Good morning, and good evening, ladies and gentlemen. Thank you, and welcome to Yunji's Third Quarter 2019 Earnings Conference Call. At this time, all participants are in a listen-only mode. We will be hosting a question-and-answer session after management's prepared remarks. With us today are Mr. Shanglue Xiao, Chairman and Chief Executive Officer; Mr. Chen Chen, Chief Financial Officer; Mr. Hui Ma, Chief Strategy Officer and Chief People Officer; and Ms. Kaye Liu, Investor Relations Director of the company. I would now like to hand the conference over to our first speaker for today, Ms. Kaye Liu, IRD of Yunji. Please go ahead, ma'am.

Hello, everyone. Welcome to our third quarter 2019 earnings call. Before we start, please note that this call will contain forward-looking statements. These forward-looking statements involve inherent risks and uncertainties that may cause actual results to differ materially from our current expectations. For detailed discussion of these risks and uncertainties, please refer to our latest document filed with U.S. SEC. Any forward-looking statements that we make on this call are based on assumptions as of today, and we do not undertake any obligation to update these statements, except as required under applicable law. These forward-looking statements are based on management's current expectations, observations that involve known and unknown risks, uncertainties and other factors that are not in the company's control, which may cause actual results, performance and achievements of the company to materially different from the results, performance expectations implied by these forward-looking statements. Our forward-looking statements are expressly qualified in their entirety by the cautionary statements, risk factors and details of the company filing with the SEC. Yunji undertake no duty to revise or update any forward-looking statements for selected events or circumstances after the date of this conference call. With that, I will now turn over to Shanglue Xiao, Chairman and CEO of Yunji.

[Foreign Language] Hello, everyone. Welcome to Yunji's third quarter 2019 earnings call. During the third quarter of 2019, our gains increased by 69.8% year-over-year to RMB 9.2 billion. We generated RMB 2.77 billion in total revenue while shrinking adjusted net loss by 37.7% to RMB 24.9 million in the prior year period. As of September 30, 2019, our cumulative membership increased by 14.2% to 12.3 million from 10.8 million as of June 30, 2019. In the 12 months ended September 30, 2019, the total number of our transacting members has increased by 122.7% year-over-year, further illustrating the ongoing expansion of our [indiscernible]. [Foreign Language] Such solid results backed our material exclusion of 3 competitive strategies. First, for things with sustainable growth and stable profitability. Second, building competitive differentiation through effective merchandising. And third, providing company value propositions to members with service managers through personalization. [Foreign Language] The backdrop of us pursuing those three strategies is that [indiscernible]. Economy centric on consumer designs to perform in the design economy, business need to proactively uncover consumer's desire and satisfy this design while in the current consumer market value with low end manufacturing products to invest, and focus our interest on collaborating with high end manufacturers. We believe that high-end products are not only enjoying favorable supply-demand dynamics, but also growing rapidly with a rising tide of CNY 800 million strong middle-income consumers in China. We are determined to also provide certified Chinese consumer design for consumption upgrade over the next 5 to 10 years, which is build to market, cheaply priced, low-end product that don't offer any compelling value to consumers. We don't [indiscernible] up by a multiple of 4x to 5x just to secure exclusivity for ourself with brand owners. Instead, we help them attain market share through our low-cost markup…

Thank you, Shanglue. Hello, everyone. Before I go through our financial results with you, please note that all numbers stated in the following remarks are in RMB terms, and our percentage changes are on a year-over-year basis unless otherwise noted. During the third quarter of 2019, our GMV increased by 69.8% to CNY 9.2 billion, and our total revenue were CNY 2.77 billion compared with CNY 3.08 billion in the same period of 2018. Since it's launch in the first quarter of 2019, our marketplace business platform has attracted a growing number of merchants interested in tagging to our massive user group. Additionally, some merchants from our merchandise sales platform have decided to move on to our marketplace business platform and is, therefore, have taken responsibility for the procurement storage and the management of their own inventory. As a result of this transfer, a portion of our revenues previously generated on our merchandise sales platform are recognized on a gross basis was shifted to our marketplace business platform, which recognize sales on a net basis. In the third quarter of 2019, revenues from net sales of merchandise were CNY 2.47 billion, accounting for 89.1% of our total revenue. As we continue to attract a more popular brands to our marketplace business platform and improve our commission rate, revenues from our marketplace business were CNY 86.3 million compared with nil in the same period of 2018. During this quarter, as we continue to enhance our merchandising mix, refine our value proposition and engage more users through our diversified membership enrollment system, revenues from our membership program increased by 16.3% to CNY 206.7 million. Meanwhile, as some merchants move to our marketplace business platform, a portion of our product purchasing and storage activities was shifted back to the merchants, which reduced our…

Thank you. [Operator Instructions] Our first question comes from the line of Ivy Liu of Credit Suisse. Please go ahead.

[Foreign Language] I’ll quickly translate myself. So my first question is on GMV. Will 3P GMV continue to expand in terms of the contribution ratio? And what will the stabilized level be like looking into 2020? And what type of merchants or brands are management particularly interested in working with or bringing in onto the platform? So my second question is on member growth. So will there be other user acquisition strategies or tactics aside from the existing ones? And is there any specific target number in terms of the transaction numbers for 2019? That's it. Thank you.

Thanks, Ivy. I will take this question. So for your first question, it is that GMV allocation between the 1P model and the 3P model. So currently, because our focus is due on the - to select the products that member needs, and we focus on what products and what sales format can best fit our members' needs. So, we do not set the expectations on the percentage of how much GMV will come from 1P or how much GMV will come from 3P. So if the 3P platform -- if 1 product in 3P platform can provide more value and more efficient logistic efficiencies to our members, we'll choose the 3P model. And if 1 product can provide us our member more value and bring us more gross margin in the 1P model, we'll choose the 1P model. So we do not have the detailed expectations. But we hope we can balance the 1P and the 3P business in the 50-50 in 2020. And of course for the brands to couple with. So because, if we want to differentiate us with other e-commerce platforms like JD, Alibaba, PDD, I think our unique place is to promote the emerging brands with high-mark gross margin and high profit because these brands need more - need a moderate communication between the platform members and the buyers. And these brands need Yunji to have some -- to educate the market. So, because Yunji has a larger social network, so I think for these brands, it's the best for these brands to couple with Yunji and each can also gain more profits through cooperation with these brands. So, the good emerging brands, which removes a very high profit of the well-known famous brands and can also bring us more profit is the brand Yunji wants to couple with. So for your last question, our member acquisition strategy, I think we will continue to use our current path strategy to recruit members, but we will use both online/offline activities to do the recruitment. So traditional - I said in previous years, we already use the online method to acquire the members, use WeChat to send the link and ask the young people to register as the members. But starting from this year, we think that if we do more offline promotions, which can bring us more - the members thickness will be much, much higher. So we set a lot of trainings and workshops in the offline and also, we encourage our active members and our managers to do the experience sharing and to hold the offline gathering and also expect - also other kind of the sharings to recruit the members. So, our key member acquisition method will not be changed. We’ll continue to use our method, but we will allow more and more offline activities.

Thank you. [Operator Instructions] Our next question is from the line of Andre Chang of JPMorgan. Please go ahead.

[Foreign Language]

Thank you, Andre. So for your first question about the gross margin in Q3 is lower than Q2. So if we look at the gross margin, it -- traditionally, in Q3, some gross margin is lower than Q2 and also lower than Q4. So in Q4, you can expect the gross margin will be higher than the Q3. So it - and the second reason is that, starting from this quarter, as our CEO stated in the CEO statement, so that we -- our focus is to introduce more emerging brands to our members and to our buyers. And of course, these new and introduced emerging brands, because we need more time to do the education in the market, and also we need to encourage our members to do more communication between the members and the buyers to facilitate the transactions. So in this quarter, indeed, we set higher member commissions if a member refers a product to the buyers or if the member do the self purchase, so that is what you think. And in addition, we also set a little bit higher service and manager service fee to encourage the new-introduced emerging brands sales. So, I think the gross margin for these new-introduced products will be in effect in Q4. So in Q4, because we have already some - did some education of these brands, so these brands' margin will be higher in Q4. So you can expect our gross margin and both - also the operating income will be increased in Q4. So, it's your first question. And then for your second question, it is our private label. The private label GMV in Q3 is around close to 12% in Q3, and we estimate that - our target for the whole year is also close to 13% in whole year of 2019.

Thank you. [Operator Instructions] Now I’d like to hand the conference back to our management for closing remarks. Please continue.

Thank you, everyone, for joining today. And we are looking forward to speaking with everyone next quarter. If you have any questions, please contact the IR team of Yunji. Thank you.

Thank you. Ladies and gentlemen, that concludes our conference for today and thank you for participating. You may now all disconnect.