representing the Ordinary Shares are currently trading on the NYSE. “Insider trading” occurs when you purchase or sell securities while in possession of inside information relating to such securities. As explained in Section III below, “inside information” is information which is considered to be both “material” and “non-public.” Preventing insider trading is necessary to comply with United States securities law and to preserve the reputation and integrity of the Company as well as that of all persons affiliated with it.The Company considers strict compliance with the policies (the “Policy”) set forth in this Statement to be a matter of utmost importance. Violation of this Policy could cause extreme embarrassment and possible legal liability to you and the Company. Knowing or willful violations of this Statement or its spirit will be grounds for immediate dismissal from the Company. Violation of the Policy might expose the violator to severe criminal penalties and civil liabilities. The monetary damages flowing from a violation could be three times the profit realized by the violator, as well as the attorney’s fees of the persons injured.This Statement applies to all officers, directors, employees and consultants of the Company and itssubsidiaries or any consolidated entities or any other person or entity (a) over which an individual mentioned aboveexercises influence or control of its investment decisions, or (b) which effects a transaction in the Company’ssecurities, which securities are in fact beneficially owned by any of the individuals mentioned above (“Insider(s)”). Every Insider must review this Statement, and execute and return the Certificate of Compliance attached hereto to Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex11d2.htm Type: EX-11.2 Pg: 2 of 8 2the Company’s Human Resources department within seven (7) days after you receive this Statement.Questions regarding the Statement should be directed to the Compliance Officer.II.POLICIES PROHIBITING INSIDER TRADINGFor purposes of this Statement, while the terms “purchase” and “sell” of securities exclude the acceptanceof options granted by the Company thereof and the exercise of options that does not involve the sale of securities,the cashless exercise of options does involve the sale of securities and therefore is subject to the policies set forthbelow.A.No Trading with Material Insider Information – No Insider shall purchase or sell any securitiesof the Company while in possession of material, non-public information relating to the Company, its ADSsor other securities (the “Material Insider Information”) or during certain periods.If you possess Material Insider Information you must wait for the later of (i) forty eight (48) hours after public disclosure of the Material Insider Information by the Company, or (ii) one full Trading Day on the NYSE following such public disclosure before trading the Company’s ADSs or other securities. The term “Trading Day” is defined as a day on which the NYSE is open for trading. NYSE’s regular trading hours are from 9:30 a.m. to 4:00 p.m., New York City time, Monday through Friday.In addition, no Insider shall purchase or sell any securities of the Company, regardless of whether suchInsider possesses any Material Insider Information, (1) during any period commencing on the 20th day of the lastmonth of each fiscal quarter and ending at the close of trading on the second Trading Day following the date uponwhich the Company’s earnings statement for that fiscal quarter is released to the public; or (2) without priorclearance by the Compliance Officer, during any period designated as a “limited trading period.” The Compliance Officer may declare limited trading periods at the times that he deems appropriate, and need not provide any reason for making a declaration.Furthermore, beginning on December 20 of each fiscal year, no Insider shall purchase or sell any security ofthe Company until the close of trading on the second Trading Day following the date of the Company’s release ofits financial results for the fiscal year ended on December 31 of the prior year.Please see Section III below for an explanation of the Material Insider Information.B.No Trading Outside of the Trading Window for Directors, Officers and Key Employees –Directors, officers and key employees designated by the Company may only purchase or sell any securities ofthe Company during the “Trading Window” and if such persons are not otherwise restricted from purchasing or selling any securities of the Company by Section II-A above. Generally, there will be fourTrading Windows per year, each commencing with the close of trading on the second Trading Day following thedate upon Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex11d2.htm Type: EX-11.2 Pg: 3 of 8 3which the Company’s financial results for the prior fiscal quarter is released to the public and closing on the 20thday of the last month of each fiscal quarter.Furthermore, all transactions in the Company’s securities (including without limitation, acquisitions anddispositions of the ADSs and the sale of Ordinary Shares issued upon exercise of stock options, but excluding theacceptance of options granted by the Company and the exercise of options that does not involve the sale ofsecurities) by officers, directors and key employees designated by the Company from time to time must be pre-approved by the Compliance Officer.If the Company’s earnings statement for a fiscal quarter or fiscal year is released on a Trading Day morethan four hours before the NYSE closes, then such date of disclosure shall be considered the first Trading Dayfollowing such public disclosure.Please note that trading in Company securities during the Trading Window is not a “safe harbor,”and all Insiders should strictly comply with all other policies set forth in this Statement.When in doubt, do not trade! Check with the Compliance Officer first.C.No Tipping – No Insider shall directly or indirectly disclose any Material Insider Information toanyone who trades in securities (so-called “tipping”).D.Confidentiality – No Insider shall communicate any Material Insider Information to anyone outsidethe Company under any circumstances unless approved by the Compliance Officer in advance, or to anyone withinthe Company other than on a need-to-know basis.E.No Comment – No Insider shall discuss any internal matters or developments of the Company with anyone outside of the Company, except as required in the performance of regular corporate duties. Unless you are expressly authorized to the contrary, if you receive any inquiries about the Company or its securities by the financial press, investment analysts or others, or any requests for comments or interviews, you should decline to comment and direct the inquiry or request to the Compliance Officer.F.Corrective Action – If any potentially Material Insider Information is inadvertently disclosed, anyInsider should notify the Compliance Officer immediately so that the Company can determine whether or notcorrective action, such as general disclosure to the public, is warranted. Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex11d2.htm Type: EX-11.2 Pg: 4 of 8 4III.EXPLANATION OF INSIDER TRADINGAs noted above, “insider trading” refers to the purchase or sale of securities while in possession of “material” and “non-public” information relating to such securities. “Securities” include not only stocks, bonds, notes and debentures, but also options, warrants and similar instruments. “Purchase” and “sale” are defined broadly under the federal securities law. “Purchase” includes not only the actual purchase of securities, but any contract to purchase or otherwise acquire securities. “Sale” includes not only the actual sale of securities, but any contract to sell or otherwise dispose of securities. These definitions extend to a broad range of transactions including conventional cash-for-stock transactions, the grant and exercise of stock options and acquisitions and exercises of warrants or puts, calls or other options related to the securities. It is generally understood that insider trading includes the following:●Trading by Insiders while in possession of material, non-public information;●Trading by persons other than Insiders while in possession of material, non-public informationwhere the information either was given in breach of an Insider’s fiduciary duty to keep itconfidential or was misappropriated; or●Communicating or tipping material, non-public information to others, including recommending thepurchase or sale of the securities while in possession of such information.As noted above, for purposes of this Statement, the terms “purchase” and “sell” of securities exclude the acceptance of options granted by the issuer thereof and the exercise of options that does not involve the sale of securities. Among other things, the cashless exercise of options does involve the sale of securities and therefore is subject to the policies set forth in this Statement.What Facts are Material?The materiality of a fact depends upon the circumstances. A fact is considered “material” if it could reasonably be expected to affect the decision of a reasonable investor to buy, sell or hold the Company’s securities or where the fact is likely to have a significant effect on the market price of the Company’s securities. Material Insider Information can be positive or negative and can relate to virtually any aspect of a company’s business or to any type of securities, debt or equity.Examples of Material Insider Information include (but are not limited to) information concerning:●dividends;●corporate earnings or earnings forecasts;●changes in financial condition or asset value; Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex11d2.htm Type: EX-11.2 Pg: 5 of 8 5●negotiations for the mergers or acquisitions or dispositions of significant subsidiaries or assets;●significant new contracts or the loss of a significant contract;●significant new products or services;●significant marketing plans or changes in such plans;●capital investment plans or changes in such plans;●material litigation, administrative action or governmental investigations or inquiries about theCompany or any of its affiliated companies, officers or directors;●significant borrowings or financings;●defaults on borrowings;●new equity or debt offerings;●significant personnel changes;●changes in accounting methods and write-offs; and●any substantial change in industry circumstances or competitive conditions which couldsignificantly affect the Company’s earnings or prospects for expansion.A good general rule of thumb: when in doubt, do not trade. One convenient rule of thumb in making this determination is to ask yourself, “Would the person on the other side of this transaction still want to complete the trade at this price if he or she knew what I know about the Company?” If the answer is “no,” you probably possess material, non-public information.What is Non-public?Information is “non-public” if it has not been disclosed in a manner that allows it to be widely disseminated. In order for information to be considered public, it must be widely disseminated in a manner making it generally available to investors and confirmed by a reasonably reliable source. Wide dissemination generally occurs through a press release or in the Company’s filing with the United States Security and Exchange Commission (the “SEC”),or through such media as Dow Jones, Reuters Economic Services, The Wall Street Journal, Bloomberg, AssociatedPress, or United Press International. Reasonable confirmation generally includes confirmation by officers, directors and key employees who have been authorized by the Company to speak on its behalf. The circulation of rumors, even if accurate and reported in the media, does not constitute effective public dissemination.In addition, even after a public announcement, a reasonable period of time must lapse in order for the market to react to the information. Generally, one should allow approximately forty Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex11d2.htm Type: EX-11.2 Pg: 6 of 8 6eight (48) hours following publication as a reasonable waiting period before such information is deemed to bepublic.Who is an Insider?Insiders include all officers, directors, employees, consultants and advisors (e.g. accountants, attorneys,investment bankers and consultants) of the Company and its subsidiaries or consolidated entities or any otherperson or entity (a) over which an individual mentioned above exercises influence or control of its investmentdecisions, or (b) which effects a transaction in the Company’s securities, which securities are in fact beneficiallyowned by any of the individuals mentioned above. Insiders have independent fiduciary duties to their company and its stockholders not to trade on material non-public information relating to the company’s securities. In addition, family members and friends of Insiders as well as professional advisors of the Company (e.g. accountants, attorneys, investment bankers and consultants) who receive material, non-public information about the Company may also fall under the definition of Insiders of the Company.It should be noted that trading by members of an Insider’s family members can be the responsibility of suchInsider under certain circumstances and could give rise to legal and Company-imposed sanctions.Trading by Persons Other than InsidersInsiders are also prohibited from disclosing material non-public information, or making a recommendation or expressing an opinion regarding the Company’s securities based on such information, to others who might use the information to trade in the Company’s securities. Both the Insider who communicated the material non-public information and the person who receives and uses such information (the “Tippee”) may be liable under UnitedStates securities laws.Persons other than Insiders also can be liable for insider trading, including Tippees who trade on material, non-public information tipped to them or individuals who trade on material, non-public information which has been misappropriated. Tippees inherit an Insider’s duties and are liable for trading on material, non-public information illegally tipped to them by an Insider. Similarly, just as Insiders are liable for the insider trading of their Tippees, so are Tippees who pass the information along to others who trade. In other words, a Tippee’s liability for insider trading is no different from that of an Insider. Tippees can obtain material, non-public information by receiving overt tips from others or through, among other things, conversations at social, business, or other gatherings.Penalties for Engaging in Insider TradingPenalties for trading on or tipping material, non-public information can extend significantly beyond any profits made or losses avoided, both for individuals engaging in such unlawful conduct and their employers. The SEC and the United States Department of Justice have made the civil and criminal prosecution of insider trading violations a top priority. Enforcement remedies available to the government or private plaintiffs under the federal securities laws include: Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex11d2.htm Type: EX-11.2 Pg: 7 of 8 7●SEC administrative sanctions;●securities industry self-regulatory organization sanctions;●civil injunctions;●damage awards to private plaintiffs;●disgorgement of all profits;●civil fines for the violator of up to three times the amount of profit gained or loss avoided;●civil fines for the employer or other controlling person of a violator (i.e., where the violator is anemployee or other controlled person) of up to the greater of US$1,000,000 or three times the amountof profit gained or loss avoided by the violator;●criminal fines for individual violators of up to US$1,000,000 (US$2,500,000 for an entity); and●jail sentences of up to 10 years.In addition, insider trading could result in serious sanctions by the Company, including immediate dismissal. Insider trading violations are not limited to violations of the federal securities laws: other federal and state civil or criminal laws, such as the laws prohibiting mail and wire fraud and the United States Racketeer Influenced and Corrupt Organizations Act (RICO), may also be violated upon the occurrence of insider trading.(Remainder of the page intentionally left blank) Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex11d2.htm Type: EX-11.2 Pg: 8 of 8 CERTIFICATION OF COMPLIANCETO:Compliance OfficerFROM: RE:BEST INC. STATEMENT OF POLICIES OF GOVERNING MATERIAL, NON-PUBLICINFORMATION AND THE PREVENTION OF INSIDER TRADINGI have received, reviewed, and understand the above-referenced Statement of Policies (the “Policy”) and herebyundertake, as a condition to my present and continued employment at or association with BEST Inc., to complyfully with the Policy.I hereby certify that I have adhered to the Policy during the time period that I have been employed by orassociated with BEST Inc.I agree to adhere to the Policy in the future.Name:Title:Date: Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex12d1.htm Type: EX-12.1 Pg: 1 of 1 Exhibit 12.1Certification by the Principal Executive OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Shao-Ning Johnny Chou, certify that:1.I have reviewed this annual report on Form 20-F of BEST Inc. (the “Company”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presentedin this report;4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in ExchangeAct Rules 13a-15(f) and 15d-15(f)) for the company and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the Company, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this reportis being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples;(c)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered bythis report based on such evaluation; and(d)Disclosed in this report any change in the Company’s internal control over financial reporting that occurred duringthe period covered by the annual report that has materially affected, or is reasonably likely to materially affect, thecompany’s internal control over financial reporting; and5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or personsperforming the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize andreport financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in theCompany’s internal control over financial reporting.Date: April 30, 2024 By:/s/ Shao-Ning Johnny ChouName:Shao-Ning Johnny ChouTitle:Chief Executive Officer Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex12d2.htm Type: EX-12.2 Pg: 1 of 1 Exhibit 12.2Certification by the Principal Financial OfficerPursuant to Section 302 of the Sarbanes-Oxley Act of 2002I, Gloria Fan, certify that:1.I have reviewed this annual report on Form 20-F of BEST Inc. (the “Company”);2.Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material factnecessary to make the statements made, in light of the circumstances under which such statements were made, not misleadingwith respect to the period covered by this report;3.Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in allmaterial respects the financial condition, results of operations and cash flows of the Company as of, and for, the periods presentedin this report;4.The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures(as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in ExchangeAct Rules 13a-15(f) and 15d-15(f)) for the company and have:(a)Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designedunder our supervision, to ensure that material information relating to the Company, including its consolidatedsubsidiaries, is made known to us by others within those entities, particularly during the period in which this reportis being prepared;(b)Designed such internal control over financial reporting, or caused such internal control over financial reporting to bedesigned under our supervision, to provide reasonable assurance regarding the reliability of financial reporting andthe preparation of financial statements for external purposes in accordance with generally accepted accountingprinciples;(c)Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report ourconclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered bythis report based on such evaluation; and(d)Disclosed in this report any change in the Company’s internal control over financial reporting that occurred duringthe period covered by the annual report that has materially affected, or is reasonably likely to materially affect, thecompany’s internal control over financial reporting; and5.The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control overfinancial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or personsperforming the equivalent functions):(a)All significant deficiencies and material weaknesses in the design or operation of internal control over financialreporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize andreport financial information; and(b)Any fraud, whether or not material, that involves management or other employees who have a significant role in theCompany’s internal control over financial reporting.Date: April 30, 2024 By:/s/ Gloria FanName:Gloria FanTitle:Chief Financial Officer Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex13d1.htm Type: EX-13.1 Pg: 1 of 1 Exhibit 13.1Certification by the Principal Executive OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the annual report of BEST Inc. (the “Company”) on Form 20-F for the year ended December 31, 2023 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Shao-Ning Johnny Chou, Chief Executive Officer ofthe Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that tomy knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the Company.Date: April 30, 2024By:/s/ Shao-Ning Johnny Chou Name:Shao-Ning Johnny Chou Title:Chief Executive Officer  Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex13d2.htm Type: EX-13.2 Pg: 1 of 1 Exhibit 13.2Certification by the Principal Financial OfficerPursuant to Section 906 of the Sarbanes-Oxley Act of 2002In connection with the annual report of BEST Inc. (the “Company”) on Form 20-F for the year ended December 31, 2023 as filedwith the Securities and Exchange Commission on the date hereof (the “Report”), I, Gloria Fan, Chief Financial Officer of the Company,certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operationsof the Company.Date: April 30, 2024By:/s/ Gloria Fan Name:Gloria Fan Title:Chief Financial Officer  Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex15d1.htm Type: EX-15.1 Pg: 1 of 1 Exhibit 15.1CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMWe consent to the incorporation by reference in the following Registration Statements:(1)Registration Statement (Form S-8 No. 333-222126) pertaining to the 2008 Equity and Performance Incentive Plan and 2017Equity Incentive Plan of BEST Inc.,(2)Registration Statement (Form S-8 No. 333-237744) pertaining to 2017 Equity Incentive Plan of BEST Inc., and(3)Registration Statement (Form S-8 No. 333-263062) pertaining to 2017 Equity Incentive Plan of BEST Inc.of our reports dated April 30, 2024, with respect to the consolidated financial statements of BEST Inc. included in this Annual Report(Form 20-F) of BEST Inc. for the year ended December 31, 2023./s/ Ernst & Young Hua Ming LLPShanghai, The People’s Republic of ChinaApril 30, 2024 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex15d2.htm Type: EX-15.2 Pg: 1 of 1 Exhibit 15.2April 30, 2024BEST Inc.2nd Floor, Block A, Huaxing Modern Industry ParkNo. 18 Tangmiao Road, Xihu District, Hangzhou, Zhejiang Province 310013People’s Republic of ChinaAttention: The Board of DirectorsDear Sirs or Madam,Re: BEST Inc. (the “Company”)We, King & Wood Mallesons, consent to the reference to our firm under the captions of “Item 3.D — Risk Factors — Risks Related toDoing Business in the People’s Republic of China” and “Item 4.B — Business Overview —Regulatory Matters” in BEST Inc.’s annualreport on Form 20-F for the year ended December 31, 2023, which will be filed with the Securities and Exchange Commission in themonth of April 2024.In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 ofthe Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgatedthereunder.Yours faithfully, /s/ King & Wood Mallesons King & Wood Mallesons  Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex97d1.htm Type: EX-97.1 Pg: 1 of 5 Exhibit 97.1BEST Inc.Incentive CompensationClawback Policy(As Adopted on November 20, 2023 Pursuant to NYSE Rule 303A.14)1.Overview. The Board of Directors (the “Board”) of BEST Inc. (the “Company”) has adopted thisIncentive Compensation Clawback Policy (the “Policy”) which requires the recoupment of certain incentive-basedcompensation in accordance with the terms herein and is intended to comply with Section 303A.14 of The NewYork Stock Exchange Listed Company Manual, as such section may be amended from time to time (the “ListingRules”). Capitalized terms not otherwise defined herein shall have the meanings assigned to such terms underSection 12 of this Policy.2.Interpretation and Administration. The Compensation Committee (the “Committee”) of theBoard shall have full authority to interpret and enforce the Policy; provided, however, that the Policy shall beinterpreted in a manner consistent with its intent to meet the requirements of the Listing Rules. As further set forthin Section 10 below, this Policy is intended to supplement any other clawback policies and procedures that theCompany may have in place from time to time pursuant to other applicable law, plans, policies or agreements.3.Covered Executives. The Policy applies to each current and former Executive Officer of theCompany who serves or served as an Executive Officer at any time during a performance period in respect of whichIncentive Compensation is Received, to the extent that any portion of such Incentive Compensation is (a) Receivedby the Executive Officer during the last three completed Fiscal Years or any applicable Transition Period precedingthe date that the Company is required to prepare a Restatement (regardless of whether any such Restatement isactually filed) and (b) determined to have included Erroneously Awarded Compensation. For purposes ofdetermining the relevant recovery period referenced in the preceding clause (a), the date that the Company isrequired to prepare a Restatement under the Policy is the earlier to occur of (i) the date that the Board, a committeeof the Board, or the officer or officers of the Company authorized to take such action if Board action is notrequired, concludes, or reasonably should have concluded, that the Company is required to prepare a Restatementor (ii) the date a court, regulator, or other legally authorized body directs the Company to prepare a Restatement.Executive Officers subject to this Policy pursuant to this Section 3 are referred to herein as “Covered Executives.”4.Recovery of Erroneously Awarded Compensation. If any Erroneously Awarded Compensation isReceived by a Covered Executive, the Company shall reasonably promptly take steps to recover such ErroneouslyAwarded Compensation in a manner described under Section 5 of this Policy.5.Forms of Recovery. The Committee shall determine, in its sole discretion and in a manner thateffectuates the purpose of the Listing Rules, one or more methods for recovering any Erroneously AwardedCompensation hereunder in accordance with Section 4 above, which may include, without limitation: (a) requiringcash reimbursement; (b) seeking recovery or forfeiture of any gain realized on the vesting, exercise, settlement,sale, transfer or other disposition of any equity-based awards; (c) offsetting the amount to be recouped from anycompensation Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex97d1.htm Type: EX-97.1 Pg: 2 of 5 2otherwise owed by the Company to the Covered Executive; (d) cancelling outstanding vested or unvested equityawards; or (e) taking any other remedial and recovery action permitted by law, as determined by the Committee. Tothe extent the Covered Executive refuses to pay to the Company an amount equal to the Erroneously AwardedCompensation, the Company shall have the right to sue for repayment and/or enforce the Covered Executive’sobligation to make payment through the reduction or cancellation of outstanding and future compensation. Anyreduction, cancellation or forfeiture of compensation shall be done in compliance with Section 409A of the InternalRevenue Code of 1986, as amended, and the regulations promulgated thereunder.6.No Indemnification. The Company shall not indemnify any Covered Executive against the loss ofany Erroneously Awarded Compensation for which the Committee has determined to seek recoupment pursuant tothis Policy.7.Exceptions to the Recovery Requirement. Notwithstanding anything in this Policy to the contrary,Erroneously Awarded Compensation need not be recovered pursuant to this Policy if the Committee (or, if theCommittee is not composed solely of Independent Directors, a majority of the Independent Directors serving on theBoard) determines that recovery would be impracticable as a result of any of the following:(a)the direct expense paid to a third party to assist in enforcing the Policy would exceed theamount to be recovered; provided that, before concluding that it would be impracticable to recover any amount ofErroneously Awarded Compensation based on expense of enforcement, the Company must make a reasonableattempt to recover such Erroneously Awarded Compensation, document such reasonable attempt(s) to recover, andprovide that documentation to the Exchange;(b)recovery would violate home country law where that law was adopted prior to November 28,2022; provided that, before concluding that it would be impracticable to recover any amount of ErroneouslyAwarded Compensation based on violation of home country law, the Company must obtain an opinion of homecountry counsel, acceptable to the Exchange, that recovery would result in such a violation, and must provide suchopinion to the Exchange; or(c)recovery would likely cause an otherwise tax-qualified retirement plan, under which benefitsare broadly available to employees of the Company, to fail to meet the requirements of 26 U.S.C. 401(a)(13) or 26U.S.C. 411(a) and the regulations thereunder.8.Committee Determination Final. Any determination by the Committee with respect to the Policyshall be final, conclusive and binding on all interested parties.9.Amendment. The Policy may be amended by the Committee from time to time, to the extentpermitted under the Listing Rules.10.Non-Exclusivity. Nothing in the Policy shall be viewed as limiting the right of the Company or theCommittee to pursue additional remedies or recoupment under or as required by any similar policy adopted by theCompany or under the Company’s compensation plans, award agreements, employment agreements or similaragreements or the applicable provisions of any law, rule or regulation which may require or permit recoupment to agreater degree or with respect to additional compensation as compared to this Policy (but without duplication as toany Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex97d1.htm Type: EX-97.1 Pg: 3 of 5 3recoupment already made with respect to Erroneously Awarded Compensation pursuant to this Policy). This Policyshall be interpreted in all respects to comply with the Listing Rules.11.Successors. The Policy shall be binding and enforceable against all Covered Executives and theirbeneficiaries, heirs, executors, administrators or other legal representatives.12.Defined Terms.“Covered Executives” shall have the meaning set forth in Section 3 of this Policy.“Erroneously Awarded Compensation” shall mean the amount of Incentive Compensation actuallyReceived that exceeds the amount of Incentive Compensation that otherwise would have been Received had it beendetermined based on the restated amounts, and computed without regard to any taxes paid. For IncentiveCompensation based on stock price or total shareholder return, where the amount of erroneously awarded IncentiveCompensation is not subject to mathematical recalculation directly from the information in a Restatement:(A)The calculation of Erroneously Awarded Compensation shall be based on a reasonableestimate of the effect of the Restatement on the stock price or total shareholder return uponwhich the Incentive Compensation was Received; and(B)The Company shall maintain documentation of the determination of that reasonable estimateand provide such documentation to the Exchange.“Exchange” shall mean The New York Stock Exchange.“Executive Officer” shall mean the Company’s president, principal financial officer, principalaccounting officer (or if there is no such accounting officer, the controller), any vice-president of the Company incharge of a principal business unit, division, or function (such as sales, administration, or finance), any other officerwho performs a policy-making function, or any other person who performs similar policy-making functions for theCompany. Executive officers of the Company’s parent(s) or subsidiaries shall be deemed executive officers of theCompany if they perform such policy-making functions for the Company.“Financial Reporting Measures” shall mean measures that are determined and presented inaccordance with the accounting principles used in preparing the Company’s financial statements, and any measuresthat are derived wholly or in part from such measures, including, without limitation, stock price and totalshareholder return (in each case, regardless of whether such measures are presented within the Company’s financialstatements or included in a filing with the Securities and Exchange Commission).“Fiscal Year” shall mean the Company’s fiscal year; provided that a Transition Period between thelast day of the Company’s previous fiscal year end and the first day of its new fiscal year that comprises a period ofnine to 12 months will be deemed a completed fiscal year.“Incentive Compensation” shall mean any compensation (whether cash or equity-based) that isgranted, earned, or vested based wholly or in part upon the attainment of a Financial Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex97d1.htm Type: EX-97.1 Pg: 4 of 5 4Reporting Measure, and may include, but shall not be limited to, performance bonuses and long-term incentiveawards such as stock options, stock appreciation rights, restricted stock, restricted stock units, performance shareunits or other equity-based awards. For the avoidance of doubt, Incentive Compensation does not include (i) awardsthat are granted, earned and vested exclusively upon completion of a specified employment period, without anyperformance condition, and (ii) bonus awards that are discretionary or based on subjective goals or goals unrelatedto Financial Reporting Measures. Notwithstanding the foregoing, compensation amounts shall not be considered“Incentive Compensation” for purposes of the Policy unless such compensation is Received (1) while the Companyhas a class of securities listed on a national securities exchange or a national securities association and (2) on orafter October 2, 2023, the effective date of the Listing Rules.“Independent Director” shall mean a director who is determined by the Board to be “independent”for Board or Committee membership, as applicable, under the rules of the Exchange, as of any determination date.“Listing Rules” shall have the meaning set forth in Section 1 of this Policy.Incentive Compensation shall be deemed “Received” in the Company’s fiscal period during whichthe Financial Reporting Measure specified in the Incentive Compensation award is attained, even if the payment orgrant of the Incentive Compensation occurs after the end of that period.“Restatement” shall mean an accounting restatement due to the material noncompliance of theCompany with any financial reporting requirement under the securities laws, including any required accountingrestatement to correct an error in previously issued financial statements that is material to the Company’spreviously issued financial statements, or that would result in a material misstatement if the error were corrected inthe current period or left uncorrected in the current period.“Transition Period” shall mean any transition period that results from a change in the Company’sFiscal Year within or immediately following the three completed Fiscal Years immediately preceding theCompany’s requirement to prepare a Restatement.Adopted on: November 20, 2023 Date: 04/29/2024 09:01 PMToppan MerrillProject: 24-1847-1 Form Type: 20-F Client: 24-1847-1_BEST Inc._20-F File: best-20231231xex97d1.htm Type: EX-97.1 Pg: 5 of 5 5Acknowledgment of Incentive Compensation Clawback PolicyReference is made to the BEST Inc. Incentive Compensation Clawback Policy (as adopted on November20, 2023 pursuant to NYSE Rule 303A.14) (the “Policy”). Capitalized terms used herein without definition havethe meanings assigned to such terms under the Policy.By signing below, the undersigned acknowledges, confirms and agrees that:●the undersigned has received and reviewed a copy of the Policy;●the undersigned is, and will continue to be, subject to the Policy to the extent provided therein;●the Policy may apply both during and after termination of the undersigned’s employment with theCompany and its affiliates; and●the undersigned agrees to abide by the terms of the Policy, including, without limitation, byreturning any Erroneously Awarded Compensation to the Company pursuant to the Policy.SignaturePrint NameDate

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