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1、Table of ContentsUNITED STATESSECURITIES AND EXCHANGE COMMISSIONWASHINGTON,DC 20549FORM 20-F(Mark One)Commission file number:001-33853Securities registered or to be registered pursuant to Section 12(b)of the Act:*Not for trading,but only in connection with the listing of American depositary shares o

2、n the Nasdaq Global Select Market.Securities registered or to be registered pursuant to Section 12(g)of the Act:?REGISTRATION STATEMENT PURSUANT TO SECTION 12(b)OR 12(g)OF THE SECURITIES EXCHANGE ACT OF 1934OR?ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the

3、 fiscal year ended December 31,2017OR?TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934For the transition period from to OR?SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d)OF THE SECURITIES EXCHANGE ACT OF 1934?Date of event requiring this shell company repo

4、rt.CTRIP.COM INTERNATIONAL,LTD.(Exact name of Registrant as specified in its charter)N/A(Translation of Registrants name into English)Cayman Islands(Jurisdiction of incorporation or organization)968 Jin Zhong RoadShanghai 200335Peoples Republic of China(Address of principal executive offices)Jane Ji

5、e Sun,Chief Executive OfficerTelephone:+86(21)3406-4880Facsimile:+86(21)5251-0000968 Jin Zhong RoadShanghai 200335Peoples Republic of China(Name,Telephone,Email and/or Facsimile number and Address of Company Contact Person)Title of each className of each exchange on which registeredAmerican deposita

6、ry shares,each representing 0.125 ordinary share,par value US$0.01 per shareNasdaq Stock Market LLC(Nasdaq Global Select Market)Ordinary shares,par value US$0.01 per share*None(Title of Class)Table of ContentsSecurities for which there is a reporting obligation pursuant to Section 15(d)of the Act:In

7、dicate the number of outstanding shares of each of the issuers classes of capital or common stock as of the close of the period covered by the annual report:67,600,654 ordinary shares,par value$0.01 per share,as of December 31,2017.Indicate by check mark if the registrant is a well-known seasoned is

8、suer,as defined in Rule 405 of the Securities Act.?Yes?NoIf 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 the Securities Exchange Act of 1934.?Yes?NoIndicate by check mark whether the registran

9、t:(1)has filed all reports required to be filed by Section 13 or 15(d)of the Securities Exchange Act of 1934 during the 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 requirements for the past 90 days.?Yes?N

10、oIndicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site,if any,every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T(232.405 of this chapter)during the preceding 12 months(or for such shorter pe

11、riod that the registrant was required to submit and post such files).?Yes?NoIndicate by check mark whether the registrant is a large accelerated filer,an accelerated filer,a non-accelerated filer,or an emerging growth company.See the definitions of“large accelerated filer,”“accelerated filer,”and“em

12、erging growth company”in Rule 12b-2 of the Exchange Act.If an emerging growth company that prepares its financial statements in accordance with U.S.GAAP,indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial acco

13、unting standards provided pursuant to Section 13(a)of the Exchange Act.?The term“new or revised financial accounting standard”refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5,2012.Indicate by check mark which basis of acco

14、unting the registrant has used to prepare the financial statements included in this filing:If“Other”has been checked in response to the previous question,indicate by check mark which financial statement item the registrant has elected to follow.?Item 17?Item 18If this is an annual report,indicate by

15、 check mark whether the registrant is a shell company(as defined in Rule 12b-2 of the Exchange Act).?Yes?No(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS.)Indicate by check mark whether the registrant has filed all documents and reports required to be filed

16、 by Sections 12,13 or 15(d)of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.?Yes?NoNone(Title of Class)Large accelerated filer?Accelerated filer?Non-accelerated filer?Emerging growth company?U.S.GAAP?International Financial Reporti

17、ng Standards as issuedby the International Accounting Standards Board?Other?Table of ContentsTABLE OF CONTENTS1PageINTRODUCTION2PART I2ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERS2ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLE2ITEM 3.KEY INFORMATION3ITEM 4.INFORMATION ON THE COMPANY34

18、ITEM 5.OPERATING AND FINANCIAL REVIEW AND PROSPECTS51ITEM 6.DIRECTORS,SENIOR MANAGEMENT AND EMPLOYEES68ITEM 7.MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS78ITEM 8.FINANCIAL INFORMATION83ITEM 9.THE OFFER AND LISTING83ITEM 10.ADDITIONAL INFORMATION84ITEM 11.QUANTITATIVE AND QUALITATIVE DISCLOSURE

19、S ABOUT MARKET RISK92ITEM 12.DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES93PART II94ITEM 13.DEFAULTS,DIVIDEND ARREARAGES AND DELINQUENCIES94ITEM 14.MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS94ITEM 15.CONTROLS AND PROCEDURES94ITEM 16A.AUDIT COMMITTEE FINANC

20、IAL EXPERT95ITEM 16B.CODE OF ETHICS95ITEM 16C.PRINCIPAL ACCOUNTANT FEES AND SERVICES96ITEM 16D.EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES96ITEM 16E.PURCHASE OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS96ITEM 16F.CHANGE IN REGISTRANTS CERTIFYING ACCOUNTANT97ITEM 16G.CO

21、RPORATE GOVERNANCE97ITEM 16H.MINE SAFETY DISCLOSURE97PART III98ITEM 17.FINANCIAL STATEMENTS98ITEM 18.FINANCIAL STATEMENTS98ITEM 19.EXHIBITS98Table of ContentsINTRODUCTIONIn this annual report,unless otherwise indicated or unless the context otherwise requires:?“ADSs”refers to our American depositary

22、 shares,each of which represents 0.125 ordinary share;?“China”or“PRC”refers to the Peoples Republic of China and,solely for the purpose of this annual report,excludes Taiwan,Hong Kong,and Macau,and“Greater China”refers to the Peoples Republic of China,Taiwan,Hong Kong,and Macau;?“Qunar”refers to Qun

23、ar Cayman Islands Limited,a Cayman Islands company,and unless the context requires otherwise,includes its predecessor entities and consolidated subsidiaries and variable interest entities;?“RMB”or“Renminbi”refers to the legal currency of China;“U.S.dollars,”“dollars,”“US$,”or“$”refers to the legal c

24、urrency of the United States;“”refers to the legal currency of the United Kingdom;“”refers to the legal currency of Eurozone;?“shares”or“ordinary shares”refers to our ordinary shares,par value of US$0.01 per share;and?“we,”“us,”“our company,”or“Ctrip”refers to C International,Ltd.,its predecessor en

25、tities and subsidiaries and,in the context of describing our operations and consolidated financial information,also include its consolidated affiliated Chinese entities,unless otherwise indicated herein.We consolidate the financial results of Qunar starting from December 31,2015.In calculating the n

26、umber of hotels with which we have room supply relationships,downloads of and transactions through our mobile channel,outbound travel business,and other operational data,where applicable,as well as in describing our marketing,branding,and intellectual properties,we have not taken into account the co

27、mparable operating data or other information of Qunar.Any discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed therein are due to rounding.This annual report on Form 20-F includes our audited consolidated financial statements for the years ende

28、d December 31,2015,2016,and 2017.On December 1,2015,we effected a change of the ratio of the ADSs to ordinary shares from four ADSs representing one ordinary share to eight ADSs representing one ordinary share.Unless otherwise indicated,ADSs and per ADS amount in this annual report have been retroac

29、tively adjusted to reflect the changes in ratio for all periods presented.PART I.ITEM 1.IDENTITY OF DIRECTORS,SENIOR MANAGEMENT AND ADVISERSNot applicable.ITEM 2.OFFER STATISTICS AND EXPECTED TIMETABLENot applicable.2Table of ContentsITEM 3.KEY INFORMATIONA.Selected Financial DataSelected Consolidat

30、ed Financial DataThe following table presents the selected consolidated financial information for our business.You should read the following information in conjunction with“Item 5.Operating and Financial Review and Prospects”below.The selected consolidated statement of operations data for the years

31、ended December 31,2015,2016,and 2017 and the selected consolidated balance sheet data as of December 31,2016 and 2017 have been derived from our audited consolidated financial statements and should be read in conjunction with those statements,which are included in this annual report beginning on pag

32、e F-1.The selected consolidated statement of operations data for the years ended December 31,2013 and 2014 and the selected consolidated balance sheet data as of December 31,2013,2014,and 2015 have been derived from our audited consolidated financial statements for these periods,which are not includ

33、ed in this annual report.Our historical results do not necessarily indicate results expected for any future periods.3For the Year Ended December 31,2013RMB2014RMB2015RMB2016RMB2017RMB2017US$(in thousands,except for per ordinary share data)Consolidated Statement of Operation DataNet revenues5,386,746

34、7,346,91810,897,56819,228,44026,779,6314,115,955Cost of revenues(1,386,767)(2,100,606)(3,043,440)(4,729,750)(4,678,209)(719,028)Gross profit3,999,9795,246,3127,854,12814,498,69022,101,4223,396,927Operating expensesProduct development(1,245,719)(2,321,349)(3,296,693)(7,687,422)(8,259,233)(1,269,421)S

35、ales and marketing(1,269,413)(2,214,210)(3,087,990)(5,860,927)(8,294,186)(1,274,793)General and administrative(646,405)(861,551)(1,088,402)(2,518,819)(2,621,832)(402,968)Total operating expenses(3,161,537)(5,397,110)(7,473,085)(16,067,168)(19,175,251)(2,947,182)Income/(loss)from operations838,442(15

36、0,798)381,043(1,568,478)2,926,171449,745Net interest income/(expense)and other income/(expense)305,554186,0502,624,321(191,627)580,32489,195Income/(loss)before income tax expense,equity in income of affiliates and non-controlling interests1,143,99635,2523,005,364(1,760,105)3,506,495538,940Income tax

37、 expense(293,740)(130,821)(470,188)(478,009)(1,280,523)(196,813)Equity in income/(loss)of affiliates56,147187,191(135,781)601,883(65,116)(10,008)Net income/(loss)906,40391,6222,399,395(1,636,231)2,160,856332,119Less:Net loss/(income)attributable to non-controlling interests91,917151,117108,261205,52

38、8(18,844)(2,896)Net income/(loss)attributable to Ctrips shareholders998,320242,7392,507,656(1,430,703)2,142,012329,223Earnings Per Ordinary Share Data:Net income/(loss)attributable to Ctrips shareholders998,320242,7392,507,656(1,430,703)2,142,012329,223Earnings/(loss)per ordinary share,basic30.347.0

39、866.34(24.18)32.314.97Earnings/(loss)per ordinary share,diluted26.636.3556.85(24.18)30.574.70Weighted average ordinary shares outstanding,basic32,905,60134,289,17037,797,69859,166,58266,300,80866,300,808Weighted average ordinary shares outstanding,diluted38,069,84138,207,85847,375,24859,166,58271,77

40、5,89371,775,893(1)(2)(3)(3)(3)(4)(5)(5)Table of Contents(1)Our consolidated balance sheet data has reflected the effect of consolidation of Qunars financial statements starting from December 31,2015.Our consolidated statement of operation data has reflected the effect of consolidation of Qunars fina

41、ncial statements starting from January 1,2016.(2)Translation from Renminbi amounts into U.S.dollar amounts was made at a rate of RMB6.5063 to US$1.00.See“Item 3.A.Key InformationSelected Financial DataExchange Rate Information.”(3)Share-based compensation was included in the related operating expens

42、e categories as follows:(4)In 2015,a gain of RMB2.3 billion was recognized in the other income for the deconsolidation of Tujia,which was once a subsidiary of our company.(5)Each ADS represents 0.125 ordinary share.(6)In 2015,we determined and elected to early adopt ASU 2015-17 to our consolidated f

43、inancial statements starting December 31,2015,prospectively to present the deferred tax assets and liabilities as non-current items.(7)In April 2015,the FASB issued new guidance which changes the presentation of debt issuance cost.Under the new guidance,debt issuance cost is presented as a reduction

44、 of the carrying amount of the related liability,rather than as an asset.This guidance has been adopted and applied retrospectively by us to the prior periods presented herein.Exchange Rate InformationWe have published our consolidated financial statements in Renminbi.Our business is primarily condu

45、cted in China in Renminbi.The conversion of Renminbi into U.S.dollars in this annual report is based on the certified exchange rate published by the Federal Reserve Board.For your convenience,this annual report contains translations of some Renminbi or U.S.dollar amounts for 2017 at a rate of RMB6.5

46、063 to US$1.00,which was the certified exchange rate in effect as of December 29,2017.The certified exchange rate on April 13,2018 was RMB6.2725 to US$1.00.We make no representation that any Renminbi or U.S.dollar amounts could have been,or could be,converted into U.S.dollars or Renminbi,as the case

47、 may be,at any particular rate,the rates stated below,or at all.The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of Renminbi into foreign exchange.The following table sets forth information concerning exchange rates between Ren

48、minbi and U.S.dollars for the periods indicated.The exchange rates refer to the exchange rates as set forth in the H.10 statistical release of the Federal Reserve Board.These rates are provided solely for your convenience and are not necessarily the exchange rates that we used in this annual report

49、or will use in the preparation of our periodic reports or any other information to be provided to you.The source of these rates is the Federal Reserve Statistical Release.4As of December 31,2013RMB2014RMB2015RMB2016RMB2017RMB2017US$(in thousands)Consolidated Balance Sheet Data:Cash and cash equivale

50、nts7,138,3455,300,88819,215,67518,434,68118,242,9922,803,896Restricted cash739,544836,3952,286,8831,744,4901,748,796268,785Short-term investments3,635,0916,438,8558,235,78614,112,86228,129,9384,323,492Accounts receivable,net1,518,2301,826,7663,150,7684,624,8184,559,053700,714Prepayments and other cu

51、rrent assets1,237,5312,480,2767,711,7566,994,5916,546,0411,006,109Deferred tax assets,current96,980193,503Non-current assets6,324,93814,132,84278,241,72498,502,460102,821,65715,803,399Total assets20,690,65931,209,525118,842,592144,413,902162,048,47724,906,395Current liabilities6,368,00812,714,70333,

52、666,09530,295,02542,159,9326,479,863Deferred tax liabilities,non-current63,197132,5073,045,2593,607,8833,847,440591,341Long-term Debt5,529,3687,984,58818,354,60834,650,67429,220,2554,491,071Other long-term Liabilities91,702339,567347,82053,459Share capital3,0333,0854,1214,9605,173795Total Ctrips sha

53、reholders equity8,530,3969,529,17944,550,73071,536,83584,693,81413,017,201Noncontrolling interests199,690848,54819,134,1983,983,9181,779,216273,460Total shareholders equity8,730,08610,377,72763,684,92875,520,75386,473,03013,290,661For the Year Ended December 31,2013RMB2014RMB2015RMB2016RMB2017RMB201

54、7US$(in thousands)Product development138,668184,665291,6432,079,5151,012,747155,656Sales and marketing49,10554,39265,574392,642185,78628,555General and administrative250,157257,587285,3791,087,563635,28097,641(1)(2)(6)(7)(2)Table of Contents(1)Annual averages are calculated using the average of mont

55、h-end rates of the relevant year.Monthly averages are calculated using the average of the daily rates during the relevant month.B.Capitalization and IndebtednessNot applicable.C.Reasons for the Offer and Use of ProceedsNot applicable.D.Risk FactorsRisks Related to Our CompanyOur business could suffe

56、r if we do not successfully manage current growth and potential future growth.Our business has grown significantly as a result of both organic growth of existing operations and acquisitions,and we expect to continue to experience such growth in the future.We have significantly expanded our operation

57、s and anticipate further expansion of our operations and workforce,as a result of the continued growth of our service offerings,customer base and geographic coverage.For example,we have invested in,and plan to continue to invest in,organic growth by rolling out new business initiatives focusing in a

58、 diverse range of areas including cruise lines,car services,bus tickets and train tickets.Consequentially,in 2017,we invested US$1.3 billion in product development.If such new business initiatives fail to perform as expected,our financial condition and results of operations could be adversely affect

59、ed.Our growth to date has placed,and our anticipated future operations will continue to place,a significant strain on our management,systems and resources.In addition to training and managing our workforce,we will need to continue to improve and develop our financial and managerial controls and our

60、reporting systems and procedures.We cannot assure you that we will be able to efficiently or effectively manage the growth of our operations,and any failure to do so may limit our future growth and hamper our business strategy.Strategic acquisition of complementary businesses and assets,and the subs

61、equent integration of newly acquired business into our own,create significant challenges that may have a material adverse effect on our business,reputation,results of operations and financial condition.We have made and intend to continue to make strategic acquisitions in the travel industry in Great

62、er China and overseas.For example,in October 2015,we completed a share exchange transaction with Baidu Inc.,or Baidu,whereby we obtained approximately 45%of the aggregate voting interest of Qunar in exchange for our newly issued ordinary shares.Subsequently,we issued ordinary shares represented by A

63、DSs to certain special purpose vehicles holding shares solely for the benefit of certain Qunar employees and,in return,we received Class B ordinary shares of Qunar from these employees.We directly injected these shares to a third-party investment entity dedicated to investing in business in China.Fr

64、om an accounting perspective,we consolidated the financial statements of these non-U.S.investment entities and started to consolidate Qunars financial statements from December 31,2015.In October 2016,we participated as a member in the buying consortium in Qunars going-private transaction and rolled

65、our then existing equity stake into the entity that wholly owns Qunar upon the completion of the transaction in February 2017.5Noon Buying RatePeriodPeriod-EndAverageLowHigh(RMB per US$)20136.05376.14126.24386.053720146.20466.17046.25916.040220156.47786.28696.48966.187020166.94306.65496.95806.448020

66、176.50636.73506.95756.4773October6.63286.62546.65336.5712November6.60906.62006.63856.5967December6.50636.59326.62106.50632018January6.28416.42336.52636.2841February6.32806.31836.34716.2649March6.27266.31746.35656.2685April(through April 13,2018)6.27256.28896.30456.2655(1)Table of ContentsIf we are p

67、resented with appropriate opportunities,we may continue to acquire complementary businesses and assets in the future.However,strategic acquisitions and the subsequent integration of new businesses and assets into our own would require significant attention from our management and could result in a d

68、iversion of resources from our existing business,which in turn could have an adverse effect on our business operations.In addition,acquisitions could result in potential dilutive issuances of equity securities,use of substantial amounts of cash,and exposure to potential ongoing financial obligations

69、 and unforeseen or hidden liabilities of the acquired business.The cost and duration of,and difficulties in,integrating newly acquired businesses and managing a larger overall business could also materially exceed our expectations.Moreover,we may not be able to achieve our intended strategic strateg

70、ies and record substantial impairment charges to goodwill,if we fail to successfully integrate the newly acquired business or manage a larger business.Any such negative developments could have a material adverse effect on our business,reputation,results of operations and financial condition.Our stra

71、tegy to acquire or invest in complementary businesses and assets and establish strategic alliances involves significant risk and uncertainties that may have a material adverse effect on our business,reputation,results of operations and financial condition.As part of our plan to expand our product an

72、d service offerings,we have made and intend to make strategic acquisitions or investments in the travel service industries in Greater China and overseas,such as the following,in addition to our transactions relating to Qunar described elsewhere in this annual report:?In May 2015,we acquired approxim

73、ately 38%share capital of eLong,Inc.In May 2016,eLong,Ipleted its going-private transaction and merger with E-dragon Holdings Limited,or eLong.In December 2017,eLong and Tongcheng Network Technology Co.,Ltd.,or LY.com,announced an agreement to merge and form Tongcheng-Elong Holdings Limited,which wa

74、s consummated in March 2018.In exchange for our prior holdings in eLong,we received an equity method investment in the enlarged group.?In January 2016,we invested US$180 million in MakeMyTrip Limited,or MakeMyTrip,Indias largest online travel company,via convertible notes,and subsequently appointed

75、a director to MakeMyTrips board of directors.In October 2016,we converted all of the outstanding principal amount of convertible notes into ordinary shares of MakeMyTrip.In May 2017,we further invested approximately US$33 million in MakeMyTrip by subscribing for 916,666 of its ordinary shares.As of

76、December 31,2017,based on the market price,we re-measured the investment at a fair value of approximately RMB2.1 billion.?In April 2016,we announced strategic collaboration with China Eastern Airlines Corporation Limited,or China Eastern Airlines,one of Chinas three major air transportation groups,o

77、n a broad range of products and services.In June 2016,we invested approximately RMB3.0 billion in approximately 466 million A shares of China Eastern Airlines in a private placement.?In December 2016,we consummated an acquisition transaction whereby shares held by nearly all the shareholders of Skys

78、canner Holdings Limited,or Skyscanner,a leading global travel search site headquartered in Edinburgh,the United Kingdom,were acquired by Ctrip.?In December 2016,in connection with our share exchange transaction with BTG Hotels(Group)Co.,Ltd.,or BTG,a PRC joint stock company that is listed on the Sha

79、nghai Stock Exchange and principally engaged in the management of hotels and tourism destinations,and Homeinns Hotel Group,or Homeinns,we exchanged our previously held equity interest in Homeinns for 22%equity interest of BTG.If the ADS or share prices of the public companies that we have invested i

80、n or may invest in the future which are classified as available-for-sale investments decline and become lower than our share purchase prices,as have happened historically,we could incur impairment loss under U.S.GAAP,which in turn would adversely affect our financial results for the relevant periods

81、.In addition,if any of our investees in which our investments are classified as equity method investments incur net losses in the future,we will share their net losses proportionate to our equity interest in them.6Table of ContentsOur strategic investments could also subject us to other uncertaintie

82、s and risks,and our failure to address any of these uncertainties and risks,among others,may have a material adverse effect on our financial condition and results of operations:?diversion of our resources and management attention;?high acquisition and financing costs;?failure to achieve our intended

83、 objectives or benefits in making these investments or revenue-enhancing opportunities;?potential claims or litigation regarding our boards exercise of its duty of care and other duties required under applicable law in connection with any of our significant investments approved by the board;and?fail

84、ure to be in full compliance with applicable laws,rules and regulations.In particular,our strategy of acquiring or investing in a competing business could be adversely affected by uncertainties in the implementation and enforcement of the PRC Anti-Monopoly Law.Under the PRC Anti-Monopoly Law,compani

85、es undertaking acquisitions or investments in a business in China must notify the PRC Ministry of Commerce,or MOFCOM,in advance of any transaction where the parties revenues in the China market and global market exceed certain thresholds and the buyer would obtain control of,or decisive influence ov

86、er,the target.There are numerous factors MOFCOM considers in determining“control”or“decisive influence,”and,depending on certain criteria,MOFCOM will conduct anti-monopoly review of transactions in respect of which it was notified.In light of the uncertainties relating to the interpretation,implemen

87、tation and enforcement of the PRC Anti-Monopoly Law,we cannot assure you that MOFCOM will not deem our past and future acquisitions or investments,including the ones referenced herein or elsewhere in this annual report,to have met the filing criteria under the PRC Anti-Monopoly Law and therefore dem

88、and a filing for merger review.However,there have been limited cases of MOFCOM anti-monopoly review of filings involving companies with a“variable interest entity”structure,or VIE structure,similar to ours.If we are found to have violated the PRC Anti-Monopoly Law for failing to file the notificatio

89、n of concentration and request for review,we could be subject to a fine of up to RMB500,000,and the parts of the transaction causing the prohibited concentration could be ordered to be unwound.Such unwinding could affect our business and financial results,and harm our reputation.Further,if any of ou

90、r business cooperation arrangements with Qunar are determined to have violated the PRC Anti-Monopoly Law,we could be subject to sanctions including an order to cease the relevant activities,confiscation of illegal gains and fines of 1%to 10%of our sales revenue from the previous year.In addition,we

91、establish strategic alliances with various third parties to further our business purpose from time to time.Strategic alliances with third parties could subject us to a number of risks,including risks associated with sharing proprietary information,non-performance by the counter-party,an increase in

92、expenses incurred in establishing new strategic alliances,inefficiencies caused by failure to integrate strategic partners businesses with our own,and unforeseen levels of diversion of our resources and management attention,any of which may materially and adversely affect our business.As a result of

93、 any of the above factors,any actual or perceived failure to realize the benefits we expected from these investments may materially and adversely affect our business and financial results and cause the trading price of our ADSs to decline.7Table of ContentsIf Qunar fails to effectively implement and

94、 execute its strategies to maintain competitiveness and grow its business,or incur net loss in the future,our business,results of operations and financial condition may be materially and adversely affected.As a result of the transactions described elsewhere in this annual report involving Qunar secu

95、rities during 2015,we began to consolidate Qunars financial results from December 31,2015 from an accounting perspective under U.S.GAAP.Historically,Qunar enjoyed one of the market leading positions in Chinas travel industry with its unique business model as a search-based travel commerce platform,w

96、hile it is currently transitioning into a mobile and online commerce travel platform that focuses on providing users with one-stop solutions.Certain risks and uncertainties associated with the business operations of Qunar are distinct from those we have faced historically:?Failure to transition into

97、 a one-stop mobile and online commerce travel platform from a search-based platform.As part of the transitioning effort,Qunars product development and product headcount has increased significantly in recent years as a result of its focus on development of its mobile platform and hotel direct busines

98、s;?Failure to increase penetration into hotel business in lower-tier cities,and maintain and increase popularity among young users in China by offering attractive features and services to meet user requirements of those markets;?Failure to maintain relationships with air ticket suppliers,such as maj

99、or airlines and Chinas sole global distribution systems,from which Qunar retrieves ticket availability information in order to generate comprehensive and accurate flight information on its platform;?Failure to maintain and strengthen relationships with online travel agents that are Qunars existing c

100、ustomers,and establish new customer relationships with other online travel agents and travel service providers to ensure that it has access to a steady supply of travel product information on favorable commercial terms;?Failure to adequately monitor and secure service quality of travel service provi

101、ders on its platform,and address user dissatisfaction with travel service providers;?Consolidation of the results of operations of Qunar.Qunar historically incurred net loss and our consolidation of Qunars financial statements had negatively impacted our financial statements previously:?Consolidatio

102、n of the fragmented travel market in China,which may result in travel service providers becoming fewer but larger,comprehensive travel information more readily available to users,and a potential loss to the value of Qunars business as a travel service platform;and?Inability to maintain or increase a

103、wareness and preference of its brand“Qunar”as a result of failure to provide a compelling user experience of online travel searches,maintaining the quality of its services,and preserving Qunars reputation and goodwill in the event of negative media publicity toward its services,internet security or

104、other issues affecting Qunar or online travel businesses in China.If Qunar is unable to successfully implement and execute its strategies to maintain competitiveness and grow its business,or effectively address risks and uncertainties associated with its business operations and transitioning efforts

105、,our business,results of operations and financial condition may be materially and adversely affected.8Table of ContentsOur transactions involving issuance of our shares as consideration and investment or financing arrangements with selected third-party investment entities may result in substantial d

106、ilution to our shareholders and may also reduce our existing cash balance and adversely affect our working capital.In the long-term interest of our company,we make investments,in the form of limited partnership contributions,assets injection or other financing arrangements,into or with certain entit

107、ies that are dedicated to investing businesses in China.We agreed to make certain investments,in the form of limited partnership contribution or other financing arrangements,in several non-U.S.investment entities,amounting to an aggregate fair value of approximately US$2.9 billion and US$0.4 billion

108、 in 2016 and 2017.These entities are managed or owned by parties unaffiliated with each other and unaffiliated with us and are dedicated to investing in businesses in China.These investment entities have spent the proceeds of our investments to acquire the equity interest in Qunar that were not held

109、 by us through privately negotiated transactions.Under U.S.GAAP,we consolidate the financial statements of these investment entities from an accounting perspective.These investments,capital contributions and financing arrangements together with the share exchange with Baidu and issuance of shares fo

110、r the benefit of Qunar employees historically caused significant dilution to our existing shareholders and impacted our working capital.Transactions involving issuance of a substantial number of our ordinary shares such as the transactions contemplated hereunder may result in substantial dilution to

111、 our shareholders.In addition,future sale of our shares by these non-U.S.investment entities and/or our other significant shareholders such as Baidu may cause our share price to decline.Furthermore,if we obtain debt financings,we may be subject to restrictive covenants limiting or restricting our ab

112、ility to take specific actions,such as incurring additional debt,making capital expenditures or declaring dividends.See“Item 4.B.Information on the CompanyBusiness OverviewStrategic Investments and Acquisitions.”Our business is sensitive to global economic conditions.A severe or prolonged downturn i

113、n the global or Chinese economy may have a material and adverse effect on our business,and may materially and adversely affect our growth and profitability.The global macroeconomic environment is facing challenges,including the escalation of the European sovereign debt crisis since 2011,the end of q

114、uantitative easing by the U.S.Federal Reserve,the economic slowdown in the Eurozone in 2014,and the slowdown of the Chinese economy since 2012.There have been concerns over unrest in the Middle East and Africa,which have resulted in volatility in oil and other markets,and over the expansion of terro

115、rist activities into Europe and other regions.In June 2016,British citizens voted in a referendum to withdraw the membership of the United Kingdom from the European Union.The result of the vote caused instant and significant volatility in the global financial and securities markets.The various uncer

116、tainties in the political and economic situations of the United Kingdom and the European Union arising from the anticipated withdrawal may have a negative and prolonged impact on the global economy.Economic conditions in China are sensitive to global economic conditions.Our business and operations a

117、re primarily based in China and the majority of our revenues are derived from our operations in China.Accordingly,our financial results have been,and are expected to continue to be,affected by the economy and travel industry in China.While the economy in China has grown significantly over the past d

118、ecades,growth has been uneven,both geographically and among various sectors of the economy,and the rate of growth has been slowing.Since we derive the majority of our revenues from accommodation reservation,transportation ticketing and packaged-tour services in China,any severe or prolonged slowdown

119、 in the global and/or Chinese economy or the recurrence of any financial disruptions could reduce expenditures for travel,which in turn may adversely affect our business operating results and financial condition in a number of ways.For example,the weakness in the economy could erode consumer confide

120、nce which,in turn,could result in changes to consumer spending patterns relating to travel products and services.If consumer demand for travel products and services we offer decreases,our revenues may decline.Furthermore,continued turbulence in the international markets may adversely affect our abil

121、ity to access the capital markets to meet liquidity needs.General declines or disruptions in the travel industry may materially and adversely affect our business and results of operations.Our business is significantly affected by the trends that occur in the travel industry in China,including the ho

122、tel,transportation ticketing and packaged-tour sectors.As the travel industry is highly sensitive to business and personal discretionary spending levels,it tends to decline during general economic downturns.The recent worldwide recession has led to a weakening in the demand for travel services.Other

123、 trends or events that tend to reduce travel and are likely to reduce our revenues include:9Table of Contents?terrorist attacks or threats of terrorist attacks or wars,particularly given the terrorist attacks in Paris and the worsening situation in Syria;?an outbreak of H1N1 influenza,Ebola virus,av

124、ian flu,Middle East respiratory syndrome,or MERS,severe acute respiratory syndrome,or SARS,or any other serious contagious diseases;?increasing prices in the hotel,transportation ticketing,or other travel-related sectors;?increasing occurrence of travel-related accidents;?political unrest;?natural d

125、isasters or poor weather conditions;and?any travel restrictions or other security procedures implemented in connection with any major events in China.We could be severely and adversely affected by declines or disruptions in the travel industry and,in many cases,have little or no control over the occ

126、urrence of such events.Such events could result in a decrease in demand for our travel services.This decrease in demand,depending on the scope and duration,could significantly and adversely affect our business and financial performance over the short and long term.We recorded a significant amount of

127、 goodwill and indefinite lived intangible assets in connection with our strategic acquisitions and investments,and we may incur material impairment charges to our goodwill and indefinite lived intangible assets if the recoverability of these assets become substantially reduced.In connection with our

128、 strategic acquisitions over the recent years,we recorded a significant amount of goodwill and indefinite lived intangible assets booked in our financial statements.As of December 31,2017,our goodwill was RMB56.2 billion(US$8.6 billion)and our indefinite lived intangible assets were RMB11.8 billion(

129、US$1.8 billion).In 2015,our acquisition of Qunar securities resulted in a RMB43.0 billion increase in our goodwill.ASC 350“IntangiblesGoodwill and Other”provides that intangible assets that have indefinite useful lives and goodwill will not be amortized but rather will be tested at least annually fo

130、r impairment.ASC 350 also requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable from its undiscounted future cash flow.For 2015,2016,and 2017,we did not recognize any impairment char

131、ges for goodwill or intangible assets.If different judgments or estimates had been utilized,however,material differences could have resulted in the amount and timing of the impairment charge.We may potentially incur significant impairment charges if the recoverability of these assets become substant

132、ially reduced in the future.Any such impairment charges would adversely affect our results of operations and financial condition.The trading price of our ADSs has been volatile historically and may continue to be volatile regardless of our operating performance.The trading price of our ADSs has been

133、 and may continue to be subject to wide fluctuations.In 2017,the trading prices of our ADSs on the Nasdaq Global Select Market have ranged from US$40.40 to US$60.65 per ADS,and the last reported trading price on April 20,2018 was US$42.65 per ADS.The price of our ADSs may fluctuate in response to a

134、number of events and factors,including the following:?actual or anticipated fluctuations in our quarterly operating results;?changes in financial estimates by securities analysts;?conditions in the Internet or travel industries;?changes in the economic performance or market valuations of other Inter

135、net or travel companies or other companies that primarily operate in China;?Table of Contents?changes in major business terms between our travel suppliers and us;?announcements by us or our competitors of new products or services,significant acquisitions,strategic partnerships,joint ventures,or capi

136、tal commitments;?negative publicity in connection with our business operation;?additions or departures of key personnel;and?market and volume fluctuations in the stock market in general.In addition,the stock market in general,and the market prices for Internet-related companies and companies with op

137、erations in China in particular,have experienced volatility that often has been unrelated to the operating performance of such companies.The securities of some China-based U.S.-listed companies have experienced significant volatility since their initial public offerings,including,in some cases,subst

138、antial declines in the trading prices of their securities.The trading performance of the securities of these China-based U.S.-listed companies after their offerings and the surge in the number of China-based U.S.-listed companies that commenced going-private proceedings in recent years may affect th

139、e attitudes of investors toward China-based U.S.-listed companies,which consequently may impact the trading performance of the ADSs,regardless of our actual operating performance.Furthermore,some negative news and perceptions about inadequate corporate governance practices or fraudulent accounting,c

140、orporate structure including the use of VIE structures or other matters of other China-based U.S.-listed companies have negatively affected the attitudes of investors towards China-based U.S.-listed companies,including us,in general in the past,regardless of whether we have engaged in any inappropri

141、ate activities,and any news or perceptions with a similar nature may continue to negatively affect us in the future.In addition,the global financial crisis and the ensuing economic recessions in many countries have contributed and may continue to contribute to extreme volatility in the global stock

142、markets,such as the large decline in share prices in the United States,China and other jurisdictions in recent years.These broad market and industry fluctuations may continue to adversely affect the trading price of the ADSs,regardless of our operating performance.Additionally,volatility or a lack o

143、f positive performance in our ADS price may adversely affect our ability to retain key employees,all of whom have been granted share-based awards.If we are unable to maintain existing relationships with travel suppliers and strategic alliances,or unable to establish new arrangements with travel supp

144、liers and strategic alliances at or on favorable terms or at terms similar to those we currently have,or at all,our business,market share and results of operations may be materially and adversely affected.We rely on travel suppliers(including without limitation hotels and domestic and international

145、airlines)to make their services available to consumers through us,and our business prospects depend on our ability to maintain and expand relationships with travel suppliers.If we are unable to maintain satisfactory relationships with our existing travel suppliers,or if our travel suppliers establis

146、h similar or more favorable relationships with our competitors,or if our travel suppliers increase their competition with us through their direct sales,or if any one or more of our travel suppliers significantly reduce participation in our services for a sustained period of time or completely withdr

147、aw participation in our services,our business,market share and results of operations may be materially and adversely affected.To the extent any of those major or popular travel suppliers ceased to participate in our services in favor of one of our competitors systems or decided to require consumers

148、to purchase services directly from them,our business,market share and results of operations may suffer.Our business depends significantly upon our ability to contract with hotels in advance for the guaranteed availability of certain hotel rooms.We rely on hotel suppliers to provide us with rooms at

149、discounted prices.However,our contracts with our hotel suppliers are not exclusive and most of the contracts must be renewed semi-annually or annually.We cannot assure you that our hotel suppliers will renew our contracts in the future on favorable terms or terms similar to those we currently have a

150、greed.The hotel suppliers may reduce the commission rates on bookings made through us.Furthermore,in order to maintain and grow our business and to effectively compete with many of our competitors in all potential markets,we will need to establish new arrangements with hotels and accommodations of a

151、ll ratings and categories in our existing markets and in new markets.We cannot assure you that we will be able to identify appropriate hotels or enter into arrangements with those hotels on favorable terms,if at all.This failure could harm the growth of our business and adversely affect our operatin

152、g results and financial condition,which consequently will impact the trading price of our ADSs.11Table of ContentsWe derive revenues and other significant benefits from our arrangements with major domestic airlines in China and international airlines.Our airline ticket suppliers allow us to book and

153、 sell tickets on their behalf and collect commissions on tickets booked and sold through us.Although we currently have supply relationships with these airlines,they also compete with us for ticket bookings and have entered into similar arrangements with many of our competitors and may continue to do

154、 so in the future.Such arrangements may be on better terms than we have.Starting in early 2016,some PRC airlines,including four of the largest airlines in China,announced suspension of their respective business cooperation with Qunar without indicating the length of such suspension and cited serious

155、 customer complaints in their respective announcements.Although most of these airlines have resumed cooperation with Qunar,if any airlines choose to take similar actions against us and additional airlines follow suit,our business,market share and results of operations may be materially and adversely

156、 affected.We cannot assure you that any of these airlines will continue to have supplier relationships with us or pay us commissions at the same or similar rates as what they paid us in the past.Further,on July 1,2016,the four largest airlines in China announced that third-party ticketing agents are

157、 prohibited from selling tickets for domestic flights on third-party platforms,such as ours.Additionally,on July 1,2016,most major domestic airlines also replaced their commissions and rebate incentives completely with a reduced,fixed“admin fee”per ticket.The loss of supplier relationships or furthe

158、r adverse changes in major business terms with our travel suppliers would materially impair our operating results and financial condition as we would lose an increasingly significant source of our revenues.Part of the revenues that we derive from our hotel suppliers,airline ticket suppliers and othe

159、r travel service providers are obtained through our strategic alliances with various third parties.We cannot assure you,however,that we will be able to successfully establish and maintain strategic alliances with third parties which are effective and beneficial for our business.Our inability to do s

160、o could have a material adverse effect on our market penetration,revenue growth and profitability.If we fail to further increase our brand recognition,we may face difficulty in maintaining existing and acquiring new customers and business partners and our business may be harmed.We believe that maint

161、aining and enhancing the Ctrip brand depends in part on our ability to grow our customer base and obtain new business partners.Some of our potential competitors already have well-established brands in the travel industry.The successful promotion of our brand will depend largely on our ability to mai

162、ntain a sizeable and active customer base,maintain relationships with our business partners,provide high-quality customer service,properly address customer needs and handle customer complaints and organize effective marketing and advertising programs.If our customer base significantly declines or gr

163、ows more slowly than our key competitors,the quality of our customer services substantially deteriorates,or our business partners cease to do business with us,we may not be able to cost-effectively maintain and promote our brand,and our business may be harmed.If we do not compete successfully agains

164、t new and existing competitors,we may lose our market share,and our business may be materially and adversely affected.We compete primarily with other consolidators of hotel accommodations and transportation reservation services based in China.We also compete with traditional travel agencies and new

165、Internet travel search websites.In the future,we may also face competition from new players in the hotel consolidation market in China and abroad that may enter China.We may face more competition from hotels and airlines as they enter the discount rate market directly or through alliances with other

166、 travel consolidators.In addition,international travelers have become an increasingly important customer base.Competitors that have formed stronger strategic alliances with overseas travel consolidators may have more effective channels to address the needs of customers in China to travel overseas.Fu

167、rthermore,we do not have exclusive arrangements with our travel suppliers.The combination of these factors means that potential entrants to our industry face relatively low entry barriers.In the past,certain competitors launched aggressive advertising campaigns,special promotions and engaged in othe

168、r marketing activities to promote their brands,acquire new customers or to increase their market shares.In response to such competitive pressure,we started to take and may continue to take similar measures and as a result will incur significant expenses,which in turn could negatively affect our oper

169、ating margins in the quarters or years when such promotional activities are carried out.For example,we launched a promotion program in recent years to offer certain selected transportation tickets,hotel rooms and package tours as well as grant of e-coupons to our customers in response to promotion c

170、ampaigns that our competitors have launched.Primarily as a result of the enhanced marketing efforts and additional investment in product developments in response to the intensified market competition,our operational margin was negatively affected.In addition,some of our existing and potential compet

171、itors may have competitive advantages,such as significantly larger active user base on mobile or other online platforms,greater financial,marketing and strategic relationships and alliances or other resources or name recognition,and may be able to imitate and adopt our business model.We cannot assur

172、e you that we will be able to successfully compete against new or existing competitors.In the event we are not able to compete successfully,our business,results of operations and profit margins may be materially and adversely affected.12Table of ContentsOur quarterly results are likely to fluctuate

173、because of seasonality in the travel industry in Greater China.Our business experiences fluctuations,reflecting seasonal variations in demand for travel services.For example,the first quarter of each year generally contributes the lowest portion of our annual net revenues primarily due to a slowdown

174、 in business activity around and during the Chinese New Year holiday,which occurs during the period.Consequently,our results of operations may fluctuate from quarter to quarter.Any failure to maintain satisfactory performance of our mobile platform,websites,and systems,particularly those leading to

175、disruptions in our services,could materially and adversely affect our business and reputation,and our business may be harmed if our infrastructure or technology is damaged or otherwise fails or becomes obsolete.The satisfactory performance,reliability and availability of our infrastructure,including

176、 our mobile platform,websites,and systems,are critical to the success of our business.Any system interruptions that result in the unavailability or slowdown of our mobile platform,websites or other systems and the disruption in our services could reduce the volume of our business and make us less at

177、tractive to customers.Substantially all of our computer and communications systems are located at two customer service centers,one in Shanghai,China and the other one in Nantong,China.Our technology platform and computer and communication systems are vulnerable to damage or interruption from human e

178、rror,computer viruses,fire,flood,power loss,telecommunications failure,physical or electronic break-ins,hacking or other attempts at system sabotage,vandalism,natural disasters,and other similar events.For example,in May 2015,we experienced a network shut-down for a few hours,leading to temporary di

179、sruptions in the operations of our mobile platform and websites and interrupted customer services;later internal investigations revealed the cause to be employee human error.No data leakage occurred as part of the May 2015 incident,and we have since implemented extensive measures to ensure prompt re

180、sponses to similar future incidents of network shutdown/service disruption and to continue to update our security mechanisms to protect our systems from any human error,third-party intrusions,viruses or hacker attacks,information or data theft or other similar activities;however,we cannot assure you

181、 that unexpected interruptions to our systems will not occur again in the future.We do not carry business interruption insurance to compensate us for losses that may occur as a result of such disruptions.In addition,any such future occurrences could reduce customer satisfaction levels,damage our rep

182、utation and materially and adversely affect our business.We use an internally developed booking software system that supports nearly all aspects of our booking transactions.Our business may be harmed if we are unable to upgrade our systems and infrastructure quickly enough to accommodate future traf

183、fic levels,avoid obsolescence or successfully integrate any newly developed or purchased technology with our existing system.Capacity constraints could cause unanticipated system disruptions,slower response times,poor customer service,impaired quality and speed of reservations and confirmations and

184、delays in reporting accurate financial and operating information.These factors could cause us to lose customers and suppliers,which would have a material adverse effect on our results of operations and financial condition.In addition,our future success will depend on our ability to adapt our product

185、s and services to the changes in technologies and Internet user behavior.For example,the number of people accessing the Internet through mobile devices,including smart devices,mobile phones,tablets and other hand-held devices,has increased in recent years,and we expect this trend to continue while 4

186、G and more advanced mobile communications technologies are broadly implemented.As we make our services available across a variety of mobile operating systems and devices,we are dependent on the interoperability of our services with popular mobile devices and mobile operating systems that we do not c

187、ontrol,such as Android,iOS and Windows.Any changes in such mobile operating systems or devices that degrade the functionality of our services or give preferential treatment to competitive services could adversely affect usage of our services.Further,if the number of platforms for which we develop ou

188、r services increases,which is typically seen in a dynamic and fragmented mobile services market such as China,it will result in an increase in our costs and expenses.In order to deliver high quality services,it is important that our services work well across a range of mobile operating systems,netwo

189、rks,mobile devices and standards that we do not control.If we fail to develop products and technologies that are compatible with all mobile devices and operating systems,or if the products and services we develop are not widely accepted and used by users of various mobile devices and operating syste

190、ms,we may not be able to penetrate the mobile Internet market.In addition,the widespread adoption of new Internet technologies or other technological changes could require significant expenditures to modify or integrate our products or services.If we fail to keep up with these changes to remain comp

191、etitive,our future success may be adversely affected.13Table of ContentsOur business depends substantially on the continuing efforts of our key executives,and our business may be severely disrupted if we lose their services.Our future success depends heavily upon the continued services of our key ex

192、ecutives.We rely on their expertise in business operations,finance and travel services and on their relationships with our suppliers,shareholders,and business partners.We do not maintain key-man life insurance for any of our key executives.If one or more of our key executives are unable or unwilling

193、 to continue in their present positions,we may not be able to easily replace them.In that case,our business may be severely disrupted,we may incur additional expenses to recruit and train personnel and our financial condition and results of operations may be materially and adversely affected.In addi

194、tion,if any of these key executives joins a competitor or forms a competing company,we may lose customers and suppliers.Each of our executive officers has entered into an employment agreement with us that contains confidentiality and non-competition provisions.If any disputes arise between our execu

195、tive officers and us,we cannot assure you of the extent to which any of these agreements would be enforced in China,where most of these executive officers reside and hold most of their assets,in light of the uncertainties with Chinas legal system.See“Item 3.D.Key InformationRisk FactorsRisks Related

196、 to Doing Business in ChinaUncertainties with respect to the PRC legal system could adversely affect us.”If we are unable to attract,train and retain key individuals and highly skilled employees,our business may be adversely affected.If our business continues to expand,we will need to hire additiona

197、l employees,including travel supplier management personnel to maintain and expand our travel supplier network,information technology and engineering personnel to maintain and expand our mobile platform,websites,customer service centers,and systems,and customer service representatives to serve an inc

198、reasing number of customers.If we are unable to identify,attract,hire,train,and retain sufficient employees in these areas,users of our mobile platform,websites,and customer service centers may not have satisfactory experiences and may turn to our competitors,which may adversely affect our business

199、and results of operations.The PRC government regulates the air-ticketing,travel agency,and Internet industries.If we fail to obtain or maintain all pertinent permits and approvals or if the PRC government imposes more restrictions on these industries,our business may be adversely affected.The PRC go

200、vernment regulates the air-ticketing,travel agency,and Internet industries.We are required to obtain applicable permits or approvals from different regulatory authorities to conduct our business,including separate licenses for value-added telecommunications,air-ticketing,travel agency and Internet-r

201、elated activities.If we fail to obtain or maintain any of the required permits or approvals in the future,we may be subject to various penalties,such as fines or suspension of operations in these regulated businesses,which could severely disrupt our business operations.As a result,our financial cond

202、ition and results of operations may be adversely affected.In particular,the Civil Aviation Administration of China,or CAAC,together with National Development and Reform Commission,or NDRC,regulates pricing of air tickets.CAAC also supervises commissions payable to air-ticketing agencies together wit

203、h China Air Transport Association,or CATA.If restrictive policies are adopted by CAAC,NDRC,or CATA,or any of their regional branches,our air-ticketing revenues may be adversely affected.We may not be able to prevent others from using our intellectual property,which may harm our business and expose u

204、s to litigation.We regard our domain names,trade names,trademarks and similar intellectual property as critical to our success.We try to protect our intellectual property rights by relying on trademark protection and confidentiality laws and contracts.Trademark and confidentiality protection in Chin

205、a may not be as effective as that in the United States.Policing unauthorized use of proprietary technology is difficult and expensive.14Table of ContentsThe steps we have taken may be inadequate to prevent the misappropriation of our proprietary technology.Any misappropriation could have a negative

206、effect on our business and operating results.Furthermore,we may need to go to court to enforce our intellectual property rights.Litigation relating to our intellectual property might result in substantial costs and diversion of resources and management attention.See“Item 3.D.Key Information Risk Fac

207、tors Risks Related to Doing Business in China Uncertainties with respect to the PRC legal system could adversely affect us.”We rely on services from third parties to carry out our business and to deliver our products to customers,and if there is any interruption or deterioration in the quality of th

208、ese services,our customers may not continue using our services.We rely on third-party computer systems to host our websites,as well as third-party licenses for some of the software underlying our technology platform.In addition,we rely on third-party transportation ticketing agencies to issue transp

209、ortation tickets and travel insurance products,confirmations and deliveries in some cities in Greater China.We also rely on third-party local operators to deliver on-site services to our packaged-tour customers.Any interruption in our ability to obtain the products or services of these or other thir

210、d parties or deterioration in their performance,such as server errors or interruptions,or dishonest business conduct,could impair the timing and quality of our own service.If our service providers fail to provide high quality services in a timely manner to our customers or violate any applicable rul

211、es and regulations,our services will not meet the expectations of our customers and our reputation and brand will be damaged.Furthermore,if our arrangement with any of these third parties is terminated,we may not find an alternative source of support on a timely basis or on favorable terms to us.If

212、our hotel suppliers or customers provide us with untrue information regarding our customers stay,we may not be able to recognize and collect revenues to which we are entitled.A substantial portion of our revenues are represented by commissions paid by hotels for room nights booked through us.General

213、ly,we do not receive payment from our customers on behalf of our hotel suppliers,as our customers pay hotels directly.To confirm whether a customer adheres to the booked itinerary,we routinely make inquiries with the hotel and,occasionally,with the customer.We rely on the hotel and the customer to p

214、rovide us truthful information regarding the customers check-in and check-out dates,which forms the basis for calculating the commission we are entitled to receive from the hotel.If our hotel suppliers or customers provide us with untrue information with respect to our customers length of stay at th

215、e hotels,we would not be able to collect revenues to which we are entitled.In addition,using such untrue information may lead to inaccurate business projections and plans,which may adversely affect our business planning and strategy.We may suffer losses if we are unable to predict the amount of inve

216、ntory we will need to purchase during the peak holiday seasons.During the peak holiday seasons in China,we establish limited merchant business relationships with selected travel service suppliers,particularly for our packaged-tour products,in order to secure adequate supplies for our customers.In me

217、rchant business relationships,we buy hotel rooms and/or transportation tickets before selling them to our customers and thereby incur inventory risk.If we are unable to correctly predict demand for hotel rooms and transportation tickets that we are committed to purchase,we would be responsible for c

218、overing the cost of the hotel rooms and transportation tickets we are unable to sell,and our financial condition and results of operations would be adversely affected.The recurrence of SARS or other similar outbreaks of contagious diseases as well as natural disasters may materially and adversely af

219、fect our business and operating results.In early 2003,several regions in Asia,including Hong Kong and China,were affected by the outbreak of SARS.The travel industry in China,Hong Kong and some other parts of Asia suffered tremendously as a result of the outbreak of SARS.Furthermore,in early 2008,se

220、vere snowstorms hit many areas of China and particularly affected southern China.The travel industry was severely and adversely affected during and after the snowstorms.Additionally,in May 2008,a major earthquake struck Chinas populous Sichuan Province,causing great loss of life,numerous injuries,pr

221、operty loss and disruption to the local economy.The earthquake had an immediate impact on our business as a result of the sharp decrease in travel in the relevant earthquake-affected areas in Sichuan Province.In 2009,an outbreak of H1N1 influenza(swine flu)occurred in Mexico and the United States an

222、d human cases of the swine flu were discovered in China and Hong Kong.In March 2011,a powerful earthquake hit Japan,and the subsequent tsunami and nuclear accidents had far-reaching impact on the surrounding economies.Starting from March 2013,H7N9 bird flu,a new strain of animal influenza,has been s

223、preading in China and has infected more than a hundred people.In October 2013,large scale political protests began in Thailand that lasted several months and caused disruption to tourism and travel.In November 2013,one of the largest typhoons ever recorded hit the Philippines,causing widespread deva

224、station.In March 2014,the World Health Organization reported a major Ebola outbreak in Guinea,a western African nation.The disease then rapidly spread to the neighboring countries of Liberia and Sierra Leone.As of February 3,2015,22,560 suspected cases and 9,019 deaths had been reported;however,the

225、World Health Organization has said that these numbers may be underestimated.In June 2015,an outbreak of Middle East respiratory syndrome,or MERS,affected South Korea,one of our popular overseas travel destinations.15Table of ContentsAny future outbreak of contagious diseases,extreme unexpected bad w

226、eather or natural disasters would adversely affect our business and operating results.Ongoing concerns regarding contagious disease or natural disasters,particularly its effect on travel,could negatively impact our customers desire to travel.If there is a recurrence of an outbreak of certain contagi

227、ous diseases or natural disasters,travel to and from affected regions could be curtailed.Government advice regarding,or restrictions on,travel to and from these and other regions on account of an outbreak of any contagious disease or occurrence of natural disasters may have a material adverse effect

228、 on our business and operating results.If tax benefits available to our subsidiaries in China are reduced or repealed,our results of operations could suffer.Under the PRC Enterprise Income Tax Law and the relevant implementation rules,or the EIT Law,effective on January 1,2008,foreign-invested enter

229、prises,or FIEs,and domestic enterprises are subject to EIT at a uniform rate of 25%.Certain enterprises will benefit from a preferential tax rate of 15%under the EIT Law if they qualify as“high and new technology enterprises,”or HNTEs,or if they are located in applicable PRC regions as specified in

230、the Catalogue of Encouraged Industries in Western Regions,or the Western Regions Catalogue,subject to certain general restrictions described in the EIT Law and the related regulations.In December 2008 and 2009,some of our PRC subsidiaries,Ctrip Computer Technology,Ctrip Travel Information,Ctrip Trav

231、el Network and Qunar Software,and one of our consolidated affiliated Chinese entities,Qunar Beijing,were each designated by relevant local authorities as a HNTE under the EIT Law with an effective period of three years.Therefore,these entities were entitled to enjoy a preferential tax rate of 15%,as

232、 long as they maintained their qualifications for HNTEs that are subject to verification by competent authorities and renewals every three years.The qualifications of these entities as HNTEs have been renewed and would expire by the end of 2018 or 2020.We cannot assure you that our subsidiaries and

233、the consolidated affiliated Chinese entity will continue to qualify as HNTEs when they are subject to reevaluation in the future.In 2002,the PRC State Administration of Taxation,or SAT,started to implement preferential tax policy in Chinas western region,and companies located in applicable jurisdict

234、ions covered by the Western Regions Catalogue are eligible to apply for a preferential income tax rate of 15%if their businesses fall within the“encouraged”category of the policy and the revenue derived from such“encouraged”businesses accounts for more than 70%of the total revenue.Benefiting from th

235、is policy,Chengdu Ctrip and Chengdu Ctrip International obtained approval from local tax authorities to apply the 15%tax rate for their annual tax filing subject to periodic renewals over the years since 2012.After the initial effective period expired in 2014,the two entities were approved by the re

236、levant government authority to renew this qualification,which will expire in 2020.In 2013,Chengdu Information Technology Co.,Ltd.,or Chengdu Information,obtained approval from local tax authorities to apply the 15%tax rate for its 2012 tax filing and for the years from 2013 to 2020.In the event that

237、 the preferential tax treatment for these entities is discontinued,these entities will become subject to the standard tax rate at 25%,which would materially increase our tax obligations.We have sustained losses in the past and may experience earnings declines or net losses in the future.We sustained

238、 net losses in certain past periods,and we cannot assure you that we can sustain profitability or avoid net losses in the future.We expect that our operating expenses will increase and the degree of increase in these expenses is largely based on anticipated growth,revenue trends and competitive pres

239、sure.As a result,any decrease or delay in generating additional sales volume and revenues and increase in our operating expenses may result in substantial operating losses.Moreover,consolidation of Qunars financial statements starting from December 31,2015 had negatively impacted our financial state

240、ments previously,which may happen again in the future.See“Item 3.D.Key InformationRisk FactorsRisks Relating to Our CompanyConsolidation of the results of operations of Qunar with ours may negatively impact our financial performance and results of operations.”We have incurred substantial indebtednes

241、s and may incur additional indebtedness in the future.We may not be able to generate sufficient cash to satisfy our outstanding and future debt obligations.16Table of ContentsAs of December 31,2017,our total short-term bank borrowings and long-term bank borrowings(current portions)were RMB8.7 billio

242、n(US$1.3 billion),our total long-term borrowings(excluding current portions)were RMB8.8 billion(US$1.4 billion),and the aggregate principal amount of our outstanding convertible notes was RMB28.1 billion(US$4.3 billion).To the extent that we were to settle or redeem our convertible notes in cash,our

243、 debt obligations would become more substantial.Our substantial indebtedness could have important consequences to you.For example,it could:?increase our vulnerability to adverse general economic and industry conditions;?require us to dedicate a substantial portion of our cash flow from operations to

244、 servicing and repaying our indebtedness,thereby reducing the availability of our cash flow to fund working capital,capital expenditures and other general corporate purposes;and?limit,along with the financial and other restrictive covenants of our indebtedness,among other things,our ability to condu

245、ct additional financing activities,or increase the cost of additional financing.In the future,we may from time to time incur additional indebtedness and contingent liabilities.If we incur additional debt,the risks that we face as a result of our substantial indebtedness and leverage could intensify.

246、Our ability to generate sufficient cash to satisfy our outstanding and future debt obligations will depend upon our future operating performance,which will be affected by prevailing economic conditions and financial,business and other factors,many of which are beyond our control.As a result,we may n

247、ot generate or obtain sufficient cash flow to meet our anticipated operating expenses and to service our debt obligation as they become due.We may be subject to legal or administrative proceedings regarding information provided on our online portals or other aspects of our business operations,which

248、may be time-consuming to defend.Our online portals contain information about hotels,transportation,popular vacation destinations,and other travel-related topics.It is possible that if any information accessible on our online portals contains errors or false or misleading information,third parties co

249、uld take action against us for losses incurred in connection with the use of such information.From time to time,we have become and may in the future become a party to various legal or administrative proceedings arising in the ordinary course of our business,including actions with respect to labor an

250、d employment claims,breach of contract claims,anti-competition claims,and other matters.Although such proceedings are inherently uncertain and their results cannot be predicted with certainty,we believe that the resolution of our current pending matters will not have a material adverse effect on our

251、 business,consolidated financial position,results of operations,or cash flow.Regardless of the outcome and merit of such proceedings,however,any legal action can have an adverse impact on us because of defense costs,negative publicity,diversion of managements attention,and other factors.In addition,

252、it is possible that an unfavorable resolution of one or more legal or administrative proceedings,whether in China or in another jurisdiction,could materially and adversely affect our financial position,results of operations or cash flows in a particular period or damage our reputation.We could be li

253、able for breaches of Internet security or fraudulent transactions by users of our mobile platform and our websites.Internet industry is facing significant challenges regarding information security and privacy,including the storage,transmission and sharing of confidential information.In recent years,

254、PRC government authorities have enacted legislation on Internet use to protect personal information from any unauthorized disclosure.See“Item 4.B.Information on the CompanyBusiness OverviewPRC Government RegulationsInternet Privacy.”We conduct a significant portion of our transactions through the In

255、ternet,including our mobile platform and websites.In such transactions,secured transmission of confidential information(such as customers itineraries,hotel and other reservation information,credit card information,personal information,and billing addresses)over public networks and ensuring the confi

256、dentiality,integrity,availability,and authenticity of the information of our users,customers,hotel suppliers,and airline partners are essential to maintaining their confidence in our online products and services.Our current security measures may not be adequate and may contain deficiencies that we f

257、ail to identify,and advances in technology,increased levels of expertise of hackers,new discoveries in the field of cryptography or others could increase our vulnerability.For example,a third-party website with focus on Internet security information exchange released news in March 2014 that as a res

258、ult of a temporary testing function performed by us,certain data files containing customers credit card information had been stored on local servers maintained by us,which may lead to potential exposure of these customers information to hackers.We removed the cause of the potential security concern

259、within two hours of the release of the news report and then examined all other possible leaks and found that 93 customers credit card information might have been downloaded by the above-mentioned website for the purpose of confirming potential risks.Although to our knowledge,no customer has suffered

260、 financial loss or other damage from the incident as of the date of that report,our business,results of operations,user experience,and reputation may be materially and adversely affected if similar incidents related to Internet security recur in the future.In August 2011,the PRC Supreme Peoples Cour

261、t and the PRC Supreme Peoples Procuratorate issued judicial interpretations regarding hacking and other Internet crimes.However,its effect on curbing hacking and other illegal online activities still remains to be seen.17Table of ContentsSignificant capital,managerial and human resources are require

262、d to enhance information security and to address any issues caused by security failures.If we are unable to protect our systems and the information stored in our systems from unauthorized access,use,disclosure,disruption,modification or destruction,such problems or security breaches may cause loss,e

263、xpose us to litigation and possible liability to the owners of confidential information,disrupt our operations and may harm our reputation and ability to attract customers.Our failure to comply with privacy and data protection laws and regulations in various jurisdictions could subject us to sanctio

264、ns,damages,and litigation,and could harm our reputation and business.We collect and process certain personal data of our users,including email addresses,usage data,identification information,user passwords,and additional information.We also collect and process user billing information,such as credit

265、 card numbers,full names,billing addresses,and phone numbers of our users.We are subject to the privacy and data protection laws and regulations in various jurisdictions,including China,European Union,and Korea.Privacy laws provide restrictions and guidance in connection with our storage,use,process

266、ing,disclosure,transfer,and protection of personal information.We strive to comply with all applicable laws,regulations,policies relating to privacy and data protection.We are also subject to privacy and data security-related obligations deriving from our privacy policy and terms of use with our use

267、rs,and we may be liable to third parties in the event we are deemed wrongfully processed personal data.European Union traditionally takes a broader view as to what is considered personal information and has imposed greater obligations under their privacy and data protection laws.In particular,the Eu

268、ropean Union adopted a new General Data Protection Regulation in April 2016,which will become effective in May 2018.The General Data Protection Regulation will result in more stringent requirements for data processors and controllers,including more fulsome disclosures about the processing of persona

269、l information,data retention limits,and deletion requirements,mandatory notification in the case of a data breach,and elevated standards regarding valid consent in some specific cases of data processing.The General Data Protection Regulation also includes substantially higher penalties for failure t

270、o comply with the requirements.For example,in the event of violations,a fine up to 20 million or up to 4%of the annual worldwide turnover,whichever is greater,may be imposed.When General Data Protection Regulation and other future laws and regulations come into effect,the more stringent requirements

271、 on privacy user notifications and data handling will require us to adapt our business and incur additional costs.Privacy concerns are becoming more widely acknowledged and may cause our users to resist providing the personal data necessary to allow them to use our platform effectively.We have imple

272、mented multiple measures and security protocols to maintain and improve our privacy protection capability.However,measures we have implemented may not alleviate all potential privacy concerns and threats.In addition,a failure by us or a third-party contractor providing services to us to comply with

273、applicable privacy and data security laws,regulations,obligations,or our terms of use with our users,may result in sanctions,statutory or contractual damages or litigation.These violations or proceedings may,among other things,force us to spend money in defense or settlement,result in the imposition

274、 of monetary liability or restrict access to our services from certain territory,which could adversely affect our reputation and business.Negative publicity with respect to us or the travel industry in general could impair our reputation,which in turn could materially and adversely affect our busine

275、ss,results of operations,and price of ADSs.18Table of ContentsNegative publicity with respect to us or the travel industry in general could impair our reputation.Prospective customers may be prevented from engaging in transactions with us if there is any negative publicity in connection with the use

276、 of our services or products,the operation of our business,and other aspects about us.Furthermore,negative publicity about other market players or isolated incidents,whether or not factually correct,may result in negative perception of our industry as a whole and undermine the credibility we have es

277、tablished.Negative developments in the market may lead to tightened regulatory scrutiny and limit the scope of our permissible business activities.We could lose significant number of customers due to negative publicity with respect to us or the travel industry in general,which could materially and a

278、dversely affect our business,results of operations,and price of ADSs.We may be the subject of detrimental conduct by third parties,including complaints to regulatory agencies,negative blog postings,and the public dissemination of malicious assessments of our business,which could have a negative impa

279、ct on our reputation and cause us to lose market share,travel suppliers,and customers and revenues,and adversely affect the price of our ADSs.We may be the target of anti-competitive,harassing,or other detrimental conduct by third parties.Such conduct may include complaints,anonymous or otherwise,to

280、 regulatory agencies regarding our operations,accounting,revenues,business relationships,business prospects and business ethics.Additionally,allegations,directly or indirectly against us,may be posted in Internet chat-rooms or on blogs or any websites by anyone,whether or not related to us,on an ano

281、nymous basis.We may be subject to government or regulatory investigation as a result of such third-party conduct and may be required to spend significant time and incur substantial costs to address such third-party conduct,and we cannot assure you that we will be able to conclusively refute each of

282、the allegations within a reasonable period of time,or at all.Our reputation may also be negatively affected as a result of the public dissemination of anonymous allegations or malicious statements about our business,which in turn may cause us to lose market share,travel suppliers and customers and r

283、evenues and adversely affect the price of our ADSs.We have limited business insurance coverage in Greater China.Insurance companies in Greater China offer limited business insurance products and generally do not,to our knowledge,offer business liability insurance.Business disruption insurance is ava

284、ilable to a limited extent in Greater China,but we have determined that the risks of disruption,the cost of such insurance and the difficulties associated with acquiring such insurance make it impractical for us to have such insurance.We do not maintain insurance coverage for any kinds of business l

285、iabilities or disruptions and would have to bear the costs and expenses associated with any such events out of our own resources.We hire celebrities to be our brand ambassadors to market our brands and products and this marketing initiative may not be effective.From time to time,we hire celebrities

286、to be our brand ambassadors to market our“Ctrip”brand or our products and services that are important to our business.However,we cannot assure you that the endorsement from our brand ambassadors or related advertisements will remain effective,that the brand ambassadors will remain popular or their i

287、mages will remain positive and compatible with the messages that our brand and products aim to convey.Furthermore,we cannot assure you that we can successfully find suitable celebrities to replace any of our existing brand ambassadors if any of their popularities decline or if the existing brand amb

288、assadors are no longer able or suitable to continue the engagement,and termination of such engagements may have a significant impact on our brand images and the promotion or sales of our products.If any of these situations occurs,our business,financial condition and results of operations could be ma

289、terially and adversely affected.We may face greater risk of doubtful accounts as our business increases in scale.We provide credit terms to our merchant customers,and also extend credit to our users by making payments on behalf of them when they book travel products on our platform.Our accounts rece

290、ivable and other receivable have increased as our business grows.We cannot assure you that we will be able to collect payment fully and in a timely manner on our outstanding receivables from our merchant customers and users.As a result,we may face a greater risk of non-payment of our receivables and

291、,as our business grows in scale,we may need to make higher provisions for doubtful accounts.For the years 2015,2016 and 2017,we recognized the provisions for accounts receivables of approximately RMB32 million,RMB32 million,and RMB98 million(US$15 million),respectively,while the provisions for other

292、 receivable were immaterial.Our operating results and financial condition may be materially and adversely affected if we are unable to successfully manage our receivables.19Table of ContentsOur accounting treatment for share-based compensation could continue to significantly reduce our net income.Si

293、nce 2006,we have accounted for share-based compensation in accordance with ASC 718“Compensation Stock Compensation,”or ASC 718,which requires a public company to recognize,as an expense,the fair value of share options and other share-based compensation to employees based on the requisite service per

294、iod of the share-based awards.We have granted share-based compensation awards,including share options and restricted share units,to employees,officers and directors to incentivize performance and align their interests with ours.See“Item 6.B.Directors,Senior Management and Employees Compensation Empl

295、oyees Share Incentive Plans.”As a result of the grants and potential future grants under our share incentive plans,we had incurred in the past and expect to continue to incur in future periods significant share-based compensation expenses.The amount of these expenses is based on the fair value of th

296、e share-based awards.Our board of directors has the discretion to change terms of any previously issued share options and any such change may significantly increase the amount of our share-based compensation expenses for the period that the change takes effect as well as those for any future periods

297、.In February 2009,our board of directors approved to reduce the exercise price of all outstanding unvested options that were granted by us in 2007 and 2008 under our 2007 Plan to the then fair market value of our ordinary shares underlying such options and,in December 2009,our board of directors app

298、roved to extend the expiration dates of all stock options granted in 2005 and 2006 to eight years after the respective original grant dates of these options.As a result of such changes,our share-based compensation expense of 2009 reduced our diluted earnings per ADS by US$0.14.In February 2010,our c

299、ompensation committee approved to extend the expiration dates of all stock options granted in and after 2007 to eight years after the respective original grant dates of these options.As a result of such changes and extensions,our share-based compensation expense of 2010 reduced our diluted earnings

300、per ADS by US$0.06.In addition,with such changes and extensions,the application of ASC 718 will continue to have a significant impact on our net income.Further,future changes to various assumptions used to determine the fair value of awards issued or the amount and type of equity awards granted may

301、also create uncertainty as to the amount of future share-based compensation expense.Changes in accounting standards may affect the results of our operations.We are required to adopt new accounting standards under FASB from time to time.Certain new accounting standards may impose significant differen

302、t accounting treatments on certain line items on our consolidated financial statements,which could result in unexpected changes to our results of operation.For example,in May 2014,the FASB issued a new accounting standard on the recognition of revenue generated from contracts with customers that was

303、 designed to create greater comparability for financial statement users across industries and jurisdictions.The core principle of this new standard is that an“entity recognizes revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to w

304、hich the entity expects to be entitled in exchange for those goods or services.”We adopted this new standard,effective from January 1,2018,and applied the full retrospective transition approach to all contracts,which means that the financial statements were retrospectively adjusted.Financial stateme

305、nts of 2018 will be reported under this new standard.We do not expect that the new standard will change the presentation of the majority of our revenues on a net basis.However,the timing of revenue recognition for certain revenue streams will change under this new standard.For example,revenue for ac

306、commodation reservation services,which is primarily recognized after end users having completed their stays under the current standard,will change to be recognized once the reservation made becomes non-cancellable.In January 2016,the FASB issued ASU No.2016-01,Recognition and Measurement of Financia

307、l Assets and Financial Liabilities.This accounting standard retains the current accounting for classifying and measuring investments in debt securities and loans,but requires equity investments to be measured at a fair value with subsequent changes recognized in net income,except for those accounted

308、 for under the equity method or requiring consolidation.This guidance also changes the accounting for investments without a readily determinable fair value and those do not qualify for the practical expedient to estimate a fair value.A policy election can be made for these investments whereby invest

309、ment will be carried at cost and adjusted in subsequent periods for any impairment or changes in observable prices of identical or similar investments.This revised guidance is effective from the fiscal years beginning after December 15,2017,including interim periods within those fiscal years.We appl

310、ied the new standard beginning on January 1,2018 and recognize the changes in fair value for all equity investments measured at fair value through net income/(loss).For investments in equity securities that lack readily determinable fair values,we will elect to use the alternative measurement define

311、d as cost,less impairments,adjusted by observable price changes.We anticipate that the adoption of ASU 2016-01 will increase the volatility of its other income/(expense),net,as a result of the remeasurement of its equity securities upon the occurrence of observable price changes and impairments.For

312、further details,see“Item 5.A.Operating and Financial Review and Prospects Operating Results Critical Accounting Policy.”As a result of changes in accounting standards,our results of operations may be adversely affected.Failure to maintain effective internal control over financial reporting could res

313、ult in errors in our published financial statements,which in turn could have a material adverse effect on the trading price of our ADSs.We are subject to the reporting obligations under the U.S.securities laws.As required under Section 404 of the Sarbanes-Oxley Act of 2002,the SEC has adopted rules

314、requiring public companies to include a report of management on the effectiveness of such companies internal control over financial reporting in its annual report.In addition,an independent registered public accounting firm for a public company must issue an attestation report on the effectiveness o

315、f the companys internal control over financial reporting.Our management conducted an evaluation of the effectiveness of our internal control over financial reporting and concluded that our internal control over financial reporting was effective as of December 31,2017.In addition,our independent regi

316、stered public accounting firm attested the effectiveness of our internal control and reported that our internal control over financial reporting was effective as of December 31,2017.If we fail to maintain the effectiveness of our internal control over financial reporting,we may not be able to conclu

317、de on an ongoing basis that we have effective internal control over financial reporting in accordance with the Sarbanes-Oxley Act.Moreover,effective internal control over financial reporting is necessary for us to produce reliable financial reports.As a result,any failure to maintain effective inter

318、nal control over financial reporting could result in the loss of investor confidence in the reliability of our financial statements,which in turn could negatively impact the trading price of our ADSs.Furthermore,we may need to incur additional costs and use additional management and other resources

319、in an effort to comply with Section 404 of the Sarbanes-Oxley Act and other requirements going forward.20Table of ContentsWe may need additional capital and we may not be able to obtain it.We believe that our current cash and cash equivalents,short-term investments,cash flow from operations and proc

320、eeds from our financing activities will be sufficient to meet our anticipated cash needs for the foreseeable future.We may,however,require additional cash resources due to changed business conditions or other future developments,including any investments or acquisitions we may decide to pursue.If th

321、ese resources are insufficient to satisfy our cash requirements,we may seek to sell additional equity or debt securities or obtain a credit facility.The sale of additional equity securities could result in additional dilution to our shareholders.The incurrence of indebtedness would result in increas

322、ed debt service obligations and could result in operating and financing covenants that would restrict our operations.We cannot assure you that financing will be available in amounts or on terms acceptable to us,if at all.In particular,the recent financial turmoil affecting the financial markets and

323、banking system may significantly restrict our ability to obtain financing in the capital markets or from financial institutions on commercially reasonable terms,or at all.Risks Related to Our Corporate StructurePRC laws and regulations restrict foreign investment in the air-ticketing,travel agency a

324、nd value-added telecommunications businesses,and substantial uncertainties exist with respect to the application and implementation of PRC laws and regulations.We are a Cayman Islands incorporated company and a foreign person under PRC law.Due to foreign ownership restrictions in the air-ticketing,t

325、ravel agency and value-added telecommunications industries,we conduct part of our business through contractual arrangements with our consolidated affiliated Chinese entities.These entities hold the licenses and approvals that are essential for our business operations.In the opinion of our PRC counse

326、l,Commerce&Finance Law Offices,our current ownership structure,the ownership structure of our subsidiaries and our consolidated affiliated Chinese entities,the contractual arrangements among us,our subsidiaries,our consolidated affiliated Chinese entities and their shareholders,as described in this

327、annual report,are in compliance with existing PRC laws,rules and regulations.There are,however,substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations.Accordingly,we cannot assure you that PRC government authorities will not ultimately tak

328、e a view contrary to the opinion of our PRC legal counsel due to the lack of official interpretation and clear guidance.If we and our consolidated affiliated Chinese entities are found to be in violation of any existing or future PRC laws or regulations,the relevant governmental authorities would ha

329、ve broad discretion in dealing with such violation,including,without limitation,levying fines,confiscating our income or the income of our consolidated affiliated Chinese entities,revoking our business licenses or the business licenses of our consolidated affiliated Chinese entities,requiring us and

330、 our consolidated affiliated Chinese entities to restructure our ownership structure or operations and requiring us or our consolidated affiliated Chinese entities to discontinue any portion or all of our value-added telecommunications,air-ticketing or travel agency businesses.In particular,if the P

331、RC government authorities impose penalties which cause us to lose our rights to direct the activities of and receive economic benefits from our consolidated affiliated Chinese entities,we may lose the ability to consolidate and reflect in our financial statements the operation results of our consoli

332、dated affiliated Chinese entities.Any of these actions could cause significant disruption to our business operations,and may materially and adversely affect our business,financial condition and results of operations.21Table of ContentsAccording to the PRC Property Rights Law,effective as of October

333、1,2007,and the Measures for the Registration of Equity Pledge with the PRC State Administration for Industry and Commerce(2016 Revision),effective as of April 29,2016,the effectiveness of the pledges will be denied if the pledges are not registered with the PRC State Administration for Industry and Commerce,or SAIC.Our equity pledges have been duly registered with the relevant local branches of SA