• Key Excerpts
  • VIE Structure
  • VIE Risks
  • VIE Revenue
  1. Mr. Jinsong Zhu, a vice president of our company and the chief technology officer of CIG, holds 100% equity interests in Beijing Xinbao.
  2. BBIT, Bin Li and Weihai Qu hold 78.7%, 7.9% and 2.0% equity interests in CIG, respectively. Other four limited partnerships and one third party investor hold the remaining equity interests of 11.4%.
  3. Bin Li and Weihai Qu hold 80% and 20% equity interests in BBIT, respectively.
  4. Bin Li and Weihai Qu hold 80% and 20% equity interests in BEAM, respectively.
  5. Beijing Runlin Automobile and Technology Company Limited is 51% owned by BBIT and 49% owned by an entity unrelated to us.
  6. Target Net (Beijing) Technology Company Limited is 51% owned by BBIT and 49% owned by individuals unrelated to us.
  7. Each of Tencent, JD.com and Baidu holds 24.9%, 14.2% and 3.9% equity interests on a fully diluted basis in Yixin Capital, respectively. Other third-party investors hold the remaining equity interests.
  8. Bin Li, Shenzhen Tencent Industry Investment Fund Co., Ltd., Beijing Jiasheng Investment Management Co., Ltd. hold 55.7%, 26.6% and 17.7% equity interests in Beijing Yixin, respectively.
  9. Bitauto Hong Kong Limited holds 74.8% equity interests on a fully diluted basis in KKC Holdings Limited. Other third-party shareholders hold the remaining equity interests.
  10. Cai Bo, Wei Zheng and Yi Zheng hold 9.1%, 84.4% and 6.5% equity interests in Beijing Kankanche Information Technology Limited, respectively.

Key excerpts from filing(s) - related to VIEs

PRC law currently limits foreign ownership of companies that provide internet content services in China up to 50%. Foreign and wholly foreign-owned enterprises are currently restricted from providing other internet information services, such as internet advertising and financing. Our wholly foreign-owned PRC subsidiaries are currently not eligible to apply for the required licenses for providing internet content services in China.
As such, we conduct our business through contractual arrangements with our variable interest entities (including their subsidiaries) in China, including Beijing Bitauto Information Technology Company Limited, or BBIT, Beijing C&I Advertising Company Limited, or CIG, and Beijing Yixin Information Technology Company Limited, or Beijing Yixin. Each of the variable interest entities is currently owned by shareholders who are PRC citizens or PRC entities and the relevant variable interest entities hold the requisite licenses or permits to provide internet content or advertising services in China.
We rely on and expect to continue to rely on contractual arrangements with our variable interest entities in China and their respective shareholders to operate our internet content and advertising services business.
Our variable interest entities contributed RMB2.61 billion, RMB4.15 billion and RMB4.39 billion (US$632.2 million), representing 99.6%, 97.6% and 76.0%, respectively, of our total revenues in 2014, 2015 and 2016.
Conflicts of interest may arise between the dual roles of those individuals who are both minority shareholders, directors and executive officers of our company and shareholders of our variable interest entities.
For example, Mr. Bin Li, our chairman of the board of directors and chief executive officer, and Mr. Weihai Qu, our senior vice president are the shareholders of some of our variable interest entities including BBIT and CIG. For these directors and executive officers, their fiduciary duties toward our company under Cayman law—to act honestly, in good faith and with a view to our best interests—may conflict with their roles in our variable interest entities, as what is in the best interest of our variable interest entities may not be in the best interests of our company. In comparison, Mr. Li and Mr. Qu each only hold a minority interest in us.

Risks identified in filing(s) - related to VIEs

If the PRC government finds that the agreements that establish the structure for operating our businesses in China do not comply with applicable PRC governmental restrictions on foreign investment in internet content and marketing services, or if these regulations or the interpretation of existing regulations change in the future, we could be subject to severe penalties or be forced to relinquish our interests in those operations.
We rely on contractual arrangements with our variable interest entities in China, and their shareholders, for our business operations, which may not be as effective in providing operational control or enabling us to derive economic benefits as through ownership of controlling equity interest.
Our ability to enforce the share pledge agreements between us and the variable interest entities' shareholders may be subject to limitations based on PRC laws and regulations.
The shareholders of our variable interest entities may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.
Contractual arrangements with the variable interest entities may be subject to scrutiny by the PRC tax authorities and may result in a finding that we and the variable interest entities owe additional taxes or are ineligible for tax exemption, or both, which could substantially increase our taxes owed and thereby reduce our net income.
We may have exposure to greater than anticipated tax liabilities.
We may rely on dividends and other distributions on equity paid by our wholly owned subsidiaries to fund any cash and financing requirements we may have, and any limitation on the ability of our subsidiaries to pay dividends to us could have a material adverse effect on our ability to conduct our business.
If our PRC subsidiaries or variable interest entities become the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy substantially all of our assets, which could reduce the size of our operations and materially and adversely affect our business, ability to generate revenues and the market price of our ADSs.
Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of the draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.
Year Total Revenue VIEs Revenue Contribution of VIEs %
RMB (in millions)
2014 2,617 2,609 99.69%
2015 4,254 4,154 97.65%
2016 5,773 4,389 76.03%

Ownership and Voting power details

Related Blog Entries

Source(s)