Sina Corporation (SINA) 2013年年度報告「NASDAQ」.pdf

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1、Table of Contents UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,D.C.20549 FORM 20-F ooREGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR(g)OF THE SECURITIESEXCHANGE ACT OF 1934 OR xxANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF1934For the fiscal year ende

2、d December 31,2013 OR ooTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACTOF 1934 OR ooSHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGEACT OF 1934 Date of event requiring this shell company report.For the transition period from to Commission

3、 file number:000-30698 SINA CORPORATION(Exact name of Registrant as specified in its charter)Cayman Islands(Jurisdiction of incorporation or organization)37F,Jin Mao Tower88 Century Boulevard,PudongShanghai 200121,China(Address of principal executive offices)Chief Financial OfficerPhone:+8610 8262 8

4、888Facsimile:+8610 8260 716620/F Beijing Ideal International PlazaNo.58 North 4th Ring Road West,Haidian District,Beijing,100080,Peoples Republic of China(Name,Telephone,E-mail and/or Facsimile number and Address of Company Contact Person)Securities registered or to be registered pursuant to Section

5、 12(b)of the Act.Title of each className of each exchange on which registeredOrdinary Shares,$0.133 par valueThe NASDAQ Stock Market LLCOrdinary Shares Purchase Rights(NASDAQ Global Select Market)Securities registered or to be registered pursuant to Section 12(g)of the Act.Not Applicable(Title of Cl

6、ass)Table of Contents Securities for which there is a reporting obligation pursuant to Section 15(d)of the Act.Not Applicable(Title of Class)As of December 31,2013,there were 66,022,379 shares of the registrants ordinary shares outstanding,$0.133 par value.Indicate by check mark if the registrant is

7、 a well-known seasoned issuer,as defined in Rule 405 of the Securities Act.x Yes o No If this report is an annual or transition report,indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d)of theSecurities Exchange Act of 1934.o Yes x No Indicate by

8、check mark whether the registrant(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 duringthe preceding 12 months(or for such shorter period that the registrant was required to file such reports),and(2)has been subject to such filing requiremen

9、tsfor the past 90 days.x Yes o No Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required tobe submitted and posted pursuant to Rule 405 of Regulation S-T(229.405 of this chapter)during the preceding

10、12 months(or for such shorter period thatthe registrant was required to submit and post such files).x Yes o No Indicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or a smaller reporting company.See thedefinitions of“large accelerate

11、d filer,”“accelerated filer”and“smaller reporting company”in Rule 12b-2 of the Exchange Act.(Check one):Large accelerated filer xAccelerated filer oNon-accelerated filer oSmaller reporting company o(Do not check if a smaller reporting company)Indicate by check mark which basis of accounting the regi

12、strant has used to prepare the financial statements included in this filing:U.S.GAAP x International Financial Reporting Standards as issuedby the International Accounting Standards Board o Other o If“Other”has been checked in response to the previous question,indicate by check mark which financial

13、statement item the registrant has elected to follow.o Item 17 o Item 18 If this is an annual report,indicate by check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).o Yes x No(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST

14、FIVE YEARS)Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12,13 or 15(d)of the Securities ExchangeAct of 1934 subsequent to the distribution of securities under a plan confirmed by a court.o Yes o No Table of Contents TABLE OF CONTE

15、NTS INTRODUCTION1INFORMATION REGARDING FORWARD-LOOKING STATEMENTS2PART I3Item 1.Identity of Directors,Senior Management and Advisers3Item 2.Offer Statistics and Expected Timetable3Item 3.Key Information3Item 4.Information on the Company38Item 4A.Unresolved Staff Comments68Item 5.Operating and Financ

16、ial Review and Prospects69Item 6.Directors,Senior Management and Employees91Item 7.Major Shareholders and Related Party Transactions102Item 8.Financial Information109Item 9.The Offer and Listing110Item 10.Additional Information111Item 11.Quantitative and Qualitative Disclosures About Market Risk116I

17、tem 12.Description of Securities Other than Equity Securities118PART II118Item 13.Defaults,Dividend Arrearages and Delinquencies118Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds118Item 15.Controls and Procedures118Item 16A.Audit Committee Financial Expert119Item

18、 16B.Code of Ethics119Item 16C.Principal Accountant Fees and Services119Item 16D.Exemptions from the Listing Standards for Audit Committees119Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers119Item 16F.Change in Registrants Certifying Accountant119Item 16G.Corporate Go

19、vernance120Item 16H.Mine Safety Disclosure120PART III120Item 17.Financial Statements120Item 18.Financial Statements120Item 19.Exhibits120SIGNATURES125 Table of Contents INTRODUCTION In this annual report,except where the context otherwise requires and for purposes of this annual report only:“we,”“us

20、,”“our company,”“the Company,”“our”and“SINA”refer to SINA Corporation,its subsidiaries,and,in the context ofdescribing our operations and consolidated financial information,include our consolidated variable interest entities(“VIEs”)in China;“China”or“PRC”refers to the Peoples Republic of China and,s

21、olely for the purpose of this annual report,do not include the HongKong Special Administrative Region,the Macau Special Administrative Region or Taiwan;“GAAP”refers to generally accepted accounting principles in the United States;“PRC GAAP”refers to generally accepted accountingprinciples in the PRC

22、;“monthly active users”or“MAUs”refer to monthly active users,which are Weibo users who logged in and accessed Weibo throughWeibos website,mobile website,desktop or mobile applications,SMS or connections via platform partners websites or applications thatare integrated with Weibo,during a given calen

23、dar month.The numbers of MAUs are calculated using internal company data that hasnot been independently verified,and we treat each account as a separate user for purposes of calculating MAUs,although it is possiblethat some people and organizations may have set up more than one account and some acco

24、unts used by organizations are used by manypeople within the organization;“average daily active users”or“DAUs”refer to daily active users,which are Weibo users who logged in and accessed Weibo throughWeibos website,mobile website,desktop or mobile applications,SMS or connections via platform partner

25、s websites or applications thatare integrated with Weibo,on a given day,and“average DAUs”for a month refers to the average of the DAUs for each day during themonth.The numbers of DAUs are calculated using internal company data that has not been independently verified,and we treat eachaccount as a se

26、parate user for purposes of calculating DAUs,although it is possible that some people and organizations may have setup more than one account and some accounts used by organizations are used by many people within the organization;“shares”or“common shares”refer to our ordinary shares;all references to

27、“RMB”or“renminbi”are to the legal currency of China,and all references to“$,”“dollars,”“US$”and“U.S.dollars”are to the legal currency of the United States.RMB amounts that are not included in our financial statements in this annualreport are made at a rate of RMB6.0537 to US$1.00,the exchange rate o

28、n December 31,2013 as set forth in the H.10 statistical releasepublished by the Federal Reserve Board;and all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due torounding.1Table of Contents INFORMATION REGARDING FORWARD-LOOKI

29、NG STATEMENTS This Annual Report on Form 20-F contains forward-looking statements.These statements relate to future events or our future financial performance.In some cases,you can identify forward-looking statements by terminology such as“may,”“will,”“should,”“expect,”“plan,”“anticipate,”“believe,”

30、“estimate,”“predict,”“potential”or“continue,”and the negative of such terms or other comparable terminology.These statements areonly predictions.Actual events or results may differ materially.Although we believe that the expectations reflected in the forward-looking statements are reasonable,we cann

31、ot guarantee future results,levels ofactivity,performance or achievements.Moreover,neither we nor any other person assumes responsibility for the accuracy and completeness of theforward-looking statements.We undertake no duty to update any of the forward-looking statements after the date of this rep

32、ort to conform suchstatements to actual results or to changes in our expectations.Readers are also urged to carefully review and consider the various disclosures made by us which attempt to advise interested parties of the factorswhich affect our business,including without limitation the disclosures

33、 made under the caption“Risk Factors”included herein.2Table of Contents PART I Item 1.Identity of Directors,Senior Management and Advisers Not applicable.Item 2.Offer Statistics and Expected Timetable Not applicable.Item 3.Key Information A.Selected Financial Data The selected consolidated financial

34、 data present the results for the five fiscal periods ended and as of December 31,2013.The Companys historicalresults do not necessarily indicate results expected for any future periods.The selected consolidated financial data below should be read in conjunction withour consolidated financial statem

35、ents and notes thereto,“Item 5.Operating and Financial Review and Prospects”below,and the other information contained inthis Form 20-F.Years Ended December 31,20132012201120102009(In thousands,except per share data)Operations:Net revenues$665,106$529,329$482,829$402,617$358,567Gross profit394,042281

36、,397267,481234,207200,275Income(loss)from operations22,572(8,548)(33,662)96,24337,202Income(loss)before income tax expense58,43234,585(297,417)(10,903)420,628Net income(loss)43,83031,855(302,418)(19,339)412,305Net income(loss)attributable to SINA45,13231,738(302,092)(19,094)411,895Net income(loss)pe

37、r share attributable to SINABasic$0.68$0.48$(4.64)$(0.31)$7.53Diluted$0.66$0.47$(4.64)$(0.31)$6.95Shares used in computing basic net income(loss)pershare attributable to SINA66,74166,40165,12161,21654,722Shares used in computing diluted net income(loss)pershare attributable to SINA67,08766,84965,121

38、61,21659,259(1)Fiscal year 2013 results included a dilution loss of$10.2 million in the investment in E-House(China)Holdings Limited(“E-House”),which was relatedto the issuance of incremental shares by E-House to its management in March 2013,whose issuance price per share was less than our average c

39、arryingvalue per share.We also recognized a$6.1 million of other-than-temporary impairment loss on our investments under the cost method and a$21.1million gain from change in fair value of investor option liability.(2)Fiscal year 2012 results included$18.5 million in impairment charges of equity inv

40、estments,including other-than-temporary impairment of$8.4 millionrelated to our equity investment in Mecox Lane Limited(“MCOX”).In 2012,China Real Estate Information Corporation(“CRIC”)merged into andbecame a 100%subsidiary of E-House.As a result,our interest in CRIC was converted into 29.3 million

41、ordinary shares of E-House,equivalent to a24.9%interest of E-House,and$85.5 million cash.We recognized an amount of$45.3 million one-time gain as a result of the merger.We also recognizeda gain of$10.2 million resulting from sale of shares of Tudou Holdings Limited(“Tudou”)in March 2012 and the gain

42、 from Tudous merger withYouku Inc.(“Youku”)in August 2012.(3)Fiscal year 2011 results included$350.1 million in impairment charges,including other-than-temporary impairment of$230.3 million related to ourequity investment in CRIC,other-than-temporary impairment of$50.9 million related to our equity

43、investment in MCOX and goodwill impairment of$68.9 million related to our mobile value added service(“MVAS”)business.3(1)(2)(3)(4)(5)Table of Contents(4)Fiscal year 2010 results included an other-than-temporary impairment of$128.6 million related to our equity investment in CRIC.(5)In 2009,we spun o

44、ff China Online Housing Technology Corporation(“COHT”)and merged it with CRIC,a real estate information and consultingservices subsidiary of E-House,following CRICs initial public offering.We recorded a one-time gain of$376.6 million resulting from the sale of its66%equity interest in COHT in exchan

45、ge for CRICs ordinary shares.Beginning October 1,2009,we no longer consolidate the financial results ofCOHT and instead accounts for its interest in CRIC using the equity method of accounting.Years Ended December 31,20132012201120102009(In thousands)Financial position:Cash,cash equivalents and short

46、-term investments$1,868,239$713,598$673,475$882,835$821,518Working capital1,790,696658,318627,167760,635694,484Total assets2,897,8431,482,9061,391,4471,636,0901,613,842Long-term liabilities894,119110,004128,355147,540166,729Total liabilities1,222,225337,033329,098395,564391,143Total SINA shareholder

47、s equity1,191,2101,136,6701,055,6701,239,3081,221,727Total shareholders equity1,675,6181,145,8731,062,3491,240,5261,222,699 B.Capitalization and Indebtedness Not applicable.C.Reasons for the Offer and Use of Proceeds Not applicable.D.Risk Factors Risks Related to Our Business Due to the rapidly evol

48、ving market in which we operate,we cannot predict whether we will meet internal or external expectations of futureperformance.Our primary market is in China,where the internet industry is rapidly evolving and new products,new business models and new players emergefrom time to time.In addition,regula

49、tory changes can have an unexpected and significant impact on many aspects of our business.We believe our futuresuccess depends on our ability to significantly grow our revenues from new and existing products,business models and sales channels.However,market dataon our business,especially on new pro

50、ducts,business models and sales channels,are often limited,unreliable or nonexistent.Accordingly,our prospectsmust be considered in light of the risks,expenses and difficulties frequently encountered by companies in a fast changing market where there are abundantprivate and public capital to support

51、 competing new product developments,new business models and new companies.These risks include our ability to:offer new and innovative products;attract and retain users and advertisers;react quickly and effectively to regulatory changes;generate revenues from our users from fee-based and other intern

52、et services,including our social media platform Weibo;4Table of Contents respond effectively to competitive pressures and address the effects of strategic relationships or corporate combinations among our competitors;attract buyers for our mobile value-added services;maintain our current,and develop

53、 new,strategic relationships;increase awareness of our brand and continue to build user loyalty;attract and retain qualified managerial and other talented employees;upgrade our technology to support increased traffic and expanded services;expand the content and services on our network,secure premium

54、 content and increase network bandwidth in a cost-effective manner;and develop a sufficiently large customer and user base and monetization models for our Weibo services to recover its development costs,networkexpenditures and marketing expenses and eventually achieve profitability.Due to the rapidl

55、y evolving market in which we operate,our historical year-over-year and quarter-over-quarter trends may not provide a goodindication of our future performance.For certain business lines,we have experienced high growth rates in the past and there may be expectations that thesegrowth rates will contin

56、ue.For other business lines,we have experienced declining trends.In the past,we have relied on the growth of our online advertisingbusiness to derive profitability,which we have used to fund new initiatives such as Weibo.Our online advertising business may suffer from price competitionfrom other onl

57、ine advertising companies.We may have to lower our profitability or operate at a loss in order to adequately fund critical initiatives that webelieve will create value for our company and strengthen our market position over the long run.Our operating results have in the past fallen below theexpectat

58、ions of industry analysts and investors and may fall again in the future and our share price may decline significantly as a result of our failure to meetsuch expectations.You should not place undue reliance on our financial guidance,nor should you rely on our quarterly operating results as an indica

59、tion ofour future performance,because our results of operations are subject to significant fluctuations.We may experience significant fluctuations in our quarterly operating results due to a variety of factors,many of which are outside our control.Significant fluctuations in our quarterly operating

60、results could be caused by various factors,including but not limited to,our ability to retain existing usersand user activity levels,attract new users at a steady rate and maintain user satisfaction;the announcement or introduction of new or enhanced services,content and products by us or our compet

61、itors;lack of significant news events in the current period,resulting in lower website traffic;technical difficulties,system downtime or internet failures;changes in demand for advertising space,new advertising formats or new advertising products from advertisers;seasonality of the advertising marke

62、t;the amount and timing of operating costs and capital expenditures relating to the expansion of our business,operationsand infrastructure;mobile operators policies;governmental regulation and potentially sudden changes in policies affecting our businesses;seasonal trends ininternet use;a shortfall

63、in our revenues relative to our forecasts and a decline in our operating results due to our inability to adjust our spending quickly;decreases in earnings from equity investments;impairment of our equity investments;lower interest income resulting from decrease in interest yield and cashbalance;and

64、general economic conditions and economic conditions specific to the internet,wireless,e-commerce,media/advertising industry and the GreaterChina market.As a result of these and other factors,you should not place undue reliance on our financial guidance,nor should you rely on quarter-to-quartercompar

65、isons of our operating results as indicators of likely future performance.Our quarterly revenue guidance is our best estimate at the time we provideguidance.Our operating results may be below our expectations or the expectations of public market analysts and investors in one or more future quarters.

66、Ifthat occurs,the price of our ordinary shares could decline and you could lose part or all of your investment.5Table of Contents We are relying on advertising and marketing as a significant part of our future revenues,but the online advertising and marketing industry issubject to many uncertainties

67、,which could cause our advertising and marketing revenues to decline.The online advertising and marketing industry is rapidly evolving in China.Many of our current and potential advertisers have limited experiencewith the internet as an advertising and marketing medium,have not traditionally devoted

68、 a significant portion of their advertising and marketing expendituresor other available funds to web-based advertising and marketing,and may not find the internet to be effective for promoting their products and services relativeto traditional print and broadcast media.We may not be successful in a

69、ttracting new advertisers,convincing our current and potential advertisers to increasetheir budgets for online advertising and marketing or securing a significant share of those budgets.If the internet does not become more widely accepted as amedium for advertising and marketing,our ability to gener

70、ate additional revenues could be negatively affected.Our ability to generate significant advertisingand marketing revenues will depend on a number of factors,many of which are beyond our control,including but not limited to:the development and retention of a large base of users possessing demographi

71、c characteristics attractive to advertisers;the maintenance and enhancement of our brands in a cost-effective manner;increased competition and potential downward pressure on online advertising and marketing prices and limitations on web page space;changes in government policy that curtail or restric

72、t our online advertising and marketing services or content offerings or increase our costsassociated with policy compliance;the acceptance of online advertising and marketing as an effective way for advertisers to market their businesses;advertisers preferences for new online advertising and marketi

73、ng formats,products or business models offered by other competitors and ourability to provide similar or competing new formats,products and solutions;the development of independent and reliable means of verifying levels of online advertising and traffic;and the effectiveness of our advertising deliv

74、ery,tracking and reporting systems.In 2013,approximately 72%of our advertising and marketing revenues in China were derived from the automobile,fast-moving consumer goods,internet and financial services,IT and telecommunication sectors.If there is a downturn in advertising and marketing spending,esp

75、ecially in these sectors,our results of operations,cash flows and financial condition and our share price could suffer.Our growth in advertising and marketing revenues will alsodepend on our ability to increase the advertising and marketing space on our network and develop new advertising and market

76、ing inventory offerings,such asthose tied to video content,mobile environment and user-generated content in social media environments,as well as performance-based inventories.If we fail toincrease our advertising and marketing space at a sufficient rate or fail to develop new advertising and marketi

77、ng inventory offerings that achieve marketacceptance,our growth in advertising and marketing revenues could be hampered and our share price may drop significantly.Further,the increasing usage ofonline advertising blocking software may result in a decrease of our advertising and marketing revenues as

78、 the advertisers may choose not to advertise on theinternet if such software is widely used.Our advertising and marketing revenues may also be materially adversely impacted if we are unable to developeffective advertising and marketing offerings for our mobile traffic,as internet users in China more

79、 and more rely on mobile devices,such as smart phonesand tablets,to access the internet.6Table of Contents If our social media platform Weibo fails to achieve expansion and retention of user base and generate sustainable revenue growth and profit,our share price could suffer significantly.We only st

80、arted to monetize Weibo traffic in the first half of 2012 through advertising and marketing services and value-added services such as gamerelated services and VIP membership.Weibo is a form of social media featuring microblogging services and social networking services and,thus,is subjectto intense

81、competition from providers of both types of services and potential new types of online networking services.The major Chinese portals,includingTencent Holdings Ltd.(“Tencent”),S Inc.(“Sohu”)and NetE Inc.(“Netease”),offer similar products that compete with us for users andtraffic,as well as content,ta

82、lent and marketing resources.In addition,there are many websites,including K,R,(GiantInteractive Group Inc.,or Giant Interactive)and (China Mobile)and mobile applications,including Line,Kakao Talk,WhatsApp,WeChat(Tencent),QQ Mobile(Tencent),Yixin(China Telecom/Netease),Laiwang(Alibaba)and Momo,that

83、specialize in providing microblogging services and/orsocial networking services.We may be unable to compete successfully against these competitors or new market entrants,which may adversely affect ourfinancial performance.Monetization has been a challenge to other microblogging services and social n

84、etworking services,and it has been a challenge to us as well.Wecannot guarantee that the monetization methods adopted by other microblogging and social networking services will work with Weibo or the current Weibomonetization methods can generate sustainable revenue growth and profit.In our efforts

85、to build scale and increase user base and user stickiness,we havesignificantly increased and expect to further increase investments in Weibo in areas such as technology,infrastructure and marketing,which have caused ourprofitability to significantly decline and may result in further declines.In addi

86、tion,we cannot assure you that the investments we make will result in increasedWeibo users and traffic.If our monetization efforts are not successful,then our investments in Weibo could significantly depress our profitability,and if weare unsuccessful in growing and monetizing Weibos user base and t

87、raffic,our share performance could be materially adversely affected,the price of ourordinary shares could decline.Weibo monetization may require users to accept“promoted”advertising in their feeds or private messages,which may affect user experienceand cause decline in user traffic and delay in Weib

88、o monetization.Weibo users typically can log into their personal accounts to view user-generated feeds and private messages from accounts that they have selected tofollow.Social media companies have been subject to negative comments(and in the case of facebook,a lawsuit)for introducing promoted adve

89、rtising intotheir users content stream.We started to test promoted advertising products in Weibo at the end of December 2012 and have received user complaints.If weare unable to address user complaints to an acceptable level,Weibos monetization may be delayed and usage activities may decline,which m

90、ay adverselyimpact our revenues and profitability.We expect to generate a significant portion of our advertising revenues from our strategic alliance with Alibaba;if we fail to earn theserevenues as expected,our results of operations and growth prospect may be adversely affected.In April 2013,we for

91、med a strategic alliance with Alibaba and its affiliated entities to jointly explore social commerce and develop innovativemarketing solutions to enable merchants on Alibaba e-commerce platforms to better connect and build relationships with our Weibo users.As part of thestrategic alliance,Alibaba h

92、as committed to purchase approximately RMB 2.3 billion($380 million)in advertising and social commerce services from Weiboand us.Assuming the successful development of new products,business models and growth of effective traffic,we expect to generate such amount inrevenues in aggregate for Weibo and

93、 us from 2013 to 2015,with non-Weibo portion not exceeding 15%of such revenues.As a result of these arrangements,weanticipate that a significant percentage of our revenues through 2015 will be attributable to our collaboration with Alibaba.If we are unable to maintain ourstrategic alliance with Alib

94、aba,enhance relationship with Alibaba,establish new relationships with additional strategic partners or recognize such purchasecommitment as revenue,our results of operations and growth prospects would be adversely affected.7Table of Contents Our MVAS revenues have experienced an overall decline and

95、 may decrease further in the future.In 2013,2012 and 2011,MVAS revenues accounted for 9%,13%and 18%of our total net revenues,respectively.Our MVAS revenues declinedyear over year for the past three years,and may further decline in the future.If users do not adopt our MVAS at a sufficient rate,our ov

96、erall MVAS revenuecould be negatively affected.Factors that may prevent us from maintaining or growing our MVAS revenues include:our ability to launch new popular services;our ability to retain existing customers of our subscription services;our ability to attract new subscribers in a cost-effective

97、 manner;our ability to provide satisfactory services to customers;competitors,including mobile operators,may launch competing or better products;changes in policy,process and/or system by China Mobile Communications Corporation(“China Mobile”),China United NetworkCommunications Group Co.,Ltd.(“China

98、 Unicom”)or other mobile operators,on whom we rely for service delivery,billing and paymentcollection.Examples include limiting the service offerings and partnerships allowed for each Short Messaging Service(“SMS”)service code;requiring additional notices and customer confirmations in the MVAS order

99、ing process;complicating the product launch approval process;andshifting our products to more costly platforms.In the past,the mobile operators have made sudden changes that have significantly impacted ourrevenues and may do so again in the future;changes in government regulations,which could restri

100、ct our MVAS offerings,curtail our ability to market our services or change user adoptionor usage patterns in a negative way.For example,in August 2007,the Ministry of Information Industry(“MII”)(superseded by the Ministry ofIndustry and Information Technology(“MIIT”)established in March 2008)tighten

101、ed the regulations over direct advertising in China,whichreduced the effectiveness of our direct advertising on MVAS and increased the difficulties of new user recruitment.In December 2007,the MIIunified the dialing codes of each service provider(“SP”),which increased the number of digits a user mus

102、t input to subscribe to an SPsMVAS,thereby making the purchasing process more complicated.Effective as of September 1,2013,the MIIT has required mobile users toregister their real names.Implementation of these types of changes has led to in the past and may lead to in the future fewer subscriptions

103、ofMVAS and a decrease in new customers;and changes in mobile subscriber base from 2G and 2.5G,from whom we derive most of our MVAS revenues,to 3G and soon 4G,where mobileapplications are more popular.In light of the changing operating environment and evolving,uncertain policies and regulations,our n

104、ew MVAS offerings may not continue to beaccepted by the market or meet mobile operators requirements and government regulations.Neither can we assure that our new MVAS will provide meaningfulmargin contribution in the current competitive landscape when other MVAS providers are willing to accept lowe

105、r revenue sharing to acquire marketingchannels and MVAS content and mobile operators are demanding higher revenue sharing for new MVAS offerings and MVAS offerings using their newerplatforms.If revenues from our MVAS services do not grow significantly or generate profits,our financial position,resul

106、ts of operations and cash flows maybe materially and adversely affected.With respect to MVAS,we rely on China Mobile,China Unicom and other mobile operators for marketing,service delivery,billing andpayment collection,and we may be adversely affected by changes that they may make suddenly and unilat

107、erally.Our MVAS offerings depend mainly on cooperation arrangements with China Mobile and China Unicom and,to a lesser extent,ChinaTelecommunications Corporation(“China Telecom”).We rely on these mobile operators in the following ways:utilizing their network and gateway to recruitand provide MVAS to

108、 subscribers;utilizing their billing systems to charge the fees to our subscribers through the subscribers mobile phone bills;utilizingtheir collection services to collect payments from subscribers;and relying on their infrastructure development to further develop our new products andservices.As of

109、December 31,2013,we offered our MVAS through 30 provincial and local subsidiaries of China Mobile;additionally,we also had contractswith China Unicom and one of its provincial subsidiaries.As we have limited bargaining power over the mobile operators,we may be required to enter intocooperation agree

110、ments on terms that are unfavorable to us.The mobile operators may also unilaterally terminate or amend the agreements at any time.If ChinaMobile,China Unicom or other mobile operators choose not to continue the cooperation arrangements with us or if they unilaterally amend the cooperationarrangemen

111、ts with terms significantly unfavorable to us,our MVAS revenues and operating profitability could be materially and negatively affected.8Table of Contents In the past,mobile operators have made sudden and unexpected changes in their policies,processes and systems,which have harmed,and maycontinue to

112、 harm,our business.For example:In December 2010,under the MIITs policy directives,China Mobile began requiring a subscription reminder to be sent for monthly MVASsubscriptions after receiving double confirmation of the subscription.Subscribers can cancel MVAS subscriptions by replying to the reminde

113、rnotice.This has complicated the subscription process and reduced our ability to acquire new monthly subscribers in a cost-effective manner.In January 2011,China Mobile implemented a series of measures that included limiting the service offerings and partnerships allowed for eachSMS service code,pre

114、venting the television and radio promotion of certain interactive voice response(“IVR”)products and requiring additionalnotices and customer confirmations in the MVAS ordering process.These measures have had a negative impact to our results of operations,cash flows and financial condition.In Septemb

115、er 2012,China Unicom implemented a series of measures that limited the promotion of certain MVAS.A MVAS provider may bepenalized if the number of complaints against the provider related to non-compliance of MVAS subscriptions with China Unicoms standardprocedure exceeds a given threshold.Our MVAS re

116、venues were significantly affected by such measures.Our mobile operators have made other policy changes in the past and may make further changes at any time,including,but not limited to,requiringus to use the mobile operators customer service and/or marketing service and charging for these services;

117、requiring us to migrate our MVAS to an operatorsplatform and increase the fees charged for using the mobile operators platform;changing their fee structure or billing method in a way that would require us todelay the recognition of MVAS revenues from an accrual basis to when actual payments are rece

118、ived;implementing new billing rules,such as reducing MVASfees that can be charged to users;disallowing us to bill certain inactive users and limiting the amount of MVAS fees that can be billed;requiring us to absorbend customer bad debts;issuing new rules on how wireless application protocol(“WAP”)s

119、ervices are ranked on mobile operator browsers,whichsignificantly determines WAP revenues;refusing to pay us for services delivered;limiting the product offerings of service providers by working directly withcontent providers to launch competing services or giving exclusive rights to certain service

120、 providers to offer certain MVAS;complicating our product launchprocedures by requiring approval at the provincial level of the mobile operator;and prolonging the product launch review period from monthly to quarterly.Any change in policy,process or system by the mobile operators could result in a m

121、aterial reduction of our MVAS revenues.China Mobile,China Unicom and other mobile operators have in the past increased the fees charged for providing their services and may do so againin the future.If they choose to increase such fees,our gross margin for MVAS and our operating profitability may be

122、negatively impacted.These mobileoperators have generally retained a certain percentage of the fees for MVAS we provided to our users via their platform for fee collection.In addition,theycharge transmission fees for some products such as SMS and Multimedia Message Service(“MMS”)on a per message basi

123、s,and the rates of suchtransmission fees vary for different products and message volume.For 2013,we received on average 75%and 66%of the amount we charged to our users viathe China Mobile platform and the China Unicom platform,respectively,after they deducted the fees for collection and transmission

124、.9Table of Contents Our MVAS revenues could be negatively impacted if China Mobile,China Unicom or other mobile operators restrict MVAS to be charged on amonthly subscription basis or disallow us to charge monthly fees for users who do not use our service in a particular month.For 2013,approximately

125、 4%ofour MVAS revenues were derived from monthly subscription products,which mainly consist of SMS and MMS.In the past,China Mobile and China Unicom imposed penalties on MVAS providers for violating certain of their operating policies relating toMVAS.In some cases,they stopped making payments to cer

126、tain service providers for serious violations.In the past three years,the total penalties we weresubject to were insignificant in dollar amounts,but it is difficult to determine the specific conduct that might be interpreted as violating their operating policies.Additionally,mobile operators may uni

127、laterally revise their arrangements with us at any time,which could result in us breaching the new terms and beingsubject to fines.If China Mobile,China Unicom or other mobile operators impose more severe penalties on us for policy violations,our MVAS revenues andoperating results may be negatively

128、impacted.We are potentially subject to liability and penalty for delivering inappropriate content through our MVAS.One of the violations cited in the notice fortemporary termination of our IVR service at the end of July 2004 was that we had provided inappropriate content to our mobile subscribers th

129、rough our IVRservice.The definition and interpretation of inappropriate content in many cases are vague and subjective.We are not sure whether mobile operators,includingChina Mobile and China Unicom,or the Chinese government will find our mobile content inappropriate and therefore prevent us from op

130、erating the MVASrelating to such content in the future.If they prevent us from offering such services,our MVAS revenues may suffer significantly.A portion of our MVAS revenues is currently estimated based on our internal records of billings and transmissions for the month,adjusted for priorperiod co

131、nfirmation rates from mobile operators and prior period discrepancies between internal estimates and confirmed amounts from operators.Historically,there have been no significant true-up adjustments to our estimates.If there was no consistent trend of confirmation rates or if there were continuous si

132、gnificanttrue-up adjustments to our estimates under the new billing platforms,we will need to rely on the billing statements from the operators to record revenues.Due tothe time lag of receiving the billing statements,our MVAS revenues may fluctuate with the collection of billing statements if we we

133、re to record our MVASrevenues when we receive the billing statements.For example,if an mobile operator switches payment to service providers from estimated collection from usersto actual collection,such policy change may cause us to delay the recognition of these revenues until we receive the actual

134、 billings and/or until we have reliableinformation to make such revenue estimates.For 2013,approximately 4%of our MVAS revenues were estimated at period end.In the past,China Mobile has requested resettlement of billings that were settled in previous periods on which payments had been made to us.Weh

135、ave had to accrue for such credits against revenues based on a rolling history,and the true-ups between the accrued amounts and actual credit memos issuedby China Mobile have not been significant.However,if China Mobile or other mobile operators request resettlement of billings for a previous period

136、 atamounts significantly larger than the credits we accrued based on historical patterns,our operating results,financial position and cash flow may be severelyimpacted.If China Mobiles,China Unicoms or other mobile operators systems encounter technical problems,if they refuse to cooperate with us or

137、 if they donot provide adequate services,our MVAS offerings may cease or be severely disrupted,which could have a significant and adverse impact on our operatingresults.The markets for internet and social media and social networking services are highly competitive,and we may be unable to competesucc

138、essfully against established industry competitors and new entrants,which could reduce our market share and adversely affect ourfinancial performance.We provide online content and services for the global Chinese community,including but not limited to informational features,microblogging andsocial net

139、working services as well as other fee-based services.This industry can be characterized as highly competitive and rapidly changing due to the fastgrowing market demand.Barriers to entry are relatively low,and current and new competitors can launch new websites or services at a relatively low cost.Ma

140、ny companies offer various content and services targeting this community and compete with our offerings.10Table of Contents In terms of informational features,we compete with existing or emerging PRC internet portals such as Baidu Inc.(“Baidu”),Tencent,Netease,TOMOnline,Inc.(“TOM Online”),Sohu and P

141、hoenix New Media Limited(“iF”).In addition,we also face competition from vertical websites,which mayhave better focus and more resources dedicated to a specific topical area,such as automobile,finance and IT information.Our competitors in this area includeHexun,East Money,China Finance Online,PCAuto

142、,Autohome and Bitauto,Xcar,ZOL Online,PC and PConline.As we expand our product and services offerings into social media and social networking services,online video,WAP(mobile portal),blog,lightblog and messaging services,we face competition from companies that are focused in the same space.Major Chi

143、nese internet companies,including Sohu,NetEase,Tencent and iF,as well as other microblogging services and new players in China who offer online media,including content aggregation anddistribution services,compete directly with us for user traffic and user engagement,content,talent and marketing reso

144、urces.In addition,as a form of socialmedia featuring social networking services and messaging services,we are subject to intense competition from providers of similar services as well as potentialnew types of online services,including interest-based social products.These services include mobile appl

145、ications,such as WhatsApp,Line,Ozone,WeChat,QQ Mobile,Kakao Talk,Yixin,Laiwang,Douban and Momo,and websites,such as .We also compete with both offline and online games forthe time and money of gamers.We have begun to offer social commerce solutions to our customers that enable them to conduct e-comm

146、erce on our platform.Consequently,our offerings compete with e-commerce platforms that enable merchants to conduct e-commerce,including location-based services and online-to-offline services.In addition,we may also face increasing competition from global social media and social networking services,s

147、uch as Twitter and Facebook.On MVAS,we compete with other service providers such as Kongzhong and Linktone that specialize in MVAS as well as other players such asSohu,iF and TOM Online.In addition,the major mobile operators in China,including China Mobile and China Unicom,have entered the businesso

148、f content development.In addition,we compete with companies who sponsor or maintain high traffic volume websites or provide an initial point of entry for internet users,including but not limited to,providers of search services,navigation pages,desktop applications,mobile applications and operating s

149、ystems.Searchproviders include internet search companies,such as Baidu,Sogou(Sohu and Tencent),Qihoo,Yahoo!/Alibaba,Microsoft(Bing),Netease(Youdao)andGoogle,Inc.(“Google”),as well as vertical search companies,such as Youku Tudou(video search),Gougou(video search),Qunar(travel search)andK(travel sear

150、ch).Navigation page providers include Qihoo()and Baidu().Companies that offer desktop and/or mobileapplications,such as messenger,pinyin,web browser,app download store,security software and mobile browser,include Tencent,Sogou(Sohu/Tencent),Baidu,Qihoo,Kingsoft,NQ,Microsoft(MSN),China Telecom/Neteas

151、e(Yixin),Yahoo!/Alibaba(Yahoo Messenger),Alibaba(Laiwang)and UC Mobile Ltd(UC Browser)and 91 Wireless(app download store).Smart phone operating system providers such as Apple Inc.(iOS),Google(Android)and Microsoft(Windows)are also becoming a threat as mobile internet users are increasingly using the

152、 application stores as an initial entry point to various internet productsand services.Online companies who can aggregate significant traffic may have the ability to direct traffic to their other internet offerings and providecompeting advertising and fee-based services.We also compete for advertise

153、rs with traditional media companies,such as newspapers,magazines and television networks that have a longer historyof operation and greater acceptance among advertisers.Although outdoor media companies more directly compete with traditional media such as television,they also indirectly compete with

154、us to convert advertisers from traditional media to their own formats.These competitors include Focus Media,Air MediaGroup Inc.,Vision China Media Inc.and other China-based private or public outdoor media advertising companies.Many of our competitors have greater financial resources,a longer history

155、 of providing online services,a larger and more active user base,moreestablished brand names and currently offer a greater breadth of products that may be more popular than our online offerings.Many of our competitors arefocused solely on one area of our business and are able to devote all of their

156、resources to that business line and can more quickly adapt to changing technologyand market conditions.As internet usage in Greater China increases and the Greater China market becomes more attractive to advertisers and for conductingfee-based services,large global competitors,such as facebook,Linke

157、dIn,Google,Twitter,Line,Kakao and WhatsApp,may increasingly focus theirresources on the Greater China market.We cannot assure you that we will succeed in competing against the established and emerging competitors in themarket.The increased competition could result in reduced traffic,loss of market s

158、hare and revenues,and lower profit margins.11Table of Contents Our business is highly sensitive to the strength of our brands in the marketplace,and we may not be able to maintain current or attract newusers,customers and strategic partners for our products and offerings if we do not continue to inc

159、rease the strength of our brands anddevelop new brands successfully in the marketplace.Our operational and financial performance is highly dependent on our strong brands in the marketplace.Such dependency will increase further asthe number of internet and mobile users as well as the number of market

160、 entrants in China grows.In order to retain existing and attract new internet users,advertisers,mobile customers and strategic partners,we may need to substantially increase our expenditures to create and maintain brand awareness andbrand loyalty.Consequently,we will need to grow our revenues at lea

161、st in the same proportion as any increase in brand spending to maintain our current levelsof profitability.There has in the past been various negative press coverage about our company based on untrue or unsubstantiated rumors and,as a result,the priceof our ordinary shares has at times been negative

162、ly affected.We have in some cases taken affirmative steps to address such coverage.However,we cannotassure you that we will be able to diffuse negative press coverage about our company to the satisfaction of our investors,users,advertisers,customers andstrategic partners.If we are unable to diffuse

163、negative press coverage about our company,our brands may suffer in the marketplace,our operational andfinancial performance may be negatively impacted and the price of our ordinary shares may decline.Our financial results could be adversely affected by our long-term investments.We periodically revie

164、w our long-term investments in publicly traded companies,privately held companies and limited partnerships for impairment.If we conclude that any of these investments are impaired and that such impairment is other-than-temporary,we will write down the asset to its fair value andtake a corresponding

165、charge to our consolidated statements of comprehensive income.As of December 31,2013,our long-term investments included$211.7million in privately held companies and limited partnerships,which may not have the resources nor level of controls in place like public companies to timelyand accurately prov

166、ide updates about their company to us.Furthermore,many of our investments are at an early,pre-revenue stage of development,and theirimpairment may be difficult to assess as market information on internet-related startups is not readily available.Determination of estimated fair value of theseinvestme

167、nts require complex and subjective judgments due to their limited financial and operating history,unique business risks and limited publicinformation.Consequently,we may not receive information about our investments on a timely basis to properly account for them.We are unable to controlthese factors

168、 and an impairment charge recognized by us,especially untimely recorded,may adversely impact our financial results and share price.In 2011,we recognized impairment charges of$230.3 million and$50.9 million on our investments in CRIC and MCOX,respectively.In 2012,we recognized animpairment charge of$

169、18.5 million on our long-term investments,including$8.4 million on our investment in MCOX.In 2013,we recognized animpairment charge of$6.1 million on our long-term investments.We may continue to incur impairment charges,which could depress our profitability orsubject us to incur a net loss.We report

170、ed our ownership in CRIC using the equity method of accounting starting from October 1,2009 and,as such,our net income wasimpacted by CRICs performance.For 2011,we recorded$2.6 million in income from equity investment in CRIC.CRIC merged into and became a 100%subsidiary of E-House on April 20,2012 a

171、nd,as a result,each ordinary share of CRIC held by us was converted into 0.6 ordinary share of E-House,togetherwith the right to receive cash consideration of$1.75 per ordinary share.Our earnings from equity investments have declined since the merger of CRIC with E-House.For 2012,we recorded$16.7 mi

172、llion in loss from equity investment in E-House/CRIC.For 2013,we recorded a gain of$2.3 million from our equityinvestment in E-house due to the recovery of real estate market in China.However,we may incur loss from such investment again in the future.Our future financial results may be also adversel

173、y affected by the performance of E-House and other equity investments accounted for under theequity method.If the financial results of E-House and other equity investments accounted for under the equity method decline,it will negatively impact ourfinancial results.Furthermore,we will not be able to

174、report our quarterly and annual results until we have obtained the result of the E-House and other equityinvestments accounted for under the equity method,which we have reported a quarter in arrears.A delay in the reporting by E-House and other equityinvestments accounted for under the equity method

175、 could adversely affect our reporting schedule and cause the market to react negatively to our share price.E-Houses business(including CRICs business)is subject to risks that may be different than those that affect our business.Potential risks and uncertaintiesinclude,but are not limited to:12Table

176、of Contents E-House may not be able to successfully execute its strategy of expanding into new geographical markets in China;E-House may not be able to successfully execute its growth strategy to maintain and enhance its brands and image;E-Houses business is susceptible to fluctuations in the real e

177、state market in China;E-Houses business may be materially and adversely affected by government measures aimed at Chinas real estate industry;and a severe or prolonged downturn in the global or Chinese economy could materially and adversely affect E-Houses business and its financialcondition.Further

178、information regarding these and other risks can be found in E-Houses filings with the SEC.SINA assumes no obligation to update E-Houses risks factors.If we cannot obtain sufficient cash when we need it,we may not be able to meet our payment obligations under our convertible notes.In November 2013 we

179、 issued$800,000,000 principal amount of convertible senior notes due 2018.The notes will bear interest at a rate of 1.00%peryear,payable semiannually in arrears on June 1 and December 1 of each year,beginning on June 1,2014.On December 1,2016,holders may require us torepurchase their notes at a pric

180、e equal to 100%of the principal amount of the notes plus accrued and unpaid interest to but excluding the repurchase date.Thenotes will mature on December 1,2018.We may not have sufficient funds to pay the interest or repurchase price or fulfill other obligations under the notes.We derive most of ou

181、r revenues from,and hold most of our assets through,our subsidiaries.As a result,we may rely in part upon distributions andadvances from our subsidiaries in order to help us meet our payment obligations under the notes and our other obligations.Our subsidiaries are distinct legalentities and do not

182、have any obligation(legal or otherwise)to provide us with distributions or advances.We may face tax or other adverse consequences,orlegal limitations,on our ability to obtain funds from these entities.In addition,our ability to obtain external financing in the future is subject to a variety ofuncert

183、ainties,including:our financial condition,results of operations and cash flows;general market conditions for financing activities by internet companies;and economic,political and other conditions in the PRC and elsewhere.If we are unable to obtain funding in a timely manner or on commercially accept

184、able terms,we may not be able to meet our payment obligationsunder our convertible notes.If we fail to pay interest on the notes,we will be in default under the indenture governing the notes,which in turn may constitute adefault under existing and future agreements governing our indebtedness.13Table

185、 of Contents If we are unable to keep up with the rapid technological changes of the internet industry,our business may suffer.The internet industry is experiencing rapid technological changes.For example,with the advances of search engines,internet users may choose toaccess information through sear

186、ch engines instead of our web portal and other web properties.With the advent of Web 2.0,the interests and preferences ofinternet users may shift to user-generated content,such as social media services,social networking services and other online communities.As broadbandbecomes more accessible,intern

187、et users may demand content in pictorial,audio-rich and video-rich formats.With the development of 2.5G,3G and 4Gnetworks in China and the growing availability of Wi-Fi connections,mobile users have been shifting from the predominant text messaging services to newerapplications,such as social networ

188、king,location-based services,messengers with free texting,voicemail and internet conferencing,mobile commerce,music,photo and video download sites,applications and sharing platforms,and mobile games.In addition,with the proportion of internet usage shifting frompersonal computers to mobile phones,ha

189、ndheld computers and other mobile devices in China,mobile operating systems,browsers and application-basedplatforms may redefine the way internet companies operate,impacting our competitiveness and hindering our ability to shift our personal-computer-basedofferings into the mobile environment.Our fu

190、ture success will depend on our ability to anticipate,adapt and support new technologies and industry standards.If we fail to anticipate and adapt to these and other technological changes,our market share,profitability and share price could suffer.If we fail to successfully develop and introduce new

191、 products and services,our competitive position and ability to generate revenues could beharmed.We continuously develop new products and services.The planned timing or introduction of new products and services is subject to risks anduncertainties.Actual timing may differ materially from original pla

192、ns.Unexpected technical,operational,distribution or other problems could delay or preventthe introduction of one or more of our new products or services.Moreover,we cannot be sure that any of our new products and services will achievewidespread market acceptance or generate incremental revenue.If ou

193、r efforts to develop,market and sell new products and services to the market are notsuccessful,our financial position,results of operations and cash flows could be materially adversely affected,the price of our ordinary shares could declineand you could lose part or all of your investment.Traffic gr

194、owth and user engagement depend upon effective interoperation with operating systems,networks,devices,web browsers andstandards that we do not control.We make our products and services available across a variety of operating systems and through websites.We are dependent on the interoperability ofour

195、 products and services with popular devices,desktop and mobile operating systems and web browsers that we do not control,such as Windows,Mac OS,Android,iOS,and others.Any changes in such systems,devices or web browsers that degrade the functionality of our products and services or givepreferential t

196、reatment to competitive products or services could adversely affect usage of our products and services.Further,if the number of platforms forwhich we develop our products increases,it will result in an increase in our costs and expenses.In order to deliver high quality products and services,it isimp

197、ortant that our products and services work well with a range of operating systems,networks,devices,web browsers and standards that we do not control.In addition,because a large number of our users access our products and services through mobile devices,we are particularly dependent on the interopera

198、bilityof our products and services with mobile devices and operating systems.We may not be successful in developing relationships with key participants in themobile industry or in developing products or services that operate effectively with these operating systems,networks,devices,web browsers and

199、standards.Inthe event that it is difficult for our users to access and use our products and services,particularly on their mobile devices,our user growth and userengagement could be harmed,and our business and operating results could be adversely affected.New technologies could block our advertiseme

200、nts,desktop clients and mobile applications and may enable technical measures that could limitour traffic growth and new monetization opportunities.Technologies have been developed that can disable the display of our advertisements and that provide tools to users to opt out of our advertisingproduct

201、s.Most of our revenues are derived from fees paid to us by advertisers in connection with the display of advertisements on webpages to our users.Inaddition,our traffic growth is significantly dependent on content viewing via mobile devices,such as smart phones and tablets.Technologies and tools forP

202、Cs and mobile devices,such as operating systems,internet browsers,anti-virus software and other applications,as well as mobile application downloadstores could set up technical measures to direct away internet traffic,require a fee for the download of our products or block our products all together,

203、whichcould adversely affect our overall traffic and ability to monetize our services.14Table of Contents Our business and growth could suffer if we are unable to hire and retain key personnel.We depend on the continued contributions of our senior management and other key employees,many of whom are d

204、ifficult to replace.The loss of theservices of any of our executive officers or other key employees could harm our business.Competition for qualified talent in China is intense.Our futuresuccess is dependent on our ability to attract a significant number of qualified employees and retain existing ke

205、y employees.If we are unable to do so,ourbusiness and growth,including that of Weibo,may be materially and adversely affected and our share price could suffer.Our need to significantly increasethe number of our qualified employees and retain key employees may cause us to materially increase compensa

206、tion-related costs,including stock-basedcompensation.We may not be able to manage our expanding operations effectively,which could harm our business.We have expanded rapidly by acquiring companies,entering into joint ventures and forming strategic partnerships.These new businesses,jointventures and

207、strategic partnerships provide various services,such as instant messaging and application development.We anticipate continuous expansion inour business,both through further acquisitions and internal growth.In addition,the geographic dispersion of our operations as a result of acquisitions andinterna

208、l growth requires significant management resources that our locally based competitors do not need to devote to their operations.In order to manage theplanned growth of our operations and personnel,we will be required to improve and implement operational and financial systems,procedures and controls,

209、and expand,train and manage our growing employee base.Further,our management will be required to maintain and expand our relationships with variousother websites,internet and other online service providers and other third parties necessary to our business.We cannot assure you that our current and pl

210、annedpersonnel,systems,procedures and controls will be adequate to support our future operations.If we are not successful in establishing,maintaining andmanaging our personnel,systems,procedures and controls,our business will be materially and adversely affected.Our strategy of acquiring complementa

211、ry assets,technologies and businesses may fail and may result in equity or earnings dilution.As part of our business strategy,we have acquired and intend to continue to identify and acquire assets,technologies and businesses that arecomplementary to our existing business.Acquired businesses or asset

212、s may not yield the results we expect.In addition,acquisitions could result in the use ofsubstantial amounts of cash,potentially dilutive issuances of equity securities,significant amortization expenses related to intangible assets and exposure topotential unknown liabilities of the acquired busines

213、s.Moreover,the cost of identifying and consummating acquisitions,and integrating the acquiredbusinesses into ours,may be significant,and the integration of acquired businesses may be disruptive to our existing business operations.In addition,wemay have to obtain approval from the relevant PRC govern

214、mental authorities for the acquisitions and comply with any applicable PRC rules and regulations,which may be costly.The PRC government recently established additional procedures and requirements that could make merger and acquisition activities byus more time-consuming and complex.For instance,as o

215、f September 1,2011,the PRC Ministry of Commerce(“MOFCOM”)adopted a national securityreview rule which requires acquisitions by foreign investors of PRC companies engaged in military-related or certain other industries that are crucial to nationalsecurity to be subject to security review before consu

216、mmation of any such acquisition.In the event that our acquisitions are not successful,our financialcondition and results of operations may be materially and adversely affected.We may not be able to adequately protect our intellectual properties,which could cause us to be less competitive.We rely on

217、a combination of copyright,trademark and trade secret laws and restrictions on disclosure to protect our intellectual property rights.Despite our efforts to protect our proprietary rights,unauthorized parties may attempt to copy or otherwise obtain and use our intellectual properties.Monitoring unau

218、thorized use of our products is difficult and costly,and we cannot be certain that the steps we have taken will prevent misappropriation of ourintellectual properties,particularly in countries where the laws may not protect our proprietary rights as fully as in the United States.From time to time,we

219、may have to resort to litigation to enforce our intellectual property rights,which could result in substantial costs and diversion of our resources.15Table of Contents We may be subject to intellectual property infringement claims or other allegations by third parties for services we provide or for

220、informationor content displayed on,retrieved from or linked to our websites,or distributed to our users,which may materially and adversely affect ourbusiness,financial condition and prospects.Companies in the internet,technology,and media industries are frequently involved in litigation based on all

221、egations of infringement of intellectualproperty rights,unfair competition,invasion of privacy,defamation and other violations of other parties rights.The validity,enforceability and scope ofprotection of intellectual property rights in internet-related industries,particularly in China,are uncertain

222、 and still evolving.As we face increasing competitionand as litigation becomes more common in China in resolving commercial disputes,we face a higher risk of being the subject of intellectual propertyinfringement claims.We allow users to upload written materials,images,pictures and other content on

223、our platform and download,share,link to and otherwise accessgames and applications(some of which are developed by third parties)as well as audio,video and other content either on our platform or from other websitesthrough our platform.We have procedures designed to reduce the likelihood that content

224、 might be used without proper licenses or third-party consents.However,these procedures may not be effective in preventing the unauthorized posting of copyrighted content.With respect to games and applications developed by third parties displayed on our platform,we have procedures designed to reduce

225、 the likelihood ofinfringement.However,such procedures might not be effective in preventing third-party games and applications from infringing other parties rights.We mayface liability for copyright or trademark infringement,defamation,unfair competition,libel,negligence,and other claims based on th

226、e nature and content ofthe materials that are delivered,shared or otherwise accessed through our services or published on our websites.Defending patent and other intellectual property litigation is costly and can impose a significant burden on management and employees,and there canbe no assurances t

227、hat favorable final outcomes will be obtained in all cases.Such claims,even if they do not result in liability,may harm our reputation.Anyresulting liability or expenses,or changes required to our websites to reduce the risk of future liability,may have a material adverse effect on our business,fina

228、ncial condition and prospects.Our business and operations results may be harmed by service disruptions,or by our failure to timely and effectively scale and adapt ourexisting technology and infrastructure.The continual accessibility of our websites and the performance and reliability of our network

229、infrastructure are critical to our reputation and ourability to attract and retain users,advertisers and merchants.Any system failure or performance inadequacy that causes interruptions in the availability of ourservices or increases the response time of our services could reduce our appeal to users

230、 and consumers.Factors that could significantly disrupt our operationsinclude system failures and outages caused by fire,floods,earthquakes,power loss,telecommunications failures and similar events;software errors;computer viruses,break-ins and similar disruptions from unauthorized tampering with ou

231、r computer systems;and security breaches related to the storage andtransmission of proprietary information,such as credit card numbers or other personal information.As the number of our users increases and our users generate more content,including photos and videos on our platform,we may be required

232、 toexpand and adapt our technology and infrastructure to continue to reliably store and analyze this content.It may become increasingly difficult to maintain andimprove the performance of our products and services,especially during peak usage times,as our products and services become more complex an

233、d our usertraffic increases.We have limited backup systems and redundancy.In the past,we experienced an unauthorized tampering of the mail server of our Chinawebsites which briefly disrupted our operations.Future disruptions or any of the foregoing factors could damage our reputation,require us to e

234、xpendsignificant capital and other resources and expose us to a risk of loss or litigation and possible liability.We do not carry sufficient business interruptioninsurance to compensate for losses that may occur as a result of any of these events.Accordingly,our revenues and results of operations ma

235、y be adverselyaffected if any of the above disruptions should occur.16Table of Contents We have contracted with third parties to provide content and services for our portal network and MVAS and we may lose users and revenuesif these arrangements are terminated.We have arrangements with a number of t

236、hird parties to provide content and services to our websites.In the area of content,we have relied and willcontinue to rely on third parties for the majority of the content that we publish under the SINA brand.Although no single third-party content provider iscritical to our operations,if these part

237、ies fail to develop and maintain high-quality and successful media properties,or if a large number of our existingrelationships are terminated,we could lose users and advertisers and our brand could be harmed.In addition,the PRC government has the ability to restrict or prevent state-owned media fro

238、m cooperating with us in providing certain content to us,which will result in a significant decrease of the amount of content we can publish on our websites.We may lose users if the PRC government chooses torestrict or prevent state-owned media from cooperating with us,in which case our revenues wil

239、l be impacted negatively.Certain state-owned media companies,from whom we currently procure content,have built their own portal websites and may decide to not cooperate with us in the future.In the area of web-based services,we have contracted with various third-party providers for our principal int

240、ernet connections.If we experiencesignificant interruptions or delays in service,or if these agreements terminate or expire,we may incur additional costs to develop or secure replacement servicesand our relationship with our users could be harmed.A substantial part of our non-advertising revenues is

241、 generated through MVAS where we depend on mobile network operators for services deliveryand payment collection.If we are unable to continue these arrangements,our MVAS could be severely disrupted or discontinued.Furthermore,we are highlydependent on these mobile service providers for our profitabil

242、ity in that they can choose to increase their service fees at will.We depend on a third partys proprietary and licensed advertising serving technology to deliver advertisements to our network.If the third party failsto continue to support its technology or if its services fail to meet the advertisin

243、g needs of our customers and we cannot find an alternative solution on a timelybasis,our advertising revenues could decline.Increases in competition and market prices for professionally produced content may have an adverse impact on our financial condition andresults of operations.We have recently e

244、xperienced significant fee increases from some of our content providers in the areas of video content and other premium content.Competition for quality content for online advertising is intense in China.Our competitors include well-capitalized companies,both private and newly listedcompanies,many of

245、 whom operate on a net-loss basis,as well as well-established companies that have user traffic greater than ours.If we are unable to securea large portfolio of professionally produced quality content due to prohibitive cost,or if we are unable to manage our content acquisition costs effectively andg

246、enerate sufficient revenues to outpace the increase in content spending,our website traffic,financial condition and results of operations may be adverselyaffected.Concerns about the security of transactions and communications on the internet may reduce our user traffic and impede our growth.A signif

247、icant barrier to transactions and communications over the internet in general has been a public concern over security and privacy,especiallythe transmission of confidential information.If these concerns are not adequately addressed,they may inhibit the growth of the internet and other onlineservices

248、 generally,especially as a means of conducting commercial transactions.If a well-publicized internet breach of security were to occur,general internetusage could decline,which could harm our brand,reduce our user traffic and adversely impact our growth and results of operations.17Table of Contents S

249、ecurity breaches or computer virus attacks could have a material adverse effect on our business prospects and results of operations.Any significant breach of security of our products could significantly harm our business,reputation and results of operations and could expose usto lawsuits brought by

250、our users and partners and to sanctions by governmental authorities in the jurisdictions in which we operate.We have in the pastexperienced security breaches by third parties,including hacking into our user accounts and redirecting our user traffic to other websites,and we were able torectify the se

251、curity breaches without significant impact to our operations.However,we cannot assure you that our IT systems will be completely secure fromfuture security breaches or computer virus attacks.Anyone who is able to circumvent our security measures could misappropriate proprietary information,including

252、 the personal information of our users,obtaining users names and passwords and enabling the hackers to access users other online accounts,ifthose users use identical user names and passwords.They could also misappropriate other information,including financial information,uploaded by ourusers in a se

253、cure environment,such as Weibo,Weibo Wallet,SINA email,weiDisk and other applications requiring user log-in that were internally developedor developed by third parties for use on Weibos open application platform.Functions that facilitate interactivity with other websites,such as our WeiboConnect,tha

254、t allows users to log onto partner websites using their Weibo identity,could increase the scope of access of hackers to other user accounts.Thesecircumventions may cause interruptions in our operations or damage our brand image and reputation.Our servers may be vulnerable to computer viruses,physica

255、l or electronic break-ins and similar disruptions,which could cause system interruptions,website slowdown or unavailability,delays incommunication or transactions,or loss of data.We may be required to incur significant additional costs to protect against security breaches or to alleviateproblems cau

256、sed by such breaches.In addition,a significant security breach or virus attack on our system could result in a material adverse impact on ourbusiness and results of operations.Spam could diminish the user experience on Weibo platform,which could damage our reputation and deter our users from using W

257、eibo.“Spam”on Weibo refers to a range of abusive activities that are prohibited by Weibos terms of service and is generally defined as unsolicited,repeated actions that negatively impact other users with the general goal of drawing user attention to a given account,site,product or idea.This includes

258、posting large numbers of unsolicited mentions of a user,duplicate feeds,misleading links(e.g.,to malware or click-jacking pages)or other false or misleadingcontent,and aggressively following and un-following accounts,sending invitations and feeds to inappropriately attract attention.Although we cont

259、inue toinvest resources to reduce spam on Weibo,we expect spammers will continue to seek ways to act inappropriately on Weibo.In addition,we expect thatincreased number of users on Weibo will result in increased efforts by spammers to misuse the platform.We continuously combat spam,including bysuspe

260、nding or terminating accounts we believe to be spammers and launching algorithmic changes focused on curbing abusive activities.Our actions tocombat spam require the diversion of significant time and focus of our engineering team for improving our products and services.If spam increases on Weibo,thi

261、s could hurt our reputation for delivering relevant content or reduce user growth and user engagement,which may deter our existing and potential users fromusing our products and services.We prioritize product innovation and user experience over short-term operating results,which may harm our revenue

262、 and operating results.We encourage employees to quickly develop and help us launch new and innovative features.We focus on improving the user experience for ourproducts and services and on developing new and improved products and services for the advertisers on our platform.We prioritize innovation

263、 and theexperience for users and advertisers on Weibo over short-term operating results.We frequently make product and service decisions that may reduce our short-term operating results if we believe that the decisions are consistent with our goals to improve the user experience and performance for

264、advertisers,which webelieve will improve our operating results over the long term.These decisions may not be consistent with the short-term expectations of investors and may notproduce the long-term benefits that we expect,in which cause our user growth and user engagement,our relationships with adv

265、ertisers and our business andoperating results could be harmed.In addition,our focus on the user experience may negatively impact our relationships with our existing or prospectivecustomers.This could result in a loss of customers and platform partners,which would harm our revenue and operating resu

266、lts.18Table of Contents We rely on assumptions and estimates to calculate certain of our key operating metrics,and real or perceived inaccuracies in such metrics mayharm our reputation and negatively affect our business.The number of Weibo active users is calculated using internal company data that

267、has not been independently verified.While this number is based onwhat we believe to be reasonable calculations for the applicable period of measurement,there are inherent challenges in measuring usage and user engagementacross Weibos large user base of Chinese communities around the world.For exampl

268、e,there are a number of false or spam accounts in existence on Weibo.Although we continuously combat spam by suspending or terminating these accounts,our active user number may include a number of false or spamaccounts and may not accurately represent the actual number of active accounts.We treat mu

269、ltiple accounts held by a single person or organization as multipleusers for purposes of calculating our active users,because we permit people and organizations to have more than one account.Additionally,some accountsused by organizations are used by many people within the organization.As such,the c

270、alculations of Weibo active users may not accurately reflect the actualnumber of people or organizations using Weibo.We regularly review and may adjust our processes for calculating Weibo internal metrics to improve their accuracy.Weibos measures of user growthand user engagement may differ from est

271、imates published by third parties or from similarly-titled metrics of our competitors due to differences in methodology.If advertisers,platform partners or investors do not perceive our user metrics to be accurate representations of our user base or user engagement,or if wediscover material inaccura

272、cies in Weibos user metrics,our reputation may be harmed and advertisers and platform partners may be less willing to allocatetheir budgets or resources to Weibo,which could negatively affect our business and operating results.The law of the internet remains largely unsettled,which subjects our busi

273、ness to legal uncertainties that could harm our business.Due to the increasing popularity and use of the internet and other online services,it is possible that a number of laws and regulations may be adoptedwith respect to the internet or other online services covering issues such as user privacy,pr

274、icing,content,copyrights,distribution,antitrust andcharacteristics and quality of products and services.Furthermore,the growth and development of the market for e-commerce may prompt calls for morestringent consumer protection laws that may impose additional burdens on companies conducting business

275、online.The adoption of additional laws orregulations may decrease the growth of the internet or other online services,which could,in turn,decrease the demand for our products and services andincrease our cost of doing business.Moreover,the applicability to the internet and other online services of e

276、xisting laws in various jurisdictions governing issues such as propertyownership,sales and other taxes,libel and personal privacy is uncertain and may take years to resolve.For example,new tax regulations may subject us orour customers to additional sales and income taxes.Any new legislation or regu

277、lation,the application of laws and regulations from jurisdictions whose laws donot currently apply to our business,or the application of existing laws and regulations to the internet and other online services could significantly disrupt ouroperations or subject us to penalties.We may be subject to c

278、laims based on the content we provide over our websites and platforms and the products and services sold on ourwebsites and platforms,which,if successful,could cause us to pay significant damage awards.As a publisher and distributor of content and a provider of services over the internet,we face pot

279、ential liability for defamation,negligence,copyright,patent or trademark infringement and other claims based on the nature and content of the materials that we publish or distribute;the selection of listings thatare accessible through our branded products and media properties,or through content and

280、materials that may be posted by users in our classifieds,messageboards,chat room services,social media,light blog,blog,online video and other areas on our websites;losses incurred in reliance on any erroneousinformation published by us,such as stock quotes,analyst estimates or other trading informat

281、ion;unsolicited emails,lost or misdirected messages,illegal orfraudulent use of email or interruptions or delays in email service;and product liability,warranty and similar claims to be asserted against us by end userswho purchase goods and services through SINA Mall and any future e-commerce servic

282、es we may offer.19Table of Contents We may incur significant costs in investigating and defending any potential claims,even if they do not result in liability.Although we carry generalliability insurance,our insurance may not cover potential claims of this type and may not be adequate to indemnify u

283、s against all potential liabilities.We may be subject to litigation for user-generated content provided on our websites and platforms,which may be time-consuming to defend.User-generated content,or UGC,has become an important source of content to draw traffic to our website and platforms.Our UGC web

284、sites andplatforms,including social media,light blog,blog,online video,audio streaming and photo gallery,are open to the public for posting.Although we haverequired our users to post only decent and unobtrusive materials and have set up screening procedures,our screening procedures may fail to scree

285、n out allpotentially offensive or non-compliant UGC and,even if properly screened,a third party may still find UGC postings on our website offensive and takeaction against us in connection with the posting of such information.As with other companies who provide UGC on their websites,we have had to d

286、eal withsuch claims in the past and anticipate that such claims will increase as UGC becomes more popular in China.Any such claim,with or without merit,couldbe time-consuming and costly to defend,and may result in litigation and divert managements attention and resources.Privacy concerns may prevent

287、 us from selling demographically targeted advertising in the future and make us less attractive to advertisers.We collect personal data from our user base in order to better understand our users and their needs and to help our advertisers target specificdemographic groups.If privacy concerns or regu

288、latory restrictions prevent us from selling demographically targeted advertising,we may become less attractiveto advertisers.For example,as part of our future advertisement delivery system,we may integrate user information such as advertisement response rate,name,address,age or email address,with th

289、ird-party databases to generate comprehensive demographic profiles for individual users.In Hong Kong,however,theHong Kong Personal Data Ordinance provides that an internet company may not collect information about its users,analyze the information for a profile ofthe users interests and sell or tran

290、smit the profiles to third parties for direct marketing purposes without the users consent.If we are unable to constructdemographic profiles of internet users because they refuse to give consent,we will be less attractive to advertisers and our business could suffer.Our board members or executive of

291、ficers may have conflicts of interest.One executive officer and one director of our company are also directors of Weibo.In addition,Weibo may continue to grant share incentivecompensation to our directors,officers,employees and consultants from time to time.These relationships could create,or appear

292、 to create,conflicts of interestwhen these persons are faced with decisions with potentially different implications for Weibo and us.Should such conflicts of interest arise,we cannot assureyou that our directors and officers will act in the best interest of the our company.Future outbreaks of Severe

293、 Acute Respiratory Syndrome(“SARS”),H1N1 flu,H7N9 flu,Avian flu or other widespread public healthproblems could adversely affect our business.Future outbreaks of SARS,H1N1 flu,H7N9 flu,Avian flu or other widespread public health problems in China and surrounding areas,wheremost of our employees work

294、,could negatively impact our business in ways that are hard to predict.Prior experience with the SARS virus suggests that afuture outbreak of SARS,H1N1 flu,H7N9 flu,Avian flu or other widespread public health problems may lead public health authorities to enforcequarantines,which could result in clo

295、sures of some of our offices and other disruptions of our operations.A future outbreak of SARS,H1N1 flu,H7N9 flu,Avian flu or other widespread public health problems could result in the reduction of our advertising and fee-based revenues.We have limited business insurance coverage.The insurance indu

296、stry in China is still developing and the business insurance products offered in China are limited.We do not have any businessliability or disruption insurance coverage for our operations.Any business disruption,litigation or natural disaster may cause us to incur substantial costsand divert our res

297、ources.20Table of Contents Risks Related to Our Corporate Structure In order to comply with PRC regulatory requirements,we operate our main businesses through companies with which we have contractualrelationships but in which we do not have controlling ownership.If the PRC government determines that

298、 our agreements with thesecompanies are not in compliance with applicable regulations,our business in the PRC could be adversely affected.The Chinese government restricts foreign investment in internet-related and MVAS businesses,including internet access,distribution of content overthe internet and

299、 MVAS.Accordingly,we operate our internet-related and MVAS businesses in China through several VIEs that are PRC domestic companiesowned principally or completely by certain of our PRC employees or PRC employees of our directly-owned subsidiaries.We control these companies andoperate these businesse

300、s through contractual arrangements with the respective companies and their individual owners,but we have no equity control over thesecompanies.Such restrictions and arrangements also apply to some of the China-based companies we have acquired or in which we have invested.We cannot be sure that the P

301、RC government would view our contractual arrangements to be in compliance with PRC licensing,registration or otherregulatory requirements,including the requirements under the MII Circular 2006,with existing policies or with requirements or policies that may be adopted inthe future.On September 28,20

302、09,the General Administration of Press and Publication(“GAPP,”formerly the State Press and Publications Administration(“SPPA”),the National Copyright Administration and the National Office of Combating Pornography and Illegal Publications jointly published a noticeprohibiting foreign investors from

303、participating in the operation of online games via wholly owned,equity joint venture or cooperative joint venture investmentsin China,and from controlling and participating in such businesses directly or indirectly through contractual or technical support arrangements(“Circular13”).It is not clear y

304、et as to whether other PRC government authorities,such as the MOFCOM and the MIIT,will support GAPP to enforce the prohibition ofthe VIE model that Circular 13 contemplates.If we are deemed to be in violation of any existing laws or regulations,the PRC government could levy fines,revoke our business

305、 and operatinglicenses,require us to discontinue or restrict our operations,restrict our ability to collect payments,block our website,require us to restructure our business,corporate structure or operations,impose restrictions on our business operations or on our customers,impose additional conditi

306、ons or requirements withwhich we may not be able to comply,or take other regulatory or enforcement actions against us.The imposition of any of these penalties could result in amaterial and adverse effect on our ability to conduct our business and on our results of operations.If any of these penaltie

307、s results in our inability to direct theactivities of our VIEs that most significantly impact their economic performance,and/or our failure to receive the economic benefits from our VIEs,we maynot be able to consolidate the VIEs in our consolidated financial statements in accordance with U.S.GAAP.We

308、 may also encounter difficulties in obtaining performance under or enforcement of related contracts.For example,as part of the contractualarrangements described above,our relevant subsidiaries and the employee shareholders of the VIEs entered into equity pledge agreements pursuant to which theemploy

309、ee shareholders of the VIEs pledged their respective equity interests in the VIEs to our respective subsidiaries.We believe that the equity pledgeagreements between our subsidiaries and the shareholders of the relevant VIEs as contracts between the parties thereto became effective and valid on the d

310、atewhen the agreements were duly executed.Therefore,lack of registration does not limit the ability of our subsidiaries to enforce their contractual rights againstthe equity holders of the VIEs under the equity pledge agreements,such as the rights to ask the equity holders to register the equity ple

311、dge and demand theequity holders to transfer the equity interests being pledged in the event of default under contracts secured by the equity pledge.However,according to the PRCProperty Rights Law,such pledges can only be perfected upon their registration with the relevant local office for the admin

312、istration for industry and commerce.Before a successful registration of the equity pledges,we cannot assure you that our subsidiaries interests as pledgee will prevail over those of third partieswho acquired the equities in the VIEs in good faith.As of the date of this annual report,we have register

313、ed the equity pledge on the shares of Beijing WeimengTechnology Co.,Ltd.,and we are in the process of obtaining the relevant registrations for our other VIEs.21Table of Contents We rely on contractual arrangements with our VIEs for our China operations,which may not be as effective in providing cont

314、rol over theseentities as direct ownership.Any failure by our VIEs or their respective shareholders to perform their obligations under the contractualarrangements could have a material adverse effect on our business and financial condition.Because PRC regulations restrict our ability to provide inte

315、rnet content and MVAS directly in China,we are dependent on our VIEs,in which wehave little or no equity ownership interest,and must rely on contractual arrangements to control and operate these businesses.These contractual arrangementsmay not be as effective in providing control over these entities

316、 as direct ownership.If our VIEs or their respective shareholders fail to perform their respectiveobligations under the contractual arrangements of which they are a party,we may have to incur substantial costs and resources to enforce our rights under thecontracts,and rely on legal remedies under PR

317、C law,including seeking specific performance or injunctive relief and claiming damages,which may not beeffective.In addition,we cannot be certain that the individual equity owners of the VIEs will always act in the best interests of our company,especially afterthey have left our company.For example,

318、if the shareholders of our VIEs were to refuse to transfer their equity interests in our consolidated affiliated entities tous or our designee when we exercise the option to purchase their equity interests pursuant to these contractual arrangements,or if they were otherwise to act inbad faith toward

319、 us,then we may have to take legal actions to compel them to perform their respective contractual obligations.All of these contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC.Accordingly,these contracts would be interpreted in ac

320、cordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures.The legal system in the PRC is not as developed as in other jurisdictions,such as the United States.As a result,uncertainties in the PRC legal system couldlimit our ability to enforce these contractual a

321、rrangements.Under PRC law,rulings by arbitrators are final,parties cannot appeal the arbitration results incourts,and the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings,which wouldincur additional expenses and delay.In the e

322、vent we are unable to enforce these contractual arrangements,we may not be able to exert effective control over ouraffiliated entities,and our ability to conduct our business may be negatively affected.Substantially all economic benefits generated from our VIEs are paid to our subsidiaries in China

323、through related party transactions undercontractual agreements.We believe that the terms of these contractual agreements are in compliance with the laws in China.Due to the uncertaintiessurrounding the interpretation of the transfer pricing rules relating to related party transactions in China,it is

324、 possible that in the future tax authorities inChina may challenge the prices that we have used for related party transactions among our entities in China.In that case,we may be forced to restructure ourbusiness operation,which could have a material adverse effect on our business.If the chops of our

325、 subsidiaries in China and VIEs are not kept safely,are stolen or are used by unauthorized persons or for unauthorizedpurposes,the corporate governance of those entities could be severely and adversely compromised.In China,a company chop or seal serves as the legal representation of the company towa

326、rds third parties even when unaccompanied by a signature.Each legally registered company in China is required to have a company chop,which must be registered with the local Public Security Bureau.In addition tothis mandatory chop,companies may have several other chops which can be used for specific

327、purposes.The chops of our subsidiaries in China and VIEs aregenerally held securely by personnel designated or approved by us in accordance with our internal control procedures.To the extent those chops are not keptsafely,are stolen or are used by unauthorized persons or for unauthorized purposes,th

328、e corporate governance of these entities could be severely and adverselycompromised and those corporate entities may be bound to abide by the terms of any documents so chopped,even if they were chopped by an individual wholacked the requisite power and authority to do so.In addition,if the holders o

329、f such chops at our VIEs failed to employ them in accordance with the terms ofthe various VIE-related agreements or removed them from the premises,the operation of the VIEs could be significantly and adversely impacted.The Chinese legal system has inherent uncertainties that could limit the legal pr

330、otections available to you.Our contractual arrangements with our VIEs in China are governed by the laws of the PRC.Chinas legal system is based upon written statutes.Unlike the common law system,prior court decisions may be cited for reference but are not binding on subsequent cases and have limited

331、 value as precedents.Since 1979,the PRC legislative bodies have promulgated laws and regulations dealing with economic matters such as foreign investment,corporateorganization and governance,commerce,taxation and trade.The overall effect of legislation over the past three decades has significantly e

332、nhanced theprotections afforded to various forms of foreign investments in China.However,China has not developed a fully integrated legal system,and recently enactedlaws and regulations may not sufficiently cover all aspects of economic activities in China.In particular,the interpretation and enforc

333、ement of these laws andregulations involve uncertainties.Since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory andcontractual terms,it may be difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection available to you and us.22Table of Contents Furthermore,the PRC legal system is based