v3.22.1

Investments

12 Months Ended

Dec. 31, 2021

Schedule of Investments [Abstract]

Investments

4.   INVESTMENTS

Short-term Investments

As of December 31, 2020 and 2021, the Company’s short-term investments comprised of only debt securities. Short-term held-to-maturity securities were mainly deposits in commercial banks with maturities less than one year and wealth management products issued by commercial banks and other financial institutions for which the Company has the positive intent and ability to hold those securities to maturity. The short-term available-for-sale securities include wealth management products issued by commercial banks and other financial institutions which are not classified as trading securities or as held-to-maturity securities.

During the years ended December 31, 2019, 2020 and 2021, the Company recorded interest income from its short-term investments of RMB5.4 billion, RMB4.7 billion and RMB4.5 billion (US$701 million) in the consolidated statements of comprehensive (loss) income, respectively.

Short-term investments classification as of December 31, 2020 and 2021 were shown as below:

		As of December 31, 2020
		Cost or Amortized cost less allowance for credit losses				Gross unrecognized holding gains				Gross unrecognized holding losses				Gross unrealized gains				Gross unrealized losses				Fair value
		RMB				RMB				RMB				RMB				RMB				RMB
		(In millions)
Held-to-maturity debt investments			123,537				595				—				—				—				124,132
Available-for-sale debt investments			2,862				—				—				3				—				2,865

		As of December 31, 2021
		Cost or Amortized cost less allowance for credit losses				Gross unrecognized holding gains				Gross unrecognized holding losses				Gross unrealized gains				Gross unrealized losses				Fair value
		RMB				RMB				RMB				RMB				RMB				RMB				US$
		(In millions)
Held-to-maturity debt investments			140,686				898				—				—				—				141,584				22,218
Available-for-sale debt investments			2,547				—				—				10				—				2,557				401

Long-term Investments

The following table sets forth a breakdown of the categories of long-term investments held by the Company as of the dates indicated:

		As of December 31,
		2020				2021				2021
		RMB				RMB				US$
		(In millions)
Equity investments at fair value with readily determinable fair value			12,978				16,375				2,570
Equity investments without readily determinable fair value(i)			24,603				11,745				1,843
Available-for-sale debt investments			2,607				2,262				355
Equity method investments			24,067				24,808				3,893
Investments accounted for at fair value			2,238				4,228				663
Long-term held-to-maturity investments			9,740				7,914				1,242
Total long-term investments			76,233				67,332				10,566

(i) The total carrying value of equity investments without readily determinable fair value using NAV practical expedient was RMB957 million (US$150 million) for the year ended December 31, 2021. The total carrying value of equity investments without readily determinable fair value using measurement alternative was RMB10,788 million (US$1,693 million) for the year ended December 31, 2021.

Equity investments at fair value with readily determinable fair value

Equity investments at fair value with readily determinable fair value represent investments in the equity securities of publicly listed companies, for which the Company does not have significant influence.

In 2017, the Company acquired equity interests in China United Network Communication Limited (“China Unicom”), a listed telecommunications company in China for cash consideration of RMB7.0 billion. The China Unicom investment was held by a non-wholly-owned subsidiary of the Company. In 2020, the China Unicom investment was accounted for as an equity investment with readily determinable fair value and the Company partially disposed its investment in China Unicom for RMB2.7 billion.

Equity investments without readily determinable fair value

The Company accounted for private equity funds of which the Company does not have the ability to exercise significant influence using NAV practical expedient in accordance with ASC 820. For equity investments

without readily determinable fair value and do not qualify for the NAV practical expedient, the Company elected to use the measurement alternative to measure such investments at cost, less any impairment, plus or minus changes resulting from observable price changes in orderly transactions for identical or similar investments of the same issuer, if any in accordance with ASC 321. Impairment charges recognized on equity investments without readily determinable fair value were RMB778 million, RMB2,310 million and RMB4,259 million (US$668 million) for the years ended December 31, 2019, 2020 and 2021, respectively.

The total carrying value of equity investments without readily determinable fair value that do not qualify for NAV practical expedient held as of December 31, 2020 and 2021 were as follows:

		As of December 31, 2020				As of December 31, 2021				As of December 31, 2021
		RMB				RMB				US$
		(In millions)
Initial cost basis			19,725				13,016				2,042
Cumulative unrealized gains			8,113				3,910				614
Cumulative unrealized losses (including impairment)			(3,235	)			(6,138	)			(963	)
Total carrying value			24,603				10,788				1,693

Total unrealized and realized gains and losses of equity securities without readily determinable fair values that do not qualify for NAV practical expedient for the years ended December 31, 2019, 2020 and 2021 were as follows:

		For the years ended December 31,
		2019				2020				2021				2021
		RMB				RMB				RMB				US$
		(In millions)
Gross unrealized gains			1,447				4,396				1,062				167
Gross unrealized losses (including impairment)(i)			(1,641	)			(2,679	)			(4,424	)			(694	)
Net unrealized (losses) gains on equity securities held			(194	)			1,717				(3,362	)			(527	)
Net realized gains on equity securities sold			211				266				—				—
Total net gains (losses) recognized			17				1,983				(3,362	)			(527	)

(i) Gross unrealized losses (downward adjustments excluding impairment) were RMB863 million, RMB378 million and RMB165 million (US$26 million) for the years ended December 31, 2019, 2020 and 2021, respectively.

Equity method investments

The carrying amounts of the Company’s equity method investments were RMB24.1 billion and RMB24.8 billion (US$3.9 billion) as of December 31, 2020 and 2021, respectively. For the years ended December 31, 2019, 2020 and 2021, the impairment recognized for equity method investments were RMB9.2 billion, RMB297 million and RMB57 million (US$9 million), respectively.

Equity Investment in Trip.com International, Ltd. (“Trip”) (formally known as Ctrip)

As of December 31, 2018, the Company held approximately 19% of Trip’s outstanding shares. The Company was considered to have significant influence over Trip and accounts for such investment as an equity method investment in accordance with ASC 323.

During 2019, the market value of Trip had significantly declined and remained below the carrying value of the investment for a prolonged period of time. Therefore, the Company concluded that the decline in market value of the investment in Trip was other-than-temporary as of September 30, 2019 and an impairment charge of RMB8.9 billion was recorded in the third quarter of 2019. The Company made a corresponding RMB8.9 billion downward adjustment to the equity method goodwill arising from its acquisition of the Trip investment.

In October 2019, the Company disposed an aggregate of 36 million American Depositary Shares of Trip for cash consideration of US$988 million and recognized a disposal loss of RMB43 million in the year ended December 31, 2019.

After the partial disposal of the investment in Trip the Company held approximately 12% equity interest in Trip, and the Company can actively participate in the operating and financing policies of Trip through its two seats on Trip’s board of directors with a total of nine members. Accordingly, the Company continues to have significant influence over Trip and accounts for its remaining investment as an equity method investment in accordance with ASC 323. As of December 31, 2021, the Company’s investments in Trip had a fair value of RMB10.9 billion (US$1.7 billion), based on the closing share price.

The following tables set forth the summarized financial information of Trip:

		As of September 30, (i)
		2020				2021				2021
		RMB				RMB				US$
		(In millions)
Current assets			65,782				76,596				12,020
Non-current assets			132,417				124,268				19,500
Current liabilities			61,360				73,517				11,536
Non-current liabilities			36,558				16,418				2,576
Noncontrolling interests			1,566				924				145

		For the twelve months ended September 30, (i)
		2019				2020				2021				2021
		RMB				RMB				RMB				US$
		(In millions)
Total revenues			34,958				21,704				20,313				3,188
Gross profit			27,627				16,838				15,916				2,498
Income (loss) from operations			4,271				(827	)			(723	)			(113	)
Net income (loss)			3,764				(2,236	)			1,198				188
Net income (loss) attributable to the investees			3,813				(2,243	)			1,288				202

(i) The Company adopted a one-quarter lag in reporting its share of equity income (loss) in Trip.

Equity Investment in Jidu Auto Inc. (“Jidu”)

In January 2021, the Company entered into an agreement with Zhejiang Geely Holding Group (“Geely”) to established Jidu to produce intelligent electric vehicles. The Company hold an equity interest of 52.38%, however, considering the substantive participating rights held by Geely, the Company accounts for its investment as an equity method investment in accordance with ASC 323.

Disposal of financial services business

After finishing a series of legal restructuring and recapitalization of the financial services business (“Du Xiaoman”), the Company retained 41% of Du Xiaoman ’s shares on a fully diluted basis, and accounted as an equity method investment in accordance with ASC 323, as it retained significant influence over Du Xiaoman. The carrying amount of the Du Xiaoman investment in excess of the Company’s proportionate interest in Du Xiaoman was recognized as equity method goodwill of RMB3.5 billion, intangible assets of RMB851 million and related deferred tax liabilities of RMB213 million.

Deconsolidation of one of the Company’s subsidiaries

In December 2019, the Company lost control and therefore deconsolidated one of its subsidiaries. A non-cash disposal loss of RMB801 million was recognized in “Others, net” in the consolidated statement of comprehensive loss for the year ended December 31, 2019. The Company continued to have significant influence over the entity and accounted for its remaining equity interest in the entity as an equity-method investment in accordance with ASC 323.

As of December 31, 2020 and 2021, in addition to the aforementioned equity method investments, the Company held other equity method investments through its subsidiaries or VIEs and over which had significant influence.

For the year ended December 31, 2021, equity method investments excluding Trip held by the Company in aggregate have met the significance criteria as defined under Rule 4-08(g) of Regulation S-X. Financial information for the Company’s equity method investments other than Trip are summarized as a group as follow:​​​​​​​

		As of September 30, (i)
		2020				2021				2021
		RMB				RMB				US$
		(In millions)
Current assets			96,713				125,266				19,657
Non-current assets			15,094				18,512				2,905
Current liabilities			73,842				90,744				14,240
Non-current liabilities			5,545				9,218				1,447
Noncontrolling interests			1,577				1,662				261

		For the twelve months ended September 30, (i)
		2019				2020				2021				2021
		RMB				RMB				RMB				US$
		(In millions)
Total revenues			12,598				13,981				21,380				3,355
Gross profit			6,247				5,083				7,624				1,196
(Loss) income from operations			(680	)			(1,282	)			1,238				194
Net (loss) income			(638	)			(832	)			2,065				324
Net (loss) income attributable to the investees			(933	)			(891	)			2,040				320

(i) The Company adopted a one-quarter lag in reporting its share of (loss) income in majority of its equity investees.

Investments accounted for at fair value

Long-term equity investments in unlisted companies held by consolidated investment companies are accounted for at fair value in accordance with ASC 946-320. These investments are carried at fair value with realized or unrealized gains and losses recorded in “Others, net” in the consolidated statements of comprehensive (loss) income.

The methodology used in the determination of fair values for held-to-maturity debt investments, available-for-sale debt investments, equity investments with readily determinable fair values and other investment securities accounted for at fair value are disclosed in Note 25.

Long-term investments classification, excluding equity method investments and equity investments without readily determinable fair value, as of December 31, 2020 and 2021 are shown as below:​​​​​​​

		As of December 31, 2020
		Cost or Amortized cost				Gross unrealized gains				Gross unrealized losses				Fair value
		RMB				RMB				RMB				RMB
		(In millions)
Equity investments at fair value with readily determinable fair value			8,419				7,342				(2,783	)			12,978
Available-for-sale debt investments			2,804				166				(363	)			2,607
Investments accounted for at fair value			1,580				885				(227	)			2,238

		As of December 31, 2021
		Cost or Amortized cost				Gross unrealized gains				Gross unrealized losses				Fair value
		RMB				RMB				RMB				RMB				US$
		(In millions)
Equity investments at fair value with readily determinable fair value			15,046				6,046				(4,717	)			16,375				2,570
Available-for-sale debt investments			2,820				216				(774	)			2,262				355
Investments accounted for at fair value			1,974				2,653				(399	)			4,228				663

Long-term held-to-maturity investments

Long-term held-to-maturity securities were mainly deposits in commercial banks with maturities of greater than one year and wealth management products issued by commercial banks and other financial institutions for which the Company has the positive intent and ability to hold those securities to maturity with maturities of greater than one year.

During the years ended December 31, 2019, 2020 and 2021, the Company recorded interest income from its long-term held-to-maturity investments of RMB2 million, RMB118 million and RMB326 million (US$51 million) in the consolidated statements of comprehensive (loss) income, respectively.

Long-term held-to-maturity investments classification as of December 31, 2020 and 2021 were shown as below:

As of December 31, 2020

Cost or Amortized cost

Gross unrecognized holding gains

Gross unrecognized holding losses

Fair value

RMB

RMB

RMB

RMB

(In millions)

Long-term held-to-maturity investments

9,740

14

—

9,754

As of December 31, 2021

Cost or Amortized cost

Gross unrecognized holding gains

Gross unrecognized holding losses

Fair value

RMB

RMB

RMB

RMB

US$

(In millions)

Long-term held-to-maturity investments

7,914

100

—

8,014

1,258

The following table summarizes the amortized cost of long-term held-to-maturity investments with stated contractual dates, classified by the contractual maturity date of the investments:

		As of December 31,
		2020				2021				2021
		RMB				RMB				US$
		(In millions)
Due in 1 year			—				—				—
Due in 1 year through 2 years			9,690				7,914				1,242
Due in 2 years through 3 years			50				—				—
Total			9,740				7,914				1,242

Available-for-sale debt investments

Available-for-sale debt investments are convertible debt instruments issued by private companies and an investment in preferred shares that is redeemable at the Company’s option, which are measured at fair value. Investments in preferred shares that are redeemable at the Company’s option have no contractual maturity date.

The following table summarizes the estimated fair value of available-for-sale debt investments with stated contractual dates, classified by the contractual maturity date of the investments:

		As of December 31,
		2020				2021				2021
		RMB				RMB				US$
		(In millions)
Due in 1 year			—				—				—
Due in 1 year through 5 years			1,587				1,685				264
Not due at a single maturity date			1,020				577				91
Total			2,607				2,262				355

X

- Definition

The entire disclosure for investment.

+ References

Reference 1: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 321
-URI http://asc.fasb.org/topic&trid=75115024

Reference 2: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 320
-URI http://asc.fasb.org/topic&trid=2196928

Reference 3: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 325
-URI http://asc.fasb.org/topic&trid=2197064

Reference 4: http://www.xbrl.org/2009/role/commonPracticeRef
-Publisher FASB
-Name Accounting Standards Codification
-Topic 323
-URI http://asc.fasb.org/topic&trid=2196965

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X

- References

No definition available.

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