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ORGANIZATION AND NATURE OF OPERATIONS
 12 Months Ended
Dec. 31, 2011
ORGANIZATION AND NATURE OF OPERATIONS
1. ORGANIZATION AND NATURE OF OPERATIONS

The accompanying consolidated financial statements include the financial statements of Giant Interactive Group, Inc. (the “Company” or “Giant Interactive”), its subsidiaries, Shanghai Giant Network Technology Co., Ltd. (“Giant Network” or the “VIE”) and its subsidiaries, collectively referred to as the “Group”.

Giant Interactive was incorporated in the Cayman Islands on July 26, 2006 and became the holding company of the Group.

The Group is engaged in the development and operation of online games in the People’s Republic of China (the “PRC”). The Group primarily develops and operates online games through its subsidiary, Zhengtu Information, and its VIE subsidiary, Giant Network.

Details of the Company’s subsidiaries are as follows:

 

Entities

   

Date of
incorporation/
establishment

    Place of
incorporation/
establishment		   Percentage of
shareholding/
ownership		    

Principal activities

Subsidiaries:

          

Eddia International Group Limited (“Eddia International”)

    July 26, 2006    British Virgin
Islands (“BVI”)		     100.00 %   

Investment holding

Shanghai Zhengtu Information Technology Co., Ltd. (“Zhengtu Information”)

    September 6, 2006    PRC     100.00 %   

Online game development and maintenance

Giant Interactive (HK) Limited (“Giant HK”)

    December 22, 2008    Hong Kong     100.00 %   

Investment holding

Zhuhai Zhengtu Information Technology Co., Ltd. (“Zhuhai Zhengtu”)

    February 19, 2009    PRC     100.00 %   

Online game research and development

Hangzhou Snow Wolf Software Co., Ltd. (“Snow Wolf Software”)

   

Acquired on

May 18, 2009

    PRC     51.07 %   

Online game research and development

Shanghai Zhengduo Information Technology Co., Ltd. (“Zhengduo Information”)

    July 8, 2009    PRC     100.00 %   

Online game development and maintenance

Shanghai Jujia Network Technology Co., Ltd. (“Jujia Network”)

    October 20, 2009    PRC     51.00 %   

Online game research and development

Shanghai Juhuo Network Technology Co., Ltd. (“Juhuo Network”)

    November 4, 2009    PRC     51.00 %   

Online game development and maintenance

Shanghai Juhe Network Technology Co., Ltd. (“Juhe Network”)

    November 4, 2009    PRC     51.00 %   

Online game research and development

Shanghai Juyan Network Technology Co., Ltd. (“Juyan Network”)

    January 4, 2010    PRC     100.00 %   

Online game research and development

Chengdu Jufan Network Technology Co., Ltd. (“Jufan Network”)

    March 29, 2010    PRC     51.00 %   

Online game research and development

Shanghai Zhengju Information Technology Co., Ltd. (“Zhengju Information”)

    April 28, 2010    PRC     100.00 %   

Online game research and development

Shanghai Juquan Network Technology Co., Ltd. (“Juquan Network”)

    May 19, 2010    PRC     51.00 %   

Online game research and development

 

Subsidiary

    Date of
incorporation/
establishment		    Place of
incorporation/
establishment		    Percentage of
shareholding/
ownership		     

Principal activities

Variable Interest Entity (the “VIE”)

            

Shanghai Giant Network Technology Co., Ltd. (“Giant Network”)

    November 14, 2004    PRC      —        

Internet content provider

Held directly by Giant Network:

            

Wuxi Giant Network Technology Co., Ltd. (“Wuxi Network”)

    December 28, 2009    PRC      —        

Online game research and development

Wuxi Tiema Network Technology Co., Ltd. (“Tiema Network”)

    June 3, 2010    PRC      —        

Online game research and development

Shanghai Juxin Network Technology Co., Ltd. (“Juxin Network”)

    October 9, 2010    PRC      —        

Online game research and development

Beijing Giant Glorious Mission Network Technology Co., Ltd. (“Beijing Giant”)

    October 13, 2010    PRC      —        

Online game research and development

Beijing Julun Network Information Technology Co., Ltd. (“Julun Network”)

    Acquired on
November 19, 2010		    PRC      —        

Online game research and development

Shanghai Haoji Network Technology Co., Ltd. (“Haoji Network”)

    Acquired on
November 24, 2010		    PRC      —        

Online game research and development

Wuxi Tiequan Network Technology Co., Ltd. (“Tiequan Network”)

    May 23, 2011    PRC      —        

Online game research and development

In September 2006, in contemplation of an initial public offering, the Group completed a reorganization (the “Reorganization”) which was necessary to comply with PRC law and regulations that restrict foreign ownership of a company that provides Internet content services, which includes operating online games.

As part of the Reorganization, Mr. Yuzhu Shi, his immediate family and the other eighteen individual shareholders of Giant Network through their respective BVI holding companies, established the Company and Eddia International. Mr. Yuzhu Shi and his immediate family, through their BVI holding companies, Union Sky Holding Co., Ltd. and Vogel Holding Group Limited, are the controlling shareholders of the Company since incorporation. Subsequently, on September 6, 2006, Eddia International established Zhengtu Information, a wholly-owned foreign enterprise, which entered into a series of agreements with Giant Network. Pursuant to these agreements, Giant Network transferred most of its employees and operating assets, including the rights to operate its online game, ZT Online, to Zhengtu Information, except for certain assets that an online game operator must own to be an Internet license holder. In return, Zhengtu Information exclusively provides certain technical and consulting services and software licenses to Giant Network in exchange for fees, which can be adjusted at the Company’s discretion, through its direct ownership interest in Zhengtu Information as well as provide financial support to Giant Network, as necessary. As a result of these agreements, the Company is considered the primary beneficiary of Giant Network through Zhengtu Information (see Note 2) and accordingly, Giant Network’s results of operation and financial condition are consolidated in the financial statements of the Group.

In January 2011, Zhengduo Information purchased 49% equity interest in Juyan Network that it previously owned 51% equity interest in, at a consideration of approximately RMB3,500,000 (US$556,000). As a result, the Company through Zhengduo Information owns 100% equity interest in Juyan Network.

On May, 2011, Wuxi Network and 7 individuals invested approximately RMB 300,000 (US$48,000) to establish Tiequan Network. The Company, through its VIE, Giant Network, owns 25.8% equity interest of Tiequan Network. (Giant Network owns 50.6% equity interest in Wuxi Network and Wuxi Network owns 51% equity interest of Wuxi Tiequan).

On August 15, 2011, Zhengduo Information, wholly owned by Giant HK, injected paid-in capital of approximately RMB 29,000,000 (US$4,608,000) to Zhengju Information, which was a wholly owned enterprise by Giant Network as of December 31, 2010. On September 14, 2011, Giant Network retrieved all of its investment of approximately RMB 1,000,000 (US$159,000), which resulted in Zhengju Information being a wholly owned subsidiary by Zhengduo Information.