CHINA AUTOMOTIVE SYSTEMS, INC.

INDEX


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PART I		5
Item 1.	Business.	5
Item 1A.	Risk Factors.	16
Item 1B.	Unresolved Staff Comments.	32
Item 2.	Properties.	32
Item 3.	Legal Proceedings.	33
Item 4.	Mine Safety Disclosures.	33

PART II		34
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.	34
Item 6.	[Reserved].	34
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	35
Item 7A.	Quantitative and Qualitative Disclosures about Market Risk.	48
Item 8.	Financial Statements and Supplementary Data.	49
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.	49
Item 9A.	Controls and Procedures.	50
Item 9B.	Other Information.	51
Item 9C.	Disclosure Regarding Foreign Jurisdictions that Prevent Inspections.	51

PART III		51
Item 10.	Directors, Executive Officers and Corporate Governance.	51
Item 11.	Executive Compensation.	55
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.	57
Item 13.	Certain Relationships and Related Transactions, and Director Independence.	57
Item 14.	Principal Accountant Fees and Services.	58

PART IV		58
Item 15.	Exhibits, Financial Statement Schedules.	58
Item 16.	Form 10-K Summary.	60

Signatures		61
Financial Statements		63

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Cautionary Statement

This Annual Report on Form 10-K contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, and Section 21E of the Securities Exchange Act of 1934. These statements relate to future events or the Company’s future financial performance. The Company has attempted to identify forward-looking statements by terminology including “anticipates,” “believes,” “expects,” “can,” “continues,” “could,” “estimates,” “expects,” “intends,” “may,” “plans,” “potential,” “predicts,” “should” or “will” or the negative of these terms or other comparable terminology. Such statements are subject to certain risks and uncertainties, including the matters set forth in this Annual Report or other reports or documents the Company files with the Securities and Exchange Commission, the “SEC,” from time to time, which could cause actual results or outcomes to differ materially from those projected. Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance or achievements. Undue reliance should not be placed on these forward-looking statements which speak only as of the date hereof. The Company’s expectations are as of the date this Form 10-K is filed, and the Company does not intend to update any of the forward-looking statements after the date this Annual Report on Form 10-K is filed to confirm these statements to actual results, unless required by law.

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PART I

ITEM 1. BUSINESS.

COMPANY HISTORY

China Automotive Systems, Inc., “China Automotive” or the “Company,” was incorporated in the State of Delaware on June 29, 1999. Through its subsidiary, Great Genesis Holdings Limited, “Genesis,” a corporation organized under the laws of the Hong Kong Special Administrative Region, China, it owns interests in eight Sino-joint ventures and seven wholly-owned subsidiaries in the People’s Republic of China, “China” or the “PRC,” which manufacture power steering systems and/or related products for different segments of the automobile industry. Genesis also owns interests in a Brazil-based trading company, which engages mainly in the import and sales of automotive parts in Brazil.

Henglong USA Corporation, “HLUSA,” which was incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after sales service and research and development (“R&D”) support.

Unless the context indicates otherwise, the Company uses the terms “the Company,” “we,” “our” and “us” to refer to China Automotive collectively on a consolidated basis.

BUSINESS OVERVIEW

The Company is a holding company and has no significant business operations or assets other than its interest in Genesis and HLUSA. Genesis mainly engages in the manufacture and sale of automotive systems and components through its controlled subsidiaries and the joint ventures, as described below.

Set forth below is an organizational chart as at December 31, 2022.

CHINA AUTOMOTIVE SYSTEMS, INC. [NASDAQ:CAAS]

↓100%

Great Genesis Holdings Limited

Henglong USA Corporation

↓

↓100%

↓70%

Hubei

Shenyang

Henglong

Jinbei Henglong

Automotive

System Group

Steering System

Co., Ltd.

“Hubei Henglong”¹

“Shenyang”²

↓

↓100%

↓85%

↓70%

↓95.84%

↓100%

↓66.6%

↓51%

↓62%

↓100%

Jingzhou

Shashi

Wuhu

Wuhan

Chongqing

CAAS

Hubei

Hyoseong

Wuhu

Changchun

Henglong

Jiulong

Henglong

Jielong

Henglong

Brazil’s

Henglong

(Wuhan)

Hongrun

Hualong

Automotive

Power

Automotive

Electric

Hongyan

Imports And

Group

& KYB

Motion

New

Automotive

Parts

Steering

Power

Automotive

Trade In

Shanghai

Automobile

Mechatronics

Material

Technology

Co., Ltd.

Gears

System Co.,

Steering Co.,

System Co.,

Automotive

Electric

System

Co., Ltd.

Ltd.

Parts Ltd.

Electronics

Steering

Co., Ltd.

Research and

System

Development

Co., Ltd.

Ltd.

“Chongqing

“Brazil

“Shanghai

“Henglong

“Wuhan

“Wuhu

“Changchun

“Henglong”³

“Jiulong”⁴

“Wuhu”⁵

“Jielong”⁶

Henglong”⁷

Henglong”⁸

Henglong”¹¹

KYB”¹²

Hyoseong”¹³

Hongrun”¹⁴

Hualong”¹⁵

↓

↓100%

↓85%

Jingzhou

Wuhan

Henglong

Chuguanjie

Automotive

Technology

Science and

(Testing)

Technology

Center

Ltd.

“Testing

“Wuhan

Center”⁹

Chuguanjie”¹⁰

On March 7, 2007, Genesis established Hubei Henglong, formerly known as Jingzhou Hengsheng Automotive System Co., Ltd., its wholly-owned subsidiary, to engage in the production and sales of automotive steering systems. On July 8, 2012, Hubei Henglong changed its name to Hubei Henglong Automotive System Group Co., Ltd.

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2.	Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles.

3.	Henglong was established in 1997 and mainly engages in the production of rack and pinion power steering gears for cars and light-duty vehicles.

4.	Jiulong was established in 1993 and mainly engages in the production of integral power steering gears for heavy-duty vehicles.

Wuhu was established in 2006 and mainly engages in the production and sales of automobile steering systems. In April 2021, the Company obtained an additional 22.67% equity in Wuhu for total consideration of RMB 6.9 million, equivalent to approximately $1.1 million, from the other shareholder. The Company retained its controlling interest in Wuhu and the acquisition of the non-controlling interest was accounted for as an equity transaction.

6.	Jielong was established in 2006 and mainly engages in the production and sales of automobile steering columns.

7.	On February 21, 2012, Hubei Henglong and SAIC-IVECO Hongyan Company, “SAIC-IVECO,” established a Sino-foreign joint venture company, Chongqing Henglong, to design, develop and manufacture both hydraulic and electric power steering systems and parts.

On August 21, 2012, Brazil Henglong was established as a Sino-foreign joint venture company by Hubei Henglong and two Brazilian citizens, Ozias Gaia Da Silva and Ademir Dal’ Evedove. Brazil Henglong engages mainly in the import and sale of automotive parts in Brazil. In May 2017, the Company obtained an additional 15.84% equity interest in Brazil Henglong for nil consideration. The Company retained its controlling interest in Brazil Henglong and the acquisition of the non-controlling interest was accounted for as an equity transaction.

9.	In December 2009, Henglong, a subsidiary of Genesis, formed Testing Center, which mainly engages in the research and development of new products.

10.

In May 2014, together with Hubei Wanlong, Jielong formed a subsidiary, Wuhan Chuguanjie Automotive Science and Technology Ltd., “Wuhan Chuguanjie”, which mainly engages in research and development, manufacture and sales of automobile electronic systems and parts. Wuhan Chuguanjie is located in Wuhan, China.

In May 2020, Wuhan Chuguanjie merged with another subsidiary, Universal Sensor Application Inc., “USAI”, which was established in 2005 and mainly engages in the production and sales of sensor modules.

11.	In January 2015, Hubei Henglong formed Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong”, which mainly engages in the design and sale of automotive electronics.

12.

In August 2018, Hubei Henglong and KYB (China) Investment Co., Ltd. (“KYB”) established Hubei Henglong KYB Automobile Electric Steering System Co., Ltd. (“Henglong KYB”), which mainly engages in design, manufacture, sales and after-sales service of automobile electronic systems. Hubei Henglong owns 66.6% of the shares of this entity and has consolidated it since its establishment.

13.

In March 2019, Hubei Henglong and Hyoseong Electric Co., Ltd. established Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd. (“Wuhan Hyoseong”), which mainly engages in the design, manufacture and sales of automotive motors and electromechanical integrated systems. Hubei Henglong owns 51.0% of the shares of Wuhan Hyoseong and has consolidated it since its establishment.

14.	In December 2019, Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd. (“Wuhu Hongrun”), which mainly engages in the development, manufacturing and sale of high polymer materials. Hubei Henglong owns 62.0% of the shares of Wuhu Hongrun and has consolidated it since its establishment.

15.

In April 2020, Hubei Henglong acquired 100.0% of the equity interests of Changchun Hualong Automotive Technology Co., Ltd., “Changchun Hualong”, for total consideration of RMB 1.2 million, equivalent to approximately $0.2 million from an entity controlled by Hanlin Chen. Before the acquisition, 52.1% of the shares of Changchun Hualong were ultimately owned by Hanlin Chen and 47.9% of the shares were owned by third parties. Changchun Hualong mainly engages in design and R&D of automotive parts.

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The Company has business relationships with more than sixty vehicle manufacturers, including the five largest automobile manufacturers in China, such as SAIC Motor Co., Ltd, China FAW Group Co., Ltd and others; Shenyang Brilliance Jinbei Co., Ltd, one of the largest light vehicle manufacturers in China; BYD Auto Co., Ltd., Zhejiang Geely Automobile Co., Ltd., and Great Wall Motors Co., Ltd., three of the largest privately owned car manufacturers in China. All of them are our key customers. For overseas customers, the Company has supplied power steering gear to Fiat Chrysler North America since 2009 and to Ford Motor Company since 2016.

The Holding Foreign Companies Accountable Act

Pursuant to the Holding Foreign Companies Accountable Act, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States. On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong, including our auditor. In April 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of the annual report on Form 10-K for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 10-K. Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we continue to use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 10-K for the relevant fiscal year. There can be no assurance that we would not be identified as a Commission-Identified Issuer for any future fiscal year, and if we were so identified for two consecutive years, we would become subject to the prohibition on trading under the HFCAA and our securities may be delisted from Nasdaq as a result. Delisting of our securities would force holders of our securities to sell their securities. Further, we may be prohibited from listing our securities on another U.S. securities exchange. The market price of our securities could be adversely affected as a result of anticipated negative impacts of such legislative or executive actions upon, as well as negative investor sentiment toward, companies with significant operations in mainland China and Hong Kong that are listed in the United States, regardless of whether such actions are implemented and regardless of our actual operating performance. See “Item 1A. Risk Factors—Risks Related To Doing Business In China And Other Countries Besides The United States—The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.” And “Item 1A. Risk Factors—Risks Related To Doing Business In China And Other Countries Besides The United States—Our shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of the shares, or the threat of being delisted, may materially and adversely affect the value of your investment.”

Our Corporate Structure

The Company is not a PRC operating company but a Delaware holding company with operations primarily conducted through its wholly owned direct subsidiaries, Genesis and HLUSA, and its several indirect subsidiaries that are either wholly owned or majority owned by either Genesis or HLUSA. Our investors hold shares of common stock in China Automotive, the Delaware holding company.

We do not have or intend to set up any subsidiary or enter into any contractual arrangements to establish a variable interest entity structure with any entity in China.

Our holding company structure presents unique risks as our investors may never directly hold equity interests in our operating subsidiaries and will be dependent upon dividends and other distributions from our subsidiaries to finance our cash flow needs. Our ability to receive dividends and other contributions from our subsidiaries are significantly affected by regulations promulgated by Hong Kong and PRC authorities. Any change in the interpretation of existing rules and regulations or the promulgation of new rules and regulations may materially affect our operations and or the value of our securities, including causing the value of our securities to significantly decline or become worthless. For a detailed description of the risks facing the Company associated with our structure, please refer to “Item 1A. Risk Factors – Risks Related to Doing Business in China and Other Countries Besides the United States.”

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Currently, PRC laws and regulations do not prohibit direct foreign investment in our operating subsidiaries. Nonetheless, in light of the recent statements and regulatory actions by the PRC government, such as those related to the promulgation of regulations prohibiting foreign ownership of Chinese companies operating in certain industries, which are constantly evolving, and anti-monopoly concerns, we may be subject to the risks of uncertainty of any future actions of the PRC government in this regard, which would likely result in a material change in our operations, including our ability to continue our existing holding company structure, carry on our current business, accept foreign investments, and offer or continue to offer securities to our investors, and the resulting adverse change in value to our common stock. We may also be subject to penalties and sanctions imposed by the PRC regulatory agencies, including the China Securities Regulatory Commission, or CSRC, if we fail to comply with such rules and regulations, which would likely adversely affect the ability of the Company’s securities to continue to trade on Nasdaq, which would likely cause the value of our securities to significantly decline or become worthless.

As of the date of this report, there is no Chinese Communist Party official who sits on CAAS’ board of directors and CAAS’ certificate of incorporation and bylaws do not contain any charter of the Chinese Communist Party.

Doing Business in China

As a result of our operations in China, the Chinese government may intervene in or exert influence over our operations at any time with little or no advanced notice, which could result in a material change in our operations and/or the value of our securities. For example, the Chinese government has recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding any industry that could adversely affect the business, financial condition and results of operations of our company.

Furthermore, the Chinese government has also recently indicated an intent to exert more oversight and control over securities offerings and other capital markets activities that are conducted outside of China and over foreign investment in China-based companies. Any such action, once taken by the Chinese government, could significantly limit or completely hinder our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline or in extreme cases, become worthless. Recently, the Chinese government initiated a series of regulatory actions and statements to regulate business operations in China, including enforcement actions against illegal activities in the securities market, enhancing supervision over China-based companies listed outside of China using the variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding the efforts in anti-monopoly enforcement. For example, on July 6, 2021, the relevant PRC government authorities made public the Opinions on Intensifying Crack-Down on Illegal Securities Activities. These opinions emphasized the need to strengthen the administration over illegal securities activities and the supervision on overseas listings by China-based companies and proposed to take measures, such as promoting the construction of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. On November 14, 2021, the Cyberspace Administration of China (the “CAC”) released the draft Administrative Regulations on Cyber Data Security (the “Draft Cyber Data Security Regulations”) for public comments, which requires, among others, that a prior cybersecurity review should be required for listing abroad of data processors which process over one million users’ personal information, and the listing of data processors in Hong Kong which affects or may affect national security.

The Chinese government may further promulgate relevant laws, rules and regulations that may impose additional and significant obligations and liabilities on overseas listed Chinese companies regarding data security, cross-border data flow, anti-monopoly and unfair competition, and compliance with China’s securities laws. It is uncertain whether or how these new laws, rules and regulations and the interpretation and implementation thereof may affect us, but among other things, our ability to obtain external financing through the issuance of equity securities in the United States, Hong Kong or other markets could be negatively affected, and as a result, the trading prices of our securities could significantly decline or become worthless. For a detailed description of risks related to our doing business in China, see “Item 1A. Risk Factors - Risks Related To Doing Business In China And Other Countries Besides The United States.”

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Permissions Required from the PRC Authorities for Our Operations

We conduct our business primarily through our subsidiary Genesis, which owns interests in eight Sino-joint ventures and seven wholly owned subsidiaries in the PRC. Our operations in China are governed by PRC laws and regulations. As advised by our PRC counsel, Zhong Lun Law Firm, as of the date of this report, these entities have obtained the requisite licenses and permits from the PRC government authorities that are material for their business operations, including, among others, certain business licenses, approvals for the establishment of enterprises with foreign investment, approvals for overseas direct investment and environmental and occupational safety and health approvals. Given the uncertainties of interpretation and implementation of relevant laws and regulations and the enforcement practice by relevant government authorities, we may be required to obtain additional licenses, permits, filings or approvals for the functions and services of our platform in the future.

On February 17, 2023, the CSRC promulgated the Trial Administrative Measures of Overseas Securities Offering and Listing by Domestic Companies, or the Trial Measures, which will come into effect on March 31, 2023. On the same day, the CSRC also published a series of guidance and Q&As in connection with the implementation of the Trial Measures. The Trial Measures established (i) a list outlining the circumstances where a PRC domestic company is prohibited from offering and listing securities overseas (the “Trial Measures Negative List”) and (ii) a new filing-based regime to regulate overseas offerings and listings by PRC domestic companies. According to the Trial Measures, in connection with an overseas offering of securities (including shares, depository receipts, corporate bonds convertible into shares and other equity securities) and listing by a PRC domestic company, either in a direct or indirect manner, the issuer must file certain documents with the CSRC (the “Trial Measures Filing Obligations”). An indirect offering and listing is determined by a set of quantifiable standards. For example, any overseas offering and listing by an issuer that meets both of the following standards will be deemed to be indirect: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by PRC domestic companies, and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China.

The Trial Measures provide the CSRC with the authority to warn, fine, and issue injunctions against PRC domestic companies, their controlling shareholders, advisors, and other responsible persons in connection with a listing or offering securities (collectively, the “Subject Entities”), as well as individuals directly responsible for these Subject Entities (the “Subject Individuals”). In cases of serious violation, the relevant responsible persons may be prohibited from entering the securities market1 by the CSRC and may be held criminally liable. For failure to comply with the Trial Measures Negative List or the Trial Measures Filing Obligations, or materially false or misleading statements in the filing and reporting required by the Trial Measures, PRC domestic companies and their controlling shareholders, if the controlling shareholders induced the PRC domestic companies’ failure to comply, severally, may face warnings, injunctions to comply, and fines between RMB 1.0 million and 10.0 million. The Subject Individuals in these entities may severally, face warnings and fines between RMB 0.5 million and 5.0 million. Advisors in listings or offerings of securities that failed to dutifully advise the PRC domestic companies and their controlling shareholders in complying with the Trial Measures and caused such failures to comply can face warnings and fines between RMB 0.5 million and 5.0 million. The Subject Individuals of these advisor entities may, severally, face warnings and fines between RMB 0.2 million and 2.0 million.

Because our shares have already listed on Nasdaq, we believe we will be deemed as an “Existing Issuer” pursuant to the Trial Measures and the implementation guidance and, accordingly, are not required to complete the filing procedures with the CSRC for our historical securities offering. Nevertheless, in the event that we conduct any securities issuance or offering in the future that would be captured by the Trial Measures after they come into effect, we will have to complete the filing procedures with the CSRC within three (3) business days following the closing of thesuch securities issuance or offering.

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Therefore, in connection with our business operations and issuance or offering of securities to foreign investors, under currently effective PRC laws, regulations, and rules, and taking the Trial Measures into account, as of the date of this annual report, we and our PRC subsidiaries (i) are not required to obtain permissions from, or complete the filing procedures with, the CSRC for our prior issuances and offerings of securities to foreign investors which were completed before the date of implementation of the Trial Measures, but are required to go through filing procedures with CSRC for our future issuances or offerings of securities (including shares, depository receipts, corporate bonds convertible into shares and other equity securities) to foreign investors if we meet certain conditions set forth in the Trial Measures to be considered as an indirect overseas offering and listing by a PRC domestic company, (ii) are not required to go through cybersecurity review by the CAC for our issuance or offering of securities to foreign investors, and (iii) are not required to obtain any prior permission or approval from any other PRC government authorities for our issuance or offering of securities to foreign investors. If we and our subsidiaries are deemed to be a critical information infrastructure operator, or CIIO, or a network platform operator, whose network product or service purchasing or data processing activities affect or may affect national security, we would be required to go through a cybersecurity review by the CAC. As of the date of this annual report, neither we nor any of our subsidiaries has been identified as a CIIO by any government authority, involved in any investigations or become subject to a cybersecurity review by the CAC based on the Cybersecurity Review Measures. However, there might remain some uncertainty as to how relevant rules published by the PRC government authorities will be interpreted or implemented, and our opinions summarized above are subject to any new laws, rules, and regulations or detailed implementations and interpretations in any form. We cannot assure you that the relevant PRC government authorities, including the CSRC and the CAC, would reach the same conclusion and hence, we may face regulatory actions or other sanctions from them. For more details, see “Item 1A. Risk Factors—Risks Relating to Doing Business in China — The PRC government has significant oversight over the conduct of the business of our PRC subsidiaries; such oversight could result in a material change in our operations and/or the value of our securities or could significantly limit our ability to offer or continue to offer securities and/or other securities to investors and cause the value of such securities to significantly decline.” and “Item 1A - Risk Factors — Risks Relating to Doing Business in China—The approval of and filing with the CSRC or other PRC government authorities may be required in connection with our offshore offerings under PRC law, and, if required, we cannot predict whether or for how long we will be able to obtain such approval or complete such filing.”

Cash Flows through Our Organization

China Automotive is a holding company with no operations of its own. We conduct our operations in China primarily through our subsidiaries, particularly Genesis, which owns interests in eight Sino-joint ventures and seven wholly owned subsidiaries in the PRC. As a result, although other means are available for us to obtain financing at the holding company level, China Automotive’s ability to pay dividends to the shareholders and to service any debt it may incur may depend upon dividends paid by our PRC subsidiaries. If any of our subsidiaries incurs debt on its own behalf, the instruments governing such debt may restrict its ability to pay dividends to China Automotive. In addition, our PRC subsidiaries are permitted to pay dividends to China Automotive only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Further, our PRC subsidiaries are required to make appropriations to certain statutory reserve funds, which are not distributable as cash dividends except in the event of a solvent liquidation of the companies.

We may rely on dividends and other distributions on equity paid by our PRC subsidiaries for our cash and financing requirements, including the funds necessary to pay dividends and other cash distributions to our shareholders or to service any debt we may incur. If any of our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other distributions to us. Under PRC laws and regulations, our PRC subsidiaries may pay dividends only out of their respective accumulated profits as determined in accordance with PRC accounting standards and regulations. In addition, a wholly foreign-owned enterprise is required to set aside at least 10% of its accumulated after-tax profits each year, if any, to fund a certain statutory reserve fund, until the aggregate amount of such fund reaches 50% of its registered capital. Such reserve funds cannot be distributed to us as dividends. At its discretion, a wholly foreign-owned enterprise may allocate a portion of its after-tax profits based on PRC accounting standards to an enterprise expansion fund, or a staff welfare and bonus fund. In addition, registered share capital and capital reserve accounts are also restricted from withdrawal in the PRC, up to the amount of net assets held in each operating subsidiary. The amounts restricted include the paid-up capital and the statutory reserve funds of our PRC subsidiaries, totaling RMB 465.9 million, RMB 499.8 million, RMB 504.7 million and RMB 508.8 million as of December 31, 2019, 2020, 2021 and 2022, respectively.

Under PRC law, China Automotive may provide funding to its PRC subsidiaries only through capital contributions or loans.

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During the fiscal years ended December 31, 2019, 2020, 2021 and 2022, the Company received loans which were interest free from its subsidiaries in the aggregate amount of $4.3 million, $6.6 million, $2.5 million and $6.1 million, respectively, and no principal was repaid in such years.

Although the Company announced a special cash dividend of $0.18 per common share to the Company’s shareholders of record as of the close of business on June 26, 2014, it does not anticipate paying any other cash dividends in the foreseeable future. The Company currently intends to retain future earnings, if any, to finance operations and the expansion of its business. Any future determination to pay cash dividends will be at the discretion of the Company’s board of directors and will be based upon the Company’s financial condition, operating results, capital requirements, plans for expansion, restrictions imposed by any financing arrangements and any other factors that the Company’s board of directors deems relevant.

INTELLECTUAL PROPERTY RIGHTS

Intellectual Property rights, “IP,” are important in helping the Company maintain its competitive position. Currently, the Company owns IP rights, including two trademarks covering automobile parts, “HL” and “JL,” and more than eighty-five patents registered in China covering power steering technology. The Company is in the process of integrating new advanced technologies such as electronic chips in power steering systems into its current production line and is pursuing aggressive strategies in technology to maintain a competitive edge within the automobile industry. In December 2009, the Company, through Henglong, formed Testing Center and cooperated with Nanyang Ind. Co. Ltd. and Tsinghua University to engage in the research and development of new products, such as Electric Power Steering (“EPS”), integral rack and pinion power steering and high pressure power steering, to optimize current products design and to develop new, cost-saving manufacturing processes. In January 2015, Hubei Henglong formed Shanghai Henglong, which mainly engages in the design and sale of automotive electronics, to capture the market opportunities for EPS, which were included in traditional hydraulic power steering products by many automobile makers. In November 2017, Hubei Henglong formed Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd.(“Jingzhou Qingyan”), which mainly engages in the research and development of intelligent automotive technology. In August 2018, Hubei Henglong established a non-wholly owned subsidiary, Hubei Henglong KYB Automobile Electric Steering System Co., Ltd., which mainly engages in design, manufacture, sales and after-sales service of automobile electronic systems. In March 2019, Hubei Henglong established a non-wholly owned subsidiary, Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., which mainly engages in the design, manufacture and sales of automotive motors and electromechanical integrated systems. In December 2019, Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd. (“Wuhu Hongrun”), which mainly engages in the development, manufacturing and sale of high polymer materials. In April 2020, Hubei Henglong acquired 100.0% of the equity interests of Changchun Hualong Automotive Technology Co. Ltd., “Changchun Hualong”, which mainly engages in design and R&D of automotive parts. In April 2021, Hubei Henlgong acquired 100.0% of the equity interests of Wuhu Henglong Automotive Steering Systems Co., Ltd., “Wuhu”, which mainly engages in the production and sales of automobile steering systems. Jingzhou Qingyan deregistered from the local business administration on June 22, 2022.

STRATEGIC PLAN

The Company’s short to medium term strategic plan is to focus on both domestic and international market expansion. To achieve this goal and higher profitability, the Company focuses on brand recognition, quality control, cost efficiency, research and development and strategic acquisitions. Set forth below are the Company’s programs:

—

Brand Recognition. Under the brands of Henglong and Jiulong, the Company offers four separate series of power steering sets and 310 models of power steering sets, steering columns and steering hoses.

—

Quality Control. The Henglong and Jiulong manufacturing facilities obtained the ISO/TS 16949 System Certification in January 2004, a well-recognized quality control system in the auto industry developed by TUVRheindland of Germany.

—

Cost Efficiency. By improving the Company’s production ability and enhancing equipment management, optimizing the process and products structure, perfecting the supplier system and cutting production cost, the Company’s goal is to achieve a more competitive profit margin.

—

Research and Development. The Company established Testing Center for the research and development of products and, by partnering with Nanyang Ind. Co. Ltd. and Tsinghua University for the development of advanced steering systems, the Company’s objective is to gain increased market share in China.

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International Expansion. The Company has entered into agreements with several international vehicle manufacturers and auto parts modules suppliers and carried on preliminary negotiations regarding future development projects.

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Acquisitions. The Company is exploring opportunities to create long-term growth through new ventures or acquisitions of other auto component manufacturers. The Company will seek acquisition targets that meet the following criteria:

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companies that can be easily integrated into product manufacturing and corporate management;

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companies that have strong joint venture partners that would become major customers; and

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companies involved with power steering systems.

CUSTOMERS

The Company’s five largest customers represented 42.8% of the Company’s total sales for the year ended December 31, 2022. The following table sets forth information regarding the Company’s five largest customers.


	Percentage of Total
Name of Major Customers	Revenue in 2022
Fiat Chrysler North America	20.2	%
Hubei Hongrun	6.2	%
Great Wall Motors	5.9	%
BYD Auto Co., Ltd.,	5.3	%
Chery Automobile Co.,Ltd.	5.2	%
Total	42.8	%

The Company primarily sells its products to the above-mentioned customers, which, except for Hubei Hongrun, are original equipment manufacturing, “OEM”, customers; it also has excellent relationships with them, including serving as their first-rank supplier and developer for product development for new models. While the Company intends to continue to focus on retaining and winning this business, it cannot ensure that it will succeed in doing so. It is difficult to keep doing business with the above mentioned OEM customers as a result of severe price competition and customers’ diversification of their supply base. The Company’s business would be materially and adversely affected if it loses one or more of these major customers.

SALES AND MARKETING

The Company’s sales and marketing team has 98 sales persons, which are divided into an OEM team, a sales service team and a working group dedicated to international business. These sales and marketing teams provide a constant interface with the Company’s key customers. They are located in all major vehicle producing regions to more effectively represent the Company’s customers’ interests within the Company’s organization, to promote their programs and to coordinate their strategies with the goal of enhancing overall service and satisfaction. The Company’s ability to support its customers is further enhanced by its broad presence in terms of sales offices, manufacturing facilities, engineering technology centers and joint ventures.

The Company’s sales and marketing organization and activities are designed to create overall awareness and consideration of, and therefore to increased sales of the Company’s modular systems and components. To achieve that objective, the Company organized delegations to visit the United States, Korea, India and Japan and has supplied power steering gear to Fiat Chrysler North America (“Fiat”). Through these activities, the Company has generated potential business interest as a strong base for future development.

DISTRIBUTION

The Company’s distribution system covers all of China. The Company has established sales and service offices with certain significant customers to deal with matters related to such customers in a timely fashion. The Company also established distribution warehouses close to major customers to ensure timely deliveries. The Company maintains strict control over inventories. Each of these sales and service offices sends back to the Company, through e-mail or fax, information related to the inventory and customers’ needs. The Company guarantees product delivery in 8 hours for those customers who are located within 200 km from the Company’s distribution

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warehouses, and 24 hours for customers who are located outside of 200 km from the Company’s distribution warehouses. Delivery time is a very important competitive factor in terms of customer decision making, together with quality, pricing and long-term relationships. The Company has two distribution warehouses in the United States, which are located in Michigan and Texas, respectively. The warehouses deliver parts to customers every day.

EMPLOYEES AND FACILITIES

As of December 31, 2022, the Company employed approximately 4,093 persons, including approximately:

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1,139 by Henglong (including Testing Center formed by Henglong);

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686 by Jiulong;

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152 by Shenyang;

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113 by Wuhu;

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282 by Jielong;

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124 by Wuhan Chuguanjie;

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832 by Hubei Henglong;

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24 by HLUSA;

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66 by Chongqing Henglong;

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68 by Brazil Henglong;

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538 by Henglong KYB;

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35 by Wuhan Hyoseong;

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13 by Wuhu Hongrun; and

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21 by Chuangchun Hualong.

As of December 31, 2022, Henglong, Jiulong, Shenyang, Chongqing, Wuhan Chuguanjie, Hubei Henglong and Wuhu had a manufacturing and administration area of 111,211 square meters, 39,478 square meters, 35,354 square meters, 57,849 square meters, 53,675 square meters, 277,269 square meters and 83,705 square meters, respectively.

Hubei Province, which is home to Dongfeng, one of the largest automakers in China, provides an ample supply of inexpensive but skilled labor to automotive-related industries. The annual production of one of the Company’s main products, power steering gears, was approximately 8.1 million units and 7.8 million units in 2022 and 2021, respectively. Although the production process continues to rely heavily on manual labor, the Company has invested substantially in high-level production machinery to improve capacity and production quality. Approximately $53.7 million was spent over the last three years to purchase professional-grade equipment and extend workshops.

RAW MATERIALS

The Company purchases various manufactured components and raw materials for use in its manufacturing processes. The principal components and raw materials the Company purchases include castings, finished sub-components, aluminum, steel, fabricated metal electronic parts and molded plastic parts. The most important raw material is steel. The Company enters into purchase agreements with local suppliers. The annual purchase plans are determined at the beginning of the calendar year but are subject to revision every three months as a result of customers’ orders. A purchase order is made according to monthly production plans. This protects the Company from building up inventory when the orders from customers change.

The Company’s purchases from its ten largest suppliers represented in the aggregate 24.8% of all components and raw materials it purchased for the year ended December 31, 2022, and none of them provided more than 10% of total purchases.

All components and raw materials are available from numerous sources. The Company has not, in recent years, experienced any significant shortages of manufactured components or raw materials and normally does not carry inventories of these items in excess of what is reasonably required to meet its production and shipping schedules.

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RESEARCH AND DEVELOPMENT

The Company owns the Testing Center, a Hubei Provincial-Level technical center, which has been approved by the Hubei Economic Commission. The center has a staff of about 227, including 94 engineers, primarily focusing on steering system R&D, tests, production process improvement and new material and production methodology application.

In addition, the Company has formed Shanghai Henglong to engage in the design and sale of automotive electronics, including key parts of EPS.

The Company believes that its engineering and technical expertise, together with its emphasis on continuing research and development, allow it to use the latest technologies, materials and processes to solve problems for its customers and to bring new, innovative products to market. The Company believes that continued research and development activities, including engineering, are critical to maintaining its pipeline of technologically advanced products. The Company has aggressively managed costs in other portions of its business in order to increase its total expenditures for research and development activities, including engineering, at approximately $36.1 million and $28.2 million for the years ended December 31, 2022 and 2021, respectively. In 2022 and 2021, the sales of such newly developed products accounted for about 29.5% and 23.2%, respectively, of total sales.

COMPETITION

The automotive components industry is extremely competitive. The Company’s customers consider criteria including quality, price/cost competitiveness, system and product performance, reliability and timeliness of delivery, new product and technology development capability, excellence and flexibility in operations, degree of global and local presence, effectiveness of customer service and overall management capability. The power steering system market is fragmented in China, and the Company has seven major competitors. Of these competitors, two are Sino-foreign joint ventures while the other five are state-owned. Like many competitive industries, there is pressure on downward selling prices.

The Company’s major competitors, including Shanghai ZF, Nexteer and First Auto FKS, “FKS,” are component suppliers to specific automobile manufacturers. Shanghai ZF is the joint venture of SAIC and ZF Germany, which is an exclusive supplier to SAIC-Volkswagen and SAIC-GM. FKS is a joint venture between First Auto Group and Japan’s Koyo Company and its main customer is FAW-Volkswagen Company.

While the Chinese government limits foreign ownership of auto assemblers to 50%, there is no analogous limitation in the automotive components industry. Thus, opportunities exist for foreign component suppliers to set up factories in China. These overseas competitors employ technology that may be more advanced and may have existing relationships with global automobile assemblers, but they are generally not as competitive as the Company in China in terms of production cost and flexibility in meeting client requirements.

CHINESE AUTOMOBILE INDUSTRY

The Company is a supplier of automotive parts and most of its operations are located in China. An increase or decrease in the output and sales of Chinese vehicles could result in an increase or decrease of the Company’s results of operations. According to the latest statistics from the China Association of Automobile Manufacturers, “CAAM”, the output and sales volume of passenger vehicles in 2022 was 23.8 million and 23.6 million units respectively, an increase of 11.2% and 9.5%, respectively, compared to 2021. The output and sales volume of commercial vehicles in 2022 was 3.2 million and 3.3 million units, respectively, a decrease of 31.9% and 31.2%,

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respectively, compared to 2021. In 2022, the Company’s sales of steering gears for passenger vehicles increased by 15.6% and the sales of steering gears for commercial vehicles decreased by 26.1%, compared to 2021 in China.

ENVIRONMENTAL COMPLIANCE

The Company is subject to the requirements of U.S. federal, state, local and non-U.S., including China’s, environmental and occupational safety and health laws and regulations. These include laws regulating air emissions, water discharge and waste management. The Company has an environmental management structure designed to facilitate and support its compliance with these requirements globally. Although the Company intends to comply with all such requirements and regulations, it cannot provide assurance that it is at all times in compliance. The Company has made and will continue to make capital and other expenditures to comply with environmental requirements, although such expenditures were not material during the past two years. Environmental requirements are complex, change frequently and have tended to become more stringent over time. Accordingly, the Company cannot assure that environmental requirements will not change or become more stringent over time or that its eventual environmental cleanup costs and liabilities will not be material.

During the years ended December 31, 2022 and 2021, the Company did not make any material capital expenditures relating to environmental compliance.

FINANCIAL INFORMATION AND GEOGRAPHIC AREAS

Financial information about sales and long-term assets by major geographic region can be found in Note 27, “Segment Reporting” to the consolidated financial statements in this Report. The following table summarizes the percentage of sales and total assets by major geographic regions:


	Net Sales				Long-term assets
	Year Ended December 31,				As of December 31,
	2022		2021		2022		2021
Geographic region:
China	62.6	%	65.3	%	98.5	%	99.2	%
United States	25.5		27.0		0.6		0.5
Other foreign countries	11.9		7.7		0.9		0.3
Total consolidated	100.0	%	100.0	%	100.0	%	100.0	%

WEBSITE ACCESS TO SEC FILINGS

The Company files electronically with, or furnishes to, the SEC its annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and amendments to those reports pursuant to Section 13(a) of the Securities Exchange Act of 1934. The Company makes available free of charge on its web site (www.caasauto.com) all such reports as soon as reasonably practicable after they are filed.

The SEC maintains an Internet site that contains reports, proxy information and information statements, and other information regarding issuers that file electronically with the SEC. The address of that website is http://www.sec.gov.

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ITEM 1A. RISK FACTORS.

Any investment in the Company’s securities involves a high degree of risk. You should carefully consider the risks described below, together with the information contained elsewhere in this Annual Report, before you make a decision to invest in the Company. The Company’s business, financial conditions and results of operations could be materially and adversely affected by many risk factors. Because of these risk factors, actual results might differ significantly from those projected in any forward-looking statements. Factors that might cause such differences include, among others, the following:

RISKS RELATED TO THE COMPANY’S BUSINESS AND INDUSTRY

The cyclical nature of automotive production and sales could result in a reduction in automotive sales, which could adversely affect the Company’s business and results of operations.

The Company’s business relies on automotive vehicle production and sales by its customers, which are highly cyclical and depend on general economic conditions and other factors, including consumer spending and preferences and the price and availability of gasoline. They also can be affected by labor relations issues, regulatory requirements and other factors. In the last two years, the price of automobiles in China has generally declined. Additionally, the volume of automotive production in China has fluctuated from year to year, which gives rise to fluctuations in the demand for the Company’s products. Therefore, any significant economic decline could result in a reduction in automotive production and sales by the Company’s customers and could have a material adverse effect on the Company’s results of operations. Moreover, if the prices of automobiles keep declining, the selling price of automotive parts also would decrease, which would result in lower revenues and profitability.

Increasing costs for manufactured components and raw materials may adversely affect the Company’s profitability.

The Company uses a broad range of manufactured components and raw materials in its products, including castings, electronic components, finished sub-components, molded plastic parts, fabricated metal, aluminum, steel and resins. Because it may be difficult to pass increased prices for these items on to the Company’s customers, a significant increase in the prices of the Company’s components and materials could materially increase the Company’s operating costs and adversely affect its profit margins and profitability.

Because the Company is a holding company with substantially all of its operations conducted through its subsidiaries, its performance will be affected by the performance of its subsidiaries.

The Company almost has no operations independent of those of Genesis and its subsidiaries, and the Company’s principal assets are its investments in Genesis and its subsidiaries and affiliates. As a result, the Company is dependent upon the performance of Genesis and its subsidiaries and will be subject to the financial, business and other factors affecting Genesis as well as general economic and financial conditions. As substantially all of the Company’s operations are, and will be, conducted through its subsidiaries, the Company will be dependent on the cash flow of its subsidiaries to meet its obligations.

Because virtually all of the Company’s assets are, and will be, held by operating subsidiaries, the claims of the Company’s stockholders will be structurally subordinate to all existing and future liabilities, obligations and trade payables of such subsidiaries. In the event of the Company’s bankruptcy, liquidation or reorganization, its assets and those of its subsidiaries will be available to satisfy the claims of the Company’s stockholders only after all of its and its subsidiaries’ liabilities and obligations have been paid in full.

With the automobile parts markets being highly competitive and many of the Company’s competitors having greater resources than it does, the Company may not be able to compete successfully.

The automobile parts industry is a highly competitive business. The Company’s customers consider criteria including:

●quality;

●price/cost competitiveness;

●system and product performance;

●reliability and timeliness of delivery;

●new product and technology development capability;

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●excellence and flexibility in operations;

●degree of global and local presence;

●effectiveness of customer service; and

●overall management capability.

The Company’s competitors include independent suppliers of parts, as well as suppliers formed by spin-offs from the Company’s customers, who are becoming more aggressive in selling parts to other vehicle manufacturers. Depending on the particular product, the number of the Company’s competitors varies significantly. Many of the Company’s competitors have substantially greater revenues and financial resources than it does, as well as stronger brand names, consumer recognition, business relationships with vehicle manufacturers, and geographic presence than it has. The Company may not be able to compete favorably and increased competition may substantially harm its business, business prospects and results of operations.

Internationally, the Company faces different market dynamics and competition. The Company may not be as successful as its competitors in generating revenues in international markets due to the lack of recognition of its products or other factors. Developing product recognition overseas is expensive and time-consuming and the Company’s international expansion efforts may be more costly and less profitable than it expects. If the Company is not successful in its target markets, its sales could decline, its margins could be negatively impacted and it could lose market share, any of which could materially harm the Company’s business, results of operations and profitability.

Pricing pressure by automobile manufacturers on their suppliers may adversely affect the Company’s business and results of operations.

Recently, pricing pressure from automobile manufacturers has been prevalent in the automotive parts industry in China. Virtually all vehicle manufacturers seek price reductions each year. Although the Company has tried to reduce costs and resist price reductions, these reductions have impacted the Company’s sales and profit margins. If the Company cannot offset continued price reductions through improved operating efficiencies and reduced expenditures, price reductions will have a material adverse effect on the Company’s results of operations.

The Company’s business, revenues and profitability would be materially and adversely affected if it loses any of its large customers.

For the year ended December 31, 2022, approximately 20.2%, 6.2%, 5.9%, 5.3% and 5.2% of the Company’s sales were to Fiat Chrysler North America, Hubei Hongrun, Great Wall Motors, BYD Auto. and Chery Automobile Co.,Ltd., the Company’s five largest customers in 2022, respectively. In total, these five customers accounted for 42.8% of total sales in 2022. For the year ended December 31, 2021, approximately 21.2%, 9.0%, 5.1%, 5.1% and 4.4% of the Company’s sales were to Fiat Chrysler North America, Great Wall Motors, Hubei Hongrun, Beiqi Foton and Ford Motor Company, the Company’s five largest customers in 2021, respectively. In total, these five customers accounted for 44.8% of total sales in 2021. The loss of, or significant reduction in purchases by, one or more of these major customers could adversely affect the Company’s business.

The Company may not be able to collect receivables incurred by customers.

The Company currently sells its products on credit and its ability to receive payment for its products depends on the continued creditworthiness of its customers. Although the Company has long-term relationships with its major customers, the customer base may change if its sales increase because of the Company’s expanded capacity. If the Company is not able to collect its receivables, its profitability will be adversely affected.

In November 2020, Intermediate People’s Court of Shenyang, Liaoning province, China, accepted the bankruptcy reorganization application of one of our customers. As of December 31, 2022 and 2021, the Company had accounts and notes receivable with a total amount of $6.0 million and $6.6 million, respectively, due from this customer and its subsidiaries, which receivables we considered in significant doubt of collectability. The Company provided full allowance for these receivables.

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The Company may be subject to product liability and warranty and recall claims, which may increase the costs of doing business and adversely affect the Company’s financial condition and liquidity.

The Company may be exposed to product liability and warranty claims if its products actually or allegedly fail to perform as expected or the use of its products results, or is alleged to result, in bodily injury and/or property damage. The Company started to pay some of its customers’ increased after-sales service expenses due to consumer rights protection policies of “recall” issued by the Chinese government in 2004, such as the recalling flawed vehicles policy. Beginning in 2004, automobile manufacturers unilaterally required their suppliers to pay a “3-R Guarantees” service charge for repair, replacement and refund in an amount of about 1%–5% of the total amount of parts supplied. Accordingly, the Company has experienced and will continue to experience higher after-sales service expenses. Product liability, warranty and recall costs may have a material adverse effect on the Company’s financial condition.

The Company is subject to environmental and safety regulations, which may increase the Company’s compliance costs and may adversely affect its results of operations.

The Company is subject to the requirements of environmental and occupational safety and health laws and regulations in China. The Company cannot provide assurance that it has been or will be at all times in full compliance with all of these requirements, or that it will not incur material costs or liabilities in connection with these requirements. Additionally, these regulations may change in a manner that could have a material adverse effect on the Company’s business, results of operations and financial condition. The capital requirements and other expenditures that may be necessary to comply with environmental requirements could increase and become a material expense of doing business.

Non-performance by the Company’s suppliers may adversely affect its operations by delaying delivery or causing delivery failures, which may negatively affect demand, sales and profitability.

The Company purchases various types of equipment, raw materials and manufactured component parts from its suppliers. The Company would be materially and adversely affected by the failure of its suppliers to perform as expected. The Company could experience delivery delays or failures caused by production issues or delivery of non-conforming products if its suppliers fail to perform, and it also faces these risks in the event any of its suppliers becomes insolvent or bankrupt.

The Company’s business and growth may suffer if it fails to attract and retain key personnel.

The Company’s ability to operate its business and implement its strategies effectively depends on the efforts of its executive officers and other key employees. The Company depends on the continued contributions of its senior management and other key personnel. The Company’s future success also depends on its ability to identify, attract and retain highly skilled technical staff, particularly engineers and other employees with mechanics and electronics expertise, and managerial, finance and marketing personnel. The Company does not maintain a key person life insurance policy on Mr. Hanlin Chen or Mr. Qizhou Wu. The loss of the services of any of the Company’s key employees or the failure to attract or retain other qualified personnel could substantially harm the Company’s business.

The Company’s management controls approximately 65.15% of its outstanding common stock and may have conflicts of interest with the Company’s minority stockholders.

As of December 31, 2022, members of the Company’s management beneficially own approximately 65.15% of the outstanding shares of the Company’s common stock. As a result, except for the related party transactions that require approval of the audit committee of the board of directors of the Company, these majority stockholders have control over decisions to enter into any corporate transaction, which could result in the approval of transactions that might not maximize overall stockholders’ value. Additionally, these stockholders control the election of members of the Company’s board, have the ability to appoint new members to the Company’s management team and control the outcome of matters submitted to a vote of the holders of the Company’s common stock. The interests of these majority stockholders may at times conflict with the interests of the Company’s other stockholders. The Company regularly engages in transactions with entities controlled by one or more of its officers and directors, including those controlled by Mr. Hanlin Chen, the chairman of the board of directors of the Company and its controlling stockholder.

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There is a limited public float of the Company’s common stock, which can result in the Company’s stock price being volatile and prevent the realization of a profit on resale of the Company’s common stock or derivative securities.

There is a limited public float of the Company’s common stock. As of December 31, 2022, approximately 34.85% of the Company’s outstanding common stock is considered part of the public float. The term “public float” refers to shares freely and actively tradable on the NASDAQ Capital Market and not owned by officers, directors or affiliates, as such term is defined under the Securities Act. As a result of the limited public float and the limited trading volume on some days, the market price of the Company’s common stock can be volatile, and relatively small changes in the demand for or supply of the Company’s common stock can have a disproportionate effect on the market price for its common stock. This stock price volatility could prevent a security holder seeking to sell the Company’s common stock or derivative securities from being able to sell them at or above the price at which the stock or derivative securities were bought, or at a price which a fully liquid market would report.

The Company is subject to penny stock regulations and restrictions.

The SEC has adopted regulations which generally define so-called “penny stock” as an equity security that has a market price less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exemptions. As of December 31, 2022, the closing price for the Company’s common stock was $5.80. If the Company’s stock is a “penny stock”, it may become subject to Rule 15g-9 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the “Penny Stock Rule.” This rule imposes additional sales practice requirements on broker-dealers that sell such securities to persons other than established customers and “accredited investors,” generally, individuals with a net worth in excess of $1.0 million or annual incomes exceeding $0.2 million, or $0.3 million together with their spouses. For transactions covered by Rule 15g-9, a broker-dealer must make a special suitability determination for the purchaser and have received the purchaser’s written consent to the transaction prior to sale. As a result, this rule may affect the ability of broker-dealers to sell the Company’s securities and may affect the ability of purchasers to sell any of the Company’s securities in the secondary market.

For any transaction involving a penny stock, unless exempt, the rules require delivery, prior to any transaction in a penny stock, of a disclosure schedule prepared by the SEC relating to the penny stock market. Disclosure also is required to be made about sales commissions payable to both the broker-dealer and the registered representative and current quotations for the securities. Finally, monthly statements are required to be sent disclosing recent price information for the penny stock held in the account and information on the limited market in penny stock.

There can be no assurance that the Company’s common stock will qualify for exemption from the Penny Stock Rule. In any event, even if the Company’s common stock were exempt from the Penny Stock Rule, the Company would remain subject to Section 15(b)(6) of the Exchange Act, which gives the SEC the authority to restrict any person from participating in a distribution of penny stock if the SEC finds that such a restriction would be in the public interest.

Provisions in the Company’s certificate of incorporation and bylaws and the General Corporation Law of Delaware may discourage a takeover attempt.

Provisions in the Company’s certificate of incorporation and bylaws and the General Corporation Law of Delaware, the state in which it is organized, could make it difficult for a third party to acquire the Company, even if doing so might be beneficial to the Company’s stockholders. Provisions of the Company’s certificate of incorporation and bylaws impose various procedural and other requirements, which could make it difficult for stockholders to effect certain corporate actions and possibly prevent transactions that would maximize stockholders’ value.

Failure to maintain effective internal control over financial reporting could have a material adverse effect on the Company’s business, results of operations and the trading price of its shares.

The Company is subject to reporting obligations under the U.S. securities laws. The Securities and Exchange Commission, the “SEC,” as required by Section 404 of the Sarbanes-Oxley Act of 2002, has adopted rules requiring public companies to include a report of management in its annual report that contains an assessment by management of the effectiveness of such company’s internal control over financial reporting.

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If the Company fails to maintain the adequacy of its internal controls in the future, it will not be able to ensure that it can conclude on an ongoing basis that it has effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act. Moreover, effective internal controls are necessary for the Company to produce reliable financial reports and are important to help prevent fraud. Any failure to maintain effective internal control over financial reporting could result in the loss of investor confidence in the reliability of the Company’s financial statements, which in turn could harm its business and negatively impact the trading price of its common stock. Furthermore, the Company may need to incur additional costs and use additional management and other resources in an effort to comply with Section 404 of the Sarbanes-Oxley Act and other requirements going forward.

The Company generally does not pay cash dividends on its common stock.

Techniques employed by short sellers may drive down the market price of the Company’s common stock.

Short selling is the practice of selling securities that the seller does not own but rather has borrowed from a third party with the intention of buying identical securities back at a later date to return to the lender. The short seller hopes to profit from a decline in the value of the securities between the sale of the borrowed securities and the purchase of the replacement shares, as the short seller expects to pay less in that purchase than it received in the sale. As it is in the short seller’s best interests for the price of the stock to decline, many short sellers publish, or arrange for the publication of, negative opinions regarding the relevant issuer and its business prospects in order to create negative market momentum and generate profits for themselves after selling a stock short. These short attacks have, in the past, led to selling of shares in the market.

In the recent past, public companies that have substantially all of their operations in China have been the subject of short selling. Much of the scrutiny and negative publicity has centered around allegations of a lack of effective internal control over financial reporting resulting in financial and accounting irregularities and mistakes, inadequate corporate governance policies or a lack of adherence thereto and, in many cases, allegations of fraud. As a result, many of these companies are now conducting internal and external investigations into the allegations and, in the interim, are subject to shareholder lawsuits and/or SEC enforcement actions.

It is not clear what effect such negative publicity would have on the Company, if any. If the Company were to become the subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, the Company could have to expend a significant amount of resources to investigate such allegations and/or defend itself. While the Company would strongly defend against any such short seller attacks, the Company may be constrained in the manner in which it can proceed against the relevant short seller by principles of freedom of speech, applicable state law or issues of commercial confidentiality. Such a situation could be costly and time-consuming, and could distract the Company’s management from growing the Company. Even if such allegations are ultimately proven to be groundless, allegations against the Company could severely impact its business operations and stockholders’ equity, and any investment in the Company’s stock could be greatly reduced or rendered worthless.

The Company’s secured credit facilities contain certain financial covenants that it may not satisfy, which, if not satisfied, could result in the acceleration of the amounts due under the Company’s secured credit facilities and the limitation of the Company’s ability to borrow additional funds in the future.

The agreements governing the Company’s secured credit facilities subject it to various financial and other restrictive covenants with which the Company must comply on an ongoing or periodic basis. These covenants include, but are not limited to, restrictions on the utilization of the funds and the maintenance of certain financial ratios. If the Company violates any of these covenants, the Company’s outstanding debt under the Company’s secured credit facilities could become immediately due and payable, the Company’s lenders could proceed against any collateral securing such indebtedness and the Company’s ability to borrow additional funds in the future may be limited. Alternatively, the Company could be forced to refinance or renegotiate the terms and conditions of the Company’s secured credit facilities, including the interest rates, financial and restrictive covenants and security requirements of the secured credit facilities, on terms that may be significantly less favorable to the Company.

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Our business operations have been and may continue to be materially and adversely affected by the outbreak of the coronavirus disease (COVID-19).

An outbreak of respiratory illness caused by COVID-19 emerged in Wuhan city, Hubei province, PRC, where the Company’s headquarters is located, in December 2019 and has been expanding within the PRC and globally. The new strain of COVID-19 is considered to be highly contagious and poses a serious public health threat. On January 23, 2020, the PRC government announced the lockdown of Wuhan city in an attempt to quarantine the city. Since then, other measures including travel restrictions have been imposed in other major cities in the PRC and throughout the world in an effort to contain the COVID-19 outbreak. The World Health Organization (the “WHO”) is closely monitoring and evaluating the situation. On March 11, 2020, the WHO declared the outbreak of COVID-19 a pandemic, expanding its assessment of the threat beyond the global health emergency it had announced in January. As our headquarters are located in Wuhan, we closed our headquarters effective January 23, 2020 and reopened in late March 2020.

Any outbreak of such epidemic illness or other adverse public health developments in the PRC or elsewhere in the world may materially and adversely affect the global economy, our markets and our business.

We cannot foresee whether the pandemic of COVID-19 will be effectively contained, nor can we predict the severity and duration of its impact. If the pandemic of COVID-19 is not effectively and timely controlled, our business operations and financial condition may be materially and adversely affected as a result of the deteriorating market outlook for automobile sales, the slowdown in regional and national economic growth, weakened liquidity and financial condition of our customers or other factors that we cannot foresee. Any of these factors and other factors beyond our control could have an adverse effect on the overall business environment, cause uncertainties in the regions where we conduct business, cause our business to suffer in ways that we cannot predict and materially and adversely impact our business, financial condition and results of operations.

RISKS RELATED TO DOING BUSINESS IN CHINA AND OTHER COUNTRIES BESIDES THE UNITED STATES

The Company may face a severe operating environment during times of economic recession.

The sales volume of the Company’s core products is largely influenced by the demand for its customers’ end products which are mostly sold in the Chinese markets. Future economic crises, either within China or without, may lead to a drastic drop in demand for the Company’s products.

Inflation in China could negatively affect the Company’s profitability and growth.

China’s economy has experienced rapid growth, much of it due to the issuance of debt over the last few years. This debt-fueled economic growth has led to growth in the money supply, causing rising inflation. If prices for the Company’s products rise at a rate that is insufficient to compensate for the rise in the cost of production, it may harm the Company’s profitability. In order to control inflation, the Chinese government has imposed controls on bank credit, limits on loans and other restrictions on economic activities. Such policies have led to a slowing of economic growth. Additional measures could further slow economic activity in China, which could, in turn, materially increase the Company’s costs while also reducing demand for the Company’s products.

The Chinese government’s macroeconomic policies could have a negative effect on the Company’s business and results of operations.

The Chinese government has implemented various measures from time to time to control the rate of economic growth in the PRC. Some of these measures may have a negative effect on the Company over the short or long term. Recently, to cope with high inflation and economic imbalances, the Chinese government has tightened monetary policy and implemented floating exchange rate policy. In addition, in order to alleviate some of the effects of unbalanced growth and social discontent, the Chinese government has enacted a series of social programs and anti-inflationary measures. These, in turn, have increased the costs on the financial and manufacturing sectors, without having alleviated the effects of high inflation and economic imbalances. The Chinese government’s macroeconomic policies, even if effected properly, may significantly slow down China’s economy or cause great social unrest, all of which would have a negative effect on the Company’s business and results of operations.

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The economic, political and social conditions in China could affect the Company’s business.

Most of the Company’s business, assets and operations are located in China. The economy of China differs from the economies of most developed countries in many respects, including government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. The economy of China has been transitioning from a planned economy to a more market-oriented economy. Although the Chinese government has implemented measures emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets and the establishment of sound corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the Chinese government.

In addition, the Chinese government continues to play a significant role in regulating industry by imposing industrial policies. It also exercises significant control over China’s economic growth through the allocation of resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing preferential treatment to particular industries or companies. Therefore, the Chinese government’s involvement in the economy could adversely affect the Company’s business operations, results of operations and/or financial condition.

Because the Company’s operations are mostly located outside of the United States and are subject to Chinese laws, any change of Chinese laws may adversely affect its business.

Most of the Company’s operations are in the PRC, which exposes it to risks, such as exchange controls and currency restrictions, currency fluctuations and devaluations, changes in local economic conditions, changes in Chinese laws and regulations, exposure to possible expropriation or other PRC government actions, and unsettled political conditions. These factors may have a material adverse effect on the Company’s operations or on its business, results of operations and financial condition.

The Company’s international expansion plans subject it to risks inherent in doing business internationally.

The Company’s long-term business strategy relies on the expansion of its international sales outside China by targeting markets, such as the United States and Brazil. Risks affecting the Company’s international expansion include challenges caused by distance, language and cultural differences, conflicting and changing laws and regulations, foreign laws, international import and export legislation, trading and investment policies, foreign currency fluctuations, the burdens of complying with a wide variety of laws and regulations, protectionist laws and business practices that favor local businesses in some countries, foreign tax consequences, higher costs associated with doing business internationally, restrictions on the export or import of technology, difficulties in staffing and managing international operations, trade and tariff restrictions, and variations in tariffs, quotas, taxes and other market barriers. These risks could harm the Company’s international expansion efforts, which could in turn materially and adversely affect its business, operating results and financial condition.

On September 17, 2012, the United States filed a trade case with the World Trade Organization, “WTO,” against the PRC with respect to the PRC government’s purported provision of subsidies to the automobile and automobile-parts enterprises in the PRC. If the WTO rules against China in this trade case, the cost of sales of the Company could increase due to the imposition of any tariff and/or the Company’s ability to export products to the United States could be limited, which could affect the Company’s business and operating results.

In addition, under Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the SEC has adopted additional disclosure requirements related to the source of certain “conflict minerals” for issuers for which such “conflict minerals” are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, by that issuer. The metals covered by the rules include tin, tantalum, tungsten and gold, commonly referred to as “3TG.” If these materials are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, the rules require a reasonable country of origin inquiry be conducted to determine if an issuer knows, or has reason to believe, that any of the minerals used in the production process may have originated from the Democratic Republic of the Congo or an adjoining country. In such a case, if an issuer were not able to determine that the minerals did not originate from a covered country or conclude that there is no reason to believe that the minerals used in the production process may have originated in a covered country, that issuer could be required to perform supply chain due diligence on members of its supply chain. Global supply chains can have multiple layers, thus the costs of complying with these new requirements could be substantial. These new requirements may also reduce the number of suppliers that provide conflict-free metals and may also affect a company’s ability to obtain products in sufficient quantities or at competitive prices. If the Company was to source such 3TG minerals that are necessary to the functionality or production of a product manufactured, or contracted to be manufactured, compliance

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costs with these rules and/or the unavailability of raw materials could have a material adverse effect on the Company’s results of operations.

The Company faces risks associated with currency exchange rate fluctuations; any adverse fluctuation may adversely affect its operating margins.

Although the Company is incorporated in the State of Delaware, in the United States, the majority of its current revenues are in Chinese currency. Conducting business in currencies other than U.S. dollars subjects the Company to fluctuations in currency exchange rates that could have a negative impact on its reported operating results. Fluctuations in the value of the U.S. dollar relative to other currencies impact the Company’s revenues, cost of revenues and operating margins and result in foreign currency translation gains and losses. Historically, the Company has not engaged in exchange rate hedging activities. Although the Company may implement hedging strategies to mitigate this risk, these strategies may not eliminate its exposure to foreign exchange rate fluctuations and involve costs and risks of their own, such as ongoing management time and expertise requirements, external costs to implement the strategy and potential accounting implications.

If relations between the United States and China worsen, the Company’s stock price may decrease and the Company may have difficulty accessing the U.S. capital markets.

At various times during recent years, the United States and China have had disagreements over political and economic issues. Controversies may arise in the future between these two countries. Any political or trade controversies between the United States and China could adversely affect the market price of the Company’s common stock and its ability to access U.S. capital markets. Political events, international trade disputes and other business interruptions could harm or disrupt international commerce and the global economy, and could have a material adverse effect on the Company, its customers and its other business partners.

The Chinese government could change its policies toward private enterprise, which could adversely affect the Company’s business.

The Company’s business is subject to political and economic uncertainties in China and may be adversely affected by China’s political, economic and social developments. Over the past several years, the Chinese government has pursued economic reform policies including the encouragement of private economic activity and greater economic decentralization. The Chinese government may not continue to pursue these policies or may alter them to the Company’s detriment from time to time. Changes in policies, laws and regulations, or in their interpretation or the imposition of confiscatory taxation, restrictions on currency conversion, restrictions or prohibitions on dividend payments to stockholders, devaluations of currency or the nationalization or other expropriation of private enterprises could have a material adverse effect on the Company’s business. Nationalization or expropriation could result in the total loss of the Company’s investment in China.

Government control of currency conversion and future movements in exchange rates may adversely affect the Company’s operations and financial results.

The Company receives most of its revenues in Chinese Renminbi, “RMB”. A portion of such revenues will be converted into other currencies to meet the Company’s foreign currency obligations. Foreign exchange transactions under the Company’s capital account, including principal payments in respect of foreign currency-denominated obligations, continue to be subject to significant foreign exchange controls and require the approval of the State Administration of Foreign Exchange in China. These limitations could affect the Company’s ability to obtain foreign exchange through debt or equity financing, or to obtain foreign exchange for capital expenditures.

The Chinese government controls its foreign currency reserves through restrictions on imports and conversion of RMB into foreign currency. In July 2005, the Chinese government has adjusted its exchange rate policy from “Fixed Rate” to “Floating Rate”. From July 2005 to December 2022, the exchange rate between the RMB and the U.S. dollar appreciated from RMB 1.00 to $0.1205 to RMB 1.00 to $0.1436. Any significant appreciation of the RMB is likely to decrease the income of export products and the cash flow of the Company.

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Because the Chinese legal system is not fully developed, the Company and its security holders’ legal protections may be limited.

The Chinese legal system is based on written statutes and their interpretation by the Supreme People’s Court. Although the Chinese government introduced new laws and regulations to modernize its business, securities and tax systems on January 1, 1994, China does not yet possess a comprehensive body of business law. Because Chinese laws and regulations are relatively new, interpretation, implementation and enforcement of these laws and regulations involve uncertainties and inconsistencies and it may be difficult to enforce contracts. In addition, as the Chinese legal system develops, changes in such laws and regulations, their interpretation or their enforcement may have a material adverse effect on the Company’s business operations. Moreover, interpretative case law does not have the same precedential value in China as in the United States, so legal compliance in China may be more difficult or expensive.

The Company may be subject to fines and legal sanctions imposed by State Administration of Foreign Exchange, “SAFE”, or other Chinese government authorities if it or its Chinese directors or employees fail to comply with recent Chinese regulations relating to employee share options or shares granted by offshore listed companies to Chinese domestic individuals.

On December 25, 2006, the People’s Bank of China, or PBOC, issued the Administration Measures on Individual Foreign Exchange Control, and the corresponding Implementation Rules were issued by SAFE on January 5, 2007. Both of these regulations became effective on February 1, 2007. According to these regulations, all foreign exchange matters relating to employee stock holding plans, share option plans or similar plans with Chinese domestic individuals’ participation require approval from the SAFE or its authorized branch. On March 28, 2007, the SAFE issued the Application Procedure of Foreign Exchange Administration for Domestic Individuals Participating in Employee Stock Holding Plan or Stock Option Plan of Overseas-Listed Company, or the Stock Option Rule. Under the Stock Option Rule, Chinese domestic individuals who are granted share options or shares by an offshore listed company are required, through a Chinese agent or Chinese subsidiary of the offshore listed company, to register with the SAFE and complete certain other procedures. As the Company is an offshore listed company, its Chinese domestic directors and employees who may be granted share options or shares shall become subject to the Stock Option Rule. Under the Stock Option Rule, employees stock holding plans, share option plans or similar plans of offshore listed companies with Chinese domestic individuals’ participation must be filed with the SAFE. After the Chinese domestic directors or employees exercise their options, they must apply for the amendment to the registration with the SAFE. As of December 31, 2022, the Company has completed such SAFE registration and other related procedures according to PRC law. If the Company or its Chinese domestic directors or employees fail to comply with these regulations in the future, the Company or its Chinese domestic directors or employees may be subject to fines or other legal sanctions imposed by the SAFE or other Chinese government authorities.

Capital outflow policies in China may hamper the Company’s ability to declare and pay dividends to its stockholders.

China has adopted currency and capital transfer regulations. These regulations may require the Company to comply with complex regulations for the movement of capital. Although the Company’s management believes that it will be in compliance with these regulations, should these regulations or the interpretation of them by courts or regulatory agencies change, the Company may not be able to pay dividends to its stockholders outside of China. In addition, under current Chinese law, the Company’s joint-ventures and wholly-owned enterprise in China must retain a reserve equal to 10% of its net income after taxes, not to exceed 50% of its registered capital. Accordingly, this reserve will not be available to be distributed as dividends to the Company’s stockholders. The Company presently does not intend to pay dividends for the foreseeable future. The Company’s board of directors intends to follow a policy of retaining all of the Company’s earnings to finance the development and execution of its strategy and the expansion of the Company’s business.

The recent state government interference into business activities of U.S.-listed Chinese companies may negatively impact our operations.

Recently, the Chinese government announced that it would step up supervision of Chinese companies listed on foreign exchanges. China intends to improve regulation of cross-border data flows and security, crack down on illegal activity in the securities market and punish fraudulent securities issuance, market manipulation and insider trading. China will also check sources of funding for securities investment and control leverage ratios. The Cyberspace Administration of China has also opened a cybersecurity probe into several U.S.-listed tech companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the Data Security Law, how companies collect, store, process and transfer data. If the Chinese government’s interference expands, our operations may be negatively impacted in a significant way, although, presently, there is no discernible immediate impact.

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The PCAOB had historically been unable to inspect our auditor in relation to their audit work performed for our financial statements and the inability of the PCAOB to conduct inspections of our auditor in the past has deprived our investors with the benefits of such inspections.

Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its compliance with the applicable professional standards. The auditor is located in mainland China, a jurisdiction where the PCAOB was historically unable to conduct inspections and investigations completely before 2022. As a result, we and investors in our shares were deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China in the past has made it more difficult to evaluate the effectiveness of our independent registered public accounting firm’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB inspections. On December 16, 2021, the PCAOB issued the HFCAA Determination Report, according to which our auditor is subject to the determinations that the PCAOB is unable to inspect or investigate completely. On December 15, 2022, the PCAOB issued a report that vacated its December 16, 2021 determination and removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. However, if the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong, and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we and investors in our shares would be deprived of the benefits of such PCAOB inspections again, which could cause investors and potential investors in our shares to lose confidence in our audit procedures and reported financial information and the quality of our financial statements.

Our shares may be prohibited from trading in the United States under the HFCAA in the future if the PCAOB is unable to inspect or investigate completely auditors located in China. The delisting of the shares, or the threat of being delisted, may materially and adversely affect the value of your investment

Pursuant to the HFCAA, if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not been subject to inspections by the PCAOB for two consecutive years, the SEC will prohibit our shares from being traded on a national securities exchange or in the over-the-counter trading market in the United States.

On December 16, 2021, the PCAOB issued a report to notify the SEC of its determination that the PCAOB was unable to inspect or investigate completely registered public accounting firms headquartered in mainland China and Hong Kong and our auditor was subject to that determination. In April 2022, the SEC conclusively listed us as a Commission-Identified Issuer under the HFCAA following the filing of our annual report on Form 10-K for the fiscal year ended December 31, 2021. On December 15, 2022, the PCAOB removed mainland China and Hong Kong from the list of jurisdictions where it is unable to inspect or investigate completely registered public accounting firms. For this reason, we do not expect to be identified as a Commission-Identified Issuer under the HFCAA after we file this annual report on Form 10-K for the fiscal year ended December 31, 2022.

Each year, the PCAOB will determine whether it can inspect and investigate completely audit firms in mainland China and Hong Kong, among other jurisdictions. If the PCAOB determines in the future that it no longer has full access to inspect and investigate completely accounting firms in mainland China and Hong Kong and we use an accounting firm headquartered in one of these jurisdictions to issue an audit report on our financial statements filed with the Securities and Exchange Commission, we would be identified as a Commission-Identified Issuer following the filing of the annual report on Form 10-K for the relevant fiscal year. In accordance with the HFCAA, our securities would be prohibited from being traded on a national securities exchange or in the over-the-counter trading market in the United States if we are identified as a Commission-Identified Issuer for two consecutive years in the future. If our shares are prohibited from trading in the United States, there is no certainty that we will be able to list on a non-U.S. exchange or that a market for our shares will develop outside of the United States. A prohibition of being able to trade in the United States would substantially impair your ability to sell or purchase our shares when you wish to do so, and the risk and uncertainty associated with delisting would have a negative impact on the price of our shares. Also, such a prohibition would significantly affect our ability to raise capital on terms acceptable to us, or at all, which would have a material adverse impact on our business, financial condition, and prospects.

In the case that the bill becomes the law, it will reduce the time period before our shares could be delisted from the exchange and prohibited from over-the-counter trading in the U.S. from 2024 to 2023.

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Proceedings instituted by the SEC against PRC affiliates of the “big four” accounting firms, including the Company’s independent registered public accounting firm, could result in the Company’s financial statements being determined to not be in compliance with the requirements of the Exchange Act.

Starting in 2011, the Chinese affiliates of the “big four” accounting firms, including the Company’s independent registered public accounting firm, were affected by a conflict between U.S. and Chinese law. Specifically, for certain U.S.-listed companies operating and audited in mainland China, the SEC and the PCAOB sought to obtain from the Chinese firms access to their audit work papers and related documents. However, the firms were advised and directed that under Chinese law, they could not respond directly to the U.S. regulators on those requests, and that requests by foreign regulators for access to such papers in China had to be channeled through the CSRC.

In late 2012, this impasse led the SEC to commence administrative proceedings under Rule 102(e) of its Rules of Practice and also under the Sarbanes-Oxley Act of 2002 against the Chinese accounting firms, including the Company’s independent registered public accounting firm. A first instance trial of the proceedings in July 2013 in the SEC’s internal administrative court resulted in an adverse judgment against the firms. The administrative law judge proposed penalties on the firms including a temporary suspension of their right to practice before the SEC, although that proposed penalty did not take effect pending review by the Commissioners of the SEC. On February 6, 2015, before a review by the Commissioners had taken place, the firms reached a settlement with the SEC. Under the settlement, the SEC accepted that future requests by the SEC for the production of documents will normally be made to the CSRC. The firms were to receive matching Section 106 requests, and were required to abide by a detailed set of procedures with respect to such requests, which in substance required them to facilitate production via the CSRC. If they failed to meet specified criteria, the SEC retained authority to impose a variety of additional remedial measures on the firms depending on the nature of the failure.

Under the terms of the settlement, the underlying proceeding against the four China-based accounting firms was deemed dismissed with prejudice four years after entry of the settlement. The four-year mark occurred on February 6, 2019. The Company cannot predict whether the SEC will further challenge the four China-based accounting firms’ compliance with U.S. law in connection with U.S. regulatory requests for audit work papers or if the results of such a challenge would result in the SEC imposing penalties such as suspensions. If additional remedial measures are imposed on the Chinese affiliates of the “big four” accounting firms, including the Company’s independent registered public accounting firm, the Company could be unable to timely file future financial statements in compliance with the requirements of the Exchange Act.

If the Company’s independent registered public accounting firm were denied, even temporarily, the ability to practice before the SEC and the Company were unable to timely find another registered public accounting firm to audit and issue an opinion on the Company’s financial statements, the Company’s financial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to the delisting of the Company’s common stock from the Nasdaq Capital Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of the Company’s common stock in the United States.

The non-U.S. activities of the Company’s non-U.S. subsidiaries may be subject to U.S. taxation.

The majority of the Company’s subsidiaries are based in China and are subject to income taxes in the PRC. These China-based subsidiaries conduct substantially all of the Company’s operations, and generate most of the Company’s income in China. The Company is a Delaware corporation and is subject to income tax in the United States. New U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump-sum payment.

Certain activities conducted in the PRC or other jurisdictions outside of the U.S. may give rise to U.S. corporate income tax. These taxes would be imposed on the Company when its subsidiaries that are controlled foreign corporations (“CFCs”) generate income that is subject to Subpart F of the U.S. Internal Revenue Code, or “Subpart F”. Passive income, such as rents, royalties, interest, dividends, and gain from disposal of the Company’s investments is among the types of income subject to taxation under Subpart F. Any income taxable

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under Subpart F is taxable in the U.S. at federal corporate income tax rates of up to 21% for taxable years beginning after December 31, 2017. Subpart F income is taxable to the Company, even if it is not distributed to the Company.

The U.S. Tax Reform also includes provisions for a new tax on global intangible low-taxed income (“GILTI”) effective for tax years of non-U.S. corporations beginning after December 31, 2017. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of CFCs, subject to the possible use of foreign tax credits and a deduction equal to 50 percent to offset the income tax liability, subject to some limitations.

Information technology dependency and cyber security vulnerabilities could lead to reduced revenue, liability claims, or competitive harm.

The Company is dependent on information technology systems and infrastructure (“IT systems”) to conduct its business. The Company’s IT systems may be vulnerable to disruptions from human error, outdated applications, computer viruses, natural disasters, unauthorized access, cyber-attack and other similar disruptions. Any significant disruption, breakdown, intrusion, interruption or corruption of these systems or data breaches could cause the loss of data or intellectual property, equipment damage, downtime, and/or safety related issues and could have a material adverse effect on the Company’s business. The Company has, from time to time, experienced incidents related to its IT systems, and expect that such incidents will continue, including malware and computer virus outbreaks, unauthorized access, systems failures and disruptions. The Company has measures and defenses in place against such events, but the Company may not be able to prevent, immediately detect, or remediate all instances of such events. A material security breach or disruption of the Company’s IT systems could result in theft, unauthorized use, or publication of the Company’s intellectual property and/or confidential business information, harm the Company’s competitive position, disrupt the Company’s manufacturing, reduce the value of the Company’s investment in research and development and other strategic initiatives, impair the Company’s ability to access vendors and suppliers or otherwise adversely affect the Company’s business.

Additionally, the Company believes that utilities and other operators of critical infrastructure that serve the Company’s facilities face heightened security risks, including cyber-attack. In the event of such an attack, disruption in service from the Company’s utility providers could disrupt the Company’s manufacturing operations which rely on a continuous source of power (electrical, gas, etc.).

The Company’s business is subject to natural disasters, health epidemics and other catastrophic incidents.

In addition to COVID-19, China has in the past experienced significant natural disasters, including earthquakes, extreme weather conditions, as well as health scares related to epidemic diseases, and any similar event could materially impact the Company’s business in the future. If a disaster or other disruption were to occur in the future that affects the regions where the Company operates its business, the Company’s operations could be materially and adversely affected due to loss of personnel and damage to property. Even if the Company is not directly affected, such a disaster or disruption could affect the operations or financial conditions of the Company’s customers, which could harm the Company’s results of operations.

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The recent government interference into business activities of U.S.-listed Chinese companies may negatively impact our operations.

Recently, certain PRC regulatory authorities issued Opinions on Strictly Cracking Down on Illegal Securities Activities, which were available to the public on July 6, 2021, which further emphasized their goal to strengthen the cross-border regulatory collaboration, to improve relevant laws and regulations on data security, cross-border data transmission, and confidential information management, and provided that efforts will be made to revise the regulations on strengthening the confidentiality and file management relating to the offering and listing of securities overseas, to implement the responsibility on information security of overseas listed companies, and to strengthen the standardized management of cross-border information provision mechanisms and procedures. However, these opinions are newly issued, and there were no further explanations or detailed rules or regulations with respect to such opinions, and there are still uncertainties regarding the interpretation and implementation of these opinions. China intends to improve regulation of cross-border data flows and security, crack down on illegal activity in the securities market and punish fraudulent securities issuance, market manipulation and insider trading. China will also check sources of funding for securities investment and control leverage ratios. The Cyberspace Administration of China has also opened a cyber security probe into several U.S.-listed tech companies focusing on anti-monopoly, financial technology regulation and more recently, with the passage of the Data Security Law, how companies collect, store, process and transfer data. If the Chinese government’s interference expands, our operations may be negatively impacted in a significant way, although, presently, there is no discernible immediate impact.

If the Company becomes directly subject to the recent scrutiny, criticism and negative publicity involving U.S.-listed Chinese companies, we may have to expend significant resources to investigate and resolve the matters. Any unfavorable results from the investigations could harm our business operations and our reputation.

Recently, U.S. public companies that have substantially all of their operations in China have been subjects of intense scrutiny, criticism and negative publicity by investors, financial commentators and regulatory agencies, such as the SEC. Much of the scrutiny, criticism and negative publicity has centered on financial and accounting irregularities, lack of effective internal control over financial reporting, inadequate corporate governance and ineffective implementation thereof and, in many cases, allegations of fraud. As a result of enhanced scrutiny, criticism and negative publicity, the publicly traded stocks of many U.S.-listed Chinese companies have sharply decreased in value and, in some cases, have become virtually worthless or illiquid. Many of these companies are now subject to shareholder lawsuits and SEC enforcement actions and are conducting internal and external investigations into the allegations. It is not clear what effects the sector-wide investigations will have on the Company. If the Company becomes a subject of any unfavorable allegations, whether such allegations are proven to be true or untrue, the Company will have to expend significant resources to investigate such allegations and defend the Company. If such allegations were not proven to be baseless, the Company would be severely hampered and the price of the stock of the Company could decline substantially. If such allegations were proven to be groundless, the investigation might have significantly distracted the attention of the Company’s management.

Because a majority of our operations are in China, our business is subject to the complex and rapidly evolving laws and regulations there. The Chinese government may exercise significant oversight and discretion over the conduct of our business and may intervene in or influence our operations at any time, which could result in a material change in our operations and/or the value of our securities.

As a business operating in China, we are subject to the laws and regulations of the PRC, which can be complex and which evolve rapidly. The PRC government has the power to exercise significant oversight and discretion over the conduct of our business, and the regulations to which we are subject may change rapidly and with little notice to us or our shareholders. As a result, there remain uncertainties regarding the application, interpretation, and enforcement of new and existing laws and regulations in the PRC. Compliance with the complex and evolving PRC laws, regulations, and regulatory statements may be costly, and such compliance or any associated inquiries or investigations or any other government actions may:

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Delay or impede our development,

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Result in negative publicity or increase our operating costs,

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Require significant management time and attention, and

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Subject us to remedies, administrative penalties and even criminal liabilities that may harm our business, including fines assessed for our current or historical operations, or demands or orders that we modify or even cease our business practices.

The promulgation of new laws or regulations, or the new interpretation of existing laws and regulations, that restrict or otherwise unfavorably impact the ability or manner in which we conduct our business and could require us to change certain aspects of our business

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to ensure compliance, could decrease demand for our products, reduce revenues, increase costs, require us to obtain more licenses, permits, approvals or certificates, or subject us to additional liabilities. To the extent any new or more stringent measures are required to be implemented, our business, financial condition and results of operations could be adversely affected as well as materially decrease the value of our securities.

The PRC government has significant oversight over the conduct of the business of our PRC subsidiaries; such oversight could result in a material change in our operations and/or the value of our securities or could significantly limit our ability to offer or continue to offer securities and/or other securities to investors and cause the value of such securities to significantly decline.

The PRC government has significant oversight over the conduct of the business of our PRC subsidiaries and may intervene or influence our operations in mainland China, which may potentially result in a material adverse effect on our operations. The PRC government has recently published new policies that significantly affect certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely affect our business, financial condition and results of operations.

Recently, the General Office of the Central Committee of the Communist Party of China and the General Office of the State Council jointly issued the Opinions on Intensifying Crack Down on Illegal Securities Activities, which call for strengthened regulation over illegal securities activities and supervision on overseas listings by China-based companies and propose to take effective measures, such as promoting the development of relevant regulatory systems to deal with the risks and incidents faced by China-based overseas-listed companies. The PRC government has indicated that it may exert more control or influence over offerings of securities conducted overseas. If the PRC authorities attempt to exercise such control or influence through regulation over our PRC subsidiaries, we could be required to restructure our operations to comply with such regulations or potentially cease operations in the PRC entirely, which could adversely affect our business, results of operations and financial condition. Moreover, any such action could significantly limit our ability to offer or continue to offer securities to investors and cause the value of such securities to significantly decline.

Currently, these statements and regulatory actions have had no impact on our daily business operations, the ability to accept foreign investments and list our securities on a U.S. or other foreign exchange. Since these statements and regulatory actions are new, it is highly uncertain how soon legislative or administrative regulation making bodies will respond and what existing or new laws or regulations or detailed implementations and interpretations will be modified or promulgated, if any, and the potential impact such modified or new laws and regulations will have on our daily business operations, the ability to accept foreign investments and list our securities on a U.S., Hong Kong, or other stock exchange.

The approval of, or filing or other procedures with, the CSRC or other Chinese regulatory authorities may be required in connection with issuing our equity securities to foreign investors under Chinese law, and, if required, we cannot predict whether we will be able, or how long it will take us, to obtain such approval or complete such filing or other procedures. We are also required to obtain business licenses from Chinese authorities in connection with our general business activities currently conducted in China.

On July 6, 2021, the General Office of the Communist Party of China Central Committee and the State Council jointly promulgated the Opinions on Intensifying Crack Down on Illegal Securities Activities, pursuant to which Chinese regulators are required to accelerate rulemaking related to the overseas issuance and listing of securities, and update the existing laws and regulations related to data security, cross-border data flow, and administration of classified information. As there are still uncertainties regarding the interpretation and implementation of such regulatory guidance, we cannot assure investors that we will be able to comply with new regulatory requirements relating to our future overseas capital-raising activities and we may become subject to more stringent requirements with respect to matters including data privacy and cross-border investigation and enforcement of legal claims.

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standards will be deemed to be indirect: (i) 50% or more of the issuer’s operating revenue, total profit, total assets or net assets as documented in its audited consolidated financial statements for the most recent accounting year is accounted for by PRC domestic companies, and (ii) the main parts of the issuer’s business activities are conducted in mainland China, or its main places of business are located in mainland China, or the senior managers in charge of its business operation and management are mostly Chinese citizens or domiciled in mainland China.

The Trial Measures provide the CSRC with the authority to warn, fine, and issue injunctions against PRC domestic companies, their controlling shareholders, and their advisors in connection with a listing or offering securities (collectively, the “Subject Entities”), as well as individuals directly responsible for these Subject Entities (the “Subject Individuals”). For failure to comply with the Trial Measures Negative List or the Trial Measures Filing Obligations, or materially false or misleading statements in the filing and reporting required by the Trial Measures, PRC domestic companies and their controlling shareholders, if the controlling shareholders induced the PRC domestic companies’ failure to comply, severally, may face warnings, injunctions to comply, and fines between RMB 1.0 million and 10.0 million. The Subject Individuals in these entities may severally, face warnings and fines between RMB 0.5 million and 5.0 million. Advisors in listings or offerings of securities that failed to dutifully advise the PRC domestic companies and their controlling shareholders in complying with the Trial Measures and caused such failures to comply can face warnings and fines between RMB 0.5 million and 5.0 million. The Subject Individuals of these advisor entities may, severally, face warnings and fines between RMB 0.2 million and 2.0 million.

Because our shares are already listed on Nasdaq, we believe will be deemed as an “Existing Issuer” pursuant to the Trial Measures and, accordingly, are not required to complete the filing procedures with the CSRC for our previous securities offerings. Nevertheless, in the event that we conduct any securities issuance or offering in the future that would be captured by the Trial Measures after they come into effect, we will have to complete the filing procedures with the CSRC within three (3) business days following the closing of such securities issuance or offering.

Therefore, in connection with our business operations and the issuance or offering of securities to foreign investors, under currently effective PRC laws, regulations, and rules and taking the Trial Measures into account, as of the date of this annual report, we, our PRC subsidiaries, (i) are not required to obtain permissions from or complete the filing procedures with the CSRC for our historical issuance or offering of securities to foreign investors which has been completed before the date of implementation of the Trial Measures, but are required to go through filing procedures with CSRC for our future issuance or offering of securities (including shares, depository receipts, corporate bonds convertible into shares and other equity securities) to foreign investors if we meet certain conditions set forth in the Trial Measures to be considered as an indirect overseas offering and listing by a PRC domestic company, (ii) are not required to go through cybersecurity review by the CAC for our issuance or offering of securities to foreign investors, and (iii) are not required to obtain any prior permission or approval from any other PRC government authorities for our issuance or offering of securities to foreign investors. If we and our subsidiaries are deemed to be a critical information infrastructure operator, or CIIO, or a network platform operator, whose network product or service purchasing or data processing activities affect or may affect national security, we would be required to go through a cybersecurity review by the CAC.

As of the date of this annual report, neither we nor any of our subsidiaries has been identified as a CIIO by any government authority, involved in any investigations or become subject to a cybersecurity review by the CAC based on the Cybersecurity Review Measures. However, there might remain some uncertainty as to how relevant rules published by the PRC government authorities will be interpreted or implemented, and our opinions summarized above are subject to any new laws, rules, and regulations or detailed implementations and interpretations in any form. We cannot assure you that relevant PRC government authorities, including the CSRC and the CAC, would reach the same conclusion and hence, we may face regulatory actions or other sanctions from them.

The PRC government has significant oversight and discretion over the conduct of the business operations of our PRC subsidiaries or to exert control over any offering of securities conducted overseas and/or foreign investment in China-based issuers, and may intervene with or influence our operations, may limit or completely hinder our ability to offer or continue to offer securities to investors, and may cause the value of such securities to significantly decline or be worthless, as the government deems appropriate to further regulatory, political and societal goals.

The PRC government may intervene or influence the operations of our PRC subsidiaries at any time with little to no advanced notice, which could result in a material change in our operations and/or the value of our securities. For example, the PRC government recently published new policies that significantly affected certain industries such as the education and internet industries, and we cannot rule out the possibility that it will in the future release regulations or policies regarding any industry that could adversely affect the business,

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financial condition and results of operations of our company. For example, on December 28, 2021, the Cyberspace Administration of China (“CAC”) adopted rules mandating that an issuer who is a “critical information infrastructure operator” or a “data processing operator” as defined therein and who possesses personal information of more than one million users, and intends to have its securities listed for trading in a foreign country must complete a cybersecurity review by the CAC. Alternatively, relevant governmental authorities in the PRC may initiate cyber security review if such governmental authorities determine an operator’s cyber products or services, data processing or potential listing in a foreign country affect or may affect national security. The rules became effective on February 15, 2022. Moreover, on July 7, 2022, the CAC promulgated the Measures for the Security Assessment of Cross-border Data Transmission, which will come into effect on September 1, 2022, and will regulate the security assessment on the cross-border data transfer by data processor of important data and personal information collected and generated during operations within the PRC. According to these measures, personal data processors will be subject to security assessment conducted by the Cyberspace Administration of China prior to any cross-border transfer of data if the transfer involves (i) important data; (ii) personal information transferred overseas by operators of critical information infrastructure or a data processor that has processed personal data of more than one million persons; (iii) personal information transferred overseas by a data processor that has already provided personal data of 100,000 persons or sensitive personal data of 10,000 persons overseas since January 1 of the prior year; or (iv) other circumstances as requested by the Cyberspace Administration of China.

The new CAC rules do not appear to apply to the Company or its subsidiaries at this time. As advised by our PRC counsel, Zhong Lun Law Firm, as of the date of this report, (i) the Company does not hold personal information of over one million users; (ii) the Company and its subsidiaries have not been informed by any PRC governmental authority of any requirement that it file for a cybersecurity review; (iii) data processed in the Company’s business does not have a bearing on national security and may not be classified as core or important data by the PRC governmental authorities; and (iv) none of the Company and its subsidiaries provides any important data, personal information or sensitive personal data outside the territory of PRC, therefore, the Company believes it is not required to pass cybersecurity review of CAC. If the Chinese government’s interference expands, our operations may be negatively impacted in a significant way, although, presently, there is no discernible immediate impact.

Uncertainties with respect to the PRC legal system, including uncertainties regarding the enforcement of laws, and sudden or unexpected changes in policies, laws and regulations in China could adversely affect us.

Our operations in China are governed by the PRC laws and regulations. We may be adversely affected by the complexity, uncertainties and changes in PRC laws and regulations regarding foreign investment and manufacturing, which could have a material adverse effect on our business and our ability to operate our business in China.

From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. Any administrative and court proceedings in China may be protracted, resulting in substantial costs and diversion of resources and management attention. Since PRC administrative and court authorities have some discretion in interpreting and implementing statutory provisions and contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy, than in more developed legal systems. These uncertainties may impede our ability to enforce contracts in China and could materially and adversely affect our business and results of operations.

Furthermore, the PRC legal system is based in part on government policies and internal rules, some of which are not published on a timely basis, or at all, and may have retroactive effect. As a result, we may not be aware of our violation of any of these policies and rules until sometime after the violation. Such unpredictability towards our contractual, property and procedural rights could adversely affect our business, and impede our ability to continue our operations and proceed with our future business plans.

It may be difficult to serve the Company with legal process or enforce judgments against the Company or its management.

Most of the Company’s assets are located in China, nine of its directors and officers are non-residents of the United States, and all or substantial portions of the assets of such non-residents are located outside the United States. As a result, it may not be possible to effect service of process within the United States upon such persons to originate an action in the United States. Moreover, there is uncertainty that the courts of China would enforce judgments of U.S. courts against the Company, its directors or officers based on the civil liability provisions of the securities laws of the United States or any state, or an original action brought in China based upon the securities laws of the United States or any state.

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The recognition and enforcement of foreign judgments are provided for under the PRC Civil Procedures Law. PRC courts may recognize and enforce foreign judgments in accordance with the requirements of the PRC Civil Procedures Law based either on treaties between China and the country where the judgment is made or on principles of reciprocity between jurisdictions. China does not have any treaties or other forms of reciprocity with the United States that provide for the reciprocal recognition and enforcement of foreign judgments. In addition, according to the PRC Civil Procedures Law, the PRC courts will not enforce a foreign judgment against us or our director and officers if they decide that the judgment violates the basic principles of PRC laws or national sovereignty, security or public interest. As a result, it is uncertain whether and on what basis a PRC court would enforce a judgment rendered by a court in the United States.

ITEM 1B. UNRESOLVED STAFF COMMENTS.

Not Applicable.

ITEM 2. PROPERTIES.

The Company’s headquarters are located at No. 1 Henglong Road, Yu Qiao Development Zone, Shashi District, Jing Zhou City Hubei Province, the PRC. Set forth below are the manufacturing facilities operated by each joint venture. The Company has forty-five to fifty years long-term rights to use the lands and buildings (in thousands of USD, except for references to area in square meters).


		Total Area	Building Area	Original Cost of
Name of Entity	Product	(sq.m.)	(sq.m.)	Equipment		Site
Henglong	Automotive Parts	97,818	20,226	$	61,254	Jingzhou City, Hubei Province
		13,393	13,707	$	—	Wuhan City, Hubei Province
Jiulong	Power Steering Gear	39,478	24,734	$	42,274	Jingzhou City, Hubei Province
Shenyang	Automotive Steering Gear	35,354	18,041	$	7,449	Shenyang City, Liaoning Province
Chongqing	Power Steering Gear	57,849	22,812	$	3,428	Chongqing City
Jielong ⁽¹⁾	Electric Power Steering	—	—	$	7,971	Jingzhou City, Hubei Province
Wuhan Chuguanjie	Electric Power Steering	53,675	44,054	$	5,076	Wuhan City, Hubei Province
Henglong KYB ⁽¹⁾	Automotive Steering Gear	—	—	$	19,763	Jingzhou City, Hubei Province
Hubei Henglong	Automotive Steering Gear	277,269	78,833	$	75,629	Jingzhou City, Hubei Province
Wuhu	Automotive Steering Gear	83,705	27,288	$	4,497	Wuhu City, Anhui Province
Wuhu Hongrun⁽¹⁾	High Polymer Materials	—	—	$	1,052	Wuhu City, Anhui Province
Total		658,541	249,695	$	228,393

(1)	Jielong, Henglong KYB and Wuhu Hongrun do not own land use rights or buildings by themselves. They rent buildings from Jiulong, Hubei Henglong and Wuhu, respectively.

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The Company is not involved in investments in real estate or interests in real estate, real estate mortgages, and securities of or interests in persons primarily engaged in real estate activities, as all of its land rights are used for production purposes.

ITEM 3. LEGAL PROCEEDINGS.

The Company is not a party to any pending or, to the best of the Company’s knowledge, any threatened legal proceedings and no director, officer or affiliate of the Company, or owner of record of more than five percent of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

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PART II

ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

The Company’s common stock is traded on the Nasdaq Capital Market under the symbol “CAAS”.

ISSUER PURCHASES OF EQUITY SECURITIES

On December 5, 2018, the Board of Directors of the Company approved a share repurchase program under which the Company was permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing markets prices or in privately negotiated transactions through December 4, 2019. The Company has extended the program to December 4, 2020. During the year ended December 31, 2019, under the repurchase program, the Company repurchased 452,559 shares of the Company’s common stock for cash consideration of $1.0 million on the open market. During the year ended December 31, 2020, there were no shares of common stock repurchased under such program.

On August 13, 2020, the Board of Directors of the Company approved a share repurchase program under which the Company is permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing market prices not to exceed $3.50 per share through August 12, 2021. During the year ended December 31, 2021, the Company repurchased 322,269 of the shares that were authorized to be repurchased under the program. On March 29, 2022, the Board of Directors of the Company approved a share repurchase program under which the Company was permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing markets prices not to exceed $4.00 per share through March 30, 2023. During the year ended December 31, 2022, the Company repurchased 666,074 shares of common stock under such program.

STOCKHOLDERS

The Company’s common shares are issued in registered form. Securities Transfer Corporation in Frisco, Texas is the registrar and transfer agent for the Company’s common stock. As of December 31, 2022, there were 32,338,302 shares of the Company’s common stock (including 2,152,600 shares of the Company’s treasury stock) issued and the Company had approximately 54 stockholders of record.

DIVIDENDS

The Company does not anticipate paying any cash dividends in the foreseeable future. The Company currently intends to retain future earnings, if any, to finance operations and the expansion of its business. Any future determination to pay cash dividends will be at the discretion of the Company’s board of directors and will be based upon the Company’s financial condition, operating results, capital requirements, plans for expansion, restrictions imposed by any financing arrangements and any other factors that the Company’s board of directors deems relevant.

SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS

The securities authorized for issuance under equity compensation plans on December 31, 2022 are as follows:


	Number of securities to be	Weighted average		Number of securities
	issued upon exercise of	exercise price of		remaining available for
Plan category	outstanding options	outstanding options		future issuance
Equity compensation plans approved by security holders	2,200,000	$	5.24	1,563,650

The stock option plan was approved at the Annual Meeting of Stockholders held on June 28, 2005 and extended for ten years at the Annual Meeting of Stockholders held on September 16, 2014. The maximum common shares for issuance under the plan are 2,200,000. The term of the plan was extended to June 27, 2025.

ITEM 6. RESERVED

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ITEM 7. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

The following discussion and analysis should be read in conjunction with the Company’s consolidated financial statements and the related notes thereto and other financial information contained elsewhere in this report.

GENERAL OVERVIEW

China Automotive Systems, Inc., including, when the context so requires, its subsidiaries and the subsidiaries’ interests in the Sino-foreign joint ventures described below, is referred to herein as the “Company.” The Company, through its Sino-foreign joint ventures, engages in the manufacture and sales of automotive systems and components in the People’s Republic of China, the “PRC,” or “China.” Genesis, a company incorporated on January 3, 2003 under the Companies Ordinance of Hong Kong as a limited liability company, is a wholly-owned subsidiary of the Company. Henglong USA Corporation, “HLUSA,” which was incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after sales service and research and development support. Furthermore, the Company owns the following aggregate net interests in the subsidiaries incorporated in the PRC and Brazil as of December 31, 2022 and 2021.


	Aggregate Net Interest
	December 31,		December 31,
Name of Entity	2022		2021
Henglong	100.00	%	100.00	%
Jiulong	100.00	%	100.00	%
Shenyang	70.00	%	70.00	%
Wuhu	100.00	%	100.00	%
Jielong	85.00	%	85.00	%
Hubei Henglong	100.00	%	100.00	%
Testing Center	100.00	%	100.00	%
Chongqing Henglong	70.00	%	70.00	%
Brazil Henglong	95.84	%	95.84	%
Wuhan Chuguanjie	85.00	%	85.00	%
Shanghai Henglong	100.00	%	100.00	%
Jingzhou Qingyan	—	%	60.00	%
Henglong KYB	66.60	%	66.60	%
Wuhan Hyoseong	51.00	%	51.00	%
Wuhu Hongrun	62.00	%	62.00	%
Changchun Hualong	100.00	%	100.00	%

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RESULTS OF OPERATIONS

Selected highlights from our operations (in thousands of U.S. dollars):


	2022		2021		Change		Change%
Net product sales	$	529,551	$	497,993	$	31,558	6.3	%
Cost of products sold		446,157		425,914		20,243	4.8
Net gain on other sales		3,696		4,368		(672)	(15.4)
Selling expenses		16,910		18,278		(1,368)	(7.5)
General and administrative expenses		26,120		24,423		1,697	6.9
Research and development expenses		36,109		28,228		7,881	27.9
Other income, net		5,782		6,668		(886)	(13.3)
Interest expense		1,450		1,437		13	0.9
Financial (income)/expense, net		(10,753)		2,350		(13,103)	(557.6)
Income taxes		3,082		4,004		(922)	(23.0)
Net income		22,343		10,726		11,617	108.3
Net income/(loss) attributable to non-controlling interest		1,132		(352)		1,484	(421.6)
Net income attributable to parent company’s common shareholders		21,181		11,050		10,131	91.7	%

Net Product Sales and Cost of Products Sold

For the years ended December 31, 2022 and 2021, net sales and cost of sales are summarized as follows (figures are in thousands of USD):


	Net Sales								Cost of sales
	2022		2021		Change				2022		2021		Change
Henglong	$	246,594	$	202,612	$	43,982	21.7	%	$	225,682	$	188,973	$	36,709	19.4	%
Jiulong		70,113		94,510		(24,397)	(25.8)			61,924		85,025		(23,101)	(27.2)
Shenyang		11,942		16,510		(4,568)	(27.7)			10,404		13,084		(2,680)	(20.5)
Wuhu		42,243		27,227		15,016	55.2			39,069		25,708		13,361	52.0
Hubei Henglong		126,652		128,142		(1,490)	(1.2)			109,842		105,969		3,873	3.7
Henglong KYB		121,139		80,683		40,456	50.1			106,621		75,277		31,344	41.6
Brazil Henglong		39,280		25,513		13,767	54.0			34,265		22,001		12,264	55.7
Other Entities		80,971		70,884		10,087	14.2			63,178		54,799		8,379	15.3
Total segment		738,934		646,081		92,853	14.4			650,985		570,836		80,149	14.0
Eliminations		(209,383)		(148,088)		(61,295)	41.4			(204,828)		(144,922)		(59,906)	41.3
Total		529,551		497,993		31,558	6.3	%		446,157		425,914		20,243	4.8	%

Net Product Sales

Net product sales were $529.6 million for the year ended December 31, 2022, as compared to $498.0 million for the year ended December 31, 2021, representing an increase of $31.6 million, or 6.3%, mainly due to the Company’s increased sales of electric power steering (“EPS”) systems and parts.

Net sales of traditional steering products were $373.3 million for the year ended December 31, 2022, which is generally consistent with $382.7 million for 2021. Net sales of EPS were $156.3 million for the year ended December 31, 2022, compared to $115.3 million for 2021, representing an increase of $41.0 million, or 35.6%. As a percentage of net sales, the sales of EPS were 29.5% for the year ended December 31, 2022, compared to 23.2% for 2021.

The increase in net product sales was mainly due to the offsetting effects of the increase in sales volume of passenger vehicles and decline in demand of commercial vehicles.

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Further analysis is as follows:

—

Henglong mainly engages in providing passenger vehicle steering systems. Net sales for Henglong were $246.6 million for the year ended December 31, 2022, compared with $202.6 million for the year ended December 31, 2021, representing an increase of $44.0 million, or 21.7%. The increase was mainly due to the increase in sales volume of products used in passenger vehicles.

—

Jiulong mainly engages in providing commercial vehicle steering systems. Net sales for Jiulong were $70.1 million for the year ended December 31, 2022, compared with $94.5 million for the year ended December 31, 2021, representing a decrease of $24.4 million, or 25.8%. The decrease was mainly due to the decline in demand of commercial vehicles.

—

Shenyang mainly engages in providing vehicle steering systems to Shenyang Brilliance Jinbei Automobile Co., LTD., “Jinbei”, one of the major automotive manufacturers in China. Net sales for Shenyang were $11.9 million for the year ended December 31, 2022, compared with $16.5 million for the year ended December 31, 2021, representing a decrease of $4.6 million, or 27.9%. The decrease was mainly due to the decline in demand from Jinbei.

—

Wuhu mainly engages in providing vehicle steering systems to Chery Automobile Co., Ltd., “Chery”, one of the major automotive manufacturers in China. Net sales for Wuhu were $42.2 million for the year ended December 31, 2022, compared with $27.2 million for the year ended December 31, 2021, representing an increase of $15.0 million, or 55.1%. The increase was mainly due to the increase in sales volume of products used in passenger vehicles from Chery.

—

Hubei Henglong mainly engages in providing vehicle steering systems to Chrysler and Ford. Net sales for Hubei Henglong were $126.7 million for the year ended December 31, 2022, which is consistent with $128.1 million for the year ended December 31, 2021.

—

Henglong KYB mainly engages in providing passenger EPS products. Net sales for Henglong KYB were $121.1 million for the year ended December 31, 2022, compared with $80.7 million for the year ended December 31, 2021, representing an increase of $40.4 million, or 50.1%. The increase was mainly due to the increase in sales volume of EPS products used in passenger vehicles.

—

Brazil Henglong mainly provides steering systems to Fiat in Brazil. Net product sales for Brazil Henglong were $39.3 million for the year ended December 31, 2022, compared to $25.5 million for the year ended December 31, 2021, representing an increase of $13.8 million, or 54.1%. The increase was mainly due to the increase in demand of Fiat in Brazil.

—

Net product sales for other entities were $81.0 million for the year ended December 31, 2022, compared with $70.9 million for the year ended December 31, 2021, representing an increase of $10.1 million, or 14.2%. The increase was mainly due to the increases in sales volume from Wuhan Hyoseong.

Cost of Products Sold

For the year ended December 31, 2022, the cost of sales was $446.1 million, compared with $425.9 million for the year ended December 31, 2021, representing an increase of $20.2 million, or 4.7%. The increase in cost of sales was mainly due to the increase in sales volume and increase in unit cost. Further analysis is as follows:

—

Cost of sales for Henglong was $225.7 million for the year ended December 31, 2022, compared to $189.0 million for the year ended December 31, 2021, representing an increase of $36.7 million, or 19.4%. The increase was mainly due to the increase in sales volumes and the increase in unit cost.

—

Cost of sales for Jiulong was $61.9 million for the year ended December 31, 2022, compared to $85.0 million for the year ended December 31, 2021, representing a decrease of $23.1 million, or 27.2%. The decrease was mainly due to the decrease in sales volumes and the offsetting of the increase in unit cost.

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—

Cost of sales for Shenyang was $10.4 million for the year ended December 31, 2022, compared with $13.1 million for the year ended December 31, 2021, representing a decrease of $2.7 million, or 20.6%. The decrease was mainly due to the decrease in sales volumes and the offsetting of the increase in unit cost.

—

Cost of sales for Wuhu was $39.1 million for the year ended December 31, 2022, compared to $25.7 million for the year ended December 31, 2021, representing an increase of $13.4 million, or 52.1%. The increase was mainly due to the increase in sales volumes and the increase in unit cost.

—

Cost of sales for Hubei Henglong was $109.8 million for the year ended December 31, 2022, compared with $106.0 million for the year ended December 31, 2021, representing an increase of $3.8 million, or 3.6%. The increase was mainly due to the increase in unit cost.

—

Cost of sales for Henglong KYB was $106.6 million for the year ended December 31, 2022, compared to $75.3 million for the year ended December 31, 2021, representing an increase of $31.3 million, or 41.6%. The increase was mainly due to the increase in sales volumes and the increase in unit cost.

—

Cost of products sold for Brazil Henglong was $34.3 million for the year ended December 31, 2022, compared to $22.0 million for the year ended December 31, 2021, representing an increase of $12.3 million, or 55.9%. The increase was mainly due to the increase in sales volumes.

Cost of products sold for other entities was $63.2 million for the year ended December 31, 2022, compared to $54.8 million for the year ended December 31, 2021, representing an increase of $8.4 million, or 15.3%.

Gross margin was 15.7% for the year ended December 31, 2022, compared to 14.5% for the year ended December 31, 2021, representing an increase of 1.2%. The increase was mainly due to a change in our product mix for the year ended December 31, 2022.

Net Gain on Other Sales

Gain on other sales mainly consisted of rental income, gain on disposal of property, plant and equipment and R&D revenue. For the year ended December 31, 2022, gain on other sales amounted to $3.7 million, which is stable compared to $4.4 million for the year ended December 31, 2021.

Selling Expenses

For the years ended December 31, 2022 and 2021, selling expenses are summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021		Increase/(Decrease)		Percentage
Transportation expense	$	6,523	$	9,870	$	(3,347)	(33.9)	%
Marketing and office expense		3,679		2,822		857	30.4	%
Salaries and wages		3,582		3,280		302	9.2	%
Warehousing and inventory handling expenses		2,495		2,146		349	16.3	%
Other expense		631		160		471	294.4	%
Total	$	16,910	$	18,278	$	(1,368)	(7.5)	%

Selling expenses were $16.9 million for the year ended December 31, 2022, compared to $18.3 million for the year ended December 31, 2021, representing a decrease of $1.4 million, or 7.7%, which was mainly due to a decrease in transportation expenses as a result of decreased air freight, with an offsetting impact of increased marketing and office expense caused by the increased sales in 2022.

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General and Administrative Expenses

For the years ended December 31, 2022 and 2021, general and administrative expenses are summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021		Increase/(Decrease)		Percentage
Salaries and wages	$	10,141	$	9,693	$	448	4.6	%
Allowances for credit losses		4,456		2,738		1,718	62.7	%
Office expense		3,118		3,361		(243)	(7.2)	%
Labor insurance expense		2,128		2,221		(93)	(4.2)	%
Depreciation and amortization expense		1,798		2,233		(435)	(19.5)	%
Listing expenses ⁽¹⁾		1,464		1,445		19	1.3	%
Property and other taxes		1,238		1,474		(236)	(16.0)	%
Maintenance and repair expenses		1,183		947		236	24.9	%
Other expense		594		311		283	91.0	%
Total	$	26,120	$	24,423	$	1,697	6.9	%

(1)	Listing expenses consisted of the costs associated with legal, accounting and auditing fees for operating a public company.

General and administrative expenses were $26.1 million for the year ended December 31, 2022, as compared to $24.4 million for the year ended December 31, 2021, representing an increase of $1.7 million, or 7.0%, which was mainly due to the increase of provision of allowance for doubtful accounts.

Research and Development Expenses

Research and development expenses, “R&D” expenses, were $36.1 million for the year ended December 31, 2022 as compared to $28.2 million for the year ended December 31, 2021, representing an increase of $7.9 million, or 28.0%, which was mainly due to the increase of expenditures on R&D activities for new projects.

Other Income, Net

Other income, net was $5.8 million for the year ended December 31, 2022, as compared to $6.7 million for the year ended December 31, 2021, representing a decrease of $0.9 million, which was primarily due to the provision for impairment of prepayment for the investment in Hefei Senye (See Note 10), with an offsetting impact of an increase in the amount of government subsidies from $4.9 million in 2021 to $6.3 million in 2022.

Interest Expense

Interest expense was $1.5 million for the year ended December 31, 2022, which remains stable compared with $1.4 million for the year ended December 31, 2021.

Financial Income/(Expense), net

Financial income, net was $10.8 million for the year ended December 31, 2022, as compared to financial expense, net of $2.4 million for the year ended December 31, 2021, representing an increase in financial income of $13.2 million, which was primarily due to an increase in the foreign exchange gains due to the sharp fluctuations of the US dollar against the RMB and the Brazilian Real.

Income Taxes

Income tax expense was $3.1 million for the year ended December 31, 2022, as compared to $4.0 million for the year ended December 31, 2021, representing a decrease of $0.9 million, or 22.5%, which was mainly due to the less valuation allowance in the year ended December 31, 2022 and offsetting by the increase in income before income tax expenses.

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Net Income/(loss) Attributable to Non-controlling Interests

Net income attributable to non-controlling interests amounted to $1.1 million for the year ended December 31, 2022, compared to net loss attributable to non-controlling interests of $0.4 million for the year ended December 31, 2021, representing an increase in net income attributable to non-controlling interests of $1.5 million.

Net Income Attributable to Parent Company’s Common Shareholders

Net income attributable to parent company’s common shareholders was $21.2 million for the year ended December 31, 2022, compared to $11.1 million for the year ended December 31, 2021, representing an increase in net income attributable to parent company’s common shareholders of $10.1 million.

LIQUIDITY AND CAPITAL RESOURCES

Capital Resources and Use of Cash

The Company has historically financed its liquidity requirements from a variety of sources, including short-term borrowings under bank credit agreements, bankers’ acceptances, issuances of capital stock and notes and internally generated cash. As of December 31, 2022, the Company had cash and cash equivalents and short-term investments of $134.1 million, compared with $133.5 million as of December 31, 2021, representing an increase of $0.6 million.

The Company had working capital (total current assets less total current liabilities) of $156.5 million as of December 31, 2022, compared with $149.6 million as of December 31, 2021, representing an increase of $6.9 million, or 4.6%.

Except for the expected distribution of dividends from the Company’s PRC subsidiaries to the Company in order to fund the payment of the one-time transition tax due to the U.S. Tax Reform, the Company intends to indefinitely reinvest the funds in subsidiaries established in the PRC.

The pandemic of COVID-19 has had certain impacts on our cash flow for the year of 2022 with potential continuing impacts on subsequent periods. However, based on our liquidity assessment, we believe that our current cash position, cash flow from operations and proceeds from our financing activities will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for the foreseeable future and for at least 12 months subsequent to the filing of this annual report.

Capital Source

The Company’s capital source is multifaceted, such as bank loans and banks’ acceptance facilities. In financing activities and operating activities, the Company’s banks require the Company to sign line of credit agreements and repay such facilities within one to two years. On the condition that the Company can provide adequate mortgage security and has not violated the terms of the line of credit agreement, such facilities can be extended for another one to two years.

The Company had short-term loans of $45.7 million, long-term loans of $0.5 million (See Note 11) and bankers’ acceptance notes payable of $91.7 million as of December 31, 2022.

The Company currently expects to be able to obtain similar bank loans, i.e., RMB loans, and bankers’ acceptance facilities in the future if it can provide adequate mortgage security following the termination of the above-mentioned agreements, see the table under “Bank Arrangements” below for more information. If the Company is not able to do so, it will have to refinance such debt as it becomes due or repay that debt to the extent it has cash available from operations or from the proceeds of additional issuances of capital stock. Due to a depreciation of assets, the value of the mortgages securing the above-mentioned bank loans and banker’s acceptances is expected to be reduced by approximately $17.0 million over the next 12 months. If the Company wishes to maintain the same amount of bank loans and banker’s acceptances in the future, it may be required by the banks to provide additional mortgages of $17.0 million as of the maturity date of such line of credit agreements, see the table under “Bank Arrangements” below for more information. The Company can still obtain lines of credit with a reduction of $10.9 million, which is 64.0%, the mortgage ratio, of $17.0 million, if it cannot provide additional mortgages. The Company expects that the reduction in bank loans will not have a material adverse effect on its liquidity.

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Bank Facilities

As of December 31, 2022, the principal outstanding under the Company’s credit facilities and lines of credit was as follows (figures are in thousands of USD).


							Assessed
		Due	Amount		Amount		Mortgage
	Bank	Date	Available ⁽³⁾		Used ⁽⁴⁾		Value ⁽⁵⁾
1. Comprehensive credit facilities	China CITIC Bank ⁽²⁾	Aug-2024		69,638		47,411		27,447

2. Comprehensive credit facilities	Shanghai Pudong Development Bank ^{(1) (2)}	Jan-2023		18,666		12,743		16,729

3. Comprehensive credit facilities	Hubei Bank⁽²⁾	Mar-2024		24,409		774		74,377

4. Comprehensive credit facilities	Chongqing Bank	Mar-2025		1,005		571		1,833

5. Comprehensive credit facilities	China Constitution Bank	Sep-2025		2,872		2,297		6,516

6. Comprehensive credit facilities	China Merchants Bank⁽¹⁾	Jun-2024		14,358		5,529		—

7. Comprehensive credit facilities	Bank of China ⁽¹⁾	Aug-2023		13,066		5,743		—

8. Comprehensive credit facilities	China Everbright Bank	Dec-2025		4,307		—		9,020
Total			$	148,321	$	75,068	$	135,922

(1)	The facility has expired. The Company is currently in the process of negotiating with the bank to renew the credit facility.

(2)

The comprehensive credit facilities with China CITIC Bank are guaranteed by Henglong and Hubei Henglong in addition to the above pledged assets. The comprehensive credit facilities with Shanghai Pudong Development Bank are guaranteed by Henglong in addition to the above pledged assets. The comprehensive credit facilities with Hubei Bank are guaranteed by Chen Hanlin in addition to the above pledged assets. The comprehensive credit facilities with Merchants Bank are guaranteed by Hubei Henglong, Chen Hanlin and certain account receivables in addition to the above pledged assets. The comprehensive credit facilities with Bank of China are guaranteed by Hubei Henglong in addition to the above pledged assets.

(3)	“Amount available” is used for the drawdown of bank loans and issuance of bank notes at the Company’s discretion. If the Company elects to utilize the facility by issuance of bank notes, additional collateral is requested to be pledged to the bank.

(4)

“Amount used” represents the credit facilities used by the Company for the purpose of bank loans or notes payable during the facility contract period. The loans or notes payable under the credit facilities will remain outstanding regardless of the expiration of the relevant credit facilities until the separate loans or notes payable expire. The amount used includes bank loans of $35.5 million and notes payable of $39.6 million as of December 31, 2022.

(5)	In order to obtain lines of credit, the Company needs to pledge certain assets to banks. As of December 31, 2022, the pledged assets included property, plant and equipment and land use rights with an aggregate assessed value of $135.9 million.

The Company may request the banks to issue notes payable or bank loans within its credit line using a 365-day revolving line.

The Company renewed its existing short-term loans and borrowed new loans during 2022 at annual interest rates ranging from 1.60% to 3.90%, and the Company’s loan terms range from 3 months to 35 months. The large spread in interest rates was due to the different lenders. Pursuant to the comprehensive credit line arrangement, the Company pledged and guaranteed:

1.	Land use rights and buildings with an assessed value of approximately $27.4 million as security for its comprehensive credit facility with China CITIC Bank Wuhan Branch.

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2.	Land use rights and buildings with an assessed value of approximately $16.7 million as security for its revolving comprehensive credit facility with Shanghai Pudong Development Bank.

3.	Equipment with an assessed value of approximately $74.4 million as security for its revolving comprehensive credit facility with Hubei Bank.

4.	Buildings with an assessed value of approximately $1.8 million as security for its comprehensive credit facility with Chongqing Bank

5.	Land use rights and buildings with an assessed value of approximately $6.5 million as security for its revolving comprehensive credit facility with China Constitution Bank.

6.	Land use rights and buildings with an assessed value of approximately $9.0 million as security for its revolving comprehensive credit facility with China Everbright Bank.

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Cash Requirements

The following table summarizes the Company’s expected cash outflows resulting from financial contracts and commitments. The Company has not included information on its recurring purchases of materials for use in its manufacturing operations. These amounts are generally consistent from year to year, closely reflecting the Company’s levels of production, and are not long-term in nature (being less than three months in length).


	(in thousands of USD)
			Less than 1						More than 5
	Total		year		1-3 years		3-5 years		Years
Loans including interest payable	$	46,695	$	46,121	$	574	$	—	$	—
Notes payable ⁽¹⁾		91,693		91,693		—		—		—
Taxes payable and withholding tax liabilities due to U.S. Tax Reform (See Note 22)		21,075		5,270		15,805		—		—
Obligation for investment contract ⁽²⁾		6,350		6,350		—		—		—
Other contractual purchase commitments, including service agreements		28,612		23,962		4,650		—		—
Total	$	194,425	$	173,396	$	21,029	$	—	$	—

(1)	Notes payable do not bear interest.

(2)

In June 2021, Hubei Henglong entered into a share purchase agreement with Jingzhou WiseDawn Electric Car Co., Ltd., “Jingzhou WiseDawn”, a related party controlled by the Company’s controlling shareholder, Mr. Chen Hanlin. In accordance with the agreement, CAAS would purchase 200 shares, representing 40% of Sentient AB’s share capital, from Jingzhou WiseDawn for total consideration of RMB 155.2 million, equivalent to approximately $24.5 million. The transaction was completed in March 2022. Pursuant to the share purchase agreement, the Company has the right to appoint two directors to the board of directors, so it can exercise significant influence over Sentient AB. Therefore, the investment is accounted for using the equity method. As of December 31, 2022, the Company has paid RMB 141.0 million, equivalent to approximately $21.6 million, with the remaining consideration of RMB 14.2 million, equivalent to approximately $2.0 million, to be paid in 2023.

In January 2022, Hubei Henglong entered into an agreement with other parties and committed to purchase 27.78% of the shares of Suzhou Qingshan for total consideration of RMB 60.0 million, equivalent to approximately $9.5 million at the prevailing rate. As of December 31, 2022, Hubei Henglong has paid RMB 30.0 million, equivalent to approximately $4.7 million. According to the agreement, the remaining consideration of RMB 30.0 million, equivalent to approximately $4.3 million, will be paid in 2023.

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Short-term Loans and Long-term Loans

The following table summarizes the contract information of short-term borrowings between the banks and the Company as of December 31, 2022 (figures are in thousands of USD).


			Borrowing			Annual		Date of
Bank		Borrowing	Term			Interest		Interest
Government	Purpose	Date	(Months)	Principal		Rate		Payment	Due Date
Bank of China	Working Capital	October 28, 2022	12		2,872	3.80	%	Pay monthly	October 28, 2023

Bank of China	Working Capital	September 28, 2022	12		2,872	3.00	%	Pay monthly	September 27, 2023

China CITIC Bank⁽¹⁾	Working Capital	April 27, 2022	9		1,436	3.90	%	Pay monthly	January 27, 2023

China CITIC Bank⁽¹⁾	Working Capital	May 20, 2022	8		1,436	3.90	%	Pay quarterly	January 20, 2023

China CITIC Bank	Working Capital	September 26, 2022	12		718	3.65	%	Pay monthly	September 25, 2023

China CITIC Bank	Working Capital	September 26, 2022	12		718	3.65	%	Pay monthly	September 25, 2023

China Constitution Bank	Working Capital	September 28, 2022	12		1,436	3.50	%	Pay monthly	September 26, 2023

Chongqing Bank	Working Capital	April 14, 2022	12		14	3.85	%	Pay semiannually	April 14, 2023

Chongqing Bank	Working Capital	April 14, 2022	18		14	3.85	%	Pay semiannually	October 14, 2023

Chongqing Bank	Working Capital	April 14, 2022	35		39	3.85	%	Pay semiannually	March 20, 2025

Chongqing Bank	Working Capital	April 27, 2022	35		120	3.85	%	Pay semiannually	March 20, 2025

Chongqing Bank	Working Capital	May 12, 2022	34		75	3.85	%	Pay semiannually	March 20, 2025

Chongqing Bank	Working Capital	May 24, 2022	34		55	3.85	%	Pay semiannually	March 20, 2025

Chongqing Bank	Working Capital	June 16, 2022	33		43	3.85	%	Pay semiannually	March 20, 2025

Chongqing Bank	Working Capital	June 29, 2022	33		116	3.85	%	Pay semiannually	March 20, 2025

Chongqing Bank	Working Capital	July 28, 2022	33		80	3.85	%	Pay semiannually	April 13, 2025

China CITIC Bank	Working Capital	June 16, 2022	12		6,872	2.30	%	Pay in arrear	June 15, 2023

China CITIC Bank⁽¹⁾	Working Capital	March 21, 2022	12		1,392	3.00	%	Pay in arrear	March 21, 2023

China CITIC Bank⁽¹⁾	Working Capital	March 23, 2022	12		4,455	3.00	%	Pay in arrear	March 23, 2023

China CITIC Bank	Working Capital	June 16, 2022	12		4,909	2.30	%	Pay in arrear	June 15, 2023

Hankou Bank⁽¹⁾	Working Capital	March 18, 2022	12		2,817	1.90	%	Pay in arrear	March 13, 2023

China CITIC Bank⁽¹⁾	Working Capital	March 21, 2022	12		5,151	3.00	%	Pay in arrear	March 21, 2023

China CITIC Bank⁽¹⁾	Working Capital	September 5, 2022	6		504	1.70	%	Pay in arrear	February 28, 2023

China CITIC Bank⁽¹⁾	Working Capital	September 21, 2022	5	$	285	1.70	%	Pay in arrear	February 20, 2023

China CITIC Bank⁽¹⁾	Working Capital	September 21, 2022	4		143	1.70	%	Pay in arrear	January 18, 2023

China CITIC Bank⁽¹⁾	Working Capital	September 21, 2022	4		143	1.70	%	Pay in arrear	January 18, 2023

China CITIC Bank⁽¹⁾	Working Capital	September 21, 2022	5		338	1.70	%	Pay in arrear	February 9, 2023

China CITIC Bank⁽¹⁾	Working Capital	September 21, 2022	5		285	1.70	%	Pay in arrear	February 13, 2023

China CITIC Bank⁽¹⁾	Working Capital	September 21, 2022	5		285	1.70	%	Pay in arrear	March 2, 2023

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			Borrowing			Annual		Date of
Bank		Borrowing	Term			Interest		Interest
Government	Purpose	Date	(Months)	Principal		Rate		Payment	Due Date
China CITIC Bank	Working Capital	October 20, 2022	6		71	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank	Working Capital	October 20, 2022	6		427	1.65	%	Pay in arrear	April 11, 2023

China CITIC Bank	Working Capital	October 20, 2022	6		142	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank	Working Capital	October 20, 2022	6		214	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank⁽¹⁾	Working Capital	October 20, 2022	3		286	1.65	%	Pay in arrear	January 7, 2023

China CITIC Bank⁽¹⁾	Working Capital	October 20, 2022	4		372	1.65	%	Pay in arrear	February 25, 2023

China CITIC Bank	Working Capital	October 20, 2022	6		712	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank	Working Capital	October 20, 2022	6		285	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank⁽¹⁾	Working Capital	November 21, 2022	5		143	1.65	%	Pay in arrear	March 23, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		71	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		27	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		45	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		143	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		143	1.65	%	Pay in arrear	April 8, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		63	1.65	%	Pay in arrear	April 28, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		143	1.65	%	Pay in arrear	April 28, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		100	1.65	%	Pay in arrear	April 28, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		285	1.65	%	Pay in arrear	April 28, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		285	1.65	%	Pay in arrear	April 28, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		143	1.65	%	Pay in arrear	April 28, 2023

China CITIC Bank	Working Capital	November 21, 2022	5		143	1.65	%	Pay in arrear	April 28, 2023

China CITIC Bank	Working Capital	November 21, 2022	6		427	1.65	%	Pay in arrear	May 16, 2023

China CITIC Bank	Working Capital	December 19, 2022	5		285	1.60	%	Pay in arrear	May 29, 2023

China CITIC Bank	Working Capital	December 19, 2022	5		285	1.60	%	Pay in arrear	May 29, 2023

China CITIC Bank	Working Capital	December 19, 2022	5		285	1.60	%	Pay in arrear	May 29, 2023

China CITIC Bank	Working Capital	December 19, 2022	5		285	1.60	%	Pay in arrear	May 29, 2023

China CITIC Bank	Working Capital	December 19, 2022	5		50	1.60	%	Pay in arrear	May 30, 2023

Bank of China⁽¹⁾	Working Capital	July 28, 2022	6		287	1.25	%	Pay in arrear	January 12, 2023

Bank of China⁽¹⁾	Working Capital	July 28, 2022	6		142	1.25	%	Pay in arrear	January 18, 2023

Bank of China⁽¹⁾	Working Capital	July 28, 2022	6		287	1.25	%	Pay in arrear	January 7, 2023
Total					46,199

(1)	These bank loans were repaid during the period from January to March 2023 when they became due.

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The Company must use the loans for the purpose described and repay the principal outstanding on the specified date in the table. If it fails to do so, it will be charged additional 30% to 100% penalty interest.

The Company had complied with such financial covenants as of December 31, 2022.

Notes Payable

The following table summarizes the contract information of issuing notes payable between the banks and the Company as of December 31, 2022 (figures are in thousands of USD):


			Amount Payable on
Purpose	Term (Month)	Due Date	Due Date
Working Capital ⁽¹⁾	6	Jan-2023		14,454
Working Capital ⁽¹⁾	6	Feb-2023		10,732
Working Capital ⁽¹⁾	6	Mar-2023		14,083
Working Capital	6	Apr-2023		22,587
Working Capital	6	May-2023		16,731
Working Capital	6	Jun-2023		13,106
Total			$	91,693

(1)	The notes payable were repaid in full on their respective due dates.

The Company must use notes payable for the purpose described in the table. If it fails to do so, the banks will no longer issue the notes payable, and it may have an adverse effect on the Company’s liquidity and capital resources. The Company has to deposit a sufficient amount of cash on the due date of notes payable for payment to the suppliers. If the bank has advanced payment for the Company, it will be charged an additional 50% penalty interest. The Company complied with such financial covenants as of December 31, 2022, and management believes it will continue to comply with them.

Cash flows

(a)Operating Activities

Net cash provided by operating activities for the year ended December 31, 2022 was $48.0 million, compared to net cash provided by operating activities of $28.3 million for the year ended December 31, 2021, representing an increase in net cash inflows by $19.8 million, which was mainly due to the offsetting impact of (1) the increase in net income excluding non-cash items by $16.0 million, (2) the decrease in the cash outflows from movements of inventory by $20.3 million, (3) the decrease in the cash inflows from movements of accounts and notes receivable by $63.5 million, (4) the decrease in the cash outflows from movements of accounts and notes payable by $30.1 million, and (5) a combination of other factors contributing an increase of cash inflows by $16.9 million, including the decrease in the cash outflows from movements of taxes payable by $7.4 million.

(b)Investing Activities

Net cash used in investing activities for the year ended December 31, 2022 was $32.7 million, as compared to net cash provided by investing activities of $3.0 million in 2021, representing an increase in cash outflows by $35.7 million, which was mainly due to the net effect of (1) an increase in purchase of short-term investments and long-term time deposits of $16.8 million, (2) a decrease in cash received from long-term investments $16.6 million , (3) a combination of other factors contributing to a decrease of cash inflows by $2.3 million, including an increase in the payment to acquire property, plant and equipment by $11.0 million, and a decrease in cash prepaid for investment under equity method by $13.5 million.

(c)Financing Activities

Net cash used in financing activities for the year ended December 31, 2022 was $1.6 million, compared net cash used in financing activities of $3.1 million for 2021, representing a decrease in outflows by $1.5 million, which was mainly due to the net effect of (1) a

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decrease in repayment of the borrowing under sale and leaseback transaction by $3.3 million, and (2) an increase in repurchase of common share by $2.4 million, (3) a combination of other factors contributed an increase of cash inflows by $0.6 million.

OFF-BALANCE SHEET ARRANGEMENTS

On December 31, 2022 and 2021, the Company did not have any transactions, obligations or relationships that could be considered off-balance sheet arrangements.

SUBSEQUENT EVENTS

None.

INFLATION AND CURRENCY MATTERS

China’s economy has experienced rapid growth recently, mostly through the issuance of debt. Debt-induced economic growth can lead to growth in the money supply and rising inflation. If prices for the Company’s products rise at a rate that is insufficient to compensate for the rise in the cost of supplies, it may harm the Company’s profitability. In order to control inflation, the Chinese government has imposed controls on bank credit, limits on loans for fixed assets and restrictions on state bank lending. Such policies can lead to a slowing of economic growth. Rises in interest rates by the central bank would likely slow economic activity in China which could, in turn, materially increase the Company’s costs and also reduce demand for the Company’s products.

Foreign operations are subject to certain risks inherent in conducting business abroad, including price and currency exchange controls, and fluctuations in the relative value of currencies. During 2022, the Company mainly supplied products to North America and settled in cash in U.S. dollars. As a result, appreciation or currency fluctuation of the RMB against the U.S. dollar would increase the cost of export products, and adversely affect the Company’s financial performance.

In July 2005, the Chinese government adjusted its exchange rate policy from “Fixed Rate” to “Floating Rate.” During December 2021 to December 2022, the exchange rate between RMB and U.S. dollar appreciated from RMB1.00 to $0.1568 to RMB1.00 to $0.1436. The depreciation of the RMB may continue. Significant depreciation of the RMB is likely to decrease the Company’s income generated from China.

RECENT ACCOUNTING PRONOUNCEMENTS

Information regarding new accounting pronouncements is included in Note 2 to the Consolidated Financial Statements.

SIGNIFICANT ACCOUNTING POLICIES AND CRITICAL ACCOUNTING ESTIMATES

The Company prepares its consolidated financial statements in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires the use of estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amount of revenues and expenses during the reporting periods. Management periodically evaluates the estimates and judgments made. Management bases its estimates and judgments on historical experience and on various factors that are believed to be reasonable under the circumstances. Actual results may differ from these estimates as a result of different assumptions or conditions. The following critical accounting policies affect the more significant judgments and estimates used in the preparation of the Company’s consolidated financial statements.

The Company considers an accounting estimate to be critical if:

●

it requires the Company to make assumptions about matters that were uncertain at the time it was making the estimate; and

●

changes in the estimate or different estimates that the Company could have selected would have had a material impact on the Company’s financial condition or results of operations.

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The table below presents information about the nature and rationale for the Company critical accounting estimates:


	Critical
Balance Sheet	Estimate		Assumptions/Approaches
Caption	Item	Nature of Estimates Required	Used	Key Factors
Accrued liabilities and other long-term liabilities	Warranty obligations	Estimating warranty requires the Company to forecast the resolution of existing claims and expected future claims on products sold. OEMs are increasingly seeking to hold suppliers responsible for product warranties, which may impact the Company’s exposure to these costs.	The Company bases its estimate on historical trends of units sold and payment amounts, combined with its current understanding of the status of existing claims and discussions with its customers.	· OEM sourcing · OEM policy decisions regarding warranty claims

Property, plant and equipment, intangible assets and other long-term assets	Valuation of long- lived assets and investments	The Company is required, from time-to-time, to review the recoverability of certain of its assets based on projections of anticipated future cash flows, including future profitability assessments of various product lines.	The Company estimates cash flows using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments.	· Future production estimates · Customer preferences and decisions

Accounts receivable	Allowance for doubtful accounts	The Company is required, from time to time, to review the credit of customers and make timely provision of allowance for doubtful accounts.	The Company estimates the collectability of the receivables based on the future cash flows using historical experiences.	· Customer credit

Inventory	Provision for inventory impairment	The Company is required, from time to time, to review the turnover of inventory based on projections of anticipated future cash flows, including provision of inventory impairment for over market price and undesirable inventories.	The Company estimates cash flows using internal budgets based on recent sales data, independent automotive production volume estimates and customer commitments.	· Future production estimates · Customer preferences and decisions

Deferred income taxes	Recoverability of deferred tax assets	The Company is required to estimate whether recoverability of its deferred tax assets is more likely than not based on forecasts of taxable earnings in the related tax jurisdiction.	The Company uses historical and projected future operating results, based upon approved business plans, including a review of the eligible carry-forward period, tax planning opportunities and other relevant considerations.	· Tax law changes · Variances in future projected profitability, including by taxing entity

ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK.

The Company is exposed to market risk from changes in interest rates and foreign currency exchange rates. For purposes of specific risk analysis, the Company uses sensitivity analysis to determine the effects that market risk exposures may have.

FOREIGN CURRENCY RISK

The Company’s reporting currency is the U.S. dollar and the majority of its revenues will be settled in RMB and U.S. dollars. The Company’s currency exchange rate risks come primarily from the sales of products to international customers. Most of the Company’s assets are denominated in RMB except for part of cash and accounts receivable. As a result, the Company is exposed to foreign exchange risk as its revenues and results of operations may be affected by fluctuations in the exchange rate between the U.S. dollar and the RMB.

The value of the RMB fluctuates and is affected by, among other things, changes in China’s political and economic conditions. In addition, the RMB is not readily convertible into U.S. dollars or other foreign currencies. All foreign exchange transactions continue to take place either through the Bank of China or other banks authorized to buy and sell foreign currencies at the exchange rate quoted by the People’s Bank of China. The conversion of RMB into foreign currencies such as the U.S. dollar has been generally based on rates set by the People’s Bank of China, which are set daily based on the previous day’s interbank foreign exchange market rates and current exchange rates on the world financial markets. On December 31, 2022 and 2021, the exchange rates of RMB against U.S. dollar were RMB 1.00 to $0.1436 and RMB 1.00 to $0.1568, respectively. Any significant future depreciation of the RMB is likely to decrease the Company’s profits generated from overseas.

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In order to mitigate the currency exchange rate risk, the Company and its international customers established a price negotiation mechanism that provides that, if the currency exchange rate fluctuation is more than 8% since the last price negotiation, the Company and the customers would adjust the prices for future sales. Normally the adjustment to future sales prices would reflect half of the impact from the change in exchange rate.

CREDIT RISK

Financial instruments that potentially subject the Company to concentrations of credit risk consist primarily of trade accounts receivable. The Company does not require collateral or other security to support client receivables since most of its customers are large, well-established companies. The Company’s credit risk is also mitigated because its customers are all selected enterprises supported by the local government. One customer, Fiat Chrysler North America, accounted for more than 10% (20.2%) of the Company’s consolidated revenues in 2022. The Company maintains an allowance for doubtful accounts for any potential credit losses related to its trade receivables. The Company does not use foreign exchange contracts to hedge the risk in receivables denominated in foreign currencies and the Company does not hold or issue derivative financial instruments for trading or speculative purposes.

INTEREST RATE RISK

The Company’s exposure to changes in interest rates results primarily from its credit facility borrowings. As of December 31, 2022, the Company had nil of outstanding indebtedness, which is subject to interest rate fluctuations.

The Company’s level of outstanding indebtedness fluctuates from time to time and may result in additional payable.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

(a)	The financial statements required by this item begin on page 61.

(b)	Selected quarterly financial data for the past two years are summarized in the following table (figures are in thousands of USD, except those for items headed “Basic” and “Diluted”):


	Quarterly Results of Operations
	First				Second				Third				Fourth
	2022		2021		2022		2021		2022		2021		2022		2021
Net sales	$	136,396	$	130,341	$	127,161	$	120,604	$	137,207	$	108,231	$	128,787	$	138,817
Gross profit		14,734		19,748		22,711		15,829		20,918		16,792		25,031		19,710
Income/(loss) from operations		(1,538)		4,160		7,200		119		4,887		591		(2,598)		648
Net income/(loss)		149		3,231		9,935		2,928		8,007		(268)		4,252		4,835
Net income/(loss) attributable to non-controlling interest		200		18		500		(279)		529		42		(97)		(133)
Net income/(loss) attributable to parent company’s common shareholders		(59)		3,206		9,428		3,200		7,470		(317)		4,342		4,961
Net income/(loss) attributable to parent company’s common shareholders per share-
Basic	$	—	$	0.10	$	0.31	$	0.10	$	0.24	$	(0.01)	$	0.14	$	0.16
Diluted	$	—	$	0.10	$	0.31	$	0.10	$	0.24	$	(0.01)	$	0.14	$	0.16

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.

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ITEM 9A. CONTROLS AND PROCEDURES.

Evaluation of Disclosure Controls and Procedures

The Company’s management, under the supervision and with the participation of its chief executive officer and chief financial officer, Messrs. Wu Qizhou and Li Jie, respectively, evaluated the effectiveness of the Company’s disclosure controls and procedures as of December 31, 2022, the end of the period covered by this Report. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended, or the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports, such as this Form 10-K, that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its chief executive officer and chief financial officer, as appropriate, to allow timely decisions regarding required disclosure. Based on that evaluation, Messrs. Wu and Li concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2022.

Management’s Report on Internal Control Over Financial Reporting

Management of the Company is responsible for establishing and maintaining adequate internal control over financial reporting.

Internal control over financial reporting, as defined in Rules 13a-15(f) and 15d-15(f) promulgated under the Exchange Act, is a process designed by, or under the supervision of, the chief executive officer and chief financial officer and effected by the board of directors, management and other personnel to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the consolidated financial statements for external reporting purposes in accordance with generally accepted accounting principles. Internal control over financial reporting includes those policies and procedures that:

pertain to the maintenance of records that, in reasonable detail accurately and fairly reflect the transactions and dispositions of the Company’s assets;

provide reasonable assurance that transactions are recorded as necessary to permit preparation of the consolidated financial statements in accordance with generally accepted accounting principles, and that the Company’s receipts and expenditures are being made only in accordance with appropriate authorization of the Company’s management and board of directors; and

provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the consolidated financial statements.

In making its assessment of internal control over financial reporting, management, under the supervision and with the participation of the chief executive officer and chief financial officer, used the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in “Internal Control—Integrated Framework (2013).”

Management has assessed the effectiveness of internal control over financial reporting as of December 31, 2022 and determined that internal control over financial reporting was effective as of December 31, 2022.

This report does not include an auditors’ report on the effectiveness of internal control over financial reporting due to SEC rules that exempt smaller reporting companies such as CAAS from providing such a report.

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Inherent Limitations on Effectiveness of Controls

A control system, no matter how well designed and operated, can provide only reasonable, not absolute, assurance that the control system’s objectives will be met. The design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Further, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that misstatements due to error or fraud will not occur or that all control issues and instances of fraud, if any, within the Company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty and that breakdowns can occur because of simple error or mistake. Controls can also be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the controls. Projections of any evaluation of controls effectiveness to future periods are subject to risks. Over time, controls may become inadequate because of changes in conditions or deterioration in the degree of compliance with policies or procedures.

Changes in Internal Control Over Financial Reporting

There were no changes in our internal control over financial reporting that occurred during the three months ended December 31, 2022 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 9B. OTHER INFORMATION.

None.

ITEM 9C.DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS.

We were identified by the SEC pursuant to Section 104(i)(2)(A) of the Sarbanes-Oxley Act of 2002 (15 U.S.C. 7214(i)(2)(A)) as having retained, for the preparation of the audit report on its financial statements included in its Annual Report on Form 10-K for the year ended December 31, 2021, a registered public accounting firm that has a branch or office that is located in a foreign jurisdiction and that the PCAOB had then determined it was unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction, which determination was vacated by the PCAOB on December 15, 2022. We hereby confirm that we are not owned or controlled by any governmental entity in such foreign jurisdiction. We are not a party to any material contracts with such a foreign governmental party, and there is no such foreign government representative on the Company’s board of directors.

Furthermore, in August 2022, the PCAOB signed a Statement of Protocol with the CSRC and the Ministry of Finance of the People’s Republic of China, taking the first step toward opening access for the PCAOB to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong. PCAOB staff members conducted on-site inspections and investigations from September to November 2022, and in December 2022, the PCAOB announced that it has secured complete access to inspect and investigate registered public accounting firms headquartered in mainland China and Hong Kong and confirmed that until such time as the PCAOB issues any new determination, there are no Commission-Identified Issuers at risk of having their securities subject to a trading prohibition under the HFCAA.

For further information, see Item 1. Business and Item 1A. Risk Factors— Risks Related To Doing Business In China And Other Countries Besides The United States.

PART III

ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE.

The following table and text set forth the names and ages of all directors and executive officers of the Company as of December 31, 2022. The Board of Directors is comprised of only one class. All of the directors will serve until the next annual meeting of stockholders and until their successors are elected and qualified, or until their earlier death, retirement, resignation or removal. Also provided herein are brief descriptions of the business experience of each director and executive officer during the past five years and an indication of directorships held by each director in other companies subject to the reporting requirements under the federal securities laws.

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Name	Age	Position(s)

Hanlin Chen	65	Chairman of the Board

Tong Kooi Teo	66	Director

Guangxun Xu	72	Director

Heng Henry Lu	57	Director

Qizhou Wu	58	Chief Executive Officer and Director

Jie Li	53	Chief Financial Officer

Andy Tse	52	Senior Vice President

Haimian Cai	59	Vice President

Henry Chen	32	Vice President

BIOGRAPHIES OF DIRECTORS AND EXECUTIVE OFFICERS

Directors

Hanlin Chen has served as the chairman of the board of directors and an executive officer since March 2003. From 1993 to 1997, Mr. Chen was the general manager of Shashi Jiulong Power Steering Gears Co., Ltd. Since 1997, he has been the chairman of the Board of Henglong Automotive Parts, Ltd. Mr. Hanlin Chen is the brother-in-law of the Company’s senior vice president, Mr. Andy Tse.

Qizhou Wu has served as a director since March 2003 and as the chief executive officer of the Company since September 2007. He served as chief operating officer from 2003 to 2007. He was the executive general manager of Shashi Jiulong Power Steering Gears Co., Ltd. from 1993 to 1999 and the general manager of Henglong Automotive Parts Co., Ltd. from 1999 to 2002. Mr. Wu graduated from Tsinghua University in Beijing with a Master’s degree in automobile engineering.

Heng Henry Lu has served as an independent director of the Company since July 2019. He is a member of the audit committee, the nominating committee and the compensation committee of the Board of Directors. He has been an adviser to NBS Group since February 2016. Dr. Lu was a partner of SVC China from 2012 to 2014 and Chief Representative of William Blair & Company, L.L.C., Shanghai Representative Office from 2006 to 2011. Prior to that, Dr. Lu was with McKinsey & Company advising global and domestic companies on their growth and financial strategies. Dr. Lu received a Doctor of Philosophy from Columbia University in 1997 and a Master of Business Administration from University of Chicago Business School in 2000.

Tong Kooi Teo has served as an independent director of the Company since July 2019. He is the chairman of the compensation committee, and a member of the audit committee and the nominating committee of the Board of Directors. He is the Chief Executive Officer of DPS Corporate Advisory Company Limited, Beijing, China, a member of Head International Group, China since March 2018. He is a senior and independent non-executive director of Tropicana Corporation Bhd since March 2021, listed on the Kuala Lumpur Stock Exchange. He is also Non-Executive Director of Guocoland (China) Limited since February 2018. He was the Managing Director of Guoco Investment (China) Ltd., Hong Kong from 2014 to 2018, after serving as the Group Managing Director of Guocoland (China) Ltd. from 2012 to 2014. Prior to that, Mr. Teo was the Chief Executive Officer (China and Vietnam Operations) of WCT Holdings Bhd, Malaysia from 2011 to 2012. He was the Chief Executive Officer of Hong Leong Asia Ltd (HLA), which is listed on the Singapore Stock Exchange from 2004 to 2010. From 2003 to 2004, Mr. Teo was the Managing Director of Tasek Corporation Bhd, Malaysia, which was listed on the Kuala Lumpur Stock Exchange. From 1994 to 2002, Mr. Teo was General Manager of Corporate Banking Division and Chief Operating Officer of Hong Leong Bank Malaysia. From 1989 to 1994, Mr. Teo was with Deutsche Bank Malaysia where his last held position was Head of Corporate Banking.

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Guangxun Xu has served as an independent director of the Company since December 2009. He is the chairman of both the audit committee and the nominating committee, and a member of the compensation committee. Mr. Xu has been the Chief Representative of NASDAQ in China and a managing director of the NASDAQ Stock Market International, Asia for over ten (10) years. With a professional career in the finance field spanning over thirty (30) years, Mr. Xu’s practice focuses on providing package services on U.S. and U.K. listings, advising on and arranging for private placements, PIPEs, IPOs, pre-IPO restructuring, M&A, corporate and project finance, corporate governance, post-IPO IR compliance and risk control.

Executive Officers

Jie Li has served as the chief financial officer since September 2007. Prior to that position he served as the corporate secretary from December 2004. Prior to joining the Company in September 2003, Mr. Li was the assistant president of Jingzhou Jiulong Industrial Inc. from 1999 to 2003 and the general manager of Jingzhou Tianxin Investment Management Co. Ltd. from 2002 to 2003. Mr. Li has a Bachelor’s degree from the University of Science and Technology of China. He also completed his graduate studies in economics and business management at the Hubei Administration Institute.

Andy Tse has served as a senior vice president of the Company since March 2003. He has also served as chairman of the board of Shenyang. He was the vice GM of Jiulong from 1993 to 1997 and the vice GM of Henglong. Mr. Tse has over 10 years of experience in automotive parts sales and strategic development. Mr. Tse has an MBA from the China People University. He is brother in-law to Mr. Hanlin Chen.

Haimian Cai was an independent director of the Company from September 2003 to December 2009, and also a member of the Company’s Audit, Compensation and Nominating Committees. Dr. Cai is a technical specialist in the automotive industry. Prior to that, Dr. Cai was a staff engineer in ITT Automotive Inc. Dr. Cai has written more than fifteen technical papers and co-authored a technical book regarding the Powder Metallurgy industry for automotive application. Dr. Cai has more than ten patents including pending patents. Dr. Cai holds a B.S. Degree in Automotive Engineering from Tsinghua University and a M.S. and Ph. D. in manufacturing engineering from Worcester Polytechnic Institute. Since December 2009, Mr. Cai has not served as independent director and a member of the Company’s Audit Committee, Compensation and Nominating Committees, because he was nominated as vice president of the Company.

Henry Chen has served as a vice president of the Company since August 2022. Prior to that position he served in Hubei Henglong Automotive System Co., Ltd. as the executive vice president from February 2022 to August 2022, the assistant to president from January 2021 to January 2022 and the European regional business director from July 2017 to January 2021. Mr. Chen was the investment manager of Suzhou Qingyan Captial from June 2016 to June 2017. Mr. Chen holds a B.S. Degree in History and Political Science and a M.S. in Global History from University of Warwick. He is the son of Mr. Hanlin Chen.

BOARD COMPOSITION AND COMMITTEES

Audit Committee and Independent Directors

The Company has a standing Audit Committee of the Board of Directors established in accordance with Section 3(a)(58)(A) of the Exchange Act, as amended. The Audit Committee is operated under a written charter. The Audit Committee consists of the following individuals, all of whom the Company considers to be independent, as defined under the SEC’s rules and regulations and the Nasdaq’s definition of independence: Mr. Tong Kooi Teo, Mr. Guangxun Xu and Mr. Heng Henry Lu. Mr. Guangxun Xu is the Chairman of the Audit Committee. The Board has determined that Mr. Guangxun Xu is the audit committee financial expert, as defined in Item 407(d)(5) of Regulation S-K, serving on the Company’s Audit Committee.

Compensation Committee

The Company has a standing Compensation Committee of the Board of Directors. The Compensation Committee is responsible for determining compensation for the Company’s executive officers. Three of the Company’s independent directors, as defined under the SEC’s rules and regulations and the Nasdaq’s definition of independence, Mr. Tong Kooi Teo, Mr. Guangxun Xu and Mr. Heng Henry Lu serve on the Compensation Committee. Mr. Tong Kooi Teo is the Chairman of the Compensation Committee. The Board has determined that all members of the Compensation Committee are independent directors under the rules of the Nasdaq Stock Market, as applicable. The Compensation Committee administers the Company’s benefit plans, reviews and administers all compensation arrangements for executive officers, and establishes and reviews general policies relating to the compensation and benefits of the

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Company’s officers and employees. The Compensation Committee operates under a written charter that is made available on the Company’s website, www.caasauto.com.

The Company’s Compensation Committee is empowered to review and approve the annual compensation and compensation procedures for the executive officers of the Company. The primary goals of the Compensation Committee of the Company’s Board of Directors with respect to executive compensation are to attract and retain the most talented and dedicated executives possible and to align executives’ incentives with stockholder value creation. The Compensation Committee evaluates individual executive performance with a goal of setting compensation at levels the committee believes are comparable with executives in other companies of similar size and stage of development operating in similar industry while taking into account the Company’s relative performance and its strategic goals.

The Company has not retained a compensation consultant to review its policies and procedures with respect to executive compensation. The Company conducts an annual review of the aggregate level of its executive compensation, as well as the mix of elements used to compensate its executive officers. The Company compares compensation levels with amounts currently being paid to executives in its industry and most importantly with local practices in China. The Company is satisfied that its compensation levels are competitive with local conditions.

Nominating Committee

The Company has a standing Nominating Committee of the Board of Directors. Director candidates are nominated by the Nominating Committee. The Nominating Committee will consider candidates based upon their business and financial experience, personal characteristics, and expertise that are complementary to the background and experience of other Board members, willingness to devote the required amount of time to carry out the duties and responsibilities of Board membership, willingness to objectively appraise management performance, and any such other qualifications the Nominating Committee deems necessary to ascertain the candidates’ ability to serve on the Board. The Nominating Committee will not consider nominee recommendations from security holders, other than the recommendations received from a security holder or group of security holders that beneficially owned more than 5 percent of the Company’s outstanding common stock for at least one year as of the date the recommendation is made. Three of the Company’s independent directors, as defined under the SEC’s rules and regulations and the Nasdaq’s definition of independence, Mr. Tong Kooi Teo, Mr. Guangxun Xu and Mr. Heng Henry Lu, serve on the Nominating Committee. Mr. Xu is the Chairman of the Nominating Committee.

Stockholder Communications

Stockholders interested in communicating directly with the Board of Directors, or individual directors, may email the Company’s independent director Mr. Guangxun Xu at guangxunxu@hotmail.com. Mr. Xu will review all such correspondence and will regularly forward to the board of directors of the Company copies of all such correspondence that deals with the functions of the Board or committees thereof or that he otherwise determines requires their attention. Directors may at any time review all of the correspondence received that is addressed to members of the board of directors of the Company and request copies of such correspondence. Concerns relating to accounting, internal controls or auditing matters will immediately be brought to the attention of the Audit Committee and handled in accordance with procedures established by the Audit Committee with respect to such matters.

Family Relationships

Mr. Hanlin Chen and Mr. Andy Tse are brothers-in-law.

Mr. Hanlin Chen and Mr. Henry Chen are father and son.

Code of Ethics and Conduct

The Board of Directors has adopted a Code of Ethics and Conduct which is applicable to all officers, directors and employees. The Code of Ethics and Conduct was filed as an exhibit to the Form 10-K for the year ended December 31, 2009, which was filed with the Securities and Exchange Commission on March 25, 2010.

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ITEM 11. EXECUTIVE COMPENSATION.

COMPENSATION DISCUSSION AND ANALYSIS

In 2003, the Board of Directors established a Compensation Committee consisting only of independent Board members, which is responsible for setting the Company’s policies regarding compensation and benefits and administering the Company’s benefit plans. At the end of fiscal year 2022, the Compensation Committee consisted of Mr. Tong Kooi Teo, Mr. Guangxun Xu and Mr. Heng Henry Lu. The members of the Compensation Committee approved the amount and form of compensation paid to executive officers of the Company and set the Company’s compensation policies and procedures during these periods.

The primary goals of the Company’s compensation committee with respect to executive compensation are to attract and retain highly talented and dedicated executives and to align executives’ incentives with stockholder value creation.

The Compensation Committee will conduct an annual review of the aggregate level of the Company’s executive compensation, as well as the mix of elements used to compensate the Company’s executive officers. The Company compares compensation levels with amounts currently being paid to executives at similar companies in the same area and the same industry. Most importantly, the Company compares compensation levels with local practices in China. The Company believes that its compensation levels are competitive with local conditions.

Elements of Compensation

The Company’s executive compensation consists of the following elements:

Base Salary

In determining the amount of base salaries for our named executive officers (“Named Executive Officers”), the Compensation Committee strives to establish base salaries that are similar to those paid by other companies to executives in similar positions and with similar responsibilities. Base salaries are adjusted from time to time to realign salaries with market levels after considering individual responsibilities, performance and experience. The Compensation Committee established a salary structure to determine base salaries and is responsible for initially setting executive officer compensation in employment arrangements with each individual. The base salary amounts are intended to reflect the Company’s philosophy that the base salary should attract experienced individuals who will contribute to the success of the Company’s business goals and represent cash compensation that is commensurate with the compensation of individuals at similarly situated companies.

The Company’s Board of Directors and Compensation Committee have approved the current salaries for executives: RMB 2.2 million (equivalent to approximately $0.32 million) for the Chairman, RMB 1.4 million (equivalent to approximately $0.21 million) for the CEO and RMB 0.9 million (equivalent to approximately $0.13 million) individually for each other officer in 2022.

Performance Bonus

Grantees: Mr. Hanlin Chen, Mr. Qizhou Wu, Mr. Andy Tse, Mr. Henry Chen and Mr. Jie Li.

Conditions: based on the Company’s consolidated financial statements, (i) the year over year growth rate of sales for 2022 must be 5% or higher; or (ii) the year over year growth rate of sales for 2022 must be 10% or higher.

Bonus: If condition (i) is satisfied, 25% of each officer’s annual salary in 2022. If condition (ii) is satisfied, 50% of each officer’s annual salary in 2022.

The Company accrued 25% of the annual salary as performance bonus for each Named Executive Officer in 2022 as the Company reached the above condition (i).

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Stock Option Awards

The stock options plan proposed by management, which aims to incentivize and retain core employees, to meet employees’ benefits, the Company’s long term operating goals and stockholder benefits, was approved at the Annual Meeting of Stockholders held on June 28, 2005, and extended for ten years at the Annual Meeting of Stockholders held on September 16, 2014. The maximum common shares available for issuance under the plan is 2,200,000. The term of the plan was extended to June 27, 2025.

There were no stock options granted to management in 2022.

Other Compensation

Other than the base salary for the Company’s Named Executive Officers, the performance bonus and the stock option awards referred to above, the Company does not have any other benefits and perquisites for its Named Executive Officers. However, the Compensation Committee in its discretion may provide benefits and perquisites to these executive officers if it deems advisable to do so.

Compensation Tables

Executive Officers

The compensation that Named Executive Officers received for their services for fiscal years 2022 and 2021 were as follows (figures are in thousands of USD):


Name and principal position	Year	Salary (1)		Bonus (2)		Option Awards (3)		Total
Hanlin Chen (Chairman)	2022	$	321	$	80	$	—	$	401
	2021	$	330	$	165	$	—	$	495

Qizhou Wu (CEO)	2022	$	214	$	53	$	—	$	267
	2021	$	220	$	110	$	—	$	330

Jie Li (CFO)	2022	$	128	$	32	$	—	$	160
	2021	$	132	$	66	$	—	$	198

Haimian Cai (Vice President)	2022	$	383	$	—	$	—	$	383
	2021	$	356	$	—	$	—	$	356

(1)	Salary – Please refer to Base Salary disclosed under “Elements of compensation” section above for further details.

(2)	Bonus – Please refer to Performance Bonus disclosed under “Elements of compensation” section above for further details.

(3)	Option Awards – Please refer to Stock Option Awards disclosed under “Elements of compensation” section above for further details.

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Compensation for Directors

Based on the number of the board of directors’ service years, workload and performance, the Company decides on their pay. The management believes that the pay for the members of the Board of Directors was appropriate as of December 31, 2022. The compensation that directors received for serving on the Board of Directors for fiscal year 2022 was as follows (figures are in thousands of USD):


Name	Fees earned or paid in cash		Option awards ⁽¹⁾		Total
Tong Kooi Teo	$	32	$	—	$	32
Guangxun Xu	$	59	$	—	$	59
Heng Henry Lu	$	32	$	—	$	32

(1)	The company did not grant option awards to directors in 2022.

The cost of the above-mentioned compensation paid to directors was measured based on investment, operating, technology, and consulting services they provided. All other directors did not receive compensation for their service on the Board of Directors.

ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

As used in this section, the term beneficial ownership with respect to a security is defined by Rule 13d-3 under the Securities Exchange Act of 1934, as amended, as consisting of sole or shared voting power, including the power to vote or direct the vote, and/or sole or shared investment power, including the power to dispose of or direct the disposition of, with respect to the security through any contract, arrangement, understanding, relationship or otherwise, subject to community property laws where applicable. The percentage ownership is based on 30,185,702 shares of common stock outstanding at December 31, 2022 (exclusive of 2,152,600 shares of treasury stock).


Name/Title	Total Number of Shares	Percentage Ownership
Hanlin Chen, Chairman ⁽¹⁾	17,849,014	59.13	%
Qizhou Wu, CEO and Director	1,325,136	4.39	%
Guangxun Xu, Director	—	—	%
Tong Kooi Teo, Director	—	—	%
Heng Henry Lu, Director	—	—	%
Haimian Cai, VP	—	—	%
Jie Li, CFO ⁽²⁾	91,031	0.30	%
Tse Andy, Sr. VP	400,204	1.33	%
Henry Chen, VP	—	—	%
All Directors and Executive Officers (9 persons)	19,665,385	65.15	%

(1)

Includes (i) 13,322,547 shares of common stock beneficially owned by Mr. Hanlin Chen; (ii) 1,502,925 shares of common stock beneficially owned by Ms. Liping Xie, Mr. Hanlin Chen’s wife; and (iii) 3,023,542 shares of common stock beneficially owned by Wiselink, a company controlled by Mr. Hanlin Chen.

(2)

Includes 50,000 shares held as nominee for Jingzhou Jiulong Machinery and Electronic Manufacturing Co., Ltd. On October 13, 2014, the Company issued 4,078,000 of its common shares in a private placement to nominee holders of Jingzhou Jiulong Machinery and Electronic Manufacturing Co., Ltd. for the acquisition of the 19.0% and 20.0% equity interest in Jiulong and Henglong held by Jingzhou Jiulong Machinery and Electronic Manufacturing Co., Ltd., respectively. All of the nominee holders of Jingzhou Jiulong Machinery and Electronic Manufacturing Co., Ltd. are unrelated parties except for Mr. Jie Li (CFO).

ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE.

For the information required by Item 13 please refer to Note 2 (Basis of Presentation and Significant Accounting Policies–Certain Relationships and Related Transactions) and Note 25 (Related Party Transactions) to the consolidated financial statements in this Report.

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The Company’s Audit Committee’s charter provides that one of its responsibilities is to review and approve related party transactions defined as those transactions required to be disclosed under Item 404 of Regulation S-K of the rules and regulations under the Exchange Act. The Company has a formal written set of policies and procedures for the review, approval or ratification of related party transactions. Where a related party transaction is identified, the Audit Committee reviews and, where appropriate, approves the transaction based on whether it believes that the transaction is at arm’s length and contains terms that are no less favorable than what the Company could have obtained from an unaffiliated third party.

ITEM 14. PRINCIPAL ACCOUNTANT FEES AND SERVICES.

The following table sets forth the aggregate fees for professional audit services rendered by PricewaterhouseCoopers Zhong Tian LLP for the audit of the Company’s annual financial statements and other services provided in the fiscal years 2022 and 2021. The Audit Committee has approved the following fees (figures are in thousands of USD):

AUDIT COMMITTEE’S PRE-APPROVAL POLICY

During the fiscal years ended December 31, 2022 and 2021, the Audit Committee of the Board of Directors adopted policies and procedures for the pre-approval of all audit and non-audit services to be provided by the Company’s independent auditor and for the prohibition of certain services from being provided by the independent auditor. The Company may not engage the Company’s independent auditor to render any audit or non-audit service unless the service is approved in advance by the Audit Committee or the engagement to render the service is entered into pursuant to the Audit Committee’s pre-approval policies and procedures. On an annual basis, the Audit Committee may pre-approve services that are expected to be provided to the Company by the independent auditor during the fiscal year. At the time such pre-approval is granted, the Audit Committee specifies the pre-approved services and establishes a monetary limit with respect to each particular pre-approved service, which limit may not be exceeded without obtaining further pre-approval under the policy. For any pre-approval, the Audit Committee considers whether such services are consistent with the rules of the Securities and Exchange Commission on auditor independence.

PART IV

ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES.

(a)(1) FINANCIAL STATEMENTS


1.	Report of Independent Registered Public Accounting Firm, PricewaterhouseCoopers Zhong Tian LLP
2.	Consolidated Balance Sheets as of December 31, 2022 and 2021
3.	Consolidated Statements of Income or Loss for the years ended December 31, 2022 and 2021
4.	Consolidated Statements of Comprehensive Income or Loss for the years ended December 31, 2022 and 2021
5.	Consolidated Statements of Changes in Stockholders’ Equity for the years ended December 31, 2022 and 2021
6.	Consolidated Statements of Cash Flows for the years ended December 31, 2022 and 2021
7.	Notes to Consolidated Financial Statements

58 | Page

(b) EXHIBITS

The following is a list of exhibits filed as part of this Annual Report on Form 10-K. Where so indicated by footnote, exhibits that were previously filed are incorporated by reference.


Exhibit Number		Description

3.1(i)		Certificate of Incorporation (incorporated by reference to Exhibit 3(i) to the Company’s Form 10-SB filed on August 27, 2001)

3.1.1(i)		Certificate of Amendment of Certificate of Incorporation, filed May 19, 2003 (incorporated by reference to Exhibit 4.1.1 to the Company’s Registration Statement on Form S-3 (File No. 333-133331) filed on April 17, 2006)

3.1(ii)		Bylaws (incorporated by reference to Exhibit 3(ii) to the Company’s Form 10-SB filed on August 27, 2001)

4.1		Description of the Company’s Securities *

10.1		Joint-venture Agreement, dated March 31, 2006, as amended on May 2, 2006, between Great Genesis Holdings Limited and Wuhu Chery Technology Co., Ltd. (incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q Quarterly Report filed on May 10, 2006)

10.2		Translation of the Equity Transfer Agreement dated March 31, 2008 in English (incorporated by reference to exhibit 99.1 to the Company’s Form 8-K filed on April 2, 2008) Translation of the Equity Transfer Agreement dated March 31, 2008 in English (incorporated by reference to Exhibit 99.1 of the Company’s Form 8-K filed on April 2, 2008)

10.3		English Translation of the Sino-Foreign Equity Joint Venture Contract dated January 24, 2010 between Great Genesis Holdings Limited and Beijing Hainachuan Auto Parts Co., Ltd. (incorporated by reference to Exhibit 10.21 to the Company’s Form 10-K for the year ended December 31, 2010 filed on March 25, 2010)

10.4		Stock Exchange Agreement dated August 11, 2014 by and among Jingzhou City Jiulong Machinery Electricity Manufacturing Co., Ltd., China Automotive Systems, Inc. and Hubei Henglong Automotive System Group Co., Ltd. (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q Quarterly Report filed on August 13, 2014)

10.5		English translation of Joint Venture Contract, dated as of April 27, 2018, by and between Hubei Henglong Automotive System Group Co., Ltd. and KYB (China) Investment Co., Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 27, 2018)

21		Schedule of Subsidiaries (incorporated by reference to Note 1 of the consolidated financial statements of the Company in this Annual Report on Form 10-K)

23.1		Consent of PricewaterhouseCoopers Zhong Tian LLP*

31.1		Rule 13a-14(a) Certification*

31.2		Rule 13a-14(a) Certification*

32.1		Section 1350 Certification*

32.2		Section 1350 Certification*

101*		The following materials from the China Automotive Systems, Inc. Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 30, 2023, formatted in Extensible Business Reporting Language (XBRL):

(i)

Consolidated Balance Sheets;

(ii)

Consolidated Statements of Income or Loss;

(iii)

Consolidated Statements of Comprehensive Income or Loss;

(iv)

Consolidated Statements of Changes in Stockholders’ Equity;

(v)

Consolidated Statements of Cash Flows; and

(vi)

Related notes.

*	Filed herewith.

59 | Page

ITEM 16. FORM 10-K SUMMARY

Not Applicable.

60 | Page

SIGNATURES

In accordance with Section 13 or 15(d) of the Securities Exchange Act of 1934, the Company duly caused this Annual Report to be signed on its behalf by the undersigned, thereunto duly authorized.


		CHINA AUTOMOTIVE SYSTEMS, INC.

Dated: March 30, 2023		/s/ Qizhou Wu

	Name:	Qizhou Wu

	Title:	Chief Executive Officer and President

61 | Page

POWER OF ATTORNEY

KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints Qizhou Wu his attorney-in-fact and agent, with the power of substitution, for him in any and all capacities, to sign any and all amendments to this Annual Report on Form 10-K, and to file the same, with exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, or substitutes, may do or cause to be done by virtue hereof.

In accordance with the Securities Exchange Act of 1934, this Annual Report has been signed below by the following persons on behalf of the Company and in the capacities and on the dates indicated.


Dated: March 30, 2023		/s/ Hanlin Chen
	Name:	Hanlin Chen
	Title:	Chairman and Director

Dated: March 30, 2023		/s/ Qizhou Wu
	Name:	Qizhou Wu
	Title:	Chief Executive Officer, President and Director
		(Principal Executive Officer)

Dated: March 30, 2023		/s/ Jie Li
	Name:	Jie Li
	Title:	Chief Financial Officer
		(Principal Financial Officer and Principal Accounting Officer)

Dated: March 30, 2023		/s/ Tong Kooi Teo
	Name:	Tong Kooi Teo
	Title:	Director

Dated: March 30, 2023		/s/ Guangxun Xu
	Name:	Guangxun Xu
	Title:	Director

Dated: March 30, 2023		/s/ Heng Henry Lu
	Name:	Heng Henry Lu
	Title:	Director

62 | Page

Report of Independent Registered Public Accounting Firm

To the Board of Directors and Stockholders of China Automotive Systems, Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of China Automotive Systems, Inc.

and its subsidiaries (the “Company”) as of December 31, 2022 and 2021, and the related consolidated statements of income or loss, of comprehensive income or loss, of changes in stockholders’ equity and of cash flows for the years then ended, including the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the years then ended in conformity with accounting principles generally accepted in the United States of America.

Basis for Opinion

These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s consolidated financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight 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 of these consolidated financial statements in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.

Our audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matters

The critical audit matter communicated below is a matter arising from the current period audit of the consolidated financial statements that was communicated or required to be communicated to the audit committee and that (i) relates to accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Assessment of the recoverability of deferred tax assets

As described in Notes 2 and 9 to the consolidated financial statements, as of December 31, 2022, the Company’s deferred tax assets were $7.7 million. Deferred tax assets and liabilities are recognized for the future tax consequences, which is attributable to operating loss and tax credit carryforwards and for differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, by applying enacted statutory rates applicable to future years. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of, the deferred tax assets will not be realized. The valuation allowance is based on management’s estimates of future taxable profits and application of relevant income tax law.

The principal considerations for our determination that performing procedures relating to the assessment of the recoverability of deferred tax assets is a critical audit matter are (i) the significant judgment by management when assessing the recoverability of deferred tax assets and a high degree of estimation uncertainty related to the estimates of future taxable profits; and (ii) a high degree of auditor

63 | Page

judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s estimates of future taxable profits related to the recoverability of deferred tax assets.

Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of controls relating to management’s assessment of recoverability of deferred tax assets, including controls over the estimates of future taxable profits. These procedures also included, among others, evaluating the reasonableness of management’s estimates of future taxable profits used to assess the recoverability of the deferred tax assets by (i) considering the results of a retrospective comparison of the estimates of future taxable profits in prior year to actual results in the current year; (ii) comparison of revenue growth rate, gross margin and profit margin in the estimates of future taxable profits to historical results and industry trends; (iii) performing sensitivity analyses of significant assumptions to evaluate the changes in the estimates of future taxable profits; and (iv) comparing whether the estimates of future taxable profits was consistent with evidence obtained in other areas of the audit.

/s/PricewaterhouseCoopers Zhong Tian LLP

Shanghai, the People’s Republic of China

March 30, 2023

We have served as the Company's auditor since 2010.

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China Automotive Systems, Inc. and Subsidiaries

Consolidated Balance Sheets

(In thousands of USD, except share and per share amounts)


	December 31,
	2022		2021
ASSETS
Current assets:
Cash and cash equivalents	$	121,216	$	131,695
Pledged cash		37,735		27,804
Short-term investments		12,861		1,756
Accounts and notes receivable, net - unrelated parties (Allowance for credit losses of $14,359 and $11,961, respectively)		214,308		195,729
Accounts and notes receivable, net - related parties (Allowance for credit losses of $1,763 and $898, respectively)		10,016		14,607
Advance payments and others, net - unrelated parties (Allowance for credit losses of $115 and $55, respectively)		10,907		12,696
Advance payments and others - related parties		1,439		600
Inventories		112,236		116,493
Total current assets		520,718		501,380
Non-current assets:
Property, plant and equipment, net		106,606		127,721
Land use rights, net		9,555		10,732
Intangible assets, net		1,273		1,812
Operating lease assets		477		138
Long-term time deposits		—		8,135
Other receivables, net (Allowance for credit losses of nil and $50, respectively)		46		358
Advance payment for property, plant and equipment - unrelated parties		6,331		2,284
Advance payment for property, plant and equipment - related parties		1,884		810
Long-term investments		59,810		36,966
Deferred tax assets		7,652		10,114
Other non-current assets		—		16,312
Total assets	$	714,352	$	716,762

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Short-term bank loans	$	45,671	$	47,592
Accounts and notes payable - unrelated parties		218,412		214,590
Accounts and notes payable - related parties		16,695		13,464
Customer deposits		5,654		2,400
Accrued payroll and related costs		11,628		10,984
Accrued expenses and other payables		48,311		50,332
Taxes payable		17,598		12,326
Operating lease liabilities - current portion		226		128
Total current liabilities		364,195		351,816
Long-term liabilities:
Advances payable		2,144		2,028
Operating lease liabilities - non-current portion		255		22
Long-term loans		528		—
Deferred tax liabilities		4,010		4,380
Long-term taxes payable		15,805		21,075

Total liabilities		386,937		379,321
Commitments and Contingencies (Note 26)
Mezzanine equity:
Redeemable non-controlling interests		582		553
Stockholders’ Equity
Common stock, $0.0001 par value - Authorized - 80,000,000 shares Issued – 32,338,302 and 32,338,302 shares at December 31, 2022 and 2021, respectively		3		3
Additional paid-in capital		63,731		63,731
Retained earnings-
Appropriated		11,851		11,481
Unappropriated		247,174		226,363
Accumulated other comprehensive income		(3,413)		24,717
Treasury stock – 2,152,600 and 1,486,526 shares at December 31, 2022 and 2021, respectively		(7,695)		(5,261)
Total parent company stockholders’ equity		311,651		321,034
Non-controlling interests		15,182		15,854
Total stockholders’ equity		326,833		336,888
Total liabilities, mezzanine equity and stockholders’ equity		714,352	$	716,762

The accompanying notes are an integral part of these consolidated financial statements.

65 | Page

China Automotive Systems, Inc. and Subsidiaries

Consolidated Statements of Income or Loss

(In thousands of USD, except share and per share amounts)


	Year Ended December 31,
	2022		2021
Net product sales ($44,282 and $65,131 sold to related parties for the years ended December 31, 2022 and 2021)	$	529,551	$	497,993
Cost of products sold ($28,810 and $31,580 purchased from related parties for the years ended December 31, 2022 and 2021)		446,157		425,914
Gross profit		83,394		72,079
Net gain on other sales		3,696		4,368
Operating expenses:
Selling expenses		16,910		18,278
General and administrative expenses		26,120		24,423
Research and development expenses		36,109		28,228
Total operating expenses		79,139		70,929
Operating income		7,951		5,518
Other income, net		5,782		6,668
Interest expense		(1,450)		(1,437)
Financial income/(expense), net		10,753		(2,350)
Income before income tax expenses and equity in earnings of affiliated companies		23,036		8,399
Less: Income taxes		3,082		4,004
Add: Equity in earnings of affiliated companies		2,389		6,331
Net income		22,343		10,726
Net income/(loss) attributable to non-controlling interest		1,132		(352)
Accretion to redemption value of redeemable non-controlling interests		(30)		(28)
Net income attributable to parent company’s common shareholders		21,181		11,050

Net income attributable to parent company’s common shareholders per share -
Basic	$	0.69	$	0.36

Diluted	$	0.69	$	0.36

Weighted average number of common shares outstanding -
Basic		30,639,102		30,851,776
Diluted		30,641,274		30,855,431

The accompanying notes are an integral part of these consolidated financial statements.

66 | Page

China Automotive Systems, Inc. and Subsidiaries

Consolidated Statements of Comprehensive Income or Loss

(In thousands of USD unless otherwise indicated)


	Year Ended December 31,
	2022		2021
Net income		22,343		10,726
Other comprehensive income:
Foreign currency translation (loss)/gain		(29,934)		7,784
Comprehensive (loss)/income		(7,591)		18,510
Comprehensive (loss)/income attributable to non-controlling interest		(672)		128
Accretion to redemption value of redeemable non-controlling interest		(30)		(28)
Comprehensive (loss)/income attributable to parent company	$	(6,949)	$	18,354

The accompanying notes are an integral part of these consolidated financial statements.

67 | Page

China Automotive Systems, Inc. and Subsidiaries

Consolidated Statements of Changes in Stockholders’ Equity

(In thousands of USD, except share and per share amounts)


	2022		2021
Common Stock
Balance at January 1, 2022 and 2021 - 32,338,302 and 32,338,302 shares, respectively	$	3	$	3
Balance at December 31, 2022 and 2021 - 32,338,302 and 32,338,302 shares, respectively	$	3	$	3

Additional Paid-in Capital
Balance at January 1	$	63,731	$	64,273
Share-based compensation		—		88
Acquisition of the non-controlling interest in Wuhu		—		(630)
Balance at December 31	$	63,731	$	63,731

Retained Earnings - Appropriated
Balance at January 1	$	11,481	$	11,303
Appropriation of retained earnings		370		178
Balance at December 31	$	11,851	$	11,481

Unappropriated
Balance at January 1	$	226,363	$	215,491
Net income attributable to parent company		21,211		11,078
Accretion of redeemable non-controlling interests		(30)		(28)
Appropriation of retained earnings		(370)		(178)
Balance at December 31	$	247,174	$	226,363

Accumulated Other Comprehensive (Loss)/Income
Balance at January 1	$	24,717	$	17,413
Net foreign currency translation adjustment attributable to parent company		(28,130)		7,304
Balance at December 31	$	(3,413)	$	24,717

Treasury Stock
Balance at January 1, 2022 and 2021 – 1,486,526 and 1,486,526 shares, respectively	$	(5,261)	$	(5,261)
Repurchase of common stock in 2022 and 2021 – 666,074 and nil shares, respectively		(2,434)		—
Balance at December 31, 2022 and 2021 – 2,152,600 and 1,486,526 shares, respectively	$	(7,695)	$	(5,261)

Total parent company stockholders’ equity	$	311,651	$	321,034

Non-controlling Interest
Balance at January 1	$	15,854	$	16,170
Net foreign currency translation adjustment attributable to non-controlling interest		(1,804)		480
Net income/(loss) attributable to non-controlling interest		1,132		(352)
Acquisition of the non-controlling interest in Wuhu		—		(444)
Balance at December 31	$	15,182	$	15,854

Total stockholders’ equity	$	326,833	$	336,888

The accompanying notes are an integral part of these consolidated financial statements.

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China Automotive Systems, Inc. and Subsidiaries

Consolidated Statements of Cash Flows

(In thousands of USD unless otherwise indicated)


	Year Ended December 31,
	2022		2021
Cash flows from operating activities:
Net income	$	22,343	$	10,726
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation		—		88
Depreciation and amortization		25,173		27,113
Deferred income taxes		1,243		4,020
Allowance for credit losses		4,404		2,738
Impairment loss on prepayment for investment in Hefei Senye(See Note 10)		2,676		—
Equity in earnings of affiliates		(2,389)		(6,331)
Government subsidy reclassified from advances payable		—		(1,253)
Loss on disposal of fixed assets		58		389
(Increase)/decrease in:
Accounts and notes receivable		(36,935)		26,560
Advance payments and others		(41)		1,439
Inventories		(5,368)		(25,684)
Increase/(decrease) in:
Accounts and notes payable		27,271		(2,801)
Customer deposits		3,580		870
Accrued payroll and related costs		1,628		(2,721)
Accrued expenses and other payables		1,158		(4,081)
Taxes payable		2,925		(4,501)
Advances payable		297		1,700
Net cash provided by operating activities		48,023		28,271

Cash flows from investing activities:
Purchase of short-term investments and long-term time deposits		(80,244)		(63,478)
Proceeds from maturities of short-term investments		75,144		69,351
Decrease/(increase) in demand loans and employee housing loans included in other receivables		292		(171)
Loan to a related party		(146)		—
Repayment of loan from a related party		—		154
Cash received from property, plant and equipment sales		1,514		150
Cash paid to acquire property, plant and equipment (including $ 3,445 and $1,965 paid to related parties for the years ended December 31, 2022 and 2021, respectively)		(20,296)		(9,260)
Cash paid to acquire intangible assets		(188)		(642)
Cash received from long-term investment		3,986		20,621
Investment under equity method		(12,802)		(308)
Cash prepaid for investment under equity method		—		(13,454)
Net cash provided by/(used in) investing activities		(32,740)		2,963

Cash flows from financing activities:
Proceeds from bank loans		51,898		53,209
Repayment of bank loans and government loans		(49,917)		(50,803)
Repurchase of common shares		(2,434)		—
Repayments of the borrowing under sale and leaseback transaction		(1,130)		(4,450)
Acquisition of non-controlling interest		—		(1,075)
Net cash used in financing activities		(1,583)		(3,119)

Cash and cash equivalents affected by foreign currency		(14,248)		3,323
Net increase in cash and cash equivalents		(548)		31,438
Cash, cash equivalents and pledged cash at beginning of year		159,499		128,061
Cash, cash equivalents and pledged cash at end of year	$	158,951	$	159,499

The accompanying notes are an integral part of these consolidated financial statements.

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China Automotive Systems, Inc. and Subsidiaries

Consolidated Statements of Cash Flows (continued)

(In thousands of USD unless otherwise indicated)

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:


	Year Ended December 31,
	2022		2021
Cash paid for interest	$	1,492	$	1,843
Cash paid for income taxes	$	4,044	$	3,398

SUPPLEMENTAL DISCLOSURE OF NON-CASH ACTIVITIES:

Non-cash investing activities:


	Year Ended December 31,
	2022		2021
Property, plant and equipment recorded during the year which previously were advance payments	$	2,473	$	8,543
Change in accounts payable for acquiring property, plant and equipment	$	985	$	1,510


	Year Ended December 31,
	2022	2021
Supplemental disclosure of acquisition of operating lease assets	477	$	—

The accompanying notes are an integral part of these consolidated financial statements

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China Automotive Systems, Inc. and Subsidiaries

Notes to Consolidated Financial Statements

1.	Organization and Business

China Automotive Systems, Inc., “China Automotive,” was incorporated in the State of Delaware on June 29, 1999 under the name of Visions-In-Glass, Inc. China Automotive, including, when the context so requires, its subsidiaries, is referred to herein as the “Company.” The Company is primarily engaged in the manufacture and sale of automotive systems and components, as described below.

Great Genesis Holdings Limited, a company incorporated on January 3, 2003 under the Companies Ordinance of Hong Kong as a limited liability company, “Genesis,” is a wholly-owned subsidiary of the Company.

Henglong USA Corporation, “HLUSA,” which was incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after-sales service and research and development (“R&D”) support.

The Company owns interests in the following subsidiaries incorporated in the PRC and Brazil as of December 31, 2022 and 2021.


	Percentage Interest
	December 31,		December 31,
Name of Entity	2022		2021
Shashi Jiulong Power Steering Gears Co., Ltd., “Jiulong” ¹	100.00	%	100.00	%
Jingzhou Henglong Automotive Parts Co., Ltd., “Henglong” ²	100.00	%	100.00	%
Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., “Shenyang” ³	70.00	%	70.00	%
Wuhan Jielong Electric Power Steering Co., Ltd., “Jielong” ⁴	85.00	%	85.00	%
Wuhu Henglong Automotive Steering System Co., Ltd., “Wuhu”⁵	100.00	%	100.00	%
Hubei Henglong Automotive System Group Co., Ltd., “Hubei Henglong” ⁶	100.00	%	100.00	%
Jingzhou Henglong Automotive Technology (Testing) Center, “Testing Center” ⁷	100.00	%	100.00	%
Chongqing Henglong Hongyan Automotive System Co., Ltd., “Chongqing Henglong” ⁸	70.00	%	70.00	%
CAAS Brazil’s Imports and Trade In Automotive Parts Ltd., “Brazil Henglong” ⁹	95.84	%	95.84	%
Wuhan Chuguanjie Automotive Science and Technology Ltd., “Wuhan Chuguanjie” ¹⁰	85.00	%	85.00	%
Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong” ¹¹	100.00	%	100.00	%
Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., “Jingzhou Qingyan”¹²	—		60.00	%
Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., “Henglong KYB”¹³	66.60	%	66.60	%
Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., “Wuhan Hyoseong”¹⁴	51.00	%	51.00	%
Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun”¹⁵	62.00	%	62.00	%
Changchun Hualong Automotive Technology Co., Ltd., “Changchun Hualong” ¹⁶	100.00	%	100.00	%

1.	Jiulong was established in 1993 and mainly engages in the production of integral power steering gears for heavy-duty vehicles.

2.	Henglong was established in 1997 and mainly engages in the production of rack and pinion power steering gears for cars and light duty vehicles.

3.	Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles.

4.	Jielong was established in 2006 and mainly engages in the production and sales of automobile steering columns.

71 | Page

Wuhu was established in 2006 and mainly engages in the production and sales of automobile steering systems. In April 2021, the Company obtained an additional 22.67% equity interest in Wuhu for total consideration of RMB 6.9 million, equivalent to approximately $1.1 million, from the other shareholder. The Company retained its controlling interest in Wuhu and the acquisition of the non-controlling interest was accounted for as an equity transaction.

7.	In December 2009, Henglong, a subsidiary of Genesis, formed the Testing Center, which mainly engages in the research and development of new products.

8.	On February 21, 2012, Hubei Henglong and SAIC-IVECO Hongyan Company, “SAIC-IVECO,” established a Sino-foreign joint venture company, Chongqing Henglong, to design, develop and manufacture both hydraulic and electric power steering systems and parts.

On August 21, 2012, Brazil Henglong was established as a Sino-foreign joint venture company by Hubei Henglong and two Brazilian citizens, Ozias Gaia Da Silva and Ademir Dal’ Evedove. Brazil Henglong engages mainly in the import and sales of automotive parts in Brazil. In May 2017, the Company obtained an additional 15.84% equity interest in Brazil Henglong for nil consideration. The Company retained its controlling interest in Brazil Henglong and the acquisition of the non-controlling interest was accounted for as an equity transaction.

10.

11.	In January 2015, Hubei Henglong formed Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong”, which mainly engages in the design and sale of automotive electronics.

12.

In November 2017, Hubei Henglong formed Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., “Jingzhou Qingyan”, which mainly engages in the research and development of intelligent automotive technology. Jingzhou Qingyan deregistered from the local business administration on June 22, 2022.

13.

14.

15.	In December 2019, Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun”, which mainly engages in the development, manufacturing and sale of high polymer materials. Hubei Henglong owns 62.0% of the shares of Wuhu Hongrun and has consolidated it since its establishment.

16.

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2.	Basis of Presentation and Significant Accounting Policies

Basis of Presentation - For the years ended December 31, 2022 and 2021, the consolidated financial statements include the accounts of the Company and its subsidiaries, which are described in Note 1. Significant inter-company balances and transactions have been eliminated upon consolidation. The consolidated financial statements have been prepared in accordance with generally accepted accounting principles in the United States of America.

Shenyang was formed in 2002, with 70% owned and controlled by the Company, and 30% owned by Shenyang Automotive Industry Investment Corporation, “JB Investment.” The highest authority of Shenyang is its board of directors, which is comprised of seven directors, four of whom, 57%, are appointed by the Company, and three of whom, 43%, are appointed by JB Investment. As for day-to-day operating matters, approval by more than two-thirds of the members of such board of directors, 67%, is required. The chairman of such board of directors is appointed by the Company. In March 2003, the Company and Jinbei entered into an act-in-concert agreement, under which the directors appointed by Jinbei agree to act in concert with the directors appointed by the Company. As a result, the Company obtained control of Shenyang in March 2003. The general manager of Shenyang is appointed by the Company.

Jielong was formed in April 2006. On December 31, 2022, 85% of Jielong was owned by the Company, and 15% of Jielong was owned by Hubei Wanlong. The highest authority of Jielong is its board of directors, which is comprised of three directors, two of whom, 67%, are appointed by the Company, and one of whom, 33%, is appointed by Hubei Wanlong. As for day-to-day operating matters, approval by at least two-thirds of the members of such board of directors is required. Both the chairman of such board of directors and the general manager of Jielong are appointed by the Company.

Chongqing Henglong was formed in 2012, with 70% owned by the Company and 30% owned by SAIC-IVECO. The highest authority of the Chongqing Henglong is its board of directors, which is comprised of five directors, three of whom, 60%, are appointed by the Company, and two of whom, 40%, are appointed by SAIC-IVECO. As for day-to-day operating matters, approval by at least two-thirds of the members of such board of directors is required. In February 2012, the Company and SAIC-IVECO entered into an “Act in Concert” agreement. According to the agreement, the directors appointed by SAIC-IVECO agreed to execute the “Act in Concert” agreement with the directors designated by the Company, resulting in the Company having voting control of Chongqing Henglong. The chairman of such board of directors and the general manager of Chongqing Henglong are both appointed by the Company.

Brazil Henglong was formed in 2012, with 80% owned by the Company and 20% owned by Mr. Ozias Gaia Da Silva and Mr. Ademir Dal’ Evedove. In May 2017, the Company obtained an additional 15.84% equity interest in Brazil Henglong for nil consideration. The Company retained its controlling interest in Brazil Henglong and the acquisition of the non-controlling interest was accounted for as an equity transaction. After the acquisition, the Company owns 95.84% of Brazil Henglong’s shares. The highest authority of Brazil Henglong is its board of directors. In making operational decision, approval by voting rights representing at least 3/4 of the capital, 75%, is required and 95.84% of voting rights were owned by the Company. The chairman of such board of directors is appointed by the Company. The general manager is Mr. Ozias Gaia Da Silva.

Wuhan Chuguanjie was formed in 2014, with 85% owned by the Company and 15% owned by Hubei Wanlong. The highest authority of Wuhan Chuguanjie is its board of directors, which is comprised of three directors, two of whom, 67%, are appointed by the Company, and one of whom, 33%, is appointed by Hubei Wanlong. As for day-to-day operating matters, approval by at least two-thirds of the members of such board of directors is required. Both of the chairman of such board of directors and the general manager of Chuguanjie are appointed by the Company.

Henglong KYB was formed in 2018, with 66.60% owned by the Company and 33.40% owned by KYB. The highest authority of Henglong KYB is its board of directors, which is comprised of five directors, three of whom are appointed by the Company, and two of whom are appointed by KYB. As for day-to-day operating matters, approval by at least three-fifths of the members of such board of directors is required. The chairman of such board of directors is appointed by the Company and the general manager is appointed by KYB.

Wuhan Hyoseong was formed in 2019, with 51% owned by the Company and 49% owned by Hyoseong. The highest authority of Wuhan Hyoseong is its board of directors, which is comprised of five directors, three of whom are appointed by the Company, and two of whom are appointed by Hyoseong. As for day-to-day operating matters, approval by at least three-fifths of the members of such board of directors is required. The chairman of such board of directors is appointed by the Company and the vice chairman is appointed by Wuhan Hyoseong.

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Wuhu Hongrun was formed in 2019, with 62% owned by the Company and 38% owned by the other two parties. The highest authority of Wuhu Hongrun is its board of directors, which is comprised of five directors. The directors are elected by the general meeting of shareholders. As for day-to-day operating matters, approval by at least three-fifths of the members of such board of directors is required. The chairman and the general management are appointed by the board of directors.

Use of Estimates - The preparation of consolidated financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the dates of the financial statements, and the reported amounts of revenues and expenses during the reporting periods. The Company is of the opinion that the significant estimates related to valuation of long term assets and investment, the realizable value of accounts receivable and inventories, the accrual of warranty obligations and the recoverability of deferred tax assets. Actual results could differ from those estimates.

Cash and Cash Equivalents - Cash and cash equivalents include all highly-liquid investments with an original maturity of three months or less at the date of purchase.

Pledged Cash - Pledged as collateral for the Company’s notes payable and restricted to use. The Company regularly pays some of its suppliers by bank notes. The Company has to deposit a cash deposit, equivalent to 40%-100% of the face value of the relevant bank note, in order to obtain the bank note.

Short-term Investments - Short-term investments are comprised of time deposits with original terms of three months to one year and wealth management financial products maturing within one year. The carrying values of time deposits approximate fair value because of their short-term maturities. The interest earned is recognized in the consolidated statements of income or loss over the contractual term of the deposits. The wealth management financial products are measured at fair value and classified as Level 3 within the fair value measurement hierarchy. Changes in the fair value are reflected in other income in the consolidated statements of income or loss.

Current Expected Credit Losses - The company adopted ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments” (“ASC Topic 326”) and other related ASUs. The Company’s accounts and notes receivable, advance payments and other receivables are within the scope of ASC Topic 326. The Company has identified the relevant risk characteristics of its customers and the related receivables, and other receivables which include type of the products the Company provides, nature of the customers or a combination of these characteristics. Receivables with similar risk characteristics have been grouped into pools. For each pool, the Company considers the historical credit loss experience, current economic conditions, supportable forecasts of future economic conditions, and any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the expected credit loss analysis include customer demographics, payment terms offered in the normal course of business to customers, and industry-specific factors that could impact the Company’s receivables. Additionally, external data and macroeconomic factors are also considered.

For the year ended December 31, 2022 and 2021, the Company recorded $4.5 million and $2.7 million expected credit loss expense in general and administrative expenses, respectively. As of December 31, 2022, the expected credit loss provision for the current and non-current assets were $16.2 million and nil, respectively.

Inventories - Inventories are stated at the lower of cost and net realizable value. Cost is calculated on the moving-average basis and includes all costs to acquire and other costs to bring the inventories to their present location and condition. The Company evaluates the net realizable value of its inventories on a regular basis and records a provision for loss to reduce the computed moving-average cost if it exceeds the net realizable value.

Advance Payments - These amounts represent advances to acquire various assets to be utilized in the future in the Company’s normal business operations, such as machine equipment, raw materials and technology. Such amounts are paid according to their respective contract terms. Advance payment for machinery and equipment is classified as advance payment for property, plant and equipment in the consolidated balance sheet and advance payment of raw materials and technology are classified as advance payments and others in the consolidated balance sheet.

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Property, Plant and Equipment – Property, plant and equipment are stated at cost. Major renewals and improvements are capitalized; minor replacements and maintenance and repairs are charged to operations. Depreciation is calculated on the straight-line method over the estimated useful lives of the respective assets as follows:


Category		Estimated Useful Life (Years)
Buildings		25
Machinery and equipment		6
Electronic equipment		4
Motor vehicles		8

Land use rights - Land use rights represent acquisition costs to purchase land use rights from the PRC government, which are evidenced by property certificates. The periods of these purchased land use rights are either 45 years or 50 years. The Company classifies land use rights as long-term assets on the balance sheet and cash outflows related to acquisition of land use rights as investing activities.

Land use rights are carried at cost less accumulated amortization and impairment losses, if any. Amortization is computed using the straight-line method over the term specified in the land use right certificate for 45 years or 50 years, as applicable. Amortization expenses of land use rights were $0.3 million and $0.3 million for the years ended December 31, 2022 and 2021, respectively.

As of December 31, 2022 and 2021, the Company had pledged land use rights with a net book value of approximately $5.1 million and $5.7 million, respectively, as security for its comprehensive credit facilities with banks in China.

Construction in Progress – Construction in progress, which represents buildings under construction and plant and equipment pending installation, are stated at cost. Cost includes construction and acquisitions, and interest charges arising from borrowings used to finance assets during the period of construction or installation and testing. No provision for depreciation is made on assets under construction until such time as the relevant assets are completed and ready for their intended commercial use.

Gains or losses on disposal of property, plant and equipment are determined as the difference between the net disposal proceeds and the carrying amount of the relevant asset, and are recognized in the consolidated statements of income or loss on the date of disposal.

Interest Costs Capitalized - Interest costs incurred in connection with borrowings for the acquisition, construction or installation of property, plant and equipment are capitalized and depreciated as part of the asset’s total cost when the respective asset is placed into service. Interest costs capitalized for the years ended December 31, 2022 and 2021, were $0.2 million and $0.5 million, respectively.

Intangible Assets - Intangible assets, representing patents and technical know-how acquired, are stated at cost less accumulated amortization and impairment losses. Amortization is calculated on the straight-line method over the estimated useful life of 5 to 15 years.

Long-Lived Assets - The Company has adopted the provisions of ASC Topic 360, “Accounting for the Impairment or Disposal of Long-Lived Assets.” Property, plant and equipment and definite life intangible assets are reviewed periodically for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be fully recoverable. If required, an impairment loss is recognized as the difference between the carrying value and the fair value of the assets.

In assessing long-lived assets for impairment, management considered the Company’s product line portfolio, customers and related commercial agreements, and other factors in grouping assets and liabilities at the lowest level for which identifiable cash flows are largely independent. The Company considers projected future undiscounted cash flows, trends and other factors in its assessment of whether impairment conditions exist. Whilst the Company believes that its estimates of future cash flows are reasonable, different assumptions regarding such factors as future automotive production volumes, customer pricing, economics and productivity and cost saving initiatives, could significantly affect its estimates. In determining fair value of long-lived assets, management uses appraisals, management estimates or discounted cash flow calculations.

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Long-term Investments – The Company’s long-term investments include investments in corporations and investments in limited partnerships. Investments in corporations which the Company has the ability to exert significant influence are accounted for using the equity method. Investments in limited partnerships which the Company has more than virtually no influence are accounted for using the equity method. The limited partnerships accounted for its investments at fair value that were classified under Level 1, in the fair value hierarchy , for those whose shares were listed and actively traded on stock exchange. The fair value of the limited partnerships’ Level 2 investments were determined using recent market price or buy-back price. The fair value of the limited partnerships’ Level 3 investments were determined using valuation techniques based on market approach or income approach with unobservable inputs, which required significant judgment made by management with respect to the assumptions and estimates. For the investments made close to the period end, their initial investment amount were deemed approximate to their fair value. As of December 31, 2022, certain investments funds are approaching the end of their investment term and actively sought for exit with their investees or potential buyers. The investments in limited partnerships were accounted for substantially under Level 1 or Level 2 as at December 31, 2022.

The Company continually reviews its investment to determine whether a decline in fair value below the carrying value is other than temporary. The primary factors the Company considers in its determination are the length of time that the fair value of the investment is below the Company’s carrying value and the financial condition, operating performance and near-term prospects of the investee. In addition, the Company considers the reason for the decline in fair value, including general market conditions, industry-specific or investee-specific reasons, changes in valuation subsequent to the balance sheet date and the Company’s intent and ability to hold the investment for a period of time sufficient to allow for a recovery in fair value. If the decline in fair value is deemed to be other than temporary, the carrying value of the security is written down to fair value.

Revenue Recognition - The Company has adopted ASC Topic 606 “Revenue from Contracts with Customers”. Products sales to customers are made pursuant to master agreements entered into between the Company and its customers that provide for transfer of both title and risk of loss upon the Company’s delivery to the location specified in the contracts. The Company’s sales arrangements generally do not contain variable considerations and are short-term in nature. A period of credit term is granted to the customers after the delivery and before making payment. The Company recognizes revenue at a point in time based on management’s evaluation of when the customer obtains control of the products. Revenue is recognized when all performance obligations under the terms of a contract with the customer are satisfied and control of the product has been transferred to the customer. Sales of goods do not include multiple product and/or service elements.

Revenue is measured as the amount of consideration management expects the Company to receive in exchange for transferring goods pursuant to the contracts. Value-added tax that the Company collects concurrent with revenue-producing activities is excluded from revenue. Incidental contract costs that are not material in the context of the delivery of goods and services are recognized as expense.

At the time revenue is recognized, allowances are recorded, with the related reduction to revenue, for estimated price discounts based upon historical experience and related terms of customer arrangements. Where the Company has offered product warranties, the Company also establishes liabilities for estimated warranty costs based upon historical experience and specific warranty provisions. Warranty liabilities are adjusted when experience indicates the expected outcome will differ from initial estimates of the liability.

The Company accounts for shipping and handling fees as a fulfillment cost since control of the products is usually transferred to the customer after the delivery.

Revenue Disaggregation

Revenue disaggregation under the segment reporting standard is measured on the same basis as under the revenue standard. Management has concluded that the disaggregation level is the same under both the revenue standard and the segment reporting standard, and does not repeat the disaggregation of revenue under both standards.

Contract Assets and Liabilities

Contract assets, such as costs to obtain or fulfill contracts, are an insignificant component of the Company’s revenue recognition process. The majority of the Company’s cost of fulfillment as a manufacturer of products is classified as inventory, fixed assets and intangible assets, which are accounted for under the respective guidance for those asset types. Other costs of contract fulfillment are immaterial due to the nature of the Company’s products and their respective manufacturing processes.

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Contract liabilities are mainly customer deposits.

Customer Deposits

As of December 31, 2022 and 2021, the Company has customer deposits of $5.7 million and $2.4 million , respectively. During the year ended December 31, 2022, $10.2 million was received and $6.9 million (including $2.4 million from the beginning balance of customer deposits) was recognized as net product sales revenue. During the year ended December 31, 2021, $7.2 million was received and $6.3 million (including $1.5 million from the beginning balance of customer deposits) was recognized as net product sales revenue. Customer deposits represent non-refundable cash deposits for customers to secure rights to an amount of products produced by the Company under supply agreements. When the products are shipped to customers, the Company will recognize revenue and bill the customers to reduce the amount of the customer deposit liability.

Practical Expedient and Exemptions

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

The Company does not adjust the promised amount of consideration for the effects of a significant financing component since the Company expects, at contract inception, that the period between when the Company transfers promised goods to the customers and when the customers pay for the goods will be less than one year.

Government Subsidies - The Company’s PRC based subsidiaries received government subsidies according to related policy from local government. For the subsidies for which the Chinese government has specified their purpose, such as product development and renewal of production facilities, the Company recorded specific purpose subsidies as advances payable when received. Upon government acceptance of the related project development or assets acquisition, the specific purpose subsidies are recognized to reduce related R&D expenses or cost of acquired assets. The Company recognized the subsidies that do not have specific purpose as other income upon receipt.

Sales Taxes - The Company is subject to value added tax, “VAT.” The applicable VAT tax rate is 13% for products sold in the PRC. Products exported overseas are exempted from VAT. The amount of VAT liability is determined by applying the applicable tax rate to the invoiced amount of goods sold less VAT paid on purchases made with the relevant supporting invoices. VAT is collected from customers by the Company on behalf of the PRC tax authorities and is therefore not charged to the consolidated statements of income or loss.

Uncertain Tax Positions - In order to assess uncertain tax positions, the Company applies a more likely than not threshold and a two-step approach for tax position measurement and financial statement recognition. For the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement. As of December 31, 2022 and 2021, the Company has no uncertain tax positions.

Product Warranties - The Company provides for the estimated cost of product warranties when the products are sold. Such estimates of product warranties were based on, among other things, historical experience, product changes, material expenses, service and transportation expenses arising from the manufactured product. Estimates will be adjusted on the basis of actual claims and circumstances.

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For the years ended December 31, 2022 and 2021, the warranties activities were as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at the beginning of year	$	36,572	$	36,215
Additions during the year		10,941		13,917
Settlement within the year		(11,877)		(14,427)
Foreign currency translation loss		(3,201)		867
Balance at end of year	$	32,435	$	36,572

Pension - Most of the operations and employees of the Company are located in China. The Company records pension costs and various employment benefits in accordance with the relevant Chinese social security laws, which is approximately at a total of 35% and 35% of base salary for the years ended December 31, 2022 and 2021, respectively. Base salary levels are the average salary determined by the local governments. For employees in overseas countries (mainly U.S. and Brazil), the Company records pension costs and various employment benefits in accordance with the relevant overseas social security regulations, which is approximately at a total of 26% and 26% of base salary for the years ended December 31, 2022 and 2021, respectively.

Concentration of Credit Risk - Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of trade accounts receivable.

In 2022, the Company’s five largest customers accounted for 42.8% of the Company’s consolidated sales, with one customer accounting for more than 10% of consolidated sales (i.e., 20.2% of consolidated sales, which comprised a total of $106.9 million in sales included in the Hubei Henglong segment (Note 27)).

In 2021, the Company’s five largest customers accounted for 44.8% of the Company’s consolidated sales, with one customer accounting for more than 10% of consolidated sales (i.e., 21.2% of consolidated sales, which comprised a total of $105.6 million in sales included in the Hubei Henglong segment (Note 27)).

At December 31, 2022 and 2021, approximately 8.0% and 7.7% of accounts receivable were from trade transactions with the aforementioned customer (accounting for more than 10% of consolidated sales).

The Company performs ongoing credit evaluations with respect to the financial condition of its debtors, but does not require collateral. It records a provision for doubtful accounts to cover probable credit losses. Management reviews and adjusts this allowance periodically based on historical experience, current economic conditions, supportable forecasts of future economic conditions and other factors for evaluation of the collectability of outstanding accounts receivable.

Income Taxes - Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the relevant tax jurisdictions. The Company accounts for income taxes using the asset and liability method. Under this method, deferred tax assets and liabilities are recognized for the future tax consequences, which is attributable to operating loss and tax credit carryforwards and for differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, by applying enacted statutory rates applicable to future years. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes. The effect on deferred taxes of a change in tax rates is recognized in income in the period enacted. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than not that some portion of, or all of, the deferred tax assets will not be realized. The valuation allowance is based on management’s estimates of future taxable profits and application of relevant income tax law. The Company applies ASC 740, “Income Taxes”, which clarifies the accounting for uncertainty in income taxes recognized in the Company’s consolidated financial statements and prescribes a more likely than not threshold for financial statement recognition and measurement of a tax position taken or expected to be taken in a tax return. It also provides guidance on derecognition of income tax assets and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures.

If the amount of the Company’s taxable income or income tax liability is a determinant of the amount of a grant, the grant is treated as a reduction of the income tax provision in the year the grant is realized.

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Gain on other sales - Gain on other sales mainly consists of rental income, gain on disposal of intangible assets and property, plant and equipment and technical services revenue.

Research and Development Costs - Research and development costs are expensed as incurred.

Advertising, Shipping and Handling Costs – Advertising, shipping and handling costs are expensed as incurred and recorded in selling expenses. Shipping and handling costs relating to sales of $6.5 million and $9.9 million were included in selling expenses for the years ended December 31, 2022 and 2021, respectively.

Leases – The Company adopted ASU 2016-02, Leases, and other related ASUs (collectively, “ASC 842”). The Company determines if an arrangement is a lease upon inception. A contract is or contains a lease if the contract conveys the right to control the use of an identified asset for a period of time in exchange for consideration. The right to control the use of an asset includes the right to obtain substantially all of the economic benefits of the underlying asset and the right to direct how and for what purpose the asset is used. The Company’s major plants and buildings are self-owned and limited temporary small offices were rented. For leases with a term of 12 months or less, the Company makes an accounting policy election by class of underlying asset not to recognize lease assets and lease liabilities. The Company recognizes lease expenses for such leases on a straight-line basis over the lease term. Operating lease assets and liabilities are recognized at commencement date based on the present value of lease payments over the lease term. The discount rate used to calculate present value is the Company’s incremental borrowing rate or, if available, the rate implicit in the lease. The Company determines the incremental borrowing rate for each lease based primarily on the lease term and the economic environment of the applicable country or region. The discount rate used by the Company for its operating lease was 4.75%. As of December 31, 2022, the weighted average remaining lease term was 2.3 years. The Company did not have finance lease arrangements as of December 31, 2022.

Income Per Share - Basic income per share is computed by dividing net income attributable to ordinary shareholders by the weighted average number of ordinary shares outstanding during the period using the two-class method. Under the two-class method, net income is allocated between ordinary shares and other participating securities, including convertible note holders, if any, based on their participating rights. Diluted income per share is calculated by dividing net income attributable to ordinary shareholders, as adjusted for the effects on income of participating securities as if they were dilutive ordinary shares, if any, by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the period. Ordinary equivalent shares consist of ordinary shares issuable upon the conversion of the convertible notes using the if-converted method, and shares issuable upon the exercise of stock options and warrants for the purchase of ordinary shares using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted earnings per share calculation when inclusion of such shares would be antidilutive.

Comprehensive Income – ASC Topic 220 establishes standards for the reporting and display of comprehensive income, its components and accumulated balances in a full set of general purpose financial statements. ASC Topic 220 defines comprehensive income to include all changes in equity except those resulting from investments by owners and distributions to owners, including adjustments to minimum pension liabilities, accumulated foreign currency translation, and unrealized gains or losses on marketable securities.

Fair Value Measurements – For purposes of fair value measurements, the Company applies the applicable provisions of ASC 820 “Fair Value Measurements and Disclosures.” Accordingly, fair value for the Company’s financial accounting and reporting purposes represents the estimated price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the designated measurement date. With an objective to increase consistency and comparability in fair value measurements and related disclosures, the Financial Accounting Standard Board established the fair value hierarchy which prioritizes the inputs to valuation techniques used to measure fair value into three broad levels.

Level 1 Inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date. An active market for the asset or liability is a market in which transactions for the asset or liability occur with sufficient frequency and volume to provide pricing information on an ongoing basis. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available. As at December 31, 2022 and 2021, marketable securities with nil and $0.1 million, respectively, were classified as Level 1.

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Level 2 Inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. If the asset or liability has a specified (contractual) term, a Level 2 input must be observable for substantially the full term of the asset or liability. As at December 31, 2022 and 2021, the Company did not have any fair value assets and liabilities classified as Level 2.

Level 3 Inputs are unobservable inputs for the asset or liability. Unobservable inputs are used to measure fair value to the extent that observable inputs are not available, thereby allowing for situations in which there is little, if any, market activity for the asset or liability at the measurement date. However, the fair value measurement objective remains the same, that is, an exit price from the perspective of a market participant that holds the asset or owes the liability. Therefore, unobservable inputs shall reflect the reporting entity’s own assumptions about the assumptions that market participants would use in pricing the asset or liability (including assumptions about risk). As at December 31, 2022 and 2021, wealth management financial products with amounts of $12.9 million and $1.7 million, respectively, were classified as Level 3.

The Company’s financial instruments consist principally of cash and cash equivalents, pledged cash, time deposits, accounts and notes receivable, accounts and notes payable, advance payment or payable, other receivable or payable, accrued expenses and bank loans. As of December 31, 2022 and 2021, the respective carrying values of all financial instruments approximated fair value because any changes in fair value, after considering the discount rate, are immaterial.

Segment Reporting - Based on the criteria established by ASC 280 “Segment Reporting,” the Company currently operates and manages its business by product sectors and each of them is a reportable segment. The Company’s chief operating decision-maker (“CODM”) is the chief executive officer. The CODM reviews operating results to make decisions about allocating resources for the Company and assessing performance of its segments. Since most of the revenue generated of the Company and assets held by the Company are in PRC while others are generated and held in other countries, information by geographic region is also presented.

Stock-Based Compensation - The Company may issue stock options to employees and stock options or warrants to non-employees in non-capital raising transactions for services and for financing costs. The Company has adopted ASC Topic 718, “Accounting for Stock-Based Compensation,” which establishes a fair value based method of accounting for stock-based compensation plans. In accordance with ASC Topic 718, the cost of stock options and warrants issued to employees and non-employees is measured on the grant date based on the fair value. The fair value is determined using the Black-Scholes option pricing model. The resulting amount is charged to expense on the straight-line basis over the period in which the Company expects to receive the benefit, which is generally the vesting period.

Foreign Currencies - China Automotive, the parent company, and HLUSA maintain their books and records in United States Dollars, “USD,” which is their functional currency. The Company’s subsidiaries based in the PRC and Genesis maintain their books and records in Renminbi, “RMB,” which is their functional currency. The Company’s subsidiary based in Brazil maintains its books and records in Brazilian reais, “BRL,” which is its functional currency. In accordance with ASC Topic 830, “FASB Accounting Standards Codification”, foreign currency transactions denominated in currencies other than the functional currency are remeasured into the functional currency at the rate of exchange prevailing at the balance sheet date for monetary items. Nonmonetary items are remeasured at historical rates. Income and expenses are remeasured at the rate in effect on the transaction dates. Transaction gains and losses, if any, are included in the determination of net income for the period.

In translating the financial statements of the Company’s China and Brazil subsidiaries and Genesis from their functional currency into the Company’s reporting currency of United States dollars, balance sheet accounts are translated using the closing exchange rate in effect at the balance sheet date and income and expense accounts are translated using an average exchange rate prevailing during the reporting period. Adjustments resulting from the translation, if any, are included in cumulative other comprehensive income (loss) in stockholders’ equity.

Certain Relationships and Related Transactions

The following are the related parties of the Company. The Company or the major shareholders of the Company directly or indirectly have interests in these related parties:

●

Wiselink Holding Limited, “Wiselink”

●

Xiamen Joylon Co., Ltd., “ Xiamen Joylon ”

●

Shanghai Tianxiang Automotive Parts Co., Ltd., “ Shanghai Tianxiang ”

80 | Page

●

Jiangling Tongchuang Machining Co., Ltd., “ Jiangling Tongchuang ”

●

Shanghai Hongxi Investment Inc, “ Hongxi ”

●

Hubei Wiselink Equipment Manufacturing Co., Ltd., “ Hubei Wiselink ”

●

Jingzhou Derun Agricultural S&T Development Co., Ltd., “ Jingzhou Derun ”

●

Jingzhou Tongying Alloys Materials Co., Ltd., “ Jingzhou Tongying ”

●

Wuhan Dida Information S&T Development Co., Ltd., “ Wuhan Dida ”

●

Hubei Wanlong Investment Co., Ltd., “ Hubei Wanlong ”

●

Jingzhou Yude Machining Co., Ltd., “ Jingzhou Yude ”

●

Honghu Changrun Automotive Parts Co., Ltd., “ Honghu Changrun ”

●

Jingzhou Henglong Real Estate Co., Ltd., “ Henglong Real Estate ”

●

Xiamen Joylon Automotive Parts Co., Ltd., “Xiamen Automotive Parts ”

●

Jingzhou Jiulong Material Co., Ltd., “ Jiulong Material ”

●

Wuhan Tongkai Automobile Motor Co., Ltd., “ Wuhan Tongkai ”

●

Jingzhou Natural Astaxanthin Inc, “Jingzhou Astaxanthin”

●

Hubei Asta Biotech Inc., “Hubei Asta”

●

Shanghai Yifu Automotive Electronics Technology Co., Ltd., “Shanghai Yifu”

●

Suzhou Qingyan Venture Capital Fund L.P., “Suzhou Qingyan”

●

Chongqing Qingyan Venture Capital Fund L.P., “Chongqing Qingyan”

●

Chongqing Jinghua Automotive Intelligent Manufacturing Technology Research Co., Ltd., “Chongqing Jinghua”

●

Hubei Hongrun Intelligent System Co.,Ltd., “Hubei Hongrun”

●

Jingzhou WiseDawn Electric Car Co., Ltd., “Jingzhou WiseDawn”

●

Hubei Zhirong Automobile Technology Co., Ltd., “Hubei Zhirong”

●

Hubei Tongrun Automotive Parts Industry Development Co., Ltd., “Hubei Tongrun”

●

Hubei Qingyan Venture Capital Fund L.P, “Hubei Qingyan”

●

Hubei Henglongtianyu Pipe system Co.,Ltd., “Henglong Tianyu”

●

Wuhan Ewinlink Intelligent System Co., Ltd., “Ewinlink”

●

Hubei HLTW Automotive Lightweight Co.,Ltd., “Hubei HLTW”

●

Hubei Jinlv New Energy Battery Technology Co., Ltd., “Hubei Jinlv”

●

Hubei Yiling Intelligent Technology Co., Ltd., “Hubei Yiling”

●

Sentient AB

●

Suzhou Sentient Automotive Technology Co., Ltd., “Suzhou Sentient”

●

Suzhou Qingshan Zhiyuan Venture Capital Fund L.P., “Suzhou Qingshan”

●

Beijing Hainachuan HengLong Automotive Steering System Co., Ltd., “ Beijing Henglong ”

Principal policies of the Company in connection with transactions with related parties are as follows:

Products Sold to Related Parties – The Company sold products to related parties at fair market prices and granted them credit of three to four months. These transactions were consummated under similar terms as the Company’s other customers.

Materials Purchased from Related Parties – The Company purchased materials from related parties at fair market prices, and also received from them credit of three to four months. These transactions were consummated under similar terms as the Company’s other suppliers’.

Equipment and Production Technology Purchased from Related Parties - The Company purchased equipment and production technology from related parties at fair market prices, or reasonable cost-plus pricing if fair market prices are not available. The Company sometimes was required to pay in advance based on the purchase agreement, because equipment manufacturing and technology development normally requires a long period. These transactions are consummated under similar terms as the Company’s other suppliers’.

Short-term Loans Extended to Related Parties - The Company provides short-term loans to related parties and assists the borrowing entities in addressing certain cash flow needs. In general, the Company charges interest by referencing to the prevailing borrowing interest rates published by PBOC.

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Recent Accounting Pronouncements

In November 2021, the FASB issued Accounting Standards Update (“ASU”) 2021-10 Government Assistance (Topic 832): Disclosures by Business Entities about Government Assistance, effective for financial statements issued for annual periods beginning after December 15, 2021. ASU 2021-10 requires business entities to disclose information in the notes to the financial statements about certain types of government assistance. The annual disclosure requirements apply to transactions with a government that are accounted for by analogizing to either a grant model or a contribution model. The Company adopted this guidance from January 1, 2022. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

3.	Accounts and Notes Receivable

The Company’s accounts receivable on December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Accounts receivable - unrelated parties	$	139,533	$	146,362
Notes receivable - unrelated parties ⁽¹⁾		89,134		61,328
Total accounts and notes receivable - unrelated parties		228,667		207,690
Less: allowance for doubtful accounts - unrelated parties		(14,359)		(11,961)
Accounts and notes receivable, net - unrelated parties		214,308		195,729
Accounts and notes receivable - related parties		11,779		15,505
Less: allowance for doubtful accounts - related parties		(1,763)		(898)
Accounts and notes receivable, net - related parties		10,016		14,607
Accounts and notes receivable, net	$	224,324	$	210,336

(1)	Notes receivable represents accounts receivable in the form of bills of exchange whose acceptances and settlements are handled by banks.

As of December 31, 2022 and 2021, the Company pledged its notes receivable in amounts of $13.7 million and $18.2 million, respectively, as collateral for banks to endorse the payment of the Company’s notes payable to the noteholder upon maturity (See Note 12).

The activity in the Company’s allowance for doubtful accounts of accounts receivable during the years ended December 31, 2022 and 2021, is summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at beginning of year	$	12,859	$	9,854
Amounts provided during the year		5,371		2,774
Amounts reversed of collection during the year		(967)		(24)
Foreign currency translation		(1,141)		255
Balance at end of year	$	16,122	$	12,859

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4.	Advance Payments and Others

The Company’s advance payments and others as of December 31, 2022 and 2021, consisted of the following:


	Year Ended December 31,
	2022		2021
Prepayments for purchase of raw materials	$	3,942	$	6,066
Input VAT		4,283		3,433
Prepayment for share repurchase program		754		1,238
Prepaid income tax		1,287		1,366
Employee advances		713		641
Prepayment for R&D service		748		—
Others		734		607
Total advance payments and others		12,461		13,351
Less: Allowance for doubtful accounts		(115)		(55)
Advance payments and others, net	$	12,346	$	13,296

5.	Inventories

The Company’s inventories at December 31, 2022 and 2021, consisted of the following (figures are in thousands of USD):


	December 31,
	2022		2021
Raw materials	$	24,502	$	33,583
Work in process		16,001		9,415
Finished goods		71,371		73,495
Cost of R&D service		362		—
Balance at end of year	$	112,236	$	116,493

The Company recorded $4.7 million and $4.7 million of inventory write-down to cost of product sold for the years ended December 31, 2022 and 2021, respectively.

6.	Property, Plant and Equipment

The Company’s property, plant and equipment at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Costs:
Buildings	$	64,928	$	69,554
Machinery and equipment		239,385		253,245
Electronic equipment		6,242		6,887
Motor vehicles		4,308		5,121
Construction in progress		8,238		6,583
		323,101		341,390
Less: Accumulated depreciation		(216,495)		(213,669)
Balance at end of year	$	106,606	$	127,721

Depreciation charges for the years ended December 31, 2022 and 2021, were $24.2 million and $26.1 million, respectively.

As of December 31, 2022 and 2021, the Company pledged property, plant and equipment with net book value of approximately $51.6 million and $54.7 million, respectively, as security for its comprehensive credit facilities with banks in China.

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7.	Intangible Assets

The Company’s intangible assets at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Costs:
Patent technology	$	2,266	$	2,598
Management software license		3,756		3,994
Total intangible assets - at cost		6,022		6,592
Less: Accumulated amortization		(4,749)		(4,780)
Balance at end of year, net	$	1,273	$	1,812

Amortization expenses were $0.6 million and $0.6 million for the years ended December 31, 2022 and 2021, respectively.


	Estimated Amortization Expenses
	2023		2024		2025		2026		2027
Amortization expenses	$	496	$	319	$	232	$	130	$	88

8.	Long-term Investments

The Company’s long-term investments on December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Limited Partnerships:
Chongqing Venture Fund ⁽¹⁾	$	14,435	$	17,530
Hubei Venture Fund ⁽²⁾		11,738		9,665
Suzhou Venture Fund ⁽³⁾		5,473		7,413
Suzhou Qingshan ⁽⁴⁾		4,179		—
Subtotal - Investments in limited partnerships		35,825		34,608
Corporations:
Sentient AB⁽⁵⁾		21,831		—
Henglong Tianyu		774		913
Chongqing Jinghua		695		642
Jiangsu Intelligent		685		803
Subtotal - Investments in corporations		23,985		2,358
Total	$	59,810	$	36,966

(1)

In May 2016, Hubei Henglong entered into an agreement with other parties to establish a limited partnership, the “Chongqing Venture Fund”. As of December 31, 2022, Hubei Henglong owned 18.5% of Chongqing Venture Fund’s equity. As a limited partner, Hubei Henglong has more than virtually no influence over the Chongqing Venture Fund’s operating and financial policies. The investment is accounted for using the equity method. The Company’s proportionate share of Chongqing Venture Fund’s net earnings for the year ended Decemeber 31, 2022 was $0.9 million, recorded as equity in earning of affiliated company, and the Company also recorded $0.9 million in distributions from the fund. There was no impairment on this investment during the year ended December 31, 2022.

(2)

In March 2018, Hubei Henglong entered into an agreement with other parties to establish a limited partnership, the “Hubei Venture Fund”. As of December 31, 2022, Hubei Henglong owned 28.5% of Hubei Venture Fund’s equity. As a limited partner, Hubei Henglong has more than virtually no influence over the Hubei Venture Fund’s operating and financial policies. The investment is accounted for using the equity method. The Company’s proportionate share of Hubei Venture Fund’s net earnings for the year ended Decemeber 31, 2022 was $3.9 million, recorded as equity in earning of affiliated company, and the Company also recorded $1.2 million in distributions from the fund. There was no impairment on this investment during the year ended December 31, 2022.

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(3)

In September 2014, Hubei Henglong entered into an agreement with other parties to establish a limited partnership, the “Suzhou Venture Fund”. As of December 31, Hubei Henglong owned 12.5% of the Suzhou Venture Fund’s equity. As a limited partner, Hubei Henglong has more than virtually no influence over the Suzhou Venture Fund’s operating and financial policies. The investment is accounted for using the equity method. The Company’s proportionate share of Suzhou Venture Fund’s net earnings for the year ended Decemeber 31, 2022 was $0.4 million, recorded as equity in earning of affiliated company, and the Company also recorded $1.8 million in distributions from the fund. There was no impairment on this investment during the year ended December 31, 2022.

(4)

In January 2022, Hubei Henglong entered into an agreement with other parties to establish a limited partnership, Suzhou Qingshan Zhiyuan Venture Capital Fund L.P., “Suzhou Qingshan”. As of December 31, 2022, Hubei Henglong owned 22.56% of Suzhou Qingshan’s equity. As a limited partner, Hubei Henglong has more than virtually no influence over Suzhou Qingshan’s operating and financial policies. The investment is accounted for using the equity method. The Company’s proportionate share of Suzhou Qingshan Venture Fund’s net loss for the year ended Decemeber 31, 2022 was $0.1 million loss, recorded as equity in earning of affiliated company. There was no impairment on this investment during the year ended December 31, 2022.

(5)

The Company summarizes the condensed financial information of the Company’s equity method investments as a group below (figures are in thousands of USD):


	December 31,
	2022		2021
Revenue	$	5,628	$	88,122
Gross profit		1,294		59,561
Income from continuing operations		6,451		63,067
Net income	$	6,430	$	61,374

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9.	Deferred Income Tax Assets and Liabilities

The components of deferred tax assets and liabilities at December 31, 2022 and 2021, were as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Losses carryforward (U.S.) ⁽¹⁾	$	349	$	2,559
Losses carryforward (Non-U.S.) ⁽¹⁾		11,371		13,058
Product warranties and other reserves		8,525		8,679
Property, plant and equipment		7,506		7,760
Bonus accrual		252		106
Other accruals		2,163		1,101
Deductible temporary difference related to revenue recognition		1,294		879
Others		2,175		1,009
Total deferred tax assets		33,635		35,151
Less: Valuation allowance ^{(1) (2)}		(23,270)		(22,788)
Total deferred tax assets, net of valuation allowance		10,365		12,363

Deferred withholding tax for dividend distribution from PRC subsidiaries (Note 22)		4,010		4,380
Other taxable temporary differences		2,713		2,249
Total deferred tax liabilities	$	6,723	$	6,629

(1)

The net operating loss carry -forward for the U.S. entity for income tax purposes are available to reduce future years’ taxable income. These carry -forwards will not expire if not utilized, and the Company may carry the losses forward indefinitely. Net operating losses for China entities can be carried forward for 5 years to offset taxable income except for entities that qualify as a High & New Technology Enterprise, for which the net operating loss can be carried forward for 10 years. However, as of December 31, 2022, valuation allowance was $23.3 million, including $0.3 million allowance for the Company’s deferred tax assets in the United States and $23.0 million allowance for the Company’s non-U.S. deferred tax assets primarily in China. Based on the Company’s current operations, management believes that all deferred tax assets in the United States and certain deferred tax assets in non-U.S. regions are not likely to be realized in the future.

(2)	As of December 31, 2022, the Company had net operating tax loss carry -forwards amounting to $8.4 million and $1.2 million which will expire from 2023 to 2032 and from 2023 to 2027, respectively, if not used.

The deferred tax assets and liabilities are classified in the consolidated balance sheets as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Deferred tax assets	$	7,652	$	10,114
Deferred tax liabilities		4,010		4,380

The activity in the Company’s valuation allowance for deferred tax assets during the years ended December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at beginning of year	$	22,788	$	18,155
Amounts provided for during the year		5,058		4,468
Amounts used during the year		(2,721)		(247)
Foreign currency translation		(1,855)		412
Balance at end of year	$	23,270	$	22,788

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10. Other non-current assets

The Company’s other non-current assets at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Prepayment for investment in Hefei Senye⁽¹⁾	$	2,584	$	2,823
Prepayment for investment under equity method-Sentient AB (See Note 8)		—		13,489
Less: Allowance for impairment		(2,584)		—
	$	—	$	16,312

(1)

In November 2019, Hubei Henglong entered into an agreement with other parties and committed to purchase 70% of the shares of Hefei Senye Light Plastic Technology Co., Ltd. for total consideration of RMB 33.6 million, equivalent to approximately $4.8 million. As of December 31, 2022, Hubei Henglong has paid RMB 18.0 million, equivalent to approximately $2.6 million, which was reported in other non-current assets as the transaction had not been consummated. The company recognized full provision for impairment regarding this prepayment of RMB 18.0 million in 2022 as the probability of recoverability of this prepayment became substantially reduced.

11.	Bank Loans

Loans consist of the following as of December 31, 2022 and 2021 (figures are in thousands of USD):


	December 31,
	2022		2021
Short-term bank loans ⁽¹⁾⁽²⁾	$	45,671	$	47,592
Long-term loans ⁽²⁾		528		—
Total bank loans	$	46,199	$	47,592

(1)

The Company entered into credit facility agreements with various banks, which were secured by property, plant and equipment and land use rights of the Company. The total credit facility amount was $148.3 million and $116.8 million, respectively, as of December 31, 2022 and 2021. As of December 31, 2022 and 2021, the Company has drawn down loans with an aggregate amount of $46.2 million and $47.6 million, respectively. The weighted average interest rate was 2.9% and 3.5%, respectively.

(2)

The Company borrowed a total of RMB 3.9 million from Chongqing Bank loans from April to July 2022, equivalent to approximately $0.6 million. These loans are due for repayment from March to April 2025 with an interest rate of 3.85% per annum. In accordance with the loan agreement, the Company should repay the principal of RMB100,000, equivalent to approximately $14,358, every six months starting on April 2022. The principal that will be repaid in 2023 is reclassified to short-term bank loans.

The Company must use the loans for the purpose specified in the borrowing agreement. If it fails to do so, it may be charged penalty interest or triggered early repayment. The Company complied with such financial covenants as of December 31, 2022.

12.	Accounts and Notes Payable

The Company’s accounts and notes payable at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Accounts payable - unrelated parties	$	133,882	$	132,593
Notes payable - unrelated parties ⁽¹⁾		84,530		81,997
Accounts and notes payable - unrelated parties		218,412		214,590
Accounts and notes payable - related parties		16,695		13,464
Balance at end of year	$	235,107	$	228,054

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(1)

Notes payable represent payables in the form of notes issued by the bank. As of December 31, 2022 and 2021, the Company has pledged cash of $37.6 million and $27.8 million, and also has pledged notes receivable of $13.7 million and $18.2 million, respectively, as collateral for banks to endorse the payment of the Company’s notes payable to the noteholder upon maturity. The Company entered into credit facility agreements with various banks, which were secured by property, plant and equipment and land use rights of the Company. As of December 31, 2022 and 2021, the Company has used $39.6 million and $33.6 million of its credit facility, respectively, for issuing bank notes.

13.	Accrued Expenses and Other Payables

The Company’s accrued expenses and other payables at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021

Accrued expenses	$	9,652	$	5,596
Warranty reserves(See Note 2)		32,435		36,572
Payable for the investment in Sentient AB (See Note 8)		2,043		—
Payables for overseas transportation and custom clearance		294		4,548
Dividends payable to holders of non-controlling interests		431		471
Current portion of other long-term payable (See Note 15)		—		1,115
Accrued interest		465		507
Other payables		2,991		1,523
Balance at end of year	$	48,311	$	50,332

14. Taxes Payable

The Company’s taxes payable on December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021

Value-added tax payable	$	3,470	$	3,494
Tariffs payable		7,061		5,202
Long-term taxes payable - current portion ⁽¹⁾		5,270		2,809
Income tax payable		680		311
Other tax payable		1,117		510
Short-term taxes payable	$	17,598	$	12,326


	December 31,
	2022		2021

Long-term taxes payable	$	21,075	$	23,884
Less: Long-term taxes payable - current portion ⁽¹⁾		(5,270)		(2,809)
Long-term taxes payable ⁽¹⁾	$	15,805	$	21,075

(1)

A one-time transition tax of $35.6 million was recognized in the three months ended December 31, 2017 that represented management’s estimate of the amount of U.S. corporate income tax based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of certain non-U.S. subsidiaries of the Company mandated by the U.S. Tax Reform. The Company elected to pay the one-time transition tax over eight years commencing in April 2018. During the years ended December 31, 2022 and 2021, $2.8 million and $2.8 million, respectively, were paid by the Company. See Note 22 for more details about the U.S. Tax Reform.

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15.	Other Long-term Payable

On January 31, 2018, the Company entered into an equipment sales agreement with a third party (the “buyer-lessor”) and simultaneously entered into a four-year contract to lease back the equipment from the buyer-lessor. The carrying value of the equipment was $13.1 million and the sales price was $14.3 million. Pursuant to the terms of the contract, the Company is required to pay to the buyer-lessor lease payments over 4 years with a quarterly lease payment of approximately $1.0 million and is entitled to obtain the ownership of this equipment at a nominal price upon the expiration of the lease. The Company is of the view that the transaction does not qualify as a sale. Therefore, the transaction was accounted for as a financing transaction by the Company. As of December 31, 2022 and 2021, nil and $1.1 million, respectively, was recognized as other payable (See Note 13); and nil recognized as other long-term payable to the buyer-lessor. For the years ended December 31, 2022 and 2021, the Company recorded nil and $0.3 million, respectively, of interest expense related to the lease back transaction.

16. Redeemable non-controlling interests

In September 2020, one of the Company’s subsidiaries issued shares to Hubei Venture Fund amounting to $0.7 million. The shares will be transferred to the Company and the other shareholder of the subsidiary on pro rata basis at the holder’s option if the subsidiary fails to complete a qualified IPO in a pre-agreed period of time after their issuance with a transfer price of par plus 6% per year. $0.5 million of the shares are subject to purchase by the Company and are therefore accounted for as redeemable non-controlling interests in mezzanine equity and are accreted to the redemption value over the period starting from the issuance date.

For the years ended December 31, 2022 and 2021, the Company recognized accretion of $0.030 million and $0.028 million to the redemption value of the shares over the period starting from the issuance date with a corresponding reduction to retained earnings.

17.	Stock Options

The stock option plan was approved at the Annual Meeting of Stockholders held on June 28, 2005 and extended to June 27, 2025 at the Annual Meeting of Stockholders held on September 16, 2014. The maximum common shares available for issuance under this plan is 2,200,000. The stock incentive plan provides for the issuance, to the Company’s officers, directors, management and employees who served over three years or have given outstanding performance, of options to purchase shares of the Company’s common stock. The Company has issued 658,850 stock options under this plan as of December 31, 2022.

Under the aforementioned plan, the stock options granted will have an exercise price equal to the closing price of the Company’s common stock traded on NASDAQ one day before the date of grant, and will expire two to five years after the grant date. Except for the 298,850 options granted to management in December 2008, which became exercisable on a ratable basis over the vesting period (3 years), the options were exercisable immediately on the grant dates. Stock options will be settled in shares of the Company’s common stock upon exercise and are recorded in the Company’s consolidated balance sheets under the caption “Additional paid-in capital.” As of December 31, 2022, the Company has sufficient unissued registered common stock for settlement of the stock incentive plan mentioned above.

The fair value of stock options was determined at the date of grant using the Black-Scholes option pricing model. The Black-Scholes option model requires management to make various estimates and assumptions, including expected term, expected volatility, risk-free rate, and dividend yield. The expected term represents the period of time that stock-based compensation awards granted are expected to be outstanding and is estimated based on considerations including the vesting period, contractual term and anticipated employee exercise patterns. Expected volatility is based on the historical volatility of the Company’s stock. The risk-free rate is based on the U.S. Treasury yield curve in relation to the contractual life of stock-based compensation instruments. The dividend yield assumption is based on historical patterns and future expectations for the Company dividends.

No stock options were granted in 2022. During the year ended December 31, 2021, the Company granted options to purchase an aggregate of 225,000 shares to the independent directors. Assumptions used to estimate the fair value of stock options on the grant date is as follows:


Issuance Date	Expected volatility		Risk-free rate		Expected term (years)	Dividend yield
February 3, 2021	76.91	%	0.46	%	5	0.00	%

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The stock options granted during the year ended December 31, 2021 were exercisable immediately and their fair value on the grant date using the Black-Scholes option pricing model was $0.1 million. For the years ended December 31, 2022 and 2021, the Company recognized stock-based compensation expenses of nil and $0.1, respectively.

The activities of stock options are summarized as follows, including granted, exercised and forfeited.


				Weighted-Average
		Weighted-Average		Contractual
	Shares	Exercise Price		Term (years)
Outstanding - January 1, 2021	22,500	$	4.79	5
Expired	(7,500)		6.95	5
Granted	22,500		6.26	5
Outstanding - December 31, 2021	37,500	$	5.24	5
Expired	(7,500)		5.04	5
Outstanding - December 31, 2022	30,000	$	5.29	5

The following is a summary of the range of exercise prices for stock options that are outstanding and exercisable at December 31, 2022:


	Outstanding Stock	Weighted Average	Weighted Average		Number of Stock
Range of Exercise Prices	Options	Remaining Life	Exercise Price		Options Exercisable
$2.37 - $6.26	30,000	2.55	$	5.29	30,000

As of December 31, 2022 and 2021, the total intrinsic value of the Company’s stock options that were exercisable were nil.

During the years ended December 31, 2022 and 2021, no stock options were exercised.

No stock options were granted during the year ended December 31, 2022. During the years ended December 31, 2022, the weighted average fair value of the Company’s stock options granted was $3.19.

18.	Retained Earnings

Pursuant to the relevant PRC laws, the profits distribution of the Company’s subsidiaries, which are based on their PRC statutory financial statements, are available for distribution in the form of cash dividends after these subsidiaries have paid all relevant PRC tax liabilities, provided for losses in previous years, and made appropriations to statutory surplus at 10% of their respective after-tax profits each year. When the statutory surplus reserve reaches 50% of the registered capital of a company, no additional reserve is required. For the years ended December 31, 2022 and 2021, the subsidiaries in China appropriated statutory reserves of $0.4 million and $0.2 million, respectively.

19.	Treasury Stock

Treasury stock represents shares repurchased by the Company that are no longer outstanding and are held by the Company. Treasury stock is accounted for under the cost method. On December 5, 2018, the Board of Directors of the Company approved a share repurchase program under which the Company was permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing market prices not to exceed $4.00 per share through December 4, 2019. The Board of Directors of the Company approved the extension of such program to December 4, 2020. On August 13, 2020, the Board of Directors of the Company approved a share repurchase program under which the Company is permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing market prices not to exceed $3.50 per share through August 12, 2021. On March 29, 2022, the Board of Directors of the Company approved a share repurchase program under which the Company is permitted to repurchase up to $5.0 million of its common stock from time to time in the open market at prevailing market prices not to exceed $4.00 per share through March 30, 2023. For the years ended December 31, 2022 and 2021, the Company repurchased 666,074 and nil shares of the Company for aggregate cash consideration of $2.4 million and nil, respectively, on the open market.

The repurchased shares are not cancelled and are presented as “treasury stock” on the balance sheet.

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20.	Other Income, Net

During the years ended December 31, 2022 and 2021, the Company recorded other income which is summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Government subsidy	$	6,270	$	4,928
Investment income		1,912		1,670
Penalties income		140		70
Provision for impairment of prepayment for investment in Hefei Senye (See Note 10)		(2,540)		—
Total other income, net	$	5,782	$	6,668

21.	Financial (Income)/Expense, net

During the years ended December 31, 2022 and 2021, the Company recorded financial expense, net which is summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021

Interest income	$	(1,247)	$	(1,242)
Foreign exchange (income)/loss, net		(9,833)		3,204
Bank fees		327		388
Total financial (income)/expense, net	$	(10,753)	$	2,350

22.	Income Taxes

PRC Corporate Income Tax

The Company’s subsidiaries registered in the PRC are subject to national and local income taxes within the PRC at the applicable tax rate of 25% on the taxable income as reported in their PRC statutory financial statements in accordance with the relevant income tax laws applicable to foreign invested enterprise, unless preferential tax treatment is granted by local tax authorities. If the enterprise meets certain preferential terms according to the China income tax law, such as assessment as a “High & New Technology Enterprise” by the government, then, the enterprise will be subject to enterprise income tax at a rate of 15%.

Pursuant to the New China Income Tax Law and the Implementing Rules, “New CIT”, which became effective as of January 1, 2008, dividends generated after January 1, 2008 and payable by a foreign-invested enterprise to its foreign investors will be subject to a 10% withholding tax if the foreign investors are considered as non-resident enterprises without any establishment or place within China or if the dividends payable have no connection with the establishment or place of the foreign investors within China, unless any such foreign investor’s jurisdiction of incorporation has a tax treaty with China that provides for a different withholding arrangement.

Genesis, the Company’s wholly-owned subsidiary and the direct holder of the equity interests in the Company’s subsidiaries in China, is incorporated in Hong Kong. According to the Mainland China and Hong Kong Taxation Arrangement, dividends paid by a foreign-invested enterprise in China to its direct holding company in Hong Kong would be subject to withholding tax at a rate of 10% if Genesis could not obtain the Hong Kong tax resident certificate from the Hong Kong Inland Revenue Department. If Genesis obtains the Hong Kong tax resident certificate, owns directly at least 25% of the shares of the foreign invested enterprise and is qualified as the beneficial owner, it could benefit from a lower rate of 5%.

According to PRC tax regulation, the Company should withhold income taxes for the profits distributed from the PRC subsidiaries to Genesis, the subsidiaries’ holding company incorporated in Hong Kong. For the profits that the PRC subsidiaries intended to distribute to Genesis, the Company accrues the withholding income tax as deferred tax liabilities. As of December 31, 2022 and 2021, the Company has recognized deferred tax liabilities of $4.0 million and $4.4 million for the undistributed profits of $40.2 million and $43.1 million, respectively, which are expected to be distributed to Genesis in the future. The Company intended to re-invest the remaining

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undistributed profits generated from the PRC subsidiaries in those subsidiaries indefinitely. As of December 31, 2022 and 2021, the Company still has undistributed earnings of approximately $270.4 million and $265.9 million, respectively, from investment in the PRC subsidiaries that are considered indefinitely reinvested. Had the undistributed earnings been distributed to Genesis and not indefinitely reinvested, the tax provision as of December 31, 2022 and 2021, of approximately $27.0 million and $26.6 million, respectively, would have been recorded. Such undistributed profits will be reinvested in Genesis and not further distributed to the parent company incorporated in the United States going forward.

In 2020, Henglong, Jiulong and Hubei Henglong were granted the title of “High & New Technology Enterprise”, and based on the PRC income tax law, they were subject to enterprise income tax at a rate of 15% from 2020 to 2022. The Company estimated the applied tax rate in 2023 to be 15% as it is probable that it will pass reassessment in 2023 and continue to qualify as “High & New Technology Enterprise”.

In 2020, Chuguanjie and Wuhu were granted the title of “High & New Technology Enterprise”, and based on the PRC income tax law, they are subject to enterprise income tax at a rate of 15% from 2020 to 2023.

In 2022, Shenyang and Jielong were granted the title of “High & New Technology Enterprise”, and based on the PRC income tax law, they are subject to enterprise income tax at a rate of 15% from 2022 to 2024.

In 2021, Henglong KYB was granted the title of “High & New Technology Enterprise” and based on the PRC income tax law, it is subject to enterprise income tax at a rate of 15% from 2021 to 2023.

According to the New CIT, Shanghai Henglong, Testing Center, Wuhan Hyoseong, Changchun Hualong, Chongqing and Wuhu Hongrun are subject to income tax at a rate of 25%.

Brazil Corporate Income Tax

Based on Brazilian income tax laws, Brazil Henglong is subject to income tax at a uniform rate of 24%, and a resident legal person is subject to additional tax at a rate of 10% for the part of taxable income over BRL 0.24 million, equivalent to approximately $ 0.05 million. The Company recognized income tax expenses of $0.7 million in Brazil for the year ended December 31, 2022 and $0.5 million for the year ended December 31, 2021.

Hong Kong Corporate Income Tax

The profits tax rate of Hong Kong is 16.5%. No provision for Hong Kong tax is made as Genesis is an investment holding company, and had no assessable income in Hong Kong for the years ended December 31, 2022 and 2021.

U.S. Corporate Income Tax

The Company is a Delaware corporation that is subject to U.S. corporate income tax on its taxable income at a rate of up to 21% for taxable years beginning after December 31, 2017 and U.S. corporate income tax on its taxable income of up to 35% for prior tax years. Recent U.S. federal tax legislation, commonly referred to as the Tax Cuts and Jobs Act (the “U.S. Tax Reform”), was signed into law on December 22, 2017. The U.S. Tax Reform significantly modified the U.S. Internal Revenue Code by, among other things, reducing the statutory U.S. federal corporate income tax rate from 35% to 21% for taxable years beginning after December 31, 2017; limiting and/or eliminating many business deductions; migrating the U.S. to a territorial tax system with a one-time transition tax on a mandatory deemed repatriation of previously deferred foreign earnings of certain foreign subsidiaries; subject to certain limitations, generally eliminating U.S. corporate income tax on dividends from foreign subsidiaries; and providing for new taxes on certain foreign earnings. Taxpayers may elect to pay the one-time transition tax over eight years, or in a single lump sum.

The U.S. Tax Reform also includes provisions for a new tax on GILTI effective for tax years of foreign corporations beginning after December 31, 2017. The GILTI provisions impose a tax on foreign income in excess of a deemed return on tangible assets of controlled foreign corporations (“CFCs”), subject to the possible use of foreign tax credits and a deduction equal to 50 percent to offset the income tax liability, subject to some limitations.

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To the extent that portions of the Company’s U.S. taxable income, such as Subpart F income or GILTI, are determined to be from sources outside of the U.S., subject to certain limitations, the Company may be able to claim foreign tax credits to offset its U.S. income tax liabilities. If dividends that the Company receives from its subsidiaries are determined to be from sources outside of the U.S., subject to certain limitations, the Company will generally not be required to pay U.S. corporate income tax on those dividends. Any liabilities for U.S. corporate income tax will be accrued in the Company’s consolidated statements of comprehensive income and estimated tax payments will be made when required by U.S. law.

One-Time Transition Tax Related to U.S. Tax Reform

In 2017, the Company recognized a one-time transition tax of $35.6 million that represented management’s estimate of the amount of U.S. corporate income tax based on the deemed repatriation to the United States of the Company’s share of previously deferred earnings of certain non-U.S. subsidiaries of the Company mandated by the U.S. Tax Reform. The Company elected to pay the one-time transition tax over eight years commencing in April 2018. According to the 2017 U.S. federal income tax return of the Company filed in October 2018, the one-time transition tax was updated to $35.1 million. The Company made a true-up adjustment of $0.5 million in 2018.

The provision for income taxes was calculated as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022			2021
Tax rate		21	%		21	%
Income before income taxes	$	23,036		$	8,399
Income tax at federal statutory tax rate		4,838			1,764
Tax benefit of super deduction of R&D expense ⁽¹⁾		(7,089)			(5,212)
Effect of differences in foreign tax rate		599			504
Change in provision on valuation allowance for deferred income tax - U.S.		(2,458)			(34)
Change in provision on valuation allowance for deferred income tax - Non-U.S.		4,595			4,667
Effect of changes in tax rate		—			2,081
Other differences		2,597			234
Total income tax expense	$	3,082		$	4,004

(1)

According to a new tax incentives policy promulgated by the State Tax Bureau of the PRC and effective from March 2021 onwards, enterprises engaged in research and development activities are entitled to claim an additional tax deduction amounting to 100% of their research and development expenses in determining their taxable income for the year.

The Company is subject to tax examination in the United States and China. The Company’s tax years for 2018 through 2022 are still open for examination in China. The Company’s tax years for 2013 through 2022 are still open for examination in the United States.

Uncertain Tax Positions

The Company did not have any uncertain tax positions for the years ended December 31, 2022 and 2021.

23.	Income Per Share

Basic net income per share is computed using the weighted average number of the common shares outstanding during the year.

For diluted income per share, the Company uses the treasury stock method for options, assuming the issuance of common shares, if dilutive, resulting from the exercise of options.

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The calculations of basic and diluted income per share attributable to the parent company were (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Numerator:
Net income attributable to the parent company’s common shareholders - Basic and Diluted	$	21,181	11,050
Denominator:
Weighted average ordinary shares outstanding - Basic		30,639,102	30,851,776
Dilutive effects of stock options		2,172	3,655
Denominator for dilutive income per share - Diluted		30,641,274	30,855,431
Net income per share attributable to the parent company’s common shareholders
Basic		0.69	0.36
Diluted		0.69	0.36

As of December 31, 2022, the exercise prices for 22,500 outstanding stock options were above the weighted average market price of the Company’s common stock during the year ended December 31, 2022. Therefore, these stock options were excluded from the calculation of the diluted income per share for the corresponding periods presented.

As of December 31, 2021, the exercise prices for 30,000 outstanding stock options were above the weighted average market price of the Company’s common stock during the year ended December 31, 2021. Therefore, these stock options were excluded from the calculation of the diluted income per share for the corresponding periods presented.

24.	Significant Concentrations

A significant portion of the Company’s business is conducted in China where the currency is the RMB. Regulations in China permit foreign owned entities to freely convert the RMB into foreign currency for transactions that fall under the “current account”, which includes trade related receipts and payments, interest and dividends. Accordingly, the Company’s Chinese subsidiaries may use RMB to purchase foreign exchange for settlement of such “current account” transactions without pre-approval.

China Automotive, the parent company, may depend on Genesis and HLUSA dividend payments, which are generated from their subsidiaries in China, “China-based Subsidiaries,” after they receive payments from the China-based Subsidiaries. Regulations in the PRC currently permit payment of dividends of a PRC company only out of accumulated profits as determined in accordance with accounting standards and regulations in China. Under PRC law China-based Subsidiaries are required to set aside at least 10% of their after-tax profit based on PRC accounting standards each year to their general reserves until the cumulative amount reaches 50% of their paid-in capital. These reserves are not distributable as cash dividends, or as loans or advances. These foreign-invested enterprises may also allocate a portion of their after-tax profits, at the discretion of their boards of directors, to their staff welfare and bonus funds. Any amounts so allocated may not be distributed and, accordingly, would not be available for distribution to Genesis and HLUSA.

The PRC government also imposes controls on the convertibility of RMB into foreign currencies and, in certain cases, the remittance of currencies out of China, the China-based Subsidiaries may experience difficulties in completing the administrative procedures necessary to obtain and remit foreign currencies. If China Automotive is unable to receive dividend payments from its subsidiaries and China-based subsidiaries, China Automotive may be unable to effectively finance its operations or pay dividends on its shares.

Transactions other than those that fall under the “current account” and that involve conversion of RMB into foreign currency are classified as “capital account” transactions; examples of “capital account” transactions include repatriations of investment by or loans to foreign owners, or direct equity investments in a foreign entity by a China domiciled entity. “Capital account” transactions require prior approval from China’s State Administration of Foreign Exchange, or SAFE, or its provincial branch to convert a remittance into a foreign currency, such as U.S. Dollars, and transmit the foreign currency outside of China.

This system could be changed at any time and any such change may affect the ability of the Company or its subsidiaries in China to repatriate capital or profits, if any, outside China. Furthermore, SAFE has a significant degree of administrative discretion in implementing the laws and has used this discretion to limit convertibility of current account payments out of China. Whether as a result of a deterioration in the Chinese balance of payments, a shift in the Chinese macroeconomic prospects or any number of other reasons, China could impose additional restrictions on capital remittances abroad. As a result of these and other restrictions under the laws and

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regulations of the People’s Republic of China, or the PRC, the Company’s China subsidiaries are restricted in their ability to transfer a portion of their net assets to the parent. The Company has no assurance that the relevant Chinese governmental authorities in the future will not limit further or eliminate the ability of the Company’s Chinese subsidiaries to purchase foreign currencies and transfer such funds to the Company to meet its liquidity or other business needs. Any inability to access funds in China, if and when needed for use by the Company outside of China, could have a material and adverse effect on the Company’s liquidity and its business.

25.	Related Party Transactions

Related party transactions during the years ended December 31, 2022 and 2021, are as shown below (figures are in thousands of USD):

Merchandise Sold to Related Parties


	Year Ended December 31,
	2022		2021
Hubei Hongrun	$	32,489	$	25,229
Jingzhou Yude		8,778		10,784
Xiamen Automotive Parts		2,468		3,864
Beijing Henglong		—		24,604
Other related parties		547		650
Total	$	44,282	$	65,131

Rental Income Obtained from Related Parties


	Year Ended December 31,
	2022		2021
Wuhan Tongkai	$	166	$	180
Jingzhou Tongying		152		170
Hubei Hongrun		137		112
Hubei ASTA		—		23
Other related parties		4		8
Total	$	459	$	493

Materials Sold to Related Parties


	Year Ended December 31,
	2022		2021
Honghu Changrun	$	749	$	1,000
Jingzhou Yude		728		278
Jiangling Tongchuang		603		626
Jingzhou Tongying		547		580
Hubei Hongrun		20		12
Beijing Henglong		—		32
Other related parties		137		25
Total	$	2,784	$	2,553

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Materials Purchased from Related Parties


	Year Ended December 31,
	2022		2021
Jingzhou Tongying	$	12,152	$	10,702
Wuhan Tongkai		9,974		9,718
Jiangling Tongchuang		3,238		7,009
Honghu Changrun		2,467		2,358
Henglong Tianyu		611		1,014
Hubei Wiselink		310		481
Hubei Yiling		30		286
Other related parties		28		12
Total	$	28,810	$	31,580

Technology and Services Provided by Related Parties (recorded in R&D Expenses)


	Year Ended December 31,
	2022		2021
Suzhou Sentient	$	607	$	—
Sentient AB		462		935
Hubei Yiling		234		—
Total	$	1,303	$	935

Property, Plant and Equipment Purchased from Related Parties


	Year Ended December 31,
	2022		2021
Hubei Wiselink	$	2,336	$	1,200
Hubei Yiling		48		—
Total	$	2,384	$	1,200

Equity interest purchase from related parties

Loan transaction to a related party

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As of December 31, 2022 and 2021, accounts receivable, accounts payable and advance payments between the Company and related parties are as shown below (figures are in thousands of USD):

Accounts and Notes Receivable from Related Parties


	December 31,
	2022		2021
Hubei Hongrun	$	6,192	$	6,918
Jingzhou Yude		3,094		5,740
Xiamen Automotive Parts		1,311		1,533
Xiamen Joylon		815		890
Other related parties		367		424
Total accounts and notes receivable - related parties		11,779		15,505
Less: allowance for doubtful accounts - related parties		(1,763)		(898)
Accounts and notes receivable, net - related parties	$	10,016	$	14,607

Accounts and Notes Payable to Related Parties


	December 31,
	2022		2021
Wuhan Tongkai	$	7,173	$	4,812
Jingzhou Tongying		3,827		3,195
Hubei Wiselink		3,687		2,984
Henglong Tianyu		1,209		1,602
Honghu Changrun		692		484
Jiangling Tongchuang		45		240
Other related parties		62		147
Total	$	16,695	$	13,464

Advance Payments for Property, Plant and Equipment to Related Parties


	December 31,
	2022		2021
Hubei Wiselink	$	1,618	$	565
Henglong Real Estate		224		245
Hubei Hongrun		42		—
Total	$	1,884	$	810

Advance Payments and Others to Related Parties


	December 31,
	2022		2021
Sentient AB	$	632	$	—
Jiangling Tongchuang		401		324
Hubei Zhirong		146		—
Hubei Wiselink		54		—
Other related parties		206		276
Total	$	1,439	$	600

As of December 31, 2022, Hanlin Chen, our chairman, owns 59.13% of the common stock of the Company and has the effective power to control the vote on substantially all significant matters without the approval of other stockholders.

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26.	Commitments and Contingencies

a.	Legal proceedings

The Company is not a party to any pending or, to the best of the Company’s knowledge, any threatened legal proceedings; and no director, officer or affiliate of the Company, or owner of record of more than five percent of the securities of the Company, or any associate of any such director, officer or security holder is a party adverse to the Company or has a material interest adverse to the Company in reference to pending litigation.

b.	Commitments

In addition to bank loans, notes payables, the related interest and other payables, the following table summarizes the Company’s non-cancelable commitments and contingencies as of December 31, 2022 (figures are in thousands of USD):


	Payment Obligations by Period
	2023		2024		2025		Thereafter		Total
Obligations for investment contracts ⁽¹⁾	$	4,307	$	—	$	—	$	—	$	4,307
Obligations for purchasing and services		23,962		4,650		—		—		28,612
Total	$	28,269	$	4,650	$	—		—	$	32,919

(1)

In January 2022, Hubei Henglong entered into an agreement with other parties and committed to purchase 27.78% of shares of Suzhou Qingshan Zhiyuan for total consideration of RMB 60.0 million, equivalent to approximately $8.6 million at the prevailing rate. As of December 31, 2022, Hubei Henglong has paid RMB 30.0 million, equivalent to approximately $4.3 million. According to the agreement, the remaining consideration RMB 30.0 million, equivalent to approximately $4.3 million, will be paid in 2023.

27.	Segment Reporting

The accounting policies of the product sectors are the same as those described in the summary of significant accounting policies except that the disaggregated financial results for the product sectors have been prepared using a management approach, which is consistent with the basis and manner in which management internally disaggregates financial information for the purposes of assisting them in making internal operating decisions. Generally, the Company evaluates performance based on stand-alone product sector operating income and accounts for inter segment sales and transfers as if the sales or transfers were to third parties, at current market prices.

As of December 31, 2022, the Company had 15 product sectors, seven of which were principal profit makers and were reported as separate sectors and engaged in the production and sales of power steering (Henglong, Jiulong, Shenyang, Wuhu, Henglong KYB, Hubei Henglong and Brazil Henglong), and one holding company (Genesis). The other eight sectors were engaged in the development, manufacturing and sale of high polymer materials (Wuhu Hongrun), R&D services (Changchun Hualong), automobile steering columns (Jielong), provision of after-sales and R&D services (HLUSA), production and sale of power steering (Chongqing Henglong), manufacture and sales of automobile electronic systems and parts (Wuhan Chuguanjie), research and development of intelligent automotive technology (Jingzhou Qingyan) and manufacture and sales of automotive motors and electromechanical integrated systems (Wuhan Hyoseong).

As of December 31, 2021, the Company had 15 product sectors, six of which were principal profit makers and were reported as separate sectors and engaged in the production and sales of power steering (Henglong, Jiulong, Shenyang, Wuhu, Henglong KYB and Hubei Henglong), and one holding company (Genesis). The other nine sectors were engaged in the development, manufacturing and sale of high polymer materials (Wuhu Hongrun), R&D services (Changchun Hualong), automobile steering columns (Jielong), provision of after-sales and R&D services (HLUSA), production and sale of power steering (Chongqing Henglong), trade (Brazil Henglong), manufacture and sales of automobile electronic systems and parts (Wuhan Chuguanjie), research and development of intelligent automotive technology (Jingzhou Qingyan) and manufacture and sales of automotive motors and electromechanical integrated systems (Wuhan Hyoseong).

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The Company’s product sector information is as follows (figures are in thousands of USD):


	Net Sales				Net Income/(Loss)
	Year Ended December 31,				Year Ended December 31,
	2022		2021		2022		2021
Henglong	$	246,594	$	202,612	$	785	$	(526)
Jiulong		70,113		94,510		227		971
Shenyang		11,942		16,510		(1,083)		560
Wuhu		42,243		27,227		(215)		(385)
Hubei Henglong		126,652		128,142		9,588		11,162
Henglong KYB		121,139		80,683		4,564		248
Brazil Henglong		39,280		25,513		3,390		1,467
Other Entities		80,971		70,884		6,538		(959)
Total Segments		738,934		646,081		23,794		12,538
Corporate		—		—		(534)		(1,628)
Eliminations		(209,383)		(148,088)		(917)		(184)
Total consolidated	$	529,551		497,993	$	22,343	$	10,726


	Depreciation and Amortization				Capital Expenditures
	Year Ended December 31,				Year Ended December 31,
	2022		2021		2022		2021
Henglong	$	7,285	$	6,691	$	5,908	$	1,613
Jiulong		2,156		2,742		1,102		1,863
Shenyang		590		649		146		267
Wuhu		713		943		203		48
Hubei Henglong		9,542		11,237		5,635		2,515
Henglong KYB		1,867		1,427		6,133		4,804
Brazil Henglong		196		205		869		(185)
Other Entities		2,785		3,172		3,262		731
Total Segments		25,134		27,066		23,258		11,656
Corporate		39		47		—		—
Eliminations		—		—		(2,774)		(1,754)
Total consolidated	$	25,173	$	27,113	$	20,484	$	9,902


	Total Assets
	December 31,
	2022		2021
Henglong	$	248,927	$	241,958
Jiulong		62,075		74,816
Shenyang		20,146		24,141
Wuhu		38,579		26,314
Hubei Henglong		392,482		431,529
Henglong KYB		107,045		77,598
Brazil Henglong		20,326		16,291
Other Entities		102,644		100,458
Total Segments		992,224		993,105
Corporate		58,767		69,705
Eliminations		(336,639)		(346,048)
Total consolidated	$	714,352	$	716,762

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Financial information segregated by geographic region is as follows (figures are in thousands of USD):


	Net Sales ⁽¹⁾				Long-term assets
	Year Ended December 31,				December 31,
	2022		2021		2022			2021
Geographic region:
China	$	331,589	$	324,979	$	123,062		$	165,264
United States		135,149		134,662		726			755
Other foreign countries		62,813		38,352		1,111			471
Total consolidated	$	529,551	$	497,993	$	124,899	⁽²⁾	$	166,490	⁽²⁾

(1)	Revenue is attributed to each country based on location of customers.

(2)	Pursuant to ASC 280-10-50-41, the deferred tax assets of $7.7 million and $10.1 million and the intangible assets of $1.3 million and $1.8 million were excluded from long-term assets as of December 31, 2022 and 2021, respectively.

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EXHIBIT INDEX


Exhibit Number		Description

3.1(i)		Certificate of Incorporation (incorporated by reference to Exhibit 3(i) to the Company’s Form 10-SB filed on August 27, 2001)

3.1.1(i)		Certificate of Amendment of Certificate of Incorporation, filed May 19, 2003 (incorporated by reference to Exhibit 4.1.1 to the Company’s Registration Statement on Form S-3 (File No. 333-133331) filed on April 17, 2006)

3.1(ii)		Bylaws (incorporated by reference to Exhibit 3(ii) to the Company’s Form 10-SB filed on August 27, 2001)

4.1		Description of the Company’s Securities*

10.1		Joint-venture Agreement, dated March 31, 2006, as amended on May 2, 2006, between Great Genesis Holdings Limited and Wuhu Chery Technology Co., Ltd. (incorporated by reference to Exhibit 10.8 to the Company’s Form 10-Q Quarterly Report filed on May 10, 2006)

10.2		Translation of the Equity Transfer Agreement dated March 31, 2008 in English (incorporated by reference to Exhibit 99.1 to the Company’s Form 8-K filed on April 2, 2008)

10.3		English Translation of the Sino-Foreign Equity Joint Venture Contract dated January 24, 2010 between Great Genesis Holdings Limited and Beijing Hainachuan Auto Parts Co., Ltd. (incorporated by reference to Exhibit 10.21 to the Company’s Form 10-K for the year ended December 31, 2009 filed on March 25, 2010)

10.4		Stock Exchange Agreement dated August 11, 2014 by and among Jingzhou City Jiulong Machinery Electricity Manufacturing Co., Ltd., China Automotive Systems, Inc. and Hubei Henglong Automotive System Group Co., Ltd. (incorporated by reference to Exhibit 10.2 to the Company’s Form 10-Q Quarterly Report filed on August 13, 2014)

10.5		English translation of Joint Venture Contract, dated as of April 27, 2018, by and between Hubei Henglong Automotive System Group Co., Ltd. and KYB (China) Investment Co., Ltd. (incorporated by reference to Exhibit 10.1 to the Company’s Current Report on Form 8-K filed on April 27, 2018)

23.1		Consent of PricewaterhouseCoopers Zhong Tian LLP*

31.1		Rule 13a-14(a) Certification*

31.2		Rule 13a-14(a) Certification*

32.1		Section 1350 Certification*

32.2		Section 1350 Certification*

101*		The following materials from the China Automotive Systems, Inc. Annual Report on Form 10-K for the year ended December 31, 2022, filed on March 30, 2022, formatted in Extensible Business Reporting Language (XBRL):

(i)

Consolidated Balance Sheets;

(ii)

Consolidated Statements of Income or Loss;

(iii)

Consolidated Statements of Comprehensive Income or Loss;

(iv)

Consolidated Statements of Changes in Stockholders’ Equity;

(v)

Consolidated Statements of Cash Flows; and

(vi)

Related Notes.

*	Filed herewith.

101 | Page

EX-4.1 2 caas-20221231xex4d1.htm EX-4.1

Exhibit 4.1

DESCRIPTION OF THE REGISTRANT’S SECURITIES

REGISTERED PURSUANT TO SECTION 12 OF THE

SECURITIES EXCHANGE ACT OF 1934

DESCRIPTION OF COMMON STOCK

We are authorized to issue 80,000,000 shares of common stock of $0.0001 par value per share. As of March 30, 2022, there were 32,338,302 shares of our common stock (including 2,152,600 shares of treasury stock) issued.

General

The holders of common stock are entitled to one vote per share on all matters submitted to a vote of stockholders, including the election of directors. There is no right to cumulate votes in the election of directors. The holders of common stock are entitled to any dividends that may be declared by the board of directors out of funds legally available therefore subject to the prior rights of holders of preferred stock and any contractual restrictions we have against the payment of dividends on common stock. In the event of our liquidation or dissolution, holders of common stock are entitled to share ratably in all assets remaining after payment of liabilities and the liquidation preferences of any outstanding shares of preferred stock (if any). Holders of common stock have no preemptive rights and have no right to convert their common stock into any other securities. All of the outstanding shares of common stock are fully paid and non-assessable.

Dividends

On May 27, 2014, the Company announced the payment of a special cash dividend of $0.18 per common share to the Company’s shareholders of record as of the close of business on June 26, 2014. The Company does not anticipate paying any other cash dividends in the foreseeable future. The Company currently intends to retain future earnings, if any, to finance operations and the expansion of its business. Any future determination to pay cash dividends will be at the discretion of the Company’s board of directors and will be based upon the Company’s financial condition, operating results, capital requirements, plans for expansion, restrictions imposed by any financing arrangements and any other factors that the Company’s board of directors deems relevant.

Transfer Agent

The transfer agent and registrar for our common stock is Securities Transfer Corporation.

Listing

Our common stock is listed on the NASDAQ Capital Market under the symbol “CAAS.”

Delaware Anti-Takeover Law

We are subject to the provisions of Section 203 of the Delaware General Corporation Law. In general, this section prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years after the date of the transaction in which the person becomes an interested stockholder, unless:

●

before the date on which the stockholder became an interested stockholder, the corporation’s board of directors approved either the business combination or the transaction in which the person became an interested stockholder;

●

the stockholder acquires more than 85% of the outstanding voting stock of the corporation, excluding shares held by directors who are officers or held in certain employee stock plans, upon consummation of the transaction in which the stockholder becomes an interested stockholder; or

●

the business combination is approved by the board of directors and by two-thirds of the outstanding voting stock of the corporation that is not held by the interested stockholder, at a meeting of the stockholders held on or after the date of the business combination.

Section 203 defines “business combination” to include:

●

any merger or consolidation involving the corporation and the interested stockholder;

●

any sale, transfer, pledge or other disposition of 10% or more of our assets involving the interested stockholder;

●

in general, any transaction that results in the issuance or transfer by us of any of our stock to the interested stockholder; or

●

the receipt by the interested stockholder of the benefit of any loans, advances, guarantees, pledges or other financial benefits provided

by or through the corporation.

Indemnification of Directors and Officers

Section 145 of the Delaware General Corporation Law authorizes a court to award, or a corporation’s board of directors to grant, indemnity to directors and officers in terms sufficiently broad to permit such indemnification under certain circumstances for liabilities (including reimbursement for expenses incurred) arising under the Securities Act. There are no specific provisions relating to indemnification of directors and officers in our certificate of incorporation or bylaws.

EX-23.1 3 caas-20221231xex23d1.htm EX-23.1

Exhibit 23.1

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We hereby consent to the incorporation by reference in the Registration Statements on Form S-3 (No.333-252825) and Form S-8 (No.333-126959) of China Automotive Systems, Inc. of our report dated March 30, 2023 relating to the financial statements, which appears in this Form 10-K.

/s/ PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
March 30, 2023

EX-31.1 4 caas-20221231xex31d1.htm EX-31.1

Exhibit 31.1

RULE 13a-14(a) CERTIFICATION FOR FORM 10-K (CEO)

I, Qizhou Wu, certify that:

I have reviewed this annual report on Form 10-K of China Automotive Systems, Inc.;

Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

The registrant’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 Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: March 30, 2023	By:	/s/ Qizhou Wu
		Qizhou Wu
		Chief Executive Officer

EX-31.2 5 caas-20221231xex31d2.htm EX-31.2

Exhibit 31.2

RULE 13a-14(a) CERTIFICATION FOR FORM 10-K (CFO)

I, Jie Li, certify that:

I have reviewed this annual report on Form 10-K of China Automotive Systems, Inc.;

Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal controls over financial reporting.

Date: March 30, 2023	By:	/s/ Jie Li
		Jie Li
		Chief Financial Officer

EX-32.1 6 caas-20221231xex32d1.htm EX-32.1

Exhibit 32.1

SECTION 1350 CERTIFICATION (CEO)

CHINA AUTOMOTIVE SYSTEMS, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of China Automotive Systems, Inc., the “Company,” on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof, the “Report,” I, Qizhou Wu, Chief Executive Officer and President 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:

(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 operations of the Company.

Date: March 30, 2023	By:	/s/ Qizhou Wu
		Qizhou Wu
		Chief Executive Officer

EX-32.2 7 caas-20221231xex32d2.htm EX-32.2

Exhibit 32.2

SECTION 1350 CERTIFICATION (CFO)

CHINA AUTOMOTIVE SYSTEMS, INC.

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of China Automotive Systems, Inc., the “Company,” on Form 10-K for the year ended December 31, 2022, as filed with the Securities and Exchange Commission on the date hereof, the “Report,” I, Jie Li, 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:

(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 operations of the Company.

Date: March 30, 2023	By:	/s/ Jie Li
		Jie Li
		Chief Financial Officer

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Government Subsidy Reclassified From Advances Payable Government subsidy reclassified from advances payable Gain (Loss) on Disposition of Property Plant Equipment, Excluding Oil and Gas Property and Timber Property Loss on disposal of fixed assets Increase (Decrease) in Operating Assets [Abstract] (Increase)/decrease in: Increase (Decrease) in Accounts and Notes Receivable Accounts and notes receivable Increase (Decrease) in Prepaid Expense Advance payments and others Increase (Decrease) in Inventories Inventories Increase (Decrease) in Operating Liabilities [Abstract] Increase/(decrease) in: The increase (decrease) during the reporting period in the aggregate amount of accounts and notes payable. Increase (Decrease) In Accounts and Notes Payable Accounts and notes payable Increase Decrease In Customer Refund Liability Customer deposits Increase (Decrease) in Other Employee-Related Liabilities Accrued payroll and related costs Increase (Decrease) in Accrued Liabilities Accrued expenses and other payables Increase (Decrease) in Accrued Taxes Payable Taxes payable The amount of increase or decrease in advance payable. Increase or Decrease in Advance payable Advances payable Net Cash Provided by (Used in) Operating Activities Net cash provided by operating activities Net Cash Provided by (Used in) Investing Activities [Abstract] Cash flows from investing activities: Payments to Acquire Investments Purchase of short-term investments and long-term time deposits Payments for (Proceeds from) Long-term Investments Proceeds from maturities of short-term investments Amount of increase (decrease) in receivable classified as other. Increase Decrease In Other Receivable Decrease/(increase) in demand loans and employee housing loans included in other receivables Payments to Fund Long-term Loans to Related Parties Loan to a related party Related party loan Proceeds from Collection of Long-term Loans to Related Parties Repayment of loan from a related party EX-101.PRE 12 caas-20221231_pre.xml EX-101.PRE XML 13 R1.htm IDEA: XBRL DOCUMENT

Document and Entity Information - USD ($) $ in Millions	12 Months Ended
Document and Entity Information - USD ($) $ in Millions	Dec. 31, 2022	Mar. 30, 2023	Jun. 30, 2022
Document and Entity Information [Abstract]
Document Type	10-K
Document Annual Report	true
Document Period End Date	Dec. 31, 2022
Document Transition Report	false
Entity File Number	000-33123
Entity Registrant Name	CHINA AUTOMOTIVE SYSTEMS INC
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	33-0885775
Entity Address, Address Line One	No. 1 Henglong Road, Yu Qiao Development Zone
Entity Address, Address Line Two	Shashi District
Entity Address, Address Line Three	Jing Zhou City
Entity Address, City or Town	Hubei Province
Entity Address, Country	CN
Entity Address, Postal Zip Code	434000
City Area Code	86
Local Phone Number	716-412-7901
Title of 12(b) Security	Common Stock, $0.0001 par value
Trading Symbol	CAAS
Security Exchange Name	NASDAQ
Entity Well-known Seasoned Issuer	No
Entity Voluntary Filers	No
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
ICFR Auditor Attestation Flag	false
Entity Shell Company	false
Entity Public Float			$ 28.4
Entity Common Stock, Shares Outstanding		30,185,702
Entity Central Index Key	0001157762
Current Fiscal Year End Date	--12-31
Document Fiscal Year Focus	2022
Document Fiscal Period Focus	FY
Amendment Flag	false
Auditor Name	PricewaterhouseCoopers
Auditor Firm ID	1424
Auditor Location	42/F New Bund Center, 588 Dongyu Road, Pudong New Area, Shanghai 200126, PRC

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Consolidated Balance Sheets - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Current assets:
Cash and cash equivalents	$ 121,216	$ 131,695
Pledged cash	37,735	27,804
Short-term investments	12,861	1,756
Accounts and notes receivable, net - unrelated parties (Allowance for credit losses of $14,359 and $11,961, respectively)	214,308	195,729
Accounts and notes receivable, net - related parties (Allowance for credit losses of $ 1,763 and $898, respectively)	10,016	14,607
Advance payments and others, net - unrelated parties (Allowance for credit losses of $115 and $55, respectively)	10,907	12,696
Advance payments and others - related parties	1,439	600
Inventories	112,236	116,493
Total current assets	520,718	501,380
Non-current assets:
Property, plant and equipment, net	106,606	127,721
Land use rights, net	9,555	10,732
Intangible assets, net	1,273	1,812
Operating lease assets	477	138
Long-term time deposits	0	8,135
Other receivables, net (Allowance for credit losses of nil and $50, respectively)	46	358
Advance payment for property, plant and equipment - unrelated parties	6,331	2,284
Advance payment for property, plant and equipment - related parties	1,884	810
Long-term investments	59,810	36,966
Deferred tax assets	7,652	10,114
Other non-current assets	0	16,312
Total assets	714,352	716,762
Current liabilities:
Short-term bank loans	45,671	47,592
Accounts and notes payable - unrelated parties	218,412	214,590
Accounts and notes payable - related parties	16,695	13,464
Customer deposits	5,654	2,400
Accrued payroll and related costs	11,628	10,984
Accrued expenses and other payables	48,311	50,332
Taxes payable	17,598	12,326
Operating lease liabilities - current portion	226	128
Total current liabilities	364,195	351,816
Long-term liabilities:
Advances payable	2,144	2,028
Operating lease liabilities - non-current portion	255	22
Long-term loans	528	0
Deferred tax liabilities	4,010	4,380
Long-term taxes payable	15,805	21,075
Total liabilities	386,937	379,321
Commitments and Contingencies
Mezzanine equity:
Redeemable non-controlling interests	582	553
Stockholders' Equity
Common stock, $0.0001 par value - Authorized - 80,000,000 shares Issued - 32,338,302 and 32,338,302 shares at December 31, 2022 and 2021, respectively	3	3
Additional paid-in capital	63,731	63,731
Retained earnings-
Appropriated	11,851	11,481
Unappropriated	247,174	226,363
Accumulated other comprehensive income	(3,413)	24,717
Treasury stock - 2,152,600 and 1,486,526 shares at December 31, 2022 and 2021, respectively	(7,695)	(5,261)
Total parent company stockholders' equity	311,651	321,034
Non-controlling interests	15,182	15,854
Total stockholders' equity	326,833	336,888
Total liabilities, mezzanine equity and stockholders' equity	$ 714,352	$ 716,762

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Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Consolidated Balance Sheets
Accounts and notes receivable - unrelated parties, allowance for credit losses	$ 14,359	$ 11,961
Accounts and notes receivable - related parties, allowance for credit losses	1,763	898
Advance payments and others, unrelated parties - allowance for credit losses	115	55
Other receivables, allowance for credit losses	$ 0	$ 50
Common stock, par value (in dollars per share)	$ 0.0001	$ 0.0001
Common stock, shares authorized	80,000,000	80,000,000
Common stock, shares issued	32,338,302	32,338,302
Treasury stock, shares	2,152,600	1,486,526

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Consolidated Statements of Income or Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Consolidated Statements of Income or Loss
Net product sales ($44,282 and $65,131 sold to related parties for the years ended December 31, 2022 and 2021)	$ 529,551	$ 497,993
Cost of products sold ($28,810 and $31,580 purchased from related parties for the years ended December 31, 2022 and 2021)	446,157	425,914
Gross profit	83,394	72,079
Net gain on other sales	3,696	4,368
Operating expenses:
Selling expenses	16,910	18,278
General and administrative expenses	26,120	24,423
Research and development expenses	36,109	28,228
Total operating expenses	79,139	70,929
Operating income	7,951	5,518
Other income, net	5,782	6,668
Interest expense	(1,450)	(1,437)
Financial income/(expense), net	10,753	(2,350)
Income before income tax expenses and equity in earnings of affiliated companies	23,036	8,399
Less: Income taxes	3,082	4,004
Add: Equity in earnings of affiliated companies	2,389	6,331
Net income	22,343	10,726
Net income/(loss) attributable to non-controlling interest	1,132	(352)
Accretion to redemption value of redeemable non-controlling interests	(30)	(28)
Net income attributable to parent company's common shareholders	$ 21,181	$ 11,050
Net income attributable to parent company's common shareholders per share -
Basic (in dollars per share)	$ 0.69	$ 0.36
Diluted (in dollars per share)	$ 0.69	$ 0.36
Denominator:
Basic (in shares)	30,639,102	30,851,776
Diluted (in shares)	30,641,274	30,855,431

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Consolidated Statements of Income or Loss (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Consolidated Statements of Income or Loss
Revenue from related parties	$ 44,282	$ 65,131
Related party costs	$ 28,810	$ 31,580

Direct costs arising from transactions with related parties who are not affiliates or joint Ventures. These costs are categorized as cost of goods sold.

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Consolidated Statements of Comprehensive Income or Loss - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Consolidated Statements of Comprehensive Income or Loss
Net income	$ 22,343	$ 10,726
Other comprehensive income:
Foreign currency translation (loss)/gain	(29,934)	7,784
Comprehensive (loss)/income	(7,591)	18,510
Comprehensive (loss)/income attributable to non-controlling interest	(672)	128
Accretion to redemption value of redeemable non-controlling interests	(30)	(28)
Comprehensive (loss)/income attributable to parent company	$ (6,949)	$ 18,354

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Organization and business

XML 19 R7.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Changes in Stockholders' Equity - USD ($) $ in Thousands	Common Stock	Additional Paid-in Capital Wuhu Hongrun New Material Co., Ltd., "Wuhu Hongrun"	Additional Paid-in Capital	Retained Earnings - Appropriated	Unappropriated	Accumulated Other Comprehensive (Loss)/Income	Treasury Stock	Non-controlling Interest Wuhu Hongrun New Material Co., Ltd., "Wuhu Hongrun"	Non-controlling Interest	Total
Balance at January 1 at Dec. 31, 2020	$ 3		$ 64,273	$ 11,303	$ 215,491	$ 17,413	$ (5,261)		$ 16,170
Share-based compensation			88
Acquisition of the non-controlling interest in Wuhu		$ (630)						$ (444)
Net income attributable to parent company					11,078					$ 11,050
Appropriation of retained earnings				178	(178)
Repurchase of common stock in 2022 and 2021 - 666,074 and nil shares, respectively							0			0
Net foreign currency translation adjustment attributable to non-controlling interest									480
Net income/(loss) attributable to non-controlling interest									(352)	(352)
Net foreign currency translation adjustment attributable to parent company						7,304
Balance at December 31 at Dec. 31, 2021	3		63,731	11,481	226,363	24,717	(5,261)		15,854	336,888
Total parent company stockholders' equity at Dec. 31, 2021										321,034
Accretion of redeemable non-controlling interests					(28)
Share-based compensation			0
Acquisition of the non-controlling interest in Wuhu		$ 0						$ 0
Net income attributable to parent company					21,211					21,181
Appropriation of retained earnings				370	(370)
Repurchase of common stock in 2022 and 2021 - 666,074 and nil shares, respectively							(2,434)			(2,400)
Net foreign currency translation adjustment attributable to non-controlling interest									(1,804)
Net income/(loss) attributable to non-controlling interest									1,132	1,132
Net foreign currency translation adjustment attributable to parent company						(28,130)
Balance at December 31 at Dec. 31, 2022	$ 3		$ 63,731	$ 11,851	247,174	$ (3,413)	$ (7,695)		$ 15,182	326,833
Total parent company stockholders' equity at Dec. 31, 2022										$ 311,651
Accretion of redeemable non-controlling interests					$ (30)

XML 20 R8.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Changes in Stockholders' Equity (Parenthetical) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Balance at January 1	1,486,526
Repurchase of common stock	666,074	0
Balance at December 31	2,152,600	1,486,526
Common Stock
Balance at January 1	32,338,302	32,338,302
Balance at December 31	32,338,302	32,338,302
Treasury Stock
Balance at January 1	1,486,526	1,486,526
Repurchase of common stock	666,074	0
Balance at December 31	2,152,600	1,486,526

XML 21 R9.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Cash Flows - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Cash flows from operating activities:
Net income	$ 22,343	$ 10,726
Adjustments to reconcile net income to net cash provided by operating activities:
Share-based compensation	0	88
Depreciation and amortization	25,173	27,113
Deferred income taxes	1,243	4,020
Allowance for credit losses	4,404	2,738
Impairment loss on prepayment for investment in Hefei Senye	2,676	0
Equity in earnings of affiliates	(2,389)	(6,331)
Government subsidy reclassified from advances payable	0	(1,253)
Loss on disposal of fixed assets	58	389
(Increase)/decrease in:
Accounts and notes receivable	(36,935)	26,560
Advance payments and others	(41)	1,439
Inventories	(5,368)	(25,684)
Increase/(decrease) in:
Accounts and notes payable	27,271	(2,801)
Customer deposits	3,580	870
Accrued payroll and related costs	1,628	(2,721)
Accrued expenses and other payables	1,158	(4,081)
Taxes payable	2,925	(4,501)
Advances payable	297	1,700
Net cash provided by operating activities	48,023	28,271
Cash flows from investing activities:
Purchase of short-term investments and long-term time deposits	(80,244)	(63,478)
Proceeds from maturities of short-term investments	75,144	69,351
Decrease/(increase) in demand loans and employee housing loans included in other receivables	292	(171)
Loan to a related party	(146)	0
Repayment of loan from a related party	0	154
Cash received from property, plant and equipment sales	1,514	150
Cash paid to acquire property, plant and equipment (including $ 3,568 and $1,965 paid to related parties for the years ended December 31, 2022 and 2021, respectively)	(20,296)	(9,260)
Cash paid to acquire intangible assets	(188)	(642)
Cash received from long-term investment	3,986	20,621
Investment under equity method	(12,802)	(308)
Cash prepaid for investment under equity method	0	(13,454)
Net cash provided by/(used in) investing activities	(32,740)	2,963
Cash flows from financing activities:
Proceeds from bank loans	51,898	53,209
Repayment of bank loans and government loans	(49,917)	(50,803)
Repurchase of common share	(2,434)	0
Repayments of the borrowing under sale and leaseback transaction	(1,130)	(4,450)
Acquisition of non-controlling interest	0	(1,075)
Net cash used in financing activities	(1,583)	(3,119)
Cash and cash equivalents affected by foreign currency	(14,248)	3,323
Net increase in cash and cash equivalents	(548)	31,438
Cash, cash equivalents and pledged cash at beginning of year	159,499	128,061
Cash, cash equivalents and pledged cash at end of year	158,951	159,499
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid for interest	1,492	1,843
Cash paid for income taxes	4,044	3,398
Non-cash investing activities:
Property, plant and equipment recorded during the year which previously were advance payments	2,473	8,543
Change in accounts payable for acquiring property, plant and equipment	985	$ 1,510
Supplemental disclosure of acquisition of operating lease assets	$ 477

XML 22 R10.htm IDEA: XBRL DOCUMENT

Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Payments to acquire property plant and equipment	$ 20,296	$ 9,260
Related party
Payments to acquire property plant and equipment	$ 3,445	$ 1,965

XML 23 R11.htm IDEA: XBRL DOCUMENT

Organization and business

12 Months Ended

Dec. 31, 2022

Organization and Business

1.	Organization and Business

Henglong USA Corporation, “HLUSA,” which was incorporated on January 8, 2007 in Troy, Michigan, is a wholly-owned subsidiary of the Company, and mainly engages in marketing of automotive parts in North America, and provides after-sales service and research and development (“R&D”) support.

The Company owns interests in the following subsidiaries incorporated in the PRC and Brazil as of December 31, 2022 and 2021.


	Percentage Interest
	December 31,		December 31,
Name of Entity	2022		2021
Shashi Jiulong Power Steering Gears Co., Ltd., “Jiulong” ¹	100.00	%	100.00	%
Jingzhou Henglong Automotive Parts Co., Ltd., “Henglong” ²	100.00	%	100.00	%
Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., “Shenyang” ³	70.00	%	70.00	%
Wuhan Jielong Electric Power Steering Co., Ltd., “Jielong” ⁴	85.00	%	85.00	%
Wuhu Henglong Automotive Steering System Co., Ltd., “Wuhu”⁵	100.00	%	100.00	%
Hubei Henglong Automotive System Group Co., Ltd., “Hubei Henglong” ⁶	100.00	%	100.00	%
Jingzhou Henglong Automotive Technology (Testing) Center, “Testing Center” ⁷	100.00	%	100.00	%
Chongqing Henglong Hongyan Automotive System Co., Ltd., “Chongqing Henglong” ⁸	70.00	%	70.00	%
CAAS Brazil’s Imports and Trade In Automotive Parts Ltd., “Brazil Henglong” ⁹	95.84	%	95.84	%
Wuhan Chuguanjie Automotive Science and Technology Ltd., “Wuhan Chuguanjie” ¹⁰	85.00	%	85.00	%
Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong” ¹¹	100.00	%	100.00	%
Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., “Jingzhou Qingyan”¹²	—		60.00	%
Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., “Henglong KYB”¹³	66.60	%	66.60	%
Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., “Wuhan Hyoseong”¹⁴	51.00	%	51.00	%
Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun”¹⁵	62.00	%	62.00	%
Changchun Hualong Automotive Technology Co., Ltd., “Changchun Hualong” ¹⁶	100.00	%	100.00	%

1.	Jiulong was established in 1993 and mainly engages in the production of integral power steering gears for heavy-duty vehicles.

2.	Henglong was established in 1997 and mainly engages in the production of rack and pinion power steering gears for cars and light duty vehicles.

3.	Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles.

4.	Jielong was established in 2006 and mainly engages in the production and sales of automobile steering columns.

7.	In December 2009, Henglong, a subsidiary of Genesis, formed the Testing Center, which mainly engages in the research and development of new products.

8.	On February 21, 2012, Hubei Henglong and SAIC-IVECO Hongyan Company, “SAIC-IVECO,” established a Sino-foreign joint venture company, Chongqing Henglong, to design, develop and manufacture both hydraulic and electric power steering systems and parts.

On August 21, 2012, Brazil Henglong was established as a Sino-foreign joint venture company by Hubei Henglong and two Brazilian citizens, Ozias Gaia Da Silva and Ademir Dal’ Evedove. Brazil Henglong engages mainly in the import and sales of automotive parts in Brazil. In May 2017, the Company obtained an additional 15.84% equity interest in Brazil Henglong for nil consideration. The Company retained its controlling interest in Brazil Henglong and the acquisition of the non-controlling interest was accounted for as an equity transaction.

10.

11.	In January 2015, Hubei Henglong formed Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong”, which mainly engages in the design and sale of automotive electronics.

12.

13.

14.

15.	In December 2019, Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun”, which mainly engages in the development, manufacturing and sale of high polymer materials. Hubei Henglong owns 62.0% of the shares of Wuhu Hongrun and has consolidated it since its establishment.

16.

XML 24 R12.htm IDEA: XBRL DOCUMENT

Basis of Presentation and Significant Accounting Policies

12 Months Ended

Dec. 31, 2022

Basis of Presentation and Significant Accounting Policies

Basis of Presentation and Significant Accounting Policies

2.	Basis of Presentation and Significant Accounting Policies

Cash and Cash Equivalents - Cash and cash equivalents include all highly-liquid investments with an original maturity of three months or less at the date of purchase.


Category		Estimated Useful Life (Years)
Buildings		25
Machinery and equipment		6
Electronic equipment		4
Motor vehicles		8

The Company accounts for shipping and handling fees as a fulfillment cost since control of the products is usually transferred to the customer after the delivery.

Revenue Disaggregation

Contract Assets and Liabilities

Contract liabilities are mainly customer deposits.

Customer Deposits

Practical Expedient and Exemptions

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

For the years ended December 31, 2022 and 2021, the warranties activities were as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at the beginning of year	$	36,572	$	36,215
Additions during the year		10,941		13,917
Settlement within the year		(11,877)		(14,427)
Foreign currency translation loss		(3,201)		867
Balance at end of year	$	32,435	$	36,572

Concentration of Credit Risk - Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of trade accounts receivable.

At December 31, 2022 and 2021, approximately 8.0% and 7.7% of accounts receivable were from trade transactions with the aforementioned customer (accounting for more than 10% of consolidated sales).

Gain on other sales - Gain on other sales mainly consists of rental income, gain on disposal of intangible assets and property, plant and equipment and technical services revenue.

Research and Development Costs - Research and development costs are expensed as incurred.

Certain Relationships and Related Transactions

The following are the related parties of the Company. The Company or the major shareholders of the Company directly or indirectly have interests in these related parties:

●

Wiselink Holding Limited, “Wiselink”

●

Xiamen Joylon Co., Ltd., “ Xiamen Joylon ”

●

Shanghai Tianxiang Automotive Parts Co., Ltd., “ Shanghai Tianxiang ”

●

Jiangling Tongchuang Machining Co., Ltd., “ Jiangling Tongchuang ”

●

Shanghai Hongxi Investment Inc, “ Hongxi ”

●

Hubei Wiselink Equipment Manufacturing Co., Ltd., “ Hubei Wiselink ”

●

Jingzhou Derun Agricultural S&T Development Co., Ltd., “ Jingzhou Derun ”

●

Jingzhou Tongying Alloys Materials Co., Ltd., “ Jingzhou Tongying ”

●

Wuhan Dida Information S&T Development Co., Ltd., “ Wuhan Dida ”

●

Hubei Wanlong Investment Co., Ltd., “ Hubei Wanlong ”

●

Jingzhou Yude Machining Co., Ltd., “ Jingzhou Yude ”

●

Honghu Changrun Automotive Parts Co., Ltd., “ Honghu Changrun ”

●

Jingzhou Henglong Real Estate Co., Ltd., “ Henglong Real Estate ”

●

Xiamen Joylon Automotive Parts Co., Ltd., “Xiamen Automotive Parts ”

●

Jingzhou Jiulong Material Co., Ltd., “ Jiulong Material ”

●

Wuhan Tongkai Automobile Motor Co., Ltd., “ Wuhan Tongkai ”

●

Jingzhou Natural Astaxanthin Inc, “Jingzhou Astaxanthin”

●

Hubei Asta Biotech Inc., “Hubei Asta”

●

Shanghai Yifu Automotive Electronics Technology Co., Ltd., “Shanghai Yifu”

●

Suzhou Qingyan Venture Capital Fund L.P., “Suzhou Qingyan”

●

Chongqing Qingyan Venture Capital Fund L.P., “Chongqing Qingyan”

●

Chongqing Jinghua Automotive Intelligent Manufacturing Technology Research Co., Ltd., “Chongqing Jinghua”

●

Hubei Hongrun Intelligent System Co.,Ltd., “Hubei Hongrun”

●

Jingzhou WiseDawn Electric Car Co., Ltd., “Jingzhou WiseDawn”

●

Hubei Zhirong Automobile Technology Co., Ltd., “Hubei Zhirong”

●

Hubei Tongrun Automotive Parts Industry Development Co., Ltd., “Hubei Tongrun”

●

Hubei Qingyan Venture Capital Fund L.P, “Hubei Qingyan”

●

Hubei Henglongtianyu Pipe system Co.,Ltd., “Henglong Tianyu”

●

Wuhan Ewinlink Intelligent System Co., Ltd., “Ewinlink”

●

Hubei HLTW Automotive Lightweight Co.,Ltd., “Hubei HLTW”

●

Hubei Jinlv New Energy Battery Technology Co., Ltd., “Hubei Jinlv”

●

Hubei Yiling Intelligent Technology Co., Ltd., “Hubei Yiling”

●

Sentient AB

●

Suzhou Sentient Automotive Technology Co., Ltd., “Suzhou Sentient”

●

Suzhou Qingshan Zhiyuan Venture Capital Fund L.P., “Suzhou Qingshan”

●

Beijing Hainachuan HengLong Automotive Steering System Co., Ltd., “ Beijing Henglong ”

Principal policies of the Company in connection with transactions with related parties are as follows:

Recent Accounting Pronouncements

XML 25 R13.htm IDEA: XBRL DOCUMENT

Accounts and Notes Receivable

12 Months Ended

Dec. 31, 2022

Accounts and Notes Receivable

Accounts and Notes Receivable

3.	Accounts and Notes Receivable

The Company’s accounts receivable on December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Accounts receivable - unrelated parties	$	139,533	$	146,362
Notes receivable - unrelated parties ⁽¹⁾		89,134		61,328
Total accounts and notes receivable - unrelated parties		228,667		207,690
Less: allowance for doubtful accounts - unrelated parties		(14,359)		(11,961)
Accounts and notes receivable, net - unrelated parties		214,308		195,729
Accounts and notes receivable - related parties		11,779		15,505
Less: allowance for doubtful accounts - related parties		(1,763)		(898)
Accounts and notes receivable, net - related parties		10,016		14,607
Accounts and notes receivable, net	$	224,324	$	210,336

(1)	Notes receivable represents accounts receivable in the form of bills of exchange whose acceptances and settlements are handled by banks.

The activity in the Company’s allowance for doubtful accounts of accounts receivable during the years ended December 31, 2022 and 2021, is summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at beginning of year	$	12,859	$	9,854
Amounts provided during the year		5,371		2,774
Amounts reversed of collection during the year		(967)		(24)
Foreign currency translation		(1,141)		255
Balance at end of year	$	16,122	$	12,859

XML 26 R14.htm IDEA: XBRL DOCUMENT

Advance Payments and Others

12 Months Ended

Dec. 31, 2022

Advance Payments and Others

Advance Payments and Others

4.	Advance Payments and Others

The Company’s advance payments and others as of December 31, 2022 and 2021, consisted of the following:


	Year Ended December 31,
	2022		2021
Prepayments for purchase of raw materials	$	3,942	$	6,066
Input VAT		4,283		3,433
Prepayment for share repurchase program		754		1,238
Prepaid income tax		1,287		1,366
Employee advances		713		641
Prepayment for R&D service		748		—
Others		734		607
Total advance payments and others		12,461		13,351
Less: Allowance for doubtful accounts		(115)		(55)
Advance payments and others, net	$	12,346	$	13,296

XML 27 R15.htm IDEA: XBRL DOCUMENT

Inventories

12 Months Ended

Dec. 31, 2022

Inventories

Inventories

5.	Inventories

The Company’s inventories at December 31, 2022 and 2021, consisted of the following (figures are in thousands of USD):


	December 31,
	2022		2021
Raw materials	$	24,502	$	33,583
Work in process		16,001		9,415
Finished goods		71,371		73,495
Cost of R&D service		362		—
Balance at end of year	$	112,236	$	116,493

The Company recorded $4.7 million and $4.7 million of inventory write-down to cost of product sold for the years ended December 31, 2022 and 2021, respectively.

XML 28 R16.htm IDEA: XBRL DOCUMENT

Property, Plant and Equipment

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment

Property, Plant and Equipment

6.	Property, Plant and Equipment

The Company’s property, plant and equipment at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Costs:
Buildings	$	64,928	$	69,554
Machinery and equipment		239,385		253,245
Electronic equipment		6,242		6,887
Motor vehicles		4,308		5,121
Construction in progress		8,238		6,583
		323,101		341,390
Less: Accumulated depreciation		(216,495)		(213,669)
Balance at end of year	$	106,606	$	127,721

Depreciation charges for the years ended December 31, 2022 and 2021, were $24.2 million and $26.1 million, respectively.

XML 29 R17.htm IDEA: XBRL DOCUMENT

Intangible Assets

12 Months Ended

Dec. 31, 2022

Intangible Assets

Intangible Assets

7.	Intangible Assets

The Company’s intangible assets at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Costs:
Patent technology	$	2,266	$	2,598
Management software license		3,756		3,994
Total intangible assets - at cost		6,022		6,592
Less: Accumulated amortization		(4,749)		(4,780)
Balance at end of year, net	$	1,273	$	1,812

Amortization expenses were $0.6 million and $0.6 million for the years ended December 31, 2022 and 2021, respectively.


	Estimated Amortization Expenses
	2023		2024		2025		2026		2027
Amortization expenses	$	496	$	319	$	232	$	130	$	88

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Long-term Investments

12 Months Ended

Dec. 31, 2022

Long-term Investments

Long-term Investments

8.	Long-term Investments

The Company’s long-term investments on December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Limited Partnerships:
Chongqing Venture Fund ⁽¹⁾	$	14,435	$	17,530
Hubei Venture Fund ⁽²⁾		11,738		9,665
Suzhou Venture Fund ⁽³⁾		5,473		7,413
Suzhou Qingshan ⁽⁴⁾		4,179		—
Subtotal - Investments in limited partnerships		35,825		34,608
Corporations:
Sentient AB⁽⁵⁾		21,831		—
Henglong Tianyu		774		913
Chongqing Jinghua		695		642
Jiangsu Intelligent		685		803
Subtotal - Investments in corporations		23,985		2,358
Total	$	59,810	$	36,966

(1)

(2)

(3)

(4)

(5)

The Company summarizes the condensed financial information of the Company’s equity method investments as a group below (figures are in thousands of USD):


	December 31,
	2022		2021
Revenue	$	5,628	$	88,122
Gross profit		1,294		59,561
Income from continuing operations		6,451		63,067
Net income	$	6,430	$	61,374

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Deferred Income Tax Assets and Liabilities

12 Months Ended

Dec. 31, 2022

Deferred Income Tax Assets and Liabilities

Deferred Income Tax Assets and Liabilities

9.	Deferred Income Tax Assets and Liabilities

The components of deferred tax assets and liabilities at December 31, 2022 and 2021, were as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Losses carryforward (U.S.) ⁽¹⁾	$	349	$	2,559
Losses carryforward (Non-U.S.) ⁽¹⁾		11,371		13,058
Product warranties and other reserves		8,525		8,679
Property, plant and equipment		7,506		7,760
Bonus accrual		252		106
Other accruals		2,163		1,101
Deductible temporary difference related to revenue recognition		1,294		879
Others		2,175		1,009
Total deferred tax assets		33,635		35,151
Less: Valuation allowance ^{(1) (2)}		(23,270)		(22,788)
Total deferred tax assets, net of valuation allowance		10,365		12,363

Deferred withholding tax for dividend distribution from PRC subsidiaries (Note 22)		4,010		4,380
Other taxable temporary differences		2,713		2,249
Total deferred tax liabilities	$	6,723	$	6,629

(1)

(2)	As of December 31, 2022, the Company had net operating tax loss carry -forwards amounting to $8.4 million and $1.2 million which will expire from 2023 to 2032 and from 2023 to 2027, respectively, if not used.

The deferred tax assets and liabilities are classified in the consolidated balance sheets as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Deferred tax assets	$	7,652	$	10,114
Deferred tax liabilities		4,010		4,380

The activity in the Company’s valuation allowance for deferred tax assets during the years ended December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at beginning of year	$	22,788	$	18,155
Amounts provided for during the year		5,058		4,468
Amounts used during the year		(2,721)		(247)
Foreign currency translation		(1,855)		412
Balance at end of year	$	23,270	$	22,788

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Other non-current assets

12 Months Ended

Dec. 31, 2022

Other non-current assets

Other non-current assets

10. Other non-current assets

The Company’s other non-current assets at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Prepayment for investment in Hefei Senye⁽¹⁾	$	2,584	$	2,823
Prepayment for investment under equity method-Sentient AB (See Note 8)		—		13,489
Less: Allowance for impairment		(2,584)		—
	$	—	$	16,312

(1)

XML 33 R21.htm IDEA: XBRL DOCUMENT

Bank Loans

12 Months Ended

Dec. 31, 2022

Bank Loans

Bank Loans

11.	Bank Loans

Loans consist of the following as of December 31, 2022 and 2021 (figures are in thousands of USD):


	December 31,
	2022		2021
Short-term bank loans ⁽¹⁾⁽²⁾	$	45,671	$	47,592
Long-term loans ⁽²⁾		528		—
Total bank loans	$	46,199	$	47,592

(1)

(2)

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Accounts and Notes Payable

12 Months Ended

Dec. 31, 2022

Accounts and Notes Payable

Accounts and Notes Payable

12.	Accounts and Notes Payable

The Company’s accounts and notes payable at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Accounts payable - unrelated parties	$	133,882	$	132,593
Notes payable - unrelated parties ⁽¹⁾		84,530		81,997
Accounts and notes payable - unrelated parties		218,412		214,590
Accounts and notes payable - related parties		16,695		13,464
Balance at end of year	$	235,107	$	228,054

(1)

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Accrued Expenses and Other Payables

12 Months Ended

Dec. 31, 2022

Accrued Expenses and Other Payables

Accrued Expenses and Other Payables

13.	Accrued Expenses and Other Payables

The Company’s accrued expenses and other payables at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021

Accrued expenses	$	9,652	$	5,596
Warranty reserves(See Note 2)		32,435		36,572
Payable for the investment in Sentient AB (See Note 8)		2,043		—
Payables for overseas transportation and custom clearance		294		4,548
Dividends payable to holders of non-controlling interests		431		471
Current portion of other long-term payable (See Note 15)		—		1,115
Accrued interest		465		507
Other payables		2,991		1,523
Balance at end of year	$	48,311	$	50,332

XML 36 R24.htm IDEA: XBRL DOCUMENT

Taxes Payable

12 Months Ended

Dec. 31, 2022

Taxes Payable

Taxes Payable

14. Taxes Payable

The Company’s taxes payable on December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021

Value-added tax payable	$	3,470	$	3,494
Tariffs payable		7,061		5,202
Long-term taxes payable - current portion ⁽¹⁾		5,270		2,809
Income tax payable		680		311
Other tax payable		1,117		510
Short-term taxes payable	$	17,598	$	12,326


	December 31,
	2022		2021

Long-term taxes payable	$	21,075	$	23,884
Less: Long-term taxes payable - current portion ⁽¹⁾		(5,270)		(2,809)
Long-term taxes payable ⁽¹⁾	$	15,805	$	21,075

(1)

XML 37 R25.htm IDEA: XBRL DOCUMENT

Other Long-term Payable

12 Months Ended

Dec. 31, 2022

Other Long-term Payable

Other Long-term Payable

15.	Other Long-term Payable

XML 38 R26.htm IDEA: XBRL DOCUMENT

Redeemable non-controlling interests

12 Months Ended

Dec. 31, 2022

Redeemable non-controlling interests

Redeemable non-controlling interests

16. Redeemable non-controlling interests

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Stock Options

12 Months Ended

Dec. 31, 2022

Stock Options

Stock Options

17.	Stock Options


Issuance Date	Expected volatility		Risk-free rate		Expected term (years)	Dividend yield
February 3, 2021	76.91	%	0.46	%	5	0.00	%

The activities of stock options are summarized as follows, including granted, exercised and forfeited.


				Weighted-Average
		Weighted-Average		Contractual
	Shares	Exercise Price		Term (years)
Outstanding - January 1, 2021	22,500	$	4.79	5
Expired	(7,500)		6.95	5
Granted	22,500		6.26	5
Outstanding - December 31, 2021	37,500	$	5.24	5
Expired	(7,500)		5.04	5
Outstanding - December 31, 2022	30,000	$	5.29	5

The following is a summary of the range of exercise prices for stock options that are outstanding and exercisable at December 31, 2022:


	Outstanding Stock	Weighted Average	Weighted Average		Number of Stock
Range of Exercise Prices	Options	Remaining Life	Exercise Price		Options Exercisable
$2.37 - $6.26	30,000	2.55	$	5.29	30,000

As of December 31, 2022 and 2021, the total intrinsic value of the Company’s stock options that were exercisable were nil.

During the years ended December 31, 2022 and 2021, no stock options were exercised.

No stock options were granted during the year ended December 31, 2022. During the years ended December 31, 2022, the weighted average fair value of the Company’s stock options granted was $3.19.

XML 40 R28.htm IDEA: XBRL DOCUMENT

Retained Earnings

12 Months Ended

Dec. 31, 2022

Retained Earnings

Retained Earnings

18.	Retained Earnings

XML 41 R29.htm IDEA: XBRL DOCUMENT

Treasury Stock

12 Months Ended

Dec. 31, 2022

Treasury Stock

Treasury Stock

19.	Treasury Stock

The repurchased shares are not cancelled and are presented as “treasury stock” on the balance sheet.

XML 42 R30.htm IDEA: XBRL DOCUMENT

Other Income, Net

12 Months Ended

Dec. 31, 2022

Other Income, Net

Other Income, Net

20.	Other Income, Net

During the years ended December 31, 2022 and 2021, the Company recorded other income which is summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Government subsidy	$	6,270	$	4,928
Investment income		1,912		1,670
Penalties income		140		70
Provision for impairment of prepayment for investment in Hefei Senye (See Note 10)		(2,540)		—
Total other income, net	$	5,782	$	6,668

XML 43 R31.htm IDEA: XBRL DOCUMENT

Financial (Income)/Expense, net

12 Months Ended

Dec. 31, 2022

Financial (Income)/Expense, net

Financial (Income)/Expense, net

21.	Financial (Income)/Expense, net

During the years ended December 31, 2022 and 2021, the Company recorded financial expense, net which is summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021

Interest income	$	(1,247)	$	(1,242)
Foreign exchange (income)/loss, net		(9,833)		3,204
Bank fees		327		388
Total financial (income)/expense, net	$	(10,753)	$	2,350

XML 44 R32.htm IDEA: XBRL DOCUMENT

Income Taxes

12 Months Ended

Dec. 31, 2022

Income Taxes

22.	Income Taxes

PRC Corporate Income Tax

In 2021, Henglong KYB was granted the title of “High & New Technology Enterprise” and based on the PRC income tax law, it is subject to enterprise income tax at a rate of 15% from 2021 to 2023.

According to the New CIT, Shanghai Henglong, Testing Center, Wuhan Hyoseong, Changchun Hualong, Chongqing and Wuhu Hongrun are subject to income tax at a rate of 25%.

Brazil Corporate Income Tax

Hong Kong Corporate Income Tax

U.S. Corporate Income Tax

One-Time Transition Tax Related to U.S. Tax Reform

The provision for income taxes was calculated as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022			2021
Tax rate		21	%		21	%
Income before income taxes	$	23,036		$	8,399
Income tax at federal statutory tax rate		4,838			1,764
Tax benefit of super deduction of R&D expense ⁽¹⁾		(7,089)			(5,212)
Effect of differences in foreign tax rate		599			504
Change in provision on valuation allowance for deferred income tax - U.S.		(2,458)			(34)
Change in provision on valuation allowance for deferred income tax - Non-U.S.		4,595			4,667
Effect of changes in tax rate		—			2,081
Other differences		2,597			234
Total income tax expense	$	3,082		$	4,004

(1)

Uncertain Tax Positions

The Company did not have any uncertain tax positions for the years ended December 31, 2022 and 2021.

The entire disclosure for income taxes. Disclosures may include net deferred tax liability or asset recognized in an enterprise's statement of financial position, net change during the year in the total valuation allowance, approximate tax effect of each type of temporary difference and carryforward that gives rise to a significant portion of deferred tax liabilities and deferred tax assets, utilization of a tax carryback, and tax uncertainties information.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 21
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32857-109319

Reference 2: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 2
-Subparagraph (SAB Topic 11.C)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330215-122817

Reference 3: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 17
-Subparagraph (b)
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32809-109319

Reference 4: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SAB TOPIC 6.I.5.Q1)
-URI https://asc.fasb.org/extlink&oid=122134291&loc=d3e330036-122817

Reference 5: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 10
-Section 50
-Paragraph 14
-URI https://asc.fasb.org/extlink&oid=121826272&loc=d3e32705-109319

Reference 6: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 270
-Section 50
-Paragraph 1
-URI https://asc.fasb.org/extlink&oid=6424409&loc=d3e44925-109338

Reference 7: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-URI https://asc.fasb.org/topic&trid=2144680

Reference 8: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 740
-SubTopic 30
-Section 50
-Paragraph 2
-Subparagraph (a)
-URI https://asc.fasb.org/extlink&oid=6424122&loc=d3e41874-109331

Reference 9: http://www.xbrl.org/2003/role/disclosureRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 235
-SubTopic 10
-Section S99
-Paragraph 1
-Subparagraph (SX 210.4-08(h)(2))
-URI https://asc.fasb.org/extlink&oid=120395691&loc=d3e23780-122690

Significant Concentrations

XML 45 R33.htm IDEA: XBRL DOCUMENT

Income Per Share

12 Months Ended

Dec. 31, 2022

Income Per Share

Income Per Share

23.	Income Per Share

Basic net income per share is computed using the weighted average number of the common shares outstanding during the year.

For diluted income per share, the Company uses the treasury stock method for options, assuming the issuance of common shares, if dilutive, resulting from the exercise of options.

The calculations of basic and diluted income per share attributable to the parent company were (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Numerator:
Net income attributable to the parent company’s common shareholders - Basic and Diluted	$	21,181	11,050
Denominator:
Weighted average ordinary shares outstanding - Basic		30,639,102	30,851,776
Dilutive effects of stock options		2,172	3,655
Denominator for dilutive income per share - Diluted		30,641,274	30,855,431
Net income per share attributable to the parent company’s common shareholders
Basic		0.69	0.36
Diluted		0.69	0.36

XML 46 R34.htm IDEA: XBRL DOCUMENT

Significant Concentrations

12 Months Ended

Dec. 31, 2022

Significant Concentrations

24.	Significant Concentrations

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Related Party Transactions

12 Months Ended

Dec. 31, 2022

Related Party Transactions

Related Party Transactions

25.	Related Party Transactions

Related party transactions during the years ended December 31, 2022 and 2021, are as shown below (figures are in thousands of USD):

Merchandise Sold to Related Parties


	Year Ended December 31,
	2022		2021
Hubei Hongrun	$	32,489	$	25,229
Jingzhou Yude		8,778		10,784
Xiamen Automotive Parts		2,468		3,864
Beijing Henglong		—		24,604
Other related parties		547		650
Total	$	44,282	$	65,131

Rental Income Obtained from Related Parties


	Year Ended December 31,
	2022		2021
Wuhan Tongkai	$	166	$	180
Jingzhou Tongying		152		170
Hubei Hongrun		137		112
Hubei ASTA		—		23
Other related parties		4		8
Total	$	459	$	493

Materials Sold to Related Parties


	Year Ended December 31,
	2022		2021
Honghu Changrun	$	749	$	1,000
Jingzhou Yude		728		278
Jiangling Tongchuang		603		626
Jingzhou Tongying		547		580
Hubei Hongrun		20		12
Beijing Henglong		—		32
Other related parties		137		25
Total	$	2,784	$	2,553

Materials Purchased from Related Parties


	Year Ended December 31,
	2022		2021
Jingzhou Tongying	$	12,152	$	10,702
Wuhan Tongkai		9,974		9,718
Jiangling Tongchuang		3,238		7,009
Honghu Changrun		2,467		2,358
Henglong Tianyu		611		1,014
Hubei Wiselink		310		481
Hubei Yiling		30		286
Other related parties		28		12
Total	$	28,810	$	31,580

Technology and Services Provided by Related Parties (recorded in R&D Expenses)


	Year Ended December 31,
	2022		2021
Suzhou Sentient	$	607	$	—
Sentient AB		462		935
Hubei Yiling		234		—
Total	$	1,303	$	935

Property, Plant and Equipment Purchased from Related Parties


	Year Ended December 31,
	2022		2021
Hubei Wiselink	$	2,336	$	1,200
Hubei Yiling		48		—
Total	$	2,384	$	1,200

Equity interest purchase from related parties

Loan transaction to a related party

As of December 31, 2022 and 2021, accounts receivable, accounts payable and advance payments between the Company and related parties are as shown below (figures are in thousands of USD):

Accounts and Notes Receivable from Related Parties


	December 31,
	2022		2021
Hubei Hongrun	$	6,192	$	6,918
Jingzhou Yude		3,094		5,740
Xiamen Automotive Parts		1,311		1,533
Xiamen Joylon		815		890
Other related parties		367		424
Total accounts and notes receivable - related parties		11,779		15,505
Less: allowance for doubtful accounts - related parties		(1,763)		(898)
Accounts and notes receivable, net - related parties	$	10,016	$	14,607

Accounts and Notes Payable to Related Parties


	December 31,
	2022		2021
Wuhan Tongkai	$	7,173	$	4,812
Jingzhou Tongying		3,827		3,195
Hubei Wiselink		3,687		2,984
Henglong Tianyu		1,209		1,602
Honghu Changrun		692		484
Jiangling Tongchuang		45		240
Other related parties		62		147
Total	$	16,695	$	13,464

Advance Payments for Property, Plant and Equipment to Related Parties


	December 31,
	2022		2021
Hubei Wiselink	$	1,618	$	565
Henglong Real Estate		224		245
Hubei Hongrun		42		—
Total	$	1,884	$	810

Advance Payments and Others to Related Parties


	December 31,
	2022		2021
Sentient AB	$	632	$	—
Jiangling Tongchuang		401		324
Hubei Zhirong		146		—
Hubei Wiselink		54		—
Other related parties		206		276
Total	$	1,439	$	600

XML 48 R36.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies

12 Months Ended

Dec. 31, 2022

Commitments and Contingencies

26.	Commitments and Contingencies

a.	Legal proceedings

b.	Commitments


	Payment Obligations by Period
	2023		2024		2025		Thereafter		Total
Obligations for investment contracts ⁽¹⁾	$	4,307	$	—	$	—	$	—	$	4,307
Obligations for purchasing and services		23,962		4,650		—		—		28,612
Total	$	28,269	$	4,650	$	—		—	$	32,919

(1)

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Segment Reporting

12 Months Ended

Dec. 31, 2022

Segment Reporting

27.	Segment Reporting

The Company’s product sector information is as follows (figures are in thousands of USD):


	Net Sales				Net Income/(Loss)
	Year Ended December 31,				Year Ended December 31,
	2022		2021		2022		2021
Henglong	$	246,594	$	202,612	$	785	$	(526)
Jiulong		70,113		94,510		227		971
Shenyang		11,942		16,510		(1,083)		560
Wuhu		42,243		27,227		(215)		(385)
Hubei Henglong		126,652		128,142		9,588		11,162
Henglong KYB		121,139		80,683		4,564		248
Brazil Henglong		39,280		25,513		3,390		1,467
Other Entities		80,971		70,884		6,538		(959)
Total Segments		738,934		646,081		23,794		12,538
Corporate		—		—		(534)		(1,628)
Eliminations		(209,383)		(148,088)		(917)		(184)
Total consolidated	$	529,551		497,993	$	22,343	$	10,726


	Depreciation and Amortization				Capital Expenditures
	Year Ended December 31,				Year Ended December 31,
	2022		2021		2022		2021
Henglong	$	7,285	$	6,691	$	5,908	$	1,613
Jiulong		2,156		2,742		1,102		1,863
Shenyang		590		649		146		267
Wuhu		713		943		203		48
Hubei Henglong		9,542		11,237		5,635		2,515
Henglong KYB		1,867		1,427		6,133		4,804
Brazil Henglong		196		205		869		(185)
Other Entities		2,785		3,172		3,262		731
Total Segments		25,134		27,066		23,258		11,656
Corporate		39		47		—		—
Eliminations		—		—		(2,774)		(1,754)
Total consolidated	$	25,173	$	27,113	$	20,484	$	9,902


	Total Assets
	December 31,
	2022		2021
Henglong	$	248,927	$	241,958
Jiulong		62,075		74,816
Shenyang		20,146		24,141
Wuhu		38,579		26,314
Hubei Henglong		392,482		431,529
Henglong KYB		107,045		77,598
Brazil Henglong		20,326		16,291
Other Entities		102,644		100,458
Total Segments		992,224		993,105
Corporate		58,767		69,705
Eliminations		(336,639)		(346,048)
Total consolidated	$	714,352	$	716,762

Financial information segregated by geographic region is as follows (figures are in thousands of USD):


	Net Sales ⁽¹⁾				Long-term assets
	Year Ended December 31,				December 31,
	2022		2021		2022			2021
Geographic region:
China	$	331,589	$	324,979	$	123,062		$	165,264
United States		135,149		134,662		726			755
Other foreign countries		62,813		38,352		1,111			471
Total consolidated	$	529,551	$	497,993	$	124,899	⁽²⁾	$	166,490	⁽²⁾

(1)	Revenue is attributed to each country based on location of customers.

(2)	Pursuant to ASC 280-10-50-41, the deferred tax assets of $7.7 million and $10.1 million and the intangible assets of $1.3 million and $1.8 million were excluded from long-term assets as of December 31, 2022 and 2021, respectively.

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

Reference 1: http://www.xbrl.org/2003/role/disclosureRef
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-Name Accounting Standards Codification
-Topic 280
-SubTopic 10
-Section 50
-Paragraph 31
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Reference 2: http://www.xbrl.org/2003/role/disclosureRef
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Reference 3: http://www.xbrl.org/2003/role/disclosureRef
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Reference 4: http://www.xbrl.org/2003/role/disclosureRef
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Reference 5: http://www.xbrl.org/2003/role/disclosureRef
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Basis of Presentation and Significant Accounting Policies

XML 50 R38.htm IDEA: XBRL DOCUMENT

Basis of Presentation and Significant Accounting Policies (Policies)

12 Months Ended

Dec. 31, 2022

Basis of Presentation

Use of Estimates

Cash and Cash Equivalents

Cash and Cash Equivalents - Cash and cash equivalents include all highly-liquid investments with an original maturity of three months or less at the date of purchase.

Pledged Cash

Short-term Investments

Current Expected Credit Losses

Inventories

Advance Payments

Property, Plant and Equipment


Category		Estimated Useful Life (Years)
Buildings		25
Machinery and equipment		6
Electronic equipment		4
Motor vehicles		8

Assets under Construction

Interest Costs Capitalized

Intangible Assets

Long-Lived Assets

Long-term Investments

Revenue Recognition

The Company accounts for shipping and handling fees as a fulfillment cost since control of the products is usually transferred to the customer after the delivery.

Revenue Disaggregation

Contract Assets and Liabilities

Contract liabilities are mainly customer deposits.

Customer Deposits

Practical Expedient and Exemptions

The Company does not disclose the value of unsatisfied performance obligations for contracts with an original expected length of one year or less.

Government Subsidies

Sales Taxes

Uncertain Tax Positions

Product Warranties

For the years ended December 31, 2022 and 2021, the warranties activities were as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at the beginning of year	$	36,572	$	36,215
Additions during the year		10,941		13,917
Settlement within the year		(11,877)		(14,427)
Foreign currency translation loss		(3,201)		867
Balance at end of year	$	32,435	$	36,572

Pension

Concentration of Credit Risk

Concentration of Credit Risk - Financial instruments that potentially subject the Company to significant concentrations of credit risk consist primarily of trade accounts receivable.

At December 31, 2022 and 2021, approximately 8.0% and 7.7% of accounts receivable were from trade transactions with the aforementioned customer (accounting for more than 10% of consolidated sales).

Income Taxes

Gain on other sales - Gain on other sales mainly consists of rental income, gain on disposal of intangible assets and property, plant and equipment and technical services revenue.

Research and Development Costs

Research and Development Costs - Research and development costs are expensed as incurred.

Advertising, Shipping and Handling Costs

Leases

Income Per Share

Comprehensive Income

Fair Value Measurements

Stock-Based Compensation

Foreign Currencies

Certain Relationships and Related Transactions

The following are the related parties of the Company. The Company or the major shareholders of the Company directly or indirectly have interests in these related parties:

●

Wiselink Holding Limited, “Wiselink”

●

Xiamen Joylon Co., Ltd., “ Xiamen Joylon ”

●

Shanghai Tianxiang Automotive Parts Co., Ltd., “ Shanghai Tianxiang ”

●

Jiangling Tongchuang Machining Co., Ltd., “ Jiangling Tongchuang ”

●

Shanghai Hongxi Investment Inc, “ Hongxi ”

●

Hubei Wiselink Equipment Manufacturing Co., Ltd., “ Hubei Wiselink ”

●

Jingzhou Derun Agricultural S&T Development Co., Ltd., “ Jingzhou Derun ”

●

Jingzhou Tongying Alloys Materials Co., Ltd., “ Jingzhou Tongying ”

●

Wuhan Dida Information S&T Development Co., Ltd., “ Wuhan Dida ”

●

Hubei Wanlong Investment Co., Ltd., “ Hubei Wanlong ”

●

Jingzhou Yude Machining Co., Ltd., “ Jingzhou Yude ”

●

Honghu Changrun Automotive Parts Co., Ltd., “ Honghu Changrun ”

●

Jingzhou Henglong Real Estate Co., Ltd., “ Henglong Real Estate ”

●

Xiamen Joylon Automotive Parts Co., Ltd., “Xiamen Automotive Parts ”

●

Jingzhou Jiulong Material Co., Ltd., “ Jiulong Material ”

●

Wuhan Tongkai Automobile Motor Co., Ltd., “ Wuhan Tongkai ”

●

Jingzhou Natural Astaxanthin Inc, “Jingzhou Astaxanthin”

●

Hubei Asta Biotech Inc., “Hubei Asta”

●

Shanghai Yifu Automotive Electronics Technology Co., Ltd., “Shanghai Yifu”

●

Suzhou Qingyan Venture Capital Fund L.P., “Suzhou Qingyan”

●

Chongqing Qingyan Venture Capital Fund L.P., “Chongqing Qingyan”

●

Chongqing Jinghua Automotive Intelligent Manufacturing Technology Research Co., Ltd., “Chongqing Jinghua”

●

Hubei Hongrun Intelligent System Co.,Ltd., “Hubei Hongrun”

●

Jingzhou WiseDawn Electric Car Co., Ltd., “Jingzhou WiseDawn”

●

Hubei Zhirong Automobile Technology Co., Ltd., “Hubei Zhirong”

●

Hubei Tongrun Automotive Parts Industry Development Co., Ltd., “Hubei Tongrun”

●

Hubei Qingyan Venture Capital Fund L.P, “Hubei Qingyan”

●

Hubei Henglongtianyu Pipe system Co.,Ltd., “Henglong Tianyu”

●

Wuhan Ewinlink Intelligent System Co., Ltd., “Ewinlink”

●

Hubei HLTW Automotive Lightweight Co.,Ltd., “Hubei HLTW”

●

Hubei Jinlv New Energy Battery Technology Co., Ltd., “Hubei Jinlv”

●

Hubei Yiling Intelligent Technology Co., Ltd., “Hubei Yiling”

●

Sentient AB

●

Suzhou Sentient Automotive Technology Co., Ltd., “Suzhou Sentient”

●

Suzhou Qingshan Zhiyuan Venture Capital Fund L.P., “Suzhou Qingshan”

●

Beijing Hainachuan HengLong Automotive Steering System Co., Ltd., “ Beijing Henglong ”

Products Sold to Related Parties

Principal policies of the Company in connection with transactions with related parties are as follows:

Materials Purchased from Related Parties

Equipment and Production Technology Purchased from Related Parties

Short-term Loans Extended to Related Parties

Recent Accounting Pronouncements

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Organization and business (Tables)

12 Months Ended

Dec. 31, 2022

Organization and Business

Schedule of equity method investments


	Percentage Interest
	December 31,		December 31,
Name of Entity	2022		2021
Shashi Jiulong Power Steering Gears Co., Ltd., “Jiulong” ¹	100.00	%	100.00	%
Jingzhou Henglong Automotive Parts Co., Ltd., “Henglong” ²	100.00	%	100.00	%
Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., “Shenyang” ³	70.00	%	70.00	%
Wuhan Jielong Electric Power Steering Co., Ltd., “Jielong” ⁴	85.00	%	85.00	%
Wuhu Henglong Automotive Steering System Co., Ltd., “Wuhu”⁵	100.00	%	100.00	%
Hubei Henglong Automotive System Group Co., Ltd., “Hubei Henglong” ⁶	100.00	%	100.00	%
Jingzhou Henglong Automotive Technology (Testing) Center, “Testing Center” ⁷	100.00	%	100.00	%
Chongqing Henglong Hongyan Automotive System Co., Ltd., “Chongqing Henglong” ⁸	70.00	%	70.00	%
CAAS Brazil’s Imports and Trade In Automotive Parts Ltd., “Brazil Henglong” ⁹	95.84	%	95.84	%
Wuhan Chuguanjie Automotive Science and Technology Ltd., “Wuhan Chuguanjie” ¹⁰	85.00	%	85.00	%
Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong” ¹¹	100.00	%	100.00	%
Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., “Jingzhou Qingyan”¹²	—		60.00	%
Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., “Henglong KYB”¹³	66.60	%	66.60	%
Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., “Wuhan Hyoseong”¹⁴	51.00	%	51.00	%
Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun”¹⁵	62.00	%	62.00	%
Changchun Hualong Automotive Technology Co., Ltd., “Changchun Hualong” ¹⁶	100.00	%	100.00	%

1.	Jiulong was established in 1993 and mainly engages in the production of integral power steering gears for heavy-duty vehicles.

2.	Henglong was established in 1997 and mainly engages in the production of rack and pinion power steering gears for cars and light duty vehicles.

3.	Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles.

4.	Jielong was established in 2006 and mainly engages in the production and sales of automobile steering columns.

7.	In December 2009, Henglong, a subsidiary of Genesis, formed the Testing Center, which mainly engages in the research and development of new products.

8.	On February 21, 2012, Hubei Henglong and SAIC-IVECO Hongyan Company, “SAIC-IVECO,” established a Sino-foreign joint venture company, Chongqing Henglong, to design, develop and manufacture both hydraulic and electric power steering systems and parts.

On August 21, 2012, Brazil Henglong was established as a Sino-foreign joint venture company by Hubei Henglong and two Brazilian citizens, Ozias Gaia Da Silva and Ademir Dal’ Evedove. Brazil Henglong engages mainly in the import and sales of automotive parts in Brazil. In May 2017, the Company obtained an additional 15.84% equity interest in Brazil Henglong for nil consideration. The Company retained its controlling interest in Brazil Henglong and the acquisition of the non-controlling interest was accounted for as an equity transaction.

10.

11.	In January 2015, Hubei Henglong formed Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., “Shanghai Henglong”, which mainly engages in the design and sale of automotive electronics.

12.

13.

14.

15.	In December 2019, Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd., “Wuhu Hongrun”, which mainly engages in the development, manufacturing and sale of high polymer materials. Hubei Henglong owns 62.0% of the shares of Wuhu Hongrun and has consolidated it since its establishment.

16.

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Basis of Presentation and Significant Accounting Policies (Tables)

12 Months Ended

Dec. 31, 2022

Basis of Presentation and Significant Accounting Policies

Schedule of depreciation property plant and equipment


Category		Estimated Useful Life (Years)
Buildings		25
Machinery and equipment		6
Electronic equipment		4
Motor vehicles		8

Schedule of product warranties activities

For the years ended December 31, 2022 and 2021, the warranties activities were as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at the beginning of year	$	36,572	$	36,215
Additions during the year		10,941		13,917
Settlement within the year		(11,877)		(14,427)
Foreign currency translation loss		(3,201)		867
Balance at end of year	$	32,435	$	36,572

XML 53 R41.htm IDEA: XBRL DOCUMENT

Accounts and Notes Receivable (Tables)

12 Months Ended

Dec. 31, 2022

Accounts and Notes Receivable

Schedule of accounts and notes receivable, net

The Company’s accounts receivable on December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Accounts receivable - unrelated parties	$	139,533	$	146,362
Notes receivable - unrelated parties ⁽¹⁾		89,134		61,328
Total accounts and notes receivable - unrelated parties		228,667		207,690
Less: allowance for doubtful accounts - unrelated parties		(14,359)		(11,961)
Accounts and notes receivable, net - unrelated parties		214,308		195,729
Accounts and notes receivable - related parties		11,779		15,505
Less: allowance for doubtful accounts - related parties		(1,763)		(898)
Accounts and notes receivable, net - related parties		10,016		14,607
Accounts and notes receivable, net	$	224,324	$	210,336

(1)	Notes receivable represents accounts receivable in the form of bills of exchange whose acceptances and settlements are handled by banks.

Schedule of allowance for doubtful accounts of accounts receivable

The activity in the Company’s allowance for doubtful accounts of accounts receivable during the years ended December 31, 2022 and 2021, is summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at beginning of year	$	12,859	$	9,854
Amounts provided during the year		5,371		2,774
Amounts reversed of collection during the year		(967)		(24)
Foreign currency translation		(1,141)		255
Balance at end of year	$	16,122	$	12,859

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Advance Payments and Others (Tables)

12 Months Ended

Dec. 31, 2022

Advance Payments and Others

Schedule of advance payments and others


	Year Ended December 31,
	2022		2021
Prepayments for purchase of raw materials	$	3,942	$	6,066
Input VAT		4,283		3,433
Prepayment for share repurchase program		754		1,238
Prepaid income tax		1,287		1,366
Employee advances		713		641
Prepayment for R&D service		748		—
Others		734		607
Total advance payments and others		12,461		13,351
Less: Allowance for doubtful accounts		(115)		(55)
Advance payments and others, net	$	12,346	$	13,296

XML 55 R43.htm IDEA: XBRL DOCUMENT

Inventories (Tables)

12 Months Ended

Dec. 31, 2022

Inventories

Schedule of inventories

The Company’s inventories at December 31, 2022 and 2021, consisted of the following (figures are in thousands of USD):


	December 31,
	2022		2021
Raw materials	$	24,502	$	33,583
Work in process		16,001		9,415
Finished goods		71,371		73,495
Cost of R&D service		362		—
Balance at end of year	$	112,236	$	116,493

XML 56 R44.htm IDEA: XBRL DOCUMENT

Property, Plant and Equipment (Tables)

12 Months Ended

Dec. 31, 2022

Property, Plant and Equipment

Schedule of property, plant and equipment

The Company’s property, plant and equipment at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Costs:
Buildings	$	64,928	$	69,554
Machinery and equipment		239,385		253,245
Electronic equipment		6,242		6,887
Motor vehicles		4,308		5,121
Construction in progress		8,238		6,583
		323,101		341,390
Less: Accumulated depreciation		(216,495)		(213,669)
Balance at end of year	$	106,606	$	127,721

XML 57 R45.htm IDEA: XBRL DOCUMENT

Intangible Assets (Tables)

12 Months Ended

Dec. 31, 2022

Intangible Assets

Schedule of intangible assets

The Company’s intangible assets at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Costs:
Patent technology	$	2,266	$	2,598
Management software license		3,756		3,994
Total intangible assets - at cost		6,022		6,592
Less: Accumulated amortization		(4,749)		(4,780)
Balance at end of year, net	$	1,273	$	1,812

Schedule of estimated amortization expenses


	Estimated Amortization Expenses
	2023		2024		2025		2026		2027
Amortization expenses	$	496	$	319	$	232	$	130	$	88

XML 58 R46.htm IDEA: XBRL DOCUMENT

Long-term Investments (Tables)

12 Months Ended

Dec. 31, 2022

Long-term Investments

Schedule of long-term investments

The Company’s long-term investments on December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Limited Partnerships:
Chongqing Venture Fund ⁽¹⁾	$	14,435	$	17,530
Hubei Venture Fund ⁽²⁾		11,738		9,665
Suzhou Venture Fund ⁽³⁾		5,473		7,413
Suzhou Qingshan ⁽⁴⁾		4,179		—
Subtotal - Investments in limited partnerships		35,825		34,608
Corporations:
Sentient AB⁽⁵⁾		21,831		—
Henglong Tianyu		774		913
Chongqing Jinghua		695		642
Jiangsu Intelligent		685		803
Subtotal - Investments in corporations		23,985		2,358
Total	$	59,810	$	36,966

(1)

(2)

(3)

(4)

(5)

Summary of condensed financial information of company's equity method investments

The Company summarizes the condensed financial information of the Company’s equity method investments as a group below (figures are in thousands of USD):


	December 31,
	2022		2021
Revenue	$	5,628	$	88,122
Gross profit		1,294		59,561
Income from continuing operations		6,451		63,067
Net income	$	6,430	$	61,374

XML 59 R47.htm IDEA: XBRL DOCUMENT

Deferred Income Tax Assets and Liabilities (Tables)

12 Months Ended

Dec. 31, 2022

Deferred Income Tax Assets and Liabilities

Schedule of deferred tax assets and liabilities

The components of deferred tax assets and liabilities at December 31, 2022 and 2021, were as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Losses carryforward (U.S.) ⁽¹⁾	$	349	$	2,559
Losses carryforward (Non-U.S.) ⁽¹⁾		11,371		13,058
Product warranties and other reserves		8,525		8,679
Property, plant and equipment		7,506		7,760
Bonus accrual		252		106
Other accruals		2,163		1,101
Deductible temporary difference related to revenue recognition		1,294		879
Others		2,175		1,009
Total deferred tax assets		33,635		35,151
Less: Valuation allowance ^{(1) (2)}		(23,270)		(22,788)
Total deferred tax assets, net of valuation allowance		10,365		12,363

Deferred withholding tax for dividend distribution from PRC subsidiaries (Note 22)		4,010		4,380
Other taxable temporary differences		2,713		2,249
Total deferred tax liabilities	$	6,723	$	6,629

(1)

(2)	As of December 31, 2022, the Company had net operating tax loss carry -forwards amounting to $8.4 million and $1.2 million which will expire from 2023 to 2032 and from 2023 to 2027, respectively, if not used.

Schedule of deferred tax assets and liabilities as classified in balance sheet

The deferred tax assets and liabilities are classified in the consolidated balance sheets as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Deferred tax assets	$	7,652	$	10,114
Deferred tax liabilities		4,010		4,380

Schedule of valuation allowance for deferred tax assets

The activity in the Company’s valuation allowance for deferred tax assets during the years ended December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Balance at beginning of year	$	22,788	$	18,155
Amounts provided for during the year		5,058		4,468
Amounts used during the year		(2,721)		(247)
Foreign currency translation		(1,855)		412
Balance at end of year	$	23,270	$	22,788

XML 60 R48.htm IDEA: XBRL DOCUMENT

Other non-current assets (Tables)

12 Months Ended

Dec. 31, 2022

Other non-current assets

Schedule of other non-current assets

The Company’s other non-current assets at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Prepayment for investment in Hefei Senye⁽¹⁾	$	2,584	$	2,823
Prepayment for investment under equity method-Sentient AB (See Note 8)		—		13,489
Less: Allowance for impairment		(2,584)		—
	$	—	$	16,312

(1)

XML 61 R49.htm IDEA: XBRL DOCUMENT

Bank Loans (Tables)

12 Months Ended

Dec. 31, 2022

Bank Loans

Schedule of loans

Loans consist of the following as of December 31, 2022 and 2021 (figures are in thousands of USD):


	December 31,
	2022		2021
Short-term bank loans ⁽¹⁾⁽²⁾	$	45,671	$	47,592
Long-term loans ⁽²⁾		528		—
Total bank loans	$	46,199	$	47,592

(1)

(2)

XML 62 R50.htm IDEA: XBRL DOCUMENT

Accounts and Notes Payable (Tables)

12 Months Ended

Dec. 31, 2022

Accounts and Notes Payable

Schedule of accounts and notes payable

The Company’s accounts and notes payable at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021
Accounts payable - unrelated parties	$	133,882	$	132,593
Notes payable - unrelated parties ⁽¹⁾		84,530		81,997
Accounts and notes payable - unrelated parties		218,412		214,590
Accounts and notes payable - related parties		16,695		13,464
Balance at end of year	$	235,107	$	228,054

(1)

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Accrued Expenses and Other Payables (Tables)

12 Months Ended

Dec. 31, 2022

Accrued Expenses and Other Payables

Schedule of accrued expenses and other payables

The Company’s accrued expenses and other payables at December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021

Accrued expenses	$	9,652	$	5,596
Warranty reserves(See Note 2)		32,435		36,572
Payable for the investment in Sentient AB (See Note 8)		2,043		—
Payables for overseas transportation and custom clearance		294		4,548
Dividends payable to holders of non-controlling interests		431		471
Current portion of other long-term payable (See Note 15)		—		1,115
Accrued interest		465		507
Other payables		2,991		1,523
Balance at end of year	$	48,311	$	50,332

XML 64 R52.htm IDEA: XBRL DOCUMENT

Taxes Payable (Tables)

12 Months Ended

Dec. 31, 2022

Taxes Payable

Schedule of taxes payable

The Company’s taxes payable on December 31, 2022 and 2021, are summarized as follows (figures are in thousands of USD):


	December 31,
	2022		2021

Value-added tax payable	$	3,470	$	3,494
Tariffs payable		7,061		5,202
Long-term taxes payable - current portion ⁽¹⁾		5,270		2,809
Income tax payable		680		311
Other tax payable		1,117		510
Short-term taxes payable	$	17,598	$	12,326


	December 31,
	2022		2021

Long-term taxes payable	$	21,075	$	23,884
Less: Long-term taxes payable - current portion ⁽¹⁾		(5,270)		(2,809)
Long-term taxes payable ⁽¹⁾	$	15,805	$	21,075

(1)

XML 65 R53.htm IDEA: XBRL DOCUMENT

Stock Options (Tables)

12 Months Ended

Dec. 31, 2022

Stock Options

Schedule of assumptions used to estimate fair value of stock options


Issuance Date	Expected volatility		Risk-free rate		Expected term (years)	Dividend yield
February 3, 2021	76.91	%	0.46	%	5	0.00	%

Schedule of stock options activities


				Weighted-Average
		Weighted-Average		Contractual
	Shares	Exercise Price		Term (years)
Outstanding - January 1, 2021	22,500	$	4.79	5
Expired	(7,500)		6.95	5
Granted	22,500		6.26	5
Outstanding - December 31, 2021	37,500	$	5.24	5
Expired	(7,500)		5.04	5
Outstanding - December 31, 2022	30,000	$	5.29	5

Schedule of range of exercise prices for stock options

The following is a summary of the range of exercise prices for stock options that are outstanding and exercisable at December 31, 2022:


	Outstanding Stock	Weighted Average	Weighted Average		Number of Stock
Range of Exercise Prices	Options	Remaining Life	Exercise Price		Options Exercisable
$2.37 - $6.26	30,000	2.55	$	5.29	30,000

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Other Income, Net (Tables)

12 Months Ended

Dec. 31, 2022

Other Income, Net

Schedule of components of other income, net

During the years ended December 31, 2022 and 2021, the Company recorded other income which is summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Government subsidy	$	6,270	$	4,928
Investment income		1,912		1,670
Penalties income		140		70
Provision for impairment of prepayment for investment in Hefei Senye (See Note 10)		(2,540)		—
Total other income, net	$	5,782	$	6,668

XML 67 R55.htm IDEA: XBRL DOCUMENT

Financial (Income)/Expense, net (Tables)

12 Months Ended

Dec. 31, 2022

Financial (Income)/Expense, net

Schedule of recorded financial expense, net

During the years ended December 31, 2022 and 2021, the Company recorded financial expense, net which is summarized as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021

Interest income	$	(1,247)	$	(1,242)
Foreign exchange (income)/loss, net		(9,833)		3,204
Bank fees		327		388
Total financial (income)/expense, net	$	(10,753)	$	2,350

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Income Taxes (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of provision for income taxes

The provision for income taxes was calculated as follows (figures are in thousands of USD):


	Year Ended December 31,
	2022			2021
Tax rate		21	%		21	%
Income before income taxes	$	23,036		$	8,399
Income tax at federal statutory tax rate		4,838			1,764
Tax benefit of super deduction of R&D expense ⁽¹⁾		(7,089)			(5,212)
Effect of differences in foreign tax rate		599			504
Change in provision on valuation allowance for deferred income tax - U.S.		(2,458)			(34)
Change in provision on valuation allowance for deferred income tax - Non-U.S.		4,595			4,667
Effect of changes in tax rate		—			2,081
Other differences		2,597			234
Total income tax expense	$	3,082		$	4,004

(1)

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Income Per Share (Tables)

12 Months Ended

Dec. 31, 2022

Income Per Share

Schedule of basic and diluted income per share

The calculations of basic and diluted income per share attributable to the parent company were (figures are in thousands of USD):


	Year Ended December 31,
	2022		2021
Numerator:
Net income attributable to the parent company’s common shareholders - Basic and Diluted	$	21,181	11,050
Denominator:
Weighted average ordinary shares outstanding - Basic		30,639,102	30,851,776
Dilutive effects of stock options		2,172	3,655
Denominator for dilutive income per share - Diluted		30,641,274	30,855,431
Net income per share attributable to the parent company’s common shareholders
Basic		0.69	0.36
Diluted		0.69	0.36

XML 70 R58.htm IDEA: XBRL DOCUMENT

Related Party Transactions (Tables)

12 Months Ended

Dec. 31, 2022

Related Party Transactions

Schedule of related party transactions

Related party transactions during the years ended December 31, 2022 and 2021, are as shown below (figures are in thousands of USD):

Merchandise Sold to Related Parties


	Year Ended December 31,
	2022		2021
Hubei Hongrun	$	32,489	$	25,229
Jingzhou Yude		8,778		10,784
Xiamen Automotive Parts		2,468		3,864
Beijing Henglong		—		24,604
Other related parties		547		650
Total	$	44,282	$	65,131

Rental Income Obtained from Related Parties


	Year Ended December 31,
	2022		2021
Wuhan Tongkai	$	166	$	180
Jingzhou Tongying		152		170
Hubei Hongrun		137		112
Hubei ASTA		—		23
Other related parties		4		8
Total	$	459	$	493

Materials Sold to Related Parties


	Year Ended December 31,
	2022		2021
Honghu Changrun	$	749	$	1,000
Jingzhou Yude		728		278
Jiangling Tongchuang		603		626
Jingzhou Tongying		547		580
Hubei Hongrun		20		12
Beijing Henglong		—		32
Other related parties		137		25
Total	$	2,784	$	2,553

Materials Purchased from Related Parties


	Year Ended December 31,
	2022		2021
Jingzhou Tongying	$	12,152	$	10,702
Wuhan Tongkai		9,974		9,718
Jiangling Tongchuang		3,238		7,009
Honghu Changrun		2,467		2,358
Henglong Tianyu		611		1,014
Hubei Wiselink		310		481
Hubei Yiling		30		286
Other related parties		28		12
Total	$	28,810	$	31,580

Technology and Services Provided by Related Parties (recorded in R&D Expenses)


	Year Ended December 31,
	2022		2021
Suzhou Sentient	$	607	$	—
Sentient AB		462		935
Hubei Yiling		234		—
Total	$	1,303	$	935

Property, Plant and Equipment Purchased from Related Parties


	Year Ended December 31,
	2022		2021
Hubei Wiselink	$	2,336	$	1,200
Hubei Yiling		48		—
Total	$	2,384	$	1,200

Equity interest purchase from related parties

Loan transaction to a related party

As of December 31, 2022 and 2021, accounts receivable, accounts payable and advance payments between the Company and related parties are as shown below (figures are in thousands of USD):

Accounts and Notes Receivable from Related Parties


	December 31,
	2022		2021
Hubei Hongrun	$	6,192	$	6,918
Jingzhou Yude		3,094		5,740
Xiamen Automotive Parts		1,311		1,533
Xiamen Joylon		815		890
Other related parties		367		424
Total accounts and notes receivable - related parties		11,779		15,505
Less: allowance for doubtful accounts - related parties		(1,763)		(898)
Accounts and notes receivable, net - related parties	$	10,016	$	14,607

Accounts and Notes Payable to Related Parties


	December 31,
	2022		2021
Wuhan Tongkai	$	7,173	$	4,812
Jingzhou Tongying		3,827		3,195
Hubei Wiselink		3,687		2,984
Henglong Tianyu		1,209		1,602
Honghu Changrun		692		484
Jiangling Tongchuang		45		240
Other related parties		62		147
Total	$	16,695	$	13,464

Advance Payments for Property, Plant and Equipment to Related Parties


	December 31,
	2022		2021
Hubei Wiselink	$	1,618	$	565
Henglong Real Estate		224		245
Hubei Hongrun		42		—
Total	$	1,884	$	810

Advance Payments and Others to Related Parties


	December 31,
	2022		2021
Sentient AB	$	632	$	—
Jiangling Tongchuang		401		324
Hubei Zhirong		146		—
Hubei Wiselink		54		—
Other related parties		206		276
Total	$	1,439	$	600

XML 71 R59.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of major commitments and contingencies


	Payment Obligations by Period
	2023		2024		2025		Thereafter		Total
Obligations for investment contracts ⁽¹⁾	$	4,307	$	—	$	—	$	—	$	4,307
Obligations for purchasing and services		23,962		4,650		—		—		28,612
Total	$	28,269	$	4,650	$	—		—	$	32,919

(1)

XML 72 R60.htm IDEA: XBRL DOCUMENT

Segment Reporting (Tables)

12 Months Ended

Dec. 31, 2022

Schedule of product sector information by reporting segments

The Company’s product sector information is as follows (figures are in thousands of USD):


	Net Sales				Net Income/(Loss)
	Year Ended December 31,				Year Ended December 31,
	2022		2021		2022		2021
Henglong	$	246,594	$	202,612	$	785	$	(526)
Jiulong		70,113		94,510		227		971
Shenyang		11,942		16,510		(1,083)		560
Wuhu		42,243		27,227		(215)		(385)
Hubei Henglong		126,652		128,142		9,588		11,162
Henglong KYB		121,139		80,683		4,564		248
Brazil Henglong		39,280		25,513		3,390		1,467
Other Entities		80,971		70,884		6,538		(959)
Total Segments		738,934		646,081		23,794		12,538
Corporate		—		—		(534)		(1,628)
Eliminations		(209,383)		(148,088)		(917)		(184)
Total consolidated	$	529,551		497,993	$	22,343	$	10,726


	Depreciation and Amortization				Capital Expenditures
	Year Ended December 31,				Year Ended December 31,
	2022		2021		2022		2021
Henglong	$	7,285	$	6,691	$	5,908	$	1,613
Jiulong		2,156		2,742		1,102		1,863
Shenyang		590		649		146		267
Wuhu		713		943		203		48
Hubei Henglong		9,542		11,237		5,635		2,515
Henglong KYB		1,867		1,427		6,133		4,804
Brazil Henglong		196		205		869		(185)
Other Entities		2,785		3,172		3,262		731
Total Segments		25,134		27,066		23,258		11,656
Corporate		39		47		—		—
Eliminations		—		—		(2,774)		(1,754)
Total consolidated	$	25,173	$	27,113	$	20,484	$	9,902


	Total Assets
	December 31,
	2022		2021
Henglong	$	248,927	$	241,958
Jiulong		62,075		74,816
Shenyang		20,146		24,141
Wuhu		38,579		26,314
Hubei Henglong		392,482		431,529
Henglong KYB		107,045		77,598
Brazil Henglong		20,326		16,291
Other Entities		102,644		100,458
Total Segments		992,224		993,105
Corporate		58,767		69,705
Eliminations		(336,639)		(346,048)
Total consolidated	$	714,352	$	716,762

Schedule of segment reporting information, by geographic region

Financial information segregated by geographic region is as follows (figures are in thousands of USD):


	Net Sales ⁽¹⁾				Long-term assets
	Year Ended December 31,				December 31,
	2022		2021		2022			2021
Geographic region:
China	$	331,589	$	324,979	$	123,062		$	165,264
United States		135,149		134,662		726			755
Other foreign countries		62,813		38,352		1,111			471
Total consolidated	$	529,551	$	497,993	$	124,899	⁽²⁾	$	166,490	⁽²⁾

(1)	Revenue is attributed to each country based on location of customers.

(2)	Pursuant to ASC 280-10-50-41, the deferred tax assets of $7.7 million and $10.1 million and the intangible assets of $1.3 million and $1.8 million were excluded from long-term assets as of December 31, 2022 and 2021, respectively.

XML 73 R61.htm IDEA: XBRL DOCUMENT

Organization and Business (Details)

Dec. 31, 2022

Dec. 31, 2021

Apr. 30, 2021

Apr. 30, 2020

Dec. 31, 2019

Mar. 31, 2019

Aug. 31, 2018

May 31, 2017

Jiulong

100.00%

Henglong

100.00%

Shenyang

Wuhan Jielong Electric Power Steering Co., Ltd., "Jielong"

70.00%

^[1]

70.00%

85.00%

100.00%

22.67%

Hubei Henglong

Jingzhou Henglong Automotive Technology (Testing) Center, "Testing Center"

100.00%

Chongqing Henglong Hongyan Automotive System Co., Ltd "Chongqing Henglong"

100.00%

CAAS Brazil's Imports and Trade In Automotive Parts Ltd., "Brazil Henglong"

70.00%

Wuhan Chuguanjie Automotive Science and Technology Ltd., "Wuhan Chuguanjie"

95.84%

Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., "Shanghai Henglong"

85.00%

Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., "Jingzhou Qingyan"

100.00%

Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., "Henglong KYB"

60.00%

Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., "Wuhan Hyoseong"

66.60%

Wuhu Hongrun New Material Co., Ltd., "Wuhu Hongrun"

51.00%

Changchun Hualong Automotive Technology Co Ltd Changchun Hualong

62.00%

100.00%

52.10%

15.84%

Third Party

Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd "Wuhu Hongrun"

47.90%

Changchun Hualong Automotive Technology Co Ltd Changchun Hualong

62.00%

[1]	Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles.

XML 74 R62.htm IDEA: XBRL DOCUMENT

Organization and Business - Additional Information (Details)
$ in Thousands, ¥ in Millions

1 Months Ended

12 Months Ended

Jun. 30, 2021

CNY (¥)

Jun. 30, 2021

USD ($)

Apr. 30, 2021

CNY (¥)

Apr. 30, 2021

USD ($)

Apr. 30, 2020

CNY (¥)

Apr. 30, 2020

USD ($)

May 31, 2017

USD ($)

Dec. 31, 2022

CNY (¥)

Dec. 31, 2022

USD ($)

Dec. 31, 2021

Dec. 31, 2019

Mar. 31, 2019

Aug. 31, 2018

Equity interests acquired (as a percent)

100.00%

Henglong

100.00%

Jiulong

100.00%

Shenyang

Wuhan Jielong Electric Power Steering Co., Ltd., "Jielong"

70.00%

^[1]

70.00%

^[1]

70.00%

85.00%

22.67%

100.00%

Hubei Henglong

Consideration for additional equity interest acquired

100.00%

¥ 155.2

$ 24,500

¥ 141.0

$ 21,600

Chongqing Henglong Hongyan Automotive System Co., Ltd "Chongqing Henglong"

CAAS Brazil's Imports and Trade In Automotive Parts Ltd., "Brazil Henglong"

70.00%

Wuhan Chuguanjie Automotive Science and Technology Ltd., "Wuhan Chuguanjie"

95.84%

Changchun Hualong Automotive Technology Co Ltd Changchun Hualong

85.00%

Hyoseong (Wuhan) Motion Mechatronics System Co., Ltd., "Wuhan Hyoseong"

52.10%

100.00%

51.00%

15.84%

Third Party

Hubei Henglong formed Wuhu Hongrun New Material Co., Ltd "Wuhu Hongrun"

47.90%

Wuhu Hongrun New Material Co., Ltd., "Wuhu Hongrun"

62.00%

Jingzhou Qingyan Intelligent Automotive Technology Research Institute Co., Ltd., "Jingzhou Qingyan"

62.00%

Hubei Henglong & KYB Automobile Electric Steering System Co., Ltd., "Henglong KYB"

60.00%

Jingzhou Henglong Automotive Technology (Testing) Center, "Testing Center"

66.60%

Hubei Henglong Group Shanghai Automotive Electronics Research and Development Ltd., "Shanghai Henglong"

100.00%

100.00%

Consideration for additional equity interest acquired

¥ 6.9

$ 1,100

Changchun Hualong Automotive Technology Co Ltd Changchun Hualong

Consideration for additional equity interest acquired

¥ 1.2

$ 200

Consideration for additional equity interest acquired

$ 0

[1]	Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles.

XML 75 R63.htm IDEA: XBRL DOCUMENT

Basis of Presentation and Significant Accounting Policies - Estimated useful lives (Details)	12 Months Ended
	Dec. 31, 2022
Buildings
Basis of presentation and significant accounting policies
Property, plant and equipment, useful life	25 years
Machinery and equipment
Basis of presentation and significant accounting policies
Property, plant and equipment, useful life	6 years
Electronic equipment
Basis of presentation and significant accounting policies
Property, plant and equipment, useful life	4 years
Motor vehicles
Basis of presentation and significant accounting policies
Property, plant and equipment, useful life	8 years

XML 76 R64.htm IDEA: XBRL DOCUMENT

Basis of Presentation and Significant Accounting Policies - Warranties activities (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Basis of Presentation and Significant Accounting Policies
Balance at the beginning of year	$ 36,572	$ 36,215
Additions during the year	10,941	13,917
Settlement within the year	(11,877)	(14,427)
Foreign currency translation loss	(3,201)	867
Balance at end of year	$ 32,435	$ 36,572

XML 77 R65.htm IDEA: XBRL DOCUMENT

Basis of Presentation and Significant Accounting Policies - Additional Information (Details)
$ in Thousands

12 Months Ended

Dec. 31, 2022

USD ($)

customer

Dec. 31, 2021

USD ($)

Apr. 30, 2021

May 31, 2017

Basis of presentation and significant accounting policies

Shipping, Handling and Transportation Costs

$ 446,157

$ 425,914

Rights of use land pledged with net book value

5,100

5,700

Amortization expenses

600

Interest costs capitalized

200

500

Expected credit loss provision, current

16,200

Expected credit loss provision, Non current

Customer deposits

5,654

2,400

Revenue

$ 529,551

$ 497,993

Employment benefits under Chinese social security laws

35.00%

Employment benefits under Overseas social security laws

26.00%

Discount rate used for operating leases (as a percent)

4.75%

Weighted average remaining lease term

2 years 3 months

Shenyang Jinbei Henglong Automotive Steering System Co., Ltd., "Shenyang"

Basis of presentation and significant accounting policies

70.00%

^[1]

70.00%

Basis of presentation and significant accounting policies

57.00%

Brazil Henglong Member

15.84%

Hubei Henglong Automotive System Group Co., Ltd., "Hubei Henglong"

75.00%

Basis of presentation and significant accounting policies

Henglong KYB formed in 2018

100.00%

Basis of presentation and significant accounting policies

Wuhu Hongrun formed in 2019

66.60%

Basis of presentation and significant accounting policies

Basis of presentation and significant accounting policies

62.00%

Wuhu Formed in 2006

Basis of presentation and significant accounting policies

49.00%

Jielong Formed in 2006

85.00%

Wuhan Hyoseong was Formed in 2019

67.00%

Basis of presentation and significant accounting policies

Brazil Henglong Formed in 2012

51.00%

Basis of presentation and significant accounting policies

80.00%

0.00%

Minimum voting percentage to approve operational matters

20.00%

95.84%

Chongqing Henglong Formed in 2012

Basis of presentation and significant accounting policies

70.00%

Hubei Wanlong Investment Inc

60.00%

Basis of presentation and significant accounting policies

15.00%

Basis of presentation and significant accounting policies

33.00%

Wuhu Hongrun

Wuhan Chuguanjie Automotive Science and Technology Ltd., "Wuhan Chuguanjie"

62.00%

Basis of presentation and significant accounting policies

85.00%

Wuhu Henglong Automotive Steering System Co., Ltd., "Wuhu"

67.00%

Basis of presentation and significant accounting policies

Wuhan Jielong Electric Power Steering Co., Ltd., "Jielong"

100.00%

22.67%

Basis of presentation and significant accounting policies

Basis of presentation and significant accounting policies

85.00%

Level 1

Marketable securities

$ 0

$ 100

Level 3

Basis of presentation and significant accounting policies

Wealth management financial products

12,900

1,700

Land use rights and buildings

Basis of presentation and significant accounting policies

Amortization expenses

300

General and administrative expense

Basis of presentation and significant accounting policies

Expected credit loss expense in general and administrative expenses

$ 4,500

$ 2,700

Five largest customers | Henglong KYB formed in 2018

Basis of presentation and significant accounting policies

Revenue | Customer concentration risk | Five largest customers

33.40%

Basis of presentation and significant accounting policies

Number of customers | customer

Concentration risk (as a percent)

42.80%

44.80%

Revenue | Customer concentration risk | Customer One

Basis of presentation and significant accounting policies

Concentration risk (as a percent)

20.20%

21.20%

Revenue

$ 106,900

$ 105,600

Accounts receivable | Credit concentration risk | Customer One

Basis of presentation and significant accounting policies

Concentration risk (as a percent)

8.00%

7.70%

Customer Deposits

Basis of presentation and significant accounting policies

Customer deposits

$ 5,700

$ 2,400

Customer deposits received

10,200

7,200

Customer deposits recognized as net product sales revenue

6,900

6,300

Customer deposits from the beginning balance recognized as net product sales revenue

2,400

1,500

Shipping and Handling

Basis of presentation and significant accounting policies

Shipping, Handling and Transportation Costs

$ 6,500

$ 9,900

Minimum

Basis of presentation and significant accounting policies

Finite-Lived intangible asset, useful life

5 years

Cash equivalent deposit percentage

40.00%

Maximum

Basis of presentation and significant accounting policies

Finite-Lived intangible asset, useful life

15 years

Cash equivalent deposit percentage

100.00%

Land | Minimum

Basis of presentation and significant accounting policies

Basis of presentation and significant accounting policies

45 years

Land | Maximum

Basis of presentation and significant accounting policies

50 years

Use Rights | Minimum

Basis of presentation and significant accounting policies

45 years

Use Rights | Maximum

Board of Directors Chairman | Shenyang Formed in 2002

50 years

Basis of presentation and significant accounting policies

Minimum voting percentage to approve operational matters

67.00%

Shenyang Automotive Industry Investment Corporation | Shenyang Formed in 2002

Basis of presentation and significant accounting policies

30.00%

Hong Kong Tongda | Jielong Formed in 2006

43.00%

Basis of presentation and significant accounting policies

Wuhu Chery Technology Co Ltd | Chongqing Jinghua

33.00%

Basis of presentation and significant accounting policies

Wuhu Chery Technology Co Ltd | Other two parties

30.00%

Basis of presentation and significant accounting policies

The Saic Iveco Hongyan Company entity | Chongqing Henglong Formed in 2012

38.00%

Basis of presentation and significant accounting policies

40.00%

[1]	Shenyang was established in 2002 and focuses on power steering parts for light duty vehicles.

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Accounts and Notes Receivable - Advance Payments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accounts and Notes Receivable
Accounts receivable - unrelated parties	$ 139,533	$ 146,362
Notes receivable - unrelated parties	89,134	61,328
Total accounts and notes receivable - unrelated parties	228,667	207,690
Less: allowance for doubtful accounts - unrelated parties	(14,359)	(11,961)
Accounts and notes receivable, net - unrelated parties	214,308	195,729
Accounts and notes receivable - related parties	11,779	15,505
Less: allowance for doubtful accounts - related parties	(1,763)	(898)
Accounts and notes receivable, net - related parties	10,016	14,607
Accounts and notes receivable, net	$ 224,324	$ 210,336

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Accounts and Notes Receivable (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Accounts and Notes Receivable
Balance at beginning of year	$ 12,859	$ 9,854
Amounts provided during the year	5,371	2,774
Amounts reversed of collection during the year	(967)	(24)
Foreign currency translation	(1,141)	255
Balance at end of year	$ 16,122	$ 12,859

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Accounts and Notes Receivable - Additional Information (Details) - USD ($) $ in Millions	Dec. 31, 2022	Dec. 31, 2021
Accounts and Notes Receivable
Notes receivable	$ 13.7	$ 18.2

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Advance Payments and Others (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Advance Payments and Others
Prepayments for purchase of raw materials	$ 3,942	$ 6,066
Input VAT	4,283	3,433
Prepayment for share repurchase program	754	1,238
Prepaid income tax	1,287	1,366
Employee advances	713	641
Prepayment for R&D service	748
Others	734	607
Total advance payments and others	12,461	13,351
Less: Allowance for doubtful accounts	(115)	(55)
Advance payments and others, net	$ 12,346	$ 13,296

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Inventories (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Inventories
Raw materials	$ 24,502	$ 33,583
Work in process	16,001	9,415
Finished goods	71,371	73,495
Cost of R&D Service	362
Balance at end of year	$ 112,236	$ 116,493

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Inventories - Additional information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Inventories
Inventory write-down to cost of product sold	$ 4.7	$ 4.7

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Property, Plant and Equipment (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment
Total amount of property, plant and equipment	$ 323,101	$ 341,390
Less: Accumulated depreciation	(216,495)	(213,669)
Total amount of property, plant and equipment, net	106,606	127,721
Buildings
Property, Plant and Equipment
Total amount of property, plant and equipment	64,928	69,554
Machinery and equipment
Property, Plant and Equipment
Total amount of property, plant and equipment	239,385	253,245
Electronic equipment
Property, Plant and Equipment
Total amount of property, plant and equipment	6,242	6,887
Motor vehicles
Property, Plant and Equipment
Total amount of property, plant and equipment	4,308	5,121
Construction in progress
Property, Plant and Equipment
Total amount of property, plant and equipment	$ 8,238	$ 6,583

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Property, Plant and Equipment - Additional information (Details) - USD ($) $ in Millions	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Property, Plant and Equipment
Depreciation	$ 24.2	$ 26.1
Pledged property, plant and equipment with net book value	$ 51.6	$ 54.7
Credit facilities	us-gaap:LineOfCredit	us-gaap:LineOfCredit

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Intangible Assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Costs:
Patent technology	$ 2,266	$ 2,598
Management software license	3,756	3,994
Total intangible assets - at cost	6,022	6,592
Less: Accumulated amortization	(4,749)	(4,780)
Balance at end of the year, net	$ 1,273	$ 1,812

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Intangible Assets - Amortization expenses (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Intangible Assets
2023	$ 496
2024	319
2025	232
2026	130
2027	88
Amortization expenses	$ 600	$ 600

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Long-term Investments (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Long-term Investments
Long-term investments	$ 59,810	$ 36,966
Investments in limited partnerships
Long-term Investments
Long-term investments	35,825	34,608
Chongqing Venture Fund
Long-term Investments
Long-term investments	14,435	17,530
Hubei Venture Fund
Long-term Investments
Long-term investments	11,738	9,665
Suzhou Venture Fund
Long-term Investments
Long-term investments	5,473	7,413
Suzhou Qingshan
Long-term Investments
Long-term investments	4,179
Investment in Corporations
Long-term Investments
Long-term investments	23,985	2,358
Sentient AB
Long-term Investments
Long-term investments	21,831
Henglong Tianyu [Member]
Long-term Investments
Long-term investments	774	913
Chongqing Jinghua
Long-term Investments
Long-term investments	695	642
Jiangsu Intelligent
Long-term Investments
Long-term investments	$ 685	$ 803

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Long-term Investments - Summarizes of Condensed Financial Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Long-term Investments
Revenue	$ 529,551	$ 497,993
Gross profit	83,394	72,079
Net (loss)/income	21,181	11,050
Equity Method Investments
Long-term Investments
Revenue	5,628	88,122
Gross profit	1,294	59,561
Income from continuing operations	6,451	63,067
Net (loss)/income	$ 6,430	$ 61,374

Aggregate revenue less cost of goods and services sold or operating expenses directly attributable to the revenue generation activity.

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Amount of revenue recognized from goods sold, services rendered, insurance premiums, or other activities that constitute an earning process. Includes, but is not limited to, investment and interest income before deduction of interest expense when recognized as a component of revenue, and sales and trading gain (loss).

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Long-term taxes payable - current portion

XML 90 R78.htm IDEA: XBRL DOCUMENT

Long-term Investments - Additional information (Details) $ in Thousands, ¥ in Millions	1 Months Ended		12 Months Ended
	Jun. 30, 2021 CNY (¥) shares	Jun. 30, 2021 USD ($) shares	Dec. 31, 2022 CNY (¥) director	Dec. 31, 2022 USD ($) director	Aug. 31, 2022 CNY (¥)	Mar. 31, 2022 USD ($)	Jan. 31, 2022	Dec. 31, 2021
Hubei Henglong
Long-term Investments
Purchase of common stock shares \| shares	200	200
Consideration for additional equity interest acquired	¥ 155.2	$ 24,500	¥ 141.0	$ 21,600
Equity method investment, ownership percentage				100.00%				100.00%
Remaining consideration			¥ 14.2	$ 2,000
Suzhou Venture Fund \| Hubei Henglong
Long-term Investments
Equity method investment, ownership percentage				12.50%
Net equity earnings from investment \| ¥					¥ 0.4
Proceeds from distribution from funds				$ 1,800
Impairment charges on investment				$ 0
Hubei Henglong \| Suzhou Qingshan
Long-term Investments
Equity method investment, ownership percentage				22.56%			27.78%
Net equity earnings from investment				$ 100
Impairment charges on investment				0
Hubei Henglong \| Sentient AB
Long-term Investments
Equity method investment, ownership percentage	40.00%	40.00%
Net equity earnings from investment				500
Impairment charges on investment				$ 0
Number of board of directors \| director			2	2
Chongqing Venture Fund \| Hubei Henglong
Long-term Investments
Equity method investment, ownership percentage				18.50%
Net equity earnings from investment				$ 900
Proceeds from distribution from funds				900
Impairment charges on investment				$ 0
Hubei Venture Fund \| Hubei Henglong
Long-term Investments
Equity method investment, ownership percentage				28.50%
Net equity earnings from investment						$ 3,900
Proceeds from distribution from funds				$ 1,200
Impairment charges on investment				$ 0

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Deferred Income Tax Assets and Liabilities - Components of deferred tax assets and liabilities (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Deferred Income Tax Assets and Liabilities
Losses carryforward (U.S.)	$ 349	$ 2,559
Losses carryforward (Non-U.S.)	11,371	13,058
Product warranties and other reserves	8,525	8,679
Property, plant and equipment	7,506	7,760
Bonus accrual	252	106
Other accruals	2,163	1,101
Deductible temporary difference related to revenue recognition	1,294	879
Others	2,175	1,009
Total deferred tax assets	33,635	35,151
Less: Valuation allowance	(23,270)	(22,788)	$ (18,155)
Total deferred tax assets, net of valuation allowance	10,365	12,363
Deferred withholding tax for dividend distribution from PRC subsidiaries (Note 22)	4,010	4,380
Other taxable temporary differences	2,713	2,249
Total deferred tax liabilities	$ 6,723	$ 6,629

XML 92 R80.htm IDEA: XBRL DOCUMENT

Deferred Income Tax Assets and Liabilities - Classified in the consolidated balance sheets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Deferred Income Tax Assets and Liabilities
Deferred tax assets	$ 7,652	$ 10,114
Deferred tax liabilities	$ 4,010	$ 4,380

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Deferred Income Tax Assets and Liabilities - Activity in the Companys valuation allowance for deferred tax assets (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Deferred Income Tax Assets and Liabilities
Balance at beginning of year	$ 22,788	$ 18,155
Amounts provided for during the year	5,058	4,468
Amounts used during the year	(2,721)	(247)
Foreign currency translation	(1,855)	412
Balance at end of year	$ 23,270	$ 22,788

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Deferred Income Tax Assets and Liabilities - Additional Information (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Deferred Income Tax Assets and Liabilities
Valuation allowance	$ 23,270	$ 22,788	$ 18,155
From 2023 to 2032
Deferred Income Tax Assets and Liabilities
Net operating tax loss carry forwards	8,400
From 2023 to 2027
Deferred Income Tax Assets and Liabilities
Net operating tax loss carry forwards	1,200
U.S.
Deferred Income Tax Assets and Liabilities
Valuation allowance	$ 300
Amortizing period of net operating loss	5 years
Non U.S
Deferred Income Tax Assets and Liabilities
Valuation allowance	$ 23,000
Amortizing period of net operating loss	10 years

XML 95 R83.htm IDEA: XBRL DOCUMENT

Other non-current assets (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Other non-current assets
Less: Allowance for prepayment	$ (2,584)
Other Assets, Noncurrent, Total	0	$ 16,312
Sentient AB [Member]
Other non-current assets
Prepayment for investment under equity method-Sentient AB		13,489
Hefei Senye Light Plastic Technology Co. Ltd.
Other non-current assets
Prepayment for investment in Hefei Senye	$ 2,584	$ 2,823

XML 96 R84.htm IDEA: XBRL DOCUMENT

Other non-current assets - Additional information (Details) ¥ in Millions, $ in Millions	12 Months Ended
	Dec. 31, 2022 CNY (¥)	Dec. 31, 2022 USD ($)	Nov. 30, 2019 CNY (¥)	Nov. 30, 2019 USD ($)
Provision of impairment recognized	¥ 18.0
Hubei Henglong Automotive System Group Co., Ltd., "Hubei Henglong" \| Hefei Senye Light Plastic Technology Co. Ltd.
Percentage of shares agreed to acquire			70.00%	70.00%
Total agreed consideration			¥ 33.6	$ 4.8
Equity method investments	¥ 18.0	$ 2.6

XML 97 R85.htm IDEA: XBRL DOCUMENT

Bank Loans (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Bank Loans
Short-term bank loans	$ 45,671	$ 47,592
Long-term loans	528
Total bank loans	$ 46,199	$ 47,592

XML 98 R86.htm IDEA: XBRL DOCUMENT

Bank Loans - Additional Information (Details) ¥ in Thousands, $ in Thousands	12 Months Ended
	Dec. 31, 2022 USD ($)	Dec. 31, 2021 USD ($)	Dec. 31, 2022 CNY (¥)	Jul. 31, 2022 CNY (¥)	Apr. 30, 2022 USD ($)
Bank Loans
Line of credit facility, maximum borrowing capacity	$ 148,300	$ 116,800
Proceeds from credit facility	$ 46,200	$ 47,600
Weighted average interest rate	2.90%	3.50%	2.90%
Chongqing Bank loans
Bank Loans
Total loans	$ 600			¥ 3,900
Line of credit facility, interest rate at period end	3.85%		3.85%
Loan amount			¥ 100,000		$ 14,358

XML 99 R87.htm IDEA: XBRL DOCUMENT

Accounts and Notes Payable (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accounts and Notes Payable
Accounts payable - unrelated parties	$ 133,882	$ 132,593
Notes payable - unrelated parties	84,530	81,997
Accounts and notes payable - unrelated parties	218,412	214,590
Accounts and notes payable - related parties	16,695	13,464
Balance at end of year	235,107	228,054
Cash pledged as collateral	37,600	27,800
Notes receivable pledged as collateral	13,700	18,200
Property, plant and equipment and land use right pledged as collateral	$ 39,600	$ 33,600

XML 100 R88.htm IDEA: XBRL DOCUMENT

Accrued Expenses and Other Payables (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Accrued Expenses and Other Payables
Accrued expenses	$ 9,652	$ 5,596
Warranty reserve	32,435	36,572
Payable for the investment in Sentient AB	2,043
Payables for overseas transportation and custom clearance	294	4,548
Dividends payable to holders of non-controlling interests	431	471
Current portion of other long-term payable	0	1,115
Accrued interest	465	507
Other payables	2,991	1,523
Balance at end of year	$ 48,311	$ 50,332

XML 101 R89.htm IDEA: XBRL DOCUMENT

Taxes Payable (Details) - USD ($)
$ in Thousands

Dec. 31, 2022

Dec. 31, 2021

Dec. 31, 2017

Taxes Payable

Value-added tax payable

$ 3,470

$ 3,494

Tariffs payable

7,061

5,202

^[1]

5,270

2,809

Income tax payable

680

311

Other tax payable

1,117

510

Short-term taxes payable

17,598

12,326

Long-term taxes payable

21,075

23,884

$ 35,600

Less: Long-term taxes payable - current portion

^[1]

(5,270)

(2,809)

Long-term taxes payable

^[1]

$ 15,805

$ 21,075

[1]

XML 102 R90.htm IDEA: XBRL DOCUMENT

Taxes Payable - Additional Information (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2017
Taxes Payable
Long-term taxes payable	$ 21,075	$ 23,884	$ 35,600
One-Time Transition Tax Payable,Current	$ 2,800	$ 2,800

XML 103 R91.htm IDEA: XBRL DOCUMENT

Other Long-term Payable (Details) - USD ($) $ in Thousands	12 Months Ended
Other Long-term Payable (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021	Jan. 31, 2018
Other long-term payable
Term of contract			4 years
Carrying value	$ 20,296	$ 9,260
Sale leaseback transaction, quarterly rental payments	1,000
Other payables	2,991	1,523
Interest Expense	1,450	1,437
Other long-term payable	528	0
Capital Lease Obligations
Other long-term payable
Carrying value	13,100
Cash	14,300
Other payables	0	1,100
Interest Expense	0	$ 300
Other long-term payable	$ 0

XML 104 R92.htm IDEA: XBRL DOCUMENT

Redeemable non-controlling interests (Details) - USD ($) $ in Thousands	1 Months Ended	12 Months Ended
	Sep. 30, 2020	Dec. 31, 2022	Dec. 31, 2021
Redeemable non-controlling interests
Percentage of interest, redemption price	6.00%
Accretion of temporary equity redemption value	$ 500
Temporary Equity, Accretion to Redemption Value, Adjustment		$ 30	$ 28
Hubei Venture Fund
Redeemable non-controlling interests
Issuance of shares by a subsidiary	$ 700

XML 105 R93.htm IDEA: XBRL DOCUMENT

Stock Options - Assumptions used to estimate fair value (Details)	12 Months Ended
	Dec. 31, 2022
Share-based Compensation Arrangement by Share-based Payment Award, Fair Value Assumptions and Methodology [Abstract]
Expected volatility	76.91%
Risk-free rate (as a percent)	0.46%
Expected term (years)	5 years
Dividend yield (as a percent)	0.00%

XML 106 R94.htm IDEA: XBRL DOCUMENT

Stock Options - Activities of stock options (Details) - $ / shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2020
Stock Options
Beginning, Shares Outstanding	37,500	22,500
Shares Expired	(7,500)	(7,500)
Shares Granted	0	22,500
Ending, Shares Outstanding	30,000	37,500	22,500
Beginning, Weighted-Average Exercise Price Outstanding	$ 5.24	$ 4.79
Weighted-Average Exercise Price Expired	5.04	6.95
Weighted-Average Exercise Price Granted		6.26
Ending, Weighted-Average Exercise Price Outstanding	$ 5.29	$ 5.24	$ 4.79
Weighted-Average Contractual Term (years) Outstanding	5 years	5 years	5 years
Weighted-Average Contractual Term (years) Expired	5 years	5 years
Weighted-Average Contractual Term (years) Granted		5 years
Director
Stock Options
Shares Granted		225,000

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Stock Options - Summary of the range of exercise prices for stock options (Details) - Range of Exercise Prices From $2.37 to $6.26	12 Months Ended
	Dec. 31, 2022 $ / shares shares
Stock Options
Range of Exercise Prices Minimum (in dollars per share)	$ 2.37
Range of Exercise Prices Maximum (in dollars per share)	$ 6.26
Outstanding Stock Options \| shares	30,000
Weighted Average Remaining Life (in years)	2 years 6 months 18 days
Weighted Average Exercise Price (in dollars per share)	$ 5.29
Number of Stock Options Exercisable \| shares	30,000

XML 108 R96.htm IDEA: XBRL DOCUMENT

Stock Options - Additional Information (Details) - USD ($)	1 Months Ended	12 Months Ended
	Dec. 31, 2008	Dec. 31, 2022	Dec. 31, 2021	Dec. 31, 2008
Stock Options
Total fair value of stock options granted			$ 100,000
Total instrinsic value of stock options exercisable		$ 0	$ 0
Number of stock options exercised		0	0
Shares Granted		0	22,500
Fair value of stock options granted (per share)		$ 3.19
Stock-based compensation expenses		$ 0	$ 100,000
Stock incentive plan
Stock Options
Number of shares issuable under the plan		2,200,000
Service requisite period (years)		3 years
Vesting Period	3 years
Number of shares issued		658,850		298,850
Stock incentive plan \| Minimum
Stock Options
Expiration period (years)		2 years
Stock incentive plan \| Maximum
Stock Options
Expiration period (years)		5 years

XML 109 R97.htm IDEA: XBRL DOCUMENT

Retained Earnings (Details) - USD ($) $ in Thousands	12 Months Ended
Retained Earnings (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Retained Earnings
Statutory accounting practices statutory surplus required percentage	10.00%
Percentage of statutory surplus reserve	50.00%
Statutory accounting practices statutory capital and surplus required	$ 0
Statutory accounting practices statutory capital and surplus reserve	$ 400	$ 200

XML 110 R98.htm IDEA: XBRL DOCUMENT

Treasury stock (Details) - USD ($) $ / shares in Units, $ in Millions				12 Months Ended
	Mar. 29, 2022	Aug. 12, 2021	Dec. 04, 2019	Dec. 31, 2022	Dec. 31, 2021	Aug. 13, 2020	Dec. 05, 2018
Treasury stock
Stock repurchase, authorized amount	$ 5.0						$ 5.0
Stock repurchased during period, value				$ 2.4	$ 0.0
Stock repurchase, authorized repurchase price per share	$ 4.00
Stock repurchased during period				666,074	0
Maximum
Treasury stock
Stock repurchase, authorized amount						$ 5.0
Stock repurchase, authorized repurchase price per share		$ 3.50	$ 4.00

XML 111 R99.htm IDEA: XBRL DOCUMENT

Other Income, Net (Details) - USD ($) $ in Thousands	12 Months Ended
Other Income, Net (Details) - USD ($) $ in Thousands	Dec. 31, 2022	Dec. 31, 2021
Other Income, Net
Government subsidy	$ 6,270	$ 4,928
Investment income	1,912	1,670
Penalties income	140	70
Provision for impairment of prepayment or investment in Hefei Senye	(2,540)
Total other income, net	$ 5,782	$ 6,668

XML 112 R100.htm IDEA: XBRL DOCUMENT

Financial (Income)/Expense, net (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Financial (Income)/Expense, net
Interest income	$ 1,247	$ 1,242
Foreign exchange (income)/loss, net	9,833	(3,204)
Bank fees	(327)	(388)
Total financial (income)/expense, net	$ 10,753	$ (2,350)

XML 113 R101.htm IDEA: XBRL DOCUMENT

Income Taxes - Additional information (Details) R$ in Thousands, $ in Thousands	1 Months Ended	12 Months Ended
	Jan. 31, 2008	Dec. 31, 2022 USD ($)	Dec. 31, 2022 BRL (R$)	Dec. 31, 2021 USD ($)	Dec. 31, 2020	Dec. 31, 2018 USD ($)	Dec. 31, 2017 USD ($)
Income Taxes
Withholding Tax Percentage Applicable To Foreign Investors As Non Resident Enterprises	10.00%
Percentage owned in holding company to avail withholding tax of five percent		25.00%	25.00%
Undistributed earnings, basic		$ 270,400		$ 265,900
Tax provision on retained earning not reinvested		$ 27,000		26,600
Effective income tax rate reconciliation state and local income taxes		15.00%	15.00%
Income tax expense		$ 3,082		$ 4,004
Increase In income tax expense benefit percentage		25.00%	25.00%
Tax rate		21.00%	21.00%	21.00%		21.00%	35.00%
Effective income tax rate reconciliation, transition tax, amount							$ 35,600
one-time transition tax							$ 35,100
True-up adjustment						$ 500
Description of withholding tax rate on dividend		Genesis, the Company’s wholly-owned subsidiary and the direct holder of the equity interests in the Company’s subsidiaries in China, is incorporated in Hong Kong. According to the Mainland China and Hong Kong Taxation Arrangement, dividends paid by a foreign-invested enterprise in China to its direct holding company in Hong Kong would be subject to withholding tax at a rate of 10% if Genesis could not obtain the Hong Kong tax resident certificate from the Hong Kong Inland Revenue Department. If Genesis obtains the Hong Kong tax resident certificate, owns directly at least 25% of the shares of the foreign invested enterprise and is qualified as the beneficial owner, it could benefit from a lower rate of 5%.	Genesis, the Company’s wholly-owned subsidiary and the direct holder of the equity interests in the Company’s subsidiaries in China, is incorporated in Hong Kong. According to the Mainland China and Hong Kong Taxation Arrangement, dividends paid by a foreign-invested enterprise in China to its direct holding company in Hong Kong would be subject to withholding tax at a rate of 10% if Genesis could not obtain the Hong Kong tax resident certificate from the Hong Kong Inland Revenue Department. If Genesis obtains the Hong Kong tax resident certificate, owns directly at least 25% of the shares of the foreign invested enterprise and is qualified as the beneficial owner, it could benefit from a lower rate of 5%.
Hubei Henglong
Income Taxes
Effective income tax rate reconciliation state and local income taxes				15.00%
Hong Kong Enterprise
Income Taxes
Effective income tax rate reconciliation state and local income taxes		16.50%	16.50%
CAAS Brazils Imports and Trade In Automotive Part Ltd
Income Taxes
Effective income tax rate reconciliation state and local income taxes		24.00%	24.00%
Effective income tax rate reconciliation foreign income tax rate differential		10.00%	10.00%
Additional tax payable subject to residential status		$ 50	R$ 240
Income tax expense		$ 700		$ 500
Changchun Hualong Automotive Technology Co Ltd Changchun Hualong
Income Taxes
Effective income tax rate reconciliation state and local income taxes		25.00%	25.00%
Genesis Subsidiaries Company
Income Taxes
Deferred state and local income tax expense benefit		$ 4,000		4,400
Undistributed earnings, basic		$ 40,200		$ 43,100
Shenyang
Income Taxes
Effective income tax rate reconciliation state and local income taxes		15.00%	15.00%
Jielong
Income Taxes
Effective income tax rate reconciliation state and local income taxes					15.00%
Chuguanjie
Income Taxes
Effective income tax rate reconciliation foreign income tax rate differential					15.00%

XML 114 R102.htm IDEA: XBRL DOCUMENT

Income Taxes - Provision for income taxes (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2022

Dec. 31, 2021

Dec. 31, 2018

Dec. 31, 2017

Income before income taxes

Tax rate

21.00%

35.00%

$ 23,036

$ 8,399

Income tax at federal statutory tax rate

4,838

1,764

Tax benefit of super deduction of R&D expense

^[1]

(7,089)

(5,212)

Effect of differences in foreign tax rate

599

504

Effect of changes in tax rate

2,081

Other differences

2,597

234

Total income tax expense

3,082

4,004

U.S.

Change in Provision on valuation allowance for deferred income tax

(2,458)

(34)

Non-U.S.

Change in Provision on valuation allowance for deferred income tax

$ 4,595

$ 4,667

[1]

XML 115 R103.htm IDEA: XBRL DOCUMENT

Income Per Share (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Numerator:
Net income attributable to the parent company's common shareholders - Basic and Diluted	$ 21,181	$ 11,050
Denominator:
Weighted average ordinary shares outstanding - Basic	30,639,102	30,851,776
Dilutive effects of stock options	2,172	3,655
Denominator for dilutive income per share - Diluted	30,641,274	30,855,431
Net income per share attributable to the parent company's common shareholders
Basic	$ 0.69	$ 0.36
Diluted	$ 0.69	$ 0.36

The amount of net income (loss) for the period per each share of common stock or unit outstanding during the reporting period.

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The portion of profit or loss for the period, net of income taxes, which is attributable to the parent.

XML 116 R104.htm IDEA: XBRL DOCUMENT

Income Per Share - Additional Information (Details) - shares	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Equity Option
Income per share
Ordinary shares excluded from the computation of diluted net loss per ordinary share	22,500	30,000

XML 117 R105.htm IDEA: XBRL DOCUMENT

Significant Concentrations (Details)	12 Months Ended
Significant Concentrations (Details)	Dec. 31, 2022
Significant Concentrations
Minimum percentage of profit allocated to foreign investment	10.00%
Registered capital percentage	50.00%

XML 118 R106.htm IDEA: XBRL DOCUMENT

Related Party Transactions (Details) - USD ($) $ in Thousands	12 Months Ended
	Dec. 31, 2022	Dec. 31, 2021
Related party sales
Revenue from related parties	$ 44,282	$ 65,131
Related party receivables
Accounts and notes receivable from related parties	11,779	15,505
Less: allowance for doubtful accounts - related parties	(1,763)	(898)
Accounts and notes receivable, net from related parties	10,016	14,607
Related party advance payments
Advance payment for property, plant and equipment - related parties	1,884	810
Advance payments and others to related parties	1,439	600
Related party payables
Accounts and notes payable to related parties	16,695	13,464
Related party loan	146	0
Accounts receivable
Related party receivables
Accounts and notes receivable from related parties	11,779	15,505
Less: allowance for doubtful accounts - related parties	(1,763)	(898)
Accounts and notes receivable, net from related parties	10,016	14,607
Accounts Payable
Related party payables
Accounts and notes payable to related parties	16,695	13,464
Other Advance Payments
Related party advance payments
Advance payments and others to related parties	1,439	600
Raw Materials And Others
Related party sales
Revenue from related parties	2,784	2,553
Related party \| Rental income
Related party sales
Merchandise sold to related parties	459	493
Jingzhou WiseDawn
Related party investment transaction
Equity interest purchase from related parties	23,618
Other related parties \| Accounts receivable
Related party receivables
Accounts and notes receivable from related parties	367	424
Other related parties \| Accounts Payable
Related party payables
Accounts and notes payable to related parties	62	147
Other related parties \| Other Advance Payments
Related party advance payments
Advance payments and others to related parties	206	276
Other related parties \| Raw Materials And Others
Related party sales
Revenue from related parties	137	25
Other related parties \| Related party \| Rental income
Related party sales
Merchandise sold to related parties	4	8
Merchandise
Related party sales
Merchandise sold to related parties	44,282	65,131
Merchandise \| Other related parties
Related party sales
Merchandise sold to related parties	547	650
Materials
Related party purchases
Related party purchases	28,810	31,580
Materials \| Other related parties
Related party purchases
Related party purchases	28	12
Equipment
Related party purchases
Equipment purchased from related parties	2,384	1,200
Equipment \| Hubei Yiling
Related party purchases
Equipment purchased from related parties	48
Technology and Services
Related party purchases
Technology purchased from related parties	1,303	935
Technology and Services \| Hubei Yiling
Related party purchases
Technology purchased from related parties	234
Advanced Equipment
Related party advance payments
Advance payment for property, plant and equipment - related parties	1,884	810
Advanced Equipment \| Henglong Real Estate
Related party advance payments
Advance payment for property, plant and equipment - related parties	224	245
Xiamen Joylon \| Accounts receivable
Related party receivables
Accounts and notes receivable from related parties	815	890
Hubei Wiselink \| Accounts Payable
Related party payables
Accounts and notes payable to related parties	3,687	2,984
Hubei Wiselink \| Other Advance Payments
Related party advance payments
Advance payments and others to related parties	54
Hubei Wiselink \| Materials
Related party purchases
Related party purchases	310	481
Hubei Wiselink \| Equipment
Related party purchases
Equipment purchased from related parties	2,336	1,200
Hubei Wiselink \| Advanced Equipment
Related party advance payments
Advance payment for property, plant and equipment - related parties	1,618	565
Jingzhou Yude \| Accounts receivable
Related party receivables
Accounts and notes receivable from related parties	3,094	5,740
Jingzhou Yude \| Raw Materials And Others
Related party sales
Revenue from related parties	728	278
Jingzhou Yude \| Merchandise
Related party sales
Merchandise sold to related parties	8,778	10,784
Honghu Changrun \| Accounts Payable
Related party payables
Accounts and notes payable to related parties	692	484
Honghu Changrun \| Raw Materials And Others
Related party sales
Revenue from related parties	749	1,000
Honghu Changrun \| Materials
Related party purchases
Related party purchases	2,467	2,358
Jiangling Tongchuang \| Accounts Payable
Related party payables
Accounts and notes payable to related parties	45	240
Jiangling Tongchuang \| Other Advance Payments
Related party advance payments
Advance payments and others to related parties	401	324
Jiangling Tongchuang \| Raw Materials And Others
Related party sales
Revenue from related parties	603	626
Jiangling Tongchuang \| Materials
Related party purchases
Related party purchases	3,238	7,009
Hubei Zhirong \| Other Advance Payments
Related party advance payments
Advance payments and others to related parties	146
Jingzhou Tongying \| Accounts Payable
Related party payables
Accounts and notes payable to related parties	3,827	3,195
Jingzhou Tongying \| Raw Materials And Others
Related party sales
Revenue from related parties	547	580
Jingzhou Tongying \| Related party \| Rental income
Related party sales
Merchandise sold to related parties	152	170
Jingzhou Tongying \| Materials
Related party purchases
Related party purchases	12,152	10,702
Wuhan Tongkai \| Accounts Payable
Related party payables
Accounts and notes payable to related parties	7,173	4,812
Wuhan Tongkai \| Related party \| Rental income
Related party sales
Merchandise sold to related parties	166	180
Wuhan Tongkai \| Materials
Related party purchases
Related party purchases	9,974	9,718
Beijing Henglong \| Raw Materials And Others
Related party sales
Revenue from related parties		32
Beijing Henglong \| Merchandise
Related party sales
Merchandise sold to related parties		24,604
Xiamen Automotive Parts \| Accounts receivable
Related party receivables
Accounts and notes receivable from related parties	1,311	1,533
Xiamen Automotive Parts \| Merchandise
Related party sales
Merchandise sold to related parties	2,468	3,864
Hubei ASTA \| Related party \| Rental income
Related party sales
Merchandise sold to related parties		23
Hubei Hongrun \| Accounts receivable
Related party receivables
Accounts and notes receivable from related parties	6,192	6,918
Hubei Hongrun \| Raw Materials And Others
Related party sales
Revenue from related parties	20	12
Hubei Hongrun \| Related party \| Rental income
Related party sales
Merchandise sold to related parties	137	112
Hubei Hongrun \| Merchandise
Related party sales
Merchandise sold to related parties	32,489	25,229
Hubei Hongrun \| Advanced Equipment
Related party advance payments
Advance payment for property, plant and equipment - related parties	42
Henglong Tianyu \| Accounts Payable
Related party payables
Accounts and notes payable to related parties	1,209	1,602
Henglong Tianyu \| Materials
Related party purchases
Related party purchases	611	1,014
Sentient AB \| Other Advance Payments
Related party advance payments
Advance payments and others to related parties	632
Sentient AB \| Technology and Services
Related party purchases
Technology purchased from related parties	462	935
Hubei Yiling \| Materials
Related party purchases
Related party purchases	30	$ 286
Suzhou Sentient \| Technology and Services
Related party purchases
Technology purchased from related parties	$ 607

XML 119 R107.htm IDEA: XBRL DOCUMENT

Related Party Transactions - Additional Information (Details)	Dec. 31, 2022
Hanlin Chen
Related Party Transactions
Equity method investment, ownership percentage	59.13%

XML 120 R108.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies (Details)
$ in Thousands

Dec. 31, 2022

USD ($)

Obligations for investment contracts

2023

$ 28,269

2024

4,650

Total

32,919

Obligations for purchasing and service agreements

2023

4,307

^[1]

Total

4,307

^[1]

2023

23,962

2024

4,650

Total

$ 28,612

[1]

XML 121 R109.htm IDEA: XBRL DOCUMENT

Commitments and Contingencies - Additional Information (Details) - Hubei Henglong ¥ in Millions, $ in Millions	1 Months Ended
	Jan. 31, 2022 CNY (¥)	Jan. 31, 2022 USD ($)	Dec. 31, 2022 CNY (¥)	Dec. 31, 2022 USD ($)
Suzhou Qingshan
Commitments and Contingencies
Equity method investment, ownership percentage	27.78%	27.78%	22.56%	22.56%
Suzhou Qingshan
Commitments and Contingencies
Total consideration	¥ 60.0	$ 8.6
Equity method investments			¥ 30.0	$ 4.3
Remaining capital commitment \| ¥			¥ 30.0
Remaining capital commitment paid In 2022 \| $				$ 4.3

XML 122 R110.htm IDEA: XBRL DOCUMENT

Segment Reporting - Additional Information (Details) $ in Thousands	Dec. 31, 2022 USD ($) product item	Dec. 31, 2021 USD ($) product item
Segment Reporting
Number of product sectors \| product	15	15
Number of principal profit makers	7	6
Number of holding company	1	1
Number of sectors engaged in development, manufacturing and sale of products	8	9
Deferred tax assets \| $	$ 7,652	$ 10,114
Intangible Assets, Net (Excluding Goodwill) \| $	$ 1,273	$ 1,812

XML 123 R111.htm IDEA: XBRL DOCUMENT

Segment Reporting - Product sector information (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2022

Dec. 31, 2021

^[1],[2]

$ 529,551

$ 497,993

22,343

10,726

25,173

27,113

20,484

9,902

714,352

716,762

Eliminations

(209,383)

(148,088)

(917)

(184)

(2,774)

(1,754)

(336,639)

(346,048)

Corporate

(534)

(1,628)

58,767

69,705

Henglong

246,594

202,612

785

(526)

7,285

6,691

5,908

1,613

248,927

241,958

Jiulong

70,113

94,510

227

971

2,156

2,742

1,102

1,863

62,075

74,816

Shenyang

11,942

16,510

(1,083)

560

590

649

146

267

20,146

24,141

42,243

27,227

(215)

(385)

713

943

203

38,579

26,314

Hubei Henglong

126,652

128,142

9,588

11,162

9,542

11,237

5,635

2,515

392,482

431,529

Henglong KYB

121,139

80,683

4,564

248

1,867

1,427

6,133

4,804

107,045

77,598

39,280

25,513

3,390

1,467

196

205

869

185

20,326

16,291

Other Entities

80,971

70,884

6,538

(959)

2,785

3,172

3,262

731

102,644

100,458

Total Segments

738,934

646,081

23,794

12,538

25,134

27,066

23,258

11,656

$ 992,224

$ 993,105

[1]	Pursuant to ASC 280-10-50-41, the deferred tax assets of $7.7 million and $10.1 million and the intangible assets of $1.3 million and $1.8 million were excluded from long-term assets as of December 31, 2022 and 2021, respectively.
[2]	Revenue is attributed to each country based on location of customers.

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Segment Reporting - Geographic Region (Details) - USD ($)
$ in Thousands

12 Months Ended

Dec. 31, 2022

Dec. 31, 2021

^[1],[2]

$ 529,551

$ 497,993

^[1]

124,899

166,490

China [Member]

^[2]

331,589

324,979

123,062

165,264

United States [Member]

^[2]

135,149

134,662

Other Foreign Countries [Member]

726

755

^[2]

62,813

38,352