Zkh Group Limited's Business Segments

The registrant operates in the sale and distribution of hazardous chemicals and holds licenses including the Hazardous Chemicals Operation License (Excluding Storage Facilities) and the Certification for the Production and Operation of Precursor Chemicals (Class 3). The business faces regulatory risks related to maintaining and renewing these licenses, changes in laws in mainland China, and evolving regulations within the MRO procurement service industry. The company manages and stores personal information of employees from its customers and suppliers, exposing it to risks concerning data security, privacy, and compliance with relevant laws. Security breaches or unauthorized access to confidential information could lead to reputational damage, litigation, regulatory penalties, and materially affect operations. The registrant also depends on third-party suppliers who handle sensitive information, increasing its exposure to data-related risks. The company engages in investments, acquisitions, and strategic partnerships to broaden its offerings and geographic presence, activities that may involve significant costs, management distraction, and potential liabilities. It is involved in ongoing and potential legal proceedings, including lawsuits and arbitrations, which could result in substantial liabilities, negative publicity, and diversion of management focus. Although no current proceedings are expected to have a material impact, adverse outcomes could affect the company’s financial condition, operations, and reputation.