<SEC-DOCUMENT>0001104659-23-076626.txt : 20240503
<SEC-HEADER>0001104659-23-076626.hdr.sgml : 20240503
<ACCEPTANCE-DATETIME>20230630061328
<PRIVATE-TO-PUBLIC>
ACCESSION NUMBER:		0001104659-23-076626
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		2
FILED AS OF DATE:		20230630

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			NetEase, Inc.
		CENTRAL INDEX KEY:			0001110646
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-PREPACKAGED SOFTWARE [7372]
		ORGANIZATION NAME:           	06 Technology
		IRS NUMBER:				000000000

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		NETEASE BUILDING, NO. 599 WANGSHANG RD
		STREET 2:		BINJIANG DISTRICT
		CITY:			HANGZHOU
		STATE:			F4
		ZIP:			310052
		BUSINESS PHONE:		86 571 8985-2070

	MAIL ADDRESS:	
		STREET 1:		NETEASE BUILDING, NO. 599 WANGSHANG RD
		STREET 2:		BINJIANG DISTRICT
		CITY:			HANGZHOU
		STATE:			F4
		ZIP:			310052

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NETEASE.COM, INC.
		DATE OF NAME CHANGE:	20040719

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	NETEASE COM INC
		DATE OF NAME CHANGE:	20000330
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    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><FONT STYLE="font-size: 10pt">June&nbsp;</FONT>30, 2023</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B><U>VIA EDGAR</U></B></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">U.S. Securities and Exchange Commission</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Division of Corporation Finance</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Office of Technology</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">100 F Street, NE</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Washington, D.C. 20549</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="width: 4%; padding-bottom: 8pt; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Attn: </FONT></TD>
    <TD STYLE="width: 96%">
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Megan Akst</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Christine Dietz</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Kyle Wiley</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Jennifer Thompson</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P></TD></TR>
  <TR STYLE="vertical-align: top">
    <TD STYLE="padding-bottom: 8pt; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt"><B>Re:</B></FONT></TD>
    <TD>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>NetEase,&nbsp;Inc.</B></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Form&nbsp;20-F for the Fiscal Year Ended December&nbsp;31,
2022 Filed April&nbsp;27, 2023</B></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>Correspondences from the SEC on June&nbsp;5, 2023</B></P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><B>File No.&nbsp;000-30666</B>&nbsp;</P>&nbsp;</TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">Dear Ms.&nbsp;Akst, Ms.&nbsp;Dietz, Mr.&nbsp;Wiley and
Ms.&nbsp;Thompson,</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">This letter sets forth the responses of NetEase,&nbsp;Inc. (the &#8220;Company&#8221;)
to the comments (the &#8220;Comments&#8221;) that the Company received from the staff (the &#8220;Staff&#8221;) of the Securities and
Exchange Commission in a letter dated June&nbsp;5, 2023 (the &#8220;Comment Letter&#8221;) in relation to the Company&#8217;s Form&nbsp;20-F
for the fiscal year ended December&nbsp;31, 2022 (the &#8220;2022 Annual Report&#8221;). We have included the Comments in bold, and the
Company&#8217;s responses are set forth immediately below the Comments.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Form&nbsp;20-F for the Fiscal Year Ended December&nbsp;31, 2022</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"><U>Item 5. Operating and Financial Review and Prospects<BR>
Factors Affecting our Results of Operations, page&nbsp;123</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0; margin-bottom: 0; width: 100%"><TR STYLE="vertical-align: top; text-align: justify">
<TD STYLE="width: 0.25in; text-align: left"><B>1.</B></TD><TD STYLE="text-align: left"><B>You indicate that your ability to grow your user base and
drive user engagement and loyalty is a key factor affecting your results of operations. Considering you generate a substantial portion
of your revenue from mobile game users, please tell us your consideration to quantify and discuss daily active users for each period
presented, or explain why you do not consider this to be a key performance measure in analyzing your revenue. Similarly, in light of
the growth in Cloud Music, tell us your consideration to quantify and discuss monthly average users for each period presented. Refer
to SEC Release No.&nbsp;33-10751.</B></TD>
</TR></TABLE>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><U>Response</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">In response to the Staff&#8217;s comment, the Company respectfully
submits that in preparing its disclosure for Item 5 of the 2022 Annual Report, the Company evaluated which information is necessary to
provide readers with an understanding of the Company&#8217;s online game business, as required in the instructions to Item 5. As discussed
qualitatively in &#8220;Factors Affecting Our Results of Operations&#8221; in the 2022 Annual Report, the overall size and growth of the
user bases for the Company&#8217;s various services and products is one factor that affects its results of operations. However, the Company
determined that quantitative disclosure regarding players of its online games, such as daily active users or monthly average users, from
period to period does not by itself provide a useful explanation of the Company&#8217;s current or future results because there are a
number of additional relevant factors that are not reflected in user numbers, as discussed below.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><FONT STYLE="font-size: 10pt">In particular, the Company
notes that, as disclosed in Item 4 of the </FONT>2022 Annual Report, it offers a very large portfolio of games in distinct genres such
as role-playing games, collectible card games, simulation battles, casual party games, battle arena games and massively multi-player online
role-playing games, and the Company&#8217;s mobile games generate revenues from sales of in-game virtual items. Such sales are, however,
affected by the specific operational characteristics of the games such as, for example, the types of items which are purchasable (as noted
on page&nbsp;72 of the 2022 Annual Report, these items include avatars, skills, privileges and other in-game consumables, features and
functionalities), the pricing and popularity of each virtual item, and the amount of gameplay which is available without the purchase
of virtual items and related factors. Moreover, as further explained in Item 5.A &#8220;Factors Affecting Our Results of Operations&#8221;
in the 2022 Annual Report, the Company&#8217;s results of operations are also affected by the level of user engagement, which in the context
of games primarily refers to the total amount of playing time by users and frequency of purchases of virtual items. Additionally, the
revenues generated from games depend to an extent on the proportion of players who are playing games developed in-house by the Company,
games co-developed with third parties or licensed games.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">While a large and growing user base is a general indication
of the popularity of the Company&#8217;s portfolio of games as a qualitative matter, quantitative disclosure of daily active users or
monthly average users would not take into account the nuances of their purchasing behavior or the other factors mentioned above and could
thus be misleading in that an X% increase in daily active users in Year 1 may not equate to a proportional increase in revenues or net
income in the same or subsequent years. Also, the Company notes the fact that it operates numerous games, the portfolio of games offered
changes from year to year, and the operational characteristics of the different games are too granular to succinctly summarize for readers.
For these reasons, the Company respectfully submits that it does not have a reasonable basis to explain if and to what extent specific
changes in user statistics from year to year may or may not be indicative of past or future financial performance.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">To further explain the factors affecting results from the
Company&#8217;s online game business discussed above, the Company will revise the following subsection in Item 5.A &#8220;Factors Affecting
Our Results of Operations&#8221; in its future Form&nbsp;20-F filings, subject to updates and adjustments to be made in connection with
any material development of the subject matter being disclosed:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 0.5in; background-color: white"><I>Our ability
to grow our user base and drive user engagement and loyalty<U>, as well as the mix of products and services purchased by our users</U></I></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.5in; text-align: left; text-indent: 0.5in; background-color: white">We
have built a massive and highly engaged user base across our business segments. We generate a substantial part of our revenues through
sales of in-game virtual items and play time, merchandise sales, music streaming, advertising services and tuition fees for online courses.
Our ability to generate these revenues is affected by the size of our user base and the level of their engagement<U>, including, for example,
the amount of time played on our games and the frequency of in-game purchases of virtual items</U>. Our ability to continue to grow our
user base and engagement is driven by various factors, including our ability to offer diverse, attractive and relevant content and services,
deliver differentiated and superior user experiences, improve the community features on our platforms and enhance our brand reputation.
<U>In addition, our results are affected by the mix of products and services purchased by our users. For example, with respect to online
games, our revenues depend in part on the types of virtual items purchased in-game and their pricing, as well as the proportion of players
who are playing games developed in-house by the Company, games co-developed with third parties or licensed games.</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.5in; background-color: white">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">The Company further notes that, in contrast to the Company&#8217;s
online game services, its Cloud Music business offers a single music subscription platform so the number of monthly average users more
directly correlates with the financial results of that business and can be more readily determined. Such information is also relatively
comparable across the music streaming industry, and thus it is common for participants in this industry such as Cloud Music to disclose
monthly average users (as opposed to the online game industry where it is not customary in the industry to report detailed user statistics).
Cloud Music&#8217;s monthly average users can be found on page&nbsp;81 of the 2022 Annual Report.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in"><U>Item 16I. Disclosure Regarding
Foreign Jurisdictions that Prevent Inspections, page&nbsp;194</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-indent: -0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"><B>2.</B></TD><TD><B>We note your statement that you reviewed your register of members and public filings made by your shareholders, in connection with
your required submission under paragraph (a). Please supplementally describe any additional materials that were reviewed and tell us whether
you relied upon any legal opinions or third party certifications such as affidavits as the basis for your submission. In your response,
please provide a similarly detailed discussion of the materials reviewed and legal opinions or third party certifications relied upon
in connection with the required disclosures under paragraphs (b)(2)&nbsp;and (3).</B></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><U>Response</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">The Company confirms that it has reviewed the list of holders
of ordinary shares registered on its register of members in the Cayman Islands and its register of members in Hong Kong, as well as the
list of registered holders of American depositary shares of the Company maintained by The Bank of New York Mellon, the depositary bank
for the Company&#8217;s American depositary share program. It also reviewed the public filings made by the Company&#8217;s ADS holders
and shareholders, including filings on Schedule 13D, Schedule 13G and Form&nbsp;13F and pursuant to the beneficial ownership notification
requirements of the Hong Kong Securities and Futures Ordinance with respect to the Company&#8217;s ordinary shares traded on the Hong
Kong Stock Exchange. In reviewing these lists, the Company noted any shareholders which had an address of record in China mainland or
the Cayman Islands, or whose entity names contained the words &#8220;China,&#8221; &#8220;Cayman Islands&#8221; or derivatives thereof
or who appeared to use Chinese words in their names.&nbsp; For this subset of shareholders, the Company compared the names of these shareholders
to known governmental bodies, agencies and entities that are affiliated with any part of the governments in China mainland or the Cayman
Islands and determined that there were no such affiliations known to us.&nbsp; The Company also determined that none of these shareholders
held more than 16,123,802 ordinary shares (or 3,224,760 ADSs), which is equivalent to approximately 0.5% of the Company&#8217;s outstanding
voting interests. The Company further notes that it reviewed the list of participants holding the Company's ordinary shares in the Central
Clearing and Settlement System (CCASS), a book-entry clearing and settlement system for transactions between participants in securities
listed on the Hong Kong Stock Exchange. CCASS participants are banks and brokerages which normally hold shares on behalf of their clients.
As is typical for shares listed in Hong Kong, the list of CCASS participants holding the Company's ordinary shares included several Chinese
state-owned banks, and the Company believes such participants are acting as custodians holding securities on behalf of their clients.
As a follow-up to the Staff's comment, the Company has requested that its Hong Kong share registrar contact the relevant CCASS participants
to attempt to determine if they are holding the ordinary shares on behalf of investors and will provide an update to the Staff if the
results indicate otherwise (but the Hong Kong share registrar will not be able to confirm the identities of the ultimate beneficial owners
of the ordinary shares through this process). As an additional follow-up to the Staff&#8217;s comment, the Company also engaged a third-party
financial services firm to conduct a non-objecting beneficial owner (NOBO) search with respect to the Company&#8217;s American depositary
shareholders and found that, of the more than 91,000 shareholders named on such list, two appear to be affiliated with state-owned entities
which together own American depositary shares representing approximately 0.00007% of the Company&#8217;s total outstanding ordinary shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">In addition, the Company asked each of its directors
or officers whether they are a member of the Chinese Communist Party (the &#8220;CCP&#8221;) or employed by any governmental entity
in China mainland or the Cayman Islands. The Company also asked each of its directors and officers to confirm if they were aware of
any governmental entities in the People&#8217;s Republic of China (including Hong Kong and Macau) <FONT STYLE="font-family: Times New Roman, Times, Serif">or
the Cayman Islands which own any ADSs or ordinary shares of the Company, or if they were aware of any governmental entities in the
People&#8217;s Republic of China (including Hong Kong and Macau) which have a controlling financial interest with respect to the
Company. All of the Company&#8217;s directors and officers responded NO to these questions.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">With respect to its consolidated foreign operating entities,
the Company reviewed the list of record and beneficial owners of each such entity and applied the same procedures described in the preceding
paragraph for purposes of paragraphs (b)(2)&nbsp;and (b)(3)&nbsp;of Item 16I on Form&nbsp;20-F. For its two publicly listed subsidiaries,
Youdao,&nbsp;Inc. and Cloud Music Inc., the Company also reviewed the public filings made by the subsidiaries&#8217; ADS holders and shareholders,
including filings on Schedule 13D, Schedule 13G and Form&nbsp;13F and pursuant to the beneficial ownership notification requirements of
the Hong Kong Securities and Futures Ordinance. In addition, please note that the Company has majority or complete control over the voting
interests of these consolidated foreign operating entities, which necessarily precludes control by any governmental entity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><FONT STYLE="font-size: 10pt">The Company did not request
any legal opinions to support its disclosures in Item 16I, paragraph (a)&nbsp;and paragraphs (b)(2)&nbsp;and (b)(3)&nbsp;of the </FONT>2022
Annual Report, because these disclosures do not appear to be questions of law, but instead, appear to be factual inquiries.&nbsp; The
Company inquired of several law firms, and they said that they were not willing to give a legal opinion to support the Company&#8217;s
disclosures for Item 16I in paragraph (a), (b)(2)&nbsp;or (b)(3).&nbsp;&nbsp; The Company also did not request any affidavits to support
the factual determinations, because the factual determinations relate solely to the Company and are not otherwise matters that are within
the knowledge or responsibility of third parties.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

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<TD STYLE="width: 0.25in"><B>3.</B></TD><TD><B>We note that your disclosure pursuant to Item 16I(b)(2)&nbsp;is provided for &#8220;our company or any of such variable interest
entities&#8221; and pursuant to Item 16I(b)(3)&nbsp;is provided for &#8220;NetEase,&nbsp;Inc. or any variable interest entity.&#8221;
We also note that your list of significant subsidiaries and variable interest entities in Exhibit&nbsp;8.1 appears to indicate that you
have subsidiaries in the PRC and Hong Kong that are not included in your VIEs. Please note that Item 16I(b)&nbsp;requires that you provide
disclosures for yourself and your consolidated foreign operating entities, including variable interest entities or similar structures.</B></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><FONT STYLE="font-size: 10pt"><B>&#8226;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><B>With
respect to (b)(2), please supplementally clarify the jurisdictions in which your consolidated foreign operating entities are
organized or incorporated and provide the percentage of your shares or the shares of your consolidated operating entities owned by
governmental entities in each foreign jurisdiction in which you have consolidated operating entities in your supplemental
response.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><U>Response</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">The Company has consolidated foreign operating entities,
including variable interest entities or similar structures, which are incorporated in the Cayman Islands, the United Kingdom, Canada,
France, Spain,&nbsp;Ireland, Singapore, Japan, the PRC or Hong Kong.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">Based on the review conducted by the Company as described
in its response to comment #2 above, no portion of any of the Company&#8217;s consolidated foreign operating entities is owned by any
governmental entity in China mainland or the jurisdiction of their organization. The Company notes that almost all of its subsidiaries
are wholly owned but, among the small number of subsidiaries which are not wholly owned, two are publicly listed, Youdao,&nbsp;Inc. and
Cloud Music Inc., and a significant portion of their shares are held by public shareholders meaning that the ultimate beneficial ownership
of those publicly held shares may not be known to us. Having reviewed the public filings made by the ADS holders or shareholders of each
such subsidiary as described above (and taking reference to Youdao,&nbsp;Inc.&#8217;s &#8220;Submission under Item 16I(a)&nbsp;of Form&nbsp;20-F
in relation to the Holding Foreign Companies Accountable Act&#8221; which was filed as Exhibit&nbsp;15.4 to its Form&nbsp;20-F for the
year ended December&nbsp;31, 2022 filed on April&nbsp;27, 2023), the Company did not identify any registered ADS holders or shareholders
who appear to be affiliated with the government in China mainland or in the Cayman Islands.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><FONT STYLE="font-size: 10pt"><B>&#8226;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</B></FONT><B>With
respect to (b)(3), please provide the required information for you and all of your consolidated foreign operating entities in your supplemental
response.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><U>Response</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">The Company confirms that n<FONT STYLE="background-color: white">o
governmental entities in China mainland have a controlling financial interest in the Company or any of its consolidated foreign operating
entities.</FONT></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"><B>4.</B></TD><TD><B>In order to clarify the scope of your review, please supplementally describe the steps you have taken to confirm that none of the
members of your board or the boards of your consolidated foreign operating entities are officials of the Chinese Communist Party. For
instance, please tell us how the board members&#8217; current or prior memberships on, or affiliations with, committees of the Chinese
Communist Party factored into your determination. In addition, please tell us whether you have relied upon third party certifications
such as affidavits as the basis for your disclosure.</B></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><U>Response</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">As part of the Company&#8217;s regular information gathering
process in preparing its Form&nbsp;20-F, the Company sends each of its directors a questionnaire.&nbsp; Among the questions asked of each
of these people is whether they currently hold any official position(s)&nbsp;of the CCP (which include any committee of the CCP) and the
time (month and year) they assumed such official position(s).&nbsp; In written responses to such questions, each of these directors indicated
that they were not officials of the CCP (or any committee of the CCP).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">Similarly, the Company sent written questions to the directors
of the boards of its consolidated foreign operating entities, asking them to confirm if they hold any official positions of the CCP (which
include any committee of the CCP), and (if any) what the positions are and the time they assumed such positions. All of such directors
responded that he/she was not an official of the CCP (or any committee of the CCP), except for a small number of directors who were not
able to respond due to timing constraints (and for such directors the Company checked its own internal records and publicly available
information on the names of CCP officials to confirm they were not CCP officials).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">To the extent any of the directors of the Company&#8217;s
board or the boards of its consolidated foreign operating entities are employees of the NetEase group, the Company also compared the directors&#8217;
responses with its internal records and did not identify any discrepancies.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="text-align: left; font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">The Company notes that each of these directors has a fiduciary
duty to the Company or the applicable consolidated foreign operating entity which would help to ensure the veracity of their responses.&nbsp;
The Company did not ask any other third parties for certifications or affidavits regarding the members in, or officials of, the CCP, and
we are not aware of any third parties that would be able <FONT STYLE="color: #1f497d">to </FONT>give such a certification or affidavit.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"><B>5.</B></TD><TD STYLE="text-align: left"><B>With respect to your disclosure pursuant to Item 16I(b)(5), we note that you have included language
that such disclosure is &#8220;to our best knowledge.&#8221; Please supplementally confirm without qualification, if true, that your articles
and the articles of your consolidated foreign operating entities do not contain wording from any charter of the Chinese Communist Party.</B></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"><U>Response</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">The Company hereby confirms, without qualification, that
the memorandum and articles of association of the Company and its consolidated foreign operating entities (or equivalent organizing documents)
do not contain any portion of the text of the charter of the Chinese Communist Party, other than incidental words (such as &#8220;the&#8221;,
 &#8220;a&#8221;, and other common words) that happen to appear in both texts without a shared context.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

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<TD STYLE="width: 0.25in"><U>General</U></TD><TD STYLE="text-align: justify"></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"><B>6.</B></TD><TD><B>We note your statement that NetEase,&nbsp;Inc. is a holding company with no significant assets other than cash on hand and its
equity interests in its directly and indirectly-owned subsidiaries. Please provide us with a legal analysis of whether you currently meet
the definition of &#8220;investment company&#8221; under Section&nbsp;3(a)(1)(C)&nbsp;of the Investment Company Act (the &#8220;Company
Act&#8221;). Please include in your analysis the relevant calculation(s)&nbsp;under Section&nbsp;3(a)(1)(C)&nbsp;(including, where required
by the statute, on an unconsolidated basis), identifying each constituent part of the numerator(s)&nbsp;and denominator(s). Your analysis
should identify and explain which assets held by the company are &#8220;investment securities&#8221; for purposes of Section&nbsp;3(a)(2)&nbsp;of
the Company Act, and specifically address how you treat the securities issued by your subsidiaries and the contractual relationships between
your subsidiaries and the variable interest entities. Please provide legal support for any substantive determinations and/or characterizations
of assets that are material to your calculations.</B></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" WIDTH="100%" STYLE="font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"></TD><TD STYLE="width: 0.25in"><U>Response</U></TD><TD STYLE="text-align: justify"></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">The Company respectfully advises the
Staff that the Company is not an investment company as defined in the Company Act. The Company believes that it satisfies the exception
from the definition of investment company provided in Section&nbsp;3(b)(1)&nbsp;of the Company Act because, within the meaning of the
Company Act, it is primarily engaged through its wholly owned subsidiaries in the business of providing internet-related services and
products and therefore not in the business of investing, reinvesting or trading in securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">Though the Company is primarily engaged
in the business stated above through its wholly owned subsidiaries the Company&#8217;s structure also includes variable interest entities
(&#8220;VIEs&#8221;). As discussed below, for purposes of Section&nbsp;3(b)(1)&nbsp;the Company treats the VIEs as wholly owned subsidiaries.
Additionally, a portion of the Company&#8217;s subsidiaries are not wholly owned by the Company. While the non-wholly owned companies
are also engaged in the Company&#8217;s non-investment company business, they do not comprise a significant portion of the Company&#8217;s
total assets or total net revenues. Because of this, the Company treats itself as primarily engaged through its wholly owned subsidiaries
in a non-investment company business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">The VIEs exist in the Company&#8217;s
structure solely due to PRC regulatory restrictions on foreign investment in the certain industries. But for such restrictions, the VIEs
would be wholly owned subsidiaries of the Company and, as discussed below, the VIEs are effectively treated as wholly owned subsidiaries
of the Company in all material respects.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">Although the Company, through its wholly
owned subsidiaries, does not own 95% or more of each VIE&#8217;s outstanding voting securities, the Company has the ability to exercise,
via certain contractual arrangements, the type of substantial control over the VIEs that a parent company of a wholly owned subsidiary
typically could exercise. The contractual arrangements give the Company the power to exert control over the management and financial and
operating policies of each VIE to the extent that such power and control effectually operates as owning over 95% of each VIE&#8217;s outstanding
voting securities. The Company also has an exclusive option to purchase all or part of the equity interests of each VIE at the minimum
price possible to the extent permitted by PRC law. These attributes allow the Company to be considered the primary beneficiary of each
VIE for accounting purposes and to consolidate each VIE&#8217;s operating results into the Company&#8217;s financial statements under
the U.S. GAAP. Therefore, the Company treats the VIEs as if they were wholly owned subsidiaries for purposes of its financial statements
and its Company Act analysis under Section&nbsp;3(b)(1).</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>




<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">Though the Company treats VIEs as wholly
owned subsidiaries for the purposes of its analysis under Section&nbsp;3(b)(1), understanding that the VIEs have a more complicated corporate
structure, the Company also monitors its compliance with another exception from the definition of investment company that would allow
the Company to not be an investment company were the Company to treat the VIEs as not being wholly owned subsidiaries. The Company tests
the Company&#8217;s and its various subsidiaries&#8217; assets and income for compliance with Rule&nbsp;3a-1 under the Company Act. The
Company respectfully advises the Staff that in addition to satisfying the requirements of the exclusion from the definition of investment
company found in Section&nbsp;3(b)(1), the Company also qualifies for the exception from Section&nbsp;3(a)(1)(C)&#8217;s definition of
investment company found in Rule&nbsp;3a-1 under the Company Act.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">For the Staff&#8217;s reference, the
Company is submitting, under a separate cover and on a confidential, supplemental basis, (i)&nbsp;the semi-consolidated 45% test worksheet
of the Company and its subsidiaries and VIEs as of December&nbsp;31, 2022 (the &#8220;Worksheet&#8221;) and (ii)&nbsp;a corporate structure
chart for the Company as of December&nbsp;31, 2022. The Worksheet includes a calculation of the value of the securities owned by the Company
expressed as a percentage of the value of its adjusted total assets, calculated in accordance with the 45% test contained in Rule&nbsp;3a-1
under Company Act (the &#8220;45% Test&#8221;), as well as separate calculations for each of its majority-owned subsidiaries and their
related VIEs. As discussed above, the Company is the holding company for the Company&#8217;s business, which is carried out by various
wholly owned subsidiaries, the VIEs, certain majority owned subsidiaries and the VIEs with contractual arrangements with those majority
owned subsidiaries.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">The Rule&nbsp;3a-1 safe harbor is similar
to the quantitative test in Section&nbsp;3(a)(1)(C)&nbsp;but adds companies &#8220;controlled primarily&#8221; by the issuer to the list
of &#8220;good&#8221; assets. Further, unlike the test in Section&nbsp;3(a)(1)(C), the total assets and net income tests in Rule&nbsp;3a-1
are calculated on a semi-consolidated basis with respect to the issuer and its subsidiaries. For purposes of its 45% Test, the Company
treats the VIEs as companies &#8220;controlled primarily&#8221; by the Company. Further, as required by Rule&nbsp;3a-1 the Company consolidates
its financial statements with its wholly owned subsidiaries such that the Company treats the assets and income of the wholly owned subsidiaries
as if the assets were held and the income was earned by the Company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">The 45% Test is a bottom-up analysis
and requires the 45% Test calculation be performed for each non-wholly owned entity in the Company&#8217;s corporate structure, starting
with the majority-owned subsidiaries and VIEs at the bottom of the corporate structure, and working up to the holding company.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">For each majority-owned subsidiary
or VIE controlled by a majority-owned subsidiary that fails the 45% Test or is engaged primarily in the business of investing, reinvesting,
or trading in securities or engaged in the business of issuing face-amount certificates of the installment type (i.e., an investment company),
the Company treats the securities issued by such majority-owned subsidiary or VIE as bad assets (i.e., securities) for purposes of calculating
the 45% Test of the immediate parent entity of such subsidiary or VIE. For each majority-owned subsidiary or VIE that is not an investment
company, the Company treats the securities issued by such subsidiary or VIE as a good asset (i.e., not a security) for purposes of calculating
the 45% Test of the immediate parent entity of such majority-owned subsidiary or VIE.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">Due to the nature of the Company&#8217;s
business, the Company typically generates considerable amounts of cash. The Company typically deposits certain cash with banks in <I>Ding
Qi Cun Kuan</I>, which are commonly used deposit structures similar to high yield savings accounts. The <I>Ding Qi Cun Kuan</I> offers
a fixed interest rate, a high degree of liquidity given the money can be withdrawn without penalty, and presents low levels of credit
risk given that the cash is mainly deposited in major reputable Chinese mainland or Hong Kong banks that guarantee the principal and interest.
Due to the structure of the <I>Ding Qi Cun Kuan</I> and the nature of the Company&#8217;s operations (<I>e.g.</I>, disbursing regular
dividends and engaging in regular share buybacks), the Company treats cash held in <I>Ding Qi Cun Kuan</I> with original maturities of
twelve months or fewer as cash for the purposes of Rule&nbsp;3a-1 compliance testing. However, out of an abundance of caution, the Company
treats cash held in <I>Ding Qi Cun Kuan</I> with original maturities exceeding twelve months as investment items and therefore as securities
for the purposes of compliance testing under Rule&nbsp;3a-1. For purposes of public financial disclosure, cash held in both <I>Ding Qi
Cun Kuan</I> with maturities of twelve months or fewer and maturities exceeding twelve months are categorized on the Company&#8217;s balance
sheet as time deposits.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: left">As of December&nbsp;31, 2022, the Company&#8217;s
securities represented below 45% of the Company&#8217;s adjusted total assets and below 45% of the Company&#8217;s income when calculated
on a semi-consolidated basis in accordance with the 45% Test. Please see the Worksheet that the Company submits under a separate cover
and on a confidential, supplemental basis for more detail. The Worksheet identifies which assets the Company treats as &#8220;securities&#8221;
for the purposes of its Rule&nbsp;3a-1 analysis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in; text-align: justify">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"><B>7.</B></TD><TD><B>We note that the amount of revenues generated by the VIEs accounted for 86.4% of NetEase,&nbsp;Inc.&#8217;s total net revenues
in 2022, while the total assets of the VIEs (excluding amounts from other companies in the NetEase group) represented 7.1% of NetEase,&nbsp;Inc.&#8217;s
consolidated total assets as of December&nbsp;31, 2022. To the extent not addressed in your response to our request for a comprehensive
analysis under Section&nbsp;3(a)(1)(C), please provide a supplementary explanation for the significant difference between these two percentages.</B></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><U>Response</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">The Company respectfully advises the Staff that it conducts
a substantial portion of its businesses through the VIEs. The VIEs hold the ICP (internet content provider) licenses and other regulatory
licenses that are necessary for the Company to provide online game services and other value-added telecommunications services. The carrying
amounts of these licenses are insignificant. The businesses operated by the Company, its subsidiaries and the VIEs are asset-light in
nature, and the assets on the VIEs&#8217; balance sheets mainly consist of accounts receivable, cash and cash equivalents, restricted
cash and prepayments and other current assets.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">In addition, although a large amount of revenues is generated
and cash is received by the VIEs, most of such cash is further paid by the VIEs to the Company&#8217;s subsidiaries under certain technical
service agreements, as discussed on page&nbsp;F-13 of the 2022 Annual Report. As a result, few cash or short-term investments are held
by the VIEs, which further increased the difference between the two percentages. For the years ended December&nbsp;31, 2022 and 2021,
the VIEs received RMB67.5 billion and RMB61.3 billion operating cash inflow from external parties, and paid RMB67.0 billion and RMB59.4
billion to the Company&#8217;s subsidiaries relating to technical consulting and related services, respectively.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<TABLE CELLPADDING="0" CELLSPACING="0" STYLE="width: 100%; font: 10pt Times New Roman, Times, Serif; margin-top: 0pt; margin-bottom: 0pt"><TR STYLE="vertical-align: top">
<TD STYLE="width: 0.25in"><B>8.</B></TD><TD><B>Please include a risk factor that: (1)&nbsp;explains in detail why the company believes that it is not an investment company for
purposes of Section&nbsp;3(a)&nbsp;the Company Act, with reference to key material facts and characteristics of the business and the specific
provisions of the Company Act relevant to your conclusion; and (2)&nbsp;describes the consequences to the company and its investors were
the Commission or its Staff to determine that the company is an investment company.</B></TD></TR></TABLE>

<P STYLE="margin-top: 0pt; margin-bottom: 0pt; font: 10pt Times New Roman, Times, Serif">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in"><U>Response</U></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">In response to the Staff&#8217;s comment, the Company respectfully
proposes to include the following risk factor in its future Form&nbsp;20-F filings, subject to updates and adjustments to be made in connection
with any material development of the subject matter being disclosed:</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.5in; text-align: left"><B>If our company were deemed to be
an &#8220;investment company&#8221; under the Investment Company Act of 1940, applicable restrictions could make it impractical for us
to continue our business as contemplated and could have a material adverse effect on our business and the price of our ADSs and ordinary
shares.</B></P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>




<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.25in; margin: 0pt 0.5in; text-align: left">We intend to continue
to conduct our operations so that our company will not be deemed to be an investment company under the Investment Company Act of 1940
(the &#8220;Investment Company Act&#8221;). An issuer will generally be deemed to be an &#8220;investment company&#8221; for purposes
of the Investment Company Act if, absent an applicable exemption: (1)&nbsp;it is or holds itself out as being engaged primarily, or proposes
to engage primarily, in the business of investing, reinvesting or trading in securities; or (2)&nbsp;it is engaged or proposes to engage
in the business of investing, reinvesting, owning, holding or trading in securities and it owns or proposes to acquire investment securities
having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated
basis.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.25in; margin: 0pt 0.5in; text-align: left">Our Company is
organized as a holding company and we believe that, through our wholly owned subsidiaries, we are engaged primarily in the business of
providing internet-related services and products and not in the business of investing, reinvesting or trading in securities. We also believe
that the primary source of income from each of our businesses is properly characterized as income earned in exchange for the provision
of services and products. Through public statements and statements in our public filings, we currently hold ourselves out as an internet
technology company, and our public statements evidence our intent to continue to act as an internet technology company in the future.
We do not propose to engage primarily in the business of investing, reinvesting or trading in securities.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.25in; margin: 0pt 0.5in; text-align: left">Additionally, Rule&nbsp;3a-1
under the Investment Company Act generally provides that an entity will not be deemed to be an &#8220;investment company&#8221; if: (a)&nbsp;it
does not hold itself out as being engaged primarily, and does not propose to engage primarily, in the business of investing, reinvesting
or trading securities and (b)&nbsp;consolidating the entity&#8217;s wholly-owned subsidiaries (within the meaning of the Investment Company
Act), no more than 45% of the value of its assets (exclusive of U.S. government securities and cash items) consists of, and no more than
45% of its net income after taxes (for the past four fiscal quarters combined) is derived from, securities other than U.S. government
securities, securities issued by employees&#8217; securities companies, securities issued by qualifying majority owned subsidiaries of
such entity and securities issued by qualifying companies that are controlled primarily by such entity.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.25in"></P>

<!-- Field: Page; Sequence: 10; Value: 1 -->
    <DIV STYLE="margin-top: 12pt; margin-bottom: 6pt; border-bottom: Black 1pt solid"><P STYLE="font: 10pt Times New Roman, Times, Serif; text-align: center; margin-top: 0pt; margin-bottom: 0pt"><!-- Field: Sequence; Type: Arabic; Name: PageNo -->10<!-- Field: /Sequence --></P></DIV>
    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.25in; margin: 0pt 0.5in; text-align: left">Furthermore, our
company&#8217;s assets, consolidated with its wholly-owned subsidiaries (within the meaning of the Investment Company Act), consist primarily
of assets that we believe would not be considered securities for purposes of the Investment Company Act. Therefore, as of December&nbsp;31,
2022, we believe that, consolidating the Company&#8217;s wholly-owned subsidiaries (within the meaning of the Investment Company Act),
no more than 45% of the value of our assets (exclusive of U.S. government securities and cash items) consists of, and no more than 45%
of our net income after taxes (for the past four fiscal quarters combined) is derived from, securities other than U.S. government securities,
securities issued by employees&#8217; securities companies, securities issued by qualifying majority owned subsidiaries of the Company
and securities issued by qualifying companies that are controlled primarily by the Company. Accordingly, we believe our company satisfies
the requirements set forth in the 45% test in Rule&nbsp;3a-1 under the Investment Company Act as described in clause (b)&nbsp;of the description
provided above. In addition, we believe our company is not an investment company under Section&nbsp;3(b)(1)&nbsp;of the Investment Company
Act because it is primarily engaged in a non-investment company business.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; text-indent: 0.25in; margin: 0pt 0.5in; text-align: left">However, from time
to time we hold and acquire certain securities. We also expect to make investments in other securities from time to time. We monitor these
holdings regularly to confirm our continued compliance with the assets and income test described above.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0.5in; text-align: left; text-indent: 0.25in">If, at any
time, we become or are determined to be engaged, or primarily engaged, in the business of investing, reinvesting or trading in
securities, we could become subject to regulation under the Investment Company Act. If we were to become subject to the Investment
Company Act, any violation of the Investment Company Act could subject us to material adverse consequences, including potentially
significant regulatory penalties and the possibility that certain of our contracts would be deemed unenforceable. Additionally, as a
foreign private issuer, we would not be eligible to register under the Investment Company Act. Accordingly, we would either have to
obtain exemptive relief from the SEC, modify our contractual rights or dispose of investments in order to fall outside the
definition of an investment company, each of which may have a material adverse effect on us. Additionally, we may have to forego
potential future acquisitions of interests in companies that may be deemed to be investment securities within the meaning of the
Investment Company Act. Finally, failure to avoid being deemed an investment company under the Investment Company Act could also
make us unable to comply with our reporting obligations as a public company in the United States and lead to our being delisted from
Nasdaq Stock Market LLC, which would have a material adverse effect on the liquidity and value of our ADSs and ordinary shares.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.5in; text-align: justify">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">* * *</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: center">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">Should any member of the Staff have any questions or additional
comments regarding the Company&#8217;s responses to the Staff&#8217;s Comments set forth above, please do not hesitate to contact me at
+852 9279-2755 or paulboltz@oc.netease.com or our outside legal counsel, David C. Lee of Gibson, Dunn&nbsp;&amp; Crutcher LLP, at +1 (949)
451-3842 or DLee@gibsondunn.com.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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    <DIV STYLE="break-before: page; margin-top: 6pt; margin-bottom: 12pt"><P STYLE="margin: 0pt">&nbsp;</P></DIV>
    <!-- Field: /Page -->

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

<TABLE CELLSPACING="0" CELLPADDING="0" STYLE="font: 10pt Times New Roman, Times, Serif; width: 100%; border-collapse: collapse">
  <TR>
    <TD STYLE="width: 50%">&nbsp;</TD>
    <TD STYLE="width: 50%; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">Very truly yours,</FONT></TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD STYLE="font-size: 10pt">&nbsp;</TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD STYLE="border-bottom: Black 1pt solid; text-align: left; font-size: 10pt"><FONT STYLE="font-family: Times New Roman, Times, Serif; font-size: 10pt">/s/ Paul W. Boltz,&nbsp;Jr. </FONT></TD></TR>
  <TR>
    <TD>&nbsp;</TD>
    <TD>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">Paul W. Boltz,&nbsp;Jr.</P>
    <P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-align: left">International General Counsel</P></TD></TR>
  </TABLE>
<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0 0pt 247.5pt">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">cc: Charles Yang, Chief Financial Officer of NetEase,&nbsp;Inc.</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.2in">James J. Moloney, Gibson, Dunn&nbsp;&amp; Crutcher
LLP</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.2in">David C. Lee, Gibson, Dunn&nbsp;&amp; Crutcher LLP</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0; text-indent: 0.25in">&nbsp;</P>

<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0"></P>

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<P STYLE="font: 10pt Times New Roman, Times, Serif; margin: 0pt 0">&nbsp;</P>

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end
</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
