Analysis of the Rationality of High Compensation for Bairuiji's Sales Team

Based on collected public information and professional data, we now provide you with a systematic analysis of whether the high compensation for Bairuiji’s sales team is reasonable.

Changzhou Bairuiji Biomedical Co., Ltd. is a high-tech enterprise focusing on the R&D, production and sales of biomedical materials. Its main products include cross-linked sodium hyaluronate gel for uterine cavity (anti-adhesion product), as well as products for pelvic (abdominal) cavity, nasal cavity and other fields[1]. The company’s products are mainly sold to public hospitals, accounting for 87%-89% of terminal customer revenue, and adopt a distribution model for sales, with distribution model revenue accounting for 77%-90% of main business revenue[1].

The company is currently applying for listing on the Beijing Stock Exchange and has entered the review and inquiry stage. In 2024, the company’s operating revenue was approximately RMB 231 million, and its net profit attributable to parent company after deducting non-recurring gains and losses was approximately RMB 53.69 million, representing year-on-year growth of 16.68% and 19.02% respectively[2].

According to publicly disclosed financial data, the situation of employee compensation in Bairuiji’s sales expenses is as follows[1][3]:

Bairuiji’s overall sales expense ratio shows a downward trend: 34.51% in 2021, 38.77% in 2022, 33.13% in 2023, and 30.85% in January-June 2024[1]. Notably,

According to the data in the response to the review inquiry letter, the comparison of average annual compensation per sales staff between Bairuiji and listed medical device companies in Jiangsu Province is as follows[3]:

The data shows that there is no significant difference between Bairuiji’s average annual compensation per sales staff and the average level of listed companies in the same industry and region; in 2024, it was even slightly lower than the average level in the Jiangsu region[3].

Sales positions in the medical device industry are high-value-added, technology-intensive roles. According to industry salary survey data, the Talent Shortage Index (TSI) for medical device sales representative positions exceeds 1.2, indicating a state of supply shortage[4]. The average salary for overseas sales positions exceeds RMB 200,000 per year, with a shortage index of 2.1[4].

Bairuiji’s products are mainly sold to public hospitals, and sales staff need to have professional medical knowledge to carry out academic promotion, clinical training and other activities. In its response to the review inquiry, the company clearly stated that sales staff are required to carry out professional promotion activities such as organizing academic conferences, academic or business visits, and consulting research[3].

The company’s functional skincare business has developed e-commerce business since the second half of 2021, and is in the initial stage of brand building, requiring more promotion expenses to establish brand awareness[1]. In 2024, the online promotion service fee for the functional skincare business reached RMB 32.04 million, accounting for 77.78% of the functional skincare revenue[3].

Since its launch in 2015, the company’s uterine cavity cross-linked sodium hyaluronate gel product has seen continuous revenue growth: RMB 96.67 million in 2021, RMB 110.14 million in 2022, RMB 125.02 million in 2023, and RMB 143.82 million in 2024[2]. The indicators of revenue per sales staff and profit per sales staff provide performance support for the rationality of the compensation.

Regulators have focused on the authenticity of Bairuiji’s sales expenses in their inquiry, requiring the sponsor institution and the reporting accountant to inspect the following matters[1][3]:

1. Whether there is a significant difference between sales staff compensation and that of other employees
2. Whether there are cases of commercial bribery through sales staff
3. Whether the expense reimbursements of sales staff are true and complete
4. Whether there are cases of off-book expense advances

According to the response to the inquiry letter, the inspection conclusions show[3]:

• The average reimbursement amount per sales staff is low (approximately RMB 40,000 per person in 2024), mainly for travel expenses
• The proportion of sales expenses in the form of reimbursements is small (approximately 5.45% in 2024)
• There are no cases of paying sales staff compensation through personal cards or cash

Based on the above analysis, Bairuiji’s sales team compensation has the following rationalities:

• The overall compensation level of sales positions in the medical device industry is relatively high, which is in line with industry characteristics
• Compared with listed companies in the same industry and region, the compensation level is close to or slightly lower

• Medical device sales require professional medical background and academic promotion capabilities
• The company’s products are mainly targeted at public hospitals, with high sales thresholds

• The sales expense ratio shows an overall downward trend; in 2024, the sales expense ratio of the medical device business is lower than the industry average
• Compensation growth matches the expansion of business scale

• Intermediary institutions did not identify major commercial bribery risks during inspection
• The internal control over sales expense management is relatively sound

Therefore, Bairuiji’s sales team compensation is within a reasonable range, and the high compensation has corresponding business support and industry foundation.

[1] Prospectus (Application Draft) of Changzhou Bairuiji Biomedical Co., Ltd. Oriental Fortune Network. https://pdf.dfcfw.com/pdf/H2_AN202412261641439039_1.pdf

[2] Response to the Second Round of Review Inquiry Letter Regarding the Application for Public Offering of Stocks and Listing on the Beijing Stock Exchange by Changzhou Bairuiji Biomedical Co., Ltd. Oriental Fortune Network. https://pdf.dfcfw.com/pdf/H2_AN202512021792591872_1.pdf

[3] Response to the Review Inquiry Letter Regarding the Application for Public Offering of Stocks and Listing on the Beijing Stock Exchange by Changzhou Bairuiji Biomedical Co., Ltd. Oriental Fortune Network. https://pdf.dfcfw.com/pdf/H2_AN202512021792591875_1.pdf

[4] Report on Talent Supply and Demand in the Medical Device Industry. Oriental Fortune Network. https://pdf.dfcfw.com/pdf/H3_AP202503131644339430_1.pdf