Good morning, ladies and gentlemen, and thank you for standing by for Baozun's first quarter 2022 earnings conference call. At this time, all participants are in listen-only mode. After management's prepared remarks, there will be a question-and-answer session. As a reminder, today's conference call is being recorded. I will now turn the meeting over to your host for today's call, Ms. Wendy Sun, Investor Relations Director of Baozun. Please proceed, Wendy. Thank you, operator. Hello, everyone, and thank you for joining us today. Our first quarter 2022 earnings release was distributed early today and is available on our IR website at ir.baozun.com, as well as on GlobeNewswire. They have also posted a PowerPoint presentation that accompanies our comments to the same IR website, where they are available for download. On the call today from Baozun, we have Mr. Vincent Qiu, Chairman and Chief Executive Officer, Mr. Arthur Yu, Chief Financial Officer, and Ms. Tracy Li, our Vice President of Strategic Business Development. Mr. Qiu will review the business operations and company highlights, followed by Mr. Yu, who will discuss financials and guidance. They will all be available to answer your questions during the Q&A session that follows. Before we begin, I would like to remind you that this conference call contains forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements are based upon management's current expectations and current market and operating conditions, and relates to events that involve known or unknown risk, uncertainties, and other factors, all of which are difficult to predict, and many of which are beyond the company's control, which may cause the company's actual results to differ materially from those in the forward-looking statements. Further information regarding these and other risks, uncertainties or factors is included in the company's filings with the U.S. SEC and in announcements on the website of Hong Kong Stock Exchange. The company does not undertake any obligation to update any forward-looking statements except as required under applicable law. Finally, please note that unless otherwise stated, all figures mentioned during this conference call are in RMB, and the comparisons are on year-over-year basis. It is now my pleasure to introduce our Chairman and Chief Executive Officer, Mr. Vincent Qiu. Vincent, please go ahead. Thank you, Wendy. Hello, everyone, and thank you all for joining us. As you know, Shanghai, where Baozun is headquartered, has been on strict lockdown since mid-March 2022. This has presented unprecedented challenges to business activities in China. As of today, I'm very glad to report that we were able to minimize disruptions. Thanks to our hardworking people, best-in-class technology, and the diversified Regional Service Centers, we are very confident that we can support our brand partners in navigating the turbulence. Let me start with sharing some progress we have made in this quarter. Please turn to slide number 2. To date, 2022 has been quite unique due to the COVID lockdowns and the weak consumption sentiment in the macro environment. However, our total GMV grew 28% to RMB 17 billion, driven by strong growth in FMCG and electronics. Services revenue increased by 24%, whereas product sales revenues declined by 30%, as expected, due to our ongoing brand portfolio optimization in recent quarters. During the quarter, we made notable progress in deepening service penetration, as our value-added digital marketing and IT solutions generated high double-digit growth. We view this progress as an important step in our efforts to minimize macro environment risks and enhance our value-added proposition to empower brand partners. Please turn to slide number 3. Our strategic business development efforts continued to bear fruits with faster brand acquisitions and accelerated progress in emerging channels. This first quarter, we won over several new brands, especially in the luxury, premium, and lifestyle sectors. Leveraging on this momentum, we have more flexibility to rationalize less profitable businesses and to focus on higher business efficiency. Overall, we added a net of 12 new brand partners in the first quarter, and the total number of brand partners for store operations increased to 345. Looking at the channel breakdown, this quarter, non-Tmall GMV accounted for 40% of total, compared with 32% a year ago. Notably, JD, WeChat, and Douyin all developed a triple-digit growth rate. In our view, omni-channel strategies effectively help brands accrue user assets and brand equity, which is critical for sustainable growth. Our integrated digital operating platform, along with our ability to lead brand partners to set a high omnichannel strategy, enables brand partners to expand their e-commerce flexibility and capture incremental business opportunities. With our powerful omnichannel capabilities, a brand can seamlessly offer its products and services no matter which channel consumers prefer to use. Looking at our progress in JD. During the quarter, we launched a mini program integrated store for an Italian luxury brand, and opened the flagship stores for a French luxury brand and an American premium fashion brand. These cases have been widely successful and are regarded as industry benchmarking business cases. We continue to view rich content initiatives and live streaming as powerful tool sets to leverage and enhance user experience. We have established a threefold service metrics composed of daily in-store live streams, content-oriented digital marketing, and a Douyin partner business. Although Douyin is still in its early phase of brand e-commerce, we set up our dedicated Douyin sub-branch, with over 200 staff currently serving several dozens of brands. With our omni-channel enabling operations, our Douyin partner business has already achieved solid headway in the apparel, appliance, and lifestyle categories. Now let's share with you some trends on technology innovations on slide number 4. In recent quarters, the rapidly evolving e-commerce dynamics have pushed many brand partners to elevate their efforts in digital transformation. In particular, further, the trend of omni-channel brands want to master the digital convergence between online and offline spaces, as well as enhance customer relationship management to enrich lifetime values. For example, a few months ago, we launched a dealer transformation program for one international electronics brand partner to digitalize business flows from factories to stores and to consumers. Subsequently, the brand expanded the program to incorporate more platforms such as JD, Daojia, and Dianping to the system and widened the deployment to over 3,000 stores nationwide today and targeting to double the deployment of by the end of this year. Another typical trend is brands' efforts in setting up China-for-China IT systems. In one of our recent China-for-China project, with a leading international sportswear brand, we also launched a one team methodology by fully integrating our e-commerce partner team, our IT team, and the brand partners team. You know, we work together and win as one team. We focus not only on commercial and merchandising, but also on consumer privacy protection and lifetime value creation. Both of these two examples successfully demonstrated our technology offerings' great potential. With the increasing importance of online business to drive sales growth in China, we anticipate technology and transformation will continue to play a critical role for our brand partners. Looking ahead, although our strategic progress remain healthy, we anticipate short-term turbulence due to the recent unprecedented COVID lockdown in China, continuing impact on consumer sentiment. Let me share about our prompt response to COVID as demonstrated on slide number 5. As per our mission statement, technology empowers future success. Our technology assets afford us with extended capability and flexibility to help our brand partners navigate external disruptions. We leveraged our one inventory system and OTO toolkit, like Shopdog, to seamlessly integrate online and offline inventory. Our Service Anywhere platform, SANI, has been a powerful backbone enabling us to serve our brand partners from different locations with improved quality and efficiency through digital intelligence. Our Regional Service Centers in Nantong and Hefei physically ensure flexible and reliable remote-based services, and we further expand our operations into nine additional cities across China. In logistics and supply chain, we work with our brand partners to transition from centralized warehousing to a grid management system. Our operations team continuously monitors platform policies to adjust product and marketing strategies, nurturing brand care and prioritizing relationship management. On top of minimizing disruptions, our integrated WeChat Mini Program solutions help the brand partners migrate their offline assets to online resources. This reinvigorated their offline inventories and sales staff, mitigating their impact from shutdown of many of their brick-and-mortar stores during the COVID lockdown. One of our luxury brand wrote our first Mini Program to over 50 offline stores in more than 20 cities and sustained meaningful sales growth even during the lockdown period. Overall, ensuring smooth, continuous e-commerce operations in response to unpredictable COVID lockdowns requires tremendous dedication and coordination efforts. Our ongoing efforts in category diversification, portfolio optimization, and technology innovations have greatly helped us to enhance resilience. We will continue to execute our sustainable growth strategy and proactively explore additional growth drivers, such as set forth in our medium-term plan. This March, we established a subsidiary in Singapore, making a fundamental foundational milestone for expansion into Southeast Asia. With that said, despite the lockdown challenges, we will conduct our business with courage, intelligence, and agility to protect the interest of the company and of all of our shareholders. At the start of this year, we launched a comprehensive compensation restructuring initiative called BBO, which stands for Baozun Business Owner, to cultivate an ownership-oriented culture and organization. Our BBO aims to tie the incentives more directly to individual contributions, empowering more entrepreneurial view and efficiency. Lastly, we would like to reiterate our commitment for sustainability. Last week, we issued our second annual ESG report, launching a new set of additional green initiatives. We are targeting a carbon emission reduction of 50% by 2030, compared to the 2021 baseline carbon neutrality by 2050. In the longer term, we strongly believe our resilience, business innovation, and the technology investments will triumph and earn us trust, branding, and fortune. I will now pass the call over to Arthur to go over our financials. Thank you. Okay. Thank you, Vincent, and hello, everyone. Now let me first do a quick review of financials of the first quarter, 2022. Please turn to slide number 6. During the quarter, our total GMV led by FMCG and electronics increased by 28% to RMB 17 billion. Excluding one electronic and one FMCG brand, the adjusted GMV would have declined by around 10%, mainly due to the BCI and weakening economy impact on sports and fashion apparel sectors. Although our non-distribution GMV expanded by 33% to RMB 16.2 billion, our distribution GMV declined by 29% to RMB 765 million. The reduction of distribution GMV was a reflection of our continuous progress in optimizing brand portfolio to focus on high quality business in the past few quarters. Our total net revenues declined by 2% to RMB 2 billion due to a decline of 30% in product sales revenue. Service revenue increased by 24% to RMB 1.3 billion, benefiting from solid growth in service segments, as well as new contributions from acquisitions in the past 12 months. Turn to slide 7. As we recently streamlined our organization into four business groups, we accordingly will start providing a breakdown of our revenue streams to help frame their progress. During the quarter, revenue from our traditional online store operation business accounted for 55% of total business. Revenue for warehousing and fulfillment, digital marketing and IT solutions accounted for 26% and 19%, respectively. In this quarter, revenue from our e-commerce business declined by 19%, mainly due to a reduction in low quality product sales business. At the same time, we are glad to see our value-added services have achieved double-digit growth year over year. We believe this validates our progress in service penetration and customer engagement, and we will continue to offer innovative products and services to expand Baozun's share of wallet from our brand partners. Now turn to slide 8. During the quarter, our cost of goods sold increased by 28% to RMB 596 million, which was mainly due to a reduction in product sales. In the second half of March 2022, major cities such as Shanghai experienced unexpected COVID lockdowns, resulting in a significant increase in undelivered goods and stagnated orders. That we reported as an increase in cost of goods sold on a conservative basis. Given that the entire second quarter to date remains in lockdown, we anticipate to see a similar trend in the second quarter. As a result of COVID lockdown impact, our gross profit margin for distribution model reduced to 12.5%, mainly due to a change in pricing strategy and adjustments in category mix, and the increase in cost related to defective and imperfect products. If we take into account the service revenue, our overall gross margin improved by 11% to 70%, mainly due, mainly driven by higher service revenues, which generate a higher gross margin. Now let's turn to operating costs and expenses on slide 9. Please note that the breakdown of operating expenses by organic business and M&A on this slide is based on the company management account. Fulfillment expenses were RMB 629 million, an increase of 24%. This was primarily attributable to the incremental fulfillment cost of RMB 117 million related to our two acquired logistics business last year. Excluding the impact from acquisitions, fulfillment expenses from organic business was RMB 462 million, a decline of 11%. Sales and marketing expenses were RMB 616 million, an increase of 31%. The increase was mainly due to increased BD related staff costs to drive growth and an expansion in digital marketing services, which was partially offset by efficiency improvements. Technology and content expenses were RMB 105 million, an increase of 13%. The increase was mainly driven by growth in GMV and the company's ongoing efforts in productization and commercialization during the quarter, which was partially offset by company's cost control initiatives and efficiency improvement. G&A expenses increased to RMB 91 million, an increase of 14%. This increase was mainly due to rise in human resource-related expenses from acquired business last year. Now turn to slide 10. Based on the above-mentioned items, our Non-GAAP income from operation was RMB 4.7 million during the quarter, and our N on-GAAP OP margin was 0.2%. Once again, we have prepared waterfall diagram depicting our analysis of how our top line and bottom line evolved year-over-year. As a reminder, this analysis is unaudited and should solely be used as supporting numbers to aid discussions. First, on slide 11. This waterfall diagram shows our net revenues walk from Q1 2021 to Q1 2022. In red, you can see that distribution, logistics, and sportswear and fashion apparel were the biggest drag this quarter. Meanwhile, digital marketing, luxury, IT solutions, and others were the positive growth contributors. Next, turn to slide number 12. We also provide here an indicative walk of Non-GAAP income from operations and cost streams. As shown in blue, we have positive contributions from digital marketing and IT solutions. In red, the overall macro business dragged down the profitability of store operation business due to smaller economies of scale. For M&A this quarter, there was a Non-GAAP operating loss of RMB 10 million, which was mainly related to Baotong as its express business was significantly impacted by the COVID lockdown. Additionally, we continued to invest in people and infrastructure, which contributed to the rise in back-end and strategic investments. Now turn to slide number 13. In light of the current challenging situation that contains minor uncertainties, our financial management and priority will focus on three areas. Improving operating efficiency. Continue the portfolio optimization to improve working capital efficiency. Finally, tightening overhead cost controls. The Regional Service Center, or RSC, is a key component of our multi-location strategy that improves service quality, minimizes risk, and reduces operating costs. During the quarter, we enriched more functions, including operation and design into the Regional Service Centers. We have migrated over 50% of our customer services from Shanghai to Regional Service Center in Nantong and Hefei. As RSC keeps ramping up, we anticipate generating even more economies of scale. We also begin allocating more medium-sized brands to our business operation center in order to leverage shared mechanisms to improve efficiency. This integrated platform serves multi-brand partners, helping to optimize low profit business and further streamline our overall business. For full year 2022, we anticipate cost saving of approximately RMB 20 million from these initiatives. Secondly, we will continue our efforts in portfolio optimization and enhancing our working capital efficiency. In light of the current macroenvironment, cash efficiency enhancement is more critical. We will evaluate inefficient and low margin brand partners to optimize and to minimize the risk. We have established a dedicated project team to focus on our billing processes in order to improve our accounts receivable and inventory management systems. Thirdly, we aim to further optimize our headquarters cost base and improve backend processes. By implementing more disciplined initiatives, we expect notable process improvement and cost reduction. Now turn to slide number 14 about our cash flow. As of March 31, 2022, our cash equivalents, and restricted cash reached RMB 3.4 billion, a decrease of RMB 1.3 billion from the previous quarter. The decrease was mainly attributable to repurchases of Convertible Senior Notes and our share buyback efforts, which total RMB 1.2 billion. We estimate a total savings of approximately $10 million from the retirement of Convertible Senior Notes and its associated interest expense during the quarter. In addition, as you may have noted from our announcement, we have fully completed the repurchase of Convertible Senior Notes until 2024, with total principal amount of $275 million in early May, making our balance sheet leaner. Lastly, an update on our buyback initiative. During the quarter, we repurchased approximately 2.3 million ADRs for approximately $20 million. Meanwhile, our board of directors also authorized an additional $80 million share repurchase program in this March, making our remaining authorized of $70 million as of March 31, 2022. Overall, despite some turbulence in the macro environment, we are continuing to increase the resiliency and sustainability of the company. We aim to further lower the costs and target positive free cash flow for the full year. With a solid balance sheet and a strong brand pipeline, we are confident that Baozun's business model will deliver shareholder value in the long term. This is my financial review section. That concludes our prepared remarks. Thank you. Operator, we are now ready to begin the Q&A session. Thank you. To ask a question, you will need to press star one on your telephone. To withdraw your question, press the pound key. Please stand by while we compile the Q&A roster. Our first question is from Thomas Chong with Jefferies. Your line is open. Thank you management for taking my question. I have two questions. Can management comment about the impact of the pandemic and the macro headwinds to our overall business and the trends of different categories in April and March so far? Can you also share if the luxury segment also gets impact? My second question is about our expectation on the June eighteenth. Can you share thoughts on the updates about the expectation from the user and also from the merchants? Thank you. Okay, thank you for the question. Maybe for Tracy to Yeah. Bring some color about it. Yeah. Yeah. Sure. This is Tracy speaking. I think the new wave of the pandemic has caused a great impact on China economy. We see from the public information the total retail sales in April has dropped 11% YY to almost same level of April two years before, right? From our observation from Baozun BI, the 11 key categories have showed over 20% decline during the March fifteenth to May fifteenth. It is the same trend in the quantity of the consumer buying group. I think the trend is quite similar among category like apparel, sports footwear, and the cosmetics. The exception for two category, one the first one is the outdoor and also the luxury part. I will give more details about luxury later. In terms of, I mean, the consumer demand and the spending behavior in recent two months, we do see the purchase intention recover from the first week of May. You can see actually this differs by geography in China, like the Shanghai buyer actually they've been significantly dropped during the past two months, but they rebounded back from the second week of May. The Zhejiang and Jiangsu ones have recovered quicker than Shanghai. Other provinces like Shandong or Guangdong are not that impacted by the pandemic. I think nationwide, we see the buyer amount has recovered in recent two weeks, almost to reach the same level of the first week of March. I think the transition is still catching up. We right now actually are working closely with our brand partner to mobilize resource for 618, as you mentioned. Actually, I think with the loss in the past two months, most of our brand partners expect the sign of the consumption recovery in the 618. Right now, we actually are trying to mobilize, utilize our resource on merchants and discounts and also marketing fees spared from the last two months. We are trying to hit the targets, but it's still hard to say how much we make up for the loss of the last two months, given some of the brand is still troubled by the domestic and overseas logistics. I think for the 618 it's very unique right now because most of us are working remotely at home. I think thanks to our Regional Service Centers in Nantong and Hefei, and also our Service Anywhere platform, SANI, we're able to work from different location but with the same level of the quality and the efficiency. In terms of the category you mentioned about the luxury, I think definitely this category slowed its growth rate and showing negative in April. From May, actually we see the sales has returned to the growth YY, thanks to actually some big campaigns such as Super Brand Day and the Hey Box. We work with top brands in this category. Also I think in the past two weeks, we actively adjusting our paid media and the content marketing direction geographically to lift the proportion of other cities besides Shanghai and Beijing and to the lower-tier cities. You can see actually our proportion from the, I mean, middle-tier cities has lifted 20% higher than before. Also I think for the luxury part, we see some positive progress on their digital transformation because of the lockdown. Actually this has accelerated their localized strategy, like multi-node logistics solution, one-inventory from offline to online, and also the CRM system update. We're working closely with our brand partner to capture the changes. We believe our technology asset has afforded us with extended capability and flexibility. I hope this solves your problem. Thank you. Got it. Thank you. Yeah, I would maybe just add a few more points on top of what Tracy answered. Basically, there's a lot of uncertainty. From a business point of view, during the uncertainty, we put cash at a very high priority. Therefore, our business is more focused on protecting the cash flow and improving the working capital efficiency. We also are looking into optimizing our portfolio to reduce the potential risk of our existing business. Secondly, we think it's actually a good opportunity to prove Baozun's differentiation compared with our peers, because we can provide a stable service for the logistics, for the customer service and for the IT. During the last month, we have proved we have that capability, and we received some really good feedback from some of our largest brand partners. Finally, given the situation in China, we're also looking at overseas expansion, try to divert this risk. Okay. Thank you. Thank you. Our next question from Vicky Wei with Citi. Your line is open. Good evening, management. Thanks for taking my question. I have two small questions. Would you please update about the cooperation with Cainiao and focus on warehouse and logistics business? Second, would you please provide- For example, the growth and traction of multi-mode channels. Is it fair to assume the demand from short video platforms and WeChat are more resilient than Tmall? Or are you seeing similar weakness in spending across all channels? Thank you. Okay. I will maybe answer the first question and then maybe Tracy can add some thought on the second one. In last quarter, we completed our deal with Cainiao. This quarter, we made good progress in terms of integrating the two team and start working together. In the last time, we introduced the strategy of 1+X, i.e., using Baozun's long-term capability in the sports and apparel category, try to bring new categories into Baozun with Cainiao's help. Basically, we have made good progress. From a Cainiao perspective, what Cainiao has provided to Baozun is its long list of potential kind of customers, which gave us a lot of opportunity to do business development. Secondly, Cainiao has a larger scale of economy. They have a countrywide network in terms of the warehousing and logistics network, which we utilized. During the last two months, we were able to use that capability to reduce the impact to our customer by using Cainiao's national network. Thirdly, Cainiao has a large economy of scale, which can bring down the procurement cost, which we were able to tap into the procurement process of Cainiao on the material, on the warehouse equipment, which will down the line bring the savings to Baozun. That's on the Cainiao part. On Baozun part, we also can help this venture because Baozun's customer will actually are moving into the end-to-end service, a omnichannel service, which logistics is a very important part of that. We can sell the full end-to-end solution, which brings the Baozun logistics into that play. Secondly is our technology capability, which along with Cainiao's capability, we can make a stronger technology enabler for Baozun, to sync our process and to improve our service quality. That's how we are making progress in Cainiao, and we expect we will have more progress in this year. Okay. I will pass on to Tracy for the second one. Yeah. Yes. For the second question is regarding to the dynamic change on the marketplace. I think right now it's still very early to give a conclusion on this, because actually the data is not that comprehensive in the other platform right now. In the past two months, given our BI track readout, we do see the new channel seems to have more resonance in terms of the demand. I think we saw many categories still growing week by week in the past two months. Even apparel, footwear or bags, those kind of category, they are harmed by the pandemic, but it is only last two weeks. The category quickly catch up in the last week of April and has surpassed the sales of from May. I think the advantage of that is they are more lower tier cities focused and much younger consumers. On the other hand, I think majority of their players right now is small brands and even no brands. Their flexibility in terms of the manufacturing, the logistics has kept them less impact by the lockdown. I think on the other hand, we should see the dynamic changes happening too. The competition has become much worse, and the advantage of first come first win almost the past. The real stuff, I mean, the brand equity has become more and more important. We do see other platform like including Pinduoduo and the Kuaishou or Douyin, they are quite aggressive to actually connecting the brands also. We also have several important pilots will happen in these two seasons. I think to brand, to mitigate the loss of the transition is important. To find a portfolio with a level of certainty on ROI is important too. That is exactly our understanding on the omnichannel strategy. As Vincent mentioned before, our, I think our strategy is to enable the brand partner with our powerful capability in omnichannel to provide a seamless offer where the product and the service can capture the channel consumer prefer to use no matter where it is. Yeah. Thank you. Thank you. Our next question, Joyce Ju with Bank of America, your line is open. Good evening, management. Thanks for taking my questions. I have two questions. The first question is, this quarter is the first quarter, the company started to have a separate disclosure of, digital marketing and IT solution segments, providing, more transparency in terms of the service, revenue and also profit. Just try to understand more about this business, how we internally look at it. Could you actually share more colors in terms of our strategic plan on, this revenue lines and the business and how we should expect this to grow in the future? And my second question is, we all know the pandemic actually, have a lot of impact on consumer demand. However, apart from the demand or from the brand perspective, in terms of like, you know, industry competition, how we actually see the competitive landscape of our business has changed due to the pandemic. Any like, you know, we're seeing more competition or price war, or we are actually seeing a more stabilized or like, you know, small players like kind of just squeeze out from the market. Could you share some colors? Thanks. Okay. Thank you. I will quickly answer the first one and leaving Vincent to talk about the TP, kind of the overall competition situation. I think it's the first time we split the DM and IT revenue. But that's also a key focus of the strategy of this year. Basically, in the last few quarters, we have seen the growth momentum from the traditional business, i.e., the traditional store operation start to slow down. However, from the customer and from our brand partners, what they are looking for is some value-added service can help them to sell more online, which we internally have this capability from digital marketing to IT solutions to help the brand partners to achieve that result. That expanded our service into an area where Baozun has a very unique proposition, i.e., our technology capability. The digital marketing is around data, and technology is around Baozun's technology, infrastructure and product. We have made a significant investment over the last few years. By focusing on those two categories, we were able to utilize our investment and try to generate more higher margin business from our brand partners. That's our thought, and that's how we organize our business, and that's how we are going to achieve our strategy. Yeah. Now I pass on to Vincent for the second question. Sure. Thanks, Arthur Yu. Yes. I think during the lockdown a lot of things have changed. Also, it is just like examination for all the players, no matter different brands and different you know, service providers in the market. I'm quite glad to see that you know, even during this kind of pandemic and lockdown, our capability helped the brand partners to be very resilient to the change and to stabilize the business. It's not easy. I think three points are quite important. The first one is that during the lockdown, we can see that Baozun's technology and also logistics multi-city warehousing you know planning omni-channel capability all this helped a lot of brands to sustain their business. Some of the brands even can have growth during the you know lockdown. It is because you know during the past several years, we continue to invest into logistics and also IT capability, digital marketing so you know we can help the brands not only in a common days, but also the pandemic period. Today's achievement is all about you know we invest in all these capabilities before. That is number one. That's why, you know, the biggest brands are, you know, supported by Baozun, powered by Baozun, and we are the most trusted partner to them. The second one is that, you know, in the past 15 years, we kept learning from the best brands. Learning the retailing, also the distribution, logistics, digital marketing, branding, all this kind of thing. We generally, you know, cultivated this kind of knowledge into solutions. Just now we mentioned Shopdog/ SHOPCAT, logistics, branding, all these kind of solutions are a good response to the brand, you know, the best brands demand in the past 15 years. We also transform all this kind of technology into a set of solution which we can use to serve more and more brands in the future. That's why we can see that the trend of the revenue from digital marketing, IT, and also logistics are very healthy. We benefit from this as well. Thirdly, I think, we have kind of strategic planning last just like several quarters ago, we share with you the long-term and medium you know term planning result. By this way, we can prepare more resources, you know, during different kinds of market scenarios. For example, today we have, you know, adequate financial resources to support the company to do more M&A, to do more investment during this period. Although the market is not good, but for, you know, talking about M&A and also investment, it is actually a good period. So in this case, I mean the these three points are, you know, integral parts of our strategy to support the company to grow and to deliver better and better service, more valuable service to the industry. Thank you. Thanks a lot for the colors. Our next question comes from Sophia Tan with Credit Suisse. Your line is open. Thanks, management, for taking my question. I have two questions on behalf of Ashley. My first question This is about the outlook of second quarter and next half of this year. How should we think about the potential impact on both top line and bottom line, taking the current pandemic situation and corresponding containment measures? My second question is about the cost optimization. Can management share with us what measures will we have to take this year to cut costs and OpEx? How will this imply to both gross margin and operating margin? Thank you. Okay, thank you for the question. I think there's a lot of uncertainty and there's a lot of potential scenarios could happen with the current lockdown. Currently, we are conservative in terms of the whole year financial in terms of the top line. But we do see our GMV will continue to have a double-digit growth given we have some really good brand, some really solid brand in the electronics and also in the FMCG sector. But underlying, we are concerned in terms of the apparel and some sectors which are impacted by the economic slowdown. Therefore, from a revenue perspective, we think we will see a weaker revenue compared with the last outlook we have. But it's still too early to see how much impact that will be. I think the good time for us to get back to the market will be after 618. We still cross our fingers to hope there will be a bounce back in 618, just like what happened in 2020, the first wave of the COVID. In terms of the cost control initiative, that actually we made a lot of progress on that. First of all, our initiative in terms of cost control or cost optimization is not simply on cost-cutting. What we have done is to do the process re-engineering, at the same time to use our strong IT capability to use the system to drive automation. That we have used in our headquarters in Shanghai and also our regional shared service center in Nantong and Hefei. That significantly improved the operating efficiency. At the same time, after we moved about 50% of our customer service people from Shanghai to Nantong, it also reduced our labor cost due to the location difference. Secondly, we have done a review internally looking at our headcounts. We have implemented a very strict headcounts control mechanism. The foundation of that is to looking at the value creation of each role and each function. Also we're looking at the profit contribution per IT from our frontline business, trying to differentiate which resource brings more profit to the company and trying to rationalize that. Also during that review, we have highlighted some low efficient brand we are currently operating. Our way to operate is to switch the low profit brand and replace by some high profit new business. We're actively bidding. Finally, and very simply, is the overhead control. That's a culture in terms of we try to implement, i.e., we want to spend every single penny and, by double looking at both sides before we put that money on the table. That culture has deeply implemented in every people in Baozun, and we hope with that culture and with our process re-engineering and system automation capability, we will be able to very well control our cost in the very difficult time this year. Thank you. Thank you. Our next question comes from Charlie Chen with China Renaissance. Your line is open. Okay, hi, management. Thanks for taking my questions. I have two questions here. The first one is, we all know that China's economy is particularly challenging for this year. Is there any noticeable change among your brand partners in terms of their willingness to spend in marketing? Is there any changes in terms of like, Chinese consumers, consumption downgrading instead of upgrading? All those major changes, how do those trends impact Baozun's decision-making process in terms of things like prioritization of your brand partners, pricing strategies with your brand partners? That's my first question. My second question is regarding the brand partners, especially the international brands. It seems that they are actually losing market share in some particular categories such as apparel. How do those international brands, looking at China's future market going forward, are they continue to spend in China, or how is their determination in Chinese market? Also as well, what's the progress of your onboarding Chinese local brand partners for this year? Thank you. Okay. Let me ask Tracy to answer the first one and invite Vincent to answer the second one, if that's okay. Sure. Yep. Yeah. Hello. I think in terms of the investment in China, especially on the marketing parity, I think right now it's still early to give a conclusion, say if there are similar or trends to minimize their or reduce their investment here. But I think there were two valid points I can share with you and as a team. The first, I think, definitely in the given the uncertainty in the market, to use the marketing investment marginally is definitely the direction. You can also see the trends from the recent, I mean the policy or say the regulation published by the, like, the top team from Alibaba in last month, right? They've been proactive to cut down some channel which lower ROI. This also indicates, say, for the brand part, they will definitely see the combination and the portfolio of their marketing investments between the pay media and the content marketing and also the campaign together to see what is the right and the balanced ROI for this. Secondly, I think it will actually accelerate their progress in China. We talk about the localized solutions. Because actually, given for most of our brands that we've been working right now, their China business already takes significant share of the total global business. I think the pandemic has calmed down their. In terms of the growth rate, but also to give their second thoughts on the strategy per se, how they will adjust their strategy in China in terms of the merchant and also the marketing investments, especially on the local asset part. I mean, the decentralized the mix on the channel and the mix on the price level things to compete with the competitor in the market. I think that is the two points I would like to share. In terms of the balance, I mean upward, how to say, our directions in the next 12 or 16 months, I think quality definitely come first, no matter on the I mean, channel choice or the brand partner choice. We always treat our actually our quality of the service as our first priority. I think in terms of the collaboration with brands, we will provide our best service best level of the service to work with the best level best feature of the brand. Also we will proactively to adjust our category mix between the apparel and also the consumer goods, and also our channel mix between the traditional platform and the new rising platform. I think as I mentioned, based on the in the quality here, we are trying to actually maximize our revenue portion besides the commission part, but also the marketing and technology and the logistics part. I hope this solved most of your question for the number one. Yeah. Yeah. Thank you. Yeah. Arthur. -just add, uh- Mm. Two more points on the first one in terms of the selection. We select our brand partner based on the value creation we can have for the brand partner as well. Basically we are not the cheapest in the marketplace, but we provide a premium service. Therefore, we hope we can charge a higher fee based on our premium service. We have a standard in terms of from a commercial point of view, what's the margin we need to achieve in order to decide whether or not we bring a brand partner on board. That's the first one. The second one is during this time, we particularly looking at the cash and especially the payment term and the inventory level. There are instances that we have rejected very good, a very famous brand with a distribution business because of the not very good payment term. In that way, we can protect our inventory risk and to improve our working capital efficiency. That's two things I would like to add. Vincent, please. Thank you, Arthur. Thank you, Tracy. Let me quickly cover the second question. You know, given this lockdown, I think a lot of expats in China today will feel quite surprised, especially in Shanghai. I think from the headquarters or strategic perspective of these brands, I think you know, China market is still very important given the size and also too big to ignore. So at least I think this should be more than neutral, you know, from the brand perspective. We are quite optimized for the international brands in China. After this round of lockdown, I think they will recover 'cause they have a very, very rich brand assets other than the other brand. For us, 'cause we are quite strong in this one, so I think this will benefit us. The second one, for the domestic brands. You know, just as what I said in the past five years, we have already constructed reliable broad suite of solutions, including digital marketing, IT, logistics. Recently, we also developed our RSC, which can provide trustworthy customer service and also operational services to different brands. This kind of solution right now is open to the market and also especially to the domestic brand, local brands. We are seeing very solid progress in different functions, including digital marketing. We are serving more and more you know, local brands, IT, which we have a very big wins too. Logistics, we are serving some other, you know, very influential sportswear and also apparel brand in the local brands. Even for RSC, we have some recent wins, for the you know local brands. In this case, I think, we are making good progress for local brands, and we think we are also optimistic for the international brands to recover. No matter for clients or shareholders, I think the business is in good hands. Thank you. Thank you. I would now like to turn the call back over to Wendy Sun for closing remarks. Thank you, operator. In closing, on behalf of the Baozun management team, we'd like to thank you for all your participation in today's call. If you require any further information, feel free to reach out to us. Thank you for joining us today. This concludes the call. This concludes today's conference call. Thank you for participating. You may now disconnect. Well, thank you every.