百度招股说明书

F-11df1.htmFORMF-1TableofContentsAsfiledwiththeSecuritiesandExchangeCommissiononJuly12,2005RegistrationNo.333-

SECURITIESANDEXCHANGECOMMISSIONWASHINGTON,D.C.20549FORMF-1REGISTRATIONSTATEMENTUNDERTHESECURITIESACTOF1933BAIDU.COM,INC.(ExactnameofRegistrantasspecifiedinitscharter)NotApplicable(TranslationofRegistrant’snameintoEnglish)CaymanIslands

7370

NotApplicable(Stateorotherjurisdictionofincorporationororganization)

(PrimaryStandardIndustrialClassificationCodeNumber)

(I.R.S.EmployerIdentificationNumber)12/F,IdealInternationalPlazaNo.58West-North4thRingBeijing100080,People’sRepublicofChina(8610)8262-1188(Address,includingzipcode,andtelephonenumber,includingareacode,ofRegistrant’sprincipalexecutiveoffices)CTCorporationSystem111EighthAvenueNewYork,NewYork10011(212)664-1666(Name,address,includingzipcode,andtelephonenumber,includingareacode,ofagentforservice)Copiesto:DavidT.Zhang,Esq.Latham&WatkinsLLP41stFloor,OneExchangeSquare8ConnaughtPlaceCentral,HongKongS.A.R.People’sRepublicofChina(852)2522-7886

WilliamF.Barron,Esq.AlanF.Denenberg,Esq.DavisPolk&Wardwell18thFloor,TheHongKongClubBuilding3AChaterRoadCentral,HongKongS.A.R.People’sRepublicofChina(852)2533-3300Approximatedateofcommencementofproposedsaletothepublic:IfanyofthesecuritiesbeingregisteredonthisFormaretobeofferedonadelayedorcontinuousbasispursuanttoRule415undertheSecuritiesActof1933,checkthefollowingbox.IfthisFormisfiledtoregisteradditionalsecuritiesforanofferingpursuanttoRule462(b)undertheSecuritiesAct,pleasecheckthefollowingboxandlisttheSecuritiesActregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.

IfthisFormisapost-effectiveamendmentfiledpursuanttoRule462(c)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesActregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.

IfthisFormisapost-effectiveamendmentfiledpursuanttoRule462(d)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesActregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.

IfdeliveryoftheprospectusisexpectedtobemadepursuanttoRule434,checkthefollowingbox.CALCULATIONOFREGISTRATIONFEETitleofeachclassofsecuritiestoberegistered

Proposed

maximum

aggregateoffering

price

(1)(2)

Amount

of

registration

feeClassAOrdinaryShares,parvalueUS$0.00005pershare(3)

US$80,000,000

US$9,416(1)EstimatedsolelyforthepurposeofdeterminingtheamountofregistrationfeeinaccordancewithRule457(o)undertheSecuritiesActof1933.(2)IncludesClassAordinarysharesinitiallyofferedandsoldoutsidetheUnitedStatesthatmayberesoldfromtimetotimeintheUnitedStateseitheraspartoftheirdistributionorwithin40daysafterthelateroftheeffectivedateofthisregistrationstatementandthedatethesharesarefirstbonafideofferedtothepublic,andalsoincludesClassAordinarysharesthatmaybepurchasedbytheunderwriterspursuanttoanover-allotmentoption.TheseClassAordinarysharesarenotbeingregisteredforthepurposeofsalesoutsidetheUnitedStates.(3)AmericandepositarysharesissuableupondepositoftheClassAordinarysharesregisteredherebywillberegisteredunderaseparateregistrationstatementonFormF-6(RegistrationNo.333-

).EachAmericandepositarysharerepresentsoneClassAordinaryshare.TheRegistrantherebyamendsthisRegistrationStatementonsuchdateordatesasmaybenecessarytodelayitseffectivedateuntiltheRegistrantshallfileafurtheramendmentwhichspecificallystatesthatthisRegistrationStatementshallthereafterbecomeeffectiveinaccordancewithSection8(a)oftheSecuritiesActof1933,asamended,oruntiltheRegistrationStatementshallbecomeeffectiveonsuchdateastheSecuritiesandExchangeCommission,actingpursuanttosuchSection8(a),maydetermine.TableofContentsTheinformationinthisprospectusisnotcompleteandmaybechanged.NeitherwenorthesellingshareholdersmaysellthesesecuritiesuntiltheregistrationstatementfiledwiththeSecuritiesandExchangeCommissioniseffective.Thisprospectusisnotanoffertosellthesesecuritiesandwearenotsolicitingofferstobuythesesecuritiesinanyjurisdictionwheretheofferorsaleisnotpermitted.

SubjecttoCompletion.Dated

,2005.

AmericanDepositarySharesRepresenting

ClassAOrdinaryShares

ThisisaninitialpublicofferingofAmericandepositaryshares,orADSs,ofB,Inc.,orBaidu.Baiduisoffering

ADSs,andthesellingshareholdersdisclosedinthisprospectusareofferinganadditional

ADSs.EachADSrepresentsoneClassAordinaryshare.TheADSsareevidencedbyAmericandepositaryreceipts,orADRs.WeanticipatethattheinitialpublicofferingpricewillbebetweenUS$

andUS$

perADS.

Priortothisoffering,therehasbeennopublicmarketfortheADSsortheshares.WehaveappliedtohavetheADSsquotedontheNasdaqNationalMarketunderthesymbol“BIDU.”

See“RiskFactors”beginningonpage10toreadaboutrisksyoushouldconsiderbeforebuyingtheADSs.

NeithertheUnitedStatesSecuritiesandExchangeCommissionnoranyotherregulatorybodyhasapprovedordisapprovedofthesesecuritiesorpassedupontheaccuracyoradequacyofthisprospectus.Anyrepresentationtothecontraryisacriminaloffense.

Per

ADS

Total

Initialpublicofferingprice

US$

US$

Underwritingdiscount

US$

US$

Proceeds,beforeexpenses,toBaidu

US$

US$

Proceeds,beforeexpenses,tothesellingshareholders

US$

US$

Theunderwritershaveanoptiontopurchaseuptoanadditional

ADSsfromBaiduandanadditional

ADSsfromthesellingshareholdersattheinitialpublicofferingpricelesstheunderwritingdiscount.

TheunderwritersexpecttodelivertheADSsevidencedbytheADRsagainstpaymentinU.S.dollarsinNewYork,NewYorkon

,2005.

GoldmanSachs(Asia)L.L.C.

CreditSuisseFirstBoston

PiperJaffray

Prospectusdated

,2005.TableofContents[Pageintentionallyleftblankforgraphics]TableofContentsTABLEOFCONTENTS

PageProspectusSummary

1RiskFactors

10Forward-LookingStatements

34UseofProceeds

35DividendPolicy

37Capitalization

38Dilution

39ExchangeRateInformation

40EnforceabilityofCivilLiabilities

41CorporateStructure

43SelectedConsolidatedFinancialData

47Management’sDiscussionandAnalysisofFinancialConditionandResultsofOperations

49Business

78Regulation

93Management

99PrincipalandSellingShareholders

108RelatedPartyTransactions

111DescriptionofShareCapital

113DescriptionofAmericanDepositaryShares

119SharesEligibleforFutureSale

125Taxation

128Underwriting

133ExpensesRelatingtoThisOffering

138LegalMatters

139Experts

139WhereYouCanFindAdditionalInformation

140ConventionsThatApplytoThisProspectus

141IndextoConsolidatedFinancialStatements

F-1

Nodealer,salespersonorotherpersonisauthorizedtogiveanyinformationortorepresentanythingnotcontainedinthisprospectus.Youmustnotrelyonanyunauthorizedinformationorrepresentations.ThisprospectusisanoffertosellonlytheADSsofferedhereby,butonlyundercircumstancesandinjurisdictionswhereitislawfultodoso.Theinformationinthisprospectusiscurrentonlyasofthedateofthisprospectus.

Inconnectionwiththisoffering,GoldmanSachs(Asia)L.L.C.,CreditSuisseFirstBostonLLCoranypersonactingforeitherofthemmayover-allotoreffecttransactionswithaviewtosupportingthemarketpriceoftheADSsatalevelhigherthanthatwhichmightotherwiseprevailforalimitedperiodoftimeaftertheissuedate.However,thereisnoobligationonGoldmanSachs(Asia)L.L.C.,CreditSuisseFirstBostonLLCortheirrespectiveagenttodothis.Suchstabilization,ifcommenced,maybediscontinuedatanytime,andmustbebroughttoanendafteralimitedperiod.

ThisprospectuscontainstranslationsofcertainRMBamountsintoU.S.dollarsatspecifiedratessolelyfortheconvenienceofthereader.Unlessotherwisenoted,alltranslationsfromRMBtoU.S.dollarsweremadeatthenoonbuyingrateinTheCityofNewYorkforcabletransfersinRMBperU.S.dollarascertifiedforcustomspurposesbytheFederalReserveBankofNewYork,orthenoonbuyingrate,asofJune30,2005,whichwasRMB8.2765toUS$1.00.WemakenorepresentationthatRMBorU.S.dollaramountsreferredtointhisprospectuscouldhavebeenorcouldbeconvertedintoU.S.dollarsorRMB,asthecasemaybe,atanyparticularrateoratall.OnJuly11,2005,thenoonbuyingratewasRMB8.2765toUS$1.00.

iTableofContentsPROSPECTUSSUMMARY

Thefollowingsummaryisqualifiedinitsentiretyby,andshouldbereadinconjunctionwith,themoredetailedinformationandfinancialstatementsappearingelsewhereinthisprospectus.Inadditiontothissummary,weurgeyoutoreadtheentireprospectuscarefully,especiallytherisksofinvestinginourordinarysharesandADSsdiscussedunder“RiskFactors,”beforedecidingwhethertopurchaseourordinarysharesorADSs.

OurBusiness

WearetheleadingChineselanguageInternetsearchprovider.OursearchenginewasthemostfrequentlyusedsearchengineinChinain2004,accordingtoasurveyconductedbyShanghaiiResearchCo.,Ltd.,oriResearch,amarketresearchfirmspecializinginChina’sInternetindustry.OurBwebsitewasthesecondlargestwebsiteinChinaandthesixthlargestwebsiteglobally,asmeasuredbyusertrafficthatreflectspageviewsandreachduringthethree-monthperiodendedJuly9,2005,accordingtoA.WeofferauniqueChineselanguagesearchplatformforbothusersandcustomers.OurplatformconsistsofourwebsitesandBaiduUnion,whichisournetworkofthird-partywebsites.

OurservicesaredesignedtoenableInternetsearchuserstofindrelevantinformationonline,includingChineselanguagewebpages,news,imagesandmultimediafiles,throughlinksprovidedonourwebsites.Weprovideouruserswitheasyaccesstoanindexofover690millionwebpages,80millionimagesand10millionmultimediafiles.Wealsoofferaquery-basedonlinecommunity,BaiduPostBar,whichcurrentlyconsistsofover820,000messageboards.

Ourauction-basedpay-for-performance,orP4P,servicesenableourcustomerstobidforpriorityplacementoftheirlinksinkeywordsearchresults.Webelievewewerethefirstauction-basedP4PserviceproviderinChina.Ouronlineadvertisingservicesallowcustomerstousebothquerysensitiveandnon-querysensitiveadvertisingservices,includingtextlinks,graphicaladvertisementsandotherformsofonlineadvertising.WedesignanddeliverourservicestoourP4Pandtailoredsolutionscustomersbasedontheironlinemarketingrequirements.OurP4Pcustomersarethosewhoprimarilyuseourauction-basedP4Pservices,andourtailoredsolutionscustomersarethosetowhomweprovidemarketingsolutions,whichmayconsistofoneormoreformsofouronlineadvertisingservicesaswellasP4Pservices.In2004,wehadover34,600onlinemarketingcustomers.

FoundedinJanuary2000,welaunchedInternetsearchservicesonourBwebsiteandbegangeneratingrevenuesfromP4PservicesinSeptember2001.WebeganofferingotheronlinemarketingservicesinJuly2003.Wehavegrownsignificantlysincewecommencedoperations.OurtotalnetrevenuesincreasedfromRMB10.5millionin2002toRMB110.9million(US$13.4million)in2004,representingacompoundannualgrowthrate,orCAGR,of224.6%.InthethreemonthsendedMarch31,2005,wegeneratedtotalnetrevenuesofRMB42.6million(US$5.2million).

OurIndustry

TheInternetsearchindustryinChinaisevolvingrapidlyasanincreasingnumberofpeopleseekinformation,productsandservicesviatheInternet.AccordingtoiResearch,thenumberofInternetsearchusersinChinaisprojectedtogrowfrom115millionin2005to187millionin2007,representingaCAGRof27.5%.WiththegrowthofInternetusageandtherapiddevelopmentofChina’sInternetsearchmarket,onlinemarketinghasbecomemorewidelyadopted.Accordingtoa2003reportpublishedbyIDC,aleadingmarketresearchfirm,totalonlinemarketingrevenuesinChinawouldamounttoapproximatelyUS$130millionin2004.ThepaidsearchmarketisexpectedtobethefastestgrowingsegmentofonlinemarketingintheAsiaPacificregion(excludingJapan)through2007.

1TableofContentsChina’sInternetsearchindustrypresentsuniquechallengesandopportunities.ChineselanguagesearchenginesmustaddresstheneedsofInternetusersinChina,whogenerallysearchonlineforabroadvarietyofinformation,includingChineselanguagewebpages,news,multimediafilesandimages.ChineselanguagesearchenginesmustalsodevelopspeciallanguageprocessingtechnologiestogeneraterelevantresultsduetothecomplexitiesassociatedwiththeChineselanguageandChinesekeywordsearches.Moreover,Chineselanguagesearchenginesprovidingpaidsearchservicesmustdevelopaneffectivedistributionnetworktoacquirecustomers,collectpaymentsandprovidecustomerservicesinceChina’spaidsearchcustomersarelargelycomprisedofabroadandfragmentedbaseofsmalltomedium-sizedenterprises,orSMEs.

OurStrengths,StrategiesandRisks

WebelievethatourleadingpositioninChinaisprimarilyattributabletothefollowingstrengths:

•

largestChineselanguagesearchaudienceasmeasuredbyusertraffic;

•

firstP4PserviceproviderinChinawithanextensivecustomerbaseacrossindustries;

•

oneofthemostwidelyrecognizedInternetsearchbrandsinChina,enhancingourabilitytoattractbothusersandcustomers;

•

localmarketexperienceandexpertiseinintroducingandexpandingourservicesacrossChinaandoperatinginChina’srapidlyevolvingInternetindustry;

•

leadingtechnologywithaprovenplatformprovidinguserswithrelevantsearchresultsandcustomerswithacost-effectivewaytoreachpotentialconsumers;and

•

extensiveandeffectivenationwidenetworkofover200regionaldistributors,providinghigh-qualityandconsistentcustomerservices.

OurgoalistobecomeaplatformthatprovidesInternetuserswiththebestwaytofindinformationandallowsbusinessestoreachabroadbaseofpotentialcustomers.Weintendtoachieveourgoalbyimplementingthefollowingstrategies:

•

enhancinguserexperienceandincreasingtrafficthroughthedevelopmentandintroductionofnewsearch-relatedfeaturesandfunctions;

•

growingouronlinemarketingbusinessbyattractingpotentialcustomersandincreasingper-customerspendingonourservices;

•

expandingBaiduUnionbyleveragingourbrandandofferingcompetitiveeconomicarrangementstoBaiduUnionmembers;and

•

pursuingselectivestrategicacquisitionsandalliancesthatwillallowustoincreaseusertraffic,enlargeourcustomerbase,expandourproductofferingsandreducecustomeracquisitioncosts.

Thesuccessfulexecutionofourstrategiesissubjecttocertainrisksanduncertainties,includingourabilityto:

•

maintainourleadingpositionintheInternetsearchindustryinChina;

2TableofContents

•

offernewandinnovativeproductsandservicestoattractandretainalargeruserbase;

•

attractadditionalcustomersandincreaseper-customerspending;

•

increaseawarenessofourbrandandcontinuetodevelopuserandcustomerloyalty;

•

respondtocompetitivemarketconditions;

•

respondtochangesinourregulatoryenvironment;

•

managerisksassociatedwithintellectualpropertyrights;

•

maintaineffectivecontrolofourcostsandexpenses;

•

raisesufficientcapitaltosustainandexpandourbusiness;

•

attract,retainandmotivatequalifiedpersonnel;and

•

upgradeourtechnologytosupportincreasedtrafficandexpandedservices.

Pleasesee“RiskFactors”andotherinformationincludedinthisprospectusforadiscussionoftheserisks.

OurCorporateInformation

WewereincorporatedintheCaymanIslandsinJanuary2000.Sinceourinception,wehaveconductedouroperationsprincipallythroughBaiduOnlineNetworkTechnology(Beijing)Co.,Ltd.,orBaiduOnline,ourwhollyownedsubsidiaryinBeijing,China.Inaddition,wehaveconductedpartofouroperationsthroughBaiduNetcomScienceandTechnologyCo.,Ltd.,orBaiduNetcom,alimitedliabilitycompanyinBeijing,China,whichholdsthelicensesandapprovalsnecessarytooperateourwebsitesandprovideonlineadvertisingservices.See“CorporateStructure”foradescriptionofthecontractualarrangementsamongBaiduOnlineandBaiduNetcomanditsshareholders.InJune2005,weestablishedBaidu(China)Co.,Ltd.,orBaiduChina,awhollyownedsubsidiaryinShanghai,China.WeintendtomanageourbusinessandoperationsinthesouthernpartofChinathroughBaiduChinainthefuture.

Ourprincipalexecutiveofficesarelocatedat12/F,IdealInternationalPlaza,No.58West-North4thRing,Beijing100080,People’sRepublicofChina.Ourtelephonenumberatthisaddressis+86(10)8262-1188.OurregisteredofficeintheCaymanIslandsislocatedatM&CCorporateServicesLimited,P.O.Box309GT,UglandHouse,SouthChurchStreet,GeorgeTown,GrandCayman,CaymanIslands.Ourtelephonenumberatthisaddressis+1(345)949-8066.WealsohaveregionalofficesinShanghaiandShenzhen,PRC.

Investorsshouldsubmitanyinquiriestotheaddressandtelephonenumberofourprincipalexecutiveofficessetforthabove.Bisourwebsiteandtheinformationcontainedonthiswebsiteisnotapartofthisprospectus.OuragentforserviceofprocessintheUnitedStatesisCTCorporationSystem,locatedat111EighthAvenue,NewYork,NewYork10011.

3TableofContentsOurCorporateStructure

PRClawcurrentlylimitsforeignownershipofcompaniesthatprovideInternetcontentandadvertisingservices.Tocomplywiththeseforeignownershiprestrictions,weoperateourwebsitesandprovideonlineadvertisingservicesinChinathroughBaiduNetcom,aPRClimitedliabilitycompanywhollyownedbyourco-founderandchiefexecutiveofficer,RobinYanhongLi,andourco-founder,EricYongXu,bothofwhomarePRCcitizens.BaiduNetcomholdsthelicensesandapprovalsnecessarytooperateourwebsitesandtoprovideonlineadvertisingservicesinChina.WehavecontractualarrangementswithBaiduNetcomanditsshareholderspursuanttowhichweprovidetechnologyconsultingservicesandlicenseourregistereddomainnames,trademarksandcertainsoftwaretoBaiduNetcom.Throughthesecontractualarrangements,wealsohavetheabilitytosubstantiallyinfluenceBaiduNetcom’sdailyoperationsandfinancialaffairs,appointitsseniorexecutivesandapproveallmattersrequiringshareholderapproval.Asaresultofthesecontractualarrangements,whichenableustocontrolBaiduNetcom,weareconsideredtheprimarybeneficiaryofBaiduNetcom.Accordingly,weconsolidateBaiduNetcom’sresults,assetsandliabilitiesinourfinancialstatements.Foradescriptionofthesecontractualarrangements,see“CorporateStructure—ContractualArrangementswithBaiduNetcomanditsShareholders.”

Thefollowingdiagramillustratesourcurrentcorporatestructureandtheplaceofformation,ownershipinterestandaffiliationofeachofoursubsidiariesandBaiduNetcomasofthedateofthisprospectus.

*AlimitedliabilitycompanyincorporatedinthePRC

Equityinterest

Contractualarrangementsincludingbusinesscooperationagreement,operatingagreement,licenseagreements,proxyagreementandexclusivetechnologyconsultingserviceagreement.Foradescriptionoftheseagreements,see“CorporateStructure—ContractualArrangementswithBaiduNetcomanditsShareholders.”

Contractualarrangementsincludingproxyagreement,equitypledgeagreement,optionagreement,operatingagreement,loanagreementandirrevocablepowerofattorney.Foradescriptionoftheseagreements,see“CorporateStructure—ContractualArrangementswithBaiduNetcomanditsShareholders.”

4TableofContentsTheOffering

ThefollowinginformationassumesthattheunderwriterswillnotexercisetheiroptiontopurchaseadditionalADSsintheoffering,unlessotherwiseindicated.

OfferingpriceUS$

perADS

ADSsofferedbyus

ADSs

ADSsofferedbythesellingshareholders

ADSs

ClassAordinarysharesoutstandingimmediatelyafterthisoffering

shares

ClassBordinarysharesoutstandingimmediatelyafterthisoffering

shares

ADSstoClassAordinaryshareratioEachADSrepresentsoneClassAordinaryshare.

ListingWehaveappliedtohavetheADSsquotedontheNasdaqNationalMarketunderthesymbol“BIDU.”TheordinarysharesandtheADSswillnotbelistedonanyotherexchangeortradedonanyotherautomatedquotationsystem.

OrdinarysharesHoldersofClassAordinarysharesandClassBordinaryshareshavethesamerightsexceptforvotingandconversionrights.EachClassAordinaryshareshallbeentitledtoonevoteonallmatterssubjecttoshareholders’vote,andeachClassBordinaryshareshallbeentitledto10votesonallmatterssubjecttoshareholders’vote.EachClassBordinaryshareisconvertibleintooneClassAordinaryshareatanytimebytheholderthereof.ClassAordinarysharesarenotconvertibleintoClassBordinarysharesunderanycircumstances.UponanytransferofClassBordinarysharesbyaholderthereoftoanypersonorentitywhichisnotanaffiliateofsuchholder,suchClassBordinarysharesshallbeautomaticallyandimmediatelyconvertedintotheequalnumberofClassAordinaryshares.

TheADSsTheADSswillbeevidencedbyADRs.

•

ThedepositarywillholdthesharesunderlyingyourADSs.Youwillhaverightsasprovidedinthedepositagreement.

•

Wedonotexpecttopaydividendsintheforeseeablefuture.If,however,wedeclaredividendsonourordinaryshares,thedepositarywillpayyouthecashdividendsandotherdistributionsitreceivesonourClassAordinaryshares,afterdeductingitsfeesandexpenses.

5TableofContents

•

YoumayturninyourADSstothedepositaryinexchangeforClassAordinaryshares.Thedepositarywillchargeyoufeesforanysuchexchange.

•

Wemayamendorterminatethedepositagreementwithoutyourconsent.IfyoucontinuetoholdyourADSs,youagreetobeboundbythedepositagreementasamended.

TobetterunderstandthetermsoftheADSs,youshouldcarefullyreadthe“DescriptionofAmericanDepositaryShares”sectionofthisprospectus.Youshouldalsoreadthedepositagr