(b)

Principles of consolidation

The consolidated financial statements include the financial statements of the Company and its subsidiaries. All intercompany transactions and balances among the Company and its subsidiaries have been eliminated upon consolidation.

Foreign currencies and foreign currency translation

(d)

Foreign currencies and foreign currency translation

The functional and reporting currency of the Group is Renminbi (“RMB”). The Company’s operating subsidiaries in China and Hong Kong use their respective currencies RMB and Hong Kong Dollar (“HKD”) as their functional currencies.

The financial statements of Hong Kong entities are translated into RMB using the exchange rate as of the balance sheet date for assets and liabilities and average exchange rate for the years for income and expense items. Assets and liabilities denominated in foreign currencies at the balance sheet date are translated at the applicable rates of exchange in effect at that date. The equity denominated in the functional currency other than RMB is translated at the historical rate of exchange at the time of capital contribution.

Translation adjustments arising from these are reported as foreign currency translation adjustments RMB11,615, RMB10,158 and RMB200,146 (US$28,738) for the years ended December 31, 2020, 2021 and 2022, respectively and are shown as a separate component of shareholders’ equity on the consolidated financial statement. The following table outlines the currency exchange rates that were used in preparing the consolidated financial statements, representing the index rates stipulated by the Bank of China:

HKD against RMB	December 31, 2020	December 31, 2021	December 31, 2022
Year-end spot rate	HKD1=RMB0.8504	HKD1=RMB0.8168	HKD1=RMB0.8899
Average rate	HKD1=RMB0.8928	HKD1=RMB0.8327	HKD1=RMB0.8578

Foreign currency transactions denominated in currencies other than the functional currency are translated into the functional currency using the exchange rates prevailing at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rates at the balance sheet dates. Net gains and losses resulting from foreign exchange transactions are included in exchange gains or losses on the consolidated statements of income and comprehensive income. The Group incurred and recognized foreign currency exchange loss of RMB912,988 for the years ended December 31, 2020 and foreign currency exchange gain of RMB489,268 and RMB4,407,133(US$632,791) for the years ended December 31, 2021 and 2022, respectively, as a result of changes in the exchange rate.

Segment information

(f)

Segment information

An operating segment is a component of the Group that engages in business activities from which it may earn revenues and incur expenses, and is identified on the basis of the internal financial reports that are provided to and regularly reviewed by the Group’s chief operating decision maker in order to allocate resources and assess performance of the segment.

In accordance with ASC (“Accounting Standard Codification”) 280, Segment Reporting, operating segments are defined as components of an enterprise about which separate financial information is available that is evaluated regularly by the chief operating decision maker (“CODM”), or decision-making group, in deciding how to allocate resources and in assessing performance. The Group uses the “management approach” in determining reportable operating segments. The management approach considers the internal organization and reporting used by the Group’s chief operating decision maker for making operating decisions and assessing performance as the source for determining the Group’s reportable segments. The Group’s CODM has been identified as the chief executive officer (the “CEO”), who reviews consolidated results when making decisions about allocating resources and assessing performance of the Group.

The Group has determined that there is only one reportable operating segment since all types of the services provided and products delivered are viewed as an integrated business process and allocation of the resources and assessment of the performance are not separately evaluated by the Group’s CODM.

Accounts receivable, net

(h)

Accounts receivable, net

Accounts receivable, net, include amounts billed and currently due from customers. The amounts due are stated at their net estimated realizable value. The credit terms are generally between 30 to 60 days.

Provision for doubtful accounts is recognized when reasonable and supportable forecasts affect the expected collectability. The Group reviews the accounts receivable on a periodic basis and makes general and specific allowances when there is doubt as to the collectability of individual balances. The Group considers many factors in assessing the collectability such as the age of the amounts due, consideration of historical loss experience, adjusted for current conditions, forward-looking indicators, trends in customer payment frequency, and judgments about the probable effects of relevant observable data, including present and future economic conditions and the financial health of specific customers and market sectors. The Group established standards and policies for reviewing major account exposures and concentrations of risk.

The allowance for doubtful accounts as of December 31, 2021 and 2022 was RMB682,905 and RMB1,185,328 (US$170,193), respectively.

Intangible asset, net

(j)

Intangible asset, net

Intangible asset is carried at cost less accumulated amortization and any recorded impairment. The intangible assets of the Group mainly represent the software for operating activities. Intangible asset is amortized using the straight-line basis over the estimated useful live of the asset as follows:

Category		Estimated useful lives
Software		5 - 10 years

Prepayment for acquisition

(l)

Prepayment for acquisition

The prepayment for acquisition is the payment made to acquire a business. These amounts are refundable if the acquisition is not successfully completed. Management reviews its prepayments on a regular basis to determine if the allowance is adequate, and adjusts the allowance when necessary. As of December 31, 2022, no allowance was deemed necessary. The Company expects to finish its acquisition by the middle of 2023.

Impairment of long-lived assets

(n)

Impairment of long-lived assets

The Group reviews its long-lived assets for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may no longer be recoverable. When these events occur, the Group measures impairment by comparing the carrying value of the long-lived assets to the estimated undiscounted future cash flows expected to result from the use of the assets and their eventual disposition. If the sum of the expected undiscounted cash flow is less than the carrying amount of the assets, the Group would recognize an impairment loss, which is the excess of carrying amount over the fair value of the assets, using the expected future discounted cash flows. No impairments of long-lived assets were recognized as of December 31, 2021 and 2022.

Revenue recognition

(p)

Revenue recognition

Substantially all of the Group’s revenues are from contracts associated with freight forwarding services domestically and internationally. Additionally, the Group provides supply chain management to customers, by exploiting its advantages in global supply chain services.

The following table identifies the disaggregation of the Group’s revenue for the years ended December 31, 2020, 2021 and 2022, respectively:

Revenue	FY 2020					FY 2021					FY 2022
Categories	(RMB)		%			(RMB)		%			(RMB)		(US$)		%
Type A: Freight forwarding services		243,607,373		83.91	%		488,036,905		89.46	%		577,567,025		82,928,959		88.6	%
- Integrated cross-border logistics		210,794,731		72.61	%		390,229,299		71.53	%		444,335,722		63,799,174		68.2	%
- Fragmented logistics		32,812,642		11.30	%		97,807,606		17.93	%		133,231,303		19,129,785		20.4	%
Type B: Supply chain management		43,966,498		15.14	%		53,531,895		9.81	%		69,022,899		9,910,533		10.6	%
- International trading in relation to supply chain management		41,985,512		14.46	%		52,974,861		9.71	%		68,878,594		9,889,813		10.6	%
- Agent services		1,980,986		0.68	%		557,034		0.10	%		144,305		20,720		0.0	%
Type C: Other services		2,759,062		0.95	%		4,024,697		0.73	%		5,401,669		775,589		0.8	%
- Customs brokerage		2,566,570		0.88	%		2,750,027		0.50	%		4,098,297		588,447		0.6	%
- Software development		192,492		0.07	%		1,274,670		0.23	%		1,303,372		187,142		0.2	%
Total		290,332,933		100.00	%		545,593,497		100.00	%		651,991,593		93,615,081		100.0	%

The following table presents revenue classified by timing of revenue recognition for the years ended December 31, 2020, 2021 and 2022, respectively.

	Year ended December 31, 2020		Year ended December 31, 2021		Year ended December 31, 2022
	RMB		RMB		RMB		US$
Point in time		43,966,498		53,531,895		71,448,443		10,258,801
Over time		246,366,435		492,061,602		580,543,150		83,356,280
Total revenue		290,332,933		545,593,497		651,991,593		93,615,081

Type A: Freight forwarding services

The Group primarily engages in freight forwarding services, including freight services and facilitating services such as customs brokerage services, warehousing services, packaging services and so on. For freight services, the Group fulfils its performance obligation by transporting freights from the origin to the destination, both are specified by customers, via air freight, ocean freight, and land freight. The Group considers that there is only one performance obligation as the customer cannot benefit from the facilitating services on its own but be bundled with the freight services since the customer’s purpose for entering into this contract is to transport goods from the origin to the destination. The transaction price is fixed when the contract was signed by both parties. This type of revenue is recognized over time based on the extent of progress towards completion of the performance obligation. The Group adopts the output method, which is based on the transit time period, to measure progress.

For warehousing services, such as labeling, packaging, loading and unloading service, the customer can benefit from each service provided and the promise to transfer the service is separately identifiable. Each service represents a standalone performance obligation. The Group is entitled to receive the service fees after it provides services to its customers. For storage services, the Company normally charges monthly or daily. Therefore, the revenue from storage services is divided into two categories by timing of revenue recognition: 1. point in time for daily storage services. 2. over time across the service period for monthly storage services.

The Group considers itself the principal for transactions that it is in control of establishing the transaction price, and it is responsible for managing all aspects of the shipments process and taking the risk of loss for delivery. Therefore, such revenues are reported on a gross basis.

For certain contracts, the Group considers itself the agent for transactions that it cooperates with third-party carriers to arrange freight services. Third-party carriers signed the contracts with customers and were in control of establishing the transaction price, and were responsible for fulfilling the promise to provide freight services. Therefore, such revenues are reported on a net basis.

The payment term is within 60 days after completion of freight forwarding services.

Type B: Supply chain management

The Group also engages in supply chain management, which includes international trading and agent services. The Group provides international trading, which sells electronic products through both export and import, by exploiting its advantages in global supply chain services and networks. The Group fulfils its performance obligation by transferring products to the designated location. In accordance with the Company’s customary business practices, the delivery term is “Free on board” (“FOB”). Therefore, once the products are loaded on the board, the control of products has transferred. The transaction price is fixed when the contract was signed by both parties. This type of revenue is recognized based on the product value specified in the contract at a point in time when the control of products has transferred. The Group considers itself the principal because it is in control of establishing the transaction price and bearing inventory risk. Therefore, such revenues are reported on a gross basis.

In addition to international trading, the Group also provides agent services relates to export/import procedures, for example, application for duty-refund, customs brokerage services and so on. The Group fulfils its performance obligation by arranging export/import business for the customer, including but not limited to signing contracts with end customers on behalf of the customer and preparing customs brokerage and duty refund. This type of revenue is recognized over time based on the extent of progress towards completion of the agent services. The Group considers itself the agent because the Group is not primarily responsible for fulfilling the promise to provide the specified goods, neither bears the inventory risks. Therefore, such revenues are reported on a net basis.

The payment term is within 60 days after completion of international trading and agent services.

Type C: Other value-added services

The Group also provides customs brokerage services, and logistics-related software development services.

Customs brokerage services under Type C represents independent revenue stream, different from being one of the facilitating services of the freight forwarding business under Type A, or the facilitating services of the agent services under Type B under which those services are bundled as one performance obligation. The Group fulfils its performance obligation by providing customs brokerage services only. The transaction price is fixed when the contract was signed by both parties. This type of revenue is recognized over service period, usually within one day.

The Group also generates revenues from logistics-related software development services. The Group identifies two performance obligations within the contract: the software development services and the maintenance services. The transaction price is allocated based on the stand-alone selling price for each type of service. The Group recognizes software development services revenue over time in proportionate to the relative labor hours over the total budgeted hours of the project. The Group also promises to provide one-year maintenance service after the above mentioned software has been launched. The Group recognizes maintenance services revenue over the service period of one year.

Contract assets and liabilities

In-transit freight with performance obligations recognized over time that have revenue recognized to date in excess of cumulative billings are reported on consolidated balance sheets as “Contract assets”. Contract assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Contract liabilities represents the obligation to transfer goods or services to a customer for which the entity has received consideration from the customer. Contract liabilities of the Group mainly consist of advance product payments from customers of international trading. The Group expects to recognize this balance as revenue over the next 12 months.

The following table shows the amounts of revenue recognized in the current reporting period that were included in the contract liabilities at the beginning of the reporting period:

	2020		2021		2022
	RMB		RMB		RMB		US$
Revenue recognized that was included in contract liabilities at the beginning of the reporting period:		75,020		1,908,488		7,851,588		1,231,486

Contract assets were RMB3,203,033 and RMB4,460,046 (US$640,388) as of December 31, 2021 and 2022, respectively. Contract liabilities related to advance payments from customers were RMB7,851,588 and RMB1,989,310 (US$285,632) as of December 31, 2021 and 2022, respectively.

Contract costs

Contract costs consists of incremental costs of obtaining a contract with customers, for example, sales commissions. The Group elects to use the practical expedient, allowing to recognize the incremental costs of obtaining a contract as a cost or an expense when incurred if the amortization period, usually the contractual period, would have been one year or less.

Selling expenses

(r)

Selling expenses

Selling expenses mainly consist of (i) employee payroll and commission, (ii) advertising and marketing expenses, and (iii) rental and depreciation related to selling and marketing functions.

Selling expenses

(t)

General and administrative expenses

General and administrative expenses mainly consist of (i) employee payroll, rental and depreciation related to general and administrative personnel, (ii) professional service fees, and (iii) other corporate expenses.

Financial expenses, net

(v)

Financial expenses, net

Financial expenses, net mainly consist of (i) interest expenses, (ii) foreign exchange gain or loss, and (iii) bank charges. The Group incurred interest expenses of RMB533,982, RMB1,046,305 and RMB795,144 (US$114,169) for the years ended December 31, 2020, 2021 and 2022, respectively. The Group incurred foreign exchange loss of RMB912,988 for the year ended December 31, 2020 and foreign exchange gain of RMB489,268 and RMB4,407,133 (US$632,791) for the years ended December 31, 2021 and 2022, respectively.

Non-controlling interests

(x)

Non-controlling interests

On June 13, 2017, JYD HQ entered into an equity investment agreement with Mr. Mak Chun Pong, the shareholder of TYPHK, to acquire 67% of equity interest in TYPHK with HKD 6,781. Since the Group retains the control of TYPHK, the remaining 33% of equity interest in TYPHK from the other shareholder, Cargo Link Logistics HK Company Limited, was accounted for as non-controlling interest.

On October 30, 2021, JYD WLKJ entered into a joint venture agreement with Cargo Link Logistics HK Company Limited and Ms. Zheng Yan, to set up JYD SHWL. Since the Group retains control of JYD SHWL, the remaining 44% of equity interest from Cargo Link Logistics HK Company Limited and 5% of equity interest from Ms. Zheng Yan in JYD SHWL were accounted for as non-controlling interests.

In November 2021, the Company acquired 33% non-controlling interests of JYD HKGJHY from Cargo Link Logistics HK Company Limited at the consideration of nil. The non-controlling interest was HKD 47,844 at the date of acquisition. Upon completion of the acquisition, the Company acquired 100% equity interest of JYD HKGJHY. Changes in controlling ownership interest that do not result in a loss of control of the subsidiary are accounted for in accordance with ASC 810. Any difference between the consideration paid by the parent to a non-controlling interest shareholder and the adjustment to the carrying amount of the non-controlling interest in the subsidiary is recognized directly in equity (i.e. additional paid-in capital) and attributable to the controlling interest.

In July 2022, JYD WLKJ entered into a joint venture agreement with Mr. He Pengtao, to set up JYD YCKJ. Since the Group retains control of JYD YCKJ, the the remaining 48% of equity interest in JYD YCKJ from Mr. He Pengtao was accounted for as non-controlling interest.

As of December 31, 2021 and 2022, the balance of non-controlling interest is as following.

Entity	As of December 31, 2021			As of December 31, 2022
	RMB			RMB			US$
TYPHK		(62,187	)		(72,220	)		(10,370	)
JYD SHWL		(55,057	)		(890,560	)		(127,869	)
JYD YCKJ		-			(1,465,290	)		(210,391	)
Total		(117,244	)		(2,428,070	)		(348,630	)

Leases

(z)

Leases

The Company adopted ASC 842 on January 1, 2019 on a modified retrospective basis and elected the practical expedients permitted under the transition guidance, which allows the Company to carryforward the historical lease classification, the assessment on whether a contract is or contains a lease, and the initial direct costs for any leases that exist prior to adoption of the new standard.

At inception of a contract, the Group assesses whether a contract is, or contains, a lease. A contract is or contains a lease if it conveys the right to control the use of an identified asset for a period of time in exchange of a consideration. To assess whether a contract is or contains a lease, the Group assess whether the contract involves the use of an identified asset, whether it has the right to obtain substantially all the economic benefits from the use of the asset and whether it has the right to control the use of the asset.

The right-of-use assets and related lease liabilities are recognized at the lease commencement date. The Group recognizes operating lease expenses on a straight-line basis over the lease term.

Leases with an initial term of 12 months or less are short-term lease and not recognized as operating lease right-of-use assets and operating lease liabilities on the consolidated balance sheet. The Group recognizes lease expense for short-term leases on a straight-line basis over the lease term.

The right-of-use of asset is initially measured at cost, which comprises the initial amount of the lease liability adjusted for any lease payments made at or before the commencement date, plus any initial direct costs incurred and less any lease incentive received.

Operating lease liabilities are recognized based on the present value of the lease payments not yet paid, discounted using the average borrowing rate of the Group’s outstanding loans.

Lease term includes rent holidays and options to extend or terminate the lease when the Group is reasonably certain that the Group will exercise that option. The lease assets for operating leases consist of the amount of the measurement of the lease liabilities and any prepaid lease payments. Operating lease expense is recognized on a straight-line basis over the lease term by adding interest expense determined using the effective interest method to the amortization of the operating lease right-of-use assets. Interest expense is determined using the effective interest method. The Group’s lease agreements do not contain any material residual value guarantees or material restrictive covenants.

The Group reviews the impairment of its ROU assets consistent with the approach applied for its other long-lived assets. The Group reviews the recoverability of its long-lived assets when events or changes in circumstances occur that indicate that the carrying value of the asset may not be recoverable. The assessment of possible impairment is based on its ability to recover the carrying value of the asset from the expected undiscounted future pre-tax cash flows of the related operations. The Group has elected to include the carrying amount of operating lease liabilities in any tested asset group and include the associated operating lease payments in the undiscounted future pre-tax cash flows.

Value added tax (“VAT”)

(ab)

Value added tax (“VAT”)

The Group is subject to VAT and related surcharges on revenues generated from providing services. Revenue from providing services and sales of products is generally subject to VAT at applicable tax rates, and subsequently paid to PRC tax authorities after netting input VAT on purchases. The excess of output VAT over input VAT is reflected tax payable. The Group reports revenue net of PRC’s VAT for all the periods presented in the Consolidated Statements of Income.

The PRC VAT rate is 0%, 1%, 6% and 9% for taxpayers providing logistics services and 13% for product sales for the years ended December 31, 2020, 2021 and 2022.

The Notice of Ministry of Finance (“MOF”) and State Administration of Taxation (“SAT”) on the Adjustment to VAT Rates, promulgated on April 4, 2018 and effective as of May 1, 2018, adjusted the applicative rate of VAT. The deduction rates of 17% and 11% applicable to the taxpayers who have VAT taxable sales activities or imported goods are adjusted to 16% and 10%, respectively. For the export goods to which a tax rate of 17% was originally applicable and the export rebate rate was 17%, the export rebate rate is adjusted to 16%. For the export goods and cross-border taxable activities to which a tax rate of 11% was originally applicable and the export rebate rate was 11%, the export rebate rate is adjusted to 10%.

Pursuant to the Announcement on Relevant Policies for Deepening Value-Added Tax Reform, which was promulgated by MOF, SAT and the General Administration of Customs on March 20, 2019 and became effective on April 1, 2019, where (i) for VAT taxable sales or imports of goods originally subject to value-added tax rates of 16%, such tax rates shall be adjusted to 13%; (ii) for the exported goods originally subject to a tax rate of 16% and an export tax refund rate of 16%, the export tax refund rate shall be adjusted to 13%.

Earnings per share

(ad)

Earnings per share

The Group computes earnings per share (“EPS”) in accordance with ASC 260, “Earnings per Share” (“ASC 260”). ASC 260 requires companies with complex capital structures to present basic and diluted EPS.

Basic EPS are computed by dividing income available to ordinary shareholders of the Group by the weighted average ordinary shares outstanding during the period. Diluted EPS takes into account the potential dilution that could occur if securities or other contracts to issue ordinary shares were exercised and converted into ordinary shares. As of December 31, 2020, 2021 and 2022, there was no dilution impact.

Statutory reserves

(af)

Statutory reserves

The Company’s PRC subsidiaries are required to reserve 10% of their net profit after income tax, as determined in accordance with the PRC accounting rules and regulations. Appropriation to the statutory reserve by the Group is based on profit arrived at under PRC accounting standards for business enterprises for each year. The profit arrived at must be set off against any accumulated losses sustained by corresponding PRC subsidiaries in prior years, before allocation is made to the statutory reserve. Appropriation to the statutory reserve must be made before distribution of dividends to shareholders. The appropriation is required until the statutory reserve reaches 50% of the registered capital. This statutory reserve is not distributable in the form of cash dividends. For the years ended December 31, 2020, 2021 and 2022, statutory reserve provided were RMB823,564, RMB979,039 and RMB2,203,279 (US$316,354), respectively.

Concentration of risks

(ah)

Concentration of risks

Concentration of Credit Risks

Financial instruments that potentially expose the Company to concentrations of credit risk consist primarily of cash and accounts receivable. The Company places its cash with financial institutions with high credit ratings and quality. As of December 31, 2021 and 2022, RMB35,463,754 and RMB27,832,171 (US$3,996,229) of the Group’s cash were on deposit at financial institutions in the PRC, respectively.

The Group has a concentration of its account receivables and revenues with specific customers. As of December 31, 2021, three customers accounted for 20.7%, 14.8% and 10.2% of accounts receivable, respectively. As of December 31, 2022, two customers each accounted for 13.0% of accounts receivable, respectively. For the year ended December 31, 2020, three customers accounted for approximately 17.9%, 15.7% and 10.7% of the total revenue, respectively. For the year ended December 31, 2021, one customer accounted for approximately 13.1% of the total revenue. For the year ended December 31, 2022, two customers accounted for approximately 18.0% and 11.3% of the total revenue, respectively.

The Company conducts credit evaluations of customers, and generally does not require collateral or other security from its customers. The Company establishes an allowance for doubtful accounts primarily based upon the age of the receivables and factors surrounding the credit risk of specific customers.

The Group also has a concentration of its account payables and purchases with specific suppliers. As of December 31, 2021, two suppliers accounted for 59.1% and 11.4% of the total accounts payable balance, respectively. As of December 31, 2022, two suppliers accounted for 28.1% and 12.8% of the total accounts payable balance, respectively. For the years ended December 31, 2020 and 2021, one supplier accounted for 58.0% and 36.4% of the total purchases, respectively. For the year ended December 31, 2022, two suppliers accounted for 20% and 19.8% of the total purchases, respectively.

Foreign Exchange Risk

The Groups’ operations are primarily in China. The reporting currency is denominated in RMB. The Group is exposed to currency risk primarily through sales and purchases which give rise to receivables, payables and cash balances that are denominated in currencies other than the functional currency of the operations to which the transactions relate. Thus, revenues and results of operations may be impacted by exchange rate fluctuations between RMB and U.S. dollars.