<SEC-DOCUMENT>0001193125-15-296719.txt : 20151021
<SEC-HEADER>0001193125-15-296719.hdr.sgml : 20151021
<ACCEPTANCE-DATETIME>20150820060700
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ACCESSION NUMBER:		0001193125-15-296719
CONFORMED SUBMISSION TYPE:	CORRESP
PUBLIC DOCUMENT COUNT:		1
FILED AS OF DATE:		20150820

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			Baidu, Inc.
		CENTRAL INDEX KEY:			0001329099
		STANDARD INDUSTRIAL CLASSIFICATION:	SERVICES-COMPUTER PROGRAMMING, DATA PROCESSING, ETC. [7370]
		IRS NUMBER:				000000000
		STATE OF INCORPORATION:			E9
		FISCAL YEAR END:			1231

	FILING VALUES:
		FORM TYPE:		CORRESP

	BUSINESS ADDRESS:	
		STREET 1:		BAIDU CAMPUS, NO. 10 SHANGDI 10TH STREET
		STREET 2:		HAIDIAN DISTRICT
		CITY:			BEIJING
		STATE:			F4
		ZIP:			100085
		BUSINESS PHONE:		(86-10) 5992 8888

	MAIL ADDRESS:	
		STREET 1:		BAIDU CAMPUS, NO. 10 SHANGDI 10TH STREET
		STREET 2:		HAIDIAN DISTRICT
		CITY:			BEIJING
		STATE:			F4
		ZIP:			100085

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	Baidu.com, Inc.
		DATE OF NAME CHANGE:	20050602
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 <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right"><B>B<SMALL>AIDU</SMALL>, I<SMALL>NC</SMALL>. </B></P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">Baidu Campus </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">No.&nbsp;10 Shangdi
10th Street </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">Haidian District, Beijing 100085 </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="right">The People&#146;s Republic of China </P> <P STYLE="line-height:3.0pt;margin-top:0pt;margin-bottom:2pt;border-bottom:1px solid #000000">&nbsp;</P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">August&nbsp;20, 2015 </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><B>VIA EDGAR </B></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Craig D. Wilson, Senior Assistant Chief Accountant </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Joyce
Sweeney, Staff Accountant </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Barbara C. Jacobs, Assistant Director </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ji Shin, Staff Attorney </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Division of Corporation Finance </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Securities and Exchange Commission </P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">100 F Street, N.E. </P>
<P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Washington, D.C. 20549 </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD VALIGN="top"><B>Re:</B></TD>
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<TD VALIGN="top"><B>Baidu, Inc. (the &#147;Company&#148;)</B></TD>
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<TD VALIGN="top"><B><FONT STYLE="white-space:nowrap">Form&nbsp;20-F&nbsp;for&nbsp;Fiscal&nbsp;Year&nbsp;Ended&nbsp;December&nbsp;31,&nbsp;2014&nbsp;(the&nbsp;&#147;2014&nbsp;20-F&#148;)</FONT></B></TD>
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<TD VALIGN="top"><B>Filed March 27, 2015</B></TD>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1.50pt solid #000000; font-size:10pt; font-family:Times New Roman"><B>File No. 000-51469</B></P></TD>
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</TABLE> <P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman">Ladies and Gentlemen: </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">This letter sets forth the Company&#146;s response to the comments contained in the letter dated August&nbsp;6, 2015 from the staff of the
Securities and Exchange Commission (the &#147;<U>Staff</U>&#148;) regarding the 2014 20-F. The &#147;Company&#148; is used in this letter to refer to Baidu, Inc., its subsidiaries, and its consolidated affiliated PRC entities. The comments are
repeated below and followed by the response thereto. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Form 20-F for the Fiscal Year Ended December&nbsp;31, 2014 </U></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Item&nbsp;5. Operating and Financial Review and Prospects </U></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>A. Operating Results </U></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Results of Operations, page 84
</U></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>1.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>We note your response to prior comment 1 and your representations regarding the main drivers of the operating margin change throughout 2014. Your Risk Factors disclose on page 16 that you rely on your Baidu Union
members for a significant portion of your revenues and are critical to future revenue growth. While your response clarifies the Union business is integrated using the same infrastructure as the Baidu properties, there is an additional cost incurred
related to this revenue stream. Your disclosure quantifies the amount of TAC related to Union members, but does not provide a point of reference as to how much of the revenues earned are attributable to the Union business or provide transparency as
to any trends or changes in the relative proportion of Union member revenues relative to TAC. Additionally, your disclosure does not provide a clear indication as to the significance of your Union business to the company&#146;s overall operations or
the contribution of the Union business to revenue fluctuations. As previously requested, please tell us the amount or percentage of revenues generated through Union members for each of the periods presented. If there were significant variances in
the relative revenue contribution from Union members or the revenue share ratios for the periods presented, please describe for us the factors contributing to such fluctuations. </B></TD></TR></TABLE>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">1 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">In response to the Staff&#146;s comment, the Company is supplementally providing (under a
separate cover letter) information responsive to the Staff&#146;s request about the percentage of revenues generated through Union members for each of the three years presented in the 2014 20-F. The letter and the information itself constitute
confidential information of the Company. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">As supplementally submitted to the Staff, the Company believes that there were no significant
variances in the revenue contribution from Union business. However, the Company will monitor if the trend of revenue generated through Baidu Union would alter its relationship with customers and Union member. The Company will quantitatively disclose
the revenue contribution of Union business in our future filings should such trend or indicator discussed above take place in the future. </P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">As previously submitted to the Staff in its previous responses to the Staff&#146;s comments on the 2014 20-F, the Company considers the average
revenue share and the range of revenue share ratios, which can be easily derived from the amount of revenues generated from Baidu Union members, if disclosed, to be highly sensitive and confidential commercial information. The Company continues to
believe that disclosure of the amount or percentage of revenues generated through Union members would not provide additional meaningful insights to investors and would potentially bring downside to the Company&#146;s business. </P>
<P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Operating Costs and Expenses </U></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Selling, General and
Administrative Expenses, page 79 </U></P> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>2.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>We note your statements in the earnings calls for the second and third quarters of 2014 that you will continue to invest in the pre-installation on handsets and that in 2013, a majority of the marketing expenses were
related to pre-installations. Please tell us what consideration you have given to disclosing the costs associated with pre-installations and tell us on a supplemental basis the amount of these costs for the periods presented. </B></TD></TR></TABLE>
<P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">In response to the Staff&#146;s comment, in the context of the earnings call for the second and third quarters of 2014, when discussing selling
and marketing expense for mobile products, the Company described, except people-related cost, pre-installation as one of the three marketing and promotional areas, instead of the major component of marketing expense in 2013. As mobile internet
developed rapidly in 2014, users became more and more reliant on the Company&#146;s mobile products so that the percentage of spending in pre-installation on overall marketing and promotion expense slightly declined in 2014. </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">2 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">In light of the facts above, on Page 85 of the 2014 20-F under the heading &#147;Year Ended
December&nbsp;31, 2014 Compared to Year Ended December&nbsp;31, 2013,&#148; the Company has disclosed that the increase of marketing and promotion expenses in 2014 was &#147;primarily due to the increased marketing and promotion activities relating
to our mobile products.&#148; </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">In light of the above, the Company believes quantifying the expenses associated with pre-installations, one
temporary marketing channel in a fast moving environment, would not provide investors additional meaningful information or be material to investors in making a decision whether to invest in the Company, and therefore no further disclosure would be
necessary. </P> <P STYLE="margin-top:18pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Consolidated Financial Statements </U></P>
<P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Notes to Consolidated Financial Statements </U></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Note 2.
Summary of Significant Accounting Policies </U></P> <P STYLE="margin-top:6pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman"><U>Cost of Revenues, page F-24 </U></P>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%" VALIGN="top" ALIGN="left"><B>3.</B></TD>
<TD ALIGN="left" VALIGN="top"><B>You disclose that traffic acquisition costs are payments primarily based on revenue sharing arrangements under which the company pays its Baidu Union members and other business partners a percentage of the fees it
earns from its online marketing customers. On page 85 you disclose that the increase in traffic acquisition costs in 2014 mainly reflected the increased contribution of contextual ads, Baidu Union promotion and Hao123 promotions through your
network. Please describe for us the nature of these promotions and explain why these costs are presented within traffic acquisition costs. Tell us what consideration was given to disclosing the accounting principles, judgments, nature and types of
cost associated with traffic acquisition costs as an accounting policy disclosure pursuant to ASC 235-10-50-3.b. </B></TD></TR></TABLE> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">The
Company respectfully advises the Staff that the contextual ads, Baidu Union promotion and Hao123 referenced on page 85 of the 2014 20-F are the names for three different types of online marketing products for customers offered by the Company. It did
not mean promotion of the Company&#146;s products. These three online marketing products, through Baidu Union properties, generate revenue to the Company, and accordingly, the Company pays a percentage of the revenue it earns as traffic acquisition
costs. </P> <P STYLE="margin-top:6pt; margin-bottom:0pt; margin-left:4%; font-size:10pt; font-family:Times New Roman">The Company respectfully advises the Staff that it has disclosed the accounting principles, judgments, nature and types of cost
associated with traffic acquisition costs in accordance with ASC 235-10-50-3.b. on page F-25 of the 2014 20-F. </P>
<P STYLE="margin-top:12pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;*&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;* </P>
 <p STYLE="margin-top:0pt;margin-bottom:0pt ; font-size:8pt">&nbsp;</P> <P STYLE="margin-top:0pt; margin-bottom:0pt; font-size:10pt; font-family:Times New Roman" ALIGN="center">3 </P>


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 <P STYLE="margin-top:0pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">The Company hereby acknowledges that </P>
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the Company is responsible for the adequacy and accuracy of the disclosure in the filing; </TD></TR></TABLE> <P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and </TD></TR></TABLE>
<P STYLE="font-size:6pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P>
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<TD WIDTH="4%">&nbsp;</TD>
<TD WIDTH="3%" VALIGN="top" ALIGN="left">&#149;</TD>
<TD WIDTH="1%" VALIGN="top">&nbsp;</TD>
<TD ALIGN="left" VALIGN="top">the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States. </TD></TR></TABLE>
<P STYLE="margin-top:12pt; margin-bottom:0pt; text-indent:4%; font-size:10pt; font-family:Times New Roman">If you have any additional questions or comments regarding the 2014 20-F, please contact the undersigned at +86 10 5992-8999 or the
Company&#146;s U.S. counsel, Z. Julie Gao of Skadden, Arps, Slate, Meagher&nbsp;&amp; Flom at +852 3740-4863. </P> <P STYLE="font-size:12pt;margin-top:0pt;margin-bottom:0pt">&nbsp;</P><DIV ALIGN="right">
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<TD VALIGN="top">Very truly yours,</TD></TR>
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<TD VALIGN="top"> <P STYLE="margin-top:0pt; margin-bottom:1pt; border-bottom:1px solid #000000; font-size:10pt; font-family:Times New Roman">/s/ Jennifer Xinzhe Li</P></TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Jennifer Xinzhe Li</TD></TR>
<TR STYLE="font-family:Times New Roman; font-size:10pt">
<TD VALIGN="top">Chief Financial Officer</TD></TR>
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<TD VALIGN="top">cc:</TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Robin Yanhong Li, Chairman and Chief Executive Officer, Baidu, Inc.</TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">Z. Julie Gao, Esq., Partner, Skadden, Arps, Slate, Meagher &amp; Flom LLP</TD></TR>
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<TD VALIGN="top"></TD>
<TD VALIGN="bottom">&nbsp;&nbsp;</TD>
<TD VALIGN="top">KC Yau, Partner, Ernst &amp; Young Hua Ming LLP</TD></TR>
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