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United States securities and exchange commission logo
July 19, 2022
Rong Luo
Chief Financial Officer
Baidu, Inc.
Baidu Campus
No. 10 Shangdi 10th Street
dian District, Beijing 100085
The People s Republic of China
Re: Baidu, Inc.
Form 20-F for the
Year Ended December 31, 2021
Filed March 28,
2022
File No. 000-51469
Dear Mr. Luo:
We have limited our review of your filing to the financial
statements and related
disclosures and have the following comments. In some of our comments, we
may ask you to
provide us with information so we may better understand your disclosure.
Please respond to these comments within ten business days by
providing the requested
information or advise us as soon as possible when you will respond. If
you do not believe our
comments apply to your facts and circumstances, please tell us why in
your response.
After reviewing your
response to these comments, we may have additional comments.
Form 20-F for the Year Ended December 31, 2021
Introduction
"China" or "PRC", page 1
1. You define China or PRC
to exclude Hong Kong and Macau. Please revise this definition
to remove these
exclusions. Additionally, please ensure that your disclosure makes it
clear that all the
legal and operational risks associated with being based in and having
operations in the PRC
also apply to operations in Hong Kong.
Introduction
"our Company", page 1
2. Additionally, revise
your definition of "our Company" to indicate that Baidu Inc. is not a
Rong Luo
FirstName
Baidu, Inc. LastNameRong Luo
Comapany
July NameBaidu, Inc.
19, 2022
July 19,
Page 2 2022 Page 2
FirstName LastName
Chinese operating company but a Cayman Islands holding company with
operations
conducted by your subsidiaries and through contractual arrangements
with variable
interests based in China and that this structure entails unique risks
to investors. Provide
cross-references to such risks which you cite at Item 3. Key
Information D. Risk
Factors Risks Relating to Doing Business in China."
Introduction
"we," "us," "our" or "Baidu", page 1
3. Please revise your definition of we, us, our, or
Baidu as well as "our
Company" to clarify what is meant by "consolidated affiliated entities
in China." Identify
all consolidated affiliated entities by name and indicate that you
refer to them elsewhere in
the filing as variable interest entities. Cross reference hereunder to
the diagram found on
page 134 illustrating your corporate structure, including your
principal subsidiaries and
the variable interest entities which you consolidate. Further explain
that you do not have
any equity ownership in such entities but rather include them in your
consolidated
financial statements based solely on contractual arrangements. Also,
refrain from using
terms such as our when describing activities or functions of the
VIEs. In this regard, we
note numerous references to "our variable interest entities" (page
199) and "our
consolidated affiliated entities" throughout the filing.
Item 3. Key Information
Our Corporate Structure and Contractual Arrangements with our Consolidated
Affiliated
Entities, page 3
4. Please refrain from implying that the contractual agreements are
equivalent to equity
ownership in the business of the VIE. Although you state the
"contractual
arrangements may not be as effective in providing control over these
entities as direct
ownership," you state nevertheless that the contractual arrangements
enable you to
"exercise effective control" over your consolidated affiliated
entities. You also
mention hereunder and elsewhere in your filing outside the financial
statements the
"economic benefits" that you receive from these arrangements. Any
references to control
or benefits that accrue to you because of the variable interest
entities should be limited to
a clear description of the conditions that you have satisfied for
consolidation of the VIEs
under US GAAP. Additionally, your disclosure should clarify that you
are the primary
beneficiary of the VIEs for accounting purposes, which is not akin to
a parent-subsidiary
relationship. Accordingly, please remove any analogy to a
parent-subsidiary relationship
between your Company and the VIEs. We note your statements on page
139.
Item 3. Key Information
A. Selected Financial Data
Financial Information Related to the Consolidated Affiliated Entities, page 9
5. We note your statement on page 139 that your company/iQIYI is
determined to be the
Rong Luo
FirstName
Baidu, Inc. LastNameRong Luo
Comapany
July NameBaidu, Inc.
19, 2022
July 19,
Page 3 2022 Page 3
FirstName LastName
primary beneficiary of these affiliated entities. Please revise
your presentation of your
condensed consolidating schedules of financial performance, financial
position and cash
flows as of the dates presented so that the primary beneficiary is
disaggregated and
transparent.
Additionally, since you do not hold any equity in the consolidated
affiliated entities,
please characterize your respective economic interest in such entities
as a receivable on
the condensed consolidated balance sheets (pages 10-11) instead of an
investment.
Item 4. Information on the Company
C. Organizational Structure, page 134
6. You also state on page 139 that you entered into contractual
arrangements with several
other affiliated entities and their respective nominee shareholders,
including iQIYI s
affiliated entities and their respective nominee shareholders, through
some of your
subsidiaries other than Baidu Online and Beijing QIYI Century. Please
identify these
other affiliated entities and subsidiaries with which they are
affiliated and include them on
the list hereunder.
Item 5. Operating and Financial Review and Prospects
A. Operating Results
Overview, page 140
7. Please briefly discuss how the Foreign Investment Law could materially
affect, directly or
indirectly, your operations, organizational structures, activities,
and how it would cause
reported financial information not to be necessarily indicative of
future operating results
or future financial condition, should the VIE contractual arrangements
be deemed as a
form of foreign investment. Refer to Instruction 9 to Item 303(b) of
Regulation S-K.
Notes to the Consolidated Financial Statements
1. Organization and Basis of Presentation
Equity Pledge Agreement, page F-18
8. We note the opinion of your legal counsel regarding the VIEs. Please
qualify your
statement to make clear, if true, that your basis for consolidation of
the variable interest
entities was premised on prior WFOE regulations governing the VIE
contractual
arrangements which are now subject to further guidance and
interpretation under the
recently enacted Foreign Investment Law. Further disclose that there
is uncertainty
regarding the interpretation of the Foreign Investment Law with
respect to VIE
contractual arrangements as a form of foreign investment which could
impact your
accounting treatment and organizational structures in the future.
In closing, we remind you that the company and its management are
responsible for the
accuracy and adequacy of their disclosures, notwithstanding any review,
comments, action or
absence of action by the staff.
Rong Luo
Baidu, Inc.
July 19, 2022
Page 4
You may contact Kathryn Jacobson, Senior Staff Accountant at (202)
551-3365 or Robert
Littlepage, Accountant Branch Chief at (202) 551-3361 with any questions.
Sincerely,
FirstName LastNameRong Luo
Division of
Corporation Finance
Comapany NameBaidu, Inc.
Office of Technology
July 19, 2022 Page 4
cc: Shu Du (Skadden)
FirstName LastName