SecProbe.io

CORRESP
1
filename1.htm

August
11, 2023

Securities
and Exchange Commission

Division
of Corporate Finance

100
F Street, NE

Washington,
D.C. 20549

Attn:
Ms. Jessica Ansart and Ms. Lauren Nguyen

Re:
Shineco, Inc.

Form
10-K for Fiscal Year Ended June 30, 2022

Submitted
on September 28, 2022

Response
dated May 30, 2023

File
No. 001-37776

Dear
Ms. Jessica Ansart and Ms. Lauren Nguyen:

Please
find below our responses to the questions raised by the staff (the “Staff”) of the Securities and Exchange Commission
(the “Commission”) in its letter of comments dated August 1, 2023 (the “Comment Letter”) relating
to the annual report on Form 10-K for the year ended June 30, 2022, which was submitted to the Commission by Shineco, Inc. (the “Company”
or “we”) on September 28, 2022, and our response dated May 30, 2023.

The
Company’s responses are numbered to correspond to the Staff’s comments. For your convenience, each of the Staff’s comments
contained in the Comment Letter has been restated.

In
addition, we hereby submit our proposed amended disclosures, substantially in the form as Exhibit A attached hereto (the “Annual
Report”). Once the Staff’s satisfied with the proposed disclosures, we will incorporate such disclosures into our annual
report for the fiscal year ended June 30, 2023.

Form
10-K for the Year Ended June 30, 2022

Summary
of challenges and risks involved in the VIE Arrangements and enforcing the VIE Agreements, page 7

    1.
    We
    note your response to comment 5 and your revised disclosure here discussing the challenges and risks involved in the VIE arrangements
    and enforcing the VIE arrangements. Please also disclose, if true, that the VIE agreements have not been tested in a court of law.

RESPONSE:
We note the Staff’s comment, and in response hereto, respectfully advise the Staff that we have revised the Annual Report to include
the requisite disclosures. Please see pages 7 and 17 of the Annual Report attached hereto as Exhibit A for further details.

Should
you have any questions regarding the foregoing, please do not hesitate to contact the Company’s counsel, Huan Lou, Esq. and David
Manno, Esq. of Sichenzia Ross Ference LLP at (212) 930-9700.

    Very truly
    yours,

    By:
    /s/
    Sichenzia Ross Ference LLP

    Name:
    Sichenzia
    Ross Ference LLP

    On behalf of Shineco, Inc.

1185
Avenue of the Americas | 31st Floor | New York, NY | 10036

T
(212) 930 9700 | F (212) 930 9725 | WWW.SRF.LAW

Exhibit
A

Powers
of Attorney

Under
the Powers of Attorney, the shareholders of each VIE authorize WFOE to act on their behalf as their exclusive agent and attorney with
respect to all rights as shareholders of the respective VIEs, including but not limited to: (a) attending shareholders’ meetings;
(b) exercising all the shareholder’s rights, including voting, that shareholders are entitled to under the laws of China and the
Articles of Association, including but not limited to the sale or transfer or pledge or disposition of shares in part or in whole; and
(c) designating and appointing on behalf of shareholders the legal representative, the executive director, supervisor, the chief executive
officer and other senior management members of the respective VIEs.

Summary
of challenges and risks involved in the VIE Arrangements and enforcing the VIE Agreements

Shineco
is also subject to the legal and operational risks associated with being based in and having the majority of its operations in China.
These risks could result in material changes in operations, or a complete hindrance of Shineco’s ability to offer or continue to
offer its securities to investors, and could cause the value of Shineco’s securities to significantly decline or become worthless.
Recently, the PRC government initiated a series of regulatory actions and statements to regulate business operations in China with little
advance notice, including cracking down on illegal activities in the securities market, enhancing supervision over China-based companies
listed overseas using variable interest entity structure, adopting new measures to extend the scope of cybersecurity reviews, and expanding
the efforts in anti-monopoly enforcement. On July 6, 2021, the General Office of the Communist Party of China Central Committee and the
General Office of the State Council jointly issued an announcement to crack down on illegal activities in the securities market and promote
the high-quality development of the capital market, which, among other things, requires the relevant governmental authorities to strengthen
cross-border oversight of law-enforcement and judicial cooperation, to enhance supervision over China-based companies listed overseas,
and to establish and improve the system of extraterritorial application of the PRC securities laws. On July 10, 2021, the PRC State Internet
Information Office issued the Measures of Cybersecurity Review, which requires cyberspace companies with personal information of more
than one (1) million users that want to list their securities on a non-Chinese stock exchange to file a cybersecurity review with the
Office of Cybersecurity Review of China. On December 28, 2021, a total of thirteen governmental departments of the PRC, including the
Cyberspace Administration of China (the “CAC”), issued the Measures of Cybersecurity Review, which became effective on February
15, 2022. The Cybersecurity Review Measures provide that an online platform operator, which possesses personal information of at least
one million users, must apply for a cybersecurity review by the CAC if it intends to be listed in foreign countries. Because our current
operations do not possess personal information from more than one million users at this moment, Shineco does not believe that it is subject
to the cybersecurity review by the CAC.

As
of the date of this report, neither the Measures of Cybersecurity Review nor the anti-monopoly regulatory actions has impacted Shineco’s
ability to conduct its business, accept foreign investments, or continue its listing on Nasdaq or on another non-Chinese stock exchange;
however, there are uncertainties in the interpretation and enforcement of these new laws and guidelines, which could materially and adversely
impact the Company’s overall business and financial outlook. In summary, the recent statements and regulatory actions by China’s
government related to the use of variable interest entities and data security or antimonopoly concerns have not affected our ability
to conduct our business, accept foreign investments, or list on a U.S. or other foreign exchange. However, since these statements and
regulatory actions by the PRC government are newly published and official guidance and related implementation rules have not been issued,
it is highly uncertain what the potential impact such modified or new laws and regulations will have on Shineco’s daily business
operation, the ability to accept foreign investments and list on a U.S. or non-Chinese exchange. The Standing Committee of the National
People’s Congress (the “SCNPC”) or other PRC regulatory authorities may in the future promulgate laws, regulations
or implementing rules that would require Shineco or any of its subsidiaries to obtain regulatory approval from Chinese authorities before
listing in the U.S.

Because
Shineco does not hold equity interests in the VIEs, we are subject to risks due to the uncertainty of the interpretation and application
of the PRC laws and regulations, including but not limited to regulatory review of oversea listing of PRC companies through a special
purpose vehicle, and the validity and enforcement of the contractual arrangement with the VIEs. We are also subject to the risks of the
uncertainty that the PRC government could disallow the VIE structure, which would likely result in a material change in our operations,
or a complete hindrance of our ability to offer or continue to offer our securities to investors, and the value of our shares of common
stock may depreciate significantly. The arrangements of VIE Agreements are less effective than direct ownership due to the inherent risks
of the VIE structure and that Shineco may have difficulty in enforcing any rights it may have under the VIE agreements with the VIEs,
its founders and shareholders in the PRC because all of the VIE agreements are governed by the PRC laws and provide for the resolution
of disputes through arbitration in the PRC, where the legal environment is uncertain and not as developed as in the United States, and
where the Chinese government has significant oversight and discretion over the conduct of Shineco’s business and may intervene
or influence Shineco’s operations at any time with little advance notice, which could result in a material change in our operations
and/or the value of your common stock. In addition, the contractual agreements with the VIEs have not been tested in court in China and
this structure involves unique risks to investors. Furthermore, these VIE agreements may not be enforceable in China if the PRC authorities
or courts take a view that such VIE agreements contravene with the PRC laws and regulations or are otherwise not enforceable for public
policy reasons. In the event we are unable to enforce these VIE Agreements, Shineco may not be able to derive economic benefits from
the VIEs and Shineco’s ability to conduct its business may be materially and adversely affected. Any references to economic benefits
that accrue to Shineco because of the VIEs are limited to, and subject to conditions we have satisfied for consolidation of the VIEs
under U.S. GAAP. The VIEs are consolidated for accounting purposes but none of them is an entity in which Shinceco owns equity. Shineco
does not conduct any active operations and is the primary beneficiary of the VIEs for accounting purposes. See “Risk Factors —
Risks Relating to Our Corporate Structure”, “Risk Factors — Risks Associated With Doing Business in China” and
“Risk Factors — Risks Relating to Investment in Our Common Stock” for more information.

Asset
Transfer and Dividend Distribution Among Shineco, its Subsidiaries and the VIEs

As
of the date of this report, Shineco, any of its subsidiaries or any of the VIEs have not distributed any earnings or settled any amounts
owed under the VIE Agreements. None of Shineco, its subsidiaries and the VIEs have the intention to distribute earnings on any corporate
level nor settle amounts owed under the VIE agreements in the near future. We intend to keep any future earnings to finance the expansion
of our business, and we do not anticipate that any cash dividends will be paid in the foreseeable future.

Shineco’s
operating subsidiaries and the VIEs receive substantially all of the Company’s revenue in RMB. Under our current corporate structure
of mixed ownership and VIE arrangement, the WFOE has paid some of Shineco’s expenses and Shineco has from time to time transferred
cash to WFOE to fund WFOE and other subsidiaries’ or VIEs’ operations. For the year ended June 30, 2022, Shineco transferred
cash in the total amount of $15,349,077 to WFOE and WFOE paid expense approximately $978,979 on behalf of Shineco. For the year ended
June 30, 2021, Shineco transferred cash in the aggregate amount of $787,885 to the WFOE and WFOE paid $636,887 to Shineco’s creditors
on behalf of Shineco. The assets transfer was for business operation purposes. There was no distribution of earnings by the PRC operating
subsidiaries to Shineco during the years ended June 30, 2022 and 2021, respectively.

Under
the existing PRC foreign exchange regulations, payments of current account items, such as profit distributions and trade and service-related
foreign exchange transactions, can be made in foreign currencies without prior approval from the State Administration of Foreign Exchange
(the “SAFE”) by complying with certain procedural requirements. Pursuant to the SAFE Circular 37, Shineco is allowed to pay
dividends in foreign currencies to WFOE without prior approval from the SAFE, subject to the condition that the remittance of such dividends
outside of the PRC shall comply with certain procedures under the PRC foreign exchange regulations applicable to PRC residents only.
Approval from or registration with appropriate government authorities is, however, required where RMB is to be converted into a foreign
currency and remitted out of China to pay capital expenses, such as the repayment of loans denominated in foreign currencies. The PRC
government may also, at its discretion, restrict access in the future to foreign currencies for Shineco’s accounts with little
advance notice.

Relevant
PRC Regulations

Permissions
from the PRC Authorities to Issue Our Common Stock to Foreign Investors

As
of the date of this report, Shineco, our subsidiaries and the VIEs, (1) are not required to obtain any permission from any PRC authorities
to offer, sell or issue our common stock to non-Chinese investors, (2) are not covered by the permission requirements from the China
Securities Regulatory Commission (the “CSRC”), Cyberspace Administration of China (the “CAC”), or any other regulatory
agency that is required to approve of the VIEs’ operations, and (3) have not received nor been denied such permissions by any PRC
authorities. Nevertheless, 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 Severely Cracking Down on Illegal Securities Activities According to Law,”
or the July 6, 2021 Opinions, which were made available to the public on July 6, 2021. The July 6, 2021 Opinions emphasized the need
to strengthen the administration over illegal securities activities, and the need to strengthen the supervision over overseas listings
by Chinese companies. Given the current PRC regulatory environment, it is uncertain whether and when we, any of our subsidiaries or the
VIEs, will be required to obtain any permission from the PRC government to list or continue listing on a U.S. stock exchange in the future,
and even when we obtain such permission, whether it will be denied or rescinded. We have been closely monitoring regulatory developments
in China regarding any necessary approvals from the CSRC, CAC or other PRC governmental authorities required for overseas listings.

If
(i) we, our subsidiaries or the VIEs inadvertently conclude that any of such permission was not required or (ii) it is determined in
the future that the approval of the CSRC, CAC or any other regulatory authority is required for maintaining listing of our securities
on Nasdaq, we will actively seek such permissions or approvals but may face sanctions by the CSRC, CAC or other PRC regulatory agencies.
These regulatory agencies may impose fines and penalties on our operations in China, limit our ability to pay dividends outside of China,
limit our operations in China, delay or restrict the repatriation of the proceeds from offerings into China or take other actions that
could have a material adverse effect on our business, financial condition, results of operations and prospects, as well as the trading
price of our securities. The CSRC, CAC or other PRC regulatory agencies also may take actions requiring us, or making it advisable for
us, to halt offerings before settlement and delivery of our securities. Any uncertainties and/or negative publicity regarding such an
approval requirement could have a material adverse effect on the trading price of our securities. In the event that we failed to obtain
such required approvals or permissions, it would be likely that our securities would be delisted from the Nasdaq or any other foreign
exchange our securities are listed then.

The
Holding Foreign Companies Accountable Act

On
May 20, 2020, the U.S. Senate passed the Holding Foreign Companies Accountable Act (“HFCAA”) requiring a foreign company
to certify it is not owned or con