Suzhou ousheng Electric Co., Ltd
Reply of Suzhou Alton Electrical & Mechanical Industry Co., Ltd. (north of Linhu Avenue and east of laixiu Road, FenHu high tech Development Zone, Jiangsu Province) to the examination and inquiry letter on the application documents of Suzhou ousheng Electric Co., Ltd. for IPO and listing on the gem
Sponsor (lead underwriter)
(No. 86, Jingqi Road, Shizhong District, Jinan City, Shandong Province)
December, 2001
catalogue
1. About brand authorization mode 32. About labor dispatch 243. On the legality and compliance of operation 344. About industry and Technology 395. With regard to the change of controlling shareholders in history 606. With regard to subsidiaries and other enterprises controlled by the actual controller 857. About new shareholders in the last year 1018. About product quality responsibility 1059. About plant rental 11110. About overseas real estate 11711. With regard to information disclosure 12512. On sales model and revenue recognition policy 14013. About ODM and brand authorization model 15714. With regard to operating income 18115. With regard to overseas sales 21016. About the top five customers 23117. With regard to operating costs 25618. About the top five suppliers 29119. With regard to gross profit margin 31220. With regard to inventory 34921. About accounts receivable and third-party collection 36222. About investment real estate and fixed assets 37723. With regard to period costs 39024. With regard to internal transactions and tax incentives 41525. With regard to other current assets 42126. About dividends 43827. About raised investment projects 44628. On the impact of covid-19 pneumonia 45129. With regard to the difference between the original statement and the declared statement 456 Shenzhen Stock Exchange:
We have received the examination and inquiry letter on the application documents for initial public offering and listing on the gem of Suzhou ousheng Electric Co., Ltd. (hereinafter referred to as the “examination and inquiry letter”) No. [2020] 010691 issued by your exchange on October 31, 2020. Zhongtai Securities Co.Ltd(600918) (hereinafter referred to as the “sponsor”) as the sponsor and lead underwriter, together with Suzhou ousheng Electric Co., Ltd. (hereinafter referred to as “ousheng electric”, “issuer” or “company”), Guohao law firm (Shanghai) (hereinafter referred to as the “issuer’s lawyer”) Lixin Zhonglian Certified Public Accountants (special general partnership) (hereinafter referred to as “the issuer’s accountant” and “Lixin Zhonglian”) have implemented the issues listed in the audit inquiry letter one by one. The reply is as follows. Please review.
Note:
1. Unless otherwise stated, the abbreviations and definitions of terms used in this reply report are consistent with those in the prospectus. 2. Any discrepancy between the total amount and the mantissa of the sum of the sub item values in this reply report is caused by rounding.
The font in this reply report represents the following meanings:
Review the questions listed in the inquiry letter in bold (BOLD)
Responses to the questions listed in the inquiry letter (not bold)
Amendments and supplements to the prospectus (BOLD)
1. About brand authorization mode
According to the application materials, during the reporting period, the issuer mainly used ODM and brand authorization mode for sales, of which the sales amount of brand authorization mode accounted for 39.48%, 30.43%, 35.96% and 27.99% of the main business income respectively. Under the brand authorization mode, the issuer and the brand Licensor sign a trademark use right agreement, the issuer leads the product development and design, selects customers for sales within the agreed period and designated territory, and pays the trademark license fee and sales share. In terms of small air compressor products, the issuer has obtained authorization from famous brands such as craftsman, Briggs & Stratton and DeWalt; In terms of dry and wet vacuum cleaner products, the issuer has obtained the authorization of well-known brands such as Stanley, Stanley Fatmax, Porter cable and DeWalt. The above brand licensing methods are non transferable, non sublicensable and non exclusive. Please the issuer:
(1) In combination with the main contents of the trademark use right agreement signed with the brand Licensor, supplement and disclose the main rights and obligations of both parties, the content and amount of fees paid to each brand party, whether the sales of the issuer’s own brand products are prohibited or restricted in the authorized sales area, and the adverse impact on the establishment and development of the issuer’s own brand, Whether both parties have agreed on the final sales price and sales customers of relevant commodities. In case of disputes over quality and intellectual property rights, both parties shall agree on the division of responsibilities;
(2) Supplementary disclosure of whether other parties or brand parties other than the issuer sell the same products in the same region under the non exclusive license, if so, whether they compete with the issuer, the advantages and disadvantages of the issuer compared with the above competitors, and whether there are disputes or potential disputes with the competitors;
(3) Supplementary disclosure of whether there are situations of selling self owned brands, authorized brands and products through ODM and OEM modes to the same customer at the same time, if so, whether there are risks such as intellectual property disputes;
(4) Supplementary disclosure of whether the same products are sold under different brands, if so, whether they comply with the provisions of relevant brand licensing agreements, whether they need the consent of the brand Licensor, and whether there are disputes or potential disputes;
(5) Disclose whether the above brand authorization model is commonly used in the industry, the interval between the signing of the license agreement for each brand (once every few years, whether there is difference compared with companies in the same industry), the conditions required for renewal, whether the relevant authorization is stable, whether there is a risk of being revoked or replaced by other parties, and the impact on the issuer’s sustainable operation ability, Whether the issuer uses the brand without authorization or exceeds the scope of authorization, and whether there are disputes or potential disputes with the brand Licensor.
The sponsor’s and the issuer’s lawyers are requested to express clear opinions and explain the verification process.
reply:
1、 In combination with the main contents of the trademark use right agreement signed with the brand Licensor, supplement and disclose the information of both parties
Main rights and obligations, whether the content and amount of fees paid to each brand party are within the authorized sales area
Prohibit or restrict the sale of the issuer’s own brand products and the impact on the establishment and development of the issuer’s own brand
Whether both parties agree on the final sales price and sales customers of relevant commodities, such as quality problems
For disputes such as volume and intellectual property rights, both parties shall agree on the division of responsibilities
(I) supplement and disclose the main contents of the trademark use right agreement signed with the brand Licensor
The main rights and obligations of the brand, and the content and amount of fees paid to each brand party
1. Supplement the disclosure of both parties in combination with the main contents of the trademark use right agreement signed with the brand Licensor
Main rights and obligations of
The issuer has listed “VI. main assets” in “section VI business and technology” of the prospectus
Supplement to “1. Main contents of brand licensing agreement” of “(III) licensed use of assets”
The exposure is as follows:
“(1) main contents, rights and obligations of the brand licensing agreement
During the reporting period, the company obtained information about Stanley Black & Decker and its subsidiaries
（Stanley Fatmax）、Porter Cable、Dewalt（Guaranteed Tough）、Black&Decker
(beyond by black & Decker) and craftsman brands in small air compressors and wet and dry vacuum cleaners
And other products, and obtained Briggs & Stratton tech, LLC’s information on Briggs & Stratton
The brand has the right to use the brand of small air compressor products. The trademark signed by the company and the above two brand licensors
The main contents of the right of use agreement are as follows:
Order the licensed brand of the Licensor to obtain the regional license period number of the brand license
January 1, 2017 – United States, Canada and some Latin America December 31, 2019; Dry and wet dual-purpose suction American countries and regions January 1, 2020 – Stanley oshen electric Stanley dust collector and its accessories December 31, 2022 1 Black & de gas and phase (Stanley parts) parts of Asia (China, Japan
Cker and its Guan Gong Fatmax) brand Philippines, Thailand, Indonesia, 2015.01.01- Affiliated Companies division Korea, Malaysia and China Taiwan) 2019.12.31 dry wet dual-use Australia, New Zealand, January 1, 2020 in Asia – dust collectors and dust collection areas (Cambodia, Indonesia, December 31, 2022)
Device accessories, blow to Japan, Malaysia, Philippines, Korea
Machinery, industrial fan countries, Thailand, Vietnam, Taiwan, China)
United States (including Puerto Rico), Canada November 1, 2015 – Porter cable dry and wet dual-purpose dust absorber December 31, 2018 and its accessories United States (including Puerto Rico), Canada, January 1, 2019 – Australia, New Zealand Philippines and some Latin American countries and regions on December 31, 2021
Wet and dry suction
Dust collector and dust collector, United States (including Puerto Rico), Canada, April 15, 2016 – dust collector accessories, land blowing area, November 30, 2018 machine, industrial fan
Wet and dry suction
DeWalt dust collector and dust collector
(guaranteed device accessories, blow to the United States (including Puerto Rico), Canada, 2018.12.01 – tough) brand machine, industrial wind Europe, Australia, New Zealand, Japan 2023.12.31 fan, air purification book, South Korea
