Analysis of Differences in Intermediary Service Fees of Xinsheng Technology

According to the information I obtained, the situation regarding differences in intermediary service fees of Xinsheng Technology is as follows:

Xinsheng Technology (Zhejiang Xinsheng Technology Co., Ltd.) is mainly engaged in the R&D, production and sales of computerized embroidery machines, generating revenue and profits by selling computerized embroidery machine equipment and its accessories to domestic and overseas end customers, brand owners, agents, etc.[1]

According to the disclosure in the prospectus, the proportions of domestic business intermediary service fees to agent-direct sales revenue during the reporting period are as follows:

• 2022: 3.16%
• 2023: 3.47%
• 2024: 3.29%
• Jan-Jun 2025: 3.49%

This ratio remains basically stable, but

[1].

The company has two settlement models for intermediary service fees:

Settlement Model	Details	Applicable Scenarios
Commission-based Settlement	Settle intermediary service fees and warranty service fees at the agreed percentage of sales revenue	Agents do not earn spreads from transactions
Floor Price-based Settlement	Settle intermediary service fees and warranty service fees based on sales revenue minus the agreed floor price	Agents earn spreads from transactions

• Agent-direct Sales Model
  : Agents obtain intermediary service fees and warranty service fees by introducing customers to the company and providing warranty services, with a relatively simple business process[2]
• Agent-distribution Sales Model
  : Agents purchase products from the company and resell them to end customers, while providing after-sales services. They can earn spreads from transactions or obtain intermediary service fees and warranty service fees from the company

In the 2026 initial public offering (IPO) review, regulators raised an inquiry to Xinsheng Technology regarding “the reasons and rationality of differences in intermediary service fees, warranty service fees, and after-sales service fees under different sales models”[3], indicating that these differences have attracted regulatory attention.

1. Agent Roles
   : Domestic agents are mainly located in regions such as Zhejiang, Guangdong, and Jiangsu, while overseas agents are mainly located in countries such as Turkey, Italy, and Morocco
2. Service Content
   : Agents are usually engaged in long-term after-sales maintenance of embroidery machines, have accumulated rich customer resources, and have a good understanding of local customer distribution and needs
3. Business Overlap
   : Some agents are both the company’s customers (purchasing computerized embroidery machines) and the company’s suppliers (providing intermediary services and warranty services)

The differences in Xinsheng Technology’s intermediary service fees are mainly reflected in:

1. Differences between domestic and overseas business models
2. Different settlement models (commission-based settlement vs. floor price-based settlement)
3. Differences in service fee structures under different sales models

These differences mainly stem from the company’s channel strategy, regional market characteristics, and differences in agents’ service capabilities, and have certain commercial rationality. However, their standardization and fairness still need continuous attention.

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[1] Eastmoney.com - Xinsheng Technology IPO Prospectus (Pre-Listing Draft) (https://xinsanban.eastmoney.com/Article/NoticeContent?id=AN202601091816887887)
[2] Eastmoney.com - Public Transfer Statement of Zhejiang Xinsheng Technology Co., Ltd. (https://pdf.dfcfw.com/pdf/H2_AN202409031639714215_1.pdf)
[3] Investing.com - First IPO Suspension Review This Year, Executives with Brokerage Background Included, What’s the Reason? (https://cn.investing.com/news/stock-market-news/article-3170296)