Table of Contents
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
☐ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
⌧ ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2020.
OR
☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
OR
☐ SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report.........................
For the transition period from to
Commission file number: 001-36430
Tuniu Corporation
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant’s name into English)
Cayman Islands
(Jurisdiction of incorporation or organization)
Tuniu Building No. 699-32
Xuanwudadao, Xuanwu District
Nanjing, Jiangsu Province 210042
The People’s Republic of China
(Address of principal executive offices)
Mr. Anqiang Chen,, Financial Controller
Telephone: +(86) 25 86853969
Email: ir@tuniu.com
Tuniu Building No. 699-32
Xuanwudadao, Xuanwu District
Nanjing, Jiangsu Province 210042
The People’s Republic of China
(Name, Telephone, E-mail and/or Facsimile number and Address of Company Contact Person)
Securities registered or to be registered pursuant to Section 12(b) of the Act.
Title of each class
American depositary shares (one
American depositary share
representing three Class A ordinary
shares, par value US$0.0001 per share)
Class A ordinary shares, par value
US$0.0001 per share*
Trading Symbol(s)
TOUR
Name of each exchange on which registered
The Nasdaq Stock Market LLC
(The Nasdaq Global Market)
The Nasdaq Stock Market LLC
(The Nasdaq Global Market)
*
Not for trading, but only in connection with the listing on The Nasdaq Global Market of American depositary shares.
Securities registered or to be registered pursuant to Section 12(g) of the Act.
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act.
None
(Title of Class)
None
(Title of Class)
Table of Contents
Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual
report.
371,958,044 Class A ordinary shares (including 18,842,688 Class A ordinary shares, represented by 6,280,896 ADSs, repurchased and reserved for the
future exercise of options or the vesting of other awards under the 2008 Plan and the 2014 Plan) and 17,373,500 Class B ordinary shares, par value
US$0.0001 per share, as of December 31, 2020.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
☐ Yes ⌧ No
If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934.
☐ Yes ⌧ No
Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
⌧ Yes (cid:0) No
Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of
Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).
⌧ Yes (cid:0) No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See
the definitions of “large accelerated filer,” “accelerated filer,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.
Large accelerated filer
Non-accelerated filer
☐
☐
Accelerated filer
⌧
Emerging growth company ☐
If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected
not to use the extended transition period for complying with any new or revised financial accounting standards † provided pursuant to Section 13(a) of the
Exchange Act.
† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting
Standards Codification after April 5, 2012.
Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness of its internal
control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that
prepared or issued its audit report.
⌧ Yes ☐ No
Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:
U.S. GAAP
⌧
International Financial Reporting Standards as issued by the International Accounting
Standards Board (cid:0)
Other
☐
If “Other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to
follow.
☐ Item 17 ☐ Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).
☐ Yes ☒ No
(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)
Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities
Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.
☐ Yes ☐ No
Table of Contents
TABLE OF CONTENTS
INTRODUCTION
FORWARD-LOOKING INFORMATION
PART I
Identity of Directors, Senior Management and Advisers
Item 1.
Item 2. Offer Statistics and Expected Timetable
Item 3. Key Information
Information on the Company
Item 4.
Item 4A. Unresolved Staff Comments
Item 5. Operating and Financial Review and Prospects
Item 6. Directors, Senior Management and Employees
Item 7. Major Shareholders and Related Party Transactions
Item 8.
Item 9.
Item 10. Additional Information
Item 11. Quantitative and Qualitative Disclosures about Market Risk
Item 12. Description of Securities Other than Equity Securities
Financial Information
The Offer and Listing
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
Item 15. Controls and Procedures
Item 16A.Audit Committee Financial Expert
Item 16B. Code of Ethics
Item 16C. Principal Accountant Fees and Services
Item 16D.Exemptions from the Listing Standards for Audit Committees
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
Item 16F. Change in Registrant’s Certifying Accountant
Item 16G.Corporate Governance
Item 16H.Mine Safety Disclosure
PART III
Item 17. Financial Statements
Item 18. Financial Statements
Item 19. Exhibits
SIGNATURES
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
i
1
2
3
3
3
3
48
82
82
103
115
117
118
119
133
134
136
136
136
136
137
137
138
138
138
139
139
139
140
140
140
141
144
F-1
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In this annual report, except where the context otherwise requires and for purposes of this annual report only:
INTRODUCTION
·
·
·
·
·
·
·
·
·
·
“we,” “us,” “our company,” “our,” or “Tuniu” refers to Tuniu Corporation, a Cayman Islands company, its
subsidiaries, and, in the context of describing our operations and consolidated financial information, also include
the consolidated affiliate entities, Nanjing Tuniu Technology Co., Ltd., or Nanjing Tuniu, and its subsidiaries;
“gross bookings” refer to the total amount paid by our customers for the travel products that we have delivered
and the travel services that we have rendered, including the related taxes, fees and other charges borne by our
customers;
“trips” refers to the number of packaged tours sold by us, including organized tours and self-guided tours;
“China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this annual report only,
Taiwan, Hong Kong and Macau;
“shares” or “ordinary shares” refers to our ordinary shares, which include both Class A ordinary shares and Class
B ordinary shares;
“ADSs” refer to American depositary shares, representing our Class A ordinary shares; each ADS represents three
Class A ordinary shares;
“U.S. GAAP” refers to generally accepted accounting principles in the United States;
“RMB” or “Renminbi” refers to the legal currency of China;
“$,” “dollars,” “US$” or “U.S. dollars” refers to the legal currency of the United States; and
all discrepancies in any table between the amounts identified as total amounts and the sum of the amounts listed
therein are due to rounding.
Our business is primarily conducted in China and almost all of our revenues are denominated in Renminbi. However,
periodic reports made to shareholders will include current period amounts translated into U.S. dollars using the then current
exchange rates, for the convenience of the readers. We make no representation that any Renminbi or U.S. dollar amounts
could have been, or could be, converted into U.S. dollars or Renminbi, as the case may be, at any particular rate, or at all.
The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion
of Renminbi into foreign exchange and through restrictions on foreign trade. Unless otherwise noted, all translations from
Renminbi to U.S. dollars and from U.S. dollars to Renminbi in this annual report were made at a rate of RMB6.5250 to
US$1.00, the noon buying rate in effect as of December 31, 2020.
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FORWARD-LOOKING INFORMATION
This annual report on Form 20-F contains forward-looking statements that reflect our current expectations and views
of future events. These statements are made under the “safe harbor” provisions of the U.S. Private Securities Litigation
Reform Act of 1995. You can identify these forward-looking statements by terminology such as “may,” “will,” “expect,”
“anticipate,” “future,” “intend,” “plan,” “believe,” “estimate,” “is/are likely to” or other similar expressions. We have based
these forward-looking statements largely on our current expectations and projections about future events and financial
trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These
forward-looking statements include, but are not limited to:
·
·
·
·
·
·
·
·
·
·
·
our goals and strategies;
the expected growth of the online leisure travel market in China;
our expectations regarding demand for our products and services;
our expectations regarding our relationships with customers and travel suppliers;
our ability to offer competitive travel products and services;
our future business development, results of operations and financial condition;
competition in our industry in China;
relevant government policies and regulations relating to our corporate structure, business and industry;
the impact of the COVID-19 on our business operations, the travel industry and the economy of China and
elsewhere generally;
general economic and business condition in China and elsewhere; and
assumptions underlying or related to any of the foregoing.
We would like to caution you not to place undue reliance on these forward-looking statements and you should read
these statements in conjunction with the risk factors disclosed in “Item 3.D. Key Information—Risk Factors.” Those risks
are not exhaustive. We operate in a rapidly evolving environment. New risks emerge from time to time and it is impossible
for our management to predict all risk factors, nor can we assess the impact of all factors on our business or the extent to
which any factor, or combination of factors, may cause actual results to differ from those contained in any forward-looking
statement. We do not undertake any obligation to update or revise the forward-looking statements, statements, whether as a
result of new information, future events or otherwise, except as required under applicable law.
This annual report also contains statistical data and estimates that we obtained from industry publications and reports
generated by government agencies and third-party providers of market intelligence. These industry publications and reports
generally indicate that the information contained therein was obtained from sources believed to be reliable, but do not
guarantee the accuracy and completeness of such information. Although we believe that the publications and reports are
reliable, we have not independently verified the data.
2
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PART I
Item 1.Identity of Directors, Senior Management and Advisers
Not applicable.
Item 2.Offer Statistics and Expected Timetable
Not applicable.
Item 3.Key Information
A.Selected Financial Data
The following table presents selected consolidated financial information for our company. The selected consolidated
statements of comprehensive loss data for the three years ended December 31, 2018, 2019 and 2020 and the consolidated
balance sheets data as of December 31, 2019 and 2020 have been derived from our audited consolidated financial
statements, which are included in this annual report beginning on page F-1. The selected consolidated statements of
comprehensive loss data for the years ended December 31, 2016 and 2017 and the selected consolidated balance sheet data
as of December 31, 2016, 2017 and 2018 have been derived from our audited consolidated financial statements not
included in this annual report. Our historical results do not necessarily indicate results expected for any future periods. The
selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to
our audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and
Prospects” included elsewhere in this annual report. Our audited consolidated financial statements are prepared and
presented in accordance with U.S. GAAP.
3
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For the Years Ended December 31,
2016
RMB
2017
RMB
2018
RMB
2019
RMB
2020
RMB
US$
(in thousands, except for share, per share and per ADS data)
Summary Consolidated Statements of
Comprehensive Loss Data:
Revenues:
Packaged tours
Others
10,147,148
401,100
1,589,353
602,747
1,830,630
409,519
1,886,822
394,165
Total revenues
Less: Business and related taxes
10,548,248
(17,307)
2,192,100
—
2,240,149
—
2,280,987
—
302,359
147,900
450,259
—
46,339
22,667
69,006
—
Net revenues
Cost of revenues
Gross profit
Operating expenses:
Research and product development
Sales and marketing
General and administrative
Other operating income
Loss from operations
Other income/(expenses):
Interest and investment income, net
Interest expense
Foreign exchange (losses)/gains, net
Other (loss)/income, net
Loss before income tax expense
Income tax benefit/(expense)
Equity in income of affiliates
10,530,941
(9,891,736)
2,192,100
(1,024,206)
2,240,149
(1,065,022)
2,280,987
(1,200,012)
450,259
(237,065)
69,006
(36,332)
639,205
1,167,894
1,175,127
1,080,975
213,194
32,674
(601,402)
(1,900,397)
(658,790)
22,323
(541,126)
(894,148)
(637,795)
21,749
(315,222)
(778,126)
(487,372)
56,599
(303,561)
(923,273)
(749,404)
24,419
(100,514)
(371,984)
(1,109,340)
27,849
(15,404)
(57,009)
(170,014)
4,268
(2,499,061)
(883,426)
(348,994)
(870,844)
(1,340,795)
(205,485)
87,305
—
(9,734)
(2,553)
(2,424,043)
1,711
—
130,250
—
(2,394)
(121)
(755,691)
(15,625)
—
152,929
(7,918)
(11,729)
16,494
(199,218)
(153)
—
156,862
(34,052)
(1,131)
18,509
3,526
(32,266)
18,720
(253)
540
(4,945)
2,869
(39)
(730,656)
(949)
2,223
(1,351,068)
6,641
797
(207,060)
1,018
122
Net loss
(2,422,332)
(771,316)
(199,371)
(729,382)
(1,343,630)
(205,920)
Net loss attributable to noncontrolling interests
Net (loss)/income attributable to redeemable
noncontrolling interests
Net loss attributable to Tuniu Corporation
Accretion on redeemable noncontrolling interests
Net loss attributable to ordinary shareholders
Net loss per ordinary share attributable to ordinary
shareholders
Basic
Diluted
Net loss per ADS attributable to ordinary
shareholders
Basic
Diluted
(15,104)
(4,934)
(14,037)
(35,797)
(35,674)
(5,467)
(34)
(2,407,194)
(106)
(2,407,300)
922
(767,304)
(5,725)
(773,029)
178
(185,512)
(2,422)
(187,934)
980
(694,565)
(4,634)
(699,199)
—
(1,307,956)
—
(1,307,956)
—
(200,453)
—
(200,453)
(6.45)
(6.45)
(19.35)
(19.35)
(2.04)
(2.04)
(6.12)
(6.12)
(0.50)
(0.50)
(1.50)
(1.50)
(1.89)
(1.89)
(5.67)
(5.67)
(3.53)
(3.53)
(10.59)
(10.59)
(0.54)
(0.54)
(1.62)
(1.62)
Weighted average number of ordinary shares used in
computing basic and diluted loss per share
373,347,855
378,230,039
377,744,381
369,472,880
370,240,040
370,240,040
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Summary Consolidated Balance Sheet
Data:
Cash and cash equivalents
Restricted cash
Short-term investments
Prepayments and other current assets
Long-term investments
Total assets
Accounts and notes payable
Advances from customers
Total liabilities
Redeemable noncontrolling interests
Ordinary shares
Total equity
Summary Consolidated Statements of
Cash Flow Data:
Net cash (used in)/provided by operating
2016
RMB
2017
RMB
As of December 31,
2018
RMB
2019
RMB
(in thousands)
2020
RMB
US$
1,085,236
124,561
3,603,497
1,632,329
58,764
9,171,654
1,022,704
1,806,493
4,581,927
90,072
242
4,499,655
484,101
91,810
3,084,634
939,463
484,991
6,657,805
852,500
1,210,615
2,963,777
96,719
248
3,597,309
560,356
270,670
859,211
1,673,584
1,302,506
6,556,923
1,305,610
1,058,946
3,143,071
69,319
249
3,344,533
295,463
327,052
1,305,386
1,300,284
1,305,612
6,596,620
1,311,963
1,113,879
3,847,781
37,200
249
2,711,639
213,538
50,566
1,353,670
378,704
266,866
3,196,643
705,838
208,762
1,819,428
27,200
249
1,350,015
32,726
7,750
207,459
58,038
40,899
489,907
108,174
31,994
278,839
4,169
38
206,899
2016
RMB
2017
RMB
For the Years Ended December 31,
2018
RMB
2019
RMB
(in thousands)
2020
RMB
US$
activities
(2,239,444)
(418,649)
268,089
(120,461)
(1,313,115)
(201,243)
Net cash (used in)/provided by investing
activities
(2,728,683)
615,554
153,992
(578,134)
1,159,063
177,633
Net cash provided by/(used in) financing
activities
3,627,058
(784,766)
(145,212)
485,110
(209,546)
(32,114)
B.Capitalization and Indebtedness
Not applicable.
C.Reasons for the Offer and Use of Proceeds
Not applicable.
D.Risk Factors
Risks Related to Our Business and Industry
Our business operation, financial condition, results of operations and cash flows have been and are likely to continue to
be materially and adversely affected by the COVID-19 outbreak and spread.
The outbreak of a novel strain of coronavirus, named as COVID-19, in early 2020 has severely impacted China and
the rest of the world. During the first quarter of 2021, another wave of COVID-19 infections emerged in China. As a result,
the Chinese government took a number of actions, which included quarantining individuals infected with or suspected of
having COVID-19, imposing travel restrictions in certain cities and towns and cancelling public activities, among others.
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The current COVID-19 pandemic has already materially and adversely affected many aspect of our business. Normal
economic life was sharply curtailed and the travel industry was particularly hard hit. Government authorities in major
countries across the world have implemented strict travel bans and adopted different control measures to curb the spread of
COVID-19. In connection with intensifying efforts to contain the spread of COVID-19, the Chinese government has taken
a number of actions, which included suspending operation of organized tours, quarantining individuals infected with or
suspected of having COVID-19, restricting residents from travel, encouraging employees of enterprises to work remotely
from home and cancelling public activities, among others. In addition, we have taken measure in response to COVID-19,
including adoption of modified operating hours, remote working arrangement and more stringent workplace sanitation
measures, which have had a negative impact on our business operation. The spread or fear of spread of contagious disease,
such as COVID-19 has caused a significant decline in the level of business and leisure travel in certain regions or as a
whole, and a significant decrease in the demand for our products and services, resulting in customer cancellations and
refund requests and reduced new orders relating to our services, which have materially and adversely affected our business,
financial condition, results of operations and cash flows.
Furthermore, the payment or repayment ability or decision of our business partners and borrowers has been negatively
affected by the outbreak of COVID-19, which has increased uncertainties relating to our collection of receivables, and has
resulted in additional allowances for doubtful accounts. We have also recorded impairment provisions against certain of our
long-term and short-term assets as the impacts of the COVID-19 pandemic on certain of our long-term and short-term
assets are considered to be other than temporary. In addition, our business partners and travel suppliers, including overseas
suppliers, are also experiencing similar or more serious disruptions to their business operation, which have negatively
affected our business operation, financial condition, results of operations and cash flows. We have been affirmatively
facilitating our customers in their cancellations, rescheduling and refund requests and working with our travel suppliers to
weather the difficult situations, for which we have incurred and may continue to incur significant costs and expenses.
The extent of the impact of the COVID-19 pandemic on our business and financial results will depend largely on
future developments, including the duration and extent of the spread of COVID-19 around the world, and the prevalence of
local, national and international travel restrictions which are highly uncertain and cannot be predicted. While we have seen
recovery in the China travel market since the second half of 2020 due to the substantial containment of the COVID-19
pandemic in China, we have seen a slower recovery of the international travel market, and in turn, a slower recovery of our
overseas travel business. We cannot assure you that the COVID-19 pandemic can be eliminated or contained in the near
future, or at all, or a similar outbreak will not occur again. Since the beginning of 2021, a few waves of COVID-19
infections have emerged in various regions of China, and varying levels of travel restrictions and encouragement of
reduced travel during the Chinese New Year, were reinstated in China. These travel restrictions reduce users’ demand for
our products, and are expected to materially and adversely affect our results of operations in the first quarter of 2021 and
potentially beyond. We cannot assure you when these travel restrictions will be lifted. In light of the evolving nature of
COVID-19 and the uncertainty it has produced, we do not believe it is possible to predict the COVID-19 pandemic’s
cumulative and ultimate impact on our future business, results of operations, and financial condition, though we expect that
our business operation, financial condition, results of operations and cash flows for the first two quarters of the fiscal year
of 2021 will be materially and adversely affected by the COVID-19 outbreak and spread, including but not limited to the
significant continued adverse impact on revenue and significant operating cash outflow due to the incremental cost
incurred in responses to travelers’ cancellations and refund requests.
Declines or disruptions in the leisure travel industry may materially and adversely affect our business and results of
operations.
We are dependent on the leisure travel industry for substantially all of our revenues. The leisure travel industry is
dependent on personal discretionary spending levels, which may be materially and adversely affected by economic
downturns and recessions. Although the leisure travel industry in China has experienced rapid growth over the past decade,
any severe or prolonged slowdown in the Chinese economy could reduce expenditures for leisure travel, which in turn may
adversely affect our financial condition and results of operations. See "—Risks Related to Doing Business in China— A
severe or prolonged downturn in the Chinese or global economy could materially and adversely affect the leisure travel
industry and our business, results of operations and financial condition."
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Our business may also be significantly affected by other factors that tend to reduce leisure travel, including increased
prices in hotel, air-ticketing, fuel or other travel-related sectors, work stoppages or labor unrest at airlines, increased
occurrences of travel-related accidents, outbreaks of other contagious diseases, natural disasters and extreme unexpected
bad weather, terrorist attacks and political unrest. For example, the travel industry was negatively impacted by the outbreak
of Ebola hemorrhagic fever in West Africa beginning in March 2014, the disappearance of a Malaysia Airlines flight in
March 2014 as well as the crashes of Malaysia Airlines and AirAsia flights in July and December 2014, respectively, the
earthquake in Jiuzhaigou, China in August 2017, the volcanic eruption in Bali, Indonesia in November 2017, the boat
capsizing accident in Phuket island, Thailand in July 2018, as well as the outbreak and spread of COVID-19 pandemic
across the world since December 2019 till now, all of which had a negative impact on our target customers. See "— Our
business operation, financial condition, results of operations and cash flows have been and are likely to continue to be
materially and adversely affected by the COVID-19 outbreak and spread”. In addition, our overseas leisure travel business
may be negatively affected by any adverse change in the visa policies of foreign countries that makes it difficult for
Chinese nationals to obtain tourist visas. Terrorist attacks or threats of terrorist attacks, political unrests, wars, imposition of
taxes or surcharges by regulatory authorities and regional hostilities may also reduce the demand for overseas tours. For
example, the Nice terrorist attack in France, the coup in Turkey, the deployment of THAAD by South Korea in 2016, the
political crisis in Maldives in 2018, and the protests in Hong Kong in 2019 and 2020, all negatively impacted short-term
travel demand for the tours to the affected regions. We have little or no control over the occurrence of such declines or
disruptions, which could result in a decrease in demand for our travel products and services. This decrease in demand,
depending on the scope and duration, could materially and adversely affect our business and results of operations over the
short and long term.
We face risks related to natural disasters and health epidemics.
In addition to the impact of natural disasters and health epidmics on the leisure travel industry, other aspects of our
business activities could be materially and adversely affected by natural disasters, health epidemics or other public safety
concerns affecting the PRC, and particularly Nanjing. Natural disasters may give rise to server interruptions, breakdowns,
system failures, technology platform failures or internet failures, which could cause the loss or corruption of data or
malfunctions of software or hardware as well as adversely affect our ability to operate our platforms and provide services.
Our business could also be adversely affected if our employees are affected by health epidemics, including the effects of
the COVID-19 outbreak and spread in China and globally, Ebola virus disease, H1N1 flu, H7N9 flu, avian flu or Severe
Acute Respiratory Syndrome, or SARS. In addition, our business operation, financial condition, results of operations and
cash flows could be adversely affected to the extent that any health epidemic harms the Chinese economy in general. Our
headquarter is located in Nanjing, where most of our directors and management and the majority of our employees
currently reside. Most of our system hardware and back-up systems are hosted in facilities located in Nanjing.
Consequently, if any natural disasters, health epidemics or other public safety concerns were to affect Nanjing, our
operation may experience material disruptions, which may materially and adversely affect our business, financial condition
and results of operations.
If we do not continue to provide competitive travel products and services, we may not be able to attract new customers or
to retain existing customers, and our business, financial condition and results of operations could suffer.
Our success depends on our ability to attract new customers and retain existing customers, which in turn requires our
continual provision of a wide array of competitive travel products and services.
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Participants in the online travel industry are continually developing new travel products and services in response to
increasing customer demand and changing market environment. We strive to stay abreast of emerging and rapidly changing
customer preferences and to continue to anticipate trends that will appeal to existing and potential customers. We will also
continue to invest in research and development in order to constantly improve the speed, accuracy and comprehensiveness
of our online platform. If we fail to keep on improving our travel products and services and platform at a competitive pace,
we may lose customers to our competitors and may not attract new customers. In addition to packaged tours, we provide
other travel-related services, such as sales of tourist attraction tickets, visa application services, hotel booking services, air
ticketing services, train ticketing services, bus ticketing services, car rental services, insurance services and financial
services. We intend to further broaden our product selection by extending our coverage of departing cities and travel
destinations as well as offering more departure time selections. If we fail to continue to source quality travel products and
services tailored to accommodate our customers’ changing needs and preferences, we may not be able to sell additional
products and services to our current customers, retain our current customers or attract new customers, and our business,
financial condition and results of operations will be materially and adversely affected.
Failure to maintain the quality of customer services could harm our reputation and our ability to retain existing
customers and attract new customers, which may materially and adversely affect our business, financial condition and
results of operations.
Our business is significantly affected by the overall size of our customer base, which in turn is determined by, among
other factors, their experience with our customer services. As such, the quality of customer services is critical to retaining
our existing customers and attracting new customers. If we fail to provide quality customer services, our customers may be
less inclined to book travel products and services with us or recommend us to new customers, and may switch to our
competitors. Failure to maintain the quality of customer services could harm our reputation and our ability to retain
existing customers and attract new customers, which may materially and adversely affect our business, financial condition
and results of operations.
We may not be able to adequately control and ensure the quality of travel products and services sourced from travel
suppliers. If there is any deterioration in the quality of their performance, our customers may seek damages from us
and not continue using our online platform.
Our ability to ensure satisfactory customer experience in a large part depends on travel suppliers to provide high-
quality travel products and services. Our reputation and brand will be negatively affected if travel suppliers fail to provide
quality travel products and services.
The actions we take to monitor and enhance the performance of travel suppliers may be inadequate in timely
discovering quality issues. There have been customer complaints and litigation against us due to travel suppliers’ failure to
provide satisfactory travel products or services. If our customers are dissatisfied with the travel products and services
provided, they may reduce their use of, or completely forgo, our online platform, and may even demand refunds of their
payments to us or claim compensation from us for the damages suffered as a result of travel suppliers’ performance or
misconduct, which could materially and adversely affect our business, financial condition and results of operations.
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We have incurred losses in the past and will likely incur losses in the future.
We have incurred net losses historically and will likely continue to incur losses in the future as we grow our business.
We had a net loss of RMB199.4 million, RMB729.4 million and RMB1,343.6 million (US$205.9 million) in 2018, 2019
and 2020, respectively. Our historical net losses were partially attributable to our spending associated with our rapidly
expanding business operations, including expenses related to regional expansion, branding and advertising campaigns,
mobile related initiatives and personnel related expenses. Also, the outbreak and spread of COVID-19 in 2020 caused
temporary suspension of our businesses, which led to net losses including a material amount of impairment charges. We
recorded impairment provisions and allowances against our long-term assets of RMB639.0 million (US$97.9 million) and
short-term assets of RMB272.1 million (US$41.7 million) in 2020, and the outbreak and spread of COVID-19 may result
in additional allowances for doubtful accounts and impairment provisions against our long-term assets as the impacts of
COVID-19 pandemic on certain of our long-term and short-term assets are considered to be other than temporary. In
addition, we expect that we will continue to incur expenses to further grow our business, which will affect our profitability
and cash flow from operations in the future.
Our ability to achieve profitability is also affected by various factors that are beyond our control. For example, our
revenues and profitability depend on the continual development of the online leisure travel industry in China and
consumers’ preference to make travel bookings online. We cannot assure you that making travel bookings online will
become more widely accepted in China or that consumers will increase their spending on online leisure travel booking.
Factors negatively affecting travel suppliers’ profitability will in turn adversely affect our financial condition and results of
operations.
If we are unsuccessful in addressing any of these risks and uncertainties, our business may be materially and adversely
affected and we will likely continue to incur net loss in the near future.
We face intense competition and may not be able to compete successfully against existing and new competitors.
We operate in China’s highly competitive travel industry. We compete with not only other online travel companies, but
also traditional travel service providers and tour operators, airlines and hotels and large, established Internet search engines.
See “Item 4.B. Information on the Company—Business Overview—Competition.” Some of our current and potential
competitors may have greater financial, marketing and other resources than we do. In addition, some of our competitors
may be acquired by, receive investments from or enter into strategic relationships with larger, well-established and well-
financed companies or investors. Furthermore, our business model causes us to maintain a cooperative-competitive
relationship with some of our competitors, especially tour operators, who also supplies travel products to customers
directly or through our competitors’ platforms.
Many of our competitors have launched, and may continue to launch, aggressive advertising campaigns, special
promotions and other marketing activities to promote their brands, attract new customers or increase their market shares. In
response, we started to take and may continue to take similar measures and as a result will incur significant expenses,
which in turn could negatively affect our operating margin in the quarters or years when such promotional activities are
carried out. We cannot assure you that we will be able to successfully compete against existing or new competitors. If we
are not able to compete successfully, we may lose our market share and our business, financial condition and results of
operations may be materially and adversely affected.
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If we fail to enhance our brand recognition, we may face difficulty in retaining existing and attracting new customers
and travel suppliers and our business may be harmed.
Recognition and reputation of our “Tuniu” brand among our targeted customers and travel suppliers have contributed
significantly to our growth. We have made continual investments in enhancing awareness of our brand among customers
and travel suppliers since our inception. Our brand recognition and reputation also depend on our ability to provide high-
quality customer services, address customer needs and handle customer complaints properly, maintain our relationships
with travel suppliers and provide a user-friendly online platform. See “—Risks Related to Our Business and Industry—
Failure to maintain the quality of customer services could harm our reputation and our ability to retain existing customers
and attract new customers, which may materially and adversely affect our business, financial condition and results of
operations”, “—Risks Related to Our Business and Industry—If we are unable to maintain existing relationships with
travel suppliers, or develop relationships with new travel suppliers on favorable terms or terms similar to those we
currently have, our business and results of operations may suffer” and “—Risks Related to Our Business and Industry—
The proper functioning of our online platform, including our web and mobile platforms, and management systems is
essential to our business. Any failure to maintain their satisfactory performance will materially and adversely affect our
business, reputation, financial condition and results of operations.” Failure to maintain the strength of our brand could
reduce the number of customers and deteriorate our relationships with travel suppliers.
In addition, some of our competitors have well-established brands in the travel industry, and may have more financial
and other resources to advertise and promote their brands. Therefore, we expect to continue incurring advertising and
marketing expenditures and use other resources to maintain and increase our brand recognition. Our marketing costs may
also increase as a result of inflation in media pricing in China, including costs for purchasing search engine keywords and
placing online and offline advertisements. If we fail to cost-effectively maintain and increase our brand recognition, our
financial condition and results of operations may be materially and adversely affected.
We are exposed to proceedings or claims arising from travel-related accidents or customer misconduct during their
travels, the occurrence of which may be beyond our control.
Accidents are a leading cause of mortality and morbidity among tourists. We are exposed to risks of our customers’
claims arising from or relating to travel-related accidents. As we enter into contracts with our customers directly, our
customers typically take actions against us for the damages they suffer during their travels. However, such accidents may
result from the negligence or misconduct of travel suppliers or other service providers, over which we have no or limited
control. See also “—Risks Related to Our Business and Industry—We may not be able to adequately control and ensure the
quality of travel products and services sourced from travel suppliers. If there is any deterioration in the quality of their
performance, our customers may seek damages from us and not continue using our online platform.” We maintain
insurance coverage for our liabilities as a travel company, and are indemnified by the insurance company/companies for the
damages claimed by our customers. However, there is no assurance that such insurance or indemnification will be
sufficient to cover all of our losses. For example, losses incurred due to the COVID-19 in most cases are not reimbursable.
In addition, some of the travel-related accidents result from adventure activities undertaken by our customers during their
travels, such as scuba diving, white water rafting, wind surfing and skiing. Furthermore, we may be affected by our
customers’ misconduct during their travels, over which we have no or limited control. Such accidents and misconduct,
even if not resulting from our or travel suppliers’ negligence or misconduct, could create a public perception that we are
less reliable than our competitors, which would harm our reputation, and could adversely affect our business and results of
operations.
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The proper functioning of our online platform, including our web and mobile platforms, and management systems is
essential to our business. Any failure to maintain their satisfactory performance will materially and adversely affect our
business, reputation, financial condition and results of operations.
Availability, satisfactory performance and reliability of our online platform, including our web and mobile platforms,
are critical to our ability to attract and retain customers and provide quality travel products and services to our customers.
Any unavailability or slowdown of our online platforms would reduce the number of our customers and our customers’
travel bookings. Some telecommunications carriers have system constraints that can affect our customer experience. For
example, if a large number of customers use the same telecommunications carrier at the same time for services requiring a
large amount of data transmission, the customers could experience reduced speed or other technical issues due to the
carrier’s capacity constraints, over which we have no control. Our servers may also be vulnerable to computer viruses,
physical or electronic break-ins or other potential disruptions, which could lead to interruptions, delays, loss of data or the
inability to accept and process customer queries or bookings. We may also experience interruptions caused by reasons
beyond our control such as power outages. Unexpected interruptions could damage our reputation and result in a material
decrease in our revenues. In addition, our online platform may contain undetected errors or “bugs” that could adversely
affect their performance.
Our mobile platform serves as an important and integral part of our customers’ research on travel-related information.
It is difficult to predict the problems we may encounter in developing the mobile applications for newly released mobile
devices and platforms, and we may need to devote significant resources to the development, support and maintenance of
such applications. We are dependent on the interoperability of providing our products and services on popular mobile
operating systems that we do not control, such as Android and iOS, and any changes in such systems that degrade the
accessibility of our products and services or give preferential treatment to competing products and services could adversely
affect the usability of our products and services on mobile devices. In addition, we rely upon third-party mobile application
stores for users to download our mobile applications. As such, the promotion, distribution and operation of our mobile
applications are subject to app stores’ standard terms and policies for app developers. As a result, we may fail to attract and
retain a significant portion of the growing number of customers who search for and book travel products and services
through mobile devices. We may also experience difficulties monetizing customer traffic to our mobile platform.
In addition, we rely significantly on our proprietary N-Booking system and other management systems to facilitate and
process transactions. We may in the future experience system interruptions that prevent us from efficiently fulfilling
bookings or providing services and support to our customers or travel suppliers. Any interruptions, outages or delays in our
systems, or deterioration in their performance, could impair our ability to process transactions and decrease the quality of
our services to our customers or travel suppliers. If we were to experience frequent or persistent system failures, our
reputation and brand would be harmed.
If we are unable to maintain existing relationships with travel suppliers, or develop relationships with new travel
suppliers on favorable terms or terms similar to those we currently have, our business and results of operations may
suffer.
Our business is dependent on our ability to maintain our relationships and arrangements with existing travel suppliers.
For most of our suppliers, we do not prohibit travel suppliers from developing business relationships with our competitors
or selling, through their direct sales, travel products that are the same as or similar to those they supply to us. If we are
unable to maintain satisfactory relationships with our existing travel suppliers, or if travel suppliers establish similar or
more favorable relationships with our competitors, or if travel suppliers increase their competition with us through their
direct sales, we may not have the necessary supply to meet the needs of our customers, or we may not obtain it at
satisfactory rates. We do not enter into any long-term agreements with travel suppliers. We cannot assure you that travel
suppliers will renew our agreements in the future on favorable terms or terms similar to those we currently have agreed.
Travel suppliers may increase the prices that they charge us or the deposits that they require from us. As a result, the
amount, pricing and breadth of travel products and services that we are able to offer may be reduced and our business and
results of operations could be materially and adversely affected.
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Furthermore, in order to grow our business, we will need to develop relationships with new travel suppliers of good
quality. We cannot assure you that we will be able to identify appropriate travel suppliers or enter into arrangements with
those travel suppliers on favorable terms or at all. Any failure to do so could harm the growth of our business and adversely
affect our financial condition and results of operations.
We may suffer losses if we are unable to predict the amount of travel products we will need to purchase in advance.
For peak seasons and for certain tours and destinations, we have made commitments with a number of travel suppliers
to purchase packaged tours, hotel rooms and air tickets before selling them to our customers. We operate organized tours in
which we take substantive inventory risk, and if this business increases, our inventory risk could also increase . If we are
unable to accurately predict demand for the packaged tours, hotel rooms and air tickets that we are committed to purchase
and which are nonrefundable, we would be responsible for bearing the cost of the travel products we are unable to sell, and
our financial condition and results of operations would be adversely affected.
Our quarterly results are likely to fluctuate because of seasonality in the leisure travel industry in China.
Our business experiences fluctuations, reflecting seasonal variations in demand for leisure travel services. Sales of
leisure travel products and services will increase in respect of holiday periods and decrease in respect of off-peak times,
while prices of leisure travel products and services are subject to fluctuation between peak seasons and low seasons. For
example, the third quarter of each year generally contributes the highest percentage of our annual revenues, because many
of our customers tend to travel during summer holidays in July and August. Consequently, our results of operations may
fluctuate from quarter to quarter.
If we are unable to identify, attract, hire, train and retain key individuals and highly skilled employees, our business
may be adversely affected
Our future performance depends on the continued service of our senior management, in particular, Mr. Dunde Yu, our
founder, chairman and chief executive officer. If one or more of our key executives were unable or unwilling to continue in
their present positions, we may not be able to replace them easily, our future growth may be constrained, our business may
be disrupted and our financial condition and results of operations may be materially and adversely affected. There is no
assurance that we can continue to retain their services and there can be no assurance that they will not compete against us.
If our business expands, we will need to hire additional employees, including supplier management personnel to
maintain and expand our travel supplier network, information technology and engineering personnel to maintain and
expand our online platform and customer service personnel to serve an increasing number of customers. If we are unable to
identify, attract, hire, train and retain sufficient employees in these areas, our customers may not have satisfactory
experiences with us and may turn to our competitors, which may adversely affect our business and results of operations.
We may be subject to legal or administrative proceedings regarding our travel products and services, information
provided on our online platform or other aspects of our business operations, which may be time-consuming to defend
and affect our reputation.
From time to time, we have become and may in the future become a party to various legal or administrative
proceedings arising in the ordinary course of our business, including breach of contract claims, anti-competition claims and
other matters. Such proceedings are inherently uncertain and their results cannot be predicted with certainty. Regardless of
the outcome and merit of such proceedings, any such legal action could have an adverse impact on our business because of
defense costs, negative publicity, diversion of management’s attention and other factors. In addition, it is possible that an
unfavorable resolution of one or more legal or administrative proceedings, whether in the PRC or in another jurisdiction,
could materially and adversely affect our financial position, results of operations or cash flows in a particular period or
damage our reputation. In addition, our online platform contains information about our travel products and services,
vacation destinations and other travel-related topics. It is possible that our customers would take action against us in the
event that any content accessible on our online platform were to contain errors or false or misleading information.
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We may be subject to detrimental adverse publicity, malicious allegations or other conduct by individuals or entities,
which could harm our reputation, adversely affect our business and the trading price of our ADSs.
We have been, and in the future may be, the target of adverse publicity, malicious allegations or other detrimental
conduct by individuals or entities. Such allegations, directly or indirectly against us, may be posted in internet chat-rooms,
on blogs, any website or mobile applicabtions by anyone on an anonymous basis. We may be required to spend significant
time and incur substantial costs in response to such allegations or other detrimental conduct, and there is no assurance that
we will be able to conclusively refute each of them within a reasonable period of time, or at all. Our reputation may be
harmed as a result of the public dissemination of malicious allegations about our personnel, business, operations,
accounting, prospects or business ethics, which in turn could adversely affect our business and the trading price of our
ADSs.
We have limited experience in operating a finance business. Increased exposure to credit risks or significant
deterioration in the asset quality of our finance business may have a material adverse effect on our business, results of
operations and financial condition.
We started to offer financial services in China since 2015. We provide various financial services, including consumer
financing, supply chain financing, factoring service, cash lending service and insurance products. Expansion in the finance
sector involves new risks and challenges. For certain financial products, we have committed or will commit our own
capital. Our lack of familiarity with the finance sector may make it difficult for us to anticipate the demands and
preferences in the market and develop financial products that meet the requirements and preference. We may not be able to
successfully identify new product and service opportunities or develop and introduce these opportunities to our clients in a
timely and cost-effective manner, or our clients may be disappointed in the returns from financial products that we offer.
The risk of nonpayment of loans is inherent in the finance business and we are subject to credit risk resulting from
defaults in payment for loans by the suppliers and customers. Credit risks are exacerbated in consumer financing because
there is relatively limited information available about the credit histories of customers. There can be no assurances that our
monitoring of credit risk issues and our efforts to mitigate credit risks through our credit assessment and risk management
policies are or will be sufficient to result in lower delinquencies. Furthermore, our ability to manage the quality of our loan
portfolio and the associated credit risks will have significant impact on the results of operations of our finance business.
Deterioration in the overall quality of loan portfolio and increased exposure to credit risks may occur due to a variety of
reasons, including factors beyond our control, such as a slowdown in the growth of the PRC or global economies or a
liquidity or credit crisis in the PRC or global finance sectors, which may adversely affect the businesses, operations or
liquidity of our suppliers and customers or their ability to repay or roll over their debt. Any significant deterioration in the
asset quality of our finance business and significant increase in associated credit risks may have a material adverse effect
on our business, results of operations and financial condition.
In addition, the development of finance business is capital intensive. We continue to provide management,
administration and collection services on the transferred financial assets and are obligated to absorb a portion of the losses
incurred in the outstanding portfolio of the transferred financial assets in the event of default. We may need additional cash
resources due to further developments of our financial services or changed business conditions, which may cause us to seek
credit facilities or sell additional equity or debt securities. The incurrence of indebtedness would result in increased debt
obligations and could result in operating and financial covenants that would restrict our operations. Additionally, it is
uncertain whether financing will be available in amounts or on terms acceptable, if at all.
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The regulatory regime and practice with respect to online small credit companies are evolving and subject to
uncertainty.
Government authorities have issued certain rules, laws and regulations to regulate the organization and business
activities of online small credit companies. However, due to the lack of the detailed rules on interpretation and
implementation of such rules, laws and regulations and the fact that the rules, laws and regulations are expected to continue
to evolve with respect to the online small credit companies, there are uncertainties as to how such rules, laws and
regulations will be interpreted and implemented and whether there will be new rules, laws or regulations issued which
would set further requirements and restrictions on online small credit companies. In November 2020, the China Banking
Regulatory Commission, or the CBRC which is now merged into the China Banking and Insurance Regulatory
Commission, or the CBIRC, and the People’s Bank of China, or PBOC, published the draft Interim Measures for Online
Small Credit Business, or the Draft Online Small Credit Measures, for public comment. See “ Item 4.B. Information on the
Company—Business Overview—PRC Regulation—Regulations on Small Credit Companies.” The Draft Online Small
Credit Measures, if enacted in substantially the form published for public comment, will change regulatory requirements
for online small credit business in various respects. We cannot assure you that our existing practice of the online small
credit companies will be deemed to be in full compliance with all rules, laws and regulations that are applicable, or may
become applicable to us in the future.
We have limited experience in operating our self-operated local tour operators, which may negatively affect our
business, financial condition and results of operations.
Starting in 2016, we further strengthened our presence in the travel supply chain by introducing a number of self-
operated local tour operators in major destinations such as Xiamen, Beijing and Changsha. We operate our domestic self-
operated local tour operators primarily through Xiamen Suiwang International Travel Service Co., Ltd., a wholly owned
subsidiary of us established in January 2016. Our self-operated local tour operators directly provide destination-based
services to our organized tour customers, starting from their arrival at the destination and all the way until they depart from
the destination. Similar to our travel suppliers, our self-operated local tour operators coordinate the tours based on pre-
arranged itineraries and cover all components of the tours including transportations, accommodations, entertainments,
meals and tour guide services. The tour guides directly serving our customers are either directly employed by us or
working for us on a contract basis. By operating the self-operated local tour operators, we are able to exercise greater
control over the quality of our trips and utilize years of data on travel preference to design more suitable products for
consumers. As of February 28, 2021, we operate our own local tour operators in 32 domestic destinations and 6
international destinations.
We have limited experience in operating our self-operated local tour operators. The local leisure travel industry is
highly fragmented, so our self-operated local tour operators may encounter fierce competition from peers and we may not
generate the expected profits. Furthermore, if any destinations where we have self-operated local tour operators are
negatively affected by external events such as earthquake or other natural disasters, pandemics or epidemics, such events
may negatively affect the business of our self-operated local tour operator as it will be difficult for the affected self-
operated local tour operators to change the pre-arranged itineraries of the customers. In addition, we may not be able to
adequately control and ensure the quality of service provided by the tour guides directly serving our customers, in
particular the tour guides working for us on a contract basis. If our tour guides fail to provide high quality services in a
timely manner to our customer or violate any applicable PRC laws and regulations, or in the case of customer injury or
death due to the negligence or misconduct of our tour guides, we may be liable for compensation, which may adversely
affect our reputation, business, financial condition and results of operations.
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If the fragmented travel industry in China becomes consolidated, our business, financial condition and results of
operations may be adversely affected.
China’s enormous size and population, imbalanced economic development and differences in consumer behavior
across the country have created a highly fragmented and diverse travel industry. In recent years, customers have been
shifting from highly fragmented traditional offline travel companies to travel websites for a wider product selection and
greater convenience. If, however, traditional tour operators form alliances, or merge or consolidate among themselves, or if
one of travel suppliers is acquired by another company with which we do not have a relationship, we may not be able to
maintain our strength in offering a wider selection of travel products and services as compared to traditional travel
companies, and our business, financial condition and results of operations may be adversely affected.
The Tourism Law and the Measures for Administration of the Overseas Tours of Chinese Citizens may reduce the
demand of organized tours and materially and adversely affect our business and results of operations.
On April 25, 2013, the Standing Committee of the National People’s Congress promulgated the Tourism Law, which
became effective as of October 1, 2013 and was amended in 2016 and 2018, respectively. On May 27, 2002, the State
Council promulgated the Measures for the Administration of the Overseas Tours of Chinese Citizens which became
effective as of July 1, 2002 and was amended in 2017. The Tourism Law and the Measures for the Administration of the
Overseas Tours of Chinese Citizens impose more stringent restrictions on tour operators. Pursuant to the Tourism Law and
the Measures for the Administration of the Overseas Tours of Chinese Citizens, tour operators are prohibited from
arranging compulsory shopping or other activities which charge additional fees on top of the contract prices that the tourist
has already paid, unless it is agreed upon by both parties through consultation or requested by the tourist and does not
affect the itinerary of other tourists. See “Item 4.B. Information on the Company—Business Overview—PRC Regulation—
Regulations on Travel Companies.” If travel suppliers fail to comply with these restrictions, our reputation and brand may
be negatively affected. In addition, as a result of the Tourism Law and the Measures for the Administration of the Overseas
Tours of Chinese Citizens, the commissions or rebates that tour operators receive from shopping establishments have
declined and organized tour prices have risen, which have reduced the demand for organized tours in the short term and
may continue to reduce the demand for organized tours in the future. If customers cannot adapt to the increased organized
tour prices, our business and results of operations will be materially and adversely affected.
The E-Commerce Law may significantly increase our compliance cost.
In August 2018, the Standing Committee of the National People’s Congress promulgated the E-commerce Law, which
became effective in January 2019. The E-commerce Law strengthens the regulation on E-commerce operators relating to
consumer protection, personal data protection and intellectual property rights protection. As an e-commerce operator, we
are required under the E-commerce Law, (1) to refrain from conducting false or misleading commercial promotion by
fabricating transactions, making up user comments or otherwise, to defraud or mislead consumers, (2) to allow consumer to
opt out of search results targeting his or her personally characteristics such as hobbies and shopping patterns and
simultaneously show the consumers with options not targeting his or her personally characteristics, (3) to alert consumers
of tie-in sale of commodities or services, and shall not set the tied-in commodities or services as a default option, (4) to
obtain and maintain business license and other applicable licenses as required, and disclose information of such license at
our front-page, (5) to clearly detail the refund procedure for the deposit we received from customers, and not set any
unreasonable conditions to refund, (6) to take the risks and responsibilities in the transportation of the products, unless the
consumer chooses a courier logistics service provider other than the default service provider, etc. Since the promulgation of
the E-commerce Law, PRC government has promulgated implementation rules and opinions governing e-commerce
industry, including measures governing administration of payment institutions’ foreign exchange related services provided
to e-commerce operators and consumers, as well as guiding opinions on data interconnection and sharing between
enterprises of express delivery and e-commerce industries, and the Measures for the Supervision and Administration of
Online Trading which impose a series of regulatory requirements on new forms of online trading, such as online social
networking e-commerce and online livestreaming e-commerce.
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We have adopted the required measures to keep our current practice in line with the requirements under the E-
Commerce Law and its implementation rules. However, the competent PRC government may promulgate further
implementation rules under the E-Commerce Law and may deem our current measures not sufficient under the E-
Commerce Law and its implementation rules. If we are required to adopt additional measures to comply with the E-
Commerce Law and its implementation rules, our compliance cost would increase significantly, and our business and
results of operations will be materially and adversely affected.
We may not be able to prevent others from using our intellectual property, which may harm our business and expose us
to litigation.
We regard our intellectual property as critical to our success. We rely primarily on a combination of copyright,
software registration, trademark, trade secret and unfair competition laws and contractual rights, such as confidentiality
agreements with our employees and others, to protect our intellectual property rights. The protection of intellectual
property rights in China may not be as effective as that in the United States. Unauthorized use or other misappropriation of
our technologies would enable third parties to benefit from our technologies without paying us, or enable our competitors
to offer travel products and services that are comparable to or better than ours. From time to time, we may have to enforce
our intellectual property rights through litigation. Such litigation may result in substantial costs and diversion of resources
and management attention. If we are not successful in protecting our intellectual property, our business, financial condition
and results of operations may be materially and adversely affected.
Claims by third parties that we infringe on their intellectual property rights could lead to government administrative
actions and result in significant costs and have a material adverse effect on our business, financial condition and
results of operations.
We cannot be certain that our operations or any aspects of our business do not or will not infringe upon copyrights or
other intellectual property rights held by third parties. We have been in the past, and may be from time to time in the future,
subject to legal proceedings, claims or government administrative actions relating to alleged infringement on copyrights or
other intellectual property rights held by third parties in relation to the content on our online platform or intellectual
property rights otherwise used in our operation. For example, our website may be found to contain pictures that infringe on
copyrights of third parties or hotel reviews that are third parties’ proprietary information. In addition, some of the software
that we are currently using in our business may infringe on third parties’ copyrights. If we are found to have infringed on
the intellectual property rights of others, we may be subject to liability for our infringement activities or may be prohibited
from using such intellectual property, and we may incur licensing fees. Successful infringement or licensing claims made
against us may result in significant monetary liabilities and may materially disrupt our business and operations by
restricting or prohibiting our use of the intellectual property in question. Moreover, regardless of whether we successfully
defend against such claims, we could suffer negative publicity and our reputation could be severely damaged. Any of these
events could have a material and adverse effect on our business, financial condition and results of operations.
In addition, user-generated content on our online platform may contain or provide links to information that infringes
on the copyrights or other intellectual property rights of third parties or violates applicable rules or regulations in relation to
censorship, or we may use the user-generated content in a way that infringes on the rights of the users or third parties. Any
claims, with or without merit, could be time-consuming to defend, result in litigation and divert management’s attention
and resources.
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The successful operation of our business depends upon the performance and reliability of the Internet infrastructure
and telecommunications networks in China.
Our business depends on the performance and reliability of the Internet infrastructure and telecommunications
networks in China. Almost all access to the Internet is maintained through state-owned telecommunications operators
under the administrative control and regulatory supervision of the Ministry of Industry and Information Technology of the
PRC, or the MIIT. In addition, the national networks in China are connected to the Internet through international gateways
controlled by the PRC government. These international gateways are the only channels through which domestic users can
connect to the Internet. We rely on a limited number of telecommunications service providers, primarily China Telecom
and China Unicom, to provide us with data communications capacity. We, our customers or travel suppliers, may not have
access to alternative networks in the event of disruptions, failures or other problems with China’s Internet infrastructure.
With the expansion of our business, we may be required to upgrade our technology and infrastructure to keep up with the
increasing traffic on our online platform. However, we have no control over the costs of the services provided by
telecommunications service providers. If the prices we pay for telecommunications and Internet services rise significantly,
our results of operations may be materially and adversely affected. If Internet access fees or other charges to Internet users
increase, the number of Internet users may decline and our business may be harmed. Moreover, if we are not able to renew
services agreements with the telecommunications carriers when they expire and are not able to enter into agreements with
alternative carriers on commercially reasonable terms or at all, the quality and stability of our online platform may be
adversely affected.
We are subject to payment-related risks.
We enable our customers to make payments through our website by working with various third-party online payment
processing service providers. As we rely on third parties to provide payment processing services, including processing
payments made with credit cards and debit cards, it could disrupt our business if these companies become unwilling or
unable to provide these services to us. We may be subject to human error, fraud and other illegal activities in connection
with third-party online payment services. If our data security systems are breached or compromised, we may lose our
ability to accept credit and debit card payments from our customers, and we may be subject to claims for damages from our
customers and third parties, all of which could adversely and materially affect our reputation as well as our results of
operations.
If we fail to adopt new technologies or adapt our online platform and management systems to changing user
requirements, increasing traffic or emerging industry standards, our business may be materially and adversely affected.
The online travel industry is subject to rapid technological changes. To remain competitive, we must continue to
enhance and improve the responsiveness, functionality and features of our online platform. The online travel industry is
also characterized by rapid technological evolution and changes in customer requirements and preferences. Our success
will depend, in part, on our ability to identify, develop, acquire or license leading technologies useful in our business and
respond to technological advances and emerging industry standards and practices in a cost-effective and timely manner.
The development of our online platform and other proprietary technology entails significant technical and business risks. In
addition, the widespread adoption of new Internet, networking or telecommunications technologies or other technological
changes could require substantial expenditures to modify or adapt our infrastructure. We may not be able to use new
technologies effectively or adapt our online platform, proprietary technologies and operating systems to the requirements
of our customers and travel suppliers or emerging industry standards. If we are unable to adapt in a cost-effective and
timely manner to changing market conditions or user requirements, whether for technical, legal, financial, or other reasons,
our business may be materially and adversely affected.
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Our business may be harmed if we are unable to upgrade our systems and infrastructure quickly enough to
accommodate increasing traffic levels, or to avoid obsolescence, or successfully integrate any newly developed or
purchased technologies with our existing systems. Capacity constraints could cause unanticipated system disruptions,
slower response times, poor customer experience, impaired quality and speed of reservations and confirmations and delays
in reporting accurate financial and operating information. These factors could cause us to lose customers. Additionally, we
will continue to upgrade and improve our technology infrastructure to support our business growth. However, we cannot
assure you that we will be successful in executing these system upgrades and improvement strategies. In particular, our
systems may experience interruptions during upgrades, and any new technologies or infrastructures may not be fully
integrated with our existing systems on a timely basis, or at all. If our existing or future technology infrastructure does not
function properly, it could cause system disruptions and slow response times that affect data transmission, which in turn
could materially and adversely affect our business.
We are exposed to risks associated with online security, and in particular, the implementation of laws and regulations
on data privacy in China.
We collect, store and process certain personal and other sensitive data from our customers. The massive data that we
have processed and stored makes us or the third-party service providers who host our servers a target and potentially
vulnerable to cyber-attacks, computer viruses, physical or electronic break-ins, or similar disruptions. The secure
transmission of confidential information over the Internet is essential in maintaining customer confidence in us. We
conduct a significant portion of our transactions through our website. We utilize digital certificates to help us conduct
secure communications and transactions. In addition, sensitive customer information, such as password and payment
information, is stored with encryption, and our data servers are secured with firewalls. However, advances in technology or
other developments could result in a compromise or breach of the technology that we use to protect customer and
transaction data. Any failure or perceived failure by us to prevent information security breaches or to comply with privacy
policies or privacy-related legal obligations, or any compromise of security that results in the unauthorized release or
transfer of personally identifiable information or other customer data, could cause our customers to lose trust in us, expose
us to legal claims, and adversely affect our operating results. In addition, our security measures may not be sufficient to
prevent security breaches. Any systems failure or compromise of our security that results in the unauthorized access to or
release of our customers’ data could significantly limit the delivery of our products and services, as well as harm our
reputation and brand and, therefore, our business. We spend significant resources on technology and product development
to protect against leakage of user information and other security breaches. Nonetheless, given its great commercial value,
our customer data may still likely to be misused by third-parties, which could expose us to legal and regulatory risks and
seriously harm our business.
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There are numerous laws governing privacy and the storage, sharing, use, disclosure and protection of personally
identifiable information and user data. Specifically, personally identifiable and other confidential information is
increasingly subject to legislation and regulations in numerous domestic and international jurisdictions. On November 7,
2016, the Standing Committee of the National People’s Congress issued the Cyber Security Law, which came into effect on
June 1, 2017. The Cyber Security Law stipulates that a network operator, including internet information service provider
among others, must adopt technical measures and other necessary measures in accordance with the applicable laws and
regulations as well as compulsory national and industrial standards to safeguard the safety and stability of network
operations, effectively respond to network security incidents, prevent illegal and criminal activities, and maintain the
integrity, confidentiality and availability of network data. Although we take measures to comply with the Cyber Security
Law and the applicable laws, regulations and standards, and we believe our current business operation is in line with the
requirements under the Cyber Security Law and the applicable laws, regulations and standards, there can be no assurance
that our measures will be effective and sufficient under the Cyber Security Law and the applicable laws, regulations and
standards. If we were found by the regulatory authorities to have violated the Cyber Security Law and the applicable laws,
regulations and standards, we would be subject to warnings, fines, confiscation of illegal revenue, revocation of licenses,
cancellation of filings, shutdown of our platform or even criminal liability and our business, results of operations and
financial condition would be materially adversely affected. In addition, the regulatory framework for privacy protection in
China and worldwide is currently evolving and is likely to remain uncertain for the foreseeable future. For example, the
Cyber Security Law sets high requirements for the operational security of facilities deemed to be part of the PRC’s “critical
information infrastructure.” New laws or regulations concerning data protection, or the interpretation and application of
existing consumer and data protection laws or regulations, which is often uncertain and in flux, may be inconsistent with
our practices. If so, in addition to the possibility of violation of laws and fines imposed by regulatory authorities, this could
result in an order requiring that we change our practices, which could have an adverse effect on our business and operating
results. Complying with new laws and regulations could cause us to incur substantial costs or require us to change our
business practices in a manner materially adverse to our business.
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In December 2012, the Standing Committee of the National People’s Congress enacted the Decision to Enhance the
Protection of Network Information, or the Information Protection Decision, to further enhance the protection of users’
personal information in electronic form. The Information Protection Decision provides that Internet information services
providers must expressly inform their users of the purpose, manner and scope of the collection and use of users’ personal
information by Internet information services providers, publish the Internet information services providers standards for
their collection and use of users’ personal information, and collect and use users’ personal information only with the
consent of the users and only within the scope of such consent. The Information Protection Decision also mandates that
Internet information services providers and their employees keep users’ personal information that they collect strictly
confidential, and that they must take such technical and other measures as are necessary to safeguard the information
against disclosure, damages and loss. Pursuant to the Ninth Amendment to the Criminal Law issued by the Standing
Committee of the National People’s Congress in August 2015 and becoming effective in November 2015, any internet
service provider that fails to fulfill the obligations related to internet information security administration as required by
applicable laws and refuses to rectify upon orders, shall be subject to criminal penalty for the result of (i) any dissemination
of illegal information in large scale; (ii) any severe effect due to the leakage of the client’s information; (iii) any serious
loss of criminal evidence; or (iv) other severe situation, and any individual or entity that (i) sells or provides personal
information to others in a way violating the applicable law, or (ii) steals or illegally obtain any personal information, shall
be subject to criminal penalty in severe situation. In August 2019, Cyberspace Administration of China promulgated
Provisions on Online Protection of Children’s Personal Information, or the Children Personal Information Provisions,
which came into effect in October 2019. The Children Personal Information Provisions impose higher requirements on
network operators in terms of protection of children’s personal information, such as requiring network operators to adopt
personal information protection rules and user agreements specifically for children’s personal information and appoint
persons dedicated to be responsible for the protection of children’s personal information. In November 2019, Cyberspace
Administration of China, together with other competent government authorities, published the Guidelines for Identifying
Illegal Collection and Use of Personal Information via Apps, which describes 31 specific types of illegal collection or use
of user’s personal information, divided into six categories. See “Item 4.B. Information on the Company—Business
Overview—PRC Regulation—Regulations on Internet Privacy”. In July 2020, the Standing Committee of the National
People's Congress of China released a draft data security law, or the Draft Data Security Law, for public comment. The
Draft Data Security Law provides for data security and privacy obligations on entities and individuals carrying out data
activities. The Draft Data Security Law also introduces a national security review procedure for those data activities which
may affect national security and imposes export restrictions on certain data information. In October 2020, the Standing
Committee of the National People's Congress of China released a draft personal information protection law, or the Draft
Personal Information Protection Law, for public comment. The Draft Personal Information Protection Law provides for
various requirements on personal information protection, including legal bases for data collection and processing,
requirements on data localization and cross-border data transfer, requirements for consent and requirements on processing
of sensitive personal information. As the Draft Data Security Law and Draft Personal Information Protection Law have not
been formally adopted and the requirements in the final adopted laws remain subject to change, we may be required to
make further adjustments to our business practices to comply with the enacted form of the laws. Compliance with current
regulations and regulations that may come into effect in these areas may increase our expenses related to regulatory
compliance, which could have an adverse effect on our financial condition and results of operations.
In addition to laws, regulations and other applicable rules regarding privacy and privacy advocacy, industry
associations or other organizations may propose new privacy standards. Because the interpretation and application of
privacy and data protection laws and privacy standards are still uncertain, it is possible that these laws or privacy standards
may be interpreted and applied in a manner that is inconsistent with our practices. Any inability to adequately address
privacy concerns, even if unfounded, or to comply with applicable privacy or data protection laws, regulations and privacy
standards, could result in additional cost and liability to us, damage our reputation, inhibit the use of our platform and harm
our business.
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Our use of open source software could adversely affect our ability to offer our products and services and subject us to
possible litigation.
We use open source software in connection with our development of technology infrastructure. From time to time,
companies that use open source software have faced claims challenging the use of open source software and/or compliance
with open source license terms. We could be subject to suits by parties claiming ownership of what we believe to be open
source software, or claiming noncompliance with open source licensing terms. Some open source licenses require users
who distribute software containing open source to make available all or part of such software, which in some
circumstances could include valuable proprietary code. While we monitor the use of open source software and try to ensure
that none is used in a manner that would require us to disclose our proprietary source code or that would otherwise breach
the terms of an open source agreement, such use could inadvertently occur, in part because open source license terms are
often ambiguous. Any requirement to disclose our proprietary source code or pay damages for breach of contract could be
harmful to our business, results of operations or financial condition, and could help our competitors develop travel products
and services that are similar to or better than ours.
We may not be successful in pursuing strategic alliances and acquisitions, and future alliances and acquisitions may
not bring us anticipated benefits.
Part of our growth strategy is the pursuit of strategic alliances and acquisitions. There can be no assurance that we will
succeed in implementing this strategy as it is subject to many factors which are beyond our control, including our ability to
identify and successfully execute suitable acquisition opportunities and alliances. Any future acquisitions, investments, and
strategic alliances may expose us to new operational, regulatory and market risks, as well as risks associated with
additional capital requirements, including risks associated with unforeseen or hidden liabilities, diversion of management
resources and costs of integrating acquired businesses, the inability to generate sufficient revenue to offset the costs and
expenses of acquisitions, and potentially significant loss of investments. Any acquisitions we pursue could also create
difficulties with integrating the technology of acquired businesses with our existing technology, and employees of acquired
businesses into the various departments and ranks in our company, and it could take substantial time and effort to integrate
the business processes being used in the acquired businesses with our existing business processes. Should we fail to
integrate acquired companies efficiently, our earnings, revenues, gross margins, operating margins and business operations
could be negatively affected. Furthermore, acquired companies may not perform to our expectations for various reasons,
including legislative or regulatory changes that affect the products and services in which the acquired companies specialize
and the loss of key personnel and customer accounts. Any alliances we pursue could also subject us to a number of risks,
including risks associated with sharing proprietary information, non-performance by the third party and increased expenses
in establishing new strategic alliances, any of which may materially and adversely affect our business. We may also have
limited ability to monitor or control the actions of these third parties and, to the extent any of these strategic third parties
suffer negative publicity or harm to their reputation from events relating to their business, we may also suffer negative
publicity or harm to our reputation by virtue of our association with any such third party.
We may not be able to identify suitable future acquisition or investment candidates or alliance partners. Moreover,
there is no assurance that such alliances or acquisitions will achieve our intended objectives or benefits. Even if we identify
suitable candidates or partners, we may be unable to complete an acquisition, investment or alliance on terms commercially
acceptable to us. If we fail to identify appropriate candidates or partners, or complete desired acquisitions, investments or
alliances, we may not be able to implement our strategies effectively or efficiently, and our overall profitability and growth
plans may be adversely affected.
If we fail to implement and maintain an effective system of internal controls, we may be unable to accurately report our
results of operations or prevent fraud or fail to meet our reporting obligations, and investor confidence and the market
price of our ADSs may be materially and adversely affected.
We are subject to the Sarbanes-Oxley Act of 2002, or SOX. Section 404 of the SOX requires that we include a report
from management on the effectiveness of our internal control over financial reporting in our annual report on Form 20-F. In
addition, our independent registered public accounting firm must report on the effectiveness of our internal control over
financial reporting.
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Our management has concluded that our internal control over financial reporting was effective as of December 31,
2020. See “Item 15. Controls and Procedures.” Our independent registered public accounting firm has issued an attestation
report, which has concluded that our internal control over financial reporting was effective in all material aspects as of
December 31, 2020. However, if we fail to maintain the effectiveness of our internal control over financial reporting, we
may not be able to conclude on an ongoing basis that we have effective internal control over financial reporting in
accordance with the SOX. Moreover, effective internal control over financial reporting is necessary for us to produce
reliable financial reports. As a result, any failure to maintain effective internal control over financial reporting could result
in the loss of investor confidence in the reliability of our financial statements, which in turn could negatively impact the
trading price of our ADSs. Furthermore, we may need to incur additional costs and use additional management and other
resources in an effort to comply with Section 404 of the SOX and other requirements going forward.
We have limited business insurance coverage in China.
Insurance companies in China offer limited business insurance products. Business disruption insurance is available to a
limited extent in China, but we have determined that the risks of disruption, the cost of such insurance and the difficulties
associated with acquiring such insurance make it commercially impractical for us to have such insurance. We maintain
insurance coverage for travel company liabilities, but we do not maintain insurance coverage for business disruptions and
would have to bear the costs and expenses associated with any such events out of our own resources.
We may need additional capital, and financing may not be available on terms acceptable to us, or at all.
The outbreak of COVID-19 has had material adverse impacts on our cash flow for the fiscal year of 2020 with
potential continuing impacts on subsequent periods. Together with the negative financial trends, the conditions and events
casted substantial doubt on our ability to continue as a going concern. In response to the COVID-19 pandemic, in 2020, we
have already taken actions to improve our liquidity, including scaling down our business operations by reducing capital
expenditures and operational expenses that are discretionary in nature and obtaining funding from the maturity of certain
short-term and long-term investments. We plan to maintain our operation scale while sales of domestic travel products
recover gradually, and will continue to manage our capital expenditures, operational expenses and investments based on
our working capital needs. Based on our liquidity assessment, which has considered our operations at the current business
scale, latest development of COVID-19 and its continuous impact on our business operation, the available funding that will
be provided from maturity of our short-term and long-term investments, and our available cash and cash equivalents, we
will be able to meet our working capital requirements and capital expenditures in the ordinary course of business for the
next twelve months subsequent to the filing of this annual report. As a result, we concluded that the substantial doubt on
our ability to continue as a going concern has been alleviated. We may require additional cash resources due to
unanticipated business conditions or other future developments, including any marketing initiatives or investments we may
decide to pursue. If these resources are insufficient to satisfy our cash requirements, we may seek to obtain a credit facility
or sell additional equity or debt securities. The sale of additional equity securities could result in dilution of our existing
shareholders. The incurrence of indebtedness would result in increased debt service obligations and could result in
operating and financing covenants that would restrict our operations. It is uncertain whether financing will be available in
amounts or on terms acceptable to us, if at all.
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We have granted share options and restricted shares, and may grant share options and other share-based awards in the
future, which may materially increase our net loss.
We adopted an incentive compensation plan in 2008, or the 2008 Plan, which permits the granting of options to
purchase our ordinary shares and restricted shares. We also adopted a separate incentive compensation plan in 2014, or the
2014 Plan, which permits the granting of options to purchase our ordinary shares, restricted shares and restricted share
units. In particular, our 2014 Plan contains an evergreen provision which allows us to automatically increase the maximum
aggregate number of ordinary shares reserved under the 2014 Plan to 5% of the then-issued and outstanding shares on an
as-converted basis without shareholder approval, if and whenever the shares reserved in the 2014 Plan account for less than
1% of the total then-issued and outstanding shares on an as-converted basis. For more details regarding the 2008 Plan and
the 2014 Plan, see “Item 6.B. Directors, Senior Management and Employees—Compensation.” As of February 28, 2021,
there were options to acquire 3,683,886 Class A ordinary shares outstanding under the 2008 Plan, and options to acquire
12,519,039 Class A ordinary shares and 65,658 restricted shares outstanding under the 2014 Plan. In addition, we plan to
grant employees share options and other share-based compensation in the future. Expenses associated with share-based
awards may materially impact our results of operations.
Risks Related to Our Corporate Structure
Substantial uncertainties and restrictions exist with respect to the interpretation and application of PRC laws and
regulations relating to restrictions on foreign investment in value-added telecommunications and travel companies in
China. If the PRC government finds that the structure we have adopted for our business operations does not comply
with PRC laws and regulations, we could be subject to severe penalties, including shutting down of our online platform.
Foreign ownership of Internet-based businesses is subject to significant restrictions under current PRC laws and
regulations. The PRC government regulates Internet access, the distribution of online information and the conduct of online
commerce through strict business licensing requirements and other government regulations. These laws and regulations
also include limitations on foreign ownership in PRC companies that provide Internet content distribution services.
Specifically, foreign investors are prohibited from owning more than 50% of the equity interest in any PRC entity
conducting value-added telecommunications business, except for online data processing and transaction processing
business (operational e-commerce), in which foreign investors are allowed to hold up to 100% of the equity interest.
Moreover, any major foreign investor holding equity interest in a value-added telecommunication business in PRC must
satisfy a number of stringent performance and operational experience requirements, including demonstrating good track
records and experience in operating value-added telecommunication business overseas. The Circular on Strengthening the
Administration of Foreign Investment in and Operation of Value-added Telecommunications Business issued by the
Ministry of Industry and Information Technology in July 2006, or the MIIT Circular, reiterated the regulations on foreign
investment in telecommunications business, which require foreign investors to set up foreign-invested telecom enterprises
and obtain business operating licenses for Internet content provision, or an ICP license to conduct any value-added
telecommunications business in China. Under the MIIT Circular, a domestic company that holds an ICP license is
prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any
assistance,
that conduct value-added
telecommunications business illegally in China. Furthermore, the relevant trademarks and domain names that are used in
the value-added telecommunications business must be owned by the domestic ICP license holder or its shareholders. Due
to a lack of interpretation from the MIIT, it is unclear what impact the MIIT Circular will have on us or other PRC Internet
companies that have adopted the same or similar corporate structures and contractual arrangements as ours. Nanjing Tuniu
holds our ICP licenses, and owns all the domain names used in our value-added telecommunications business. Nanjing
Tuniu is also the owner of all the registered trademarks used in our value-added telecommunications business and is the
applicant of all the applications for trademark registration we have made.
including providing resources, sites or facilities,
to foreign
investors
We are a Cayman Islands company and our wholly owned PRC subsidiary, Beijing Tuniu Technology Co., Ltd., or
Beijing Tuniu, is considered a foreign invested enterprise. To comply with PRC laws and regulations, we conduct our
operations in China through a series of contractual arrangements entered into among Beijing Tuniu, Nanjing Tuniu, and the
shareholders of Nanjing Tuniu. As a result of these contractual arrangements, we exert control over Nanjing Tuniu and its
subsidiaries and consolidate their results of operations in our financial statements under U.S. GAAP. For a detailed
description of these contractual arrangements, see “Item 4.C. Information on the Company—Organizational Structure.”
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In the opinion of our PRC counsel, Fangda Partners, the ownership structure of Nanjing Tuniu, each of the
shareholders’ voting rights agreement, powers of attorney, equity interest pledge agreement and purchase option agreement
entered into among Beijing Tuniu, Nanjing Tuniu and the shareholders of Nanjing Tuniu, and the cooperation agreement
between Beijing Tuniu and Nanjing Tuniu, which establish our contractual arrangement with Nanjing Tuniu and its
shareholders, and, except as otherwise disclosed in this annual report, our business operations are not in violation of
existing PRC laws, rules and regulations and these agreements are valid, binding and enforceable. However, we are advised
by our PRC counsel, Fangda Partners, that there are substantial uncertainties regarding the interpretation and application of
current or future PRC laws and regulations and there can be no assurance that the PRC government will ultimately take a
view that is consistent with the opinion of our PRC counsel stated above.
If our ownership structure, contractual arrangements and business of our company, our PRC subsidiaries or our
consolidated affiliated entities are found to be in violation of any existing or future PRC laws or regulations, or we fail to
obtain or maintain any of the required permits or approvals, the relevant governmental authorities would have broad
discretion in dealing with such violation, including levying fines, confiscating our income or the income of our PRC
subsidiaries or consolidated affiliated entities, revoking the business licenses or operating licenses of our PRC subsidiaries
or consolidated affiliated entities, shutting down our servers or blocking our online platform, discontinuing or placing
restrictions or onerous conditions on our operations, requiring us to undergo a costly and disruptive restructuring,
restricting or prohibiting our use of proceeds from our financing activities, such as our private placements, to finance our
business and operations in China, and taking other regulatory or enforcement actions that could be harmful to our business.
Any of these actions could cause significant disruption to our business operations and severely damage our reputation,
which would in turn materially and adversely affect our business, financial condition and results of operations. If any of
these occurrences results in our inability to direct the activities of any of our consolidated affiliated entities that most
significantly impact its economic performance, and/or our failure to receive the economic benefits from any of our
consolidated affiliated entities, we may not be able to consolidate the entity in our consolidated financial statements in
accordance with U.S. GAAP.
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Substantial uncertainties exist with respect to the interpretation and implementation of adopted PRC Foreign
Investment Law and its implementation rules and how they may impact the viability of our current corporate structure,
corporate governance and business operations.
The “variable interest entity” structure, or VIE structure, has been adopted by many PRC-based companies, including
us, to obtain necessary licenses and permits in industries that are currently subject to foreign investment restrictions in
China. See “—Risks Related to Our Corporate Structure—Substantial uncertainties and restrictions exist with respect to the
interpretation and application of PRC laws and regulations relating to restrictions on foreign investment in value-added
telecommunications and travel companies in China. If the PRC government finds that the structure we have adopted for our
business operations does not comply with PRC laws and regulations, we could be subject to severe penalties, including the
forced closure of our online platform” and “Item 4.C. Information on the Company—Organizational Structure.” In
March 2019, the PRC National People’s Congress promulgated the Foreign Investment Law, or the PRC Foreign
Investment Law. In December 2019, the State Council promulgated the Implementing Rules of the Foreign Investment
Law of the People’s Republic of China, or the Implementing Rules, to further clarify and elaborate the relevant provisions
of the PRC Foreign Investment Law. The PRC Foreign Investment Law and the Implementation Rules both became
effective on January 1, 2020 and replaced major existing laws and regulations governing foreign investment in the PRC.
Pursuant to the PRC Foreign Investment Law, “foreign investments” refer to investment activities conducted by foreign
investors (including foreign natural persons, foreign enterprises or other foreign organizations) directly or “indirectly” in
the PRC, which include any of the following circumstances: (i) foreign investors setting up foreign-invested enterprises in
the PRC solely or jointly with other investors, (ii) foreign investors obtaining shares, equity interests, property portions or
other similar rights and interests of enterprises within the PRC, (iii) foreign investors investing in new projects in the PRC
solely or jointly with other investors, and (iv) investment in other methods as specified in laws and administrative
regulations, or as stipulated by the State Council. The PRC Foreign Investment Law and the Implementation Rules do not
use the concept of “control” in determining whether a company should be considered as a foreign-invested enterprise, nor
do they explicitly provide the VIE structure as a method of foreign investment. However, the PRC Foreign Investment Law
has a catch-all provision that includes into the definition of “foreign investments” made by foreign investors in China in
other methods as specified in laws, administrative regulations, or as stipulated by the State Council. Since the PRC Foreign
Investment Law and the Implementation Rules are newly adopted and relevant government authorities may promulgate
future laws, regulations or rules on the interpretation and implementation of the PRC Foreign Investment Law, the
possibility cannot be ruled out that the concept of “control” as stated in the 2015 draft PRC Foreign Investment Law may
be reimposed, or the “variable interest entity” structure adopted by us may be deemed as a method of foreign investment
by, any of such future laws, regulations and rules, which cause significant uncertainties as to whether our VIE structures
would be treated as a method of foreign investment. If our VIE structure would be deemed as a method of foreign
investment under any of such future laws, regulations and rules, and any of our businesses operation would fall in the
“negative list” for foreign investment that is subject to any foreign investment restrictions or prohibitions, we would be
required to take further actions to comply with such laws, regulations and rules, which may materially and adversely affect
our current corporate structure, corporate governance, business, financial conditions and results of operations. Furthermore,
if future laws, administrative regulations or rules mandate further actions to be taken by companies with respect to existing
contractual arrangements, we may face substantial uncertainties as to whether we are able to complete such actions in a
timely manner, or at all. Failure to take timely and appropriate measures to respond to any of these or similar regulatory
compliance challenges could materially and adversely affect our current corporate structure, business, financial condition
and results of operations.
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The PRC Foreign Investment Law requires foreign investors or applicable FIEs to report investment information to
government authority. Pursuant to the Information Reporting Measures for Foreign Investment jointly promulgated by the
MOC and the SAMR, which took effect in January 2020, a foreign investment information reporting system shall be
established and foreign investors or FIEs shall report investment information to competent commerce departments of the
government through the enterprise registration system and the enterprise credit information publicity system, and the
administration for market regulation shall forward the above investment information to the competent commerce
departments of the government. The foreign investors or FIEs shall report the investment information by submitting initial
reports, change reports, deregistration reports and annual reports, etc. The PRC governmental authorities may promulgate
rules to further clarify the detailed information reporting requirements on foreign investors and the applicable FIEs. In that
case, our current corporate governance practices and business operations may need to be adjusted to comply with the
information reporting requirements, which would significantly increase our compliance costs, and have a material and
adverse effect on our current corporate structure, corporate governance, business, financial conditions and results of
operations.
We rely on contractual arrangements with Nanjing Tuniu and its shareholders for the operation of our business, which
may not be as effective as direct ownership. If Nanjing Tuniu or its shareholders fail to perform their obligations under
these contractual arrangements, we may have to resort to litigation or arbitration to enforce our rights, which may be
time-consuming, unpredictable, expensive and damaging to our operations and reputation. If we are unable to maintain
effective control we would not be able to continue to consolidate the financial results of our consolidated affiliated
entities with our financial results.
Although we have been advised by our PRC counsel, Fangda Partners, that our contractual arrangements with Nanjing
Tuniu and its shareholders did not and does not result in any violation of current PRC laws and these agreements are valid,
binding and enforceable, these contractual arrangements may not be as effective in providing control as direct ownership. If
Nanjing Tuniu or its shareholders fail to perform their obligations under the contractual arrangements, we may have to
incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal
remedies under contract law, including seeking specific performance or injunctive relief and claiming damages, which we
cannot assure you will be effective. For example, if the shareholders of Nanjing Tuniu refuse to transfer their equity
interests in Nanjing Tuniu to us or our designee when we exercise the purchase option pursuant to these contractual
arrangements, or if they otherwise act in bad faith toward us, then we may have to take legal actions to compel them to
perform their contractual obligations. Furthermore, while the company chops of Nanjing Tuniu are held by its legal and
accounting departments, our ability to ensure its performance under the contractual agreements may be limited if we are
unable to secure control of the company chops in the event of a dispute with its management or shareholders, as many
official documents require affixation of company chops to become fully effective. If we were the controlling shareholder of
Nanjing Tuniu with direct ownership, we would be able to exercise our rights as shareholders to effect changes to its board
of directors, which in turn could implement changes at the management and operational level.
All the agreements under our contractual arrangements are governed by PRC laws and provide for the resolution of
disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC laws
and any disputes would be resolved in accordance with PRC legal procedures. There remain significant uncertainties
regarding how our contractual arrangements would be interpreted under PRC laws and the ultimate outcome of the
resolution of disputes in relation to such contractual arrangements, should arbitration become necessary. The legal system
in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the
PRC legal system could limit our ability to enforce these contractual arrangements. Under PRC laws, if the losing parties
fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration
awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and
delay. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effective control
over Nanjing Tuniu and its shareholders, and our ability to conduct our business may be negatively affected. If we are
unable to maintain effective control, we would not be able to continue to consolidate the financial results of our
consolidated affiliated entities with our financial results.
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The shareholders of Nanjing Tuniu may have potential conflicts of interest with us, which may materially and adversely
affect our business and financial condition.
We have designated individuals who are PRC nationals to be the shareholders of Nanjing Tuniu. The equity interests
of Nanjing Tuniu are held by Messrs. Dunde Yu and Anqiang Chen. The interests of these individuals as the shareholders
of Nanjing Tuniu may differ from the interests of our company as a whole. These shareholders may breach, or cause
Nanjing Tuniu to breach, the existing contractual arrangements we have with them and Nanjing Tuniu, which would have a
material and adverse effect on our ability to effectively control Nanjing Tuniu. We cannot assure you that when conflicts of
interest arise, any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved
in our favor.
Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and
our company, except that we could exercise our purchase option under the purchase option agreement with these
shareholders to request them to transfer all of their equity interests in Nanjing Tuniu to a PRC entity or individual
designated by us, to the extent permitted by PRC laws. We rely on Mr. Dunde Yu, who is our founder, director and
beneficial owner, Mr. Anqiang Chen, who is our Financial Controller to abide by the PRC law. If we cannot resolve any
conflict of interest or dispute between us and the shareholders of Nanjing Tuniu, we would have to rely on legal
proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of
any such legal proceedings.
Our contractual arrangements with Nanjing Tuniu and its shareholders may be subject to scrutiny by the PRC tax
authorities, and a finding that we owe additional taxes could substantially increase our consolidated net loss and reduce
the value of your investment.
Under PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or
challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities
determine that the contractual arrangements among Beijing Tuniu, Nanjing Tuniu and the shareholders of Nanjing Tuniu
do not represent an arm’s-length transaction and adjust Nanjing Tuniu’s income in the form of a transfer pricing
adjustment. A transfer pricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of
expense deductions recorded by Nanjing Tuniu, which could in turn increase its tax liabilities without reducing our tax
liabilities. In addition, the PRC tax authorities may impose late payment fees and other penalties to Nanjing Tuniu for
under-paid taxes. Our consolidated net loss may be increased if our tax liabilities increase or if we are found to be subject
to late payment fees or other penalties.
If Nanjing Tuniu becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and
enjoy its assets, which could materially and adversely affect our business.
To comply with PRC laws and regulations relating to foreign ownership restrictions in the online value-added
telecommunications business, we hold our ICP license and operate our business through contractual arrangements with
Nanjing Tuniu as well as its shareholders. As part of these arrangements, Nanjing Tuniu holds assets that are important to
the operation of our business.
We do not have priority pledges or liens against Nanjing Tuniu’s assets. As a contractual and property right matter, this
lack of priority pledges and liens has remote risks. If Nanjing Tuniu undergoes an involuntary liquidation proceeding,
third-party creditors may claim rights to some or all of its assets and we may not have priority against such third-party
creditors on Nanjing Tuniu’s assets. If Nanjing Tuniu undergoes a voluntary liquidation, we may take part in the liquidation
procedures as a general creditor under the PRC Enterprise Bankruptcy Law and recover any outstanding liabilities owed by
Nanjing Tuniu to Beijing Tuniu under the cooperation agreement between them. To ameliorate the risks of an involuntary
liquidation proceeding initiated by a third-party creditor, we closely monitor the operations and finances of Nanjing Tuniu
through carefully designed budgetary and internal controls to ensure that Nanjing Tuniu is well capitalized and is highly
unlikely to trigger any third party monetary claims in excess of its assets and cash resources. Furthermore, Beijing Tuniu
has the ability, if necessary, to provide financial support to Nanjing Tuniu to avoid such an involuntary liquidation.
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If the shareholders of Nanjing Tuniu were to attempt to voluntarily liquidate Nanjing Tuniu without obtaining our prior
consent, we could effectively prevent such unauthorized voluntary liquidation by exercising our right to request Nanjing
Tuniu’s shareholders to transfer all of their equity interests to a PRC entity or individual designated by us in accordance
with the purchase option agreement with the shareholders of Nanjing Tuniu, to the extent permitted by PRC laws. In the
event that the shareholders of Nanjing Tuniu initiate a voluntary liquidation proceeding without our authorization or
attempt to distribute the retained earnings or assets of Nanjing Tuniu without our prior consent, we may need to resort to
legal proceedings to enforce the terms of the contractual agreements. Any such legal proceeding may be costly and may
divert our management’s time and attention away from the operation of our business, and the outcome of such legal
proceeding would be uncertain.
Risks Related to Doing Business in China
Our ADSs may be delisted under the Holding Foreign Companies Accountable Act if the U.S. Public Company
Accounting Oversight Board, or the PCAOB, is unable to inspect auditors who are located in China. The delisting of
our ADSs, or the threat of their being delisted, may materially and adversely affect the value of your investment.
Additionally, the inability of the PCAOB to conduct inspections deprives our investors with the benefits of such
inspections.
The Holding Foreign Companies Accountable Act, or the HFCA Act, was enacted on December 18, 2020. The HFCA
Act states if the SEC determines that we have filed audit reports issued by a registered public accounting firm that has not
been subject to inspection by the PCAOB for three consecutive years beginning in 2021, the SEC shall prohibit our shares
or ADSs from being traded on a national securities exchange or in the over the counter trading market in the U.S.
Our auditor, the independent registered public accounting firm that issues the audit report included elsewhere in this
annual report, as an auditor of companies that are traded publicly in the United States and a firm registered with the
PCAOB, is subject to laws in the United States pursuant to which the PCAOB conducts regular inspections to assess its
compliance with the applicable professional standards. Since our auditor is located in China, a jurisdiction where the
PCAOB has been unable to conduct inspections without the approval of the Chinese authorities, our auditor is currently not
inspected by the PCAOB.
On March 24, 2021, the SEC adopted interim final rules relating to the implementation of certain disclosure and
documentation requirements of the HFCA Act. We will be required to comply with these rules if the SEC identifies us as
having a “non-inspection” year under a process to be subsequently established by the SEC. The SEC is assessing how to
implement other requirements of the HFCA Act, including the listing and trading prohibition requirements described
above.
The SEC may propose additional rules or guidance that could impact us if our auditor is not subject to PCAOB
inspection. For example, on August 6, 2020, the President’s Working Group on Financial Markets, or the PWG, issued the
Report on Protecting United States Investors from Significant Risks from Chinese Companies to the then President of the
United States. This report recommended the SEC implement five recommendations to address companies from
jurisdictions that do not provide the PCAOB with sufficient access to fulfil its statutory mandate. Some of the concepts of
these recommendations were implemented with the enactment of the HFCA Act. However, some of the recommendations
were more stringent than the HFCA Act. For example, if a company was not subject to PCAOB inspection, the report
recommended that the transition period before a company would be delisted would end on January 1, 2022.
The SEC has announced that the SEC staff is preparing a consolidated proposal for the rules regarding the
implementation of the HFCA Act and to address the recommendations in the PWG report. It is unclear when the SEC will
complete its rulemaking and when such rules will become effective and what, if any, of the PWG recommendations will be
adopted. The implications of this possible regulation in addition the requirements of the HFCA Act are uncertain. Such
uncertainty could cause the market price of our ADSs to be materially and adversely affected, and our securities could be
delisted or prohibited from being traded “ over-the-counter” earlier than would be required by the HFCA Act. If our
securities are unable to be listed on another securities exchange by then, such a delisting would substantially impair your
ability to sell or purchase our ADSs when you wish to do so, and the risk and uncertainty associated with a potential
delisting would have a negative impact on the price of our ADSs.
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The PCAOB’s inability to conduct inspections in China prevents it from fully evaluating the audits and quality control
procedures of our independent registered public accounting firm. As a result, we and investors in our ordinary shares are
deprived of the benefits of such PCAOB inspections. The inability of the PCAOB to conduct inspections of independent
registered public accounting firm’s in China makes it more difficult to evaluate the effectiveness of our auditor’s audit
procedures or quality control procedures as compared to auditors outside of China that are subject to the PCAOB
inspections, which could cause investors and potential investors in our stock to lose confidence in our audit procedures and
reported financial information and the quality of our financial statements.
In May 2013, the PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement
Cooperation with the CSRC and the PRC Ministry of Finance, which establishes a cooperative framework between the
parties for the production and exchange of audit documents relevant to investigations undertaken by the PCAOB in the
PRC or by the CSRC or the PRC Ministry of Finance in the United States. The PCAOB continues to be in discussions with
the CSRC and the PRC Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with the
PCAOB and audit Chinese companies that trade on U.S. exchanges.
Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections
available to you and us.
The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases
have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of
laws and regulations governing economic matters in general. The overall effect of legislation over the past three decades
has significantly increased the protections afforded to various forms of foreign or private-sector investment in China. Our
PRC subsidiaries and consolidated affiliated entities are subject to various PRC laws and regulations generally applicable
to companies in China. However, since these laws and regulations are relatively new and the PRC legal system continues to
rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these
laws, regulations and rules involve uncertainties.
From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However,
since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory and
contractual terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of
legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on
government policies and internal rules (some of which are not published in a timely manner or at all) that may have
retroactive effect. As a result, we may not be aware of our violation of these policies and rules until sometime after the
violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including
intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China
could materially and adversely affect our business and impede our ability to continue our operations.
Changes in China’s economic, political or social conditions or government policies could have a material adverse effect
on our business and operations.
Our business operations are based in China. Accordingly, our business, financial condition, results of operations and
prospects may be influenced to a significant degree by economic, political and social conditions or government policies in
China generally and by continued economic growth in China as a whole.
China’s economy differs from the economies of most developed countries in many respects, including the amount of
government involvement, level of development, growth rate, control of foreign exchange and allocation of resources.
Although the PRC government has implemented measures emphasizing the utilization of market forces for economic
reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in
business enterprises, a substantial portion of productive assets in China is still owned by the PRC government. In addition,
the PRC government continues to play a significant role in regulating industry development by imposing industrial
policies. The PRC government also exercises significant control over China’s economic growth through allocating
resources, controlling payment of foreign currency-denominated obligations, setting monetary policy and providing
preferential treatment to particular industries or companies.
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While the Chinese economy has experienced significant growth over the past decades, growth has been uneven, both
geographically and among various sectors of the economy. Some of the government measures may benefit the overall
Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may
be adversely affected by government control over capital investments or changes in tax regulations. The growth rate of the
Chinese economy has gradually slowed since 2010, and the COVID-19 pandemic has brough uncertainties to the growth
rate of the Chinese economy. Any prolonged slowdown in the Chinese economy may reduce the demand for our products
and services and materially and adversely affect our business and results of operations. However, any stimulus measures
designed to boost the Chinese economy may contribute to higher inflation, which could adversely affect our financial
condition and results of operations. For example, certain operating costs and expenses, such as employee compensation and
office operating expenses, may increase as a result of higher inflation.
A severe or prolonged downturn in the Chinese or global economy could materially and adversely affect the leisure
travel industry and our business, results of operations and financial condition.
COVID-19 had a severe and negative impact on the Chinese and the global economy in the fiscal year of 2020.
Whether this will lead to a prolonged downturn in the economy is still unknown. Even before the outbreak of the COVID-
19, the global macroeconomic environment was facing numerous challenges. The growth rate of the Chinese economy had
already been slowing since 2010. There is considerable uncertainty over the long-term effects of the expansionary
monetary and fiscal policies which had been adopted by the central banks and financial authorities of some of the world’s
leading economies, including the United States and China. In addition, there have also been concerns about the relationship
between China and the United States, resulted from the current trade tension between the two countries. It is unclear
whether these challenges and uncertainties will be contained or resolved and what effects they may have on the global
political and economic conditions in the long term.Economic conditions in China are sensitive to global economic
conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic
growth rate in China. Any severe or prolonged slowdown in the global or Chinese economy may materially and adversely
affect the leisure travel industry and our business, results of operations and financial condition, and continued turbulence in
the international markets may adversely affect our ability to access the capital markets to meet liquidity needs. Our users
and business partners may reduce or delay spending with us, while we may have difficulty expanding our user base fast
enough, or at all, or to offset the impact of decreased spending by our existing users.
The PRC government regulates travel and other related industries. If we fail to obtain or maintain all pertinent permits
and approvals or if the PRC government imposes more restrictions on these industries, our business may be adversely
affected.
We are required to obtain applicable permits or approvals from regulatory authorities to conduct our business
activities. See “Item 4.B. Information on the Company—Business Overview—PRC Regulation.” If we fail to obtain or
maintain any of the required permits or approvals in the future, we may be subject to various penalties, such as fines or
suspension of operations in these regulated businesses, which could severely disrupt our business operations. As a result,
our financial condition and results of operations may be adversely affected.
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Under the PRC Enterprise Income Tax Law, we may be classified as a PRC resident enterprise for PRC enterprise
income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC
shareholders and would have a material adverse effect on our results of operations and the value of your investment.
Under the PRC Enterprise Income Tax Law, or the EIT Law and its Implementation Rules, that became effective on
January 1, 2008 and was amended in February 2017, December 2018 and April 2019, respectively, an enterprise
established outside the PRC with a “de facto management body” within the PRC is considered a PRC resident enterprise
for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its
worldwide income. Under the implementation rules to the EIT Law, or the Implementation Rules, a “de facto management
body” is defined as a body that has material and overall management and control over the manufacturing and business
operations, personnel and human resources, finances and properties of an enterprise. In addition, SAT Circular 82, which
was issued in April 2009 and was amended in December 2017 by the State Administration of Taxation, or the SAT,
specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be
classified as PRC resident enterprises if all of the following conditions are met: (a) senior management personnel and core
management departments in charge of the daily operations of the enterprises have their presence mainly in the PRC;
(b) their financial and human resources decisions are subject to determination or approval by persons or bodies in the PRC;
(c) major assets, accounting books and company seals of the enterprises, and minutes and files of their board’s and
shareholders’ meetings are located or kept in the PRC; and (d) half or more of the enterprises’ directors or senior
management personnel with voting rights habitually reside in the PRC. Further to SAT Circular 82, the SAT issued SAT
Bulletin 45, which took effect on September 1, 2011, to provide more guidance on the implementation of SAT Circular 82
and clarify the reporting and filing obligations of such “Chinese-controlled offshore-incorporated resident enterprises.”
SAT Bulletin 45 provides procedures and administrative details for the determination of PRC resident enterprise status and
administration on post-determination matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore
enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign
individuals like us, the determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general
position on how the “de facto management body” test should be applied in determining the PRC resident enterprise status
of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups or by PRC or
foreign individuals.
We do not believe that Tuniu Corporation meets all of the conditions above and thus we do not believe that it is a PRC
resident enterprise for PRC enterprise income tax purposes, despite the fact that all of the members of our management
team as well as the management team of Tuniu (HK) Limited are located in China. However, if the PRC tax authorities
determine that it is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax
consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our worldwide income,
which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting
obligations. Second, although dividends paid by one PRC tax resident to another PRC tax resident should qualify as “tax-
exempt income” under the EIT Law, we cannot assure you that such dividends will not be subject to a 10% withholding
tax, as the PRC foreign exchange control authorities, which enforce the withholding tax on dividends, and the PRC tax
authorities have not yet issued guidance with respect to the processing of outbound remittances to entities that are not
controlled by any PRC enterprise or PRC enterprise group and treated as PRC resident enterprises for PRC enterprise
income tax purposes.
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Under the EIT Law and its Implementation Rules, subject to any applicable tax treaty or similar arrangement between
the PRC and our investors’ jurisdiction of residence that provides for a different income tax arrangement, PRC withholding
tax at the rate of 10% is normally applicable to dividends from PRC sources payable to investors that are non-PRC resident
enterprises, which do not have an establishment or place of business in the PRC, or which have such establishment or place
of business if the relevant income is not effectively connected with the establishment or place of business. Any gain
realized on the transfer of ADSs or shares by such non-PRC resident enterprise investors is also subject to 10% PRC
income tax if such gain is regarded as income derived from sources within the PRC unless a tax treaty or similar
arrangement otherwise provides. Under the PRC Individual Income Tax Law and its implementation rules, dividends from
sources within the PRC paid to foreign individual investors who are not PRC residents are generally subject to a PRC
withholding tax at a rate of 20% and gains from PRC sources realized by such investors on the transfer of ADSs or shares
are generally subject to 20% PRC income tax, in each case, subject to any reduction or exemption set forth in applicable
tax treaties and PRC laws. It is also unclear whether dividends we pay with respect to our ordinary shares or ADSs, or the
gain realized from the transfer of our ordinary shares or ADSs, would be treated as income derived from sources within the
PRC and as a result be subject to PRC income tax if we were considered a PRC resident enterprise, as described above. If
PRC income tax were imposed on gains realized through the transfer of our ADSs or ordinary shares or on dividends paid
to our non-PRC resident investors, the value of the investment in our ADSs or ordinary shares may be materially and
adversely affected. Furthermore, our ADS holders whose jurisdictions of residence have tax treaties or arrangements with
China may not qualify for benefits under such tax treaties or arrangements.
We face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfers of our
operating company’s equity interests. Enhanced scrutiny over acquisition transactions by the PRC tax authorities may
have a negative impact on potential acquisitions we may pursue in the future.
According to the Announcement of the SAT on Several Issues Concerning the Enterprise Income Tax on Indirect
Property Transfer by Non-Resident Enterprises (“Bulletin 7”) promulgated by the SAT in February 2015, which has been
further amended by Bulletin 37 issued by the SAT in October 2017 and amended in June 2018, if a non-resident enterprise
transfers the equity interests of a PRC resident enterprise indirectly by transfer of the equity interests of an offshore holding
company (other than a purchase and sale of shares issued by a PRC resident enterprise in public stock market ) without a
reasonable commercial purpose, the PRC tax authorities have the discretion to reassess the nature of the transaction and the
indirect equity transfer will be treated as a direct transfer. As a result, gains derived from such transfer, which means the
equity transfer price minus the cost of equity, will be subject to PRC withholding tax at a rate of up to 10%. Under the
terms of Bulletin 7, as amended, the transfer that meets all of the following conditions shall be directly deemed as having
no reasonable commercial purposes: (i) more than 75% of the value of the equity interests of the offshore holding company
are directly or indirectly derived from PRC taxable properties; (ii) at any time during the year before the indirect transfer,
over 90% of the total properties of the offshore holding company are investments within PRC territory, or in the year
before the indirect transfer, over 90% of the offshore holding company’s revenue is directly or indirectly derived from PRC
territory; (iii) the function performed and risks assumed by the offshore holding company are insufficient to substantiate its
corporate existence; or (iv) the foreign income tax imposed on the indirect transfer is lower than the PRC tax imposed on
the direct transfer of the PRC taxable properties.
There is uncertainty as to the interpretation and application of Bulletin 7, as amended. If an Indirect Transfer occurs for
us, we and our non-PRC resident investors may be at risk of being taxed under Bulletin 7, as amended, and we may be
required to expend valuable resources to comply with Bulletin 7, as amended or to establish that we should not be taxed
under Bulletin 7, as amended.
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PRC regulations establish complex procedures for some acquisitions of PRC companies by foreign investors, which
could make it more difficult for us to pursue growth through acquisitions in China.
Six PRC regulatory agencies promulgated the Regulations on Mergers and Acquisitions of Domestic Companies by
Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and was subsequently amended on
June 22, 2009, with such amendments becoming effective as of the same date. See “Item 4.B. Information on the Company
—Business Overview—PRC Regulation.” The M&A Rules establish procedures and requirements that could make some
acquisitions of PRC companies by foreign investors more time-consuming and complex, including requirements in some
instances that the MOC be notified in advance of any change-of-control transaction in which a foreign investor takes
control of a PRC domestic enterprise.
In addition, national security review rules issued by the PRC governmental authorities in 2011 require acquisitions by
foreign investors of domestic companies engaged in military-related or certain other industries that are crucial to national
security to be subject to prior security review. According to the Measures for the Security Review of Foreign Investment,
or the Security Review Measures, promulgated by the NDRC and the MOC on December 19, 2020 and effective as of
January 18, 2021, investments in military, national defense-related areas or in locations in proximity to military facilities,
or investments that would result in acquiring the actual control of assets in certain key sectors, such as critical agricultural
products, energy and resources, equipment manufacturing, infrastructure, transport, cultural products and services,
information technology, Internet products and services, financial services and technology sectors, are required to obtain
approval from designated governmental authorities in advance. See also “Item 4.B. Information on the Company—
Business Overview—PRC Regulation—Foreign Investment in Value-Added Telecommunications Services.”
Moreover, the PRC Anti-Monopoly Law requires that the State Administration of Market Regulation, or SAMR, shall
be notified in advance of any concentration of undertaking if certain thresholds are triggered. In early November 2020, the
SAMR further published a draft Anti-Monopoly Guidelines for the Internet Platform Economy Sector that aims at
specifying some of the circumstances under which an activity of internet platforms may be identified as monopolistic act as
well as setting out merger controlling filing procedures involving variable interest entities. These draft guidelines are now
open for public comment and are pending finalization and enactment, and we cannot assure you that there will not be any
material changes in the final form of these draft guidelines. We may expand our business in part by acquiring
complementary businesses. Due to the uncertainties associated with the evolving legislative activities and varied local
implementation practices of anti-monopoly and competition laws and regulations in the PRC, complying with the
requirements of the M&A Rules, security review rules and other PRC regulations to complete such transactions could be
time-consuming, and any required approval processes, including obtaining approval from the SAMR, may delay or inhibit
our ability to complete such transactions, which could affect our ability to expand our business or maintain our market
share. If we are found to have violated the PRC Anti-Monopoly Law for failing to file the notification of concentration and
request for review, we could be subject to a fine of up to RMB500,000, and the parts of the transaction causing the
prohibited concentration could be ordered to be unwound. Such unwinding could affect our business and financial results,
and harm our reputation.
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PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to
increase their registered capital or distribute profits to us, limit our ability to inject capital into our PRC subsidiaries, or
otherwise expose us to liabilities and penalties under PRC laws.
The PRC State Administration of Foreign Exchange, or the SAFE, promulgated the Circular on Relevant Issues
Concerning Foreign Exchange Control on Domestic Residents’ Offshore Investment and Financing and Roundtrip
Investment through Special Purpose Vehicles, or SAFE Circular 37, on July 4, 2014, which replaced the former circular
commonly known as “SAFE Circular 75” promulgated by SAFE in October, 2005. SAFE Circular 37 requires PRC
residents to register with local branches of SAFE in connection with their direct establishment or indirect control of an
offshore entity for the purpose of overseas investment and financing, with assets or equity interests of onshore companies
or offshore assets or interests held by the PRC residents, referred to in SAFE Circular 37 as a “special purpose vehicle.”
SAFE Circular 37 further requires amendment to the registration in the event of any significant changes with respect to the
special purpose vehicle, such as increases or decreases in capital contributed by PRC residents, transfers or exchanges of
shares, mergers, divisions, or other material changes. The term “control” under SAFE Circular 37 is broadly defined as the
operation rights, beneficiary rights or decision-making rights acquired by the PRC residents in special purpose vehicles or
PRC companies by such means as acquisition, trust, proxy, voting rights, repurchase, convertible bonds or other
arrangements.
If our shareholders or beneficial owners who are PRC citizens or residents do not complete their registration with the
local SAFE branches, our PRC subsidiaries may be prohibited from distributing their profits and proceeds from any
reduction in capital, share transfer or liquidation to us, and we may be restricted in our ability to contribute additional
capital to our PRC subsidiaries. Moreover, failure to comply with the various SAFE registration requirements described
above could result in liabilities for our PRC subsidiaries under PRC laws for evasion of applicable foreign exchange
restrictions, including (1) the requirement by SAFE to return the foreign exchange remitted overseas within a period
specified by SAFE, with a fine of up to 30% of the total amount of foreign exchange remitted overseas and deemed to have
been evasive and (2) in circumstances involving serious violations, a fine of no less than 30% of and up to the total amount
of remitted foreign exchange deemed evasive. Furthermore, the persons-in-charge and other persons at our PRC
subsidiaries who are held directly liable for the violations may be subject to criminal sanctions.
SAFE Circular 37 provides that PRC residents include both PRC citizens, meaning any individual who holds a PRC
passport or resident identification card, and individuals who are non-PRC citizens but primarily reside in the PRC due to
their economic ties to the PRC. We have requested all of our known current shareholders and/or beneficial owners to
disclose whether they or their shareholders or beneficial owners fall within the ambit of SAFE Circular 37 and other related
rules, and urged relevant shareholders and beneficial owners, upon learning they are PRC residents, to make the necessary
applications, filings and amendments as required under SAFE Circular 37 and other related rules. However, we cannot
assure you that they did successfully amend their foreign exchange registrations with the local SAFE branch in compliance
with applicable laws after our initial public offering. In addition, we may not be informed of the identities of all the PRC
residents holding direct or indirect interests in our company, and we cannot compel our beneficial owners to comply with
the requirements of SAFE Circular 37. As a result, we cannot assure you that all of our shareholders or beneficial owners
who are PRC residents have complied with and will in the future comply with our requests to make or obtain any
applicable registrations or comply with other requirements required by SAFE Circular 37 or other related rules. A failure
by any of our current or future shareholders or beneficial owners who are PRC residents to comply with the SAFE
regulations may subject us to fines or other legal sanctions, restrict our cross-border investment activities, limit our PRC
subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect
our business and prospects.
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Furthermore, since it is unclear how SAFE Circular 37 and any future regulation concerning offshore or cross-border
transactions will be interpreted, amended and implemented by the relevant government authorities. We cannot predict how
these regulations will affect our business operations or future strategy. For example, we may be subject to a more stringent
review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-
currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In
addition, if we decide to acquire a PRC domestic company, either we or the owners of such company, as the case may be,
may not be able to obtain the necessary approvals or complete the necessary filings and registrations required by the
foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect
our business and prospects.
Failure to comply with PRC regulations regarding the registration requirements for share option plans may subject the
PRC plan participants or us to fines and other legal or administrative sanctions.
In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for
Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, or the Stock Option
Rules. Under the Stock Option Rules and other relevant rules and regulations, PRC residents who participate in stock
incentive plans in an overseas publicly-listed company are required to register with SAFE or its local branches and
complete certain other procedures. Participants of a stock incentive plan who are PRC residents must retain a qualified
PRC agent, which could be a PRC subsidiary of the overseas publicly-listed company or another qualified institution
selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive
plan on behalf of its participants. The participants must also retain an overseas entrusted institution to handle matters in
connection with their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund
transfers. In addition, the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if
there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted institution or other
material changes. See “Item 4.B. Information on the Company—Business Overview—PRC Regulation—Regulations on
Employee Stock Option Plans.”
We and our PRC employees who have been granted share options are subject to these regulations and Beijing Tuniu as
an agent has registered with the Beijing Branch of SAFE in connection with the 2008 Plan and the 2014 Plan. We have
advised our employees and directors participating in our share incentive plans to handle foreign exchange matters in
accordance with the Stock Option Rules. However, we cannot assure you that the share option holders can successfully
register with SAFE in full compliance with the Stock Option Rules for material changes of the granted share options.
Failure of our PRC share option holders or restricted shareholders to complete their SAFE registrations may subject these
PRC residents to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC
subsidiaries, limit our PRC subsidiaries’ ability to distribute dividends to us, or otherwise materially adversely affect our
business.
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PRC regulation of direct investment and loans by offshore holding companies to PRC entities and governmental control
of currency conversion may delay or limit us from using the proceeds of our financing activities, or making additional
capital contributions or loans to our PRC subsidiaries and our consolidated affiliated entities.
Any capital contributions or loans that we, as an offshore entity, make to our PRC subsidiaries and PRC consolidated
affiliated entities, including from the proceeds of our financing activities, such as our private placements, are subject to
PRC laws and regulations. Under PRC laws and regulations, we are permitted to utilize such proceeds to fund our existing
PRC subsidiaries and PRC consolidated affiliated entities only through loans or capital contributions or to establish new
PRC subsidiaries or new PRC consolidated affiliated entities, subject to applicable government registration and approval
requirements. Currently, there is no statutory limit to the amount of funding that we can provide to our PRC subsidiaries
through capital contributions. However, the maximum amount we can loan to our PRC subsidiaries and consolidated
affiliated entities is subject to statutory limits. According to current PRC laws and regulations, we can provide funding to
our PRC subsidiaries through loans of up to either (i) the amount of the difference between the respective registered total
investment amount and registered capital of each of our PRC subsidiaries, or the Total Investment and Registered Capital
Balance, or (ii) two times, or the then applicable statutory multiple, the amount of their respective net assets, calculated in
accordance with PRC GAAP, or the Net Assets Limit, at our election. We may also fund our PRC consolidated affiliated
entities through cross-border loans and the maximum amount would be their respective Net Assets Limit. Increasing the
Total Investment and Registered Capital Balance of our PRC subsidiaries is subject to governmental procedures and may
require a PRC subsidiary to increase its registered capital at the same time. If we choose to make a loan to a PRC
subsidiary or PRC consolidated affiliated entity based on its Net Assets Limit, the maximum amount we would be able to
loan to the relevant PRC subsidiary or PRC consolidated affiliated entity would depend on the relevant PRC entity’s net
assets and the applicable statutory multiple at the time of calculation. PRC laws and regulations may also impose more
stringent limitations to cross-border loans, which will also have negative impact on our ability to fund our PRC entities.
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In August 2008, SAFE promulgated a SAFE Circular 142 regulating the conversion by a foreign-invested enterprise of
foreign currency registered capital into Renminbi by restricting how the converted Renminbi may be used. SAFE Circular
142 provides that the Renminbi capital converted from foreign currency registered capital of a foreign-invested enterprise
may only be used for purposes within the business scope approved by the applicable government authority and unless
otherwise provided by law, such Renminbi capital may not be used for equity investments in the PRC. Although on July 4,
2014, the SAFE issued the Circular of the SAFE on Relevant Issues Concerning the Pilot Reform in Certain Areas of the
Administrative Method of the Conversion of Foreign Exchange Funds by Foreign-invested Enterprises, or SAFE Circular
36, which launched a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-
invested enterprises in certain designated areas from August 4, 2014 and some of the restrictions under SAFE Circular 142
will not apply to the settlement of the foreign exchange capitals of the foreign-invested enterprises established within the
designate areas and such enterprises are allowed to use its Renminbi capital converted from foreign exchange capitals to
make equity investment, our PRC subsidiary is not established within the designated areas. On March 30, 2015, SAFE
promulgated Circular 19, to expand the reform nationwide. Circular 19 came into force and replaced both Circular 142 and
Circular 36 on June 1, 2015. Circular 19 allows foreign-invested enterprises to make equity investments by using Renminbi
fund converted from foreign exchange capital. However, Circular 19 continues to prohibit foreign-invested enterprises
from, among other things, using Renminbi fund converted from its foreign exchange capitals for expenditure beyond its
business scope, providing entrusted loans or repaying loans between non-financial enterprises. In June 2016, SAFE
promulgated Notice on Reforming and Standardizing the Administrative Provisions on Capital Account Foreign Exchange
Settlement which further stipulates that foreign-invested enterprises shall not use Renminbi fund converted from foreign
exchange capital for providing loans to non-affiliated enterprises, except as otherwise expressly permitted under its
business scope. In addition, SAFE strengthened its oversight of the flow and use of the Renminbi capital converted from
foreign currency registered capital of a foreign-invested company. The business scopes of Beijing Tuniu and Tuniu
(Nanjing) Information Technology Co., Ltd., or Tuniu Nanjing Information Technology, include research and development
of computer software, network information technology products, computer application systems, e-commerce systems,
network security systems and computer system integration; technology services, consulting and transfers; sales of self-
developed products; investment consulting; business information consulting; and conference services and public relations
advice. Beijing Tuniu and Tuniu Nanjing Information Technology may only use Renminbi converted from foreign
exchange capital contribution for activities within their respective approved business scope. In addition, the use of such
Renminbi capital may not be altered without SAFE approval, and such Renminbi capital may not in any case be used to
repay Renminbi loans if the proceeds of such loans have not been used. Violations of these Circulars could result in severe
monetary or other penalties. If we convert the net proceeds we receive from our financing activities, such as our private
placement into Renminbi pursuant to these Circulars, our use of Renminbi funds for general corporate purposes must be
within the business scopes of our PRC subsidiaries.
Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict
our ability to satisfy our liquidity requirements.
We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on
equity from our PRC subsidiaries to satisfy our liquidity requirements. Current PRC regulations permit our PRC
subsidiaries to pay dividends to us only out of their accumulated profits, if any, as determined in accordance with PRC
accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their
respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50%
of their respective registered capital. Our PRC subsidiaries may also allocate a portion of its after-tax profits based on PRC
accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash
dividends. Furthermore, if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the
debt may restrict their ability to pay dividends or make other payments to us. In addition, the PRC tax authorities may
require us to adjust our taxable income under the contractual arrangements among Beijing Tuniu, Nanjing Tuniu and the
shareholders of Nanjing Tuniu in a manner that would materially and adversely affect Beijing Tuniu’s ability to pay
dividends and other distributions to us. Any limitation on the ability of our subsidiaries to distribute dividends to us or on
the ability of Nanjing Tuniu to make payments to us may restrict our ability to satisfy our liquidity requirements.
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We may not be able to obtain certain treaty benefits on dividends paid to us by our PRC subsidiaries through our Hong
Kong subsidiary.
Under the EIT Law, dividends generated from retained earnings after January 1, 2008 from a PRC company and
distributed to a foreign parent company are subject to a withholding tax rate of 10% unless the foreign parent’s jurisdiction
of incorporation has a tax treaty with China that provides for a preferential withholding arrangement. Pursuant to the
Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double
Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, or the Hong Kong Tax Treaty, which became
effective on December 8, 2006, a company incorporated in Hong Kong, such as Tuniu (HK) Limited, will be subject to
withholding income tax at a rate of 5% on dividends it receives from its PRC subsidiaries, if it holds a 25% or more interest
in that particular PRC subsidiary, or 10% if it holds less than a 25% interest in that subsidiary. However, the SAT
promulgated SAT Circular 9 on February 3, 2018, which became effective from April 2018 and replaced Circular 601
issued by SAT on October 27, 2009 and the Announcement of the SAT regarding Recognition of “Beneficial Owner” under
Tax Treaties, or Announcement 30 issued on June 29, 2012. Circular 9 stipulates that in determining whether a non-
resident enterprise has the status as a beneficial owner, comprehensive analysis shall be conducted based on the factors
provided in Circular 9 and the actual circumstances of the specific case shall be taken into consideration. Specifically,
Circular 9 expressly excludes an agent or a designated payee from being considered as a “beneficial owner.” As a result,
although our PRC subsidiaries, Beijing Tuniu and Tuniu Nanjing Information Technology, are currently wholly owned by
our Hong Kong subsidiary, Tuniu (HK) Limited, we cannot assure you that we would be entitled to the tax treaty benefits
and enjoy the favorable 5% rate applicable under the Hong Kong Tax Treaty. If Tuniu (HK) Limited is not recognized as
the beneficial owner of the dividends paid to it by Beijing Tuniu or Tuniu Nanjing Information Technology, such dividends
will be subject to a normal withholding tax of 10% as provided by the EIT Law.
Discontinuation or revocation of any of the preferential tax treatments and government subsidies or imposition of any
additional taxes or surcharges could adversely affect our financial condition and results of operations.
Our PRC subsidiaries are incorporated in the PRC and governed by applicable PRC tax laws and regulations. The EIT
Law and its Implementation Rules have adopted a uniform statutory enterprise income tax rate of 25% to all enterprises in
China, including foreign-invested enterprises. The EIT Law and its Implementation Rules also permit qualified “high and
new technology enterprises,” or HNTEs, to enjoy a preferential enterprise income tax rate of 15% upon filing with the
relevant tax authorities. The qualification as a HNTE is generally effective for a term of three years and the renewal of such
qualification is subject to review by the relevant authorities in China. Nanjing Tuniu originally obtained its HNTE
certificate in 2010 with a valid period of three years and successfully obtained the third renewal of such certificate in
December 2019 for another three years. Tuniu Nanjing Information Technology obtained its HNTE certificate in 2017 with
a valid period of three years and successfully obtained the first renewal of such certificate in December 2020 for another
three years. Beijing Tuniu also obtained its HNTE certificate in November 2018. Therefore, Nanjing Tuniu, Tuniu Nanjing
Information Technology and Beijing Tuniu were eligible to enjoy a preferential tax rate of 15% in 2020 to the extent they
have taxable income under the EIT Law, as long as they maintain the HNTE qualifications and duly conduct relevant EIT
filing procedures with the relevant tax authorities. If Nanjing Tuniu, Tuniu Nanjing Information Technology and Beijing
Tuniu fail to maintain their HNTE qualifications or renew their qualifications when their current terms expire, they will
lose the current preferential tax treatments and their applicable enterprise income tax rates may increase to 25%, which
could have an adverse effect on our financial condition and results of operations.
In addition, our PRC subsidiaries have received various financial subsidies from PRC local government authorities.
Preferential tax treatments and financial subsidies are subject to review and may be adjusted or revoked at any time in the
future. The discontinuation of any preferential tax treatments or financial subsidies or imposition of any additional taxes or
surcharges could adversely affect our financial condition and results of operations.
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Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your
investment.
The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank
of China. The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. The value of
Renminbi against the U.S. dollar and other currencies is affected by changes in China’s political and economic conditions
and by China’s foreign exchange policies, among other things. We cannot assure you that Renminbi will not appreciate or
depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or
U.S. government policy may impact the exchange rate between Renminbi and the U.S. dollar in the future.
Any significant appreciation or depreciation of Renminbi may materially and adversely affect our revenues, earnings
and financial position, and the value of, and any dividends payable on, our ADSs in U.S. dollars. For example, a significant
depreciation of Renminbi against the U.S. dollar may significantly reduce the U.S. dollar equivalent of our earnings, which
in turn could adversely affect the price of our ADSs.
Very limited hedging options are available in China to reduce our exposure to exchange rate fluctuations. To date, we
have not entered into any material hedging transactions in an effort to reduce our exposure to foreign currency exchange
risk. While we may decide to enter into hedging transactions in the future, the availability and effectiveness of these hedges
may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange
losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign
currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.
The approval of the China Securities Regulatory Commission may have been required in connection with our earlier
initial public offering under a regulation adopted in August 2006, and, if required, we cannot assure you that we will be
able to obtain such approval.
The M&A Rules, among other things, require offshore special purpose vehicles controlled by PRC companies or
individuals formed for the purpose of an overseas listing of such PRC companies’ or individuals’ interests in PRC domestic
companies to obtain the CSRC’s approval prior to listing their securities on an overseas stock exchange. The application of
this regulation remains unclear. Our PRC counsel, Fangda Partners, has advised us that, based on its understanding of the
current PRC laws, rules and regulations, we are not required to submit an application to the CSRC for its approval of the
listing and trading of our ADSs on the Nasdaq Global Market, because:
·
·
·
the CSRC currently has not issued any definitive rule or interpretation concerning whether offerings like our
initial public offering are subject to this regulation;
our wholly owned PRC subsidiaries were established by means of foreign direct investment, rather than through a
merger or acquisition of domestic companies, as defined under the M&A Rules; and
there is no provision in the M&A Rules that explicitly classifies contractual arrangements as a type of transaction
subject to the M&A Rules.
There is uncertainty as to how this regulation will be interpreted or implemented. If it is determined that the CSRC
approval was required for our initial public offering, we may face sanctions by the CSRC or other PRC regulatory agencies
for failure to seek the CSRC’s approval for our initial public offering. These sanctions may include fines and penalties on
our operations in the PRC, delays or restrictions on the repatriation of the proceeds from our initial public offering into the
PRC, restrictions on or prohibition of the payments or remittance of dividends by our PRC subsidiaries, or other actions
that could have a material adverse effect on our business, financial condition, results of operations, reputation and
prospects, as well as the trading price of our ADSs.
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Online payment systems in China are at the stage of development and may restrict our ability to expand our online
business.
Online payment systems in China are at the stage of development. Although major Chinese banks are instituting online
payment systems, these systems are not as widely acceptable to consumers in China as in the United States and other
developed countries. The lack of wide acceptance of online payment systems and concerns regarding the adequacy of
system security may limit the number of online commercial transactions that we can service. If online payment services
and their security capabilities are not significantly enhanced, our ability to grow our online business may be limited.
Regulation and censorship of information distribution over the Internet in China may adversely affect our business,
and we may be liable for information displayed on, retrieved from or linked to our website.
The PRC government has adopted regulations governing Internet access and the distribution of information over the
Internet. Under these regulations, Internet content providers and Internet publishers are prohibited from posting or
displaying over the Internet content that, among other things, violates PRC laws and regulations, impairs the national
dignity of China or the public interest, or is reactionary, obscene, superstitious, fraudulent or defamatory. Failure to comply
with these regulations may result in confiscation of income, fines, suspension of business, revocation of licenses to provide
Internet content and other licenses, the closure of the concerned websites, which could materially and adversely affect our
business, financial conditions and results of operations. A website operator may also be held liable for such censored
information displayed on or linked to its website. For a detailed discussion, see “Item 4.B. Information on the Company—
Business Overview—PRC Regulation—Regulations on Information Security and Censorship.” We have a team dedicated
to screening and monitoring content published on our online platform and removing prohibited content. However, we may
have difficulty identifying and removing all illegal content displayed on or linked to our website, which could expose us to
the penalties described above.
Increases in labor costs in the PRC may adversely affect our business and results of operations.
The economy of China has been experiencing increases in inflation and labor costs in recent years. As a result, the
average wage in the PRC is expected to continue to grow. In addition, we are required by PRC laws and regulations to pay
various statutory employee benefits, including pensions, housing fund, medical insurance, work-related injury insurance,
unemployment insurance and maternity insurance to designated government agencies for the benefit of our employees. The
relevant government agencies may examine whether an employer has made adequate payments of the requisite statutory
employee benefits, and those employers who fail to make adequate payments may be subject to late payment fees, fines
and/or other penalties. If the relevant PRC authorities determine that we shall make supplemental social insurance and
housing fund contributions and that we are subject to fines and legal sanctions, our business, financial condition and results
of operations may be adversely affected. We expect that our labor costs, including wages and employee benefits, will
continue to increase. Unless we are able to pass on these increased labor costs to our customers by increasing the prices of
our products and services, our financial condition and results of operations may be materially and adversely affected.
We face certain risks relating to the real properties that we lease.
We lease real properties from third parties primarily for our office use in the PRC. Our leasehold interests in a number
of these leased properties may be defective as a result of the lessors’ lack of proper title or right to lease. As a result, we
cannot assure you that our leasehold interests will not be challenged. In addition, we have not registered the vast majority
of our lease agreements with the relevant PRC governmental authorities as required by PRC law, and although failure to do
so does not in itself invalidate the leases, we may not be able to defend these leases against bona fide third parties. As of
the date of this annual report, we are not subject to any material actions, claims or investigations pending or threatened in
writing by government authorities or third parties with respect to defects in our leased properties. However, if third parties
who purport to be property owners or beneficiaries of the mortgaged properties challenge our right to lease these
properties, we may not be able to protect our leasehold interests and may be ordered to vacate the affected premises, which
could materially and adversely affect our business and results of operations.
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Additional remedial measures could be imposed on certain PRC-based accounting firms, including our independent
registered public accounting firm, in administrative proceedings instituted by the SEC, as a result of which our
financial statements may be determined to not be in compliance with the requirements of the Exchange Act, if at all.
In December 2012, the SEC brought administrative proceedings against the PRC-based affiliates of the Big Four
accounting firms, including our independent registered public accounting firm, alleging that they had violated U.S.
securities laws by failing to provide audit work papers and other documents related to certain other PRC-based companies
under investigation by the SEC. On January 22, 2014, an initial administrative law decision was issued, censuring and
suspending these accounting firms from practicing before the SEC for a period of six months. The decision was neither
final nor legally effective until reviewed and approved by the SEC, and on February 12, 2014, the PRC-based accounting
firms appealed to the SEC against this decision. In February 2015, each of the four PRC-based accounting firms agreed to a
censure and to pay a fine to the SEC to settle the dispute and avoid suspension of their ability to practice before the SEC.
The settlement requires the firms to follow detailed procedures to seek to provide the SEC with access to such firms’ audit
documents via the CSRC. If these accounting firms failed to meet the specified criteria during a period of four years
starting from the settlement date, or if there was a failure in the process between the SEC and the CSRC, the SEC retained
authority to impose a variety of additional remedial measures on the accounting firms depending on the nature of the
failure. Under the terms of the settlement, the underlying proceeding against the four PRC-based accounting firms was
deemed dismissed with prejudice at the end of four years starting from the settlement date, which was February 6, 2019.
While we cannot predict if the SEC will further challenge the four PRC-based accounting firms’ compliance with U.S. law
in connection with U.S. regulatory requests for audit work papers or if the results of such a challenge would result in the
SEC imposing penalties such as suspensions, if the accounting firms are subject to additional remedial measures, our
ability to file our financial statements in compliance with SEC requirements could be impacted. A determination that we
have not timely filed financial statements in compliance with SEC requirements could ultimately lead to our delisting from
the Nasdaq Global Market or deregistration from the SEC, or both, which would substantially reduce or effectively
terminate the trading of our ADSs in the United States.
In the event that the SEC restarts the administrative proceedings, depending upon the final outcome, listed companies
in the United States with major PRC operations may find it difficult or impossible to retain auditors in respect of their
operations in the PRC, which could result in financial statements being determined not to be in compliance with the
requirements of the Exchange Act, including possible delisting. Moreover, any negative news about any such future
proceedings against these audit firms may cause investor uncertainty regarding China-based, U.S.-listed companies and the
market price of our ADSs may be adversely affected.
If our independent registered public accounting firm was denied, even temporarily, the ability to practice before the
SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our
financial statements, our financial statements could be determined not to be in compliance with the requirements of the
Exchange Act. Such a determination could ultimately lead to the delisting of our ADSs from the Nasdaq Global Market or
deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in
the United States.
Rising political tension, particularly between U.S. and China, may adversely impact our business, financial condition,
and results of operations.
Political tensions between the United States and China have escalated due to, among other things, trade disputes, the
COVID-19 outbreak and spread, sanctions imposed by the U.S. Department of Treasury on certain officials of the Hong
Kong Special Administrative Region and the central government of the PRC and the executive orders issued by U.S.
President Donald J. Trump in August 2020 that prohibit certain transactions with certain Chinese companies and their
applications. Rising political tensions could reduce levels of trades, investments, technological exchanges and other
economic activities between the two major economies, which would have a material adverse effect on global economic
conditions and the stability of global financial markets. Any of these factors could have a material adverse effect on our
business, prospects, financial condition and results of operations.
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Risks Related to Our ADSs
Our ADSs may be delisted from the Nasdaq Global Market as a result of our failure of meeting the Nasdaq Global
Market continued listing requirements.
Our ADSs are currently listed on the Nasdaq Global Market under the symbol “TOUR.” We must continue to meet the
requirements set forth in Nasdaq Listing Rule 5550 to remain listing on the Nasdaq Global Market. The listing standards of
the Nasdaq Global Market provide that a company, in order to qualify for continued listing, must maintain a minimum
ADS price of US$1.00 and various additional requirements. On May 18, 2020, we received a letter from the Listing
Qualifications Department of Nasdaq, pursuant to which Nasdaq notified us that the closing bid price per ADS was below
the minimum bid price of US$1.00 for a period of 30 consecutive business days and we did not meet the minimum bid
price required for continued listing under Nasdaq Listing Rule 5450(a)(1). Due to the tolling of compliance period through
June 30, 2020, as determined by Nasdaq, we had until December 28, 2020, to regain compliance with Nasdaq’s minimum
bid price requirement. We received a notification letter from the Listing Qualifications Department of Nasdaq dated June
26, 2020 notifying us that we have regained compliance with the Nasdaq Listing Rule 5450(a)(1). If we fail to satisfy
Nasdaq’s continued listing requirements going forward and fail to regain compliance on a timely basis, our ADSs could be
delisted from Nasdaq Global Market.
The trading prices of our ADSs have fluctuated and may continue to be volatile.
The trading prices of our ADSs have fluctuated since we first listed our ADSs. From the time our ADSs became listed
on Nasdaq on May 9, 2014 through April 28, 2021, the trading price of our ADSs has ranged from US$24.99 to US$0.75
per ADS, and the last reported trading price on April 28, 2021 was US$3.01 per ADS. The prices of our ADSs may
continue to fluctuate because of broad market and industry factors, like the performance and fluctuation of the market
prices of other companies with business operations located mainly in China that have listed their securities in the United
States. The widespread negative publicity of alleged fraudulent accounting practices and poor corporate governance of
certain U.S. public companies with operations in China in recent years were believed to have negatively affected investors’
perception and sentiment towards companies with connection with China, which significantly and negatively affected the
trading prices of some companies’ securities listed in the U.S. Any similar negative publicity or sentiment may affect the
performances of our ADSs. The trading prices of our ADSs may also be affected by changes in the U.S. stock markets in
general. Furthermore, securities markets may from time to time experience significant price and volume fluctuations that
are not related to our operating performance, such as the large decline in share prices in the United States, China and other
jurisdictions in late 2008, early 2009 and the second half of 2011, which may have a material adverse effect on the market
price of our ADSs. The securities of some PRC companies that have listed their securities on U.S. stock markets have
experienced significant volatility. The trading performances of these PRC companies’ securities after their initial public
offerings may affect the attitudes of investors toward PRC companies listed in the United States in general and
consequently may impact the trading performance of our ADSs, regardless of our actual operating performance.
In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile for
factors specific to our own operations, including the following:
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·
·
·
·
·
the financial projections that we may choose to provide to the public, any changes in those projections or our
failure for any reason to meet those projections;
variations in our revenues, net income and cash flow;
announcements of new investments, acquisitions, strategic partnerships, or joint ventures;
announcements of new products, services and expansions by us or our competitors;
changes in financial estimates by securities analysts;
additions or departures of key personnel;
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·
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release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity
securities;
potential litigation or regulatory investigations; and
fluctuations in market prices for our products or services.
Any of these factors may result in large and sudden changes in the volume and price at which our ADSs trade.
If securities or industry analysts do not publish research or reports about our business, or if they adversely change their
recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.
The trading market for our ADSs will be influenced by research or reports that securities or industry analysts publish
about our business. If one or more analysts who cover us downgrade our ADSs, or publish unfavorable research about us,
the market price for our ADSs would likely decline. Failure to meet expectations driven by analyst research or reports,
even by aggressive research or reports, may cause the market price of our ADSs to decline. If one or more of these analysts
cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which, in turn,
could cause the market price or trading volume for our ADSs to decline.
Our dual class share structure with different voting rights will limit your ability to influence corporate matters and
could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares
and ADSs may view as beneficial.
Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary
shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to ten votes per share, with
Class A and Class B ordinary shares voting together as one class on all matters subject to a shareholders’ vote. Due to the
disparate voting powers attached to these two classes of ordinary shares, holders of our Class B ordinary shares collectively
beneficially owned approximately 4.69% of our outstanding ordinary shares as of February 28, 2021, representing 32.97%
of our total voting power. As of February 28, 2021, our directors and officers beneficially own an aggregate of 64.9% of
our outstanding shares representing 63.4% of our total voting power.
As a result of the dual class share structure and the concentration of ownership, holders of our Class B ordinary shares
have substantial influence over our business, including decisions regarding mergers, consolidations and the sale of all or
substantially all of our assets, election of directors and other significant corporate actions. They may take actions that are
not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a
change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their
shares as part of a sale of our company and may reduce the price of our ADSs. This concentrated control will limit your
ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other
change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial. For more
information regarding our principal shareholders and their affiliated entities, see “Item 7.A. Major Shareholders and
Related Party Transactions—Major Shareholders.”
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The sale or availability for sale of substantial amounts of our ADSs could adversely affect their market price.
Sales of substantial amounts of our ADSs in the public market, or the perception that these sales could occur, could
adversely affect the market price of our ADSs and could materially impair our ability to raise capital through equity
offerings in the future. As of February 28, 2021, we had 370,545,883 ordinary shares outstanding, comprising of (i)
353,172,383 Class A ordinary shares (excluding the 18,785,661 Class A ordinary shares, represented by 6,261,887 ADSs,
repurchased and reserved for the future exercise of options or the vesting of other awards under the 2008 Plan and the 2014
Plan), and (ii) 17,373,500 Class B ordinary shares. Among these shares, 88,047,546 Class A ordinary shares are in the form
of ADSs, which are freely transferable by persons other than our affiliates without restriction or additional registration
under the Securities Act. The remaining Class A ordinary shares outstanding will be available for sale, subject to volume
and other restrictions as applicable under Rules 144 and 701 under the Securities Act. We cannot predict what effect, if any,
market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities
for future sale will have on the market price of our ADSs. In addition, certain holders of our Class B ordinary shares are
entitled to certain registration rights in the event that specified conditions are met, including demand registration rights,
piggyback registration rights, and Form F-3 registration rights. Registration of these shares under the Securities Act would
result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the
effectiveness of the registration. Sales of these registered shares in the public market, or the perception that such sales
could occur, could cause the price of our ADSs to decline.
We believe that we were a passive foreign investment company, or PFIC, for United States federal income tax purposes
for the taxable year ended December 31, 2020, which could result in adverse United States federal income tax
consequences to United States investors in the ADSs or ordinary shares.
Under United States federal income tax law, we will be classified as a “passive foreign investment company,” or PFIC,
for any taxable year, if either (a) 75% or more of our gross income for such year consists of certain types of “passive”
income or (b) 50% or more of the value of our assets (generally determined on the basis of a quarterly average) during such
year is attributable to assets that produce or are held for the production of passive income (the “asset test”). Although the
law in this regard is unclear, we treat our consolidated affiliated entities as being owned by us for United States federal
income tax purposes, not only because we exercise effective control over their operations, but also because we are entitled
to substantially all of their economic benefits, and, as a result, we consolidate their operating results in our consolidated
financial statements.
Based on the market price of our ADSs and the composition of our assets (in particular the substantial amount of cash,
deposits and investments), we believe that we were a PFIC for United States federal income tax purposes for the
taxable year ended December 31, 2020 , and we will likely be a PFIC for our current taxable year ending December 31,
2021 unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive
assets we hold in assets that produce or are held for the production of active income.
If we are classified as a PFIC in any taxable year, a U.S. Holder (as defined in “Item 10.E. Additional Information—
Taxation—United States Federal Income Tax Considerations”) may incur significantly increased United States federal
income tax on gain recognized on the sale or other disposition of the ADSs or ordinary shares and on the receipt of
distributions on the ADSs or ordinary shares to the extent such gain or distribution is treated as an “excess distribution”
under the United States federal income tax rules, and such U.S. Holders may be subject to burdensome reporting
requirements. Further, if we are classified as a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary
shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our
ADSs or ordinary shares. We do not intend to provide information necessary for U.S. Holders to make qualified electing
fund elections which, if available, would result in tax treatment different from (and generally less adverse than) the general
tax treatment for PFICs. For more information, see “Item 10.E. Additional Information—Taxation—United States Federal
Income Tax Considerations—Passive Foreign Investment Company Rules.”
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You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be
limited, because we are incorporated under Cayman Islands law.
We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed
by our memorandum and articles of association, the Companies Act of the Cayman Islands (Revised) and the common law
of the Cayman Islands. The rights of shareholders to take actions against the directors, actions by minority shareholders
and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the
common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited
judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of
persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary
responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or
judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands have a less developed body
of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially
interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have
standing to initiate a shareholder derivative action in a federal court of the United States.
The Cayman Islands courts are also unlikely:
·
·
to recognize or enforce against us judgments of courts of the United States based on certain civil liability
provisions of U.S. securities laws; and
to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability
provisions of U.S. securities laws that are penal in nature.
There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts
of the Cayman Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of
competent jurisdiction without retrial on the merits.
As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of
actions taken by management, members of the board of directors or controlling shareholders than they would as public
shareholders of a company incorporated in the United States. For a discussion of significant differences between the
provisions of the Companies Act of the Cayman Islands (Revised) and the laws applicable to companies incorporated in the
United States and their shareholders, see “Item 10.B. Additional Information—Memorandum and Articles of Association
—Differences in Corporate Law.”
Judgments obtained against us by our shareholders may not be enforceable.
We are a Cayman Islands company and all of our assets are located outside of the United States. Our current
operations are based in China. In addition, majority of our current directors and executive officers are nationals and
residents of countries other than the United States. Substantially all of the assets of these persons are located outside the
United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals
in the United States in the event that you believe that your rights have been infringed under the United States federal
securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands
and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers.
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It may be difficult for overseas regulators to conduct investigation or collect evidence within China.
Shareholder claims or regulatory investigation that are common in the United States generally are difficult to pursue as
a matter of law or practicality in China. For example, in China, there are significant legal and other obstacles to providing
information needed for regulatory investigations or litigation initiated outside China. Although the authorities in China may
establish a regulatory cooperation mechanism with the securities regulatory authorities of another country or region to
implement cross-border supervision and administration, such cooperation with the securities regulatory authorities in the
Unities States may not be efficient in the absence of mutual and practical cooperation mechanism. Furthermore, according
to Article 177 of the PRC Securities Law, or Article 177, which became effective in March 2020, no overseas securities
regulator is allowed to directly conduct investigation or evidence collection activities within the territory of the PRC. While
detailed interpretation of or implementation rules under Article 177 have yet to be promulgated, the inability for an
overseas securities regulator to directly conduct investigation or evidence collection activities within China may further
increase difficulties faced by you in protecting your interests. See also “—Risks Related to Our ADSs —You may face
difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because
we are incorporated under Cayman Islands law” for risks associated with investing in us as a Cayman Islands company.
The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to
exercise your right to vote your Class A ordinary shares.
Holders of our ADSs are only able to exercise the voting rights with respect to the underlying Class A ordinary shares
in accordance with the provisions of the deposit agreement. Under the deposit agreement, holders of our ADSs must vote
by giving voting instructions to the depositary. Upon receipt of those voting instructions, the depositary will vote the
underlying Class A ordinary shares in accordance with those instructions. Holders of our ADSs are not able to directly
exercise their right to vote with respect to the underlying shares unless they withdraw the shares. Under our amended and
restated memorandum and articles of association, the minimum notice period required for convening a general meeting is
14 calendar days. When a general meeting is convened, holders of our ADSs may not receive sufficient advance notice to
withdraw the shares underlying their ADSs to allow them to vote with respect to any specific matter. If we ask for
instructions from the holders of our ADSs, the depositary will notify the holders of our ADSs of the upcoming vote and
will arrange to deliver our voting materials to them. We cannot assure holders of our ADSs that they will receive the voting
materials in time to ensure that they can instruct the depositary to vote their shares. In addition, the depositary and its
agents are not responsible for failing to carry out voting instructions or for their manner of carrying out voting instructions.
This means that holders of our ADSs may not be able to exercise their right to vote and may have no legal remedy if the
shares underlying their ADSs are not voted as requested.
We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt
from certain provisions applicable to United States domestic public companies.
Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the
securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:
·
·
·
·
the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current
reports on Form 8-K;
the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a
security registered under the Exchange Act;
the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading
activities and liability for insiders who profit from trades made in a short period of time; and
the selective disclosure rules by issuers of material nonpublic information under Regulation FD.
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We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition,
we publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the Nasdaq
Global Market. Press releases relating to financial results and material events are also furnished to the SEC on Form 6-K.
However, the information we are required to file with or furnish to the SEC is less extensive and less timely as compared to
that required to be filed with the SEC by United States domestic issuers. As a Cayman Islands company listed on the
Nasdaq Global Market, we are subject to the Nasdaq Global Market corporate governance listing standards. However,
Nasdaq Global Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home
country. Certain corporate governance practices in the Cayman Islands, our home country, may differ significantly from the
Nasdaq Global Market corporate governance listing standards. As we have chosen, and may from time to time to choose, to
follow home country practice exemptions with respect to certain corporate matters, such as the requirement of
shareholders’ approval for issuing additional securities exceeding 20% of our outstanding ordinary shares and the
requirement to hold an annual meeting of shareholders, our shareholders may be afforded less protection under Cayman
Islands law than they would under the Nasdaq corporate government requirements applicable to U.S. domestic issuers. See
“Item 16G. Corporate Governance.” As a result, you may not be afforded the same protections or information, which
would be made available to you, were you investing in a United States domestic issuer.
Because we do not expect to pay dividends in the foreseeable future, ADS holders must rely on price appreciation of our
ADSs for return on their investment.
We do not anticipate that we will pay any cash dividends on our ordinary shares, or indirectly on our ADSs, for the
foreseeable future. Any determination to pay dividends in the future will be at the discretion of our board of directors and
will depend upon our results of operations, financial condition, contractual restrictions relating to indebtedness we may
incur, restrictions imposed by applicable law and other factors our board of directors deem relevant. Accordingly, for
holders of our ADSs, realization of a gain on their investment will depend on the appreciation of the price of our ADSs,
which may never occur. Investors seeking cash dividends in the foreseeable future should not purchase our ADSs.
Holders of our ADSs may not receive dividends or other distributions on our Class A ordinary shares and may not
receive any value for them, if it is illegal or impractical to make them available.
The depositary of our ADSs has agreed to pay to holders of our ADSs the cash dividends or other distributions it or the
custodian receives on Class A ordinary shares or other deposited securities underlying our ADSs, after deducting its fees
and expenses. Holders of our ADSs will receive these distributions in proportion to the number of Class A ordinary shares
their ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a
distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of
ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or
distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to
distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of
mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to
register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions.
We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything
else to holders of ADSs. This means that holders of our ADSs may not receive distributions we make on our Class A
ordinary shares or any value for them if it is illegal or impractical for us to make them available. These restrictions may
cause a material decline in the value of our ADSs.
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Holders of our ADSs may not be able to participate in rights offerings and may experience dilution of your holdings.
We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the
deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and
the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all
holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to,
attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish
an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with
respect to these rights or underlying securities or to endeavor to have a registration statement declared effective.
Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their
holdings as a result.
Holders of our ADSs may be subject to limitations on transfer of our ADSs.
Our ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or
from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its
books from time to time for a number of reasons, including in connection with corporate events such as a rights offering,
during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period.
The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse
to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are
closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any
government or governmental body, or under any provision of the deposit agreement, or for any other reason.
We incur increased costs as a result of being a public company.
As a public company, we incur significant accounting, legal and other expenses that we did not incur as a private
company. The SOX, as well as rules subsequently implemented by the SEC and Nasdaq, have detailed requirements
concerning corporate governance practices of public companies, including Section 404 of the SOX relating to internal
controls over financial reporting. We expect these rules and regulations applicable to public companies to increase our
accounting, legal and financial compliance costs and to make certain corporate activities more time-consuming and costly.
Our management will be required to devote substantial time and attention to our public company reporting obligations and
other compliance matters. We are currently evaluating and monitoring developments with respect to these rules and
regulations, and we cannot predict or estimate the amount of additional costs we may incur or the timing of such costs. Our
reporting and other compliance obligations as a public company may place a strain on our management, operational and
financial resources and systems for the foreseeable future.
In the past, shareholders of a public company often brought securities class action suits against the company following
periods of instability in the market price of that company’s securities. If we were involved in a class action suit, it could
divert a significant amount of our management’s attention and other resources from our business and operations, which
could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action
suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if
a claim is successfully made against us, we may be required to pay significant damages, which could have a material and
adverse effect on our financial condition and results of operations.
Item 4.Information on the Company
A.History and Development of the Company
We began our operation in China through Nanjing Tuniu, a PRC company formed in December 2006. Nanjing Tuniu
acquired 100% of the equity interests in Shanghai Tuniu International Travel Service Co., Ltd., Nanjing Tuniu International
Travel Service Co., Ltd. and Beijing Tuniu International Travel Service Co., Ltd. in August 2008, December 2008 and
November 2009, respectively. Nanjing Tuniu established Nanjing Tuzhilv Tickets Sales Co., Ltd. in April 2011.
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In June 2008, we incorporated Tuniu Corporation under the laws of the Cayman Islands as our offshore holding
company in order to facilitate international financing. In May 2011, we established our wholly owned Hong Kong
subsidiary, Tuniu (HK) Limited.
We completed our initial public offering and listed our ADSs on the Nasdaq under the symbol “TOUR” in May 2014.
At the time of our initial public offering, we also entered into a concurrent private placement with three investors.
In December 2014, we entered into a share subscription agreement with Unicorn Riches Limited, a special purpose
vehicle of Hony Capital, JD.com E-commerce (Investment) Hong Kong Corporation Limited, a special purpose vehicle of
JD.com, Inc. (Nasdaq: JD), Ctrip Investment Holding Ltd., a subsidiary of Ctrip.com International, Ltd. (which later
changed its name to Trip.com Group Limited) (Nasdaq: TCOM) and the respective personal holding companies of Tuniu’s
chief executive officer and chief operating officer, pursuant to which we sold a total of 36,812,868 newly issued Class A
ordinary shares for US$148 million.
In May 2015, we entered into a share subscription agreement with each of Fabulous Jade Global Limited, a subsidiary
of JD.com, Inc., Unicorn Riches Limited, a special purpose vehicle of Hony Capital, DCM Ventures China Turbo Fund,
L.P. and DCM Ventures China Turbo Affiliates Fund, L.P., both affiliates of DCM V, L.P., Ctrip Investment Holding Ltd., a
subsidiary of Ctrip.com International, Ltd . (which later changed its name to Trip.com Group Limited), Esta Investments
Pte Ltd, an affiliate of Temasek Holdings and Sequoia Capital 2010 CV Holdco, Ltd, an affiliate of Sequoia Capital,
pursuant to which we sold a total of 93,750,000 newly issued Class A ordinary shares for US$500 million.
In November 2020, JD.com E-commerce (Investment) Hong Kong Corporation Limited transferred all its Class A
ordinary shares to Hopeful Turism Limited, a subsidiary of Caissa Sega Tourism Culture Development Group Co., Ltd., or
Caissa Group, and JD.com Investment Limitedm transferred all its shares in Fabulous Jade Global Limited to Hopeful
Turism Limited. As a result of the share transfer, Caissa Group beneficially owned 78,061,780 Class A ordinary shares.
In November 2015, we entered into a share subscription agreement with HNA Tourism Group, or HNA Tourism,
pursuant to which an affiliate of HNA Tourism purchased 90,909,091 newly issued Class A ordinary shares from us for
US$500 million in January 2016.
During the year ended December 31, 2016, we acquired 100% of controlling equity interests of one offline travel
agency, to further expand our oversea tourism market and promote our destination service. The total purchase price was
RMB28.1 million (US$4.0 million), which included cash consideration of RMB16.5 million (US$2.4 million) and
RMB11.6 million (US$1.6 million), the fair value of contingent cash consideration to be made based on the achievement of
certain revenue and profit target over the next four years.
During the year ended December 31, 2018, we acquired 80% of controlling equity interests of one offline travel
agency, to further expand our overseas tourism market and promote our destination local tour operator service. The total
purchase price was RMB20.2 million (US$2.9 million), which included cash consideration of RMB9.8 million (US$1.4
million) and RMB10.4 million (US$1.5 million), the fair value of contingent cash consideration, as at the acquisition date,
to be made based on the achievement of net profit target over the next four years.
During the year ended December 31, 2019, we acquired 51% of controlling equity interest in an offline travel agency,
and 63.51% of controlling equity interests in an online travel agency, to further expand our overseas tourism market and
promote our destination local tour operator service. The total purchase price was RMB60.0 million (US$8.6 million),
which included cash consideration of RMB52.6 million (US$7.6 million) and RMB7.3 million (US$1.1 million), being the
fair value of contingent cash consideration, as at the acquisition date, based on the achievement of certain profit target, to
be paid by us over the next four years.
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Tuniu Corporation established a wholly owned PRC subsidiary, Beijing Tuniu, in September 2008. Tuniu (HK)
Limited established another wholly owned PRC subsidiary, Tuniu (Nanjing) Information Technology Co., Ltd., in
August 2011, and acquired 100% of the equity interests in Beijing Tuniu in September 2011. Through Beijing Tuniu, we
obtained control over Nanjing Tuniu by entering into a series of contractual arrangements, including purchase option
agreement, equity interest pledge agreement, shareholders’ voting rights agreement, powers of attorney and cooperation
agreement, with Nanjing Tuniu and its shareholders. Nanjing Tuniu holds our ICP licenses as an Internet content provider
and operates our website. Beijing Tuniu International Travel Service Co., Ltd. and Nanjing Tuniu International Travel
Service Co. Ltd., both of which are Nanjing Tuniu’s subsidiaries, hold our operation permits for overseas travel business.
These contractual arrangements allow us to:
·
·
·
exercise effective control over Nanjing Tuniu;
receive substantially all of the economic benefits of Nanjing Tuniu; and
have an option to purchase all or part of the equity interests in Nanjing Tuniu when and to the extent permitted by
PRC law.
As a result of these contractual arrangements, we are the primary beneficiary of Nanjing Tuniu, and we treat it and its
subsidiaries as consolidated affiliated entities under U.S. GAAP. We have consolidated the financial results of Nanjing
Tuniu and its subsidiaries in our consolidated financial statements in accordance with U.S. GAAP.
Our principal executive offices are located at Tuniu Building No. 699-32 Xuanwudadao, Xuanwu District, Nanjing,
Jiangsu Province 210042, the People’s Republic of China. Our telephone number at this address is +86 (25) 8685-3969.
Our registered office in the Cayman Islands is located at International Corporation Services Ltd., P.O. Box 472, 2nd Floor,
Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1106, Cayman Islands. Our agent for service
of process and authorized representative in the United States in connection with each of the registration statement on
Form S-8 (File No. 333-198111 and File No. 333-251283) and registration statement on Form F-6 (File No. 333-195515) is
COGENCY GLOBAL INC., located at 122 East 42nd Street, 18th Floor, New York, NY 10168.
The SEC maintains an Internet website that contains reports, proxy and information statements, and other information
regarding us that filed electronically with the SEC, which can be accessed at http://www.sec.gov. Our annual reports,
quarterly results, press release and other SEC filings can also be accessed via our investor relationship website at
https://ir.tuniu.com/.
See “Item 5.B. Operating and Financial Review and Prospects—Liquidity and Capital Resources—Capital
Expenditures” for a discussion of our capital expenditures.
B.Business Overview
We offer a large selection of packaged tours, including organized tours and self-guided tours, as well as travel-related
services for leisure travellers. Our online platform, which comprises our tuniu.com website and mobile platform, provides
comprehensive product and travel information through user-friendly interfaces to enable leisure travellers to plan their
travels and search for itineraries that best suit their needs. Our online platform contains travel guides featuring photos,
information and recommendations for all destinations we cover, as well as user-generated content that serves as valuable
references for other travellers.
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Our recognized brand in leisure travel and growing customer base enable us to source a broad range of products from
high-quality travel suppliers at competitive prices. We rigorously select travel suppliers to ensure quality and reliability. We
have developed our proprietary supply chain management system—N-Booking system—to streamline our interactions with
travel suppliers, allowing them to receive booking information real-time, through the web or mobile devices to more
efficiently manage travel products and better understand customer preferences. In 2016, we upgraded our supplier
management system and data analytics system in order to better facilitate the cooperation between the suppliers and us. In
addition, to further broaden the range of our products and better serve our customers, we enter into strategic agreements
with various industry partners from time to time. For example, in December 2014, we entered into a strategic cooperation
agreement with Ctrip.com International, Ltd . (which later changed its name to Trip.com Group Limited), a leading travel
service provider in China, in order to expand our collaboration on shared travel resources. In November 2015, we formed a
strategic partnership with HNA Tourism, under which HNA Tourism undertook to provide us with its premium airline and
hotel resources at a preferential rate, under fair competition market rules.
Our Products and Services
We offer a wide array of packaged tours and other travel-related services to meet the diverse travel needs and
preferences of leisure travellers in China.
Packaged Tours
Packaged tours offered on our platform consist of organized tours and self-guided tours.
Organized Tours: Organized tours offer the benefits of pre-arranged itineraries, transportations, accommodations,
entertainments, meals and tour guide services. By booking an organized tour on our platform, our customers can achieve
cost savings compared to booking each component separately and enjoy a pleasant and hassle-free travel experience.
Organized tours offered on our platform cover over nearly all of the popular tourist destinations inside and outside of
China among Chinese travellers.
Organized tour product portfolio offered on our platform also includes local tours, which mainly consist of weekend
getaways and themed tours, such as water resort tours, historical town tours, ski tours and hot spring tours, and mainly
target customers who want to spend one to three days away from their departing cities. Typically, local tours have lower
average gross bookings per trip as compared to other types of organized tours.
In addition, to address the needs of group travellers who cannot be satisfied with off-the-shelf standard packaged travel
products, such as companies planning travel retreats and families planning group trips, we provide customized tours to
cater to such specific travel needs. Our group travel tour advisors work closely with travel suppliers and our customers to
design travel products and itineraries that meet such customers’ unique needs.
Self-guided Tours: Self-guided tours offered on our platform consist of combinations of flights and hotel bookings and
other optional add-ons, such as airport pick-ups that travellers can choose at their willingness. These products are offered at
attractive prices compared to booking each travel product separately. The self-guided tours target leisure travellers who
prefer greater flexibility during their vacations and who do not need tour guide services. Due to the breadth of travel
suppliers that are available on our platform, we are able to provide a wide selection of self-guided tours, covering a large
number of hotels and airlines, and have developed the most comprehensive product offerings for selected popular
destinations.
Other Travel-Related Services
Our other travel-related services comprise mainly of sales of tourist attraction tickets, visa application services, hotel
booking services, air ticketing services, train ticketing services, bus ticketing services, car rental services, insurance
services and financial services. We earn a commission or service fee for these services. In addition, we provide advertising
services to domestic and foreign tourism boards and bureaus on our online platform.
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Our Online Platform and Offline Service Network
We reach and serve customers through multiple online and offline channels, including our tuniu.com website, mobile
platform, a primary call center in Nanjing and our offline retail stores across China.
Our online platform provides our customers with the tools and information to conveniently plan, book and purchase
travel products and services. In addition, our online platform presents comprehensive product information and travel
requirements through user-friendly interfaces for leisure travellers to easily search for, compare and place orders for
product offerings that best suit their needs. We have well-trained tour advisors and customer service representatives located
at our centralized call center to supplement our online transaction infrastructure by providing our customers with
professional advice and guidance throughout their travel planning and bookings process as well as timely support before
and during their travels. The inclusion of a customer-focused, service network is particularly important to customers of our
travel products with high selling prices as these customers usually demand more assistance and attention in their travel
planning.
Our Website
Our website, tuniu.com, provides a one-stop travel platform for our customers to do everything from researching travel
destinations to booking travel products. In addition to our product information such as tour duration, departure time and
destination descriptions, our website features comprehensive travel advice ranging from basic information to professional
and user recommendations and travellers’ reviews for the destinations we cover. Users can post questions regarding
specific products and receive timely responses online from our well-trained tour advisors and customer service
representatives, which facilitates their travel planning, product selection, reservations and payments. Our user-friendly
interface enables users to quickly and easily evaluate and compare a wide array of travel products. Customers can also raise
complaints about our travel products and services through the online-messaging function on our website.
We encourage our customers to share photos, stories and other travel-related information on our website. We have built
a large and fast-growing collection of customer reviews and travel stories which we believe are attractive and useful to our
current and prospective customers. The Travelogue forum on our website, which is organized based on destinations,
provides our customers with an easy and intuitive way to access various topics of interest. Registered members can share
their travel experiences and interact with other members by posting questions and receiving answers from fellow forum
members. We have a comprehensive collection of descriptions and photos of different destinations. Our website also
provides other useful travel-related information, such as weather forecasts, exchange rates, train schedules and subway
maps to further enhance user experience.
A transaction on our website generally involves the following steps:
Browse. A customer typically enters one of our over 420 city webpages by selecting his location or departing city. The
customer can easily browse our product selection by travel destination. In order to allow customers to locate the products
they are interested in, our website also arranges our travel product offerings into different categories, such as organized
tours, self-guided tours, customized tours, cruises, tourist attractions tickets, self-drive tours, accommodation reservation,
and transportation tickets. The customer can also choose to browse through our best-sellers for each of local tours,
domestic tours, overseas tours, self-guided tours , themed tours, hotels, destination activities and tourist attractions tickets.
Search and Select. A customer conducts a search for a particular product on our website by defining desired
parameters, such as destinations, departing cities, departure time, product types, tour duration, number of travellers, prices
and itineraries. We provide the customer with information regarding each travel product in detail together with photographs
of the destinations and hotels as well as customer reviews and ratings. Our website displays various possible selections and
provides additional information about the products. The customer can sort, refine or rank search results by further defining
certain search parameters such as price range, customer ratings, popularity and keywords. Our online Q&A feature enables
the customer to raise inquiries and receive timely responses to facilitate their research. In addition, the comparison tool on
our website displays details of different travel products side-by-side, enabling the customer to evaluate different travel
products easily.
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Order Placement. After a customer has selected a particular option, our website will provide the customer with an
opportunity to review details of the travel products and services being purchased and the terms and conditions of such
purchase. The customer can also request assistance and professional advice from our tour advisors who will promptly
follow up and interact with the customer online or by phone.
Contract Confirmation. At this stage, a customer is required to confirm that he agrees to the terms and conditions of
his purchase. The customer can submit his confirmation online or sign the contract related to his purchase in one of our
offline retail stores or send us the signed contract. Contracts are entered between us and the customer directly.
Payment. After confirming the terms of a contract, a customer will be directed to the payment webpage. We offer our
customers the flexibility to choose a number of payment options, which include bank transfers, credit cards, debit cards and
online payment through third-party online payment platforms. In addition, the customer can pay at one of our offline retail
stores. If available, the customer can also discount the purchase price of our travel products by using our coupons and
travel vouchers. Electronic confirmations are sent to the customer’s e-mail address or mobile phone and the customer can
use the itinerary management function on our website or APP to check his booking details as well as amend or cancel his
bookings.
Review. After completing his or her trips, a customer is provided with incentives such as coupons to return to our
website to write reviews and travel stories and share his or her experience on our Travelogue forum. This increases
transparency regarding our travel product quality and increases customer stickiness. We regard customer reviews and travel
stories, which provide valuable information to potential customers, as important criteria in assessing the quality and
performance of travel suppliers and travel products.
We offer customized services via a sophisticated account management system accessible on our online platform. After
logging on with a unique identification, a customer can track order status, manage itineraries and check membership points,
coupons and travel vouchers.
Our Mobile Platform
Our Android- and Apple iOS-based mobile applications, such as Tuniu Travel, and the mobile version of our website,
m.tuniu.com, allow customers to search for travel products and services and place orders on mobile devices. Our mobile
platform also enables customers to track their order status and provides other location-based services to allow users to
quickly locate a variety of nearby scenic spots.
Through Tuniu Travel, our customers can search for travel products and services and complete a booking within
minutes. Tuniu Travel also serves as an important and integral part of customers’ research on travel-related information.
Customers often use our in-house developed and user-generated travel guides and other user generated content, such as
customer reviews, travel stories, tips and recommendations, on our Tuniu Travel to plan their travels. In addition, we offer
discounted travel products that are exclusive to users of Tuniu Travel for limited periods to enhance our mobile user
engagement and increase monetization . We have upgraded our mobile applications on a regular basis, adding new
functions into it.
Our Customer Services
When selecting a travel company or platform, leisure travellers often look beyond factors such as prices and selection
and focus on enjoyable experiences, in which our customer services play a crucial part. We believe that the quality
customer services provided by our well-trained tour advisors and customer service representatives attract our customers
towards our online platform.
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Offline nationwide service network. Our primary call center is located in our headquarter in Nanjing. Our call centers
provide 24-hour-a-day, seven-day-a-week customer services before, during and after travels, from answering customers’
initial inquiries on their travel-related needs to assisting them in making and amending their travel bookings. For inquiries
on detailed product information and itinerary management, our customer service representatives allocate them according to
destinations to our in-house tour advisors, who follow up with our customers within half an hour to address their concerns
and needs. We have implemented comprehensive performance measures to monitor our calls to ensure our customers
receive quality services. In October 2013 and 2015, we obtained the Best Call Center Award in the CCM Awards that was
jointly organized by Customer Care Management (CCM) World Group and CC-CMM Organization, and we were rewarded
the Golden Tone Award from 51CallCenter in the years of 2014, 2015, 2016 and 2018, a call center and business process
outsourcing industry group, for offering outstanding call center and customer service experiences. We were awarded the
Best Call Center by CCCS for three consecutive years in 2017, 2018 and 2019.
Tour Advisors. Tour advisors are well-trained through in-house training workshops as well as training sessions
provided by the travel suppliers to closely assist our customers throughout their travel planning and booking process from
pre-sale consultation to final order confirmation. Our tour advisors are equipped with product expertise to guide customers
through the details of available packaged tours on our online platform and provide insightful advice on customers’ desired
travel destinations. Our tour advisors provide professional guidance on product selection, price, travel requirements and
payment to ensure an efficient and informed shopping experience.
To create a better travel experience for our customers, we are committed to sharing part of their losses due to certain
unexpected events. For example, if our customers cannot travel due to death, pregnancy, serious injury, hospitalization or
rejection of visa applications after entering into contracts with us, we will provide them with travel vouchers equivalent to
a portion of the amounts paid which are redeemable towards the purchase of our travel products at a later time.
Supply Chain Management
Our travel suppliers primarily include tour operators, travel services providers and wholesalers of travel products and
services in China. We believe that our ability to enable these travel suppliers to extend their reach to potentially millions of
Internet users in China and fulfill their needs for inventory management, attracts new quality travel suppliers and builds
stronger ties with the existing travel suppliers. We have a product procurement team who is dedicated to developing and
enhancing our relationships with existing and prospective travel suppliers.
We source a broad range of products from travel suppliers who have significant advantages in the destinations we
cover and who offer travel products at competitive prices, which enhances our ability to attract more customers to our
online platform. Our growing customer base in turn attracts more travel suppliers, creating a virtuous cycle that strengthens
our leading market position.
We generally enter into contracts with travel suppliers based on our standard form. Travel suppliers often pay us
rebates based on our business volume. In addition, some of the travel suppliers require prepayments for reserving tour
availabilities. Typically, we settle payment with travel suppliers on a monthly basis, although travel suppliers can also
request for an early settlement on a discounted basis. To date, substantially all of the travel suppliers have sought to pursue
continuing cooperation opportunities with us.
We conduct a rigorous process in qualifying travel suppliers and in selecting their travel products and services to be
offered on our platform. In qualifying a potential travel supplier, we focus on its reputation, product quality, track record,
credibility and price competitiveness.
In addition, travel suppliers can participate in biddings for priority listings, prominent placements for biddings and
advertising displays on our website for the travel products they supply.
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Product Selection
We adopt an open-source procurement strategy to source quality travel products in the destinations we cover. Our
product procurement team works closely with travel suppliers to ensure that customers are provided with high-quality
travel products. In addition, we conduct regular price comparisons for travel products to assess the competitiveness of the
pricing of travel products offered on our platform.
Supply Management
We hosted a major conference event for our travel suppliers and presented to our travel suppliers our projected travel
demand trends each year before the outbreak of COVID-19 in 2020. This has been temporarily suspended. However, we
regularly communicate with travel suppliers, mainly through our product procurement team and our proprietary N-Booking
system, to keep them informed of any changes to the supply outlook so that they can respond to customer demand in a
timely manner. This helps us and the travel suppliers make timely adjustments to procurement plans.
Supplier Quality Control
We have developed product and service provision protocols for travel suppliers to follow. We have offline retail stores
throughout China that help us closely track the performance of travel suppliers in each region. We have a dedicated team in
charge of monitoring travel suppliers based on customer feedback; which also provides recommendations for travel
suppliers to improve their service quality and the products they supply. We impose penalties on travel suppliers or cease
listing their travel products on our platform if their products fail to meet our quality standards or if we receive valid
complaints from our customers. We also prepare regular assessment reports on travel suppliers based on the popularity,
quality and price competitiveness of their travel products. To monitor and further improve the quality of travel suppliers
and the products and services we offer, we proactively collect feedback from our customers after their travels.
B2B distribution
We launched our B2B distribution business in September 2015 and rebranded it to Difeng Cloud in October 2018.
Based on Tuniu’s direct procurement and integration with the supply chain, Difeng Cloud was able to rapidly scale by
offering Tuniu’s products and resources to other distributors within the leisure travel industry. Difeng Cloud currently
offers travel products including both packaged tours and other travel-related products such as air ticketing, hotel
reservations, attraction tickets, visa applications and insurance products.
N-Booking System
We have developed a proprietary N-Booking system, accessible via web and mobile, that offers travel suppliers the
following features:
Product Management. Travel suppliers can submit details of their travel products via an easy-to-navigate online
interface. After our review and approval, we will post the details provided by the travel suppliers and the prices determined
by us on our online platform. In addition, our N-Booking system provides travel suppliers with an option to use
descriptions and photos of destinations and tourist attractions in our database.
Just-In-Time Management. Our N-Booking system provides travel suppliers with access to real-time inventory data
and gives them a wide range of inventory management tools. Our N-Booking system also notifies travel suppliers of any
changes in the inventory level of the travel products we source from them, which enables them to timely adjust their
procurement and sales plans. As such, we are able to deliver real-time information on product availability and provide our
customers with prompt booking and order confirmations.
Account Management. Travel suppliers can review transaction history details on our N-Booking system. They can also
submit requests for early settlement of their account balance with us on a discount basis.
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Data Analysis. Supported by our big data platform, travel suppliers can analyze and understand user behavior based on
their browsing history. Travel suppliers can keep track of traffic brought to the travel products supplied by them on our
online platform and are able to evaluate the competitiveness of different travel products. We believe the user information
gathered from our online platform reflects current leisure travel market trends in China and provides excellent market
insights to travel suppliers for their procurement planning and product design. By leveraging our data mining and analytics
capabilities, travel suppliers are able to develop a more in-depth understanding of customers’ behaviors and preferences,
potentially unlocking significant value.
Financial Services
We currently offer a range of financial services, which complement our core leisure travel business, mainly to both
travellers and travel suppliers. Our financial services are designed to systematically support the overall development of the
leisure travel market in China by funding customers’ travels and supporting suppliers’ growth. For travellers, we provide
travel financing products enabling travellers to travel with an initial down payment, which has been particularly popular
among the young generation of travellers who are more price-sensitive. In addition, we also offer insurance products to our
customers. For travel suppliers, we provide various types of loans and factoring service that optimize working capital for
the selected suppliers, allowing them to provide high-quality travel products on a larger scale. We also provided account
receivables factoring service and cash lending service to customers.
Technology
We have built our technology infrastructure with high levels of performance, reliability, scalability and security to
ensure superior customer and supplier experiences. We rely on internally developed proprietary technologies and licensed
technologies to manage and improve our website, mobile platform and management systems. We have a team of engineers
dedicated to research and development in the areas of website operations, mobile platform, search engine, data analytics
and supply chain management system.
We believe that an advanced technology platform is vital to our growth and success.We obtained ISO 9001:2015
certification for our quality management system indicating our compliance with internationally recognized standards for
quality control in 2018, with such certification being renewed in 2019 and is expected to expire in 2022.
Product Search
We strive to present relevant and useful search results in a timely fashion to ensure the accuracy, efficiency and
synchronism of our search results. Despite the difficulties in analyzing leisure travel products data, we have developed
search technologies that allow us to retrieve, index, filter and rank real-time product information. We are able to prioritize
the search results and display information most suited to our customers’ requirements in a simple and intuitive interface in
real-time. Our core search technologies include the following:
Real-time Indexing. Our search infrastructure enables changes in product data to be indexed, processed and reflected in
search results on a real-time basis.
Smart Caching. We maintain a database with massive product information on packaged tours, hotels, flights and other
travel-related services. We have designed an auto-prioritizing method to update the database by ranking popular products
based on different criteria, such as popular cities, most-visited attractions, top-rated products and most-viewed products.
Different refreshing frequencies are applied to different products.
Accuracy Checking. Our accuracy checking software complements our smart caching system and is implemented to
display the latest product information such as prices and product descriptions. When a user clicks on the interested search
result, an accuracy checker is triggered to retrieve the updated product information and present it to the user.
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Fuzzy Query Processing. We maintain a dictionary for travel-related keywords in Chinese, where keywords are
classified and linked to each other based on their meanings. We have also developed a query search algorithm based on
user inputs to enhance our ability to dissect natural language queries. Such technologies help us better understand the
meanings of queries and to produce the most relevant and useful search results. We also provide additional search features
such as query spelling correction, query suggestion and search by Chinese phonetics (Pinyin).
Big Data Analysis
We gather and analyze customer behavior and data for our procurement, inventory management and marketing
purposes. We also provide selected data to travel suppliers, enabling them to optimize their product designs and marketing
strategies.
Big Data Platform. We have developed our big data platform based on a distributed computing system. Such data
analytics capabilities help us to gain a deeper understanding of existing and prospective customers and market trends, make
customized recommendations to customers and improve our applications and products accordingly.
Streaming Data Analysis. We have also built a streaming data processing pipeline based on our big data platform to
view the browsing history of the users of our online platform and to allow travel suppliers to review their performance data
near real-time.
Web Content Mining. Our web content processing system links user generated content which includes customer
reviews, travel stories and tips as well as destination guides such as locations, hotels and tourist attractions. This allows
users of our online platform to obtain information of different destinations and travel products and services in a user-
friendly manner.
N-Booking System
Our N-Booking system streamlines the interactions between us and travel suppliers. Our N-Booking system also
allows travel suppliers to receive booking information real-time through the web or mobile devices to more efficiently
manage travel products and better understand customer preferences. See “—Supply Chain Management—N-Booking
System.”
CRM System
Through a customer relationship management system, or CRM system, we gather, analyze and make use of internally-
generated customer behavior and transaction data based on customers’ historical purchase and browsing records. We
regularly use this information in budgeting and procurement planning as well as in planning our marketing initiatives and
promotional campaigns.
Data Security
Our system servers are currently housed in Nanjing, and have secure and dedicated communication links among them.
All data are backed up on an hourly basis. Our system servers utilize digital certificates to help us conduct secure
communications and transactions. The performance of our system servers is monitored and maintained by an internal team
that operates 24 hours a day, seven days a week. Customer sensitive information, such as password and payment
information, is stored with encryption, and our data servers are secured with firewalls.
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Dynamic Packaging System
Backed by our robust data analytics capabilities, we have established a dynamic packaging system that enables our
users to customize their own travel packages tailored to individual travellers’ needs. This system is able to combine trip
components from different suppliers to provide truly customized trips, automating and placing in the hands of our
customers a function that was previously performed manually. It uses algorithms and past customer data to filter out
unnatural choices and provide customers with relevant choices based on their ascertainable behavior. We believe this is one
of the first systems of its type in China.
Seasonality
Our business experiences fluctuations, reflecting seasonal variations in demand for leisure travel services. Sales of
leisure travel products and services will increase in respect of holiday periods and decrease in respect of off-peak times,
while prices of leisure travel products and services are subject to fluctuation between peak seasons and low seasons. For
example, the third quarter of each year generally contributes the highest percentage of our annual revenues, because many
of our customers tend to travel during summer holidays in July and August.
Marketing and Brand Building
We continue to build and maintain a strong Tuniu brand through both traditional offline marketing media and online
marketing channels. We conduct offline advertising primarily via television and outdoor advertisements. For our television
marketing, we have placed a number of commercials on various television channels across China. Our outdoor marketing
includes advertisements on buses and subways. In addition, we also organize targeted campaigns, make promotional and
seasonal offers and cooperate with domestic and foreign tourism boards and bureaus in holding promotional events and
marketing campaigns.
While our offline advertising plays an important role in promoting our brand image, we complement our branding
campaigns through mobile and online channels. We promote our mobile app through advertisements in the mobile app
store and various display advertisements. We have also entered into agreements with a number of search engines, pursuant
to which we have purchased travel-related keywords or directory links that direct users to our website. In addition, we have
a strong presence in online social media such as Tencent’s WeChat and Sina’s Weibo. We believe that our presence in
online social media helps us maintain engagement with our targeted customers.
As part of our cross-marketing effort, we have agreements with financial institutions to recommend our products and
services to their debit or credit card holders, and we allow these cardholders to settle their payments for travel products
purchased from us using these cards with discounts. For instance, we cooperated with several major banks in China and
launched co-branded credit cards, through which cardholders may book with us and are entitled to discounts, bonus points
and certain other privileges.
Furthermore, our customer loyalty program allows our customers to accumulate membership points and coupons as
they purchase travel products and services. Our membership points have a fixed validity term and, before expiry, customers
may redeem these points for future purchases. Our customer loyalty program is designed to encourage repeat purchases.
Currently, our membership has seven levels. For customers who meet certain spending thresholds, we upgrade their
membership status to the next level, entitling them to further discounts and more points for their spending. For all
customers who have joined our loyalty program, we provide them with designated customer service representatives to
handle their travel needs.
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Competition
We compete primarily with all other types of online travel companies. In addition, we compete with traditional travel
service providers and tour operators. In the self-guided tour business, as we sell packaged tours which include flights and
hotels, we also compete with airlines and hotels, which in recent years have made efforts to improve their direct sales.
Large, established Internet search engines have also launched applications offering travel products in various destinations
around the world. Factors affecting our competitiveness include, among other things, price, availability and breadth of
choice of travel products and services, brand recognition, customer services, and ease of use, accessibility, security and
reliability of our transaction and service infrastructure.
Some of our current and potential competitors may have greater financial, marketing and other resources than we do.
In addition, some of our competitors may be acquired by, receive investment from or enter into strategic relationships with
larger, well-established and well-financed companies or investors. They may be able to devote greater resources to
marketing and promotional campaigns and devote substantially more resources to website and system development than us.
See “Item 3.D. Key Information—Risk Factors—Risks Related to Our Business and Industry—We face intense
competition and may not be able to compete successfully against existing and new competitors.”
Intellectual Property
Our success and ability to compete depend, in part, upon our ability to establish and adequately protect our intellectual
property rights. In this regard, we rely primarily on a combination of copyright, software registration, trademark, trade
secret and unfair competition laws and contractual rights, such as confidentiality agreements with our employees and
others. As of December 31, 2020, we had 109 registered computer software copyrights, 18 registered patent and 26
registered artwork copyrights in China, and were in the process of applying for 19 patents in China. In addition, as of
December 31, 2020, we had 96 registered domain names that were material to our business, including tuniu.com, and 485
registered trademarks, including 途牛 (the Chinese characters of Tuniu),
and
,
and
in China.
Insurance
We maintain various insurance policies to safeguard against risks and unexpected events. We have purchased travel
companies’ liability insurance covering expenses related to accidents caused by us. We have also maintained property
insurance policies for our fixed assets covering losses due to fire, explosion, lightning, storm, landslide, subsidence and
aircraft damage.
PRC Regulation
This section sets forth a summary of the significant regulations or requirements that affect our business activities in
China or our shareholders’ rights to receive dividends and other distributions from us.
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Regulations on Value-Added Telecommunication Services
The PRC government extensively regulates the telecommunications industry, including the Internet sector. The PRC
State Council, the MIIT, the MOC, the SAMR (formerly the State Administration for Industry and Commerce, or the
SAIC), the National of Radio and Television, Administration and the National Press and Publication Administration, both
of which were split from State Administration of Press, Publication, Radio, Film and Television (formerly the General
Administration of Press and Publication) and other relevant government authorities have promulgated an extensive
regulatory scheme governing telecommunications, Internet-related services and e-commerce. However, since China’s
telecommunications industry and Internet-related industry are at an early stage of development, new laws and regulations
may be adopted from time to time that will require us to obtain additional licenses and permits in addition to those that we
currently have, and will require us to address new issues that arise from time to time. As a result, substantial uncertainties
exist regarding the interpretation and implementation of current and any future Chinese laws and regulations applicable to
the telecommunications, Internet-related services and e-commerce. See “Item 3.D. Key Information—Risk Factors—Risks
Related to Doing Business in China—Uncertainties in the interpretation and enforcement of PRC laws and regulations
could limit the legal protections available to you and us.”
Licenses for Value-Added Telecommunication Services
The Telecommunications Regulations issued by the PRC State Council in September 2000 and amended in
February 2016 are the primary regulations governing telecommunication services. The Telecommunications Regulations
set out the general framework for the provision of telecommunication services by PRC companies. Under the
Telecommunications Regulations, it is a requirement that telecommunications service providers procure operating licenses
prior to commencement of their operations. The Telecommunications Regulations draw a distinction between “basic
telecommunications services” and “value-added telecommunications services.” Internet content provision services, or ICP
services, is a subcategory of value-added telecommunications services.
In March 2009, the MIIT promulgated the Administrative Measures for Telecommunications Business Operating
Permit which was repealed in September 2017 by the 2017 Revision of the Administrative Measures for
Telecommunications Business Operating Permit. Pursuant to the 2017 Revision of the Administrative Measures for
Telecommunications Business Operating Permit, there are two types of telecommunication operating license for operators
in China, namely, licenses for basic telecommunications services and licenses for value-added telecommunications
services. The operation scope of the license will specify the permitted activities of the enterprise to which it is granted. An
approved telecommunication services operator must conduct its business in accordance with such specifications.
Pursuant to the Administrative Measures on Internet Information Services, promulgated by the PRC State Council in
September 2000, as amended in January 2011, commercial Internet information services operators must obtain an ICP
license, from the relevant government authorities before engaging in any commercial Internet information services
operations within the PRC. Nanjing Tuniu, our consolidated affiliated entity, obtained ICP licenses issued by the Jiangsu
Administration of Telecommunication which will expire in October 2022.
The Internet Electronic Bulletin Service Administrative Measures promulgated by the MIIT in November 2000 require
Internet information services operators to obtain specific approvals before providing BBS services, which include
electronic bulletin boards, electronic forums, message boards and chat rooms. In September 2014, the Internet Electronic
Bulletin Service Administrative Measures was repealed by Repealing and Revising Certain Rules of MIIT. However, in
practice, the relevant authorities still require obtaining such approval for the operation of BBS services. We have applied to
the Jiangsu Administration of Telecommunication for and have obtained an approval for the operation of BBS services on
our website.
In addition to the Telecommunications Regulations and the other regulations as disclosed above, the provision of
commercial internet information services on mobile internet applications is regulated by the Administrative Provisions on
Mobile Internet Applications Information Services, which was promulgated by the Cyberspace Administration of China in
June 2016. Under the Administrative Provisions on Mobile Internet Applications Information Services , the providers of
mobile internet applications need to, among other things, acquire the relevant qualifications and comply with other
requirements provided by laws and regulations and being responsible for information security.
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Foreign Investment in Value-Added Telecommunications Services
On March 15, 2019, the National People’s Congress promulgated the PRC Foreign Investment Law, which became
effective on January 1, 2020 and replaced the major existing laws and regulations governing foreign investment in the
PRC. Pursuant to the PRC Foreign Investment Law, “foreign investments” refer to investment activities conducted by
foreign investors directly or “indirectly” in the PRC, which include any of the following circumstances: (i) foreign
investors setting up foreign-invested enterprises in the PRC solely or jointly with other investors, (ii) foreign investors
obtaining shares, equity interests, property portions or other similar rights and interests of enterprises within the PRC,
(iii) foreign investors investing in new projects in the PRC solely or jointly with other investors, and (iv) investment of
other methods as specified in laws, administrative regulations, or as stipulated by the State Council. Although VIE
structure is not explicitly defined as a method of foreign investment, it remains to be further clarified and detailed on
whether VIE Structure will be interpreted to fall under the scope of the “investment in other methods as specified in laws
and administrative regulations, or as stipulated by the State Council”. Please also refer to “Item 3.D. Key Information—
Risk Factors—Substantial uncertainties exist with respect to the interpretation and implementation of the newly adopted
PRC Foreign Investment Law and its implementation rules and how they may impact the viability of our current corporate
structure, corporate governance and business operations.”
According to PRC Foreign Investment Law and the Implementation Rules, China adopts a system of pre-entry national
treatment plus negative list with respect to foreign investment administration, where “pre-entry national treatment” means
that the treatment given to foreign investors and their investments at market access stage is no less favorable than that
given to domestic investors and their investments, and “negative list”means the special entry management measures for
foreign investment’s access to specific fields or industries, which will be proposed by the competent investment department
of the State Council in conjunction with the competent commerce department of the State Council and other relevant
departments, and be reported to the State Council for promulgation, or be promulgated by the competent investment
department or competent commerce department of the State Council after being reported to the State Council for approval.
Foreign investment beyond the negative list will be granted national treatment. Foreign investors shall not invest in the
prohibited fields as specified in the negative list, and foreign investors who invest in the restricted fields must comply with
the special requirements on the shareholding, senior management personnel, etc. The current industry entry clearance
requirements governing investment activities in the PRC by foreign investors are set out in two categories, namely the
Special Entry Management Measures (Negative List) for the Access of Foreign Investment (2020 version), or the 2020
Negative List, and the Encouraged Industry Catalog for Foreign Investment (2020 version), or the 2020 Encouraged
Industry Catalog, both were promulgated by the National Development and Reform Commission (the “NDRC”) and the
MOC and took effect in July 2019 and January 2021, respectively. Industries not listed in these two categories are generally
deemed “permitted” for foreign investment unless specifically restricted by other PRC laws. Industries such as value-added
telecommunication business, which we are engaged in, are generally regarded as restricted fields to foreign investment
pursuant to the 2020 Negative List, and we conduct business operations in restricted fields through our variable interest
entities.
On December 19, 2020, the NDRC and the MOC promulgated the Security Review Measures, which took effect on
January 18, 2021. According to the Security Review Measures, the foreign investment security review work mechanism
shall be established to conduct the security review and the general office responsible for the security review will be set in
the NDRC and be jointly led by the NDRC and the MOC. Foreign investments in military, national defense-related areas or
in locations in proximity to military facilities, or foreign investments that would result in acquiring the actual control of
assets in certain key sectors, such as critical agricultural products, energy and resources, equipment manufacturing,
infrastructure, transport, cultural products and services, information technology, Internet products and services, financial
services and technology sectors, are subject to the foreign investment security review by such foreign investment security
review work mechanism. Acquiring actual control includes any investment in which foreign investors obtain more than
50% of equity interest in the invested enterprise or, in the event that the equity interest is less than 50%, the voting rights
owned by such foreign investors have significant impact on the shareholders meeting and board of directors of the invested
enterprise or where there is any other circumstance that enables foreign investors to exert a significant impact on the
business decision-making, personnel, finance, technology, etc. of the invested enterprise.
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Pursuant to the Provisions on Administration of Foreign-Invested Telecommunications Enterprises, promulgated by
the PRC State Council in December 2001 and amended in February 2016, the ultimate foreign equity ownership in a value-
added telecommunications services provider may not exceed 50%. Moreover, any major foreign investor holding equity
interest in a value-added telecommunication business in China must satisfy a number of stringent performance and
operational experience requirements, including demonstrating good track records and experience in operating value-added
telecommunication business overseas. Pursuant to the Notice regarding the Strengthening of Ongoing and Post Supervision
of Foreign Invested Telecommunication Enterprises issued by MIIT in October 2020, foreign investors are no longer
subject to the pre-approval requirements, foreign invested telecommunications enterprises are still required to submit
relevant foreign investor qualification materials to MIIT when applying for new telecommunication operating permits or
amended permits. Although the 2020 Negative List allows foreign investors to hold more than 50% equity interests in a
value-added telecommunications service provider engaging in e-commerce, domestic multiparty communication, storage-
and-forward and call center businesses, other requirements under the Provisions on Administration of Foreign-Invested
Telecommunications Enterprises still apply. Since the 2020 Negative List was recently amended and no implementing
rules with respect to the new policies on foreign investment in value-add telecommunications services have been
promulgated, there exist significant uncertainties with respect to its interpretation and implementation by authorities.
The MIIT Circular issued in July 2006 reiterated the regulations on foreign investment in telecommunications
businesses, which require foreign investors to set up foreign-invested enterprises and obtain a business operating license
for Internet content provision to conduct any value-added telecommunications business in China. Pursuant to the MIIT
Circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license to
foreign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to
foreign investors that conduct value-added telecommunications business illegally in China. Furthermore, the relevant
trademarks and domain names that are used in the value-added telecommunications business must be owned by the
domestic ICP license holder or its shareholders. The MIIT Circular further requires each ICP license holder to have the
necessary facilities for its approved business operations and to maintain such facilities in the regions covered by its license.
In addition, all value-added telecommunications service providers are required to maintain network and information
security in accordance with the standards set forth under relevant PRC regulations.
In light of the aforesaid restrictions, we rely on Nanjing Tuniu, our consolidated affiliated entity, to hold and maintain
the licenses necessary to provide online marketing services and other value-added telecommunications services in China.
For a detailed discussion of our contractual arrangements, please refer to “—C. Organizational Structure.” To comply with
these PRC regulations, we operate our website and value-added telecommunications services through Nanjing Tuniu.
Nanjing Tuniu holds our ICP licenses and owns all the domain names used in our value-added telecommunications
businesses. Nanjing Tuniu is also the owner of all the registered trademarks used in our value-added telecommunications
businesses and is the applicant of all the registered trademark applications we are currently making.
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Regulations on Information Security and Censorship
The PRC government regulates and restricts Internet content in China to protect state security and ensure the legality
of the Internet content. The National People’s Congress, China’s national legislative body, enacted a Decision on the
Safeguarding of Internet Security in December 2000, as subsequently amended in August 2009, among other things, makes
it unlawful to: (1) gain improper entry into a computer or system of strategic importance; (2) disseminate politically
disruptive information; (3) leak state secrets; (4) spread false commercial information; or (5) infringe intellectual property
rights. Pursuant to the Administrative Measures on Internet Information Services and other applicable laws, Internet
content providers and Internet publishers are prohibited from posting or displaying over the Internet content which violates
PRC laws and regulations, impairs the national dignity of China, or is reactionary, obscene, superstitious, fraudulent or
defamatory. Internet service providers are required to monitor their websites, including electronic bulletin boards. They
may not post or disseminate any content that falls within these prohibited categories and must remove any such content
from their websites. The PRC government may shut down the websites of ICP license holders that violate any of the
above-mentioned content restrictions and revoke their ICP licenses. In addition, the MIIT has published regulations that
subject ICP operators to potential liability for content displayed on their websites and the actions of users and others using
their systems, including liability for violations of PRC laws and regulations prohibiting the dissemination of content
deemed to be socially destabilizing. The Ministry of Public Security has the authority to order any local Internet service
provider to block any Internet website at its sole discretion. From time to time, the Ministry of Public Security has stopped
the dissemination over the Internet of information which it believes to be socially destabilizing.
The Ministry of Public Security has promulgated the Administrative Measures for the Security Protection of
International Connections to Computer Information Network in December 1997, as amended in January 2011, that
prohibits the use of the Internet in ways which, among other things, result in a leakage of State secrets or the distribution of
socially destabilizing content. Socially destabilizing content includes any content that incites defiance or violations of PRC
laws or regulations or subversion of the PRC government or its political system, spreads socially disruptive rumors or
involves cult activities, superstition, obscenities, pornography, gambling or violence. Under PRC laws, state secrets are
defined broadly to include information concerning PRC national defense, state affairs and other matters as determined by
the PRC authorities.
In December 2005, the Ministry of Public Security promulgated Provisions on Technological Measures for Internet
Security Protection. These measures and the Administrative Measures on Internet Information Services require all ICP
operators to keep records of certain information about their users (including user registration information, log-in and log-
out time, IP address, content and time of listings by users) for at least 60 days and submit the above information as required
by laws and regulations. The ICP operators must regularly update information security and censorship systems for their
websites with local public security authorities, and must also report any public dissemination of prohibited content. If an
ICP operator violates these measures, the PRC government may revoke its ICP license and shut down its websites.
Pursuant to the Decision on Strengthening Network Information Protection issued by the Standing Committee of the PRC
National People’s Congress in December 2012, ICP operators must request identity information from users when ICP
operators provide information publication services to the users. If ICP operators come across prohibited information, they
must immediately cease the transmission of such information, delete the information, keep relevant records, and report to
relevant government authorities. In July 2013, the MIIT promulgated the Regulation on Protection of Personal Information
of Telecommunications and Internet Users to provide for more detailed rules in this respect.
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On December 15, 2019, the Cyberspace Administration of China promulgated Provisions on Ecological Governance
of Network Information Content, or the Network Ecological Governance Provisions, which took effect on March 1, 2020.
The Network Ecological Governance Provisions provide the requirements for the content producers of the network
information, the service platforms for the network information and the users of the network information. Among others, the
Network Ecological Governance Provisions classify the network information into the “encouraged category”, the
“prohibited category” and the “prevented and resisted category”. The content producers of network information are
encouraged to produce, copy and publish network information in the encouraged category, prohibited from producing,
copying or publishing network information in the prohibited category, and shall take measures to prevent and resist the
production, reproduction and publication of undesirable information in the prevented and resisted category. In addition, the
service platforms for the network information shall strengthen the management of information content, and upon discovery
of any prohibited information or prevented and resisted information, shall immediately take measures in accordance with
the laws, keep the relevant records, and report the same to the competent governmental authorities. A service platform for
network information shall compile an annual report on the ecological governance of network information, which contains
information such as the ecological governance of network information, the performance of the person in charge of
ecological governance of network information and social evaluation.
The Measures for Cyber Security Review was jointly promulgated by the Cyberspace Administration of China, the
NDRC, the MOC, the MIIT and eight other ministries and administrations under the State Council on April 13, 2020 and
took effect on June 1, 2020. According to the Measures for Cyber Security Review, operators of critical information
infrastructure must pass a cybersecurity review when purchasing network products and services which do or may affect
national security.
In addition, the State Secrecy Bureau has issued provisions authorizing the blocking access to any website it deems to
be leaking state secrets or failing to comply with the relevant legislation regarding the protection of state secrets. As
Nanjing Tuniu is an ICP operator, it is subject to the laws and regulations relating to information security. To comply with
these laws and regulations, it has completed the mandatory security filing procedures with the local public security
authorities, regularly update their information security and content-filtering systems with newly issued content restrictions,
and maintains records of users’ information as required by the relevant laws and regulations. Nanjing Tuniu has also taken
measures to delete or remove links to content that to its knowledge contains information violating PRC laws and
regulations. Majority of the content posted on our online platform is first screened by our filtering systems. Content
containing prohibited words or images is then manually screened by employees who are dedicated to screening and
monitoring content published on our platform and removing prohibited content. We believe that with these measures in
place, no material violations have arisen out of the public dissemination of prohibited content through our online platform
under PRC information security laws and regulations in the past. However, there is significant amount of content posted on
our online platform by our users on a daily basis. If any prohibited content is publicly disseminated in the future and we
become aware of it, we will report it to the relevant government authority. We believe these measures taken by us are
generally in compliance with the relevant laws and regulations.
If, despite the precautions, we fail to identify and prevent illegal or inappropriate content from being displayed on or
through our online platform, we may be subject to liability. In addition, these laws and regulations are subject to
interpretation by the relevant authorities, and it may not be possible for us to determine in all cases the types of content that
could result in liability. To the extent that PRC regulatory authorities find any content displayed on or through our online
platform objectionable, they may require us to limit or eliminate the dissemination or availability of such content or impose
penalties, including the revocation of our operating licenses or the suspension or shutdown of our online operations. In
addition, the costs of compliance with these regulations may increase as the volume of content and the number of users on
our online platform increases.
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Regulations on Internet Privacy
The PRC Constitution states that PRC law protects the freedom and privacy of communications of citizens and
prohibits infringement of these rights. In recent years, PRC government authorities have promulgated laws and regulations
on Internet use to protect personal information from any unauthorized disclosure. The Decision on Strengthening Network
Information Protection and the Regulation on Protection of Personal Information of Telecommunication and Internet Users
provide that information that identifies a citizen, the time or location for his use of telecommunication and Internet
services, or involves privacy of any citizen such as his birth date, ID card number, and address is protected by law and must
not be unlawfully collected or provided to others. ICP operators collecting or using personal electronic information of
citizens must specify the purposes, manners and scopes of information collection and uses, obtain consent of the relevant
citizens, and keep the collected personal information confidential. ICP operators are prohibited from disclosing, tampering
with, damaging, selling or illegally providing others with, collected personal information. ICP operators are also prohibited
from collection and use of personal information after a user has stopped using the services. ICP operators are required to
take technical and other measures to prevent the collected personal information from any unauthorized disclosure, damage
or loss as well as conducting a self-examination of their protection of personal information at least once a year. The
Administrative Measures on Internet Information Services prohibit an ICP operator from insulting or slandering a third
party or infringing upon the lawful rights and interests of a third party. The relevant telecommunications authorities are
further authorized to order ICP operators to rectify unauthorized disclosure. ICP operators are subject to legal liability,
including warnings, fines, confiscation of illegal gains, revocation of licenses or filings, closing of the relevant websites,
administrative punishment, criminal liabilities, or civil liabilities, if they violate relevant provisions on Internet privacy.
Such requirements are reiterated by the Regulation on Protection of Personal Information of Telecommunications and
Internet Users. If an ICP operator appoints an agent to undertake any marketing and technical services that involve the
collection or use of personal information, the ICP operator is required to supervise and manage the protection of such
information. Any violation may subject the ICP operators to warnings, fines, disclosure to the public and, in the most
severe cases, criminal liability. The PRC government, however, has the power and authority to order ICP operators to turn
over personal information if an Internet user posts any prohibited content or engages in illegal activities on the Internet.
Pursuant to the Cyber Security Law, personal information refers to all kinds of information recorded by electronic or
otherwise that can be used to independently identify or be combined with other information to identify a specific natural
persons. Such information includes but not limited to a natural person’s name, date of birth, ID number, biologically
identified personal information, address and telephone numbers, etc. The Cyber Security Law also provides that: (i) to
collect and use personal information, network operators shall follow the principles of legitimacy, rightfulness and necessity,
disclose their rules of data collection and use, clearly express the purposes, means and scope of collecting and using the
information, and obtain the consent of the persons whose data is gathered; (ii) network operators shall neither gather
personal information unrelated to the services they provide, nor gather or use personal information in violation of the
provisions of laws and administrative regulations or the scopes of consent given by the persons whose data is gathered; and
shall dispose of personal information they have saved in accordance with the provisions of laws and administrative
regulations and agreements reached with the persons whose data is collected; and (iii) network operators shall not divulge,
tamper with or damage the personal information they have collected, and shall not provide the personal information to
others without the consent of the persons whose data is collected. However, exceptions may apply if the information has
been processed and cannot be recovered and thus it is impossible to match such information with any specific persons.
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In August 2019, Cyberspace Administration of China promulgated Provisions on Online Protection of Children’s
Personal Information, or the Children Personal Information Provisions, which came into effect in October 2019. The
Children Personal Information Provisions provides that network operators’ collection, storage, transfer, and disclosure of
children’s personal information must follow the principles of legitimacy and necessity, awareness and consent, clear
purpose, protection of security and legal use. Network operators shall clearly inform children’s guardian and obtain his
consent when collecting, storing, using, transferring and disclosing children’s personal information. According to the
Children Personal Information Provisions, network operators must adopt personal information protection rules and user
agreements specifically for children’s personal information and appoint persons dedicated to be responsible for the
protection of children’s personal information. In addition, network operators must strictly limit the access authorization to
children’s personal information within their staff members to the minimum. Furthermore, the access to children’s personal
information by network operators’ staff must be subject to approval by the children personal information protection officer
or the administrative personnel delegated by him, the access must be recorded, and technical measures must be adopted to
prevent unauthorized duplication or download of children’s personal information.
In November 2019, Cyberspace Administration of China, together with the General Office of the MIIT, the General
Office of the Ministry of Public Security and the General Office of the SAMR, published the Guidelines for Identifying
Illegal Collection and Use of Personal Information via Apps, which describes six categories of prohibited behaviors on
illegal collection or use of user’s personal information via Apps, and further broken down into 31 specific types, including
(i) failure to publicly disclose rules of collecting and using personal information, (ii) failure to clearly express the purposes,
means and scope of collecting and using personal information, (iii) collecting or using personal information without users’
consent, (iv) violating the principle of necessity and collecting personal information unrelated to services they provide,
(v) providing personal information to others without the consent of the persons whose data is collected, and (vi) failure to
provide functions of deleting or rectifying personal information as required by laws or failure to publicly disclose contact
information for complaint or reporting.
Regulations on Air-ticketing
Air-ticketing business is subject to the supervision of the China Aviation Transportation Association, or CATA, and its
regional branches. Currently the principal regulation governing air-ticketing agencies in China is the Rules on Certification
of Qualification for Civil Aviation Transport Sales Agencies, or the Air Ticketing Rules, issued by the CATA, which
became effective on March 31, 2006. Under the Air Ticketing Rules and relevant foreign investment regulations, any
company acting as an air-ticketing sale agency must obtain approval from the CATA, and a foreign investor currently
cannot own 100% of an air-ticketing agency in China, except for qualified Hong Kong and Macau aviation marketing
agencies. In addition, foreign-invested air-ticketing agencies are not permitted to sell passenger airline tickets for domestic
flights in China, except for Hong Kong and Macau aviation marketing agencies. In addition, CATA issued the
Supplementary Rules Regarding Sales via the Internet in 2008. These Supplementary Rules provide that, effective as of
June 1, 2008, if an air-ticketing sales agency would like to engage in sales via the Internet, it must obtain an ICP license
from the local counterpart of the MIIT and must complete a commercial website registration with the local counterpart of
the SAMR. Although we request that travel suppliers provide their licenses or permits to us before entering into agreements
with them, we cannot ensure that all of travel suppliers engaged in the air ticketing sales agency service obtained, and
maintained, all necessary permits. See “Item 3.D. Key Information—Risk Factors—Risks Related to Our Business and
Industry—We may not be able to adequately control and ensure the quality of travel products and services sourced from
travel suppliers. If there is any deterioration in the quality of their performance, our customers may not continue using our
online platform.”
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Regulations on Hotel Operation
In November 1987, the Ministry of Public Security issued the Measures for the Control of Security in the Hotel
Industry, which has been most recently amended in November 2020. In June 2004, the PRC State Council promulgated the
Decision of the PRC State Council on Establishing Administrative License for the Administrative Examination and
Approval Items Really Necessary To Be Retained, which has been amended in 2016 and 2019, respectively. Under these
two regulations, anyone who applies to operate a hotel is subject to examination and approval by the local public security
authority and must obtain a special industry license. The Measures for the Control of Security in the Hotel Industry impose
certain security control obligations on the operators. For example, the hotel must examine the identification card of any
guest to whom accommodation is provided and make an accurate registration. The hotel must also report to the local public
security authority if it discovers anyone violating the law or behaving suspiciously, or an offender wanted by the public
security authority.
In April 1987, the PRC State Council promulgated the Public Area Hygiene Administration Regulation, which has
been most recently amended in April 2019, requiring hotels to obtain a public area hygiene license before opening for
business. In March 2011, the Ministry of Health promulgated the Implementation Rules of the Public Area Hygiene
Administration Regulation, which has been amended in February 2016 and December 2017, respectively, requiring,
starting from May 1, 2011, hotel operators to establish hygiene administration system and keep records of hygiene
administration. In February 2009, the Standing Committee of the National People’s Congress enacted the Food Safety Law,
which has been amended in February 2016 and December 2018, respectively, requiring any hotel that provides food to
obtain a food service license.
The Fire Prevention Law, as most recently been amended by the Standing Committee of the National People’s
Congress in October 2019, and the Provisions on Supervision and Inspection on Fire Prevention and Control, as amended
by the Ministry of Public Security in July 2012, require that public gathering places such as hotels submit a fire prevention
design plan in order to apply for completion acceptance of fire prevention facilities for their construction projects and to
pass a fire prevention safety inspection by the local public security fire department, which is a prerequisite for opening
business.
In January 2006, the PRC State Council promulgated the Regulations for Administration of Entertainment Places
which has been most recently amended in November 2020. Under the regulations, hotels that provide entertainment
facilities, such as discos or ballrooms, are required to obtain a license for entertainment business operations.
We cannot ensure that all of the hotels that we offer to our customers have obtained, and maintained, all necessary
permits and licenses. See “Item 3. D. Key Information—Risk Factors—Risks Related to Our Business and Industry—We
may not be able to adequately control and ensure the quality of travel products and services sourced from travel suppliers.
If there is any deterioration in the quality of their performance, our customers may not continue using our online platform.”
Regulations on Travel Companies
The travel industry is subject to the supervision of the Ministry of Culture and Tourism, or the MCT, formerly known
as China National Tourism Administration, or the CNTA , and local culture and tourism administrations. The principal
regulations governing travel companies in China include: (i) the Regulation on Travel Companies, or the Travel Company
Regulations, issued by the PRC State Council in February 2009, and most recently amended in November 2020, which
replaced the Administration of Travel Companies Regulations (1996), (ii) the Implementation Rules for the Regulation on
Travel Companies (the “Travel Company Implementation Rules”), promulgated by the CNTA , the predecessor of MCT, in
April 2009 and amended in December 2016, (iii) the Tourism Law issued by the Standing Committee of the National
People’s Congress on April 25, 2013, and amended in November 2016 and October 2018, respectively, and (iv) Measures
for the Administration of the Overseas Tours of Chinese Citizens, issued by the PRC State Council in May 2002, became
effective as of July 2002 and was amended in March 2017. Under these regulations, a travel company must obtain a license
from the MCT to conduct cross-border travel business and a license from the provincial-level culture and tourism
administration to conduct domestic travel company business.
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The Travel Company Regulations permit foreign investors to establish wholly foreign-owned travel companies, as well
as joint ventures and cooperative travel companies. Foreign-owned travel companies are allowed to open branches
nationwide, but are restricted from engaging in overseas travel business in China, unless otherwise determined by the PRC
State Council, or provided under a bilateral free trade agreement between the country and China, or the closer economic
partnership agreements between China, Hong Kong and Macau. However, according to regulations recently promulgated
by the State Council and/or other authorities, qualified foreign-invested travel companies registered in certain areas of
China are allowed to engage in overseas travel business, except in Taiwan area, for example, (i) on July 1, 2016, the PRC
State Council issued the Decision of the State Council on Temporally Adjusting Relevant Provisions of Administrative
Regulations, Documents of the State Council and Departmental Rules approved by the State Council in the Pilot Free
Trade Zones, or Decision 41, pursuant to which qualified foreign-invested travel companies, registered in the Pilot Free
Trade Zones of Shanghai, Guangdong, Tianjin and Fujian, may engage in overseas travel business, except in Taiwan area,
(ii) the State Council Circular 16 promulgated in January 2019 allows foreign-invested travel companies, including Sino-
foreign joint ventures and wholly foreign owned travel companies, registered in Beijing to engage in overseas travel
business, except in Taiwan area, (iii) in August 2019, the PRC State Council issued Notice of the State Council on the
Overall Plans for Six Newly Established Pilot Free Trade Zones, pursuant to which qualified foreign-invested travel
companies, registered in the Pilot Free Trade Zones of Shandong and Heilongjiang provinces may engage in overseas
travel business, except in Taiwan area, (iv) in August 2019, Shanghai Municipal People’s Government promulgated
Several Measures of Shanghai Municipality for a New Round of Expanding the Opening up of the Service Sector, pursuant
to which foreign-invested travel companies registered in Shanghai may engage in overseas travel business, except in
Taiwan area, (v) in November 2019, MOC together with 17 other government authorities promulgated the Notice on Trial
Implementation in China (Hainan) Pilot Free Trade Zone of the Policies Implemented in Other Pilot Free Trade Zones,
pursuant to which qualified foreign-invested travel companies, registered in the Hainan Pilot Free Trade Zones may engage
in overseas travel business, except in Taiwan area.
The Travel Company Implementation Rules define certain terms used in the Travel Company Regulations, for
example, the definition of “domestic tourism business,” “inbound travel business” and “overseas travel business”, and set
out detailed application requirements to establish a travel company. The Travel Company Implementation Rules also
clarify certain aspects of legal liability for travel companies as prescribed in the Travel Company Regulations.
Pursuant to the Tourism Law, travel companies are prohibited from arranging for compulsory shopping or other
activities which charge additional fees on top of the contract prices that tourists have already paid, unless it is agreed upon
by both parties through consultation or requested by the tourists and does not affect the itinerary of other tourists. Travel
companies are required to pay quality deposits for compensation for damage to tourists’ rights and advance payment of
expenses for emergency assistance when the tourists’ personal safety is in danger. Travel companies are required to engage
tour guides, who are required to strictly follow the itineraries and are prohibited from altering arrangement without the
consent of customers, suspending to provide services, requesting tips from tourists, and arranging for compulsory shopping
or other activities which charge additional fees on top of the contract prices that tourists have already paid by way of
induction, deception, coercion or in other illegal forms. The information that travel companies release to attract or organize
tourists is required to be authentic and accurate, and no false publicity can be made to mislead tourists. In addition, travel
companies conducting business via the Internet are required to present information of their travel company licenses on their
websites, and ensure the truthfulness and accuracy of the travel-related information they release on their websites.
Generally, travel companies soliciting tourists are required to take primary liabilities for any breach of travel contracts,
including personal injury or property loss suffered by the tourists attributable to travel service providers and tour operators
at destinations and their suppliers.
In 2010, CNTA released the Measures for Dealing with Tourism Complaints, which took effect as of July 1, 2010.
Under these Measures, authorities which are responsible for dealing with tourist complaints are required to render a
decision on the complaints within 60 days after the date of receipt thereof.
Although we take measures, such as requesting travel suppliers to provide their relevant permits and/or licenses, we
cannot make sure that all of travel suppliers maintained all necessary permits. See “Item 3.D. Key Information—Risk
Factors—Risks Related to Our Business and Industry—We may not be able to adequately control and ensure the quality of
travel products and services sourced from travel suppliers. If there is any deterioration in the quality of their performance,
our customers may not continue using our online platform.”
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In November 2010, CNTA and China Insurance Regulatory Commission jointly promulgated the Measures for the
Administration of the Liability Insurance of Travel Companies, or the Liability Insurance Measures, which became
effective as of February 1, 2011. Travel companies are required to procure travel company liability insurance pursuant to
the Liability Insurance Measures. The insurance companies are required to, subject to the liability limits provided under the
insurance agreement, reimburse the travel companies for the compensations made by the travel companies for the personal
injury or death and the loss of properties of tourists and the relevant tour guides or tour leaders. Pursuant to the Liability
Insurance Measures, the liability limit for the personal injury or death of each person cannot be less than RMB200,000.
Each of our relevant consolidated affiliated entities engaged in travel agent business has procured and is covered by valid
travel company liability insurance.
On August 20, 2020, the MCT issued the Interim Measures on the Administration of Online Tourism Business
Services, or the Measures on Online Tourism Business Services, which took effect on October 1, 2020. The Measures on
Online Tourism Business Services provides that operators of online tourism business shall, among other things, (i)
formulate tourist security protection mechanism, (ii) refrain from transmission of information prohibited by laws and
regulations, keep relevant record and report to competent authorities, (iii) implement the classified protection system for
cyber security and take management and technical measures for protection of cyber security, (iv) provide true and accurate
tourism service
transportation,
accommodation and sightseeing for tourists; (v) protect the safety of tourists’ personal information and privacy, and (vi)
maintain travel agency liability insurance if they operate travel agency business.
transparent and accessible reservation channels for
information and establish
Regulations on Online Transaction Platform Operators
In May 2014, the SAIC issued the Guidelines for the Performance of Social Responsibilities by Online Transaction
Platform Operators, or the Online Transaction Platform Operators Guidelines. The Online Transaction Platform Operators
Guidelines stipulate the qualification requirements for operators of online transaction platform, and certain other
obligations, such as examination and registration of any business operator using online transaction platform, online
transaction operator’s contracts with suppliers and customers, data protection for consumers, among others. Pursuant to
Online Transaction Platform Operators Guidelines, online transaction platform operators must (i) establish a consumer
protection and consumer dispute settlement system, and (ii) ensure that their complaint and customer support channels are
smooth.
In addition, online transaction platform operators must also preserve all relevant online transaction data for at least two
years from the date of the transaction. Operators of online transaction platform must comply with the Consumer Protection
Law, the Product Quality Law, the Anti-unfair Competition Law and other relevant laws and regulations. Furthermore, as
required by Jiangsu Administration of Telecommunication, Nanjing Tuniu, our consolidated affiliated entity, has obtained a
license of online data processing and transaction which will expire in October 2022. Subject to any clarifications or
interpretations that may be issued in future as to the Online Transaction Platform Operators Guidelines, we might need to
adjust our operational or contracting practices.
In August 2018, the Standing Committee of the National People’s Congress promulgated the PRC E-commerce Law,
which became effective in January 2019. The E-commerce Law strengthens the regulation on E-commerce operators
relating to consumer protection, personal data protection and intellectual property rights protection. As an e-commerce
operator, we are required under the E-commerce Law, (1) to refrain from conducting false or misleading commercial
promotion by fabricating transactions, making up user comments or otherwise, to defraud or mislead consumers, (2) to
allow consumer to opt out of search results targeting his or her personally characteristics such as hobbies and shopping
patterns and simultaneously show the consumers with options not targeting his or her personally characteristics, (3) to alert
consumers of tie-in sale of commodities or services, and shall not set the tied-in commodities or services as a default
option, (4) to obtain and maintain business license and other applicable licenses as required, and disclose information of
such license at our front-page, (5) to clearly detail the refund procedure for the deposit we received from customers, and
not set any unreasonable conditions to refund, (6) to take the risks and responsibilities in the transportation of the products,
unless the consumer chooses a courier logistics service provider other than the default service provider, etc.
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On March 15, 2021, the SAMR promulgated the Measures for the Supervision and Administration of Online Trading,
or the Online Trading Measures, which will take effect and replace the Administrative Measures for Online Trading on
May 1, 2021. The Online Trading Measures further strengthen the administration and supervision of online trading
activities, and impose a series of regulatory requirements on new forms of online trading, such as online social networking
e-commerce and online livestreaming e-commerce. The Online Trading Measures specify typical examples of unreasonable
restrictions or conditions imposed by e-commerce platform operators on transactions concluded on their platforms,
including prohibiting or restricting the merchants to operate on other e-commerce platforms, by means of unfair practices,
such as reducing their search exposure, removing their products or services, blocking their stores etc., or prohibiting or
restricting the merchants from freely choosing supporting service provider for transactions, such as logistics services
providers.
Regulations on Consumer Rights Protection
According to the PRC Consumer Protection Law, as amended on October 25, 2013 and became effective as of
March 15, 2014, the rights and interests of consumers that purchase or use commodities or that receive services for
consumption purposes in daily life is required to be protected, which includes the right to personal safety and the safety of
property, the right to be informed about goods and services offered for sale, the right to free choice when selecting goods or
services and the right to enjoy fair dealings, respect for their personal dignity and ethnic customs, and compensation for
damages suffered.
Correspondingly, a business operator providing a commodity or service to a consumer is subject to a number of
requirements, which includes to ensure that commodities and services meet with certain safety requirements, to disclose
serious defects of a commodity or a service and to adopt preventive measures against damage occurring, to provide
consumers with accurate information and to refrain from conducting false advertising, and not to set unreasonable or unfair
terms for consumers or alleviate or release itself from civil liability for harming the lawful rights and interests of
consumers by means of standard contracts, circulars, announcements, shop notices or other means. A business operator
may be subject to civil liabilities for failing to fulfill the obligations discussed above. These liabilities include restoring the
consumer’s reputation, eliminating the adverse effects suffered by the consumer, offering an apology and compensating for
any losses incurred. The following penalties may also be imposed upon business operators for any infraction: issuance of a
warning, confiscation of any illegal income, imposition of a fine, an order to cease business operation, revocation of its
business license or imposition of criminal liabilities under circumstances that are specified in laws and statutory
regulations.
The amended Consumer Protection Law further strengthens the protection of consumers and imposes more stringent
requirements and obligations on business operators, especially on the business operators through the internet. The
consumers whose interests are harmed due to their purchase of goods or acceptance of services on online marketplace
platforms may claim damages from sellers or service providers. As to legal liabilities of the online marketplace platform
provider, the Consumer Protection Law set forth that, where a consumer purchases products or accepts services via an
online trading platform and his or her interests are prejudiced, if the online trading platform provider fails to provide the
name, address and valid contact information of the seller, the manufacturer or the service provider, the consumer is entitled
to demand compensation from the online trading platform provider. If the online trading platform provider gives an
undertaking that is more favorable to consumers, it shall perform such undertaking. Once the online trading platform
provider has paid compensation, it shall have a right of recourse against the seller, the manufacturer or the service provider.
If an online trading platform provider is aware or ought to have been aware that a seller, manufacturer or service provider is
using the online platform to infringe upon the lawful rights and interests of consumers and it fails to take necessary
measures, it shall bear joint and several liabilities with the seller, the manufacturer or service provider for such
infringement. The Civil Code of the PRC, which was enacted by the National People’s Congress on May 28, 2020 and took
effect on January 1, 2021, also provides that if an online service provider is aware that an online user is committing
infringing activities, such as selling counterfeit products, through its internet services and fails to take necessary measures,
it shall be jointly and severally liable with the said online user for such infringement. If the online service provider receives
any notice from the infringed party on any infringing activities, the online service provider shall take necessary measures,
including deleting, blocking and unlinking the infringing content, in a timely manner. Otherwise, it will be jointly and
severally liable with the relevant online user for the extended damages.
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In June, 2017, the SAIC issued the Interim Measures for No Reason Return of Online Purchased Commodities within
Seven Days, which came into effect in March 2017 and was amended in October 2020, which further clarifies the scope of
consumers’ rights to make returns without a reason, including the detailed rules on exceptions, return procedures and
online marketplace platform providers’ responsibility to formulate seven-day no-reason return rules, sets up the related
consumer protection systems and supervision on merchants for compliance with the relevant rules.
In December 2003, the Supreme People’s Court in China issued the Interpretation of Some Issues Concerning the
Application of Law for the Trial of Cases on Compensation for Personal Injury, as amended in December 2020, which
further increases the liabilities of business operators engaged in the operation of hotels, restaurants, or entertainment
facilities and subjects such operators to compensatory liabilities for failing to fulfill their statutory obligations to a
reasonable extent or to guarantee the personal safety of others.
In October 2010, the Supreme People’s Court of China issued the Provisions on Issues Concerning the Application of
Law for the Trial of Cases on Tourism-related Disputes, as amended in December 2020, which establish liabilities for tour
operators and tourism support service providers in the event of contract disputes, personal injury and property damage
involving tourists.
Although we take certain measures to monitor the qualities of the travel products and services provided by travel
suppliers and handle customer complaints, we cannot ensure that these measures are sufficient to protect consumer rights,
or customer dispute can be handled and resolved in a timely fashion. See “Item 3. D. Key Information—Risk Factors—
Risks Related to Our Business and Industry—We may not be able to adequately control and ensure the quality of travel
products and services sourced from travel suppliers. If there is any deterioration in the quality of their performance, our
customers may seek damages from us and not continue using our online platform.”
Regulations on Advertising Business
The SAMR is the primary governmental authority regulating advertising activities, including online advertising, in
China. Regulations that apply to advertising business primarily include:
·
·
·
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Advertisement Law of the People’s Republic of China, promulgated by the Standing Committee of the National
People’s Congress as most recently amended on October 26, 2018 and effective as of the same date;
Administrative Regulations for Advertising, promulgated by the PRC State Council on October 26, 1987 and
effective since December 1, 1987.
Regulations on Internet Information Search Services, promulgated by the Cyberspace Administration of China on
June 25, 2016 and effective on August 1, 2016 ; and
Interim Measures for Administration of Internet Advertising, promulgated by the SAIC on July 4, 2016 and
effective on September 1, 2016.
According to the above regulations, companies that engage in advertising activities must each obtain, from the SAMR
or its local branches, a business license which specifically includes operating an advertising business in its business scope.
An enterprise engaging in advertising business within the specifications in its business scope does not need to apply for the
registration for advertisement publication, provided that such enterprise is not a radio station, television station, newspaper
and periodical publishers.
Under the Rules for Administration of Foreign Invested Advertising Enterprises, which were jointly promulgated by
the SAIC and the MOC on March 2, 2004 and amended on August 22, 2008, certain foreign investors are permitted to hold
direct equity interests in PRC advertising companies. A foreign investor in a Chinese advertising company is required to
have prior direct advertising operations as its main business outside China for two years if the Chinese advertising
company is a joint venture, or three years if the Chinese advertising company is a wholly foreign-owned enterprise. Since
we have not been involved in the advertising industry outside of China for the required number of years, we are not
permitted to hold direct equity interests in PRC companies engaging in the advertising business. Therefore, we conduct our
advertising business through Nanjing Tuniu, which holds a business license that covers advertising in its business scope.
The Rules for Administration of Foreign Invested Advertising Enterprises has been abolished on June 29, 2015.
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PRC advertising laws and regulations set certain content requirements for advertisements in China, including, among
other things, prohibitions on false or misleading content, superlative wording, socially destabilizing content or content
involving obscenities, superstition, violence, discrimination or infringement of the public interest. Advertisers, advertising
agencies, and advertising distributors are required to ensure that the content of the advertisements they prepare or distribute
is true and in full compliance with applicable laws. In providing advertising services, advertising operators and advertising
distributors must review the supporting documents provided by advertisers for advertisements and verify that the content of
the advertisements complies with applicable PRC laws and regulations. Prior to distributing advertisements that are subject
to government censorship and approval, advertising distributors are obligated to verify that such censorship has been
performed and approval has been obtained. Violation of these regulations may result in penalties, including fines,
confiscation of advertising income, orders to cease dissemination of the advertisements and orders to publish an
advertisement correcting the misleading information. Where serious violations occur, the SAMR or its local branches may
revoke such offenders’ licenses or permits for their advertising business operations.
Regulations on Small Credit Companies
Under the Guiding Opinions on the Pilot Operation of Small Credit Companies which was promulgated by the CBIRC
and the PBOC on May 4, 2008, or the Guiding Opinions on Small Credit Companies, a small credit company is a company
which is specialized in operating a small credit business, established with investments from natural persons, legal-person
enterprises or other social organizations, and does not accept any public deposits. Currently there is no regulatory authority
at the national level with respect to the administration and supervision of small credit companies in the PRC. Pursuant to
the Guiding Opinions on Small Credit Companies, if a provincial government determines a competent department (office
of finance or relevant organizations) to be responsible for the supervision and administration of small credit companies and
the regulation of risks associated with small credit companies, such provincial government may carry out the pilot
operation of small credit companies within such province. The applicant is required to file an application with the
competent department of the provincial government to apply for setting up a small credit company. Based on the Guiding
Opinions on Small Credit Companies, many provincial governments, including that of Guangdong Province, where our
small credit company is incorporated, promulgated local implementing rules on the administration of small credit
companies. Our small credit company has obtained the approval issued by the competent authority to conduct small credit
businesses through the internet.
In November 2020, the CBIRC and the PBOC published the Draft Online Small Credit Measures, for public comment.
The Draft Online Small Credit Measures provide, among others, that:
● an online small credit company must obtain the CBIRC’s approval before carrying out online small credit
business across two or more provinces;
● an online micro-lending company shall provide at least 30% funding for any single co-lending loan and keep its
overall debt financing amount within five times of its net assets; and
● the amount of the balance of the loan that an online small credit company may provide to an individual or entity
shall not exceed, in the case of an individual, the lower of RMB300,000 or one-third of the individual’s average
annual income for the past three years, and, in the case of a legal person or organization, RMB1 million.
Under the Draft Online Small Credit Measures, existing online small credit companies with businesses across
provinces will have a three-year transition period to obtain the required approval and adjust their businesses as necessary to
be in compliance with these measures. The Draft Online Small Credit Measures, if enacted in substantially the form
published for public comment, will change regulatory requirements for online small credit business in various respects.
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Regulations on Insurance Brokerage
According to the Provisions on the Supervision of Insurance Brokers, or the POSIB, promulgated by the China
Insurance Regulatory Commission, which was merged into CBIRC, on February 1, 2018 and effective on May 1, 2018, the
insurance brokerage company must obtain insurance brokerage license from CBIRC before engaging in insurance
brokerage business. One of our PRC consolidated affiliated entities has obtained the insurance brokerage license to operate
the following insurance brokerage businesses: (i) draft insurance plans for insurance applicants, select insurance companies
and handle insurance application formalities nationwide; (ii) assist the insured parties or beneficiaries in making claims;
(iii) reinsurance brokerage, (iv) provide disaster prevention, loss prevention, risk evaluation or risk management advisory
services to entrusting parties; (v) other businesses approved by the CBIRC.
Regulations on Fund Distribution
According to the Administration Measures of Publicly Offered Securities Investment Funds Distribution Institutions,
or the Fund Distribution Administrative Measures, promulgated by CSRC on August 28, 2020 and effective on October 1,
2020, fund distribution institutions include fund managers and other institutions shall be registered with the CSRC or its
branches. Commercial banks, securities companies, futures companies, insurance institutions, securities investment
consulting institutions and independent institutions are required to register with local CSRC branch and obtain the relevant
fund distribution license before engaging in fund distribution service. Distribution services regulated under the Fund
Distribution Administrative Measures refer to marketing and promotion, sales and distribution, and in particular,
subscription and redemption services of mutual funds. One of our PRC consolidated affiliated entities obtained the fund
distribution license from the CSRC.
Regulations on Commercial Factoring
On June 27, 2012, the MOC promulgated the Notice on Pilot Scheme for Commercial Factoring, or Notice 419, to
launch the pilot scheme for commercial factoring in Shanghai Pudong New District and Tianjin Binhai New District. The
MOC also released several other circulars to expand the pilot areas to Guangzhou and Chongqing Liangjiang New Area,
and certain other areas. According to the local implementation rules, commercial factoring company may be established
upon approval by the local branches of the MOC or other competent authorities (e.g. local financial work offices) in the
said regions. The business scope of a commercial factoring company may cover trade financing services, management of
sales ledgers, customer credit investigation and evaluation, management and collection of accounts receivable and credit
risk guarantee. Commercial factoring companies are neither allowed to engage in prohibited financial activities such as
acceptance of deposits and disbursement of loans, nor allowed to engage in debt collection business or being entrust to
collect debts. On May 14, 2018, MOC announced that the regulatory authority of commercial factoring industry has been
transferred from MOC to the CBIRC since April 20, 2018.
One of our PRC subsidiaries established in Nanjing is approved by the competent authority in Jiangsu to provide
commercial factoring services.
Regulations on Intellectual Property Rights
The PRC has adopted legislation governing intellectual property rights, including trademarks, domain names and
copyrights.
Trademark
The PRC Trademark Law and its implementation rules protect registered trademarks. The State Intellectual Property
Office, formerly the PRC Trademark Office of the SAIC is responsible for the registration and administration of
trademarks throughout the PRC. The Trademark Law has adopted a “first-to-file” principle with respect to trademark
registration. As of December 31, 2020, we had 485 registered trademarks in different applicable trademark categories and
were in the process of applying to register 15 trademarks in China.
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In addition, pursuant to the PRC Trademark Law, counterfeit or unauthorized production of the label of another
person’s registered trademark, or sale of any label that is counterfeited or produced without authorization will be deemed as
an infringement to the exclusive right to use a registered trademark. The infringing party will be ordered to stop the
infringement immediately, a fine may be imposed and the counterfeit goods will be confiscated. The infringing party may
also be held liable for the right holder’s damages, which will be equal to the gains obtained by the infringing party or the
losses suffered by the right holder as a result of the infringement, including reasonable expenses incurred by the right
holder for stopping the infringement. If the gains or losses, or royalties are difficult to determine, the court may render a
judgment awarding damages of up to RMB3,000,000.
Domain Name
Domain names are protected under the Administrative Measures on the Internet Domain Names promulgated by the
MIIT in August 2017 and effective on November 2017. The MIIT is the major regulatory body responsible for the
administration of the PRC Internet domain names, under supervision of which the China Internet Network Information
Center, or CNNIC, is responsible for the daily administration of .cn domain names and Chinese domain names. The MIIT
issued Regulations on Internet Domain Name on August 14, 2017 and then CNNIC issued Rules for the Implementations
of the Registration of State Top-Level Domain Name on June 18, 2019, which set forth basic rules for registration of
domain names. CNNIC adopts the “first to file” principle with respect to the registration of domain names. In November
2017, MIIT promulgated the Notice of the Ministry of Industry and Information Technology on Regulating the Use of
Domain Names in Internet Information Services to further regulate the use of domain names in internet information
services. As of December 31, 2020, we had 96 registered domain names, including www.tuniu.com.
Copyright
Works are protected under the PRC Copyright Law adopted by the National People’s Congress in 1990, as amended in
2001 and 2010, as well as its implementation rules adopted by the State Council in 1991, as amended in 2002, 2011 and
2013. The PRC Copyright Law was most recently amended on November 11, 2020 and the latest amendment will take
effect on June 1, 2021. Whether such protected works are published or not, copyrights duly obtained and enjoyed by the
author or other copyright owner remain unaffected. Copyright owners, however, could register such protected works on a
voluntary basis with National Copyright Administration or its local counterparts. We have registered 26 artwork copyrights
in China.
Pursuant to the PRC Copyright Law and its implementation rules, creators of protected works enjoy personal and
property rights, including, among others, the right of disseminating the works through information network. Pursuant to the
relevant PRC regulations, rules and interpretations, Internet service providers will be jointly liable with the infringer if they
(i) participate in, assist in or abet infringing activities committed by any other person through the Internet, (ii) are or should
be aware of the infringing activities committed by their website users through the Internet, or (iii) fail to remove infringing
content or take other action to eliminate infringing consequences after receiving a warning with evidence of such infringing
activities from the copyright holder. In addition, where an ICP service operator is clearly aware of the infringement of
certain content against another’s copyright through the Internet, or fails to take measures to remove relevant contents upon
receipt of the copyright owner’s notice, and as a result, it damages the public interest, the ICP service operator could be
ordered to stop the tortious act and be subject to other administrative penalties such as confiscation of illegal income and
fines. To comply with these laws and regulations, we have implemented internal procedures to monitor and review the
content we have licensed from content providers before they are released on our website and remove any infringing content
promptly after we receive notice of infringement from the legitimate rights holder.
Software Copyrights
Computer Software Protection Regulations promulgated by the PRC State Council in December 2001, amended in
2011 and 2013, provide that the rights and interests of computer software copyright owners are protected. A Chinese
citizen, legal person, or other organization shall be entitled to the copyright in software developed thereby regardless of
whether the software has been published or not. A foreigner’s or stateless person’s software shall enjoy copyright if it is
first distributed in China.
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In order to further implement the Computer Software Protection Regulations, the State Copyright Bureau issued the
Computer Software Copyright Registration Procedures in February 2002, amended in 2004, which apply to software
copyright registration, license contract registration and transfer contract registration. As of December 31, 2020, we had 109
registered computer software copyrights in China.
Patents
Patents are protected under the PRC Patent Law adopted by the National People’s Congress in 1984, as amended in
1992, 2000 and 2008, as well as its implementation rules adopted by the State Council in 1985, as amended in 1992, 2001,
2002 and 2010. On October 17, 2020, the Standing Committee of National People’s Congress promulgated the newly
amended Patent Law, which will take effect on June 1, 2021. The Patent Office under the State Intellectual Property Office
is responsible for receiving, examining and approving patent application. A patent is valid for a term of 20 years in the case
of an invention and a term of 10 years in the case of utility models and designs. A third-party user must obtain consent or a
proper license from the patent owner to use the patent. Otherwise, the use constitutes an infringement of patent rights. As
of December 31, 2020, we had 18 registered patent, and were in the process of applying to register 19 patents in China.
Civil Code of the PRC
In accordance with the Civil Code of the PRC promulgated by the National People’s Congress on May 28, 2020,
which became effective as of January 1, 2021, Internet users and Internet service providers bear tortious liabilities in the
event they infringe other persons’ rights and interests through the Internet. Where an Internet user conducts tortious acts
through Internet services, the infringed person has the right to request the Internet service provider to take necessary
actions such as deleting contents, screening and delinking. The Internet service provider, failing to take necessary actions
after being informed, will be subject to joint and several liabilities with the Internet user with regard to the additional
damages incurred. If an Internet service provider knows an Internet user is infringing other persons’ rights and interests
through its Internet service but fails to take necessary action, it shall be jointly and severally liable with the Internet user.
We have internal policies designed to reduce the likelihood that user content may be used without proper licenses or third-
party consents. When we are approached and requested to remove content uploaded by users on the grounds of
infringement, we investigate the claims and remove any uploads that appear to infringe the rights of a third party after our
reasonable investigation and determination. However, such policy may not be effective in preventing the unauthorized
listing of copyrighted materials or materials infringing other rights of third parties. See “Item 3.D. Key Information—Risk
Factors—Risks Related to Our Business and Industry—Claims by third parties that we infringe on their intellectual
property rights could lead to government administrative actions and result in significant costs and have a material adverse
effect on our business, financial condition and results of operations.”
Regulations on Foreign Currency Exchange
The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration
Regulations. Under PRC foreign exchange regulations, payments of current account items, such as profit distributions,
interest payments and trade and service-related foreign exchange transactions, can be made in foreign currencies without
prior approval from the SAFE, by complying with certain procedural requirements. By contrast, approval from or
registration with competent government authorities is required where RMB is to be converted into foreign currency and
remitted out of China to pay capital account items, such as direct investments, repayment of foreign currency-denominated
loans, repatriation of investments and investments in securities outside of China.
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In 2012, SAFE promulgated the Circular of Further Improving and Adjusting Foreign Exchange Administration
Policies on Foreign Direct Investment, or Circular 59, which substantially amends and simplifies the current foreign
exchange procedure. Pursuant to Circular 59, the opening of various special purpose foreign exchange accounts, such as
pre-establishment expenses accounts, foreign exchange capital accounts and guarantee accounts, the reinvestment of RMB
proceeds derived by foreign investors in the PRC, and remittance of foreign exchange profits and dividends by a foreign-
invested enterprise to its foreign shareholders no longer require the approval or verification of SAFE, and multiple capital
accounts for the same entity are allowed to be opened in different provinces, which was prohibited previously. In 2013,
SAFE specified that the administration by SAFE or its local branches over direct investment by foreign investors in the
PRC must be conducted by way of registration and banks must process foreign exchange business relating to the direct
investment in the PRC based on the registration information provided by SAFE and its branches. In February 2015, SAFE
promulgated the Notice on Further Simplifying and Improving the Administration of the Foreign Exchange Concerning
Direct Investment, or SAFE Circular 13, which became effective in June 2015 and was most recently amended in
December 2019. Under SAFE Circular 13, foreign exchange registrations of direct investment will be handled by the banks
designated by the foreign exchange authority instead of SAFE and its branches. We generally follow the regulations and
apply to obtain the approval of or registration with SAFE and other relevant PRC government authorities or designated
banks. However, we may not be able to obtain these registrations or approvals on a timely basis, if at all. If we fail to
receive such registrations or approvals, our ability to provide loans or capital contributions to our PRC subsidiaries and our
consolidated affiliated entities may be negatively affected, which could adversely affect our liquidity and our ability to fund
and expand our business.
In March 2015, SAFE promulgated the Circular of the SAFE on Reforming the Management Approach regarding the
Settlement of Foreign Capital of Foreign-invested Enterprise, or Circular 19, which expands a pilot reform of the
administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide. Circular 19
replaced both the Circular of the SAFE on Issues Relating to the Improvement of Business Operations with Respect to the
Administration of Foreign Exchange Capital Payment and Settlement of Foreign Invested Enterprises, or Circular 142, and
the Circular of the SAFE on Issues concerning the Pilot Reform of the Administrative Approach Regarding the Settlement
of the Foreign Exchange Capitals of Foreign-invested Enterprises in Certain Areas, or Circular 36. Circular 19 allows all
foreign-invested enterprises established in the PRC to settle their foreign exchange capital on a discretionary basis
according to the actual needs of their business operation, provides the procedures for foreign invested companies to use
Renminbi converted from foreign currency-denominated capital for equity investments and removes certain other
restrictions that had been provided in Circular 142. However, under Circular 19, foreign-invested enterprises are continued
to be prohibited from, among other things, using RMB funds converted from their foreign exchange capital for expenditure
beyond their business scope and providing entrusted loans or repaying loans between non-financial enterprises. SAFE
further promulgated the Notice of the State Administration of Foreign Exchange on Reforming and Standardizing the
Foreign Exchange Settlement Management Policy of Capital Account, or Circular 16, effective June 2016, which reiterates
some of the rules set forth in Circular 19. Circular 16 provides that discretionary settlement of foreign exchange applies to
foreign exchange capital, foreign debt offering proceeds and remitted foreign listing proceeds, and the corresponding RMB
capital converted from foreign exchange may be used to extend loans to related parties or repay intercompany loans
(including advances by third parties). However, there are substantial uncertainties with respect to the interpretation and
implementation of Circular 16 in practice. Circular 19 or Circular 16 may delay or limit us from using the proceeds of
offshore financing activities to make additional capital contributions to our PRC subsidiaries and any violations of these
circulars could result in severe monetary or other penalties.
In January 2017, SAFE promulgated the Circular on Further Improving Reform of Foreign Exchange Administration
and Optimizing Genuineness and Compliance Verification, or Circular 3, which stipulates several capital control measures
with respect to the outbound remittance of profits from domestic entities to offshore entities, including (i) banks must
check whether the transaction is genuine by reviewing board resolutions regarding profit distribution, original copies of tax
filing records and audited financial statements, and (ii) domestic entities must retain income to account for previous years’
losses before remitting any profits. Moreover, pursuant to Circular 3, domestic entities must explain in detail the sources of
capital and how the capital will be used, and provide board resolutions, contracts and other proof as a part of the
registration procedure for outbound investment.
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On October 23, 2019, SAFE issued Circular of the State Administration of Foreign Exchange on Further Promoting
the Facilitation of Cross-border Trade and Investment, or the Circular 28, which took effect on the same day. Circular 28
allows foreign-invested enterprises of non-investment nature to use their capital funds to make equity investments in
China, provided that such investments do not violate the effective special entry management measures for foreign
investment (negative list) and the target investment projects are genuine and in compliance with laws. According to the
Circular on Optimizing Administration of Foreign Exchange to Support the Development of Foreign-related Business
issued by SAFE on April 10, 2020, eligible enterprises are allowed to make domestic payments with their income under
capital accounts such as capital funds, foreign debts and proceeds from overseas listing without submitting evidence of
genuineness to the banks in advance, provided the use of such funds is genuine and in compliance with administrative
regulations on the use of income under capital accounts.
Regulations on Dividend Distribution
The principal regulations governing distribution of dividends of wholly foreign-owned enterprises include the PRC
Company Law, which applies to both PRC domestic companies and foreign-invested companies, and the PRC Foreign
Investment Law and its Implementation Rules, which apply to foreign-invested companies. Under these laws, regulations
and rules, both domestic companies and foreign-invested companies in the PRC are required to set aside as general
reserves at least 10% of their after-tax profit, until the cumulative amount of their reserves reaches 50% of their registered
capital. PRC companies are not permitted to distribute any profits until any losses from prior fiscal years have been offset.
Profits retained from prior fiscal years may be distributed together with distributable profits from the current fiscal year.
Regulations on Offshore Financing
Pursuant to a SAFE Circular 37 issued by SAFE on July 4, 2014, which replaced the former circular commonly known
as “Safe Circular 75” issued by SAFE in October 2005, prior registration with the local SAFE branch is required for PRC
residents in connection with their direct establish or indirect control of an offshore entity, for the purposes of overseas
investment and financing, with assets or equity interests of onshore companies or offshore assets or interests held by such
PRC residents, referred to in SAFE Circular 37 as a “special purpose vehicle.” The PRC residents are also required to
amend the registration or filing with the local SAFE branch in the event of any significant changes with respect to the
special purpose vehicle, such as increase or decrease of capital contributed by PRC residents, share transfer or exchange,
merger, division or other material event.
Failure to comply with the registration procedures set forth in the SAFE Circular 37 may result in restrictions being
imposed on the foreign exchange activities of the relevant onshore company, including the increase of its registered capital,
the payment of dividends and other distributions to its offshore parent or affiliate and the capital inflow from the offshore
entities, and may also subject relevant PRC residents to penalties under PRC foreign exchange administration regulations.
PRC residents who control our company from time to time are required to register with SAFE in connection with their
investments in us. We requested PRC residents holding direct or indirect interests in our company to our knowledge to
make the necessary applications, filings and amendments as required under SAFE Circular 75 and other related rules prior
to our initial public offering. However, we might not be fully informed of the identities of all of our beneficial owners who
are PRC citizens or residents, and we cannot compel our beneficial owners to comply with the requirements of SAFE
Circular 37. As a result, we cannot assure you that all of our shareholders or beneficial owners who are PRC citizens or
residents have complied with and will in the future make or obtain any applicable registrations or approvals required by
SAFE Circular 37 or other related regulations. See “Item 3.D. Key Information—Risk Factors—Risks Related to Doing
Business in China—PRC regulations relating to offshore investment activities by PRC residents may limit our PRC
subsidiaries’ ability to increase their registered capital or distribute profits to us, limit our ability to inject capital into our
PRC subsidiaries, or otherwise expose us to liability and penalties under PRC laws.”
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Regulations on Employee Stock Option Plans
In February 2012, SAFE promulgated the Stock Option Rules, replacing the previous rules issued by SAFE in
March 2007. Under the Stock Option Rules and other relevant rules and regulations, PRC residents who participate in stock
incentive plan in an overseas publicly-listed company, which includes employee stock ownership plans, stock option plans
and other incentive plans permitted by relevant laws and regulations, are required to register with SAFE or its local
branches and complete certain other procedures. Participants of a stock incentive plan in an overseas publicly listed
company who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of the overseas
publicly listed company or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration
and other procedures with respect to the stock incentive plan on behalf of its participants. The participants must also retain
an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale
of corresponding stocks or interests and fund transfers. In addition, the PRC agent is required to amend the SAFE
registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC
agent or the overseas entrusted institution or other material changes. The PRC agents must, on behalf of the PRC residents
who have the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota for the
payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options. The foreign
exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and
dividends distributed by the overseas listed companies must be remitted into the bank accounts in the PRC opened by the
PRC agents before distribution to such PRC residents.
We adopted the 2008 Plan, pursuant to which we may issue options or restricted shares to our qualified employees and
consultants on a regular basis. We also adopted the 2014 Plan, which permits the granting of options to purchase our
ordinary shares, restricted shares and restricted share units. The failure of the share options holders to complete their
registration pursuant to the Stock Option Rules and other foreign exchange requirements may subject these PRC
individuals to fines and legal sanctions, and may also limit our ability to contribute additional capital to our PRC
subsidiaries, limit our PRC subsidiaries’ ability to distribute dividends to us or otherwise materially adversely affect our
business. See “Item 3.D. Key Information—Risk Factors—Risks Related to Doing Business in China—Failure to comply
with PRC regulations regarding the registration requirements for share option plans may subject the PRC plan participants
or us to fines and other legal or administrative sanctions.”
In addition, the State Administration for Taxation has issued circulars concerning employee share options, under which
our employees working in the PRC who exercise share options will be subject to PRC individual income tax. Our PRC
subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and to
withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or if we
fail to withhold their income taxes as required by relevant laws and regulations, we may face sanctions imposed by the
PRC tax authorities or other PRC government authorities.
Regulations on Overseas Listing
Six PRC regulatory agencies, including the CSRC, jointly adopted the Regulations on Mergers and Acquisitions of
Domestic Enterprises by Foreign Investors, or the M&A Rules, which became effective on September 8, 2006 and which
were amended on June 22, 2009, with such amendments becoming effective as of the same date. The M&A Rules, among
other things, require offshore SPVs formed for overseas listing purposes through acquisitions of PRC domestic companies
and controlled by PRC companies or individuals, to obtain the approval of the CSRC prior to publicly listing their
securities on an overseas stock exchange.
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While the application of this regulation remains unclear, we believe, based on the advice of our PRC counsel, Fangda
Partners, that CSRC approval was not required in the context of our initial public offering because (1) CSRC currently has
not issued any definitive rule or interpretation concerning whether offerings like initial public offerings are subject to this
regulation and (2) we established our PRC subsidiaries by means of direct investment other than by merger or acquisition
of PRC domestic companies and no explicit provision in the M&A Rules classifies the contractual arrangements between
Beijing Tuniu, our PRC subsidiary, Nanjing Tuniu, our consolidated affiliated entity, and its shareholders as a type of
acquisition transaction falling under the M&A Rules. See “Item 3.D. Key Information—Risk Factors—Risks Related to
Doing Business in China—The approval of the China Securities Regulatory Commission may have been required in
connection with our earlier initial public offering under a regulation adopted in August 2006, and, if required, we cannot
assure you that we will be able to obtain such approval.”
Regulations on Employment
The PRC Labor Law, the PRC Labor Contract Law and its implementation rules provide requirements concerning
employment contracts between an employer and its employees. If an employer fails to enter into a written employment
contract with an employee within one year from the date on which the employment relationship is established, the
employer would be deemed to have entered into a labor contract without a fixed term with such employee. In addition, the
employer must rectify the situation by entering into a written employment contract with the employee and pay the
employee twice the employee’s salary for the period from the day following the lapse of one month from the date of
establishment of the employment relationship to the day prior to the execution of the written employment contract. The
Labor Contract Law and its implementation rules also require compensation to be paid upon certain terminations. In
addition, if an employer intends to enforce a non-compete provision with an employee in an employment contract or non-
competition agreement, it has to compensate the employee on a monthly basis during the term of the restriction period after
the termination or ending of the labor contract. Employers in most cases are also required to provide a severance payment
to their employees after their employment relationships are terminated.
Enterprises in China are required by PRC laws and regulations to participate in certain employee benefit plans,
including social insurance funds, namely a pension plan, a medical insurance plan, an unemployment insurance plan, a
work-related injury insurance plan and a maternity insurance plan, and a housing provident fund, and contribute to the
plans or funds in amounts equal to certain percentages of salaries, including bonuses and allowances, of the employees as
specified by the local government from time to time at locations where they operate their businesses or where they are
located.
Regulations on Taxation
For a discussion of applicable PRC tax regulations, see “Item 5.A. Operating and Financial Review and Prospects—
Operating Results—Taxation.”
C.Organizational Structure
We restructured the ownership structure of Nanjing Tuniu, our variable interest entity, in February, 2021, during which
the shareholders of Nanjing Tuniu other than Messrs Dunde Yu transferred all of their equity interest in Nanjing Tuniu to
Messrs Dunde Yu and Anqiang Chen. On February 19, 2021, Beijing Tuniu, Nanjing Tuniu and the then existing
shareholders of Nanjing Tuniu, namely Dunde Yu, Haifeng Yan, Tong Wang, Jiping Wang, Xin Wen, Yongquan Tan and
Haifeng Wang entered into a termination agreement to terminate the existing contractual arrangements and, on the same
day, Beijing Tuniu, Nanjing Tuniu and the new shareholders of Nanjing Tuniu, namely Dunde Yu and Anqiang Chen,
entered into new contractual arrangements which are substantially similar to the contractual arrangements we have
historically adopted. See “Agreements that Provide us with Effective Control over Nanjing Tuniu” below.
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The following diagram illustrates our corporate structure, including our principal subsidiaries, consolidated affiliated
entity and its principal subsidiaries, as of the date of this annual report on Form 20-F:
(1) Messrs. Dunde Yu and Anqiang Chen hold 80.89% and 19.11% equity interests in Nanjing Tuniu, respectively.
Among the shareholders of Nanjing Tuniu, Mr. Dunde Yu is our founder, director and an ultimate shareholder of
Tuniu Corporation. Mr. Anqiang Chen is our Financial Controller.
Agreements that Provide us with Effective Control over Nanjing Tuniu
Purchase Option Agreement. Pursuant to the purchase option agreement entered into on February 19, 2021, each of
the shareholders of Nanjing Tuniu irrevocably and exclusively grants Beijing Tuniu an option to purchase, or have its
designated person or persons to purchase, at its discretion, to the extent permitted under PRC law, all or part of such
shareholder’s equity interests in Nanjing Tuniu. The aggregate purchase price is RMB2.43 million. The shareholders of
Nanjing Tuniu agree, without the prior written consent of Beijing Tuniu, not to transfer or otherwise dispose of their equity
interests in Nanjing Tuniu, pledge their equity interests or create any encumbrance on their equity interests. The agreement
remains effective until all equity interests held in Nanjing Tuniu by the shareholders of Nanjing Tuniu are transferred or
assigned to Beijing Tuniu or its designated person or persons. The purchase price has been prepaid by Beijing Tuniu to the
shareholders of Nanjing Tuniu.
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Equity Interest Pledge Agreement. Pursuant to the equity interest pledge agreements entered into by and between
Beijing Tuniu, Nanjin Tuniu and each shareholder of Nanjing Tuniu on February 19, 2021, each of the shareholders of
Nanjing Tuniu pledges all of such shareholder’s equity interests in Nanjing Tuniu to guarantee the performance of the
obligations under the purchase option agreement. If the shareholders of Nanjing Tuniu breach their contractual obligations
under the purchase option agreement and shareholders’ voting rightes agreement, Beijing Tuniu, as the pledgee, will have
the right to either conclude an agreement with the pledger to obtain the pledged equity or seek payments from the proceeds
of the auction or sell-off of the pledged equity to any person pursuant to the PRC law. The shareholders of Nanjing Tuniu
agree that, during the term of the equity interest pledge agreement, they will not dispose of the pledged equity interests or
create or allow any encumbrance on the pledged equity interests. During the equity pledge period, Beijing Tuniu is entitled
to all dividends and other distributions made by Nanjing Tuniu. The equity interest pledge became effective on the date
when the equity interest pledge was registered with the relevant local administration for market regulation, and remains
effective until the shareholders of Nanjing Tuniu discharge all their obligations under the purchase option agreement, or
Beijing Tuniu enforces the equity interest pledge, whichever is earlier. We have completed the registration of the equity
interest pledge with Xuanwu Branch of Nanjing Administration for Market Regulation.
Shareholders’ Voting Rights Agreement. Pursuant to the shareholders’ voting rights agreement entered into on
February 19, 2021, the shareholders of Nanjing Tuniu appointed Beijing Tuniu or its designated person as their attorney-in-
fact to exercise all of their voting and related rights with respect to their equity interests in Nanjing Tuniu, including
attending shareholders’ meetings, voting on all matters of Nanjing Tuniu requiring shareholder approval, nominating and
appointing directors, convening extraordinary shareholders’ meetings, and other voting rights pursuant to the then-effective
articles of association of Nanjing Tuniu. The shareholders’ voting rights agreement will remain in force until all the parties
to the agreement mutually agree to terminate the agreement in writing or cease to be shareholders of Nanjing Tuniu.
Irrevocable Powers of Attorney. Pursuant to the powers of attorney dated February 19, 2021, the shareholders of
Nanjing Tuniu each irrevocably appointed Beijing Tuniu as the attorney-in-fact to exercise all of such shareholder’s voting
and related rights with respect to such shareholder’s equity interests in Nanjing Tuniu, including but not limited to
attending shareholders’ meetings, voting on all matters of Nanjing Tuniu requiring shareholder approval, nominating and
appointing directors, convening extraordinary shareholders’ meetings, and other voting rights pursuant to the then-effective
articles of association of Nanjing Tuniu. Each power of attorney will remain in force until the shareholders’ voting rights
agreement expires or is terminated.
Agreement that Allows us to Receive Economic Benefits from Nanjing Tuniu
Cooperation Agreement. Under the cooperation agreement entered into on February 19, 2021, Beijing Tuniu has the
exclusive and irrevocable right to provide to Nanjing Tuniu business consulting, technical consulting and technical services
related to the businesses of Nanjing Tuniu and its subsidiaries. Beijing Tuniu owns the exclusive intellectual property rights
created by Nanjing Tuniu or its employees as a result of the performance of this agreement. Beijing Tuniu has the right to
receive, or designate a person or persons to receive, a quarterly service fee, which equals the profits of each of Nanjing
Tuniu and its subsidiaries, to which it provides such business consulting, technical consulting and technical services,
provided that such amount of service fees can be adjusted by Beijing Tuniu at its sole discretion. This agreement shall be
effective retroactive to 24 January 2014 and will remain effective until expiration of Beijing Tuniu’s business term, unless
Beijing Tuniu exercises its unilateral right to terminate the agreement, one of the parties is declared bankrupt or Beijing
Tuniu is not able to provide consulting and services as agreed for more than three consecutive years because of force
majeure. Nanjing Tuniu is not permitted to terminate the agreement in any other event.
In 2018, 2019 and 2020, we received service fees of RMB197.9 million, RMB30.4 million and RMB12.8 million
(US$2.0 million), respectively, from our consolidated affiliated entities, which were eliminated on consolidated financial
statements.
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D.Property, Plant and Equipment
Our principal executive offices, consisting of our administrative center, sales and marketing division, technical
services department, and call center, are located on leased premises in Jiangsu, Shanghai and Beijing. We lease these
premises under lease agreements from unrelated third parties, and we plan to renew these leases from time to time as
needed.
Item 4A.Unresolved Staff Comments
Not applicable.
Item 5.Operating and Financial Review and Prospects
The following discussion of our financial condition and results of operations is based upon, and should be read in
conjunction with, our audited consolidated financial statements and the related notes included in this annual report on
Form 20-F. This report contains forward-looking statements. See “Forward-Looking Information.” In evaluating our
business, you should carefully consider the information provided under the caption “Item 3.D. Key Information—Risk
Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to
substantial risks and uncertainties.
A.Operating Results
Overview
We are a leading online leisure travel company in China. We offer a large selection of packaged tours, including
organized tours and self-guided tours, as well as travel-related services for leisure travellers on our platform. Our platform
offers product portfolio consisting of organized tours, self-guided tours, and tickets for all popular domestic and overseas
tourist attractions.
We generated net revenues of RMB2,240.1 million, RMB2,281.0 million and RMB450.3 million (US$69.0 million)in
2018, 2019 and 2020, respectively. We recognized revenues from most of the organized tours for 2018, 2019 and 2020 on a
net basis as a result of changes in our role in the organized tour arrangements since the beginning of 2017 (except for
certain business arrangements under which we take substantive inventory risks and the self-operated local tour operators in
which we act as a principal, for which revenues are recognized on gross basis for 2018, 2019 and 2020). We had a net loss
of RMB199.4 million, RMB729.4 million and RMB1,343.6 million (US$205.9 million)in 2018, 2019 and 2020,
respectively. We generally collect payments from our customers upon contract confirmation before we pay travel suppliers.
Our net cash provided by operating activities was RMB268.1 million in 2018, our net cash used in operating activities was
RMB120.5 million in 2019, and our net cash used in operating activities was RMB1,313.1 million (US$201.2 million) in
2020.
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Our ability to achieve and maintain profitability depends on our ability to effectively reduce our costs and expenses as
a percentage of our net revenues. Our cost of revenues were RMB1,065.0 million, RMB1,200.0 million and RMB237.1
million (US$36.3 million)in 2018, 2019 and 2020, respectively. Our operating expenses were RMB1,524.1 million ,
RMB1,951.8 million and RMB1,554.0 million (US$238.2 million)in 2018, 2019 and 2020 respectively. The costs and
expenses were affected by the level of spending associated with our business operations, including expenses related to
regional expansion, branding and advertising campaigns, mobile related initiatives and expenses related to technology,
product development and administrative personnel such as share-based compensation. Our past results of operations should
not be taken as indicative of our future performance. Our sales and marketing expenses were RMB778.1 million,
RMB923.3 million and RMB372.0 million (US$57.0 million) in 2018, 2019 and 2020, respectively. We aim to maintain
these expenses as a percentage of net revenues at a stable or lower level over time by focusing on operational scalability
and efficiency improvements. If we fail to effectively reduce our costs and expenses as a percentage of our net revenues,
we may not be able to achieve and maintain profitability.
Impact of COVID-19 on Our Operations
Our results of operations for the year ended December 31, 2020 have been significantly and negatively affected by the
COVID-19 pandemic. The pandemic drove a significant decline in travel demand resulting in reservation cancellations,
requests for refunds and reduced new orders. In addition, allowances for doubtful accounts and impairment provisions
against our long-term assets both increased. In response to the COVID-19 pandemic, we have quickly adopted cost control
measures to mitigate a significant slowdown in customer demand. As the COVID-19 pandemic is still evolving, we will
continue to monitor and evaluate the financial impacts to our financial condition, results of operations, and cash flows and
make adjustments accordingly.
For the year ended December 31, 2020, our financial performance was materially and adversely affected as a result of
the domestic and international travel restrictions and significant incremental costs and expenses incurred to facilitate our
customers’ cancellations and refund requests. While we have seen recovery in the China travel market since the second
half of 2020 due to the substantial containment of the COVID-19 pandemic in China, we have seen a slower recovery of
the international travel market, and in turn, a slower recovery of our overseas travel business. In addition, we made
provisions for the expected difficulty in collection of receivables, which resulted in additional allowances for doubtful
accounts. We also recorded impairment provisions against our long-term and short-term assets, as the impact of the
COVID-19 pandemic on certain of our long-term and short-term assets are considered to be other than temporary. In 2020,
we recognized allowance for credit losses of RMB829.7 million (US$127.2 million), compared to RMB185.1 million in
the same period in 2019, respectively. Our net revenues for the year ended December 31, 2020 decreased by 80.3% from
2019. While the duration and the development of the pandemic is difficult to predict, our performance generally improved
starting from the third and fourth quarters of 2020, in terms of our key financial metrics such as revenues and gross margin.
Since the third quarter of 2020, we have also seen the reservations cancellation rate of customers dropping back to a level
prior to the COVID-19 pandemic, which was substantially lower than the reservation cancellation rate in the first two
quarters of 2020.
The global spread of COVID-19 pandemic in a significant number of countries around the world has resulted in, and
may intensify, global economic distress, and the extent to which it may affect our financial condition, results of operations,
and cash flows will depend on future developments, which are highly uncertain and cannot be reasonably predicted. Since
the beginning of 2021, a few waves of COVID-19 infections have emerged in various regions of China, and varying levels
of travel restrictions were reinstated. In early 2021, precautionary measures, including varying levels of travel restrictions
and encouragement of reduced travel during the Chinese New Year, were reinstated in China. These travel restrictions
reduce users’ demand for our products, and are expected to materially and adversely affect our results of operations in the
first quarter of 2021 and potentially beyond. See " Item 3.D. Key Information-Risk Factors-Risks Relating to Our Business
and Industry- Our business operation, financial condition, results of operations and cash flows have been and are likely to
continue to be materially and adversely affected by the COVID-19 outbreak and spread."
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Any future outbreak of contagious diseases or similar adverse public health developments, extreme unexpected bad
weather, or severe natural disasters would affect our business and operating results. Ongoing concerns regarding
contagious disease or natural disasters, particularly its effect on travel, could adversely affect our users’ desire to travel. If
there is a recurrence of an outbreak of certain contagious diseases or natural disasters, travel to and from affected regions
could be curtailed. Public policy regarding, or governmental restrictions on, travel to and from these and other regions on
account of an outbreak of any contagious disease or occurrence of natural disasters could materially and adversely affect
our business and operating results.
Selected Income Statement Items
Revenues
We generate revenues primarily from sales of packaged tours, which consist of organized tours and self-guided tours.
The following table sets forth the components of our revenues in absolute amounts and as percentages of our net revenues
for the periods presented.
Revenues:
Packaged tours
Others
For the Years Ended December 31,
2018
2019
2020
RMB
%
RMB
% RMB US$
%
(in thousands, except percentages)
1,830,630
409,519
81.7
18.3
1,886,822
394,165
82.7
17.3
302,359
147,900
46,339
22,667
67.2
32.8
Net revenues
2,240,149
100.0
2,280,987
100.0
450,259
69,006
100.0
Packaged tours. Packaged tours consist of organized tours and self-guided tours. In 2018, 2019 and 2020, revenues
from sales of packaged-tours were RMB1,830.6 million, RMB1,886.8 million and RMB302.4 million (US$46.3 million),
respectively. Since the beginning of 2017, we have implemented certain changes in our arrangements with the tour
operators. Under the organized tour arrangements with the tour operators, our role is an agent that provides tour booking
services to the tour operators and travellers. Among the organized tours, revenues under arrangements for which we
undertake substantive inventory risk were RMB241.2 million, RMB166.2 million and RMB1.6 million (US$0.2 million),
respectively, and revenues for the self-operated local tour operator business were RMB509.7 million, RMB724.2 million
and RMB122.7 million (US$18.8 million) for the years ended December 31, 2018, 2019 and 2020, respectively. Revenues
from packaged tours were recognized when the tours depart, except for revenues from the self-operated local tour operator
business in which we act as principal, which were recognized over time during the period of packaged tours. Our revenues
from packaged tours increased by 3.1% from RMB1,830.6 million in 2018 to RMB1,886.8 million in 2019, and decreased
by 84% to RMB302.4 million (US$46.3 million) in 2020.
Others. Other revenues were RMB409.5 million, RMB394.2 million and RMB147.9 million (US$22.7 million) in
2018, 2019 and 2020, respectively. Our other revenues are primarily generated from (i) service fees received from
insurance companies, (ii) commission fees from other travel-related products and services, such as tourist attraction tickets,
visa application services, accommodation reservation and transportation ticketing, (iii) fees for advertising services that we
provide primarily to domestic and foreign tourism boards and bureaus, (iv) fees for services that we provide for
accommodation and transportation, and (v) service fees for financial services.
Cost of Revenues
Our cost of revenues accounted for 47.5%, 52.6% and 52.7% as percentages of our net revenues in 2018, 2019 and
2020, respectively.
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As revenues from packaged tours are mainly recognized on net basis (except for certain business arrangements that we
takes substantive inventory risks and the self-operated local tour operator business in which we act as a principal, for which
revenue are recognized on gross basis), the amounts we pay to travel suppliers for packaged tours are mainly recorded as a
reduction to revenues, rather than cost of revenues.
Our cost of revenues mainly consists of salaries and other compensation-related expenses related to our tour advisors,
customer services representatives, and other personnel related to tour transactions, and other expenses directly attributable
to our principal operations, primarily including payment processing fees, telecommunication expenses, rental expenses,
depreciation expenses, and other service fee for financial service. For the arrangements where we secure availabilities of
tours and bear substantive inventory risks, and for the self-operated local tour operator business, from which revenues are
recognized on a gross basis, cost of revenues also includes the amount paid to tour operators or suppliers.
Operating Expenses
Our operating expenses were RMB1,524.1 million ,RMB1,951.8 million and RMB1,554.0 million (US$238.2 million)
in 2018, 2019 and 2020, respectively. The following table sets forth the components of our operating expenses in absolute
amounts and as percentages of our net revenues for the periods presented:
Operating expenses:
Research and product
development
Sales and marketing
General and administrative
Other operating income
For the Year Ended December 31,
2018
2019
RMB
%
%
RMB
RMB
(in thousands, except percentages)
2020
US$
%
(315,222)
(778,126)
(487,372)
56,599
(14.1)
(34.7)
(21.8)
2.5
(303,561)
(923,273)
(749,404)
24,419
(13.3)
(40.5)
(32.9)
1.1
(100,514)
(371,984)
(1,109,340)
27,849
(15,404)
(57,009)
(170,014)
4,268
(22.3)
(82.6)
(246.4)
6.2
Total operating expenses
(1,524,121)
(68.1)
(1,951,819)
(85.6)
(1,553,989)
(238,159)
(345.1)
Research and product development expenses. Research and product development expenses primarily comprise salaries
and other compensation expenses for our research and product development personnel as well as office rental, depreciation
and other expenses related to our research and product development function. Research and product development expenses
also include expenses that are incurred in connection with the planning and implementation phases of development and
costs that are associated with the maintenance of our online platform or software for internal use. Research and product
development expenses were RMB315.2 million, RMB303.6 million and RMB100.5 million (US$15.4 million) in 2018,
2019 and 2020, respectively.
Sales and marketing expenses. Sales and marketing expenses primarily comprise marketing and promotional expenses,
salaries and other compensation expenses for our sales and marketing personnel and office rental, depreciation and other
expenses related to our sales and marketing function. Our sales and marketing expenses were RMB778.1 million,
RMB923.3 million and RMB372.0 million (US$57.0 million) in 2018, 2019 and 2020, respectively.
General and administrative expenses. General and administrative expenses primarily comprise salaries and other
compensation expenses for our administrative personnel, professional service fees, office rental, depreciation, bad debt and
other expenses related to our administrative function. General and administrative expenses were RMB487.4 million,
RMB749.4 million and RMB1,109.3 million (US$170.0 million) in 2018, 2019 and 2020, respectively.
Other operating income. Other operating income relates primarily to government subsidies and tax refund that we
receive from provincial and local governments. Government subsidies are granted from time to time at the discretion of the
relevant government authorities. These subsidies are granted for general corporate purposes and to support our ongoing
operations in the region. Other operating income accounted for 2.5% , 1.1% and 6.2% of our net revenues in 2018, 2019
and 2020, respectively.
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Taxation
Cayman Islands
We are incorporated in the Cayman Islands. Under the current laws of the Cayman Islands, we are not subject to
income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands.
Hong Kong
Companies registered in Hong Kong are subject to Hong Kong Profits Tax on the taxable income as reported in their
respective statutory financial statements adjusted in accordance with relevant Hong Kong tax laws. The applicable tax rate
is 16.5% in Hong Kong. Under the Hong Kong tax law, our Hong Kong subsidiaries are exempted from income tax on its
foreign-derived income and there are no withholding taxes in Hong Kong on remittance of dividends.
PRC
Our PRC subsidiaries and consolidated affiliated entities are subject to PRC enterprise income tax, or EIT, on the
taxable income in accordance with the relevant PRC income tax laws.
Under the EIT Law, an enterprise established outside the PRC with a “de facto management body” within the PRC is
considered a PRC resident enterprise for PRC enterprise income tax purposes and is generally subject to a uniform 25%
enterprise income tax rate on its worldwide income. Under the Implementation Rules, a “de facto management body” is
defined as a body that has material and overall management and control over the manufacturing and business operations,
personnel and human resources, finances and properties of an enterprise. In addition, SAT Circular 82, which was issued in
April 2009 by the SAT and amended in 2013 and in December 2017, specifies that certain offshore incorporated enterprises
controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if all of the following
conditions are met: (a) senior management personnel and core management departments in charge of the daily operations
of the enterprises have their presence mainly in the PRC; (b) their financial and human resources decisions are subject to
determination or approval by persons or bodies in the PRC; (c) major assets, accounting books and company seals of the
enterprises, and minutes and files of their board’s and shareholders’ meetings are located or kept in the PRC; and (d) half or
more of the enterprises’ directors or senior management personnel with voting rights habitually reside in the PRC. Further
to SAT Circular 82, the SAT issued SAT Bulletin 45, which took effect on September 1, 2011 and was amended in 2015
and 2016, to provide more guidance on the implementation of SAT Circular 82 and clarify the reporting and filing
obligations of such “Chinese-controlled offshore-incorporated resident enterprises.” SAT Bulletin 45 provides procedures
and administrative details for the determination of PRC resident enterprise status and administration on post-determination
matters. Although both SAT Circular 82 and SAT Bulletin 45 only apply to offshore enterprises controlled by PRC
enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals like us, the
determining criteria set forth in SAT Circular 82 and SAT Bulletin 45 may reflect the SAT’s general position on how the
“de facto management body” test should be applied in determining the PRC resident enterprise status of offshore
enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups or by PRC or foreign
individuals.
Nanjing Tuniu was qualified for an HNTE since 2010 and was able to renew its HNTE certificate upon expiration of
the 3-year period. In 2019, Nanjing Tuniu obtained a new HNTE certificate, which will expire in 2021. Therefore, Nanjing
Tuniu was eligible to enjoy a preferential tax rate of 15% from 2019 to 2021 to the extent it has taxable income under the
EIT Law, as long as it maintains the HNTE qualification and duly conducts relevant EIT filing procedures with the relevant
tax authority. Tuniu Nanjing Information Technology was qualified for an HNTE since 2017 and was able to renew its
HNTE certificate upon expiration of the 3-year period. In 2020, Tuniu Nanjing Information Technology obtained a new
HNTE certificate, which will expire in 2022. Therefore, Tuniu Nanjing Information Technology was eligible to enjoy a
preferential tax rate of 15% from 2020 to 2022 to the extent it has taxable income under the EIT Law, as long as it
maintains the HNTE qualification and duly conducts relevant EIT filing procedures with the relevant tax authority.
Besides, Beijing Tuniu obtained the HNTE certificate as well in 2018 under which it is eligible to enjoy a preferential tax
rate of 15% from 2018 to 2020 to the extent it has taxable income under the EIT Law, as long as it maintains the HNTE
qualification and duly conducts relevant EIT filing procedures with the relevant tax authority.
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Under the EIT Law and its Implementation Rules, subject to any applicable tax treaty or similar arrangement between
the PRC and our investors’ jurisdiction of residence that provides for a different income tax arrangement, PRC withholding
tax at the rate of 10% is normally applicable to dividends from PRC sources payable to investors that are non-PRC resident
enterprises, which do not have an establishment or place of business in the PRC, or which have such establishment or place
of business if the relevant income is not effectively connected with the establishment or place of business. Any gain
realized on the transfer of American depositary shares or shares by such non-PRC resident enterprise investors is also
subject to 10% PRC income tax if such gain is regarded as income derived from sources within the PRC unless a tax treaty
or similar arrangement provides otherwise. Under the PRC Individual Income Tax Law and its implementation rules,
dividends from sources within the PRC paid to foreign individual investors who are not PRC residents are generally subject
to a PRC withholding tax at a rate of 20% and gains from PRC sources realized by such investors on the transfer of
American depositary shares or shares are generally subject to 20% PRC income tax, in each case, subject to any reduction
or exemption set forth in applicable tax treaties and PRC laws. Although substantially all of our business operations are
based in China, it is unclear whether dividends we pay with respect to our ordinary shares or ADSs, or the gain realized
from the transfer of our ordinary shares or ADSs, would be treated as income derived from sources within the PRC and as
a result be subject to PRC income tax if we were considered a PRC resident enterprise, as described above. See “Item 3.D.
Key Information—Risk Factors—Risks Related to Doing Business in China—Under the PRC Enterprise Income Tax Law,
we may be classified as a PRC resident enterprise for PRC enterprise income tax purposes. Such classification would likely
result in unfavorable tax consequences to us and our non-PRC shareholders and would have a material adverse effect on
our results of operations and the value of your investment.”
Pursuant to the applicable PRC tax regulations, any entity or individual conducting business in the service industry is
generally required to pay value-added tax, or VAT at the rate of 6% on the revenues generated from providing such
services. Entities engaging in the travel business can deduct certain approved costs from their revenues in calculating VAT.
However, if the services provided are related to technology development and transfer, such entities may be exempted from
VAT and related taxes arising from such services subject to approval by the relevant tax authorities. In our consolidated
financial statements included elsewhere in this annual report, VAT is deducted from gross revenues to arrive at net
revenues.
On March 23, 2016, the PRC Ministry of Finance and the SAT jointly issued the Circular on the Nationwide
Implementation of Pilot Program for the Collection of Value Added-Tax Instead of Business Tax, or Circular 36, pursuant
to which the VAT reforms will be implemented comprehensively across the country and extended to the construction, real
estate, financial and consumer services industries. Circular 36 became effective on May 1, 2016 and was amended as of
January 1, 2018. As a result, majority of our business will be subject to VAT at a rate of 6%, which is higher than the
business tax rate previously applied to us. We would be permitted to offset input VAT by providing valid VAT invoices
received from vendors against our output VAT liability. Alternatively, the taxable income of tourism business could be
calculated on net basis by deducting relevant expenses (including expenses for accommodation, catering, transportation,
visa, ticket and tourism fee paid to other entities/ individuals) if valid invoices could be obtained.
On May 6, 2016, the SAT issued the Administrative Measures for Value Added Tax Exemption on Cross-border
Taxable Activities under the Program for the Collection of Value Added-Tax Instead of Business Tax, which was most
recently amended on June 15, 2018, or Circular 29, pursuant to which the tourism services provided overseas are exempted
from VAT.
On March 20, 2019. The PRC Ministry of Finance, SAT and GAC (General Administration of Customs) jointly issued
the Circular on Measures to Further Implement the VAT reform, pursuant to which entities in the producer service sector
(including technology consulting service) and consumer service sector can additionally deduct 10% of the creditable input
VAT against their output VAT liability from April 2019 to December 2021. On September 30, 2019, The PRC Ministry of
Finance and SAT increased the input super deduction portion from 10% to 15% for consumer service sector, effective from
October, 2019.
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In addition, on February 6, 2020, the Ministry of Finance and the SAT jointly issued Announcement on Relevant Tax
Policies in Support of Prevention and Control of COVID-19, or Circular 8, pursuant to which the income obtained from
public transportation services, daily life services including tourism services and express delivery services shall be exempt
from VAT. And on May 15, 2020, the Ministry of Finance and the SAT issued Circular [2020] 28, which provided the
preferential tax treatments according to Circular 8 would be expired on December 31, 2020. And on March 17, 2021, the
Ministry of Finance and the SAT further issued Announcement [2021] 7. According to the Announcement, the expiration
date for the above mentioned VAT exemption treatments would be extented to March 31, 2021.
Results of Operations
The following table sets forth a summary of our consolidated results of operations in absolute amounts and
as percentages of our net revenues for the periods indicated. The period-to-period comparisons of results of operations
should not be relied upon as indicative of future performance.
Revenues:
Packaged tours
Others
2018
RMB
%
For the Years Ended December 31,
2019
RMB
RMB
%
(in thousands, except percentages)
2020
US$
%
1,830,630
409,519
81.7
18.3
1,886,822
394,165
82.7
17.3
302,359
147,900
46,339
22,667
67.2
32.8
Net revenues
2,240,149
100.0
2,280,987
100.0
450,259
69,006
100.0
Cost of revenues
(1,065,022)
(47.5)
(1,200,012)
(52.6)
(237,065)
(36,332)
(52.7)
Gross profit
Operating expenses:
1,175,127
52.5
1,080,975
47.4
213,194
32,674
47.3
Research and product development
Sales and marketing
General and administrative
Other operating income
(315,222)
(778,126)
(487,372)
56,599
(14.1)
(34.7)
(21.8)
2.5
(303,561)
(923,273)
(749,404)
24,419
(13.3)
(40.5)
(32.9)
1.1
(100,514)
(371,984)
(1,109,340)
27,849
(15,404)
(57,009)
(170,014)
4,268
(22.3)
(82.6)
(246.4)
6.2
Loss from operations
Other income/(expenses):
Interest and investment income
Interest expense
Foreign exchange (losses)/gains, net
Other (loss)/income, net
Loss before income tax expense
Income tax expense
Equity in income of affiliates
(348,994)
(15.6)
(870,844)
(38.2)
(1,340,795)
(205,485)
(297.8)
152,929
(7,918)
(11,729)
16,494
(199,218)
(153)
—
6.8
(0.4)
(0.5)
0.7
(8.9)
(0.0)
—
156,862
(34,052)
(1,131)
18,509
6.9
(1.5)
(0.0)
0.8
3,526
(32,266)
18,720
(253)
540
(4,945)
2,869
(39)
0.8
(7.2)
4.2
(0.1)
(730,656)
(949)
2,223
(32.0)
(0.0)
0.1
(1,351,068)
6,641
797
(207,060)
1,018
122
(300.1)
1.5
0.2
Net loss
(199,371)
(8.9)
(729,382)
(32.0)
(1,343,630)
(205,920)
(298.4)
Year Ended December 31, 2020 Compared to Year Ended December 31, 2019
Net Revenues. Net revenues were RMB2,281.0 million and RMB450.3 million (US$69.0 million) in 2019 and 2020,
respectively.
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·
·
Revenues from packaged tours. Revenues from packaged tours decreased by 84.0% from RMB1,886.8 million in
2019 to RMB302.4 million (US$46.3 million) in 2020 primarily due to the suspension of sale of packaged tours
impacted by the outbreak and spread of COVID-19.
Other revenues. Other revenues decreased by 62.5% from RMB394.2 million in 2019 to 147.9 million (US$22.7
million) in 2020, primarily due to the decline in commissions received from other travel-related products and
service fees received from insurance companies impacted by the outbreak and spread of COVID-19, as well as
revenues generated from financial services.
Cost of Revenues. Our cost of revenues decreased by 80.2% from RMB1,200.0 million in 2019 to RMB237.1 million
(US$36.3 million) in 2020. As a percentage of net revenues, cost of revenues was 52.7% in 2020 compared to 52.6% in
2019.
Operating Expenses. Operating expenses decreased by 20.4% from RMB2.0 billion in 2019 to RMB1.6 billion
(US$238.2 million) in 2020, primarily due to the decreases in research and product development expenses and sales and
marketing expenses.
·
·
·
·
Research and product development. Research and product development expenses decreased by 66.9% from
RMB303.6 million in 2019 to 100.5 million (US$15.4 million) in 2020, primarily due to the decrease in research
and product development personnel related expenses.
Sales and marketing. Sales and marketing expenses decreased by 59.7% from RMB923.3 million in 2019 to
RMB372.0 million (US$57.0 million) in 2020. The decrease was primarily due to the decrease in sales and
marketing personnel related expenses and promotion expenses.
General and administrative. General and administrative expenses increased by 48.0% from RMB749.4 million in
2019 to RMB1,109.3 million (US$170.0 million) in 2020. The increase was primarily due to current expected
credit losses for receivables from related parties and other third parties in the amount of RMB829.7 million
(US$127.2 million). The ongoing impact of COVID-19 and recent available information received from these
parties indicated there was no assurance of future collection of these receivables.
Other operating income. Other operating income increased from RMB24.4 million in 2019 to RMB27.8 million
(US$4.3 million) in 2020.
Net Loss. As a result of the foregoing, net loss increased from RMB729.4 million in 2019 to RMB1,343.6 million
(US$205.9 million) in 2020.
Year Ended December 31, 2019 Compared to Year Ended December 31, 2018
Net Revenues. Net revenues were RMB2,240.1 million and RMB2,281.0 million in 2018 and 2019, respectively.
·
·
Revenues from packaged tours. Revenues from packaged tours increased by 3.1% from RMB1,830.6 million in
2018 to RMB1,886.8 million in 2019 primarily due to the growth in revenue from our organized tours, which was
primarily driven by the growth in revenue from our self-operated local tour operator business.
Other revenues. Other revenues decreased by 3.7% from RMB409.5 million in 2018 to RMB394.2 million in
2019, primarily due to the decline in revenues generated from financial services and service fees received from
insurance companies.
Cost of Revenues. Our cost of revenues increased by 12.7% from RMB1,065.0 million in 2018 to RMB1,200.0
million in 2019. As a percentage of net revenues, cost of revenues was 52.6% in 2019 compared to 47.5% in 2018.
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Operating Expenses. Operating expenses increased by 28.1% from RMB1,524.1 million in 2018 to RMB2.0 billion in
2019, due to the increases in s sales and marketing expenses and general and administrative expenses, and the decrease in
other operating income, which was offset by the decrease in research and development expenses
·
·
·
·
Research and product development. Research and product development expenses decreased by 3.7% from
RMB315.2 million in 2018 to RMB303.6 million in 2019, primarily due to the increase in efficiency resulting
from the increased level of automation applied in research and product development activities, and optimization
of research and product development personnel..
Sales and marketing. Sales and marketing expenses increased by 18.7% from RMB778.1 million in 2018 to
RMB923.3 million in 2019. The increase was primarily due to the increase in sales and marketing personnel and
offline retail stores related expenses, as well as the impairment of acquired intangible assets.
General and administrative. General and administrative expenses increased by 53.8% from RMB487.4 million in
2018 to RMB749.4 million in 2019, primarily due to the increase in some one-time impairment charges and
general and administrative personnel related expenses.
Other operating income. Other operating income decreased from RMB56.6 million in 2018 to RMB24.4 million
in 2019.
Net Loss. As a result of the foregoing, net loss increased from RMB199.4 million in 2018 to RMB729.4 million in
2019.
Inflation
To date, inflation in China has not materially affected our results of operations. According to the National Bureau of
Statistics of China, the year-over-year percent changes in the consumer price index for December 2018, 2019 and 2020
were increases of 1.9%, 4.5% and 0.2%, respectively. Although we have not been materially affected by inflation in the
past, we can provide no assurance that we will not be affected by higher rates of inflation in China in the future. For
example, certain operating costs and expenses, such as employee compensation and office operating expenses may increase
as a result of higher inflation. Additionally, because a substantial portion of our assets consist of cash and cash equivalents
and short-term investments, high inflation could significantly reduce the value and purchasing power of these assets. We
are not able to hedge our exposure to higher inflation in China.
Foreign Currency
The average exchange rate between U.S. dollar and Renminbi has declined from RMB8.2264 per U.S. dollar in
July 2005 to RMB6.5250 per U.S. dollar as of December 31, 2020. For the year ended December 31, 2020, we recorded
RMB18.8 million (US$2.9 million) of net foreign currency translation loss in accumulated other comprehensive income as
a component of shareholders’ equity. To date, we have not entered into any material hedging transactions in an effort to
reduce our exposure to foreign currency exchange risk. See also “Item 3.D. Key Information—Risk Factors—Fluctuations
in exchange rates could have a material adverse effect on our results of operations and the value of your investment” and
“Item 11. Quantitative and Qualitative Disclosures about Market Risk—Foreign Exchange Risk.”
Critical Accounting Policies and Estimates
We prepare our consolidated financial statements in accordance with U.S. GAAP. In doing so, we have to make
estimates and assumptions that affect our reported amounts of assets, liabilities, revenues and expenses, as well as related
disclosure of contingent assets and liabilities. To the extent that there are material differences between these estimates and
actual results, our financial condition or operating results and margins would be affected. We base our estimates on past
experience and other assumptions that we believe are reasonable under the circumstances, and we evaluate these estimates
on an ongoing basis. We refer to accounting estimates of this type as critical accounting policies and estimates, which we
discuss further below.
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Land use right
Land use right represents the payments for usage of land for office buildings, which is recorded at cost less
accumulated amortization. Amortization is provided on a straight-line basis over their respective lease period which is 49.
Long-term investments
Long-term investments include equity investments, held-to-maturity investments and other long-term investments.
Equity investments
We account for the investments in entities with significant influence under equity-method accounting. Under this
method, our pro rata share of income (loss) from an investment is recognized in the consolidated statements of
comprehensive loss. Dividends received reduce the carrying amount of the investment. Equity-method investment is
reviewed for impairment by assessing if the decline in fair value of the investment below the carrying value is other-than-
temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized.
These include consideration of our intent and ability to hold investment and the ability of the investee to sustain an
earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized when a decline in
value is deemed to be other-than-temporary.
We adopted the ASU 2016-01 at January 1, 2018. Upon adoption of the ASU 2016-01, we elect a measurement
alternative for equity investments that do not have readily determinable fair values and where we do not have the ability to
exercise significant influence over operating and financial policies of the entity. Under the measurement alternative, we
measured these investments at cost, less any impairment, plus or minus changes resulting from observable price changes in
orderly transactions for an identical or similar investment of the same issuer. An impairment loss is recognized in the
consolidated statements of comprehensive loss equal to the excess of the investment’s cost over its fair value when the
impairment is deemed other-than-temporary.
Held-to-maturity investments
The investments that we intend and are able to hold to maturity are classified as held-to-maturity investments and are
stated at amortized cost, and interest income is recorded in the consolidated statements of comprehensive income. We
monitor our investments for other-than-temporary impairment by considering factors including, but not limited to, current
economic and market conditions, the operating performance of the companies including current earnings trends and other
company-specific information.
Other long-term investments
Other long-term investments include financial products with maturities over one year, which are carried at their fair
value at each balance sheet date and changes in fair value are reflected in the consolidated statements of operations and
comprehensive income.
Goodwill
Goodwill represents the excess of the purchase price over the fair value of identifiable assets and liabilities acquired in
business combinations. Goodwill is not amortized, but tested for impairment annually or more frequently if events or
changes in circumstances indicate that it might be impaired.
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We adopted ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for Goodwill
Impairment” (“ASU 2017-04”), which removes the requirement to compare the implied fair value of goodwill with its
carrying amount as part of step 2 of the goodwill impairment test. We first assess qualitative factors to determine whether it
is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, so as to
perform the quantitative goodwill impairment test. If determined to be necessary, the quantitative impairment test is used to
identify goodwill impairment by comparing the fair value of a reporting unit with its carrying amount and recognize an
impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair value. The loss
recognized should not exceed the total amount of goodwill allocated to that reporting unit.
There is only one reporting unit as Chief Operating Decision Maker ("CODM") only reviews the operating results on
the consolidation level, and our business substance and economic characteristics of entities and components are similar.
Therefore, the goodwill assessment was performed on consolidated level as one reporting unit.
As of December 31, 2020, we performed an annual impairment assessment and believed it was more likely than not an
impairment was indicated based on qualitative assessment including the volatility of our share price during the year and
negative financial trend impacted by the outbreak of COVID-19. Quantitative goodwill impairment test were performed
and discounted cash flow analysis was used to estimate the fair value of the reporting unit with certain key assumptions
including revenue growth rate, gross margin, operating expenses and discount rate. Based on the result of the impairment
test, the fair value of the reporting unit was higher than its carrying value as at December 31, 2020. Therefore, no
impairment loss was recognized for the year ended December 31, 2020.
No impairment loss was recognized for the year ended December 31, 2019 based on our goodwill impairment test
performed.
Impairment of non-financial assets
We evaluate our non-financial assets including property and equipment, intangible assets, land use rights and operating
lease rights-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying amount of
an asset may not be recoverable. The asset group is the unit of account for a non-financial asset or assets to be held and
used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows of other
groups of assets and liabilities. When these events occur, we measure impairment by comparing the carrying amount of the
asset group to future undiscounted net cash flows expected to result from the use of the assets and their eventual
disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets, we recognize
an impairment loss equal to the difference between the carrying amount and fair value of these assets.
As at December 31, 2020, the continuous loss making situation, net operating cash outflow and the uncertainty as to
the future impact of COVID-19 pandemic indicated that the book value of our non-financial assets are subject to potential
impairment risk. All of our non-financial assets are considered one asset group which represents the lowest level to
independently generate identifiable cash flows. We performed an impairment test of non-financial assets using the key
assumptions including revenue growth rate, gross margin and operating expenses. Based on our assessment, no additional
impairment of non-financial assets was recognized during the years ended December 31, 2018, 2019 and 2020, except for
provision for certain intangible assets.
Current expected credit losses
In 2016, the FASB issued ASU No. 2016-13, “Financial Instruments—Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments” (“ASC Topic 326”), which amends previously issued guidance regarding the
impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred
losses. On January 1, 2020, we adopted this ASC Topic 326 and several associated ASUs on the measurement of credit
losses, which requires us to estimate lifetime expected credit losses upon recognition of the financial assets. We adopted
the accounting standards update using a modified retrospective approach. Upon adoption of the new standard on January 1,
2020, we recorded a net decrease to its retained earnings of RMB19.4 million.
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Our accounts receivable, held-to-maturity investments, prepayments and other current assets, amounts due from
related parties and long-term amounts due from related parties are within the scope of ASC Topic 326. We have identified
the relevant risk characteristics of its customers and the related receivables and prepayments, which include nature, size
and types of the services we provide, or a combination of these characteristics. Receivables with similar risk characteristics
have been grouped into pools. For each pool, we consider the historical credit loss experience, current economic
conditions, supportable forecasts of future economic conditions, expected imapct of COVID-19 and any recoveries in
assessing the lifetime expected credit losses. Other key factors that influence the expected credit loss analysis include
customer demographics, payment terms offered in the normal course of business to customers, and industry-specific factors
that could impact our receivables. Additionally, external data and macroeconomic factors are also considered. This is
assessed at each quarter based on our specific facts and circumstances.
Revenue Recognition
We generate revenues primarily from sales of packaged tours and other service fees.
According to ASC 606 “Revenue from Contracts with Customers”, revenue is recognized when control of the
promised services is transferred to our customers, in an amount that reflects the consideration we expect to be entitled to in
exchange for those services. We early adopted this new revenue standard effective on January 1, 2017 by applying the full
retrospective method. There are no significant estimates in our revenue arrangements.
Packaged tours
Packaged tours include organized tours which offer pre-arranged itineraries, transportations, accommodations,
entertainments, meals and tour guide services; and self-guided tours which consist of combinations of air tickets and hotel
bookings and other optional add-ons, such as airport pick-ups that the travellers choose at their discretion.
Under the organized tour arrangements with the tour operators, our role is an agent that provides tour booking services
to the tour operators and travellers. The tour operators are primarily responsible for all aspects of providing services
relating to the tour and responsible for the resolution of customer disputes and any associated costs. Revenues from
organized tours (except for those under which we take substantive inventory risk and the self-operated local tour operator
business in which we act as principal, as discussed below) are generally reported on net basis, representing the difference
between what we receive from the travellers and the amounts due to the tour operators.
Revenues from self-guided tours are recognized on a net basis, as we have no involvement in determining the service,
and provide no additional services to travellers other than the booking services. Suppliers are responsible for all aspects of
providing the air transportation and hotel accommodation, and other travel-related services. As such, we are an agent for
the travel service providers in these transactions and revenues are reported on a net basis.
Under certain circumstances, we may enter into contractual commitments with suppliers to reserve tours, and are
required to pay a deposit to ensure tour availabilities. Some of these contractual commitments are non-cancellable, and to
the extent the reserved tours are not sold to customers, we would be liable to pay suppliers a pre-defined or negotiated
penalty, thereby assuming inventory risks. For packaged tour arrangements that we undertake inventory risk which is
considered to be substantive, revenues are recognized on gross basis. Revenues for such arrangements that we undertake
substantive inventory risk were RMB241.2 million, RMB166.2 million and RMB1.6 million (US$0.3 million) for the year
ended December 31, 2018, 2019 and 2020, which were recorded in revenues from packaged tours.
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From 2018, we expanded our self-operated local tour operator business in various destinations by directly providing
destination-based services to our organized tour customers, starting from their arrival at the destination and all the way
until they depart from the destination. As a self-operated local tour operator, we integrate the underlying resources such as
transportations, accommodations, entertainments, meals and tour guide services from selected suppliers, direct the selected
vendors to provide services on our behalf, and hence set up the price for the tour. We are also primarily responsible for
fulfilling the promise of the whole packaged tours service, which is a single performance obligation. Accordingly, we are a
principal for the self-operated local tour operator business and recognize revenue on a gross basis in accordance with ASC
606. Revenues from our self-operated tour operator business are recognized over time during the period of the tours when
control over the tour services is transferred to the customers. Revenues for the self-operated local tour operator business
were RMB509.7 million, RMB724.2 million and RMB122.7 million (US$18.8 million) for the years ended December 31,
2018, 2019 and 2020, respectively, which were recorded in revenues from packaged tours.
Under the current arrangements for the organized tours (except for the self-operated local tour operator business in
which we act as principal, as discussed above) and self-guided tours, for which our role is an agent, revenues are
recognized when the tours depart, as control over the tour booking services is transferred to the customers when the tour
booking is completed and successful.
Other revenues
Our other revenues primarily comprise revenues generated from (i) service fees received from insurance companies,
(ii) commission fees from other travel-related products and services, such as tourist attraction tickets, visa application
services, accommodation reservation and transportation ticketing, with revenue recognized of RMB81.9 million, RMB88.0
million and RMB35.3 million (US$5.4 million) for the years ended December 31, 2018, 2019 and 2020, respectively, (iii)
fees for advertising services that we provide primarily to domestic and foreign tourism boards and bureaus, with revenue
recognized of RMB66.8 million, RMB74.9 million and RMB26.2 million (US$4.0 million) for the years ended December
31, 2018, 2019 and 2020, respectively, (iv) fees for services that we provide for accommodation and transportation, and (v)
service fees for financial services. We provided account receivables factoring service and cash lending service to customers
and fees charged in connection with these financial services were recorded as other revenue over the period of the service
rendered. The amount of such service revenue for the years ended December 31, 2018, 2019 and 2020 were RMB117.5
million, RMB97.0 million and RMB43.1 million (US$6.6 million), respectively.
Revenue is recognized when the services are rendered or when the tickets are issued.
Customer incentives
We offer travellers coupons, travel vouchers, membership points or cash rewards from time to time. For customer
incentives offered where prior purchase is not required, we account for them as a reduction of revenue when the coupons
and vouchers are utilized to purchase travelling products or as selling and marketing expenses when membership points are
redeemed for merchandises. For customer incentives offered from prior purchase, we estimate the amount associated with
the future obligation to the customers, and record them as a reduction of revenue when the prior purchase revenue is
initially recognized. Unredeemed incentives are recorded in other current liabilities in the consolidated balance sheets. We
estimate liabilities under the customer loyalty program based on accumulated customer incentives, and the estimate of
probability of redemption in accordance with the historical redemption pattern. The actual expenditure may differ from the
estimated liability recorded.
Research and Product Development Expenses
Research and product development expenses include salaries and other compensation-related expenses for our research
and product development personnel, as well as office rental, depreciation and related expenses and travel-related expenses
for our research and product development team. We recognize software development costs in accordance with ASC 350-40
“Software—internal use software”. We expense all costs that are incurred in connection with the planning and
implementation phases of development, and costs that are associated with maintenance of the existing websites or software
for internal use. Certain costs associated with developing internal use software are capitalized when such costs are incurred
within the application development stage of software development.
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Income Taxes
Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and
expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the
relevant tax jurisdictions. Deferred income taxes are provided using the liability method. Under this method, deferred
income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates
applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing
assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes.
The effect on deferred taxes of a change in tax rates is recognized in the statement of comprehensive loss in the period of
change. A valuation allowance is provided to reduce the amount of deferred tax assets if it is considered more likely than
not that some portion of, or all of the deferred tax assets will not be realized.
U.S. GAAP prescribes a more likely than not threshold for financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. Guidance also provides for derecognition of income tax assets and
liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties
associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant
judgment is required in evaluating our uncertain tax positions and determining our provision for income taxes. As of
December 31, 2019 and 2020, we did not have any significant unrecognized uncertain tax positions or any interest or
penalties associated with tax positions.
In order to assess uncertain tax positions, we apply a more likely than not threshold and a two-step approach for the
tax position measurement and financial statement recognition. Under the two-step approach, the first step is to evaluate the
tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that
the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to
measure the tax benefit as the largest amount that is more than 50% likely to be realized upon settlement.
Share-based Compensation
We account for share options and restricted shares granted to employees in accordance with ASC 718, “Stock
Compensation”. The 2014 Share Incentive Plan, or the 2014 Plan, allows the plan administrator to grant options, restricted
shares and restricted share units. The 2008 Plan allows the plan administrator to grant options and restricted shares to our
employees, directors, and consultants. The plan administrator under both plans is our board of directors or a committee
appointed and determined by the board. The board may also authorize one or more of our officers to grant awards under the
plan. In accordance with the guidance, we determine whether a stock-based award should be classified and accounted for
as a liability award or equity award. Under the 2008 Plan and the 2014 Plan, we only granted options to employees and
directors, and such stock-based compensation is considered to be equity classified awards, and is recognized in the
financial statements based on their grant date fair values which are calculated using the binomial option pricing model.
Share-based compensation expense is recorded net of an estimated forfeiture rate at the time of grant and revised, if
necessary, in subsequent periods if actual forfeitures differ from initial estimates. Share-based compensation expense is
recorded net of estimated forfeitures such that expenses are recorded only for those share-based awards that are expected to
ultimately vest.
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Under the 2008 Plan and the 2014 Plan, options granted to employees vest upon satisfaction of a service condition,
which is generally satisfied over four years. Additionally, the 2008 Plan includes an exercisability clause where employees
can only exercise vested options upon the occurrence of the following events: (i) after our ordinary shares become listed
securities, (ii) in connection with or after a triggering event (defined as a sale, transfer, or disposition of all or substantially
all of our assets, or a merger, consolidation, or other business combination transaction), or (iii) if the optionee obtains all
necessary governmental approvals and consents required. Options for which the service condition has been satisfied are
forfeited should employment terminate three months prior to the occurrence of an exercisable event, which substantially
creates a performance condition. Therefore, since the adoption of the 2008 Plan through the date of the completion of our
initial public offering, we did not recognize any stock-based compensation expense for options granted, because an
exercisable event as described above did not occur. The satisfaction of the performance condition became probable upon
completion of our initial public offering, and we recorded a significant cumulative expense for share-based awards granted
for which the service condition has been satisfied as of that date. Accordingly, we recognized a significant share-based
compensation expense of RMB68.7 million, RMB61.7 million and RMB20.5 million (US$3.1 million) in 2018, 2019 and
2020, respectively. The estimates we used to determine the fair value of these options in computing our share-based
compensation expense are determined on the respective grant dates, and will not change when the underlying shares begin
trading because our options are equity classified awards.
The following table sets forth the options granted under the 2008 Plan and the 2014 Plan in 2018, 2019 and 2020:
Number
of
Options
Granted
Exercise Price
US$
RMB(2)
Fair Value
of Option
as of the
Grant Date
US$ RMB(2)
Fair Value of
the Underlying
Ordinary
Shares as of the
Grant Date
US$ RMB(2)
Intrinsic Value
as of the Grant
Date
US$ RMB(2)
Type of Valuation
403,332 0.0001 0.0007 2.92
19.00 2.92
19.00 2.92
19.00 Contemporaneous
168,214
0.0001
0.0007
2.76
17.96
2.72
17.7
2.72
17.7 Contemporaneous
25,300
2.72
17.7
1.39
9.04
2.72
17.7
—
— Contemporaneous
80,000
2.72
17.7
1.55
10.08
2.72
17.7
—
— Contemporaneous
2,848,503
1.67
11.48
1.35
9.28
2.21
15.19
0.54
3.71 Contemporaneous
4,855,500
1.67
11.48
1.24
8.53
2.21
15.19
0.54
3.71 Contemporaneous
169,461
0.0033
0.0230
1.50
10.44
1.50
10.44
1.50
10.42 Contemporaneous
4,175,853
0.0033
0.0230
1.50
10.44
1.50
10.44
1.50
10.42 Contemporaneous
January 1,
2017
June 12,
2017
June 12,
2017(1)
June 12,
2017(1)
May 8,
2018(1)
May 8,
2018(1)
Jan 30,
2019(1)
Jan
30,
2019(1)
(1) Options granted to officers and non-officer employees result in different fair value on the same grant date.
(2) The translations from U.S. dollars to Renminbi were made at a rate of RMB6.8755 to US$1.00, the exchange rate
in effect as of December 31, 2018 for the options granted after January 1, 2018, and at a rate of RMB6.9618 to
US$1.00, the exchange rate in effect as of December 31, 2019 for the options granted after January 1, 2019
(including January 1, 2019), and at a rate of RMB6.5250 to US$1.00, the exchange rate in effect as of December
31, 2020 for the options granted after January 1, 2020 (including January 1, 2020) solely for the convenience of
the readers.
We estimated the fair value of awards on their respective grant dates by considering below:
·
Expected volatility. We determine if there is sufficient history for us to calculate volatility using trading prices of
our own ADSs. Additionally, we may update the list of comparable companies from time to time.
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·
·
·
·
·
·
Risk-free interest rate (per annum). We update this estimate each time a new stock award is granted.
Exercise multiple. The exercise multiple is estimated based on a consideration of empirical studies on the actual
exercise behavior of employees of comparable companies as we currently do not have a sufficiently long history
of employee exercise patterns. Based on our employees’ exercise behavior and pattern, we continue to update this
estimate when stock awards are granted.
Expected dividend yield. This estimate remained unchanged since our initial public offering and is unlikely to
change in the foreseeable future, as we do not anticipate any dividend payments on our ordinary shares in the
foreseeable future.
Expected term (in years). This estimate did not change upon completion of our initial public offering.
Expected forfeiture rate (post-vesting). We update this estimate each time a new stock award is granted based on
the turnover rate of our employees.
Fair value of our ordinary shares. The fair value of our ordinary shares on the grant date is determined based on
the trading price of our ADSs on such date, as opposed to applying the income approach valuation method.
Recent Accounting Pronouncements
See Note 2(ag) to our consolidated financial statements included elsewhere in this annual report for discussion on
recent issued accounting pronouncements.
B.Liquidity and Capital Resources
Our primary sources of liquidity have been proceeds from operating activities, private issuances of ordinary and
preferred shares, and our initial public offering.
Prior to the completion of our initial public offering in May 2014, we financed our operations primarily through cash
generated from our operating activities, private issuances and sales of preferred shares. In May 2014, we completed our
initial public offering in which we issued and sold 8,580,000 ADSs representing 25,740,000 Class A ordinary shares.
Concurrently with our initial public offering, we issued and sold 5,000,000, 5,000,000 and 1,666,666 Class A ordinary
shares to each of DCM Hybrid RMB Fund, L.P., Ctrip Investment Holding Ltd. and Qihoo 360 Technology Co. Ltd.,
respectively. As a result of our initial public offering and such concurrent private placements, we raised an aggregate of
approximately US$106.3 million (RMB659.5 million) in proceeds, net of underwriting commissions.
In December 2014, we raised an aggregate of approximately US$148.0 million in proceeds through issuance of
36,812,868 Class A ordinary shares to certain investors. In May 2015, we raised an aggregate of approximately US$400.0
million in proceeds through issuance of 93,750,000 Class A ordinary shares to certain investors.
Generally, our customers pay us upon contract confirmation, which is usually more than one month before the
departure dates, and we pay the travel suppliers at a later date, such as at the end of each month. The timing difference
between when the cash is collected from our customers and when payments are made to travel suppliers increases our
operating cash inflow and provides us with a source of liquidity to fund our settlement of outstanding accounts payable to
travel suppliers and our prepayment to travel suppliers to secure packaged tours during peak seasons.
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Our advances from customers increased from RMB1,058.9 million as of December 31, 2018 to RMB1,113.9 million
as of December 31, 2019, which was primarily due to the change in customers’ prepayment habits, and decreased to
RMB208.8 million (US$32.0 million) as of December 31, 2020. Accounts and notes payable increased from RMB1,305,6
million as of December 31, 2018 to RMB1,312.0 million as of December 31, 2019, which was primarily due to the
increased use of financial instruments which enriched our payment methods, and decreased to RMB705.8 million
(US$108.2 million) as of December 31, 2020. Furthermore, prepayments and other current assets decreased from
RMB1,673.6 million as of December 31, 2018 to RMB1,300.3 million as of December 31, 2019 which was primarily
because we strengthened our supply chain financing cooperation to our suppliers, and further decreased to RMB378.7
million (US$58.0 million) as of December 31, 2020. The decrease in the balance of advances from customer, accounts and
notes payable and prepayments and other current assets as of December 31, 2020 compared to the same as of December 31,
2019 was primarily due to the decline in the sales of our travel products and services impacted by COVID-19. Moreover,
our sales and marketing expenses increased from RMB778.1 million in 2018 to RMB923.3 million in 2019 which was
primarily due to the increase in sales and marketing personnel and offline retail stores related expenses, as well as the
impairment of acquired intangible assets, and decreased to RMB372.0 million (US$57.0 million) in 2020 which was
primarily due to the decrease in sales and marketing personnel related expenses and promotion expenses impacted by
COVID-19. As a result, our net cash provided by operating activities was RMB268.1 million in 2018, our net cash used in
operating activities was RMB120.5 million in 2019 and our net cash used in operating activities was RMB1,313.1 million
(US$201.2 million) in 2020.
Our principal uses of cash for the years ended December 31, 2018, 2019 and 2020 were for operating activities,
primarily refund paid to customers, marketing and brand promotion expenses, salaries and other compensation expenses as
well as office rental and professional service fees. Our cash and cash equivalents consist of cash on hand and cash in bank,
including demand bank deposits. Our short-term investments comprise financial products issued by banks or other financial
institutions. As of December 31, 2018, 2019 and 2020, we had RMB1,690.2 million, RMB1,927.9 million and
RMB1,617.8 million (US$247.9 million) in cash and cash equivalents, restricted cash and short-term investments,
respectively. We had credit from several Chinese commercial banks. As of December 31, 2019 and 2020, our outstanding
short-term borrowings (including outstanding discounted bank acceptance notes) were RMB203.8 million and RMB60.7
million (US$9.3 million) and our outstanding long-term borrowings were RMB9.7 million and RMB22.6 million (US$3.5
million), respectively.
As of December 31, 2019 and 2020, we had short-term borrowings from banks which were repayable within one year,
with interests charged at rates ranging from 0.4% to 6.3% and 0.2% to 5.8% per annum, as of RMB203.8 million and
RMB60.7 million (US$9.3 million), respectively. As of December 31, 2019 and 2020, we had long-term borrowings from
banks which were repayable over one year, with interests charged at rates ranging from 0.4% to 6.0% and 0.2% to 6.0% per
annum, as of RMB9.7 million and RMB22.6 million (US$3.5 million), respectively, among which RMB2.3 million
(US$0.4 million) were guaranteed by one of our subsidiaries and subject to a pledge of our land use right as of December
31, 2020.
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We had net losses attributable to Tuniu Corporation of approximately RMB185.5 million, RMB694.6 million and
RMB1,308.0 million (US$200.5 million), for the years ended December 31, 2018, 2019 and 2020, respectively. Our net
cash provided by operating activities was RMB268.1 million in 2018, our net cash used in operating activities was
RMB120.5 million and RMB1,313.1 million (US$201.2 million) in 2019 and 2020, respectively. The significant operating
cash outflows for the year ended December 31, 2020 included those relating to refunds made to travellers as a result of
their cancellation of travel orders as a result of the outbreak of COVID-19 pandemic in early 2020. As of December 31,
2020, our accumulated deficit was RMB7,713.4 million (US$1,182.1 million) and we had cash and cash equivalents and
short-term investments of RMB1,567.2 (US$240.2 million). The COVID-19 pandemic has had a negative impact on our
business operations for the year ended December 31, 2020, and will continue to impact our results of operations and cash
flows for subsequent periods. Such conditions and events casted substantial doubt on our ability to continue as a going
concern. In responses to the COVID-19 pandemic, in 2020, we have already taken actions to improve our liquidity,
including scaling down our business operations by reducing capital expenditures and operational expenses that are
discretionary in nature and obtaining funding from the maturity of certain short-term and long-term investments. We plan
to maintain our operation scale while sales of domestic travel products recovers gradually, and will continue to manage our
capital expenditures, operational expenses and investments based on our working capital needs. Based on our liquidity
assessment, which has considered our operations at the current business scale, the latest development of COVID-19 and its
continuous impact on our business operations, the available funding from maturity of our short-term and long-term
investments, and the available cash and cash equivalents, we will be able to meet our working capital requirements and
capital expenditures in the ordinary course of business for the next twelve months subsequent to the filing of this annual
report. As a result, we concluded that the substantial doubt on our ability to continue as a going concern has been
alleviated. We may require additional cash resources due to unanticipated business conditions or other future
developments. If our existing cash is insufficient to meet our requirements, we may seek to obtain a credit facility or sell
additional equity or debt securities. See also “Item 3.D. Key Information — Risk Factors — Risks Relating to Our
Business and Industry — We may need additional capital, and financing, may not be available on terms acceptable to us, or
at all.”
The following table sets forth a summary of our cash flows for the periods presented:
Net cash provided by/(used in) operating activities
Net cash provided by/(used in) investing activities
Net cash (used in)/provided by financing activities
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
Net increase/(decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of year
Cash, cash equivalents and restricted cash at the end of year
Operating Activities
2018
RMB
For the Years Ended December 31,
2020
2019
RMB
RMB
US$
(in thousands, except percentages)
268,089
153,992
(145,212)
(120,461)
(578,134)
485,110
(1,313,115)
1,159,063
(209,546)
(201,243)
177,633
(32,114)
(21,754)
255,115
575,911
831,026
4,974
(208,511)
831,026
622,515
5,187
(358,411)
622,515
264,104
795
(54,929)
95,405
40,476
Our net cash used in operating activities was RMB1,313.1 million (US$201.2 million) in 2020, primarily attributable
to cash inflows from sales of our travel products and services of RMB2,896.3 million (US$443.9 million) and cash inflows
from other operating activities such as deposits, interest income and government subsidies of RMB219.3 million (US$33.6
million), that were offset by cash outflows due to payments to travel suppliers of RMB3,514.2 million (US$538.6 million),
payments relating to other operating activities, which include payments to employees and for employees’ benefits of
RMB428.9 million (US$65.7 million), payments for marketing and promotional activities, office rental and utilities and
professional services of RMB472.2 million (US$72.3 million), and payments of taxes and levies of RMB13.4 million
(US$2.1 million).
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Our net cash used in operating activities was RMB120.5 million in 2019, primarily attributable to cash inflows from
sales of our travel products and services of RMB20,840.5 million and cash inflows from other operating activities such as
deposits, interest income and government subsidies of RMB255.5 million, that were offset by cash outflows due to
payments to travel suppliers of RMB19,302.6 million, payments relating to other operating activities, which include
payments to employees and for employees’ benefits of RMB959.8 million, payments for marketing and promotional
activities, office rental and utilities and professional services of RMB858.0 million, and payments of taxes and levies of
RMB96.1 million.
Our net cash provided by operating activities was RMB268.1 million in 2018, primarily attributable to cash inflows
from sales of our travel products and services of RMB20,575.3 million and cash inflows from other operating activities
such as deposits, interest income and government subsidies of RMB290.2 million, that were offset by cash outflows due to
payments to travel suppliers of RMB18,837.1 million, payments relating to other operating activities, which include
payments to employees and for employees’ benefits of RMB1,061.5 million, payments for marketing and promotional
activities, office rental and utilities and professional services of RMB605.3 million, and payments of taxes and levies of
RMB93.5 million.
Investing Activities
Our net cash provided by investing activities was RMB1,159.1 million (US$177.6 million) in 2020, primarily
attributable to the proceeds from maturity of short-term investments of RMB1,445.4 million (US$221.5 million), the
decrease in loan receivable of RMB241.0 million (US$36.9 million), the proceeds from maturity of long-term investments
of RMB904.8 million (US$138.7 million) and cash received from disposal of equity investment of RMB56.6 million
(US$8.7 million), which were offset by the purchase of short-term investments of RMB1,460.1 million (US$223.8
million), the purchase of property and equipment and intangible assets of RMB28.3 million (US$4.3 million) and cash paid
for acquisition (net of cash received) of RMB0.3 million (US$0.05 million).
Our net cash used in investing activities was RMB578.1 million in 2019, primarily attributable to the purchase of
short-term investments of RMB2,041.3 million, the cash paid for long-term investment of RMB547.2 million, the purchase
of property and equipment and intangible assets of RMB122.5 million, the increase in loan receivable of RMB16.6 million,
and cash paid for acquisition (net of cash received) of RMB33.2 million, which were offset by the proceeds from the
maturity of short-term investments of RMB1,614.1million and the proceeds from maturity of long-term investments of
RMB568.5 million.
Our net cash provided by investing activities was RMB154.0 million in 2018, primarily attributable to the proceeds
from the maturity of short-term investments of RMB4,067.8 million, the proceeds from maturity of yield enhancement
products of RMB172.5 million, the proceeds from maturity of long-term investments of RMB91.0 million, cash received
from disposal of equity investments of RMB3.1 million, which were offset by the purchase of short-term investments of
RMB1,858.0 million, the increase in loan receivable of RMB1,326.2 million, the purchase of property and equipment and
intangible assets of RMB119.4 million, the cash paid for long-term investment of RMB874.1 million, and cash paid for
acquisition (net of cash received) of RMB2.7 million.
Financing Activities
Our net cash used in financing activities in 2020 was RMB209.5 million (US$32.1 million), primarily attributable to
RMB918.5 million (US$140.8 million) for repayments of short-term and long-term borrowings, RMB0.3 million (US$0.05
million) for share repurchase, RMB14.0 million (US$2.1 million) for deferred and contingent consideration of business
acquisitions made in previous years and RMB10.0 million (US$1.5 million) we paid to redeem non-controlling interests,
which were offset by RMB733.3 million (US$112.4 million) of proceeds from short-term and long-term borrowings,
RMB57,731.0 (US$8,848.0) of proceeds from employees exercising stock options.
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Our net cash provided by financing activities in 2019 was RMB485.1 million, primarily attributable to RMB833.5
million of proceeds from short-term and long-term borrowings, RMB1.5 million of cash contribution from noncontrolling
interests and RMB0.1 million of proceeds from employees exercising stock options, which were offset by RMB281.4
million we paid as repayment of short-term and long-term borrowings, RMB37.7 million we paid to redeem non-
controlling interests, RMB13.5 million we paid for share repurchase, RMB13.9 million we paid for deferred and contingent
consideration of business acquisitions made in previous years, RMB3.4 million we paid for acquisition of noncontrolling
interest of a subsidiary.
Our net cash used in financing activities in 2018 was RMB145.2 million primarily attributable to RMB171.4 million
we paid in due course for redemption of the yield-enhancement products, RMB139.1 million we paid for share repurchase,
RMB6.8 million we paid for deferred and contingent consideration of business acquisitions made in previous years,
RMB30.0 million we paid to redeem non-controlling interests, and RMB0.4 million we paid as repayment of short-term
borrowing, which were offset by RMB195.8 million proceeds from short-term and long-term borrowings, RMB4.6 million
proceeds from employees exercising stock options, and RMB2.1 million proceeds contribution from noncontrolling
interests shareholders.
Capital Expenditures
Cash outflow in connection with capital expenditures amounted to RMB119.4 million and RMB122.5 million and
RMB28.3 million (US$4.3 million) in 2018, 2019 and 2020, respectively. Our capital expenditures were primarily used to
purchase equipment and intangible assets and payment for land use right for our business. As of December 31, 2020,
capital commitments relating to leasehold improvement, purchase of equipment and construction of office building were
approximately RMB211.3 million (US$32.4 million).
Holding Company Structure
We are a holding company with no material operations of our own. We conduct our operations primarily through our
wholly owned subsidiaries and consolidated affiliated entities in China. As a result, our ability to pay dividends to our
shareholders depends upon dividends paid by our PRC subsidiaries. If our PRC subsidiaries or any newly formed PRC
subsidiaries incur debt on their own behalf in the future, the instruments governing their debt may restrict their ability to
pay dividends to us. In addition, our PRC subsidiaries are permitted to pay dividends to us only out of their retained
earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our
subsidiaries and our consolidated affiliated entities in China is required to set aside at least 10% of its after-tax profits
each year, if any, to fund certain statutory reserve funds until such reserve funds reach 50% of its registered capital. In
addition, our wholly foreign-owned subsidiaries in China may allocate a portion of their after-tax profits based on PRC
accounting standards to enterprise expansion funds and staff bonus and welfare funds at their discretion, and our
consolidated affiliated entity may allocate a portion of its after-tax profits based on PRC accounting standards to a surplus
fund at its discretion. The statutory reserve funds and the discretionary funds are not distributable as cash dividends. As our
PRC subsidiaries and consolidated affiliated entity have incurred losses, they have not started to contribute to the statutory
reserve funds and discretionary funds. Remittance of dividends by a wholly foreign-owned company out of China is
subject to examination by the banks designated by SAFE. Our PRC subsidiaries have never paid dividends and will not be
able to pay dividends until they generate accumulated profits and meet the requirements for statutory reserve funds.
C.Research and Development
We have built our technology infrastructure with high levels of performance, reliability, scalability and security. We
rely on internally developed proprietary technologies and licensed technologies to manage and improve our website,
mobile platform and management systems. We have a team of engineers dedicated to research and development in the
areas of website operations, mobile platform, search engine, data analytics and supply chain management system.
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Research and product development expenses primarily comprise salaries and other compensation expenses for our
research and product development personnel as well as office rental, depreciation and other expenses related to our
research and product development function. Research and product development expenses also include expenses that are
incurred in connection with the planning and implementation phases of development and costs that are associated with the
maintenance of our online platform or software for internal use. Our research and product development expenses decreased
from RMB315.2 million in 2018 to RMB303.6 million in 2019, primarily due to the increase in efficiency resulting from
the increased level of automation applied in research and product development activities, and optimization of research and
product development personnel, and further decreased to RMB100.5 (US$15.4) million in 2020, which was primarily due
to the decrease in research and product development personnel related expenses impacted by COVID-19.
D.Trend Information
Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands,
commitments or events for the year ended December 31, 2020 that are reasonably likely to have a material and adverse
effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial
information to be not necessarily indicative of future results of operations or financial conditions.
E.Off-Balance Sheet Arrangements
We have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any
third parties. We have not entered into any off-balance sheet derivative instruments. Furthermore, we do not have any
retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk
support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity,
market risk or credit support to us or engages in leasing, hedging or research and development services with us .
F.Contractual Obligations
The following table sets forth our contractual obligations by specified categories as of December 31, 2020.
Payment Due by Period
Less Than
More Than
Total
1 Year 1-3 Years 3-5 Years 5 Years
Operating Lease Obligations(1)
Purchase Obligations(2)
Total
61,569
211,297
272,866
(In RMB thousands)
13,926
60,168
74,094
6,474
150,000
156,474
17,817
1,129
18,946
23,352
—
23,352
(1) Operating lease obligations represent our obligations for the leased premises of our headquarter and offline retail
stores.
(2) Purchase obligations consist primarily of contractual commitments in connection with leasehold improvements,
purchase of equipment and construction of office building.
Other than the contractual obligations set forth above, we do not have any contractual obligations that are long-term
debt obligations, capital (finance) lease obligations, purchase obligations or other long-term liabilities not reflected on our
balance sheet.
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Item 6.Directors, Senior Management and Employees
A.Directors and Senior Management
The following table sets forth information regarding our executive officers and directors as of the date of this annual
report.
Directors and Executive Officers
Dunde Yu
Kun Li
Jie Zhu
Haifeng Yan
Frank Lin
Shiwei Zhou
Onward Choi
Jack Xu
Jiangtao Liu
Haijin Cheng
Anqiang Chen
Wei Zhang
Position/Title
Age
40
33
40
39
56
45
50
53
43
50
45
55
Founder, Chairman and Chief Executive Officer
Director
Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Independent Director
Financial Controller
Executive Vice President
Mr. Dunde Yu is our founder and has served as chairman of our board of directors and chief executive officer since our
inception. Prior to founding our company, Mr. Yu was the chief technology officer of ci123.com in 2006, where he helped
ci123.com become a leading Chinese childcare website. From 2004 to 2006, Mr. Yu served as the technical director of
Bokee.com. Mr. Yu received a bachelor’s degree in mathematics from Southeast University in China in 2003.
Mr. Kun Li has served as Tuniu’s director since April 21, 2020. Mr. Kun Li currently serves as the vice general
manager of asset management in HNA Tourism & Hospitality Business Unit. Mr. Li joined HNA Group in July 2013 and
has previously served as president of HNA Tourism Innovation Ventures, deputy director of the investment committee in
HNA’s Travel Innovation Platform and general manager of strategic coordination in HNA Hotels and Resorts. Mr. Li has
extensive experience in the fields of tourism and investment. Mr. Li received a master’s degree in financial modeling from
University of Glasgow in November 2012.
Mr. Jie Zhu has served as our director since February 2016. Currently, Mr. Zhu serves as general manager of HNA
Tourism & Hospitality Business Unit. After joining HNA Tourism Group in 2011, Mr. Zhu headed the investment and
securities business divisions of HNA Tourism Group and its subsidiary Beijing Tourism Investment Fund. Mr. Zhu holds
an MBA from Glendon-York University.
Mr. Haifeng Yan has served as our director since our inception and is now our independent director. Mr. Yan is the
founder and Chief Executive Officer of Black Fish Group Limited. Mr. Yan co-founded Tuniu in 2006 and previously
served as our Chief Operating Officer and President until November 2017. Prior to founding Tuniu, Mr. Yan was one of the
founding members and Chief Operating Officer of ci123.com, a leading childcare website in China, from 2005 to 2006.
Prior to that, Mr. Yan served as an analyst of iTech Holdings Limited in 2004.
Mr. Frank Lin has served as our independent director since December 2009. Mr. Lin is a general partner of DCM, a
technology venture capital firm. Prior to joining DCM in 2006, Mr. Lin was chief operating officer of Sina Corporation, a
Nasdaq-listed company. He co-founded SINA’s predecessor, SinaNet, in 1995 and later guided SINA through its listing on
Nasdaq. Mr. Lin had also held various marketing, engineering and managerial positions at Octel Communication Inc. and
NYNEX. Mr. Lin currently serves on the board of directors of various DCM portfolio companies, including Vipshop
Holdings Limited, China Online Education Group (51 Talk.com), which are NYSE listed companies, Kuaishou
Technology,a Hong Kong Exchange listed company. Mr. Lin received an MBA degree from Stanford University and a
bachelor’s degree in engineering from Dartmouth College.
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Mr. Shiwei Zhou has served as Tuniu’s independent director since February 2021. Mr. Zhou currently serves as Vice
President of Corporate Strategy & Investment at Trip.com (NASDAQ: TCOM), leading the Company’s strategic M&A
activity and investments. Mr. Zhou joined Trip.com in November 2015 as the head of its investor relations department.
Before joining Trip.com, Mr. Zhou worked in equity research on the both the buy side and the sell side in the US, covering
the technology, real estate, and hospitality sectors. Prior to that, he worked in a private investment fund, investing in US
real estate assets. Mr. Zhou is a Certified Financial Analyst (CFA) and received an MBA degree from the University of
Southern California, a Master of Science degree from Columbia University, and a Bachelor of Engineering degree from
Tongji University.
Mr. Onward Choi has served as our independent director since May 2014. Mr. Choi was the acting chief financial
officer of NetEase Inc., a Nasdaq-listed company, from July 2007 to June 2017. Mr. Choi currently serves as the
independent director and the chairman of the audit committee of Smart Share Global Limited and Ucloudlink Group Inc.,
both are Nasdaq-listed companies. Mr. Choi also serves as an independent non-executive director and the chairman of the
audit committee of Beijing Jingkelong Company Limited (HKEX: 0814) and Tongdao Liepin Group, formerly named as
Wise Talent Information Technology Company Limited (HKEX: 6100), both of which are listed on the Hong Kong Stock
Exchange. Mr. Choi is a fellow member of the Association of Chartered Certified Accountants, CPA Australia, and the
Hong Kong Institute of Certified Public Accountants. Mr. Choi received a bachelor’s degree in accountancy with honors
from the Hong Kong Polytechnic University.
Mr. Jack Xu has served as our independent director since May 2014. Mr. Xu is the managing partner at Seven Seas
Venture Partners. Mr. Xu served as Co-President and Chief Technology Officer of Sina Corporation, a Nasdaq-listed
company, from January 2013 to February 2015. Prior to joining Sina Corporation, Mr. Xu worked at Cisco as the Corporate
Vice President of the Communications and Collaboration business unit. Previously, Mr. Xu served as Vice President of
Engineering and Research at eBay from October 2002 to April 2008 and Chief Technology Officer at NetEase from
May 2000 to July 2002. He led Excite’s search engine development in 1996, while pursuing a Ph.D. at the University of
California at Berkeley. Mr. Xu received a bachelor’s degree and a master’s degree in information management from Sun
Yat-Sen University in China.
Mr.Jiangtao Liu has served as Tuniu’s independent director since February 2021. Mr. Jiangtao Liu joined Caissa
Group in 2019 and currently serves as Chief Executive Officer of Caissa Group, and Chairman of the Board of Caissa
Tourism (000796. SZ), an A-share company listed on the Shenzhen Stock Exchange. Prior to joining Caissa Group, Mr.
Liu served as Vice Chairman of Secoo Group, Executive Director and Senior Vice President of Elion Resources Group and
Vice Chairman of HNA Tourism Group Co. Mr. Liu received a bachelor’s degree in engineering from Nanjing University
of Aeronautics and Astronautics and is currently pursuing an EMBA degree in the PBC School of Finance at Tsinghua
University.
Mr. Haijin Cheng has served as Tuniu’s independent director since March 2021. Mr. Cheng has extensive experience
in internal auditing, financial management and strategic M&A with companies in a range of industries and countries. Mr.
Cheng is the founder and president of Shanghai Huan Pu Management Consulting Co., which provides management
advisory services to domestic and foreign companies. Prior to founding Huan Pu, Mr. Cheng served as the leader of the
business development department in General Electric (China) Ltd, director of the business development department in
Honeywell (China) Ltd., senior officer of the audit department in Bank of China (Hong Kong) and corporate accountant in
C. P. Group of Thailand. Mr. Cheng currently serves as an independent director of Centre Testing International Group Co.,
Ltd. (300012.SZ), an A-share company listed on the Shenzhen Stock Exchange. Mr. Cheng is a Certified Public
Accountant USA and received an MBA degree from Cornell University.
Mr. Anqiang Chen has served as our financial controller since May 2020. Mr. Chen joined Tuniu in March 2010. Prior
to the financial controller appointment, Mr. Chen previously served as associate vice president in charge of budgeting and
working capital management at Tuniu. Mr. Chen has over 25 years of experience in finance and management across
various industries. Mr. Chen holds an MBA from Xi’an University of Technology.
Mr. Wei Zhang has served as our executive vice president since May 2017. Mr. Zhang joined usin May 2015 as a
senior vice president. Prior to joining us, Mr. Zhang worked in Jiangsu Hiteker High-tech Co., Ltd. from 2000 to 2015 in
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various roles such as vice president and executive president. Mr. Zhang received a master’s degree of business
administration from a joint program between Renmin University of China and University of Wales in 2013.
B.Compensation
For the fiscal year ended December 31, 2020, we paid an aggregate of approximately RMB3.1 million (US$0.5
million) in cash to our executive officers and RMB0.7 million (US$0.1 million) to our non-executive directors and officers.
For share incentive grants to our directors and executive officers and the vesting conditions of such share incentive grants,
see “—Share Incentive Plans.”
Share Incentive Plans
2008 Incentive Compensation Plan
We adopted an incentive compensation plan, or the 2008 Plan, in 2008. The purposes of the 2008 Plan are to attract
and retain the best available personnel for positions of substantial responsibility, to provide additional incentive to
employees and consultants, and to promote the success of our business by offering these individuals an opportunity to
acquire a proprietary interest in our company. In 2012, we increased the maximum aggregate number of shares which may
be issued under the 2008 Plan from 11,500,000 to 18,375,140. As of February 28, 2021, options to purchase 3,683,886
Class A ordinary shares were outstanding under the 2008 Plan. The 2008 Plan terminated automatically in 2018.
The following paragraphs summarize the terms of the 2008 Plan.
Types of Awards. The 2008 Plan permits the awards of options and restricted shares.
Plan Administration. Our board of directors or a committee appointed by our board will administer the 2008 Plan.
The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and
number of awards to be granted to each participant, and the terms and conditions of each award grant, among other things.
Our board of directors may authorize one or more officers of us to grant awards under the 2008 Plan, subject to parameters
specified by the board of directors.
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Award Agreement. Awards granted under the 2008 Plan are evidenced by an award agreement that sets forth terms,
conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event
that the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind the award, among other things. Pursuant to the form award agreement under the 2008 Plan, 1/4 of the
ordinary shares underlying the option shall vest on the first anniversary of the date of grant, and 1/48 of the remaining
ordinary shares underlying the option shall vest on a monthly basis in the following three years. However, the option may
be exercised, to the extent vested, only (a) in connection with or after certain triggering events if the option is assumed by a
company whose shares are listed on a securities exchange, or (b) unless otherwise allowed by the plan administrator in its
sole discretion, if the option holder obtains all the necessary governmental approvals and consents required for the issuance
of such shares.
Eligibility. We may grant awards to our employees and consultants of our company. However, we may grant options
that are intended to qualify as incentive options only to our employees.
Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant
award agreement.
Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award
agreement. The vested portion of option will expire if not exercised prior to the time as the plan administrator determines at
the time of its grant. However, the maximum exercisable term is the tenth anniversary after the date of a grant.
Transfer Restrictions. Options may not be transferred in any manner by the recipient other than by will or by the laws
of descent or distribution, except as otherwise provided by the plan administrator.
Termination of the 2008 Plan. The 2008 Plan terminated automatically in 2018.
2014 Share Incentive Plan
We adopted the 2014 Share Incentive Plan, or the 2014 Plan, in 2014. The maximum aggregate number of shares
which may be issued pursuant to all awards under the 2014 Plan was initially 5,500,000 ordinary shares as of the date of its
approval. The number of shares reserved for future issuances under the 2014 Plan will be increased automatically if and
whenever the ordinary shares reserved under the 2014 Plan account for less than 1% of the total then-issued and
outstanding ordinary shares on an as-converted basis, as a result of which increase, the ordinary shares reserved under the
2014 Plan immediately after each such increase shall equal to 5% of the then-issued and outstanding ordinary shares on an
as-converted basis (the "Evergreen Provision"). Pursuant to the Evergreen Provision, the maximum aggregate number of
shares which may be issued under the 2014 Plan increased automatically by an aggregate of 36,464,263 Class A ordinary
shares in December 2014, August 2015 and December 2016, respectively, reaching to a total of 41,964,263 Class A
ordinary shares. As of February 28, 2021, options to purchase 12,519,039 Class A ordinary shares and 65,658 restricted
shares were outstanding under the 2014 Plan.
The following paragraphs summarize the terms of the 2014 Plan.
Types of Awards. The 2014 Plan permits the awards of options, restricted shares and restricted share units.
Plan Administration. Our board of directors or a committee designated by our board administers the 2014 Plan. The
committee or the full board of directors, as applicable, determines the participants to receive awards, the type and number
of awards to be granted to each participant, and the terms and conditions of each award grant.
Award Agreement. Awards granted under the 2014 Plan are evidenced by an award agreement that sets forth terms,
conditions and limitations for each award, which may include the term of the award, the provisions applicable in the event
of the grantee’s employment or service terminates, and our authority to unilaterally or bilaterally amend, modify, suspend,
cancel or rescind the award.
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Eligibility. We may grant awards to our employees, directors and consultants of our company. However, we may grant
options that are intended to qualify as incentive share options only to our employees and employees of our parent
companies and subsidiaries.
Acceleration of Awards upon Change in Control. If a change in control of our company occurs, the plan administrator
may, in its sole discretion, provide for (i) all awards outstanding to terminate at a specific time in the future and give each
participant the right to exercise the vested portion of such awards during a specific period of time, or (ii) the purchase of
any award for an amount of cash equal to the amount that could have been attained upon the exercise of such award, or
(iii) the replacement of such award with other rights or property selected by the plan administrator in its sole discretion, or
(iv) payment of award in cash based on the value of ordinary shares on the date of the change-in-control transaction plus
reasonable interest.
Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant
award agreement.
Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award
agreement. The vested portion of option will expire if not exercised prior to the time as the plan administrator determines at
the time of its grant. However, the maximum exercisable term is the tenth anniversary after the date of a grant.
Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or the laws of
descent and distribution, except as otherwise provided by the plan administrator.
Termination of the 2014 Plan. Unless terminated earlier, the 2014 Plan will terminate automatically in 2024. Our
board of directors has the authority to amend or terminate the plan subject to shareholder approval or home country
practice.
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The following table summarizes, as of February 28, 2021, the outstanding options and restricted shares granted to our
directors and executive officers under the 2008 Plan and 2014 Plan.
Exercise Price
Ordinary
Shares
Underlying
Options
Awarded/
Restricted
(US$/
(RMB/
Vesting
Share) Share)(3)
Schedule Date of Expiration
Name
Dunde Yu
Wei Zhang
Jack Xu
Onward Choi
Directors and officers as a
Shares
630,814
1,100,000
1,269,995
900,000
760,000
1,981,000
1,420,000
17,256
3
12,564
*
*
*
*
*
*
*
0.653
1.475
0.001
19.575
20.162
20.162
17.507
0.001
10.897
0.022
20.162
0.001
17.507
10.897
0.022
0.100
0.226
0.0001
3.000
3.090
3.090
2.683
0.0001
1.670
0.0033
3.090
0.0001
2.683
1.670
0.0033
N/A
N/A
Date of Grant
November 5, 2009
4 years(1)
March 11, 2011 4 years(1)
August 1, 2013 4 years(1)
June 13, 2014 4 years(1)
March 6, 2015 4 years(1)
August 20, 2015 4 years(1)
December 2, 2016 4 years(1)
January 1, 2017 1 years(2)
May 8, 2018 4 years(1)
January 30, 2019 1 years(2)
August 20, 2015 4 years(1)
August 20, 2015 4 years(1)
December 2, 2016 4 years(1)
May 8, 2018 4 years(1)
January 30, 2019 1 years(2)
May 9, 2018 4 years(1)
May 9, 2018 4 years(1)
November 4, 2019
March 10, 2021
July 31, 2029
June 12, 2024
March 5, 2025
August 19, 2025
December 1, 2026
December 31, 2026
May 7, 2028
January 29, 2029
August 19, 2025
August 19, 2025
December 1, 2026
May 7, 2028
January 29, 2029
May 8, 2028
May 8, 2028
group
8,853,644
—
—
—
—
—
*
Shares underlying vested options less than 1% of our total outstanding shares.
† Denotes restricted share award; all other awards in this table are option awards.
(1) Pursuant to the relevant award agreement, 1/4 of the ordinary shares underlying the option or restricted shares
shall vest on the first anniversary of the date of grant, and 1/48 of the remaining ordinary shares underlying the
option or restricted shares shall vest on a monthly basis in the following three years. However, the option or
restricted shares may be exercised, to the extent vested, only (a) in connection with or after certain triggering
events if the option is assumed by a company whose shares are listed on a securities exchange, or (b) unless
otherwise allowed by the plan administrator in its sole discretion, if the option holder or holder of restricted shares
obtains all the necessary governmental approvals and consents required for the issuance of such shares.
(2) Pursuant to the relevant award agreement, 1/12 of the ordinary shares underlying the option shall vest on
a monthly basis. However, the option may be exercised, to the extent vested, only (a) in connection with or after
certain triggering events if the option is assumed by a company whose shares are listed on a securities exchange,
or (b) unless otherwise allowed by the plan administrator in its sole discretion, if the option holder obtains all the
necessary governmental approvals and consents required for the issuance of such shares.
(3) The prices in Renminbi were translated using the rate of US$1.00 = RMB6.5250, the exchange rate in effect as of
December 31, 2020, solely for the convenience of the readers.
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C.Board Practices
Board of Directors
Our board of directors currently consists of ten directors. A director is not required to hold any shares in our company.
A director may vote with respect to any contract, proposed contract, or arrangement in which he or she is interested
provided (a) such director has declared the nature of his or her interest, whether material or not, at the earliest meeting of
the board at which it is practicable to do so, either specifically or by way of a general notice, (b) such director has not been
disqualified by the chairman of the relevant board meeting, and (c) if such contract or arrangement is a transaction with a
related party, such transaction has been approved by the audit committee in accordance with the Nasdaq rules. The
directors may exercise all the powers of the company to borrow money, mortgage its business, property and uncalled
capital, and issue debentures or other securities whenever money is borrowed or as security for any obligation of the
company or of any third party.
Committees of the Board of Directors
We have three committees of the board of directors: the audit committee, the compensation committee and the
nominating and corporate governance committee under the board of directors. We have adopted a charter for each of the
three committees. Each committee’s members and functions are described below.
Audit Committee. Our audit committee consists of Mr. Onward Choi, Mr. Jack Xu and Mr. Haijin Cheng and is
chaired by Mr. Choi. Each of Mr. Choi, Mr. Xu and Mr. Cheng satisfies the “independence” requirements of Rule 5605(a)
(2) of the Nasdaq Stock Market Rules and meet the independence standards under Rule 10A-3 under the Securities
Exchange Act of 1934, as amended. Our board of directors has determined that each of Mr. Choi and Mr. Xu qualifies as an
“audit committee financial expert” within the meaning of Item 407(d) of Regulation S-K under the Securities Act of 1933,
as amended. The audit committee oversees our accounting and financial reporting processes and the audits of the financial
statements of our company. The audit committee is responsible for, among other things:
·
·
·
·
·
·
selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing
services permitted to be performed by the independent registered public accounting firm;
reviewing with the independent registered public accounting firm any audit problems or difficulties and
management’s response;
reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under
the Securities Act;
discussing the annual audited financial statements with management and the independent registered public
accounting firm;
reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of
material control deficiencies;
reviewing and reassessing annually the adequacy of our audit committee charter;
· meeting separately and periodically with management and the independent registered public accounting firm; and
· monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and
effectiveness of our procedures to ensure proper compliance.
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Compensation Committee. Our compensation committee consists of Mr. Onward Choi, Mr. Jiangtao Liu and Mr. Jack
Xu, and is chaired by Mr. Choi. Each of Mr. Choi, Mr. Liu and Mr. Xu, satisfies the “independence” requirements of
Rule 5605(a)(2) of the Nasdaq Stock Market Rules. The compensation committee assists the board in reviewing and
approving the compensation structure, including all forms of compensation, relating to our directors and executive officers.
Our chief executive officer may not be present at any committee meeting during which his compensation is deliberated
upon. The compensation committee is responsible for, among other things:
·
·
·
·
reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive
officer and other executive officers;
reviewing and recommending to the board for determination with respect to the compensation of our non-
employee directors;
reviewing periodically and approving any incentive compensation or equity plans, programs or similar
arrangements; and
selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors
relevant to that person’s independence from management.
Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of
Mr. Jack Xu, Mr. Onward Choi and Mr. Frank Lin, and is chaired by Mr. Xu. Each of Mr. Xu, Mr. Choi and Mr. Lin
satisfies the “independence” requirements of Rule 5605(a)(2) of the Nasdaq Stock Market Rules. The nominating and
corporate governance committee assists the board in selecting individuals qualified to become our directors and in
determining the composition of the board and its committees. The nominating and corporate governance committee is
responsible for, among other things:
·
·
·
·
·
recommending nominees to the board for election or re-election to the board, or for appointment to fill any
vacancy on the board;
reviewing annually with the board the current composition of the board with regards to characteristics such as
independence, age, skills, experience and availability of service to us;
selecting and recommending to the board the names of directors to serve as members of the audit committee and
the compensation committee, as well as of the nominating and corporate governance committee itself;
developing and reviewing the corporate governance principles adopted by the board and advising the board with
respect to significant developments in the law and practice of corporate governance and our compliance with such
laws and practices; and
evaluating the performance and effectiveness of the board as a whole.
Terms of Directors and Executive Officers
All directors hold office until they are removed by ordinary resolution of the shareholders or become disqualified from
being a director in accordance with the terms of our articles of association. In addition, the service agreements between us,
our subsidiaries, if applicable, and the directors do not provide benefits upon termination of their service. Director
nominations by the board of directors are subject to the approval of our corporate governance and nominating committee.
Our shareholders may remove any director by ordinary resolution and may in like manner appoint another person in his
stead. A valid ordinary resolution requires (i) a majority of the votes cast at a shareholder meeting (in person or by proxy)
that is duly constituted and meets the quorum requirement; or (ii) approval by unanimous written shareholder resolutions.
Officers are elected by and serve at the discretion of the board of directors.
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Duties of Directors
Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith with a view to our best
interests. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a
reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors
must ensure compliance with our memorandum and articles of association. A shareholder may have the right to seek
damages in our name if a duty owed by our directors is breached. You should refer to “Item 10.B. Additional Information
—Memorandum and Articles of Association—Differences in Corporate Law—Directors’ Fiduciary Duties.”
D.Employees
We had a total of 7,355, 6,188, and 2,113 employees as of December 31, 2018, 2019 and 2020, respectively. The
following table sets forth the numbers of our employees, categorized by function, as of December 31, 2020:
Function
Management and administration
Customer service center
Sales and marketing
Research and product development
Total
Number of
Employees
265
1,117
241
490
2,113
We enter into standard employment agreements with all our employees. We also enter into confidentiality agreements
with certain directors and executive officers that impose confidentiality obligations until the relevant information becomes
public or is no longer considered confidential by us. In addition to salaries and benefits, we provide stock-based
compensation and performance-based bonuses for our employees and commission-based compensation for our sales
personnel.
As required by regulations in China, we participate in various employee social security plans that are organized by
municipal and provincial governments, including pension insurance, medical insurance, unemployment insurance,
maternity insurance, job-related injury insurance and a housing provident fund. We are required by PRC laws to make
contributions to employee social security plans at specified percentages of the salaries, bonuses and certain allowances of
our employees.
Our success depends on our ability to attract, retain and motivate qualified personnel. We believe that we maintain a
good working relationship with our employees, and we have not experienced any significant labor disputes.
E.Share Ownership
The following table sets forth information with respect to the beneficial ownership of our shares as of February 28,
2021 by:
·
·
each of our current directors and executive officers; and
each person known to us to own beneficially more than 5% of our shares.
See “—B. Compensation—Share Incentive Plans” for more details on options and restricted shares granted to our
directors and executive officers.
The calculations in the table below are based on 370,545,883 ordinary shares outstanding as of February 28, 2021,
including 17,373,500 Class B ordinary shares outstanding and 353,172,383 Class A ordinary shares outstanding (excluding
18,785,661 Class A ordinary shares, represented by 6,261,887 American depositary shares, repurchased and reserved for
the future exercise of options or the vesting of other awards under the 2008 Plan and the 2014 Plan).
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Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number
of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the
person has the right to acquire within 60 days, including through the exercise of any option, warrant, or other right or the
conversion of any other security. These shares, however, are not included in the computation of the percentage ownership
of any other person.
Directors and Executive Officers:*
Dunde Yu(1)
Kun Li(2)
Jie Zhu(3)
Jiangtao Liu (4)
Haijin Cheng (5)
Frank Lin(6)
Shiwei Zhou (7)
Haifeng Yan(8)
Onward Choi
Jack Xu(9)
Anqiang Chen
Wei Zhang
All directors and executive officers as a group
Principal Shareholders:
Affiliates of HNA Tourism (10)
Affiliates of Caissa Group (11)
DCM V, L.P. and Affiliates(12)
Unicorn Riches Limited(13)
Dragon Rabbit Capital Limited(14)
Fullshare Holdings Limited (15)
Class A
Ordinary
Shares
Class B
Ordinary
Shares
Total
Ordinary
Shares
Voting
%† Power††
12,195,758
100,379,869
100,379,869
78,061,780
—
31,829,512
12,481,034
—
**
**
**
**
236,042,749
10,423,503
—
—
—
—
—
—
—
—
—
—
—
10,423,503
22,619,261
100,379,869
100,379,869
78,061,780
—
31,829,512
12,481,034
6.0
27.1
27.1
21.1
—
8.6
3.4
— —
**
**
**
**
**
**
**
**
64.9
246,466,252
100,379,869
78,061,780
31,829,512
27,436,780
4,104,137
4,104,137
—
—
—
—
10,423,503
6,949,997
100,379,869
78,061,780
31,829,512
27,436,780
14,527,640
11,054,134
27.1
21.1
8.6
7.4
3.9
3.0
21.8
19.1
19.1
14.8
—
6.0
2.4
—
**
**
**
**
63.4
19.1
14.8
6.0
5.2
20.6
14.0
*
Except for Kun Li, Jie Zhu, Jiangtao Liu, Haijin Cheng, Frank Lin, Shiwei Zhou, Haifeng Yan and Jack Xu, the
business address of our directors and executive officers is Tuniu Building, No. 699-32, Xuanwudadao, Xuanwu
District, Nanjing, Jiangsu Province 210042, PRC.
** Shares underlying vested options of less than 1% of our total outstanding shares on an as-converted basis.
†
For each person and group included in this column, percentage ownership is calculated by dividing the number of
ordinary shares beneficially owned by such person or group by the sum of the total number of ordinary shares
outstanding as of February 28, 2021, which is 370,545,883 ordinary shares outstanding, including 17,373,500
Class B ordinary shares outstanding and 353,172,383 Class A ordinary shares outstanding (excluding the
18,785,661 Class A ordinary shares, represented by 6,261,887 ADSs, repurchased and reserved for the future
exercise of options or the vesting of other awards under the 2008 Plan and the 2014 Plan), plus the number of
ordinary shares such person or group has the right to acquire, including upon exercise of options and vesting of
restricted shares and restricted share units, within 60 days after February 28, 2021.
†† For each person and group included in this column, percentage ownership percentage of total voting power
represents voting power based on both Class A and Class B ordinary shares held by such person or group, and the
ordinary shares such person or group has the right to acquire upon exercise of the stock options or warrants within
60 days after February 28, 2021, with respect to the total voting power based on all the outstanding shares of our
Class A and Class B ordinary shares as a single class. Each holder of Class A ordinary shares is entitled to one
vote per Class A ordinary share. Each holder of our Class B ordinary shares is entitled to ten votes per Class B
ordinary share. Our Class B ordinary shares are convertible at any time by the holder into Class A ordinary shares
on a share-for-share basis.
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(1) Represents (i) 8,091,621 Class A ordinary shares underlying the options that have become fully vested as of
February 28, 2021 or will become fully vested within 60 days after February 28, 2021, and (ii) 4,104,137 Class A
ordinary shares and 10,423,503 Class B ordinary shares held by Dragon Rabbit Capital Limited, a British Virgin
Islands company. Dragon Rabbit Capital Limited is wholly owned by Longtu Holdings Limited, a British Virgin
Islands company which is wholly owned by a trust, of which Mr. Yu’s family is the beneficiary. On November 26,
2020, the 4,104,137 Class A ordinary shares and 10,423,503 Class B ordinary shares owned by Dragon Rabbit
Capital Limited were pledged to Fuqun Limited, as lender under a loan agreement dated August 21, 2017, to
secure the obligations of Dragon Rabbit Capital Limited under the loan agreement.
(2) Represents (i) 90,909,091 class A ordinary shares held by BHR Winwood Investment Management Limited and
(ii) 9,470,778 class A ordinary shares represented by 3,156,926 American Depository Shares held by Hong Kong
Praise Tourism Investment Limited. The business address of Mr. Li is 25/F Hainan Airlines Plaza, Xiao Yun
Road, Chaoyang District, Beijing, PRC.
(3) Represents (i) 90,909,091 class A ordinary shares held by BHR Winwood Investment Management Limited and
(ii) 9,470,778 class A ordinary shares represented by 3,156,926 American Depository Shares held by Hong Kong
Praise Tourism Investment Limited. The business address of Mr. Zhu is 25/F Hainan Airlines Plaza, Xiao Yun
Road, Chaoyang District, Beijing, PRC.
(4) Represents (i) 65,625,000 Class A ordinary shares held by Fabulous Jade Global Limited and (ii) 12,436,780
Class A ordinary shares held by Hopeful Tourism Limited. The business address of Mr. Liu is Floor 4th, Hopson
One office building, No.22 West Dawang Road. Chaoyang District, Beijing, PRC.
(5) The business address of Mr. Cheng is No.4-2-502 Dong Hua Shi Nan Li Yi Qu, Dongcheng District, Beijing,
PRC.
(6) Represents (i) 19,952,556 Class A ordinary shares held by DCM V, L.P., (ii) 486,864 Class A ordinary shares held
by DCM Affiliates Fund V, L.P., (iii) 7,640,092 Class A ordinary shares held by DCM Hybrid RMB Fund, L.P.,
(iv) 3,541,670 Class A ordinary shares held by DCM Ventures China Turbo Fund, L.P., and (v) 208,330 Class A
ordinary shares held by DCM Ventures China Turbo Affiliates Fund, L.P. The business address of Mr. Lin is Unit
1, Level 10, Tower W2, Oriental Plaza, Dong Cheng District, Beijing, PRC.
(7) Represents 12,481,034 Class A ordinary shares held by Ctrip Investment Holding Ltd. The business address of
Mr. Zhou is 10F, Building 16, 968 Jinzhong Road, Shanghai, PRC.
(8) The business address of Mr. Yan is Floor 2-5,Building C6, Zijin International Creative Park, Nanjing, Jiangsu,
PRC.
(9) The business address of Mr. Xu is 12011 Magnolia Court, Saratoga, CA 95070, USA.
(10) Represents (i) 90,909,091 class A ordinary shares held by BHR Winwood Investment Management Limited and
(ii) 9, 470,778 class A ordinary shares represented by 3,156,926 Amercian Depository Shares held by Hong Kong
Praise Tourism Investment Limited (HK Praise Tourism) . BHR Winwood Investment Management Limited is a
company incorporated in Hong Kong and wholly owned by an affiliated fund of HNA Tourism. The business
address of BHR Winwood Investment Management Limited is Unit 3101, 31/F, tower 2, China Central Place, 79
Jianguo Road, Chaoyang District, Beijing 100025, PRC. HK Praise Tourism is a company organized under the
laws of Hong Kong, and is a nominee of Beijing Capital Airlines Co. Limited, a controlled subsidiary of HNA
Tourism. The business address of HK Praise Tourism is Unit 417, 4/F, Lippo Centre Tower Two No. 89
Queensway, Admiralty, Hong Kong. We refer to BHR Winwood Investment Management Limited and HK Praise
Tourism as “Affiliates of HNA Tourism.”
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(11) Represents (i) 65,625,000 Class A ordinary shares held by Fabulous Jade Global Limited, and (ii) 12,436,780
Class A ordinary shares held by Hopeful Tourism Limited. The business address of Fabulous Jade Global Limited
is c/o Caissa Group, 4F, Hopson Building B, No. 22, West dawang Road, Chaoyang District, Beijing 100022, the
People’s Republic of China. Fabulous Jade is a wholly-owned subsidiary of Hopeful Tourism Limited. The
business address of Hopeful Tourism Limited is Flat/Rm A, 12/F Kiu Fu Commercial Building, 300 Lockhart
Road, Wan Chai, Hong Kong. Hopeful Tourism Limited is a wholly-owned subsidiary of Caissa Sega Tourism
Culture Investment Limited, which in turn is a wholly-owned subsidiary of Caissa Sega Tourism Culture
Development Group Co., Ltd. We refer to Fabulous Jade Global Limited and Hopeful Tourism Limited as
“Affiliates of Caissa Group”.
(12) Represents (i) 19,952,556 Class A ordinary shares held by DCM V, L.P., (ii) 486,864 Class A ordinary shares held
by DCM Affiliates Fund V, L.P., (iii) 7,640,092 Class A ordinary shares held by DCM Hybrid RMB Fund, L.P.,
(iv) 3,541,670 Class A ordinary shares held by DCM Ventures China Turbo Fund, L.P., and (v) 208,330 Class A
ordinary shares held by DCM Ventures China Turbo Affiliates Fund, L.P. The general partner of DCM V, L.P. and
DCM Affiliates Fund V, L.P. is DCM Investment Management V, L.P., whose general partner is DCM
International V, Ltd. DCM International V, Ltd., through DCM Investment Management V, L.P., has the sole
voting and investment power over these shares, and such voting and investment power is exercised by K. David
Chao, Thomas Blaisdell and Peter W. Moran, the directors of DCM International V, Ltd. The general partner of
DCM Hybrid RMB Fund, L.P. is DCM Hybrid RMB Fund Investment Management, L.P., whose general partner
is DCM Hybrid RMB Fund International Ltd. DCM Hybrid RMB Fund International Ltd., through DCM Hybrid
RMB Fund Investment Management, L.P., has the sole voting and investment power over these shares, and such
voting and investment power is exercised by K. David Chao, Thomas Blaisdell, Jason Krikorian, and Peter W.
Moran, the directors of DCM Hybrid RMB Fund International Ltd. The general partner of DCM Ventures China
Turbo Fund, L.P. and DCM Ventures China Turbo Affiliates Fund, L.P. is DCM Turbo Fund Investment
Management, L.P., whose general partner is DCM Turbo Fund International, Ltd. DCM Turbo Fund
International, Ltd., through DCM Turbo Fund Investment Management, L.P., has the sole voting and investment
power over these shares, and such voting and investment power is exercised by K. David Chao and Jason
Krikorian, the directors of DCM Turbo Fund International, Ltd. The business address of DCM V, L.P., DCM
Affiliates Fund V, L.P., DCM Hybrid RMB Fund, L.P., DCM Ventures China Turbo Fund, L.P. and DCM Ventures
China Turbo Affiliates Fund, L.P. is 2420 Sand Hill Road, Suite 200, Menlo Park, CA 94025, the United States.
(13) The business address of Unicorn Riches Limited is c/o Hony Capital Limited, Suite 2701, One Exchange Square,
Central, Hong Kong. Unicorn Riches Limited is a wholly-owned subsidiary of Hony Capital Fund V, L.P. Hony
Capital Fund V. L.P.’s general partner is Hony Capital Fund V GP, L.P. Hony Capital Fund V GP, L.P.’s general
partner is Hony Capital Fund V GP Limited. John Huan Zhao and Legend Holdings Corporation, have 80% and
20%, respectively, equity ownership of Hony Capital Fund V GP Limited.
(14) Dragon Rabbit Capital Limited is wholly owned by Longtu Holdings Limited is a British Virgin Islands company
which is wholly owned by a trust, of which Mr. Yu’s family is the beneficiary. The business address of Dragon
Rabbit Capital Limited is Quastisky Building, P.O. Box 4389, Road Town, Tortola, British Virgin Islands. On
November 26, 2020, the 4,104,137 Class A ordinary shares and 10,423,503 Class B ordinary shares owned by
Dragon Rabbit Capital Limited were pledged to Fuqun Limited, as lender under a loan agreement dated August
21, 2017, to secure the obligations of Dragon Rabbit Capital Limited under the loan agreement.
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(15) Represents (i) 4,104,137 Class A ordinary shares and (ii) 6,949,997 Class B ordinary shares held by Verne Capital
Limited. Verne Capital Limited is a wholly owned subsidiary of Five Seasons XV Limited. Five Seasons XV
Limited is a wholly owned subsidiary of Fullshare Value Fund II L.P.. Fullshare Investment Management III
Limited is the general partner of Fullshare Value Fund II L.P., and is wholly owned by Five Seasons XII Limited,
which is a wholly owned subsidiary of Five Seasons XVIII (A) Limited. Five Seasons XVIII (A) Limited is a
wholly owned subsidiary of Five Seasons XVIII Limited, which is a wholly owned subsidiary of Fullshare
Holdings Limited. Accordingly, Fullshare Holdings Limited and its affiliates may be deemed to beneficially own
the securities directly held by Verne Capital Limited. The business address of Fullshare Holdings Limited is Unit
2805, Level 28 Admiralty Centre Tower One 18 Harcourt Road, Admiralty Hong Kong.
To our knowledge, as of February 28, 2021, 112,236,966 of our outstanding ordinary shares are held by five record
holders in the United States. The total number of shares held by the five record holders in the United States represents
30.3% of our total outstanding shares. This includes 88,047,546 ordinary shares (excluding 18,785,661 Class A ordinary
shares, represented by 6,261,887 American depositary shares, repurchased and reserved for the future exercise of options
or the vesting of other awards under the 2008 Plan and the 2014 Plan) held of record by JPMorgan Chase Bank, N.A., the
depositary of our ADS program. The number of beneficial owners of our ADSs in the United States is likely to be much
larger than the number of record holders of our ordinary shares in the United States. We are not aware of any arrangement
that may, at a subsequent date, result in a change of control of our company.
Item 7.Major Shareholders and Related Party Transactions
A.Major Shareholders
Please refer to “Item 6.E Directors, Senior Management and Employees—Share Ownership.”
B.Related Party Transactions
Contractual Arrangements
For a description of the contractual arrangements among Beijing Tuniu, Nanjing Tuniu and the shareholders of
Nanjing Tuniu, see “Item 4.C. Information on the Company—Organizational Structure.” See also “Item 3.D. Key
Information—Risk Factors—Risks Related to Our Corporate Structure.”
Private Placements, Repurchase and Redesignation
See “Item 5.B. Operating and Financial Review and Prospects—Liquidity and Capital Resources.”
Relationship with Trip.com
Trip.com purchased 5,000,000 Class A ordinary shares in a private placement concurrent with our initial public
offering, an additional 3,731,034 Class A ordinary shares for a total of US$15,000,000 through a private placement
transaction in December 2014 as well as an additional 3,750,000 Class A ordinary shares for a total of US$20,000,000
through a private placement transaction in May 2015. We conduct transactions in the ordinary course of business with
Trip.com on the terms of arm-length transactions. We sell our packaged tours through Trip.com’s online platform and the
commission fees to Trip.com were insignificant. We purchased travelling products from Trip.com’s online platform, which
were insignificant. Revenues from Trip.com consist of commission fees for the booking of hotel rooms and air tickets
through our online platform, amounting to RMB161.7 million, RMB65.7 million and RMB16.9 million (US$2.6 million)
for the years ended December 31, 2018, 2019 and 2020, respectively. As of December 31, 2019 and 2020, amounts due
from Trip.com amounted to RMB23.8 million and RMB14.0 million (US$2.1 million), respectively, and amounts due to
Trip.com amounted to RMB27.1 million and RMB18.2 million (US$2.8 million), respectively.
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Relationship with JD.com, Inc.
On May 8, 2015, we issued 65,625,000 Class A ordinary shares to Fabulous Jade Global Limited, a subsidiary of
JD.com, Inc., for a consideration of RMB1,528.2 million in cash and RMB660.2 million representing the fair value of
business resource contributed by JD.com, Inc., which included the exclusive right to operate the leisure travel channel for
both JD.com, Inc.’s website and mobile application, preferred partnership with JD.com, Inc. for hotel and air ticket
reservation service, its internet traffic support and marketing support for the leisure travel channel for a period of five years
starting from August 2015. Such exclusive right and preferred partnership have expired in August 2020. We also purchased
travelling products from JD’s channels at the amount of RMB23.5 million, RMB49.4 million and RMB25,246.0
(US$3,869.0) for the years ended December 31, 2018, 2019 and 2020, respectively. As of December 31, 2019 and 2020,
amounts due from JD.com, Inc. amounted to RMB3.7 million and RMB1.6 million (US$0.3 million) , respectively, and
amounts due to JD.com, Inc. amounted to RMB135,524.0 and RMB112,074.0 (US$17,176.0) , respectively. On November
20, 2020, JD.com, Inc. completed transfer of all its equity interest in us to Caissa. Subsequently on February 9, 2021,
Caissa appointed a director to our board of directors to replace the director previsouly appointed by JD.com, Inc. and since
then, JD.com, Inc. was no longer a related party of us.
Relationship with Caissa Group
On November 20, 2020, pursuant to a share purchase agreement and certain amendements, Caissa completed the
purchase of all Class A ordinary shares held by JD.com, Inc.
We sold packaged tours through Caissa’s platform and the commission fees to Caissa were insignificant. As of
December 31, 2020, amounts due from Caissa amounted to RMB8.3 million (US$1.3 million) and amounts due to Caissa
amounted to RMB1.9 million (US$0.3 million).
Relationship with HNA Tourism Group
In November 2015, we entered into a strategic partnership with HNA Tourism through a share subscription agreement,
pursuant to which (i) HNA Tourism invested US$500 million in our company in January 2016 through the acquisition of
90,909,091 newly issued Class A ordinary shares of our company by one of its affiliates, and (ii) HNA Tourism agreed to
provide us with access to its premium airlines and hotels resources at a preferential rate, in compliance with applicable fair
competition market rules, and we undertook to acquire no less than US$100 million products and services sourced from
HNA Tourism until June 30, 2018. The transaction contemplated by the share subscription agreement was completed on in
January 2016. In connection with the strategic partnership with HNA Tourism, we entered into an investor rights agreement
with HNA Tourism in November 2015, which was subsequently amended in December 2015 and February 2016, to govern
certain rights and obligations of us and HNA Tourism. We have purchased RMB588.9 million, RMB443.1 million and
RMB164.4 million (US$25.2 million) air tickets from HNA Tourism for the years ended December 31, 2018, 2019 and
2020, respectively. We sold travelling products through an affiliate of HNA Tourism’s distribution channels and the
revenues were insignificant.
In December 2017, we provided financing to an affiliate of HNA Tourism (the "HNA Affiliate") amounting to
RMB40.0 million (US$6.1 million) by purchasing private placement notes issued by the HNA Affiliate (the
“Notes Financing”), with the interest rate of 8.5%, which was repayable in one year. The Notes Financing was guaranteed
by another affiliate of HNA Tourism. The Notes Financing was extended for one year upon original maturity in
December 2018 with the same interest rate and was further pledged by certain equity investment held by HNA Affiliate. In
May 2018, we provided financing in the form of accounts receivable factoring arrangement (the “Loan Financings”) to
another affiliate of HNA Tourism amounting to RMB500 million (US$76.6 million) with the average interest rate of 14%
per annum and service fee rate of 6%, which were repayable in one year. The Loan Financings were guaranteed by another
affiliate of HNA Tourism. The Loan Financings were extended for one year upon original maturity in May 2019 with
interest rate decreased to 6% per annum. We have received requests from these borrowers for extension of maturity of the
Notes Financing and Loan Financings for another one year to December 2020 and May 2021, respectively.
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As of December 31, 2019, we reviewed the recoverability of above Notes Financing and Loan Financings to reflect the
credit risk associated with the respective outstanding balances. As of December 31, 2019, we recorded an allowance
provision of RMB1.9 million (US$0.3 million) and RMB21.3 million (US$3.3 million) for the Notes Financing and the
Loan Financings, respectively. As of December 31, 2019, the carrying value of the Notes Financing and the Loan
Financings were RMB44.8 million (US$6.9 million) and RMB512.8 million (US$78.6 million), respectively, which were
presented in non-current assets, based on management’s estimates of time for collection.
By the ended of 2020, we did not receive the repayment of RMB40.0 million (US$6.1 million) from the affiliate of
HNA Tourism according to the extended schedule and no settlement plans were reached for the outstanding balance. In
addition, HNA Group, HNA Tourism’s ultimate holding company, received a formal bankruptcy and restructuring notice
from the Hainan Province High People’s Court following creditors’ action against HNA Group due to its failure to pay
overdue debts. Based on the assessment of all currently available information of HNA Group’s restructuring plan, we
believed there were no assurance as to whether the collection of the outstanding receivables are probable as of December
31, 2020 and hence we provided full allowance for current expected credit losses on the remaining balance at the amount
of RMB44.8 million (US$6.9 million) and RMB512.8 million (US$78.6 million) for the Notes Financing and the Loan
Financings, respectively. Moreover, we provided full allowance of RMB30.8 million (US$4.7 million) for the current
amounts due from HNA Tourism.
The interest income and service fee for the Notes Financing and the Loan Financings were RMB27.8 million and nil
for the years ended 2019 and 2020, respectively.
As of December 31, 2019, amounts due from HNA Tourism amounted to RMB37.7 million, long-term amounts due
from HNA Tourism amounted to RMB557.6 million, and amounts due to HNA Tourism amounted to RMB2.5 million. As
of December 31, 2020, amounts due to HNA Tourism amounted to RMB0.7 million (US$0.1 million).
Employment Agreements and Indemnification Agreements
See “Item 6.B. Directors, Senior Management and Employees—Compensation.”
Share Incentive Plans
See “Item 6.B. Directors, Senior Management and Employees—Compensation.”
C.Interests of Experts and Counsel
Not applicable.
Item 8.Financial Information
A.Consolidated Statements and Other Financial Information
See “Item 18. Financial Statements.”
Legal Proceedings
From time to time, we may be involved in legal proceedings in the ordinary course of our business. We are not
currently a party to any material legal or administrative proceedings.
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Dividend Policy
Our board of directors has discretion as to whether to distribute dividends, subject to applicable laws. Even if our
board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and
earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that our
board of directors may deem relevant. If we pay any dividends, we will pay our ADS holders to the same extent as holders
of our ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder.
See “Item 12.D. Description of Securities Other than Equity Securities—American Depositary Shares.” Cash dividends on
our ordinary shares, if any, will be paid in U.S. dollars.
We have not previously declared or paid cash dividends and we have no plan to declare or pay any dividends in the
near future on our shares or ADSs. We currently intend to retain most, if not all, of our available funds and any future
earnings to operate and expand our business.
We are a holding company incorporated in the Cayman Islands. We rely principally on dividends from our PRC
subsidiaries for our cash requirements, including any payment of dividends to our shareholders. PRC regulations may
restrict the ability of our PRC subsidiaries to pay dividends to us. See “Item 4.B. Information on the Company—Business
Overview—PRC Regulation—Regulations on Dividend Distribution” and “Item 12.D. Description of Securities Other than
Equity Securities— American Depositary Shares.” Cash dividends on our common shares, if any, will be paid in U.S.
dollars.
B.Significant Changes
Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of
our audited consolidated financial statements included in this annual report.
Item 9.The Offer and Listing
A.Offering and Listing Details
See “—C. Markets.”
B.Plan of Distribution
Not applicable.
C.Markets
Our ADSs, each representing three Class A ordinary shares of ours, have been listed on Nasdaq since May 9, 2014
under the symbol “TOUR.”
D.Selling Shareholders
Not applicable.
E.Dilution
Not applicable.
F.Expenses of the Issue
Not applicable.
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Item 10.Additional Information
A.Share Capital
Not applicable.
B.Memorandum and Articles of Association
We are a Cayman Islands company and our affairs are governed by our memorandum and articles of association and
the Companies Act (Revised) of the Cayman Islands, which we refer to as the Companies Act below. The following are
summaries of material provisions of our fifth amended and restated memorandum and articles of association that became
effective immediately prior to the completion of our initial public offering in May 2014, insofar as they relate to the
material terms of our ordinary shares.
Registered Office and Objects
Our registered office in the Cayman Islands is located at International Corporation Services Ltd., P.O. Box 472, 2nd
Floor, Harbour Place, 103 South Church Street, George Town, Grand Cayman KY1-1106, Cayman Islands, or at such other
place as our board of directors may from time to time decide. The objects for which our company is established are
unrestricted and we have full power and authority to carry out any object not prohibited by the Companies Act, as amended
from time to time, or any other law of the Cayman Islands.
Board of Directors
See “Item 6.C. Directors, Senior Management and Employees—Board Practices.”
Ordinary Shares
General. Our authorized share capital is US$100,000 divided into 1,000,000,000 shares, with a par value of
US$0.0001 each, which will be divided into 780,000,000 Class A ordinary shares with a par value of US$0.0001 each,
120,000,000 Class B ordinary shares with a par value of US$0.0001 each, and 100,000,000 shares of a par value of
US$0.0001 each of such class or classes (however designated) as our board of directors may determine. Holders of Class A
ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. All of our
outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares are issued in
registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and transfer their ordinary
shares.
Dividends. The holders of our ordinary shares are entitled to such dividends as may be declared by our board of
directors. Our current articles of association provide that dividends may be declared and paid out of our profits, realized or
unrealized, or from any reserve set aside from profits which our board of directors determine is no longer needed.
Dividends may also be declared and paid out of share premium account or any other fund or account which can be
authorized for this purpose in accordance with the Companies Act. Holders of Class A ordinary shares and Class B
ordinary shares are entitled to the same amount of dividends, if declared.
Voting Rights. In respect of all matters subject to a shareholders’ vote, each Class A ordinary share is entitled to one
vote, and each Class B ordinary share is entitled to ten votes, voting together as one class. Voting at any meeting of
shareholders is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or
any shareholder present in person or by proxy. Each holder of our ordinary shares are entitled to vote such ordinary shares
as are registered in his or her name on our register of members.
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A quorum required for a meeting of shareholders consists of at least two shareholders who hold at least one third in
nominal value of our share capital in issue at the meeting present in person or by proxy or, if a corporation or other non-
natural person, by its duly authorized representative. Shareholders’ meetings may be held annually. Each general meeting,
other than an annual general meeting, shall be an extraordinary general meeting. Extraordinary general meetings may be
called by a majority of our board of directors or our chairman or upon a requisition of shareholders holding at the date of
deposit of the requisition not less than one-third of the aggregate voting power of our company. Advance notice of at least
14 calendar days is required for the convening of our annual general meeting and other general meetings. All holders of
ordinary shares are permitted to attend general and extraordinary meetings.
An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority
of the votes attaching to the ordinary shares cast at a meeting, while a special resolution requires the affirmative vote of no
less than two-thirds of the votes cast attaching to the outstanding ordinary shares at a meeting. A special resolution is
required for important matters such as a change of name or making changes to our current memorandum and articles of
association.
Conversion. Each Class B ordinary share can be convertible into one Class A ordinary share at any time by the holder.
Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of
Class B ordinary shares by a holder to any person or entity which is not an affiliate of such holder, such Class B ordinary
shares will be automatically and immediately converted into the equivalent number of Class A ordinary shares.
Transfer of Ordinary Shares. Subject to the restrictions set out below, any of our shareholders may transfer all or any
of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our
board of directors.
Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not
fully paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any ordinary
share unless:
·
·
·
·
·
·
the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it
relates and such other evidence as our board of directors may reasonably require to show the right of the transferor
to make the transfer;
the instrument of transfer is in respect of only one class of ordinary shares;
the instrument of transfer is properly stamped, if required;
in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be
transferred does not exceed four;
the shares transferred are free of any lien in favor of the Company; and
a fee of such maximum sum as the Nasdaq Global Market may determine to be payable or such lesser sum as our
directors may from time to time require is paid to us in respect thereof.
If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of
transfer was lodged, send to each of the transferor and the transferee notice of such refusal.
The registration of transfers may, after compliance with any notice required of the Nasdaq Global Market, be
suspended and the register closed at such times and for such periods as our board of directors may from time to time
determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than
30 calendar days in a year.
Liquidation. On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of
ordinary shares), assets available for distribution among the holders of ordinary shares shall be distributed among the
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holders of the ordinary shares on a pro rata basis. If our assets available for distribution are insufficient to repay all of the
paid-up capital, the assets will be distributed so that the losses are borne by our shareholders proportionately. Any
distribution of assets or capital to a holder of a Class A ordinary share and a holder of a Class B ordinary share will be the
same in any liquidation event.
Calls on Ordinary Shares and Forfeiture of Ordinary Shares. Our board of directors may from time to time make
calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such shareholders at least 14
calendar days prior to the specified time of payment. The ordinary shares that have been called upon and remain unpaid are
subject to forfeiture.
Redemption of Ordinary Shares. The Companies Act and our current articles of association permit us to purchase our
own shares. In accordance with our current articles of association and provided the necessary shareholders or board
approval have been obtained, we may issue shares on terms that are subject to redemption, at our option or at the option of
the holders of these shares, on such terms and in such manner, including out of capital, as may be determined by our board
of directors.
Alteration of Share Capital. We may from time to time by ordinary resolution increase the share capital by such sum,
to be divided into shares of such classes and amount, as the resolution shall prescribe. We may by ordinary resolution:
(a) consolidate and divide all or any of our share capital into shares of a larger amount than its existing shares; (b) convert
all or any of our paid up shares into stock and reconvert that stock into paid up shares of any denomination; (c) subdivide
our existing shares, or any of them into shares of a smaller amount provided that in the subdivision the proportion between
the amount paid and the amount, if any, unpaid on each reduced share shall be the same as it was in case of the share from
which the reduced share is derived; and (d) cancel any shares that, at the date of the passing of the resolution, have not
been taken or agreed to be taken by any person and diminish the amount of its share capital by the amount of the shares so
cancelled. We may by special resolution reduce our share capital and any capital redemption reserve in any manner
authorised by law.
Variations of Rights of Shares. All or any of the special rights attached to any class of shares may, subject to the
provisions of the Companies Act, be materially adversely varied with the written consent of the holders of three-fourths of
the issued shares of that class or with the sanction of a special resolution passed at a general meeting of the holders of the
shares of that class. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise
expressly provided by the terms of issue of the shares of that class, be deemed to be materially adversely varied by the
creation or issue of further shares ranking pari passu with such existing class of shares, or by the creation or issue of shares
with preferred or other rights including, without limitation, the creation of shares with enhanced or weighted voting rights.
Inspection of Books and Records. Holders of our ordinary shares have no general right under Cayman Islands law to
inspect or obtain copies of our list of shareholders or our corporate records. However, we will provide our shareholders
with annual audited financial statements. See “—H. Documents on Display.”
Issuance of Additional Shares. Our current memorandum of association authorizes our board of directors to issue
additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized
but unissued shares.
Our current memorandum of association also authorizes our board of directors to establish from time to time one or
more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that
series, including:
·
·
·
·
the designation of the series;
the number of shares of the series;
the dividend rights, dividend rates, conversion rights, voting rights; and
the rights and terms of redemption and liquidation preferences.
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Our board of directors may issue preferred shares without action by our shareholders to the extent authorized but
unissued. Issuance of these shares may dilute the voting power of holders of ordinary shares.
Anti-Takeover Provisions. Some provisions of our current memorandum and articles of association may discourage,
delay or prevent a change of control of our company or management that shareholders may consider favorable, including
provisions that authorize our board of directors to issue preferred shares in one or more series and to designate the price,
rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our
shareholders.
Exempted Company. We are an exempted company with limited liability under the Companies Act. The Companies
Act distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the
Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted
company. The requirements for an exempted company are essentially the same as for an ordinary company except that an
exempted company:
·
·
·
does not have to file an annual return of its shareholders with the Registrar of Companies;
is not required to open its register of members for inspection;
does not have to hold an annual general meeting;
· may issue shares with no par value;
· may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for
20 years in the first instance);
· may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;
· may register as a limited duration company; and
· may register as a segregated portfolio company.
“Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on
the shares of the company.
Register of Members. Under the Companies Act, we must keep a register of members and there should be entered
therein:
·
·
·
the names and addresses of our members, a statement of the shares held by each member, and of the amount paid
or agreed to be considered as paid, on the shares of each member;
the date on which the name of any person was entered on the register as a member; and
the date on which any person ceased to be a member.
Under Cayman Islands law, the register of members of our company is prima facie evidence of the matters set out
therein (i.e. the register of members will raise a presumption of fact on the matters referred to above unless rebutted) and a
member registered in the register of members is deemed as a matter of Cayman Islands law to have legal title to the shares
as set against its name in the register of members.
If the name of any person is incorrectly entered in or omitted from our register of members, or if there is any default or
unnecessary delay in entering on the register the fact of any person having ceased to be a member of our company, the
person or member aggrieved (or any member of our company or our company itself) may apply to the Grand Court of the
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Cayman Islands for an order that the register be rectified, and the Court may either refuse such application or it may, if
satisfied of the justice of the case, make an order for the rectification of the register.
Differences in Corporate Law
The Companies Act is modeled after that of English law but does not follow many recent English law statutory
enactments. In addition, the Companies Act differs from laws applicable to United States corporations and their
shareholders. Set forth below is a summary of the significant differences between the provisions of the Companies Act
applicable to us and the laws applicable to companies incorporated in the State of Delaware.
Mergers and Similar Arrangements. A merger of two or more constituent companies under Cayman Islands law
requires a plan of merger or consolidation to be approved by the directors of each constituent company and authorization
by (a) a special resolution of the shareholders and (b) such other authorization, if any, as may be specified in such
constituent company’s articles of association.
A merger between a Cayman parent company and its Cayman subsidiary or subsidiaries does not require authorization
by a resolution of shareholders of that Cayman subsidiary if a copy of the plan of merger is given to every member of that
Cayman subsidiary to be merged unless that member agrees otherwise. For this purpose a subsidiary is a company of which
at least ninety percent (90%) of the issued shares entitled to vote are owned by the parent company.
The consent of each holder of a fixed or floating security interest over a constituent company is required unless this
requirement is waived by a court in the Cayman Islands.
Save in certain circumstances, a dissentient shareholder of a Cayman constituent company is entitled to payment of the
fair value of his shares upon dissenting to a merger or consolidation. The exercise of appraisal rights will preclude the
exercise of any other rights save for the right to seek relief on the grounds that the merger or consolidation is void or
unlawful.
In addition, there are statutory provisions that facilitate the reconstruction and amalgamation of companies, provided
that the arrangement is approved by a majority in number of each class of shareholders and creditors with whom the
arrangement is to be made, and who must in addition represent three-fourths in value of each such class of shareholders or
creditors, as the case may be, that are present and voting either in person or by proxy at a meeting, or meetings, convened
for that purpose. The convening of the meetings and subsequently the arrangement must be sanctioned by the Grand Court
of the Cayman Islands. While a dissenting shareholder has the right to express to the court the view that the transaction
ought not to be approved, the court can be expected to approve the arrangement if it determines that:
·
·
·
·
the statutory provisions as to the required majority vote have been met;
the shareholders have been fairly represented at the meeting in question and the statutory majority are acting bona
fide without coercion of the minority to promote interests adverse to those of the class;
the arrangement is such that may be reasonably approved by an intelligent and honest man of that class acting in
respect of his interest; and
the arrangement is not one that would more properly be sanctioned under some other provision of the Companies
Act.
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When a takeover offer is made and accepted by holders of 90.0% of the shares within four months, the offeror may,
within a two-month period commencing on the expiration of such four month period, require the holders of the remaining
shares to transfer such shares on the terms of the offer. An objection can be made to the Grand Court of the Cayman Islands
but this is unlikely to succeed in the case of an offer which has been so approved unless there is evidence of fraud, bad faith
or collusion.
If an arrangement and reconstruction is thus approved, the dissenting shareholder would have no rights comparable to
appraisal rights, which would otherwise ordinarily be available to dissenting shareholders of Delaware corporations,
providing rights to receive payment in cash for the judicially determined value of the shares.
Shareholders’ Suits. In principle, we will normally be the proper plaintiff and as a general rule a derivative action may
not be brought by a minority shareholder. However, based on English authorities, which would in all likelihood be of
persuasive authority in the Cayman Islands, there are exceptions to the foregoing principle, including when:
·
·
·
a company acts or proposes to act illegally or ultra vires;
the act complained of, although not ultra vires, could only be effected duly if authorized by more than a simple
majority vote that has not been obtained; and
those who control the company are perpetrating a “fraud on the minority.”
Indemnification of Directors and Executive Officers and Limitation of Liability. Cayman Islands law does not limit
the extent to which a company’s memorandum and articles of association may provide for indemnification of officers and
directors, except to the extent any such provision may be held by the Cayman Islands courts to be contrary to public policy,
such as to provide indemnification against civil fraud or the consequences of committing a crime. Our current
memorandum and articles of association permit indemnification of officers and directors for losses, damages, costs and
expenses incurred in their capacities as such unless such losses or damages arise from dishonesty, willful default, or fraud
of such directors or officers. This standard of conduct is generally the same as permitted under the Delaware General
Corporation Law for a Delaware corporation. In addition, we have entered into indemnification agreements with our
directors and executive officers that provide such persons with additional indemnification beyond that provided in our
current memorandum and articles of association.
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or
persons controlling us under the foregoing provisions, we have been informed that in the opinion of the SEC, such
indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.
Directors’ Fiduciary Duties. Under Delaware corporate law, a director of a Delaware corporation has a fiduciary duty
to the corporation and its shareholders. This duty has two components: the duty of care and the duty of loyalty. The duty of
care requires that a director act in good faith, with the care that an ordinarily prudent person would exercise under similar
circumstances. Under this duty, a director must inform himself of, and disclose to shareholders, all material information
reasonably available regarding a significant transaction. The duty of loyalty requires that a director acts in a manner he
reasonably believes to be in the best interests of the corporation. He must not use his corporate position for personal gain or
advantage. This duty prohibits self-dealing by a director and mandates that the best interest of the corporation and its
shareholders take precedence over any interest possessed by a director, officer or controlling shareholder and not shared by
the shareholders generally. In general, actions of a director are presumed to have been made on an informed basis, in good
faith and in the honest belief that the action taken was in the best interests of the corporation. However, this presumption
may be rebutted by evidence of a breach of one of the fiduciary duties. Should such evidence be presented concerning a
transaction by a director, the director must prove the procedural fairness of the transaction, and that the transaction was of
fair value to the corporation.
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As a matter of Cayman Islands law, a director of a Cayman Islands company is in the position of a fiduciary with
respect to the company and therefore it is considered that he or she owes the following duties to the company—a duty to
act bona fide in the best interests of the company, a duty not to make a profit based on his or her position as director (unless
the company permits him or her to do so) and a duty not to put himself or herself in a position where the interests of the
company conflict with his or her personal interest or his or her duty to a third party. A director of a Cayman Islands
company owes to the company a duty to act with skill and care. It was previously considered that a director need not
exhibit in the performance of his or her duties a greater degree of skill than may reasonably be expected from a person of
his or her knowledge and experience. However, English and Commonwealth courts have moved towards an objective
standard with regard to the required skill and care and these authorities are likely to be followed in the Cayman Islands.
Shareholder Action by Written Consent. Under the Delaware General Corporation Law, a corporation may eliminate
the right of shareholders to act by written consent by amendment to its certificate of incorporation. Cayman Islands law and
our current articles of association provide that shareholders may approve corporate matters by way of a unanimous written
resolution signed by or on behalf of each shareholder who would have been entitled to vote on such matter at a general
meeting without a meeting being held.
Shareholder Proposals. Under the Delaware General Corporation Law, a shareholder has the right to put any proposal
before the annual meeting of shareholders, provided it complies with the notice provisions in the governing documents. A
special meeting may be called by the board of directors or any other person authorized to do so in the governing
documents, but shareholders may be precluded from calling special meetings.
Cayman Islands law does not provide shareholders any right to put proposals before a meeting or requisition a general
meeting. However, these rights may be provided in articles of association. Our current articles of association allow our
shareholders holding not less than one-third of all voting power of our share capital in issue to requisition a shareholder’s
meeting. Other than this right to requisition a shareholders’ meeting, our current articles of association do not provide our
shareholders other right to put proposal before a meeting. As an exempted Cayman Islands company, we are not obliged by
law to call shareholders’ annual general meetings.
Cumulative Voting. Under the Delaware General Corporation Law, cumulative voting for elections of directors is not
permitted unless the corporation’s certificate of incorporation specifically provides for it. Cumulative voting potentially
facilitates the representation of minority shareholders on a board of directors since it permits the minority shareholder to
cast all the votes to which the shareholder is entitled on a single director, which increases the shareholder’s voting power
with respect to electing such director. There are no prohibitions in relation to cumulative voting under the laws of the
Cayman Islands but our current articles of association do not provide for cumulative voting. As a result, our shareholders
are not afforded any less protections or rights on this issue than shareholders of a Delaware corporation.
Removal of Directors. Under the Delaware General Corporation Law, a director of a corporation with a classified
board may be removed only for cause with the approval of a majority of the outstanding shares entitled to vote, unless the
certificate of incorporation provides otherwise. Under our current articles of association, directors may be removed with or
without cause, by an ordinary resolution of our shareholders.
Transactions with Interested Shareholders. The Delaware General Corporation Law contains a business combination
statute applicable to Delaware corporations whereby, unless the corporation has specifically elected not to be governed by
such statute by amendment to its certificate of incorporation, it is prohibited from engaging in certain business
combinations with an “interested shareholder” for three years following the date that such person becomes an interested
shareholder. An interested shareholder generally is a person or a group who or which owns or owned 15% or more of the
target’s outstanding voting share within the past three years. This has the effect of limiting the ability of a potential acquirer
to make a two-tiered bid for the target in which all shareholders would not be treated equally. The statute does not apply if,
among other things, prior to the date on which such shareholder becomes an interested shareholder, the board of directors
approves either the business combination or the transaction which resulted in the person becoming an interested
shareholder. This encourages any potential acquirer of a Delaware corporation to negotiate the terms of any acquisition
transaction with the target’s board of directors.
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Cayman Islands law has no comparable statute. As a result, we cannot avail ourselves of the types of protections
afforded by the Delaware business combination statute. However, although Cayman Islands law does not regulate
transactions between a company and its significant shareholders, it does provide that such transactions must be entered into
bona fide in the best interests of the company and not with the effect of constituting a fraud on the minority shareholders.
Dissolution; Winding up. Under the Delaware General Corporation Law, unless the board of directors approves the
proposal to dissolve, dissolution must be approved by shareholders holding 100% of the total voting power of the
corporation. Only if the dissolution is initiated by the board of directors may it be approved by a simple majority of the
corporation’s outstanding shares. Delaware law allows a Delaware corporation to include in its certificate of incorporation
a supermajority voting requirement in connection with dissolutions initiated by the board. Under Cayman Islands law, a
company may be wound up by either an order of the courts of the Cayman Islands or by a special resolution of its members
or, if the company is unable to pay its debts as they fall due, by an ordinary resolution of its members. The court has
authority to order winding up in a number of specified circumstances including where it is, in the opinion of the court, just
and equitable to do so. Under the Companies Act and our current articles of association, our company may be dissolved,
liquidated or wound up by a special resolution of our shareholders.
Variation of Rights of Shares. Under the Delaware General Corporation Law, a corporation may vary the rights of a
class of shares with the approval of a majority of the outstanding shares of such class, unless the certificate of incorporation
provides otherwise. Under Cayman Islands law and our current articles of association, if our share capital is divided into
more than one class of shares, we may vary the rights attached to any class with the written consent of the holders of three-
fourths of the issued shares of that class or with the sanction of a special resolution passed at a general meeting of the
holders of the shares of that class.
Amendment of Governing Documents. Under the Delaware General Corporation Law, a corporation’s governing
documents may be amended with the approval of a majority of the outstanding shares entitled to vote, unless the certificate
of incorporation provides otherwise. As permitted by Cayman Islands law, our current memorandum and articles of
association may only be amended with a special resolution of our shareholders.
Rights of Non-resident or Foreign Shareholders. There are no limitations imposed by our post-offering amended and
restated memorandum and articles of association on the rights of non-resident or foreign shareholders to hold or exercise
voting rights on our shares. In addition, there are no provisions in our current memorandum and articles of association
governing the ownership threshold above which shareholder ownership must be disclosed.
C.Material Contracts
We have not entered into any material contracts other than in the ordinary course of business and other than those
described in “Item 4. Information on the Company” or elsewhere in this annual report on Form 20-F.
D.Exchange Controls
See “Item 4.B. Information on the Company—Business Overview—PRC Regulation—Regulations on Foreign
Currency Exchange, Regulations on Dividend Distribution, Regulations on Offshore Financing, Regulations on Employee
Stock Option Plans.”
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E.Taxation
Cayman Islands Taxation
Travers Thorp Alberga, our Cayman Islands counsel, has advised us that the Cayman Islands currently levies no taxes
on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of
inheritance tax or estate duty. There are no other taxes levied by the Government of the Cayman Islands that are likely to be
material to holders of ADSs or ordinary shares. The Cayman Islands is not party to any double tax treaties. There are no
exchange control regulations or currency restrictions in the Cayman Islands.
People’s Republic of China Taxation
Under the EIT Law, an enterprise established outside the PRC with a “de facto management body” within the PRC is
considered a PRC resident enterprise for PRC enterprise income tax purposes and is generally subject to a uniform 25%
enterprise income tax rate on its worldwide income as well as tax reporting obligations. Under the Implementation Rules, a
“de facto management body” is defined as a body that has material and overall management and control over the
manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In
addition, SAT Circular 82 issued in April 2009 and amended in 2013 and 2017, specifies that certain offshore-incorporated
enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if all of
the following conditions are met: (a) senior management personnel and core management departments in charge of the
daily operations of the enterprises have their presence mainly in the PRC; (b) their financial and human resources decisions
are subject to determination or approval by persons or bodies in the PRC; (c) major assets, accounting books and company
seals of the enterprises, and minutes and files of their board’s and shareholders’ meetings are located or kept in the PRC;
and (d) half or more of the enterprises’ directors or senior management personnel with voting rights habitually reside in the
PRC. Further to SAT Circular 82, the SAT issued SAT Bulletin 45, which took effect in September 2011 and was amended
in 2015 and 2016, respectively, to provide more guidance on the implementation of SAT Circular 82. SAT Bulletin 45
provides for procedures and administration details of determination on PRC resident enterprise status and administration on
post-determination matters. If the PRC tax authorities determine that Tuniu Corporation is a PRC resident enterprise for
PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. For example, Tuniu
Corporation may be subject to enterprise income tax at a rate of 25% with respect to its worldwide taxable income. Also, a
10% withholding tax would be imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to
gains derived by our non-PRC enterprise shareholders from transferring our shares or ADSs and potentially a 20% of
withholding tax would be imposed on dividends we pay to our non-PRC individual shareholders and with respect to gains
derived by our non-PRC individual shareholders from transferring our shares or ADSs.
It is unclear whether, if we are considered a PRC resident enterprise, holders of our shares or ADSs would be able to
claim the benefit of income tax treaties or agreements entered into between China and other countries or areas. See
“Item 3.D. Key Information—Risk Factors—Risks Related to Doing Business in China—Under the PRC Enterprise
Income Tax Law, we may be classified as a PRC resident enterprise for PRC enterprise income tax purposes. Such
classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and would have a
material adverse effect on our results of operations and the value of your investment.”
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The SAT issued SAT Circular 59 together with the Ministry of Finance in April 2009 and SAT Circular 698 in
December 2009 which has been amended in 2013 and 2015. Both SAT Circular 59 and SAT Circular 698 became effective
retroactively as of January 1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have
enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-PRC
resident enterprise. The SAT further released its Bulletin on Several Issues Concerning Enterprise Income Taxation on
Income Arising from the Indirect Transfer of Property by Non-resident Enterprises (“Bulletin 7”) which became effective
on February 3, 2015. Bulletin 7 repealed the relevant Indirect Transfer provisions contained in Circular 698 and set forth
more detailed rules for the tax treatment of Indirect Transfers of equity interests in PRC resident enterprises and other
assets situated in China. Applying a “substance over form” principle, when a non-resident enterprise structures an Indirect
Transfer of an equity interest in a PRC resident enterprise or other assets situated in China to avoid taxation under the EIT
through arrangements lacking reasonable commercial purposes, the Indirect Transfer will be re-characterized as a direct
transfer. As a result, any gains derived from the Indirect Transfer may be subject to PRC withholding tax at a rate of up to
10%. Bulletin 7 provides de facto safe harbor treatment for situations in which a non-resident enterprise buys and then sells
shares, in the public securities markets, of a foreign listed company that holds an equity interest in a PRC resident
enterprise, and thereby realizes a capital gain. However, in order for the safe harbor treatment to apply, both the purchase
and sale must be conducted on the public securities markets so as to preclude market manipulation, and the equity interests
purchased and sold must be those in the same enterprise. When shares sold in the public securities markets were obtained
before such shares were listed on a public securities market or were not purchased through a public securities market, or
when shares were purchased on a public market but are to be sold through non-public markets, the safe harbor treatment
would not be applicable. In 2017, the SAT released its Bulletin on Matters concerning Withholding of Income Tax of Non-
resident Enterprises at Source (“Bulletin 37”) which became effective on December 1, 2017. Bulletin 37 abolished SAT
Circular 698, and updated the calculation method for the taxable income for the share transfer as well as stipulated the
withholding obligation of the withholding agent. There is uncertainty as to the interpretation and application of Bulletin 7
and Bulletin 37. We and our non-PRC resident investors may be at risk of being taxed under Bulletin 7 and Bulletin 37 and
we may be required to expend valuable resources to comply with Bulletin 7 and Bulletin 37 or to establish that we should
not be taxed under Bulletin 7 and Bulletin 37. See “Item 3.D. Key Information—Risk Factors—Risks Related to Doing
Business in China—We face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect
transfers of our operating company’s equity interests. Enhanced scrutiny over acquisition transactions by the PRC tax
authorities may have a negative impact on potential acquisitions we may pursue in the future.”
United States Federal Income Tax Considerations
The following discussion is a summary of United States federal income tax considerations relating to the ownership
and disposition of our ADSs or ordinary shares by a U.S. Holder, as defined below, that holds our ADSs or ordinary shares
as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as
amended (the “Code”). This discussion is based upon existing United States federal income tax law, which is subject to
differing interpretations or change, possibly with retroactive effect. There can be no assurance that the Internal Revenue
Service (the “IRS”) or a court will not take a contrary position. This discussion does not address all aspects of United
States federal income taxation that may be important to particular investors in light of their individual circumstances,
including investors subject to special tax rules that differ significantly from those summarized below (such as, for example,
certain financial institutions, insurance companies, regulated investment companies, real estate investment trusts, broker-
dealers, traders in securities that elect mark-to-market treatment, partnerships and their partners, tax-exempt organizations
(including private foundations), investors who are not U.S. Holders, investors that own (directly, indirectly, or
constructively) 10% or more of our stock (by vote or value), investors that hold their ADSs or ordinary shares as part of a
straddle, hedge, conversion, constructive sale or other integrated transaction) or investors that have a functional currency
other than the U.S. dollar). In addition, this discussion does not address United States federal estate, gift, Medicare, and
alternative minimum tax considerations, or state, local, and non-United States tax considerations. Each U.S. Holder is
urged to consult its tax advisor regarding the United States federal, state, local, and non-United States tax considerations of
an investment in our ADSs or ordinary shares.
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General
For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ADSs or ordinary shares that is, for
United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a
corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized
under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is
includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the
administration of which is subject to the primary supervision of a United States court and which has one or more United
States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise elected to be
treated as a United States person under the Code.
If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial
owner of our ADSs or ordinary shares, the tax treatment of a partner in the partnership will depend upon the status of the
partner and the activities of the partnership. Partnerships and partners of a partnership holding our ADSs or ordinary shares
are urged to consult their tax advisors regarding an investment in our ADSs or ordinary shares.
It is generally expected that a U.S. Holder of ADSs will be treated as the beneficial owner, for United States federal
income tax purposes, of the underlying shares represented by the ADSs. The remainder of this discussion assumes that a
U.S. Holder of our ADSs will be treated in this manner. Accordingly, deposits or withdrawals of our ordinary shares for our
ADSs will not be subject to United States federal income tax.
Passive Foreign Investment Company Considerations
A non-United States corporation, such as our company, will be classified as a “passive foreign investment company,”
or PFIC, for United States federal income tax purposes, if, in the case of any particular taxable year, either (i) 75% or more
of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of the value of its assets
(generally determined on the basis of a quarterly average) during such year is attributable to assets that produce or are held
for the production of passive income. For this purpose, cash is categorized as a passive asset and the company’s goodwill
and unbooked intangibles associated with active business activities may generally be classified as active assets. Passive
income generally includes, among other things, dividends, interest, rents, royalties, and gains from the disposition of
passive assets. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the
income of any other corporation in which we own, directly or indirectly, 25% or more (by value) of the stock.
Although the law in this regard is unclear, we treat our consolidated affiliated entities as being owned by us for United
States federal income tax purposes, not only because we exercise effective control over the operation of such entities but
also because we are entitled to substantially all of their economic benefits, and, as a result, we consolidate their operating
results in our consolidated financial statements.
Based on the market price of our ADSs and the composition of our assets (in particular the substantial amount of cash,
deposits and investments), we believe that we were a PFIC for United States federal income tax purposes for the
taxable year ended December 31, 2020 , and we will likely be a PFIC for our current taxable year ending December 31,
2021 unless the market price of our ADSs increases and/or we invest a substantial amount of the cash and other passive
assets we hold in assets that produce or are held for the production of active income.
If we were classified as a PFIC for any year during which a U.S. Holder held our ADSs or ordinary shares, we
generally would continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ADSs
or ordinary shares.
The discussion below under “Dividends” and “Sale or Other Disposition of ADSs or Ordinary Shares” is written on
the basis that we will not be classified as a PFIC for United States federal income tax purposes. The United States federal
income tax rules that apply if we are classified as a PFIC for the current taxable year or any subsequent taxable year are
discussed below under “Passive Foreign Investment Company Rules.”
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Dividends
Subject to the PFIC rules described below, any cash distributions (including the amount of any PRC tax withheld) paid
on our ADSs or ordinary shares out of our current or accumulated earnings and profits, as determined under United States
federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the
day actually or constructively received by the U.S. Holder, in the case of ordinary shares, or by the depositary bank, in the
case of ADSs. Because we do not intend to determine our earnings and profits on the basis of United States federal income
tax principles, a U.S. Holder should expect that any distribution paid on our ADSs or ordinary shares will be treated as a
“dividend” for United States federal income tax purposes. A non-corporate recipient of dividend income will generally be
subject to tax on dividend income from a “qualified foreign corporation” at a lower applicable capital gains rate rather than
the marginal tax rates generally applicable to ordinary income provided that certain holding period and other requirements
are met.
A non-United States corporation (other than a corporation that is classified as a PFIC for the taxable year in which the
dividend is paid or the preceding taxable year) will be considered to be a qualified foreign corporation (a) if it is eligible for
the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States
determines is satisfactory for purposes of this provision and which includes an exchange of information program, or
(b) with respect to any dividend it pays on stock (or ADSs in respect of such stock) which is readily tradable on an
established securities market in the United States. Our ADSs are listed on the Nasdaq Global Market, which is an
established securities market in the United States, and will be considered readily tradable on an established securities
market for as long as the ADSs continue to be listed on the Nasdaq Global Market.There can be no assurance that our
ADSs will continue to be considered readily tradable on an established securities market in later years. Since we do not
expect that our ordinary shares will be listed on established securities markets, it is unclear whether dividends that we pay
on our ordinary shares that are not backed by ADSs currently meet the conditions required for the reduced tax rate.
However, in the event we are deemed to be a PRC resident enterprise under the EIT Law (see “People’s Republic of China
Taxation”), we may be eligible for the benefits of the United States-PRC income tax treaty (which the Secretary of the
Treasury of the United States has determined is satisfactory for this purpose) and be treated as a qualified foreign
corporation with respect to dividends paid on our ADSs or ordinary shares. Furthermore, as mentioned above, we believe
that we were a PFIC for United States federal income tax purposes for the taxable year ended December 31, 2020 , and we
will likely be a PFIC for our current taxable year ending December 31, 2021. U.S. Holders are urged to consult their tax
advisors regarding the availability of the reduced tax rate on dividends with respect to our ADSs or ordinary shares in their
particular circumstances. Dividends received on our ADSs or ordinary shares will not be eligible for the dividends-received
deduction allowed to corporations.
For United States foreign tax credit purposes, dividends paid on our ADSs or ordinary shares will be treated as income
from foreign sources and will generally constitute passive category income. In the event that we are deemed to be a PRC
resident enterprise under the EIT Law, a U.S. Holder may be subject to PRC withholding taxes on dividends paid, if any,
on our ADSs or ordinary shares. A U.S. Holder may be eligible, subject to a number of complex limitations, to claim a
foreign tax credit in respect of any foreign withholding taxes imposed on dividends received on our ADSs or ordinary
shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a
deduction for United States federal income tax purposes in respect of such withholding, but only for a year in which such
U.S. Holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex.
U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular
circumstances.
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Sale or Other Disposition of ADSs or Ordinary Shares
Subject to the PFIC rules discussed below, a U.S. Holder will generally recognize capital gain or loss, if any, upon the
sale or other disposition of ADSs or ordinary shares in an amount equal to the difference between the amount realized upon
the disposition and the U.S. Holder’s adjusted tax basis in such ADSs or ordinary shares. Any capital gain or loss will be
long-term gain or loss if the ADSs or ordinary shares have been held for more than one year and will generally be United
States-source gain or loss for United States foreign tax credit purposes. In the event that we are treated as a PRC resident
enterprise under the EIT Law, and gain from the disposition of the ADSs or ordinary shares is subject to tax in the PRC,
such gain may be treated as PRC-source gain for foreign tax credit purposes under the United States-PRC income tax
treaty. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors
regarding the tax consequences if a foreign tax is imposed on a disposition of our ADSs or ordinary shares, including the
availability of the foreign tax credit under their particular circumstances.
Passive Foreign Investment Company Rules
If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares,
unless the U.S. Holder makes a mark-to-market election (as described below) with respect to the ADSs, the U.S. Holder
will, except as discussed below, be subject to special tax rules that have a penalizing effect, regardless of whether we
remain a PFIC, on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution paid
during a taxable year to a U.S. Holder that is greater than 125% of the average annual distributions paid in the three
preceding taxable years or, if shorter, the U.S. Holder’s holding period for the ADSs or ordinary shares), and (ii) any gain
realized on the sale or other disposition, including, under certain circumstances, a pledge, of ADSs or ordinary shares.
Under the PFIC rules:
·
·
·
·
the excess distribution and/or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or
ordinary shares;
the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to
the first taxable year in which we are classified as a PFIC (each, a pre-PFIC year) will be taxable as ordinary
income;
the amount allocated to each prior taxable year, other than the current taxable year or a pre-PFIC year, will be
subject to tax at the highest tax rate in effect applicable to the individuals or corporations, as appropriate, for
that year; and
will be increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to each
prior taxable year, other than a pre-PFIC year.
If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares and any of our
non-United States subsidiaries is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by
value) of the shares of the lower-tier PFIC for purposes of the application of these rules. Each U.S. Holder is advised to
consult its tax advisors regarding the application of the PFIC rules to any of our subsidiaries.
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As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market
election with respect to our ADSs, provided that the ADSs are regularly traded on the Nasdaq Global Market. We
anticipate that the ADSs should qualify as being regularly traded, but no assurances may be given in this regard. If a mark-
to-market election is made, the U.S. Holder will generally (i) include as ordinary income for each taxable year that we are a
PFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of
such ADSs and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market
value of such ADSs held at the end of the taxable year, but only to the extent of the net amount previously included in
income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs would be adjusted to
reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes an effective mark-to-market
election, in each year that we are a PFIC, any gain recognized upon the sale or other disposition of the ADSs will be treated
as ordinary income and loss will be treated as ordinary loss, but only to the extent of the net amount previously included in
income as a result of the mark-to-market election.
If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation
ceases to be classified as a PFIC, the U.S. Holder will not be required to take into account the mark-to-market gain or loss
described above during any period that such corporation is not classified as a PFIC.
Because a mark-to-market election cannot technically be made for any lower-tier PFICs that we may own, a U.S.
Holder who makes a mark-to-market election with respect to our ADSs may continue to be subject to the general PFIC
rules with respect to such U.S. Holder’s indirect interest in any of our non-United States subsidiaries that is classified as a
PFIC.
We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections, which,
if available, would result in tax treatment different from the general tax treatment for PFICs described above.
As discussed above under “Dividends,” dividends that we pay on our ADSs or ordinary shares will not be eligible for
the reduced tax rate that applies to qualified dividend income if we are classified as a PFIC for the taxable year in which
the dividend is paid or the preceding taxable year. In addition, if a U.S. Holder owns our ADSs or ordinary shares during
any taxable year that we are a PFIC, such U.S. Holder must file an annual report with the IRS, subject to certain limited
exceptions. Each U.S. Holder is urged to consult its tax advisor concerning the United States federal income tax
consequences of owning and disposing our ADSs or ordinary shares if we are or become a PFIC, including the possibility
of making a mark-to-market election and the unavailability of the qualified electing fund election.
Each U.S. Holder is advised to consult with its tax advisor regarding the application of the United States information
reporting rules to their particular circumstances.
F.Dividends and Paying Agents
Not applicable.
G.Statement by Experts
Not applicable.
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H.Documents on Display
We are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign
private issuers, and are required to file reports and other information with the SEC. Specifically, we are required to file
annually an annual report on Form 20-F within four months after the end of each fiscal year, which is December 31. All
information filed with the SEC can be obtained over the internet at the SEC’s website at www.sec.gov or inspected and
copied at the public reference facilities maintained by the SEC at 100 F Street, N.E., Washington, D.C. 20549. You can
request copies of documents, upon payment of a duplicating fee, by writing to the SEC. As a foreign private issuer, we are
exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy
statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery
provisions contained in Section 16 of the Exchange Act.
We will furnish JPMorgan Chase Bank, N.A., the depositary of our ADSs, with our annual reports, which will include
a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and
all notices of shareholders’ meetings and other reports and communications that are made generally available to our
shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, upon
our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting
received by the depositary from us.
In accordance with Nasdaq Stock Market Rule 5250(d), we will post this annual report on Form 20-F on our website at
http://ir.tuniu.com. In addition, we will provide hardcopies of our annual report free of charge to shareholders and ADS
holders upon request.
I.Subsidiary Information
Not applicable.
Item 11.Quantitative and Qualitative Disclosures about Market Risk
Interest Rate Risk
Our exposure to interest rate risk primarily relates to the interest income generated by excess cash, which is mostly
held in interest-bearing bank deposits. We have not used derivative financial instruments in our investment portfolio to
hedge our exposure to the interest rate risk. Interest earning instruments carry a degree of interest rate risk. We have not
been exposed to, nor do we anticipate being exposed to, material risks due to changes in market interest rates. However,
our future interest income may fall short of expectations due to changes in market interest rates.
Foreign Exchange Risk
Substantially all of our revenues and expenses are denominated in RMB. We do not believe that we currently have any
significant direct foreign exchange risk To date, we have not entered into any material hedging transactions in an effort to
reduce our exposure to foreign currency exchange risk.Although our exposure to foreign exchange risks should be limited
in general, the value of your investment in our ADSs will be affected by the exchange rate between U.S. dollar and
Renminbi because the value of our business is effectively denominated in RMB, while our ADSs will be traded in U.S.
dollars.
The conversion of Renminbi into foreign currencies, including U.S. dollars, is based on rates set by the People’s Bank
of China. The Renminbi has fluctuated against the U.S. dollar, at times significantly and unpredictably. It is difficult to
predict how market forces or PRC or U.S. government policy may impact the exchange rate between Renminbi and the
U.S. dollar in the future.
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To the extent that we need to convert U.S. dollars into Renminbi for our operations, appreciation of the Renminbi
against the U.S. dollar would have an adverse effect on the RMB amount we receive from the conversion. Conversely, if
we decide to convert Renminbi into U.S. dollars for the purpose of making payments for dividends on our ordinary shares
or ADSs or for other business purposes, appreciation of the U.S. dollar against the Renminbi would have a negative effect
on the U.S. dollar amounts available to us.
As of December 31, 2020, we had Renminbi-denominated cash and cash equivalents, restricted cash and short-term
investments of RMB1,617.8 million, and U.S. dollar-denominated cash, cash equivalents and short-term investments of
US$247.9 million. Assuming we had converted RMB1.0 million into U.S. dollars at the exchange rate of RMB6.5250 for
US$1.00 as of December 31, 2020, our U.S. dollar cash balance would have been US$153,257. If the Renminbi had
depreciated by 10% against the U.S. dollar, our U.S. dollar cash balance would have been US$139,324 instead. Assuming
we had converted US$1.0 million into Renminbi at the exchange rate of RMB6.5250 for US$1.00 as of December 31,
2020, our Renminbi cash balance would have been RMB6.5 million. If the Renminbi had depreciated by 10% against the
U.S. dollar, our Renminbi cash balance would have been RMB7.2 million instead.
Inflation
To date, inflation in China has not materially affected our results of operations. According to the National Bureau of
Statistics of China, the year-over-year percent changes in the consumer price index for December 2018, 2019 and 2020
were increases of 1.9%, 4.5% and 0.2%, respectively. Although we have not been materially affected by inflation in the
past, we can provide no assurance that we will not be affected by higher rates of inflation in China in the future.
Item 12.Description of Securities Other than Equity Securities
A.Debt Securities
Not applicable.
B.Warrants and Rights
Not applicable.
C.Other Securities
Not applicable.
D.American Depositary Shares
Fees and Charges Our ADS holders May Have to Pay
The depositary may charge each person to whom ADSs are issued, including, without limitation, issuances against
deposits of shares, issuances in respect of share distributions, rights and other distributions, issuances pursuant to a stock
dividend or stock split declared by us or issuances pursuant to a merger, exchange of securities or any other transaction or
event affecting the ADSs or deposited securities, and each person surrendering ADSs for withdrawal of deposited securities
or whose ADRs are cancelled or reduced for any other reason, US$5.00 for each 100 ADSs (or any portion thereof) issued,
delivered, reduced, cancelled or surrendered, as the case may be. The depositary may sell (by public or private sale)
sufficient securities and property received in respect of a share distribution, rights and/or other distribution prior to such
deposit to pay such charge.
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The following additional charges shall be incurred by the ADR holders, by any party depositing or withdrawing shares
or by any party surrendering ADSs or to whom ADSs are issued (including, without limitation, issuance pursuant to a stock
dividend or stock split declared by us or an exchange of stock regarding the ADSs or the deposited securities or a
distribution of ADSs), whichever is applicable:
·
·
·
·
·
·
·
·
·
·
a fee of US$1.50 per ADR for transfers of certificated or direct registration ADRs;
a fee of up to US$0.05 per ADS for any cash distribution made pursuant to the deposit agreement;
a fee of up to US$0.05 per ADS per calendar year (or portion thereof) for services performed by the depositary in
administering the ADRs (which fee may be charged on a periodic basis during each calendar year and shall be
assessed against holders of ADRs as of the record date or record dates set by the depositary during each
calendar year and shall be payable in the manner described in the next succeeding provision);
a fee for the reimbursement of such fees, charges and expenses as are incurred by the depositary and/or any of its
agents (including, without limitation, the custodian and expenses incurred on behalf of holders in connection with
compliance with foreign exchange control regulations or any law or regulation relating to foreign investment) in
connection with the servicing of the shares or other deposited securities, the sale of securities (including, without
limitation, deposited securities), the delivery of deposited securities or otherwise in connection with the
depositary’s or its custodian’s compliance with applicable law, rule or regulation (which fees and charges shall be
assessed on a proportionate basis against holders as of the record date or dates set by the depositary and shall be
payable at the sole discretion of the depositary by billing such holders or by deducting such charge from one or
more cash dividends or other cash distributions);
a fee for the distribution of securities (or the sale of securities in connection with a distribution), such fee being in
an amount equal to the US$0.05 per ADS issuance fee for the execution and delivery of ADSs which would have
been charged as a result of the deposit of such securities (treating all such securities as if they were shares) but
which securities or the net cash proceeds from the sale thereof are instead distributed by the depositary to those
holders entitled thereto;
stock transfer or other taxes and other governmental charges;
cable, telex and facsimile transmission and delivery charges incurred at your request in connection with the
deposit or delivery of shares;
transfer or registration fees for the registration of transfer of deposited securities on any applicable register in
connection with the deposit or withdrawal of deposited securities;
the fees, expenses and other charges charged by JPMorgan Chase Bank, N.A. and/or its agent (which maybe a
division, branch or affiliate) in connection with the conversion of foreign currency into U.S. dollars; and
fees of any division, branch or affiliate of the depositary utilized by the depositary to direct, manage and/or
execute any public and/or private sale of securities under the deposit agreement.
JPMorgan Chase Bank, N.A. and/or its agent may act as principal for such conversion of foreign currency. We will pay
all other charges and expenses of the depositary and any agent of the depositary (except the custodian) pursuant to
agreements from time to time between us and the depositary. The charges described above may be amended from time to
time by agreement between us and the depositary.
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Fees and Other Payments Made by the Depositary to Us
The depositary has agreed to reimburse us for certain expenses we incur that are related to establishment and
maintenance of the ADR program upon such terms and conditions as we and the depositary may agree from time to time.
The depositary may make available to us a set amount or a portion of the depositary fees charged in respect of the ADR
program or otherwise upon such terms and conditions as we and the depositary may agree from time to time. The
depositary collects its fees for issuance and cancellation of ADSs directly from investors depositing shares or surrendering
ADSs for the purpose of withdrawal or from intermediaries acting for them. The depositary collects fees for making
distributions to investors by deducting those fees from the amounts distributed or by selling a portion of distributable
property to pay the fees. The depositary may collect its annual fee for depositary services by deduction from cash
distributions, or by directly billing investors, or by charging the book-entry system accounts of participants acting for them.
The depositary will generally set off the amounts owing from distributions made to holders of ADSs. If, however, no
distribution exists and payment owing is not timely received by the depositary, the depositary may refuse to provide any
further services to holders that have not paid those fees and expenses owing until such fees and expenses have been paid.
At the discretion of the depositary, all fees and charges owing under the deposit agreement are due in advance and/or when
declared owing by the depositary. For the fiscal year 2020, we received a reimbursement of approximately US$0.29 million
from the depositary net of US$0.08 million United States withholding tax.
The fees and charges you may be required to pay may vary over time and may be changed by us and by the depositary.
You will receive prior notice of any increase in any such fees and charges.
Item 13.Defaults, Dividend Arrearages and Delinquencies
None.
PART II
Item 14.Material Modifications to the Rights of Security Holders and Use of Proceeds
None.
Item 15.Controls and Procedures
Evaluation of Disclosure Controls and Procedures
Our management, with participation of our chief executive officer and financial controller, has performed an
evaluation of the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) under the Securities
Exchange Act of 1934, as amended) as of December 31, 2020, the end of the period covered by this annual report, as
required by Rule 13a-15(b) under the Exchange Act.
Based upon that evaluation, our management has concluded that, as of December 31, 2020, our disclosure controls and
procedures were effective in ensuring that the information required to be disclosed by us in the reports that we file and
furnish under the Exchange Act was recorded, processed, summarized and reported, within the time periods specified in the
SEC’s rules and forms, and that the information required to be disclosed by us in the reports that we file or submit under
the Exchange Act is accumulated and communicated to our management, including our chief executive officer and
financial controller, to allow timely decisions regarding required disclosure.
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Management’s Annual Report on Internal Control over Financial Reporting
Our management is responsible for establishing and maintaining adequate internal control over financial reporting as
defined in Rules 13a-15(f) and 15d-15(f) under the Securities Exchange Act of 1934, as amended. Our internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of our financial reporting
and the preparation of financial statements for external purposes in accordance with Generally Accepted Accounting
Principles (GAAP) in the United States of America and includes those policies and procedures that (i) pertain to the
maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets
of our company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of
consolidated financial statements in accordance with GAAP, and that receipts and expenditures of our company are being
made only in accordance with authorizations of our management and directors; and (iii) provide reasonable assurance
regarding prevention or timely detection of the unauthorized acquisition, use or disposition of our company’s assets that
could have a material effect on the consolidated financial statements. Because of its inherent limitations, internal control
over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to
future periods are subject to the risks that controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.
Our management conducted an evaluation of the effectiveness of our company’s internal control over financial
reporting as of December 31, 2020 based on the framework in Internal Control—Integrated Framework issued by the
Committee of Sponsoring Organizations of the Treadway Commission in 2013. Based on this evaluation, our management
concluded that our internal control over financial reporting was effective as of December 31, 2020.
PricewaterhouseCoopers Zhong Tian LLP, our independent registered public accounting firm, audited the effectiveness
of our company’s internal control over financial reporting as of December 31, 2020, as stated in its report, which appears
on pages F-2 and F-3 of this annual report on Form 20-F.
Changes in Internal Control over Financial Reporting
There were no changes in our internal controls over financial reporting that occurred during the period covered by this
annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control
over financial reporting.
Item 16A.Audit Committee Financial Expert
Our board of directors has determined that Mr. Onward Choi and Mr. Jack Xu, each an independent director (under the
standards set forth in Nasdaq Stock Market Rule 5605(a)(2) and Rule 10A-3 under the Exchange Act) and a member of our
audit committee, are audit committee financial experts.
Item 16B.Code of Ethics
Our board of directors adopted a code of business conduct and ethics that applies to our directors, officers and
employees, including certain provisions that specifically apply to our chief executive officers, financial controller, senior
finance officer and any other persons who perform similar functions for us. We filed our code of business conduct and
ethics as Exhibit 99.1 to our registration statement on Form F-1, as amended, which was originally filed with the SEC on
April 4, 2014. We have posted a copy of our code of business conduct and ethics on our website at http://ir.tuniu.com.
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Item 16C.Principal Accountant Fees and Services
The following table sets forth the aggregate fees by categories specified below in connection with certain professional
services rendered by PricewaterhouseCoopers Zhong Tian LLP, our principal external auditors, for the periods indicated.
Audit fees(1)
Audit-related fees(2)
All other fees(3)
2019
2020
US$ 1,507,154 1,535,879
—
92,018
US$
—
—
US$
(1) “Audit fees” means the aggregate fees billed for professional services rendered by our principal external auditors
for the audits of our annual financial statements and effectiveness of internal control over financial reporting, as
well as the quarterly reviews of condensed consolidated financial information.
(2) “Audit-related fees” means the aggregate fees billed for professional services rendered by our principal external
auditors associated with certain financial due diligence projects.
(3) “All other fees” means the aggregate fees billed for professional services rendered by our principal external
auditors associated with other advisory services.
The policy of our audit committee
to pre-approve all audit and non-audit services provided by
PricewaterhouseCoopers Zhong Tian LLP, including audit services, audit-related services and all other services as
described above, other than those for de minimis services which are approved by the audit committee prior to the
completion of the audit.
is
Item 16D.Exemptions from the Listing Standards for Audit Committees
Not applicable.
Item 16E.Purchases of Equity Securities by the Issuer and Affiliated Purchasers
On September 30, 2020, our board of directors authorized a share repurchase program under which we may repurchase
up to US$10 million worth of our ordinary shares or American depositary shares representing ordinary shares over the next
12 months. The share repurchase programs permitted us to purchase shares from time to time on the open market at
prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible
means, depending on market conditions and in accordance with applicable rules and regulations. The repurchased shares
were presented as “treasury stock” in shareholder’s equity on our consolidated balance sheets. Treasury stock is accounted
for under the cost method.
The following table sets forth a summary of our repurchase of our ADSs made in the year 2020 under the share repurchase
programs described in the paragraph above. In 2020, we have made all the share repurchase based on the share repurchase
programs described in the paragraph above.
Period
October 2020
November 2020
Total
Total Number
of
ADSs
Purchased
Average
Price
Paid Per
ADS
Total Number
of ADSs
Purchased as
Part of Publicly
Announced
Plans
or Programs
Approximate
Dollar Value of
ADSs that May
Yet Be
Purchased
Under Plans or
Programs
(US$)
42,670 US$ 1.04
10,848 US$
53,518 US$
1.05
1.05
42,670 US$ 9,955,427
9,944,048
10,848 US$
9,944,048
53,518 US$
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Item 16F.Change in Registrant’s Certifying Accountant
Not applicable.
Item 16G.Corporate Governance
As a Cayman Islands company listed on Nasdaq, we are subject to the Nasdaq corporate governance listing standards.
However, Nasdaq rules permit a foreign private issuer like us to follow the corporate governance practices of its home
country. Travers Thorp Alberga, our Cayman Islands counsel, has advised us that certain corporate governance practices in
the Cayman Islands, our home country, may differ significantly from the Nasdaq corporate governance listing standards.
We followed home country practice for our private placements in December 2014, May 2015 and November 2015, which
would have required shareholder approval under the Nasdaq Rules but for which there was no such requirement under
Cayman Islands law. In addition, we have elected to follow home country practice in lieu of the requirement to hold an
annual meeting of shareholders under Nasdaq Rule 5620(a).
We currently do not plan to rely on the home country exemption for any other corporate governance matters. However,
if we choose to follow home country practice in other matters in the future, our shareholders may be afforded less
protection than they otherwise would under the Nasdaq corporate governance listing standards applicable to U.S. domestic
issuers. See “Item 3.D. Key Information — Risk Factors — Risks Related to Our ADSs — We are a foreign private issuer
within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to
United States domestic public companies.”
Item 16H.Mine Safety Disclosure
Not applicable.
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PART III
Item 17.Financial Statements
We have elected to provide financial statements pursuant to Item 18.
Item 18.Financial Statements
The consolidated financial statements of Tuniu Corporation, its subsidiaries and its consolidated affiliated entities are
included at the end of this annual report.
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Item 19.Exhibits
Exhibit
Number
Description of Document
1.1 Fifth Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated by
reference to Exhibit 3.2 to the Registration Statement on Form F-1 (file no. 333-195075), as amended, initially
filed with the Securities and Exchange Commission on April 4, 2014).
2.1 Registrant’s Specimen American Depositary Receipt (included in Exhibit 2.3).
2.2 Registrant’s Specimen Certificate for Class A ordinary shares (incorporated herein by reference to Exhibit 4.2
to the registration statement on Form F-1 (File No. 333-195075), as amended, initially filed with the Security
and Exchange Commission on April 4, 2014).
2.3 Form of Amended and Restated Deposit Agreement among the Registrant, the depositary and holders of the
American Depositary Receipts (incorporated herein by reference to Exhibit 99.(A) to the Post-Effective
Amendment No. 1 to the F-6 Registration Statement (File No. 333-195515), filed with the Security and
Exchange Commission on December 1, 2020).
2.4* Description of rights of each class of securities registered under Section 12 of the Securities Exchange Act of
1934
4.1 2008 Incentive Compensation Plan (incorporated herein by reference to Exhibit 10.1 to the registration
statement on Form F-1 (File No. 333-195075), as amended, initially filed with the Security and Exchange
Commission on April 4, 2014).
4.2 2014 Share Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the registration statement on
Form F-1 (File No. 333-195075), as amended, initially filed with the Security and Exchange Commission on
April 4, 2014).
4.3 Form of Indemnification Agreement with the Registrant’s directors (incorporated herein by reference to
Exhibit 10.3 to the registration statement on Form F-1 (File No. 333-195075), as amended, initially filed with
the Security and Exchange Commission on April 4, 2014).
4.4 English Translation of Form of Employment Agreement between the Registrant and an Executive Officer of
the Registrant (incorporated herein by reference to Exhibit 10.4 to the registration statement on Form F-1 (File
No. 333-195075), as amended, initially filed with the Security and Exchange Commission on April 4, 2014).
4.5* English Translation of Cooperation Agreement dated February 19, 2021 between Beijing Tuniu and Nanjing
Tuniu.
4.6* English Translation of Shareholders’ Voting Rights Agreement dated February 19, 2021 among Beijing Tuniu,
Nanjing Tuniu and the shareholders of Nanjing Tuniu.
4.7* English Translation of Powers of Attorney dated February 19, 2021 among Beijing Tuniu, Nanjing Tuniu and
the shareholders of Nanjing Tuniu.
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Exhibit
Number
Description of Document
4.8* English Translation of Equity Interest Pledge Agreement dated February 19, 2021 among Beijing Tuniu,
Nanjing Tuniu and Anqiang Chen.
4.9* English Translation of Equity Interest Pledge Agreement dated February 19, 2021 among Beijing Tuniu,
Nanjing Tuniu and Dunde Yu.
4.10* English Translation of Purchase Option Agreement dated February 19, 2021 among Beijing Tuniu, Nanjing
Tuniu and the shareholders of Nanjing Tuniu.
4.11 Business Cooperation Agreement dated May 8, 2015 between Tuniu Corporation and JD.com, Inc.
(incorporated herein by reference to Exhibit 99.6 to amendment no. 1 to Schedule 13D filed by JD.com, Inc.
and its affiliates with the Securities and Exchange Commission on May 29, 2015).
4. 12
Investor Rights Agreement dated May 22, 2015 between Tuniu Corporation and Fabulous Jade Global Limited
(incorporated herein by reference to Exhibit 99.7 to amendment no. 1 to Schedule 13D filed by JD.com, Inc.
and its affiliates with the Securities and Exchange Commission on May 29, 2015).
4.13 Registration Rights Agreement dated as of May 22, 2015 between Tuniu Corporation and Unicorn Riches
Limited (incorporated herein by reference to Exhibit 7.08 to amendment no. 1 to Schedule 13D filed by
Unicorn Riches Limited with the Securities and Exchange Commission on May 26, 2015).
4.14
Investor Rights Agreement dated as of November 20, 2015 between Tuniu Corporation and HNA Tourism
Holding (Group) Co., Ltd. (incorporated herein by reference to Exhibit 7.3 to Schedule 13D filed by BHR
Winwood Investment Management Limited and its affiliates with the Securities and Exchange Commission on
February 1, 2016).
4.15 Amendment No. 1 to Investor Rights Agreement dated as of December 31, 2015 between Tuniu Corporation
and HNA Tourism Holding (Group) Co., Ltd. (incorporated herein by reference to Exhibit 7.4 to Schedule
13D filed by BHR Winwood Investment Management Limited and its affiliates with the Securities and
Exchange Commission on February 1, 2016).
4.16 Amendment No. 2 to Investor Rights Agreement dated February 19, 2016 between Tuniu Corporation and
BHR Winwood Investment Management Limited (incorporated herein by reference to Exhibit A to
amendment no. 1 to Schedule 13D filed by BHR Winwood Investment Management Limited and its affiliates
with the Securities and Exchange Commission on February 29, 2016).
8.1* List of Significant Subsidiaries.
11.1 Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 to the
registration statement on Form F-1 (File No. 333-195075), as amended, initially filed with the Security and
Exchange Commission on April 4, 2014).
12.1* Certification by Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2* Certification by Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1** Certification by Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2** Certification by Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
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Exhibit
Number
Description of Document
15.1* Consent of PricewaterhouseCoopers Zhong Tian LLP.
15.2* Consent of Travers Thorp Alberga.
15.3* Consent of Fangda Partners.
101.INS* XBRL Instance Document.
101.SCH* XBRL Taxonomy Extension Schema Document.
101.CAL* XBRL Taxonomy Extension Calculation Linkbase Document.
101.DEF* XBRL Taxonomy Extension Definition Linkbase Document.
101.LAB* XBRL Taxonomy Extension Label Linkbase Document.
101.PRE* XBRL Taxonomy Extension Presentation Linkbase Document.
* Filed herewith
** Furnished herewith
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The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it
has duly caused and authorized the undersigned to sign this annual report on its behalf.
SIGNATURES
Tuniu Corporation
/s/ Dunde Yu
By:
Name: Dunde Yu
Title: Chairman and Chief Executive
Officer
Date: April 29, 2021
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INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Report of Independent Registered Public Accounting Firm
Consolidated Balance Sheets as of December 31, 2019 and 2020
Consolidated Statements of Comprehensive Loss for the Years Ended December 31, 2018, 2019 and 2020
Consolidated Statements of Changes in Shareholders’ Equity for the Years Ended December 31, 2018, 2019 and
2020
Consolidated Statements of Cash Flows for the Years Ended December 31, 2018, 2019 and 2020
Notes to the Consolidated Financial Statements
Financial Statement Schedule I - Condensed Financial Information of the Parent Company as of December 31, 2019
and 2020 and for each of the three years in the period ended December 31, 2020
F-2
F-6
F-7
F-8
F-9
F-10
F-53
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Shareholders of Tuniu Corporation
Opinions on the Financial Statements and Internal Control over Financial Reporting
We have audited the accompanying consolidated balance sheets of Tuniu Corporation and its subsidiaries (the “Company”)
as of December 31, 2020 and 2019, and the related consolidated statements of comprehensive loss, of changes in
shareholders’ equity and of cash flows for each of the three years in the period ended December 31, 2020, including the
related notes and financial statement schedule listed in the accompanying index (collectively referred to as the
“consolidated financial statements”). We also have audited the Company's internal control over financial reporting as of
December 31, 2020, based on criteria established in Internal Control - Integrated Framework (2013) issued by the
Committee of Sponsoring Organizations of the Treadway Commission (COSO).
In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial
position of the Company as of December 31, 2020 and 2019, and the results of its operations and its cash flows for each of
the three years in the period ended December 31, 2020 in conformity with accounting principles generally accepted in the
United States of America. Also in our opinion, the Company maintained, in all material respects, effective internal control
over financial reporting as of December 31, 2020, based on criteria established in Internal Control - Integrated Framework
(2013) issued by the COSO.
Changes in Accounting Principles
As discussed in Note 2 to the consolidated financial statements, the Company changed the manner in which it accounts for
credit losses on certain financial instruments in 2020 and the manner in which it accounts for leases in 2019.
Basis for Opinions
The Company’s management is responsible for these consolidated financial statements, for maintaining effective internal
control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting,
included in Management’s Annual Report on Internal Control over Financial Reporting appearing under Item 15. Our
responsibility is to express opinions on the Company’s consolidated financial statements and on the Company’s internal
control over financial reporting based on our audits. We are a public accounting firm registered with the Public Company
Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in
accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material
misstatement, whether due to error or fraud, and whether effective internal control over financial reporting was maintained
in all material respects.
Our audits of the consolidated financial statements included performing procedures to assess the risks of material
misstatement of the consolidated financial statements, whether due to error or fraud, and performing procedures that
respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and
disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles used and
significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial
statements. Our audit of internal control over financial reporting included obtaining an understanding of internal control
over financial reporting, assessing the risk that a material weakness exists, and testing and evaluating the design and
operating effectiveness of internal control based on the assessed risk. Our audits also included performing such other
procedures as we considered necessary in the circumstances. We believe that our audits provide a reasonable basis for our
opinions.
F-2
Table of Contents
Definition and Limitations of Internal Control over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial statements for external purposes in accordance with
generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and
procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the
transactions and dispositions of the assets of the company; (ii) provide reasonable assurance that transactions are recorded
as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and
that receipts and expenditures of the company are being made only in accordance with authorizations of management and
directors of the company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized
acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also,
projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate
because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Critical Audit Matters
The critical audit matters communicated below are matters arising from the current period audit of the consolidated
financial statements that were communicated or required to be communicated to the audit committee and that (i) relate to
accounts or disclosures that are material to the consolidated financial statements and (ii) involved our especially
challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our
opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit
matters below, providing separate opinions on the critical audit matters or on the accounts or disclosures to which they
relate.
Going concern assessment
As described in Note 2(a) to the consolidated financial statements, the Company’s consolidated financial statements have
been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities during
the normal course of operations. The Company has a history of net losses, cash used for operating activities, and
accumulated deficits. In particular, the COVID-19 pandemic has negatively impacted the Company’s business operations
for the year ended December 31, 2020 and will likely continue to impact the Company’s results of operations and cash
flows for subsequent periods. Such adverse conditions and events casted substantial doubt about the Company’s ability to
continue as a going concern. Management has developed its plan to mitigate these adverse conditions and events, including
a business plan and forecasted cash flows covering the next twelve months from the date of issuance of the consolidated
financial statements. Management has concluded that the plan alleviates the substantial doubt on the Company’s ability to
continue as a going concern. Such conclusion required management to make judgments and assumptions relating to
forecasted cash flows, including estimates of future revenues, capital expenditures, operational expenses and investments.
The principal considerations for our determination that performing procedures relating to the Company’s going concern
assessment is a critical audit matter are there was significant judgment by management when preparing its business plan
and forecasted cash flows included in the going concern assessment. This in turn led to a high degree of auditor judgment,
subjectivity and effort in performing procedures and evaluating audit evidence relating to management’s business plan and
forecasted cash flows.
F-3
Table of Contents
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of internal
controls relating to management’s going concern assessment, including the Company’s controls over the preparation of the
business plan and forecasted cash flows. These procedures also included, among others, (i) testing management’s process
for preparing the business plan and forecasted cash flows included in the going concern assessment; (ii) testing the
completeness, accuracy, and relevance of underlying data used in developing the forecasted cash flows; and (iii) evaluating
the reasonableness of the assumptions relating to future revenues, capital expenditures, operational expenses and
investments included in the business plan and forecasted cash flows by considering the Company’s historical performance,
relevant industry forecasts and market developments.
Goodwill impairment assessment
As described in Note 2(q) and Note 11 to the consolidated financial statements, the Company had goodwill of RMB232.0
million as of December 31, 2020. Management performs its goodwill impairment assessment annually or more frequently
if events or changes in circumstances indicate that it might be impaired. Where the qualitative assessment indicated that it
is more likely than not that the fair value of a reporting unit is less than its carrying amount, including goodwill, a
quantitative goodwill impairment test is performed. Goodwill impairment charge is recognized for the amount by which the
carrying amount exceeds the reporting unit’s fair value. Fair value of the reporting unit is estimated by management based
on the income approach, using a discounted cash flow model. The use of discounted cash flow model requires management
to make judgments and assumptions relating to revenue growth, gross margin, operating expenses and discount rates.
The principal considerations for our determination that performing procedures relating to goodwill impairment assessment
is a critical audit matter are there was significant judgment by management when developing the fair value measurement of
the reporting unit. This in turn led to a high degree of auditor judgment, subjectivity, and effort in performing our
procedures and in evaluating management’s cash flow projections and significant assumptions, including revenue growth,
gross margin, operating expenses and discount rates. The audit effort also included the involvement of professionals with
specialized skill and knowledge to assist in performing these procedures and evaluating the audit evidence obtained.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of internal
controls relating to management’s goodwill impairment assessment process, including internal controls over the valuation
of the Company’s reporting unit. These procedures also included, among others, (i) testing management’s determination of
the reporting unit and the process to estimate the reporting unit’s fair value, (ii) evaluating the appropriateness of the
discounted cash flow model; (iii) testing the completeness, accuracy and relevance of underlying data used in the model;
and (iv) evaluating management’s cash flow projections and significant assumptions including revenue growth, gross
margin, operation expenses and discount rates by considering the historical performance of the reporting unit, relevant
industry forecasts and market developments. Professionals with specialized skill and knowledge were also used to assist in
the evaluation of the Company’s discounted cash flow model and certain significant assumptions, including the discount
rates.
Non-financial assets impairment assessment
As described in Note 2(r), Note 8, Note 9, Note 10 and Note 14 to the consolidated financial statements, the Company had
property and equipment of RMB111.7 million, finite-lived intangible assets of RMB71.4 million, land use right of
RMB96.7 million and operating lease right-of-use assets of RMB42.3 million as of December 31, 2020. Management
performs its non-financial assets impairment assessment whenever events or changes in circumstances indicate that the
carrying value of the asset group may not be recoverable. Recoverability of asset group to be held and used is measured by
comparing the carrying amount of the asset group to future undiscounted cash flows expected to result from the use of the
asset group and their eventual disposition. Management’s impairment tests involved significant judgement and
assumptions, including determining the asset group and the related revenue growth, gross margin and operating expenses
of the asset group. If the asset group is determined to be not recoverable, an impairment loss is recognized at the amount
equal to the difference between the carrying amount and fair value of the asset group.
F-4
Table of Contents
The principal considerations for our determination that performing procedures relating to the non-financial assets
impairment assessment is a critical audit matter are there was significant judgment by management when determining the
estimated future undiscounted cash flows expected to be generated by the asset group. This in turn led to a high degree of
auditor judgment, subjectivity, and effort in performing procedures and evaluating audit evidence related to management’s
significant assumptions, including revenue growth, gross margin and operation expenses.
Addressing the matter involved performing procedures and evaluating audit evidence in connection with forming our
overall opinion on the consolidated financial statements. These procedures included testing the effectiveness of internal
controls relating to management’s impairment assessment process, including the Company’s internal controls over the
development of assumptions used to estimate the future undiscounted cash flows expected to be generated by the asset
group. These procedures also included, among others, (i) testing the determination of the asset group, (ii) testing
management’s process for developing the future undiscounted cash flows estimates; (iii) testing the completeness,
accuracy, and relevance of underlying data used in the estimate of future undiscounted cash flows; and (iv) evaluating
management’s significant assumptions used, including revenue growth, gross margin and operating expenses by
considering the historical performance of the asset group, relevant industry forecasts and market developments.
/s/ PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
April 29, 2021
We have served as the Company’s auditor since 2010, which includes periods before the Company became subject to SEC
reporting requirements.
F-5
Table of Contents
TUNIU CORPORATION
CONSOLIDATED BALANCE SHEETS
As of December 31, 2019 and 2020
(All amounts in thousands, except for share and per share data, or otherwise noted)
ASSETS
Current assets
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable, net
Amounts due from related parties
Prepayments and other current assets
Total current assets
Non-current assets
Long-term investments
Property and equipment, net
Intangible assets, net
Land use right, net
Operating lease right-of-use assets, net
Goodwill
Other non-current assets
Long-term amounts due from related parties
Total non-current assets
Total assets
LIABILITIES, REDEEMABLE NONCONTROLLING INTERESTS AND EQUITY
Current liabilities (including current liabilities of the Affiliated Entities without recourse to the Company amounting
to RMB3,350,631 and RMB1,733,252, as of December 31, 2019 and 2020, respectively)
Short-term borrowings
Accounts and notes payable
Amounts due to related parties
Salary and welfare payable
Taxes payable
Advances from customers
Operating lease liabilities, current
Accrued expenses and other current liabilities
Total current liabilities
Non-current liabilities
Operating lease liabilities, non-current
Deferred tax liabilities
Long-term borrowings
Other non-current liabilities
Total non-current liabilities
Total liabilities
Commitments and contingencies (Note 22)
Redeemable noncontrolling interests
Equity
Ordinary shares (US$0.0001 par value; 1,000,000,000 shares (including 780,000,000 Class A shares, 120,000,000
Class B shares and 100,000,000 shares to be designated by the Board of Directors) authorized as of December 31,
2019 and 2020; 389,331,544 shares (including 371,958,044 Class A shares and 17,373,500 Class B shares) issued
and outstanding as of December 31, 2019 and 2020)
Less: Treasury stock
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total Tuniu Corporation shareholders’ equity
Noncontrolling interests
Total equity
Total liabilities, redeemable noncontrolling interests and equity
2019
RMB
As of December 31,
2020
US$(Note 2(d))
RMB
295,463
327,052
1,305,386
529,983
65,108
1,300,284
3,823,276
1,305,612
223,340
166,267
98,774
105,839
232,007
83,923
557,582
2,773,344
6,596,620
203,845
1,311,963
29,755
112,511
12,207
1,113,879
57,490
907,119
3,748,769
54,718
23,658
9,689
10,947
99,012
3,847,781
213,538
50,566
1,353,670
264,134
23,913
378,704
2,284,525
266,866
111,697
71,362
96,713
42,293
232,007
91,180
—
912,118
3,196,643
60,679
705,838
21,034
47,487
6,004
208,762
18,264
676,501
1,744,569
34,367
14,861
22,577
3,054
74,859
1,819,428
32,726
7,750
207,459
40,480
3,665
58,038
350,118
40,899
17,118
10,937
14,822
6,482
35,557
13,974
—
139,789
489,907
9,299
108,174
3,224
7,278
920
31,994
2,799
103,678
267,366
5,267
2,278
3,460
468
11,473
278,839
37,200
27,200
4,169
249
(310,942)
9,113,512
293,784
(6,385,974)
2,710,629
1,010
2,711,639
6,596,620
249
(302,916)
9,125,689
275,012
(7,713,355)
1,384,679
(34,664)
1,350,015
3,196,643
38
(46,424)
1,398,573
42,147
(1,182,123)
212,211
(5,312)
206,899
489,907
The accompanying notes are an integral part of these consolidated financial statements.
F-6
Table of Contents
TUNIU CORPORATION
CONSOLIDATED STATEMENTS OF COMPREHENSIVE LOSS
For the Years Ended December 31, 2018, 2019 and 2020
(All amounts in thousands, except for share and per share data, or otherwise noted)
2018
RMB
For the Years Ended December 31,
2020
US$(Note 2(d))
2019
RMB
RMB
Revenues
Packaged tours
Others
Net revenues
Cost of revenues
Gross profit
Operating expenses
Research and product development
Sales and marketing
General and administrative
Other operating income
Total operating expenses
Loss from operations
Other income/(expenses)
Interest and investment income, net
Interest expense
Foreign exchange (losses)/gains, net
Other income/(loss), net
Loss before income tax expense
Income tax expense/(benefit)
Equity in income of affiliates
Net loss
Net loss attributable to noncontrolling interests
Net income attributable to redeemable noncontrolling interests
Net loss attributable to Tuniu Corporation
Accretion on redeemable noncontrolling interests
Net loss attributable to ordinary shareholders
1,830,630
409,519
2,240,149
(1,065,022)
1,175,127
1,886,822
394,165
2,280,987
(1,200,012)
1,080,975
302,359
147,900
450,259
(237,065)
213,194
(315,222)
(778,126)
(487,372)
56,599
(1,524,121)
(348,994)
(303,561)
(923,273)
(749,404)
24,419
(1,951,819)
(870,844)
152,929
(7,918)
(11,729)
16,494
(199,218)
(153)
—
(199,371)
(14,037)
178
(185,512)
(2,422)
(187,934)
156,862
(34,052)
(1,131)
18,509
(730,656)
(949)
2,223
(729,382)
(35,797)
980
(694,565)
(4,634)
(699,199)
(100,514)
(371,984)
(1,109,340)
27,849
(1,553,989)
(1,340,795)
3,526
(32,266)
18,720
(253)
(1,351,068)
6,641
797
(1,343,630)
(35,674)
—
(1,307,956)
—
(1,307,956)
46,339
22,667
69,006
(36,332)
32,674
(15,404)
(57,009)
(170,014)
4,268
(238,159)
(205,485)
540
(4,945)
2,869
(39)
(207,060)
1,018
122
(205,920)
(5,467)
—
(200,453)
—
(200,453)
Net loss
Other comprehensive income/(loss):
Foreign currency translation adjustment, net of nil tax
Comprehensive loss
Comprehensive loss attributable to noncontrolling interests
Comprehensive income attributable to redeemable noncontrolling interests
Comprehensive loss attributable to Tuniu Corporation
(199,371)
(729,382)
(1,343,630)
(205,920)
11,693
(187,678)
(14,037)
178
(173,819)
9,705
(719,677)
(35,797)
980
(684,860)
(18,772)
(1,362,402)
(35,674)
—
(1,326,728)
(2,877)
(208,797)
(5,467)
—
(203,330)
Loss per share
Basic and diluted
Weighted average number of ordinary shares used in computing basic and diluted
loss per share
(0.50)
(1.89)
(3.53)
(0.54)
377,744,381
369,472,880
370,240,040
370,240,040
The accompanying notes are an integral part of these consolidated financial statements.
F-7
Table of Contents
TUNIU CORPORATION
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
For the Years Ended December 31, 2018, 2019 and 2020
(All amounts in thousands, except for share and per share data, or otherwise noted)
Balance as of January 1, 2018
Repurchase of ordinary shares
Issuance of ordinary shares pursuant to
share incentive plan
Share-based compensation expenses
Capital contribution to subsidiaries with
noncontrolling interests
Acquisition of subsidiaries
Foreign currency translation adjustments
Accretion on redeemable noncontrolling
interest
Net loss
Balance as of December 31, 2018
Balance as of January 1, 2019
Repurchase of ordinary shares
Issuance of ordinary shares pursuant to
share incentive plan
Share-based compensation expenses
Capital contribution to subsidiaries with
noncontrolling interests
Acquisition of additional shares in
subsidiaries
Disposal of shares in subsidiaries
Acquisition of subsidiaries
Foreign currency translation adjustments
Accretion on redeemable noncontrolling
interest
Net loss
Balance as of December 31, 2019
Balance as of January 1, 2020
Cumulative effect of adoption of new
accounting standard (Note 2(i))
Repurchase of ordinary shares
Issuance of ordinary shares pursuant to
share incentive plan
Share-based compensation expenses
Foreign currency translation adjustments
Net loss
Balance as of December 31, 2020
Balance as of December 31, 2020(US$
(Note 2(d)))
Ordinary shares
Shares
Amount
RMB
248
—
Treasury Stock
Shares
(9,971,352)
(9,917,211)
Amount
RMB
(185,419)
(141,471)
Additional
paid-in
capital
RMB
9,013,793
—
564,663
—
22,355
—
(18,130)
68,738
—
—
—
—
—
—
—
—
249
—
—
(19,323,900)
—
—
(304,535)
9,061,979
284,079
249
—
(19,323,900)
(947,529)
(304,535)
(11,147)
9,061,979
—
Accumulated
other
comprehensive Accumulated
Total Tuniu
Corporation
Shareholders’ Noncontrolling
income/(loss)
RMB
272,386
—
—
—
—
—
11,693
—
—
284,079
—
—
—
—
—
—
—
9,705
—
—
—
—
—
(2,422)
—
(4,600)
61,736
—
(1,134)
165
—
—
(4,634)
—
deficit
RMB
(5,505,897)
—
equity
RMB
3,595,111
(141,471)
—
—
—
—
—
4,226
68,738
—
—
11,693
—
(185,512)
(5,691,409)
(2,422)
(185,512)
3,350,363
interests
RMB
2,198
—
—
—
2,117
3,892
—
—
(14,037)
(5,830)
Total Equity
RMB
3,597,309
(141,471)
4,226
68,738
2,117
3,892
11,693
(2,422)
(199,549)
3,344,533
(5,691,409)
—
3,350,363
(11,147)
(5,830)
—
3,344,533
(11,147)
—
—
—
—
—
—
—
140
61,736
—
—
140
61,736
—
1,500
1,500
(1,134)
165
—
9,705
(2,281)
(380)
43,798
—
—
(35,797)
1,010
(3,415)
(215)
43,798
9,705
(4,634)
(730,362)
2,711,639
—
(694,565)
(6,385,974)
(4,634)
(694,565)
2,710,629
388,918,015
—
413,529
—
—
—
—
—
—
389,331,544
389,331,544
—
—
—
—
—
—
—
—
—
—
1
—
—
—
—
—
—
—
—
—
—
—
—
—
964,128
4,740
—
—
—
—
—
—
—
—
—
—
—
—
—
—
(19,307,301)
—
—
(310,942)
389,331,544
249
9,113,512
293,784
389,331,544
249
(19,307,301)
(310,942)
9,113,512
293,784
(6,385,974)
2,710,629
1,010
2,711,639
—
—
—
—
—
—
389,331,544
—
—
—
—
—
—
249
—
(160,554)
—
(308)
—
—
625,167
—
—
—
(18,842,688)
8,334
—
—
—
(302,916)
(8,287)
20,464
—
—
9,125,689
—
—
—
—
(18,772)
—
275,012
(19,425)
—
(19,425)
(308)
—
—
(19,425)
(308)
—
—
—
(1,307,956)
(7,713,355)
47
20,464
(18,772)
(1,307,956)
1,384,679
—
—
—
(35,674)
(34,664)
47
20,464
(18,772)
(1,343,630)
1,350,015
389,331,544
38
(18,842,688)
(46,424)
1,398,573
42,147
(1,182,123)
212,211
(5,312)
206,899
The accompanying notes are an integral part of these consolidated financial statements.
F-8
Table of Contents
TUNIU CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
For the Years Ended December 31, 2018, 2019 and 2020
(All amounts in thousands, except for share and per share data, or otherwise noted)
For the Years Ended December 31,
2018
RMB
2019
RMB
RMB
2020
US$ (Note 2(d))
Cash flows from operating activities:
Net loss
Depreciation of property and equipment
Amortization of intangible assets and land use right
Amortization of right-of-use assets
Allowance for credit losses
Change in fair value of contingent consideration
Foreign exchange (losses)/gains
Loss from long-term investments
Loss from disposal of property and equipment and intangible assets
Loss from impairment of intangible asset
Share-based compensation expenses
Change in deferred tax liabilities
Remeasurement of equity investments
Change in fair value of investments
Gain from disposal of equity investment
Share of results of equity investees
Changes in operating assets and liabilities:
Accounts receivable
Short-term and long-term amounts due from related parties
Prepayments and other current assets
Accrued interests of yield enhancement products
Other non-current assets
Operating lease liabilities, current and non-current
Accounts and notes payable
Amounts due to related parties
Salary and welfare payable
Taxes payable
Advances from customers
Accrued expenses and other liabilities
Accrued interests of amounts due to the individual investors of yield enhancement products
Non-current liabilities
Net cash provided by/(used in) operating activities
Cash flows from investing activities:
Purchase of short-term investments
Proceeds from maturity of short-term investments
Proceeds from maturity of yield enhancement products
(Increase)/decrease in loan receivable
Purchase of property and equipment and intangible assets
Cash paid for long-term investments
Proceeds from maturity of long-term investments
Cash received from disposal of equity investment
Cash paid for acquisition, net of cash received
Net cash provided by/(used in) investing activities
Cash flows from financing activities:
Cash paid for repurchase of ordinary shares
Proceeds from issuance of ordinary shares upon exercise of options
Contingent consideration paid for business acquisitions
Repurchase of redeemable noncontrolling interests
Acquisition of noncontrolling interests of subsidiaries
Cash contribution from noncontrolling interests
Proceeds from yield enhancement products
Repayment of borrowings and discounted notes
Proceeds from borrowings and discounted notes
Net cash (used in)/provided by financing activities
Effect of exchange rate changes on cash, cash equivalents and restricted cash
Net increase/(decrease) in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of year
Cash, cash equivalents and restricted cash at the end of year
Supplemental disclosure of cash flow information
Income tax paid
Supplemental disclosure of non-cash investing and financing activities
Accrual related to purchase of property and equipment
Receivables related to exercise of stock options
Accrual related to purchase business acquisitions
(199,371)
66,903
153,258
—
2,568
(5,242)
14,279
—
1,368
—
68,738
(2,362)
(12,581)
(8,153)
(1,850)
—
(60,584)
14,810
(1,867)
10,580
(25,606)
—
553,445
(9,765)
(83,274)
(8,748)
(152,335)
(34,719)
(6,559)
(4,844)
268,089
(1,858,032)
4,067,804
172,458
(1,326,160)
(119,442)
(874,120)
91,030
3,114
(2,660)
153,992
(139,070)
4,585
(6,800)
(30,000)
—
2,117
(171,412)
(390)
195,758
(145,212)
(21,754)
255,115
575,911
831,026
3,740
5,202
(23)
36,456
(729,382)
87,887
155,002
79,683
185,130
344
(82)
—
1,501
32,014
61,736
(2,727)
(18,356)
(17,977)
(24)
(2,223)
(55,043)
49,815
160,205
—
103
(73,315)
(36,253)
(47,404)
5,860
(11,383)
44,498
15,234
—
(5,304)
(120,461)
(2,041,280)
1,614,098
—
(16,584)
(122,479)
(547,205)
568,532
—
(33,216)
(578,134)
(13,547)
109
(13,921)
(37,733)
(3,415)
1,500
—
(281,354)
833,471
485,110
4,974
(208,511)
831,026
622,515
2,286
12,473
(55)
30,530
(1,343,630)
127,836
66,597
28,952
829,652
(5,451)
(15,682)
49,502
3,790
31,876
20,464
(8,797)
9,021
(60,630)
—
(797)
208,175
9,553
447,332
—
(45,233)
(24,983)
(492,659)
(8,721)
(64,936)
(6,203)
(905,118)
(163,025)
—
—
(1,313,115)
(1,460,051)
1,445,422
—
241,003
(28,330)
—
904,755
56,574
(310)
1,159,063
(308)
58
(14,019)
(10,000)
—
—
—
(918,532)
733,255
(209,546)
5,187
(358,411)
622,515
264,104
3,515
5,632
(45)
10,750
(205,920)
19,592
10,206
4,437
127,150
(835)
(2,403)
7,587
581
4,885
3,136
(1,348)
1,383
(9,292)
—
(122)
31,904
1,464
68,557
—
(6,932)
(3,829)
(75,503)
(1,337)
(9,952)
(951)
(138,715)
(24,986)
—
—
(201,243)
(223,763)
221,521
—
36,935
(4,342)
—
138,660
8,670
(48)
177,633
(47)
9
(2,149)
(1,533)
—
—
—
(140,770)
112,376
(32,114)
795
(54,929)
95,405
40,476
539
863
(7)
1,647
The accompanying notes are an integral part of these consolidated financial statements.
F-9
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
1. Organization and Principal Activities
Tuniu Corporation (the “Company”) is an exempted company with limited liability incorporated in the Cayman
Islands. The Company, its subsidiaries and the consolidated variable interest entity (“VIE”) and the VIE’s subsidiaries
(collectively referred to as the “Affiliated Entities”) are collectively referred to as the “Group”. The Group’s principal
activity is the provision of travel-related services in the People’s Republic of China (“PRC”).
As of December 31, 2020, the Company’s significant consolidated subsidiaries and the consolidated Affiliated Entities
are as follows:
Date of establishment/acquisition
Percentage of
direct or indirect
economic
ownership
Place of
incorporation
Name of subsidiaries and Affiliated entities
Subsidiaries of the Company:
Tuniu (HK) Limited
Tuniu (Nanjing) Information Technology Co., Ltd.
Beijing Tuniu Technology Co., Ltd. (“Beijing
Tuniu”)
Jiangsu Kaihui Commercial Factoring Co., Ltd
Xiamen Suiwang International Travel Service Co.,
Established on May 20, 2011
Established on August 24, 2011
Hong Kong
PRC
Established on September 8, 2008 PRC
Established on September 22, 2015 PRC
Ltd.
Established on January 26, 2016
Tianjin Tuniu International Travel Service Co., Ltd. Established on March 23, 2016
Guangzhou Kaihui Internet Microcredit Co., Ltd.
Nanjing Kaihui Internet Microcredit Co., Ltd.
Variable Interest Entity (“VIE”)
Nanjing Tuniu Technology Co., Ltd. (“Nanjing
PRC
PRC
PRC
Established on December 28, 2016 PRC
Established on June 13, 2016
Tuniu”)
Established on December 18, 2006 PRC
Subsidiaries of VIE
Shanghai Tuniu International Travel Service Co.,
Ltd.
Acquired on August 22, 2008
Nanjing Tuniu International Travel Service Co., Ltd. Acquired on December 22, 2008
Beijing Tuniu International Travel Service Co., Ltd. Acquired on November 18, 2009
Nanjing Tuzhilv Tickets Sales Co., Ltd.
Beijing Global Tour International Travel Service
Established on April 19, 2011
Co., Ltd.
Tuniu Insurance Brokers Co., Ltd.
Acquired on July 1, 2015
Acquired on August 11, 2015
PRC
PRC
PRC
PRC
PRC
PRC
F-10
100 %
100 %
100 %
100 %
100 %
100 %
100 %
90 %
100 %
100 %
100 %
100 %
100 %
75.02 %
100 %
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies
(a) Basis of Presentation
The consolidated financial statements of the Group have been prepared in accordance with the accounting principles
generally accepted in the United States of America (“U.S. GAAP”).
Liquidity
The Group’s consolidated financial statements have been prepared on a going concern basis, which contemplates the
realization of assets and liquidation of liabilities during the normal course of operations. The Group incurred net losses of
approximately RMB199,371, RMB729,382 and RMB1,343,630 for the years ended December 31, 2018, 2019 and 2020,
respectively. Net cash used in operating activities was approximately RMB120,461 and RMB1,313,115 for the years ended
December 31, 2019 and 2020 respectively, and net cash provided by operating activities was RMB268,089 for the year
ended December 31, 2018. The significant operating cash outflows for the year ended December 31, 2020 included those
relating to refunds made to travellers as a result of their cancellation of travel orders as a result of the outbreak of COVID-
19 pandemic in early 2020. As of December 31, 2020, the Group's accumulated deficit was RMB7,713,355 and the Group
had cash and cash equivalents and short-term investments of RMB1,567,208. The COVID-19 pandemic has negatively
impacted the Group’s business operations for the year ended December 31, 2020, and will continue to impact the Group’s
results of operations and cash flows for subsequent periods. Such conditions and events casted substantial doubt on the
Group’s ability to continue as a going concern. In response to the COVID-19 pandemic, in 2020, the Group has already
taken actions to improve its liquidity, including scaling down its business operations by reducing capital expenditures and
operational expenses that are discretionary in nature and obtaining funding from the maturity of certain short-term and
long-term investments. Management plans to maintain the Group’s operation scale while sales of domestic travel products
recovers gradually, and will continue to manage the Group’s capital expenditures, operational expenses and investments
based on the Group’s working capital needs. Based on management’s liquidity assessment, which has considered the
Group’s operations at the current business scale, the latest development of COVID-19 and its continuous impact on the
Group’s business operations, the available funding from maturity of the Group’s short-term and long-term investments, and
the available cash and cash equivalents, the Group will be able to meet its working capital requirements and capital
expenditures in the ordinary course of business for the next twelve months from the issuance of these consolidated
financial statements. As a result, management concluded that the substantial doubt on the Group’s ability to continue as a
going concern has been alleviated. Accordingly, the consolidated financial statements have been prepared on going concern
basis.
(b) Principles of Consolidation
The consolidated financial statements include the financial statements of the Company, its subsidiaries, the Affiliated
Entities for which the Company is the primary beneficiary. Subsidiaries are those entities in which the Company, directly
or indirectly, controls more than one half of the voting power, has the power to appoint or remove the majority of the
members of the board of directors, or to cast a majority of votes at the meeting of board of directors, or has the power to
govern the financial and operating policies of the investee under a statute or agreement among the shareholders or equity
holders.
A VIE is an entity in which the Company, or its subsidiary, through contractual arrangements, has controlling interest
and therefore the Company or its subsidiary is the primary beneficiary of the entity. In determining whether the Company
or its subsidiary has controlling interests in a VIE, the Company considers whether the company or its subsidiary has the
power to direct activities that most significantly impact the VIE’s economic performance, and the right to receive benefits
from the VIE or the obligation right to absorb losses of the VIE that could be potentially significant to the VIE.
All significant transactions and balances among the Company, its subsidiaries and the Affiliated Entities have been
eliminated upon consolidation.
F-11
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(b) Principles of Consolidation – continued
To comply with PRC laws and regulations that restrict foreign equity ownership of companies that operate internet
content, travel agency and air-ticketing services, the Company operates its website and engaged in such restricted services
through Nanjing Tuniu and its subsidiaries. Nanjing Tuniu’s equity interests are held by Dunde Yu, the Company’s Chief
Executive Officer, Haifeng Yan, the Company’s director, and several other PRC citizens. On September 17, 2008, Beijing
Tuniu, one of the Company’s wholly owned subsidiaries, entered into a series of agreements with Nanjing Tuniu and its
shareholders. Pursuant to these agreements, Beijing Tuniu has the ability to direct substantially all the activities of Nanjing
Tuniu, and absorb substantially all of the risks and rewards of the Affiliated Entities. As a result, Beijing Tuniu is the
primary beneficiary of Nanjing Tuniu, and has consolidated the Affiliated Entities.
Contractual arrangements
On September 17, 2008, Beijing Tuniu entered into a series of contractual agreements with Nanjing Tuniu and its
shareholders. The following is a summary of the agreements which allow the Company to exercise effective control over
Nanjing Tuniu:
(1) Purchase Option Agreement.
Under the purchase option agreement entered between Beijing Tuniu and the shareholders of Nanjing Tuniu on
September 17, 2008, Beijing Tuniu has the irrevocable exclusive right to purchase, or have its designated person
or persons to purchase all or part of the shareholders’ equity interests in Nanjing Tuniu at RMB1,800 which was
increased to RMB2,430 in March 2014. The option term remains valid for a period of 10 years and can be
extended indefinitely at Beijing Tuniu’s discretion. The purchase consideration was paid by Beijing Tuniu to the
shareholders of Nanjing Tuniu shortly after the purchase option agreement was entered. On January 24, 2014, the
Company amended and restated the purchase option agreement, and the effective term of the purchase option
agreement has been changed to until all equity interests held in Nanjing Tuniu are transferred or assigned to
Beijing Tuniu or its designated person or persons.
(2) Equity Interest Pledge Agreements.
Under the equity interest pledge agreements entered between Beijing Tuniu and the shareholders of Nanjing Tuniu
on September 17, 2008, the shareholders pledged all of their equity interests in Nanjing Tuniu to guarantee their
performance of their obligations under the purchase option agreement and the shareholders’ voting rights
agreement. If the shareholders of Nanjing Tuniu breach their contractual obligations under the purchase option
agreement, Beijing Tuniu, as the pledgee, will have the right to either conclude an agreement with the pledger to
obtain the pledged equity or seek payments from the proceeds of the auction or sell-off of the pledged equity to
any person pursuant to the PRC law. The shareholders of Nanjing Tuniu agreed that they will not dispose of the
pledged equity interests or create or allow any encumbrance on the pledged equity interests. During the equity
pledge period, Beijing Tuniu is entitled to all dividends and other distributions made by Nanjing Tuniu. The equity
interest pledge agreement remains effective until the shareholders of Nanjing Tuniu discharge all their obligations
under the purchase option agreement, or Beijing Tuniu enforces the equity interest pledge, whichever is earlier.
F-12
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(b) Principles of Consolidation – continued
(3) Shareholders’ Voting Rights Agreement.
Under the shareholders’ voting rights agreement entered between Beijing Tuniu and the shareholders of Nanjing
Tuniu on September 17, 2008, each of the shareholders of Nanjing Tuniu appointed Beijing Tuniu’s designated
person as their attorney-in-fact to exercise all of their voting and related rights with respect to their equity interests
in Nanjing Tuniu, including attending shareholders’ meetings, voting on all matters of Nanjing Tuniu, nominating
and appointing directors, convene extraordinary shareholders’ meetings, and other voting rights pursuant to the
then effective articles of association. The shareholders’ voting rights agreement will remain in force for an
unlimited term, unless all the parties to the agreement mutually agree to terminate the agreement in writing or
cease to be shareholders of Nanjing Tuniu.
(4) Irrevocable Powers of Attorney.
Under the powers of attorney issued by the shareholders of Nanjing Tuniu on September 17, 2008, the
shareholders of Nanjing Tuniu each irrevocably appointed Mr. Tao Jiang, a person designated by Beijing Tuniu, as
the attorney-in-fact to exercise all of their voting and related rights with respect to their equity interests in Nanjing
Tuniu. Each power of attorney will remain in force until the shareholders’ voting rights agreement expires or is
terminated. On January 24, 2014, the shareholders of Nanjing Tuniu issued powers of attorney to irrevocably
appoint Beijing Tuniu as the attorney-in-fact to exercise all of their voting and related rights with respect to their
equity interests in Nanjing Tuniu. These powers of attorney replaced the powers of attorney previously granted to
Mr. Tao Jiang on September 17, 2008.
(5) Cooperation Agreement.
Under the cooperation agreement entered between Beijing Tuniu and Nanjing Tuniu, Beijing Tuniu has the
exclusive right to provide Nanjing Tuniu technology consulting and services related to Nanjing Tuniu’s
operations, which require certain licenses. Beijing Tuniu owns the exclusive intellectual property rights created as
a result of the performance of this agreement. Nanjing Tuniu agrees to pay Beijing Tuniu a quarterly service fee
for services performed, and the quarterly service fee shall not be lower than 100% of profits of Nanjing Tuniu and
its subsidiaries, and that Beijing Tuniu can adjust the service fee at its own discretion. This agreement remains
effective for an unlimited term, unless the parties mutually agree to terminate the agreement, one of the parties is
declared bankrupt or Beijing Tuniu is not able to provide consulting and services as agreed for more than three
consecutive years because of force majeure. On January 24, 2014, the Company amended and restated the
Cooperation Agreement. In the amended and restated agreement, the service fee has been changed to a quarterly
payment which equals the profits of each of Nanjing Tuniu and its subsidiaries, and that Beijing Tuniu can adjust
the service fee at its own discretion. Also in the amended and restated Cooperation Agreement, Beijing Tuniu has
the unilateral right to terminate the agreement.
Subsequently in February 2021, the Group restructued the ownership structure of Nanjing Tuniu, accordingly the
shareholders of Nanjing Tuniu other than Dunde Yu transferred all of their equity interest in Nanjing Tuniu to Dunde Yu
and Anqiang Chen, the Group’s financial controller. After the transaction, Dunde Yu and Anqiang Chen hold 80.89% and
19.11% equity interests in Nanjing Tuniu, respectively. On February 19, 2021, Beijing Tuniu, Nanjing Tuniu and the then
existing shareholders of Nanjing Tuniu, entered into a termination agreement to terminate the existing contractual
arrangements and, on the same day, Beijing Tuniu, Nanjing Tuniu and the new shareholders of Nanjing Tuniu, namely
Dunde Yu and Anqiang Chen, entered into new contractual arrangements which are substantially similar to the contractual
arrangements the Group has historically adopted.
F-13
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(b) Principles of Consolidation – continued
In the years ended December 31, 2018, 2019 and 2020, the Company and its subsidiaries received service fees of
RMB197,853, RMB30,420 and RMB12,813, respectively, from its consolidated Affiliated Entities, which were eliminated
in the consolidated financial statements.
Risks in relation to the VIE structure
The Group believes that each of the agreements and the powers of attorney under the contractual arrangements among
Beijing Tuniu, Nanjing Tuniu and its shareholders is valid, binding and enforceable, and does not and will not result in any
violation of PRC laws or regulations currently in effect. The legal opinion of Fangda Partners, the Company’s PRC legal
counsel, also supports this conclusion. The shareholders of Nanjing Tuniu are also shareholders, nominees of shareholders,
or designated representatives of shareholders of the Company and therefore have no current interest in seeking to act
contrary to the contractual arrangements. However, uncertainties in the PRC legal system could limit the Company’s ability
to enforce these contractual arrangements and if the shareholders of Nanjing Tuniu were to reduce their interest in the
Company, their interests may diverge from that of the Company and that may potentially increase the risk that they would
seek to act contrary to the contractual terms.
The Company’s ability to control Nanjing Tuniu also depends on the power of attorney Beijing Tuniu has to vote on all
matters requiring shareholder approval in Nanjing Tuniu. As noted above, the Company believes this power of attorney is
legally enforceable but it may not be as effective as direct equity ownership.
In addition, if the legal structure and contractual arrangements were found to be in violation of any existing PRC laws
and regulations, the PRC government could:
● levying fines or confiscate the Group’s income;
● revoke the Group’s business or operating licenses;
● require the Group to discontinue, restrict or restructure its operations;
● shut down the Group’s servers or block the Group’s websites and mobile platform;
● restrict or prohibit the use of the Group’s financing proceeds to finance its business and operations in China; or
● take other regulatory or enforcement actions against the Group that could be harmful to the Group’s business
F-14
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(b) Principles of Consolidation – continued
The imposition of any of these penalties may result in a material and adverse effect on the Group’s ability to conduct
the Group’s business. In addition, the imposition of any of these penalties may cause the Group to lose the right to direct
the activities of Nanjing Tuniu (through its equity interest in its subsidiaries) or the right to receive economic benefits from
the Affiliated Entities. Therefore, a risk exists in that the Group would no longer be able to consolidate Nanjing Tuniu and
its subsidiaries. In March 2019, the PRC National People’s Congress promulgated the Foreign Investment Law, or the PRC
Foreign Investment Law, which became effective on January 1, 2020 and replaced the major existing laws and regulations
governing foreign investment in the PRC. The 2019 Foreign Investment Law does not touch upon the relevant concepts
and regulatory regimes that were historically suggested for the regulation of VIE structures, and thus this regulatory topic
remains unclear under the Foreign Investment Law. As the PRC Foreign Investment Law is newly adopted and relevant
government authorities may promulgate more laws, regulations or rules on the interpretation and implementation of the
PRC Foreign Investment Law, the possibility can’t be ruled out that the VIE structure adopted by the Group may be
deemed as a method of foreign investment by, any of such future laws, regulations and rules, which cause significant
uncertainties as to whether the Group’s VIE structures would be treated as a method of foreign investment. If the Group’s
VIE structure would be deemed as a method of foreign investment under any of such future laws, regulations and rules, and
any of the Group’s businesses operation would fall in the “negative list” for foreign investment that is subject to any
foreign investment restrictions or prohibitions, the Group would be required to take further actions to comply with such
laws, regulations and rules, which may materially and adversely affect the Group’s current corporate structure, corporate
governance, business, financial conditions and results of operations.
F-15
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(b) Principles of Consolidation – continued
Summary financial information of the Affiliated Entities in the consolidated financial statements
As of December 31, 2020, the aggregate accumulated deficit of the Affiliated Entities was RMB4,617 million prior to
the elimination of transactions between the Affiliated Entities and the Company or the Company’s subsidiaries.
The following assets, liabilities, revenues and loss of the Affiliated Entities were included in the consolidated financial
statements as of December 31, 2019 and 2020 and for the years ended December 31, 2018, 2019 and 2020:
2019
RMB
As of December 31,
2020
US$(Note 2(d))
RMB
ASSETS
Current assets
Cash and cash equivalents
Restricted cash
Short-term investments
Accounts receivable, net
Intercompany receivables
Prepayments and other current assets
Total current assets
Non-current assets
Long-term investments
Property and equipment, net
Intangible assets, net
Operating lease right-of-use assets, net
Goodwill
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Short-term borrowings
Accounts and notes payable
Intercompany payable
Salary and welfare payable
Taxes payable
Advances from customers
Operating lease liabilities, current
Accrued expenses and other current liabilities
Total current liabilities
Non-current liabilities
Operating lease liabilities, non-current
Deferred tax liabilities
Total non-current liabilities
Total liabilities
126,096
318,826
831,256
284,469
870,818
534,144
115,737
49,068
685,773
153,844
504,780
238,020
2,965,609 1,747,222
232,068
1,009,049
46,346
129,469
61,682
91,953
37,182
68,193
185,004
185,004
83,328
82,422
1,566,090
645,610
4,531,699 2,392,832
184,000
1,149,051
5,241,312
251,685
604,766
5,293,093
81,144
6,519
1,104,505
38,397
3,384
192,965
9,527
632,528
8,591,943 7,026,345
30,779
794,633
42,155
20,112
62,267
30,108
12,019
42,127
8,654,210 7,068,472
F-16
17,737
7,520
105,099
23,578
77,361
36,478
267,773
35,566
7,103
9,453
5,698
28,353
12,771
98,944
366,717
38,572
92,684
811,202
5,885
519
29,573
1,460
96,939
1,076,834
4,614
1,842
6,456
1,083,290
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(b) Principles of Consolidation – continued
Net revenues
Net loss
Net cash provided by/(used in) operating activities
Net cash (used in)/provided by investing activities
Net cash provided by/(used in) financing activities
2018
RMB
2019
RMB
For the Years Ended December 31,
2020
US$ (Note 2(d))
74,437
(78,070)
(130,208)
138,229
(50,951)
RMB
485,702
(509,406)
(849,609)
901,947
(332,455)
1,524,924 1,181,747
(334,832)
(505,492)
(246,340)
680,822
(29,031)
31,282
(465,029)
569,565
Currently there is no contractual arrangement that could require the Company to provide additional financial support
to the Affiliated Entities. As the Company is conducting its business mainly through the Affiliated Entities, the Company
may provide such support on a discretionary basis in the future, which could expose the Company to a loss.
Under the contractual arrangements with Nanjing Tuniu and through its equity interest in its subsidiaries, the Group
has the power to direct the activities of the Affiliated Entities and direct the transfer of assets out of the Affiliated Entities.
As the consolidated Affiliated Entities are each incorporated as a limited liability company under the PRC Company Law,
the creditors do not have recourse to the general credit of the Company for all of the liabilities of the consolidated
Affiliated Entities.
(c) Use of Estimates
The preparation of the Group’s consolidated financial statements in conformity with the U.S. GAAP requires
management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of
contingent assets and liabilities. Actual results could differ materially from those estimates. Significant accounting
estimates reflected in the Group’s consolidated financial statements mainly include fair value of short-term and long-term
investments, current expected credit losses for financial assets measured at amortized cost, estimated useful lives of
property and equipment and intangible assets, impairment for goodwill and non-financial assets, the purchase price
allocation and fair value of contingent considerations with respect to business combinations, fair value of share-based
payment arrangements, subsequent measurement of equity investments using measurement alternative, valuation allowance
for deferred tax assets and the determination of uncertain tax positions.
(d) Functional Currency and Foreign Currency Translation
The Group uses Renminbi (“RMB”) as its reporting currency. The functional currency of the Company and its
subsidiaries incorporated outside of PRC is the United States dollar (“US$”), while the functional currency of the PRC
entities in the Group is RMB as determined based on ASC 830, Foreign Currency Matters.
Transactions denominated in other than the functional currencies are re-measured into the functional currency of the
entity at the exchange rates prevailing on the transaction dates. Foreign currency denominated financial assets and
liabilities are re-measured at the balance sheet date exchange rate. The resulting exchange differences are included in the
consolidated statements of comprehensive loss as foreign exchange gains / losses.
F-17
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(d) Functional Currency and Foreign Currency Translation – continued
When preparing the consolidated financial statements presented in RMB, assets and liabilities of the Company and its
subsidiaries incorporated outside of PRC are translated into RMB at fiscal year-end exchange rates, and equity accounts are
translated into RMB at historical exchange rates. Income and expense items are translated at average exchange rates
prevailing during the respective fiscal years. Translation adjustments arising from these are reported as foreign currency
translation adjustments and are shown as a component of accumulated other comprehensive income or loss in the
consolidated statement of changes in shareholders’ equity.
The unaudited United States dollar amounts disclosed in the accompanying financial statements are presented solely
for the convenience of the readers. Translations of amounts from RMB into US$ for the convenience of the reader were
calculated at the rate of US$1.00 = RMB6.5250 on December 31, 2020, as set forth in H.10 statistical release of the Federal
Reserve Board. No representation is made that the RMB amounts could have been, or could be, converted into US$ at that
rate on December 31, 2020, or at any other rate.
(e) Fair Value Measurement
The Group defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an
orderly transaction between market participants at the measurement date. When determining the fair value measurements
for assets and liabilities required or permitted to be recorded at fair value, the Group considers the principal or most
advantageous market in which it would transact and it considers assumptions that market participants would use when
pricing the asset or liability.
The established fair value hierarchy requires an entity to maximize the use of observable inputs and minimize the use
of unobservable inputs when measuring fair value. A financial instrument’s categorization within the fair value hierarchy is
based upon the lowest level of input that is significant to the fair value measurement. The three levels of inputs may be
used to measure fair value include:
Level 1 applies to assets or liabilities for which there are quoted prices in active markets for identical assets or
liabilities.
Level 2 applies to assets or liabilities for which there are inputs other than quoted prices included within Level 1 that
are observable for the asset or liability such as quoted prices for similar assets or liabilities in active markets;
quoted prices for identical assets or liabilities in markets with insufficient volume or infrequent transactions
(less active markets); or model-derived valuations in which significant inputs are observable or can be
derived principally from, or corroborated by, observable market data.
Level 3 applies to assets or liabilities for which there are unobservable inputs to the valuation methodology that are
significant to the measurement of the fair value of the assets or liabilities.
The Group’s financial instruments include cash and cash equivalents, restricted cash, short-term investments, accounts
receivable, accounts payable, amounts due from and due to related parties, long-term investments in financial products,
borrowings, operating lease liabilities, contingent consideration for acquisitions and certain accrued liabilities and other
current liabilities. The carrying values of these financial instruments approximated their fair values due to the short-term
maturity of these instruments except for certain investments which are carried at fair value at each balance sheet date.
Certain short-term and long-term investments in financial products and securities classified within Level 2 are valued using
directly or indirectly observable inputs in the market place. Certain investments in financial products classified within
Level 3 are valued based on a model utilizing unobservable inputs which require significant management judgment and
estimation.
F-18
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TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(e) Fair Value Measurement – continued
The Group’s assets and liabilities measured at fair value on a recurring basis are summarized below:
Short-term investments
Long-term investments
Fair Value Measurement Using Significant Other
Observable Inputs (Level 2)
As of December 31,
2019
RMB
1,113,536
282,995
RMB
1,223,547
6,819
2020
US$ (Note 2(d))
187,517
1,045
Short-term investments
Long-term investments
Contingent consideration for acquisitions - short term
Contingent consideration for acquisitions - long term
The roll forward of major Level 3 investments are as following:
Fair value of Level 3 investment at the beginning of the year
Addition
Decrease
Change in fair value of the investments
Fair value of Level 3 investment at the end of the year
Fair Value Measurement Using
Unobservable Inputs (Level 3)
As of December 31,
2020
US$ (Note 2(d))
—
10,959
1,179
468
—
71,506
7,696
3,054
2019
RMB
114,043
711,927
19,273
10,947
RMB
2019
RMB
1,100,080
494,100
(795,587)
27,377
825,970
As of December 31,
2020
US$ (Note 2(d))
126,585
—
(115,557)
(69)
10,959
RMB
825,970
—
(754,013)
(451)
71,506
The Company determined the fair value of its investments by using income approach with significant unobservable
inputs of future cash flows and discount rates ranging from 2.0% to 10.0%.
The roll forward of contingent consideration for acquisitions is as below:
Balance at the beginning of the year
Addition
Net change in fair value
Payment
Balance at the end of the year
2019
RMB
36,456
7,341
344
(13,921)
30,220
As of December 31,
2020
US$ (Note 2(d))
4,631
—
(835)
(2,149)
1,647
RMB
30,220
—
(5,451)
(14,019)
10,750
Contingent consideration is valued using an expected cash flow method with unobservable inputs including the
probability to achieve the operating and financial targets, which is assessed by the Group, in connection with the contingent
consideration arrangements.
F-19
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TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(f) Cash and Cash Equivalents
Cash and cash equivalents represent cash on hand and demand deposits placed with banks and third party payment
processors, which are unrestricted as to withdrawal or use.
(g) Restricted Cash
Restricted cash represents cash that cannot be withdrawn without the permission of third parties. The Group’s
restricted cash mainly represents (i) cash deposits required by tourism administration departments as a pledge to secure
travellers’ rights and interests, (ii) cash deposits required by China Insurance Regulatory Commission for engaging in
insurance agency or brokering activities. (iii) the deposits held in designated bank accounts for issuance of bank acceptance
notes and letter of guarantee, and required by the Group’s business partners.
Cash, cash equivalents and restricted cash as reported in the consolidated statement of cash flows are presented
separately on consolidated balance sheet as follows:
Cash and cash equivalents
Restricted cash
Total
(h) Short-term Investments
As of December 31,
2018
RMB
560,356
270,670
831,026
2019
RMB
295,463
327,052
622,515
RMB
213,538
50,566
264,104
2020
US$ (Note 2(d))
32,726
7,750
40,476
Short-term investments are comprised of (i) held-to-maturity investments such as time deposits, which are due
between three months and one year and stated at amortized cost; and (ii) equity securities and investments in financial
products issued by banks or other financial institutions, which contain a fixed or variable interest rate and with original
maturities between three months and one year. Such investments are generally not permitted to be redeemed early or are
subject to penalties for redemption prior to maturity. These investments are stated at fair value. Changes in the fair value
are reflected in the consolidated statements of comprehensive loss. There was no other-than-temporary impairment of
short-term investments measured at amortized cost for the years ended December 31, 2018, 2019 and 2020.
(i) Current expected credit losses
In 2016, the FASB issued ASU No. 2016-13, "Financial Instruments-Credit Losses (Topic 326): Measurement of
Credit Losses on Financial Instruments" ("ASC Topic 326"), which amends previously issued guidance regarding the
impairment of financial instruments by creating an impairment model that is based on expected losses rather than incurred
losses. On January 1, 2020, the Group adopted this ASC Topic 326 and several associated ASUs on the measurement of
credit losses, which requires the Group to estimate lifetime expected credit losses upon recognition of the financial assets.
The Group adopted the accounting standards update using a modified retrospective approach. Upon adoption of the new
standard on January 1, 2020, the Group recorded a net decrease to its retained earnings of RMB19,425.
F-20
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TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(i) Current expected credit losses – continued
The Group’s accounts receivable, held-to-maturity investments, prepayments and other current assets, amounts due
from related parties and long-term amounts due from related parties are within the scope of ASC Topic 326. The Group has
identified the relevant risk characteristics of its customers and the related receivables and prepayments, which include
nature, size and types of the services the Group provides, or a combination of these characteristics. Receivables with
similar risk characteristics have been grouped into pools. For each pool, the Group considers the historical credit loss
experience, current economic conditions, supportable forecasts of future economic conditions, expected imapct of COVID-
19 and any recoveries in assessing the lifetime expected credit losses. Other key factors that influence the expected credit
loss analysis include customer demographics, payment terms offered in the normal course of business to customers, and
industry-specific factors that could impact the Group’s receivables. Additionally, external data and macroeconomic factors
are also considered. This is assessed at each quarter based on the Group’s specific facts and circumstances.
(j) Accounts Receivable, net
The Group’s accounts receivable mainly consist of amounts due from the customers, travel agents, insurance
companies and travel boards or bureaus, which are carried at the original invoice amount less provision for current
expected credit losses. The Group recognized allowance for doubtful accounts of RMB3,299, RMB28,443 and
RMB55,910 for the years ended December 31, 2018, 2019 and 2020, respectively.
The following table summarized the details of the Group’s allowance for credit losses related to accounts receivables:
For the Years Ended December 31,
2018
2019
2020
Balance at the beginning of year
Cumulative effect of adoption of new accounting standard
Provision for doubtful accounts
Reversal
Write-offs
Balance at the end of year
(k) Long-term investments
16,905
—
20,204
—
RMB RMB RMB US$ (Note 2(d))
7,455
281
8,697
(128)
(2,294)
14,011
4,200
(901)
—
20,204
30,023
(1,580)
—
48,647
(837)
(14,968)
91,422
48,647
1,833
56,747
Long-term investments include equity investments, held-to-maturity investments and other long-term investments.
Equity investments
The Group accounts for the investments in entities with significant influence under equity-method accounting. Under
this method, the Group’s pro rata share of income (loss) from an investment is recognized in the consolidated statements of
comprehensive loss. Dividends received reduce the carrying amount of the investment. Equity-method investment is
reviewed for impairment by assessing if the decline in fair value of the investment below the carrying value is other-than-
temporary. In making this determination, factors are evaluated in determining whether a loss in value should be recognized.
These include consideration of the intent and ability of the Group to hold investment and the ability of the investee to
sustain an earnings capacity, justifying the carrying amount of the investment. Impairment losses are recognized when a
decline in value is deemed to be other-than-temporary.
F-21
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(k) Long-term investments – continued
The Group adopted the ASU 2016-01, “Financial Instruments – Overall (Subtopic 825-10) – Recognition and
Measurement of Financial Assets and Financial Liabilities”, effective from January 1, 2018. The Group elects a
measurement alternative for equity investments that do not have readily determinable fair values and where the Group does
not have the ability to exercise significant influence over operating and financial policies of the entity. Under the
measurement alternative, the Group measures these investments at cost, less any impairment, plus or minus changes
resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. An
impairment loss is recognized in the consolidated statements of comprehensive loss equal to the excess of the investment’s
cost over its fair value when the impairment is deemed other-than-temporary.
Held-to-maturity investments
The investments that the Group intends and is able to hold to maturity are classified as held-to-maturity investments
and are stated at amortized cost, and interest income is recorded in the consolidated statements of comprehensive income.
The Group monitors these investments for other-than-temporary impairment by considering factors including, but not
limited to, current economic and market conditions, the operating performance of the companies including current earnings
trends and other company-specific information.
Other long-term investments
Other long-term investments include financial products with maturities over one year, which are carried at their fair
value at each balance sheet date and changes in fair value are reflected in the consolidated statements of operations and
comprehensive income.
Refer to Note 7 for details.
(l) Property and Equipment
Property and equipment are stated at cost less accumulated depreciation and impairment if applicable. Property and
equipment are depreciated over the estimated useful lives on a straight-line basis. The estimated useful lives are as follows:
Category
Computers and equipment
Buildings
Furniture and fixtures
Vehicles
Software
Leasehold improvements
Estimated useful life
3 - 5 years
16 - 20 years
3 - 5 years
3 - 5 years
5 years
Over the shorter of the lease term or the estimated useful
life of the asset ranging from 1 – 9 years
Construction in progress represents leasehold improvements and office buildings under construction or being installed
and is stated at cost. Cost comprises original cost of property and equipment, installation, construction and other direct
costs. Construction in progress is transferred to leasehold improvements and buildings and depreciation commences when
the asset is ready for its intended use.
Gain or loss on the disposal of property and equipment is the difference between the net sales proceeds and the
carrying amount of the relevant assets and is recognized in the consolidated statements of comprehensive loss.
F-22
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(m) Land use right, net
Land use right represents the payments for usage of land for office buildings, which is recorded at cost less
accumulated amortization. Amortization is provided on a straight-line basis over their respective lease period which is 49.
(n) Capitalized Software Development Cost
The Group has capitalized certain direct development costs associated with internal-used software in accordance with
ASC 350-40, “Internal-use software”, which requires the capitalization of costs relating to certain activities of developing
internal-use software that occur during the application development stage. Costs capitalized mainly include payroll and
payroll-related costs for employees who devoted time to the internal-use software projects during the application
development stage. Capitalized internal-use software costs are stated at cost less accumulated amortization and the amount
is included in “property and equipment, net” on the consolidated balance sheets, with an estimated useful life of five years.
Software development cost capitalized amounted to RMB75,443, RMB56,927 and RMB756 for the years ended
December 31, 2018, 2019 and 2020, respectively. The amortization expense for capitalized software costs amounted to
RMB14,699, RMB36,983 and RMB90,684 for the years ended December 31, 2018, 2019 and 2020, respectively. The
unamortized amount of capitalized internal use software development costs was RMB21,700 as of December 31, 2020.
(o) Business combination
U.S. GAAP requires that all business combinations not involving entities or businesses under common control be
accounted for under the purchase method. The Group has adopted ASC 805 “Business Combinations”, and the cost of an
acquisition is measured as the aggregate of the fair values at the date of exchange of the assets given, liabilities incurred
and equity instruments issued. The transaction costs directly attributable to the acquisition are expensed as incurred.
Identifiable assets, liabilities and contingent liabilities acquired or assumed are measured separately at their fair value as of
the acquisition date, irrespective of the extent of any noncontrolling interests. The excess of the (i) the total of cost of
acquisition, fair value of the noncontrolling interests and acquisition date fair value of any previously held equity interest in
the acquiree over (ii) the fair value of the identifiable net assets of the acquiree is recorded as goodwill. If the cost of
acquisition is less than the fair value of the net assets of the subsidiary acquired, the difference is recognized directly in the
consolidated statements of operations and comprehensive income.
The determination and allocation of fair values to the identifiable assets acquired and liabilities assumed is based on
various assumptions and valuation methodologies requiring considerable management judgment. The most significant
variables in these valuations are discount rates, the number of years on which to base the cash flow projections, as well as
the assumptions and estimates used to forecast the future cash inflows and outflows. Management determines discount
rates to be used based on the risk inherent in the related activity’s current business model and industry comparisons.
Terminal values are based on the expected life of products and forecasted life cycle and forecasted cash flows over that
period. Although management believes that the assumptions applied in the determination are reasonable based on
information available at the date of acquisition, actual results may differ from the forecasted amounts and the difference
could be material. The Group recognized adjustments to provisional amounts that are identified during the measurement
period in the reporting period in which the adjustment amounts are determined.
A noncontrolling interest is recognized to reflect the portion of a subsidiary’s equity which is not attributable, directly
or indirectly, to the Group. Consolidated net loss on the consolidated statements of comprehensive loss includes the net loss
attributable to noncontrolling interests when applicable. The cumulative results of operations attributable to noncontrolling
interests are also recorded as noncontrolling interests in the Group’s consolidated balance sheets. Cash flows related to
transactions with noncontrolling interests are presented under financing activities in the consolidated statements of cash
flows when applicable.
Subsequent to the initial measurement of acquisition, adjustments to the amount of contingent consideration are
recognized as a gain or loss during the period of adjustments, and are reflected in other operating income.
F-23
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(p) Intangible Assets
Intangible assets purchased are recognized and measured at cost upon acquisition and intangible assets arising from
acquisitions of subsidiaries are recognized and measured at fair value upon acquisition. The Company’s purchased
intangible assets include computer software, which are amortized on a straight-line basis over their estimated useful lives 1
to 5 years. Separable intangible assets arising from acquisitions consist of trade names, customer relationship, software,
technology, non-compete agreements, travel licenses, insurance agency license and business cooperation agreement with
JD.com Inc., which are amortized on a straight-line basis over their estimated useful lives of 1 to 20 years. The estimated
life of intangible assets subject to amortization is reassessed if circumstances occur that indicate the life has changed. The
Group provided impairment for certain intangible assets of nil, RMB32,014 and RMB31,876 for the years ended December
31, 2018, 2019 and 2020, respectively. Refer to Note 9 for details.
(q) Goodwill
Goodwill represents the excess of the purchase price over the fair value of identifiable assets and liabilities acquired in
business combinations. Goodwill is not amortized, but tested for impairment annually or more frequently if events or
changes in circumstances indicate that it might be impaired.
The Group adopted ASU No. 2017-04, “Intangibles—Goodwill and Other (Topic 350): Simplifying the Test for
Goodwill Impairment” (“ASU 2017-04”), which removes the requirement to compare the implied fair value of goodwill
with its carrying amount as part of step 2 of the goodwill impairment test. The Group first assesses qualitative factors to
determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, including
goodwill, so as to perform the quantitative goodwill impairment test. If determined to be necessary, the quantitative
impairment test is used to identify goodwill impairment by comparing the fair value of a reporting unit with its carrying
amount and recognize an impairment charge for the amount by which the carrying amount exceeds the reporting unit’s fair
value. The loss recognized should not exceed the total amount of goodwill allocated to that reporting unit.
There is only one reporting unit in the Group as Chief Operating Decision Maker (“CODM”) only reviews the
operating results on the consolidation level, and business substance and economic characteristics of entities and
components within the Group are similar. Therefore, the goodwill assessment was performed for the Group on consolidated
level as one reporting unit.
As of December 31, 2020, management performed an annual impairment assessment and believed it was more likely
than not an impairment was indicated based on qualitative assessment including the volatility of our share price during the
year and negative financial trend impacted by the outbreak of COVID-19. Quantitative goodwill impairment test were
performed and discounted cash flow analysis was used to estimate the fair value of the reporting unit with certain key
assumptions including revenue growth rate, gross margin, operating expenses and discount rate. Based on the result of the
impairment test, the fair value of the reporting unit was higher than its carrying value as at December 31, 2020. Therefore,
no impairment loss was recognized for the year ended December 31, 2020.
No impairment loss was recognized for the year ended December 31, 2019 based on management’s goodwill
impairment test.
F-24
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(r) Impairment of non-financial assets
The Group evaluates its non-financial assets including property and equipment, intangible assets, land use rights and
operating lease rights-of-use assets for impairment whenever events or changes in circumstances indicate that the carrying
amount of an asset may not be recoverable. The asset group is the unit of account for a non-financial asset or assets to be
held and used, which represents the lowest level for which identifiable cash flows are largely independent of the cash flows
of other groups of assets and liabilities. When these events occur, the Group measures impairment by comparing the
carrying amount of the asset group to future undiscounted net cash flows expected to result from the use of the assets and
their eventual disposition. If the sum of the expected undiscounted cash flows is less than the carrying amount of the assets,
the Group recognizes an impairment loss equal to the difference between the carrying amount and fair value of these assets.
As at December 31, 2020, the continuous loss making situation, net operating cash outflow and the uncertainty as to
the future impact of COVID-19 pandemic indicated that the book value of the Group’s non-financial assets are subject to
potential impairment risk. All of the Group’s non-financial assets are considered one asset group which represents the
lowest level to independently generate identifiable cash flows. The Group performed an impairment test of non-financial
assets using the key assumptions including revenue growth rate, gross margin and operating expenses. Based on
management’s assessment, no additional impairment of non-financial assets was recognized during the years ended
December 31, 2018, 2019 and 2020, except for provision for certain intangible assets (Note 2(p) and Note 9).
(s) Advances from Customers
Advances from customers represent the amounts travellers pay in advance to purchase packaged tours or other
travelling products. Among the cash proceeds from travellers, the amounts payable to tour operators are recorded as
accounts payable and the remaining are recognized as revenues when revenue recognition criteria are met.
(t) Revenue Recognition
The Group’s revenue is primarily derived from sales of packaged tours and other service fees.
According to ASC 606, "Revenue from Contracts with Customers" revenue is recognized when control of the
promised services is transferred to our customers, in an amount that reflects the consideration the Group expects to be
entitled to in exchange for those services. The Group early adopted this new revenue standard effective from January 1,
2017 by applying the full retrospective method. There are no significant estimates in the Group’s revenue arrangements.
Packaged tours: Packaged tours include organized tours which offer pre-arranged itineraries, transportations,
accommodations, entertainments, meals and tour guide services; and self-guided tours which consist of combinations of air
tickets and hotel bookings and other optional add-ons, such as airport pick-ups that the travellers choose at their discretion.
Under the organized tour arrangements with the tour operators, the Group’s role is an agent that provides tour booking
services to the tour operators and travellers. The tour operators are primarily responsible for all aspects of providing
services relating to the tour and responsible for the resolution of customer disputes and any associated costs. Revenues
from organized tours (except for those under which the Group takes substantive inventory risks and the self-operated local
tour operator business in which the Group acts as a principal, as discussed below) are generally reported on net basis,
representing the difference between what the Group receives from the travellers and the amounts due to the tour operators.
F-25
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(t) Revenue Recognition - continued
Revenues from self-guided tours are recognized on a net basis, as the Group has no involvement in determining the
service, and provides no additional services to travellers other than the booking services. Suppliers are responsible for all
aspects of providing the air transportation and hotel accommodation, and other travel-related services. As such, the Group
is an agent for the travel service providers in these transactions and revenues are reported on a net basis.
Under certain circumstances, the Group may enter into contractual commitments with suppliers to reserve tours, and is
required to pay a deposit to ensure tour availabilities. Some of these contractual commitments are non-cancellable, and to
the extent the reserved tours are not sold to customers, the Group would be liable to pay suppliers a pre-defined or
negotiated penalty, thereby assuming inventory risks. For packaged tour arrangements that the Group undertakes inventory
risk which is considered to be substantive, revenues are recognized on gross basis. Revenues for such arrangements that the
Group undertakes substantive inventory risk were RMB241,181, RMB166,186 and RMB1,599 for the years ended
December 31, 2018, 2019 and 2020, which were recorded in revenues from packaged tours.
From 2018, the Group expanded its self-operated local tour operator business in various destinations by directly
providing destination-based services to the organized tour customers, starting from their arrival at the destination and all
the way until they depart from the destination. As a self-operated local tour operator, the Group integrates the underlying
resources such as transportations, accommodations, entertainments, meals and tour guide services from selected suppliers,
directs the selected vendors to provide services on the Group’s behalf, and hence sets up the price for the tour.The Group is
also primarily responsible for fulfilling the promise of the whole packaged tours service, which is a single performance
obligation. Accordingly, the Group is a principal for the self-operated local tour operator business and recognizes revenue
on a gross basis in accordance with ASC 606. Revenues from the self-operated tour operator business are recognized over
time during the period of the tours when control over the tour services is transferred to the customers. Revenues for the
self-operated local tour operator business were RMB509,737, RMB724,239 and RMB122,699 for the years ended
December 31, 2018, 2019 and 2020, which were recorded in revenues from packaged tours.
Under the arrangements for the organized tours (except for the self-operated local tour operator business in which the
Group acts as a principal, as discussed above) and self-guided tours, for which the Group’s role is an agent, revenues are
recognized when the tours depart, as control over the tour booking services is transferred to the customers when the tour
booking is completed and successful.
Other revenues: Other revenues primarily comprise revenues generated from (i) service fees received from insurance
companies, (ii) commission fees from other travel-related products and services, such as tourist attraction tickets, visa
application services, accommodation reservation and transportation ticketing, with revenue recognized of RMB81,879,
RMB88,042 and RMB35,284 for the years ended December 31, 2018, 2019 and 2020, respectively, (iii) fees for
advertising services that the Group provides primarily to domestic and foreign tourism boards and bureaus, with revenue
recognized of RMB66,761, RMB74,859 and RMB26,204 for the years ended December 31, 2018, 2019 and 2020,
respectively, (iv) fees for services that the Group provides for accommodation and transportation, and (v) service fees for
financial services. The Group provided account receivables factoring service and cash lending service to customers and
fees charged in connection with these financial services were recorded as other revenue over the period of the service
rendered. The amount of such service revenue for the years ended December 31, 2018, 2019 and 2020 were RMB117,537,
RMB97,016 and RMB43,149, respectively.
Revenue is recognized when relevant services are rendered or when the tickets are issued.
F-26
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(t) Revenue Recognition - continued
Customer incentives
From time to time, travelers are offered coupons, travel vouchers, membership points, or cash rewards as customer
incentives. For customer incentives offered where prior purchase is not required, the Group accounts for them as a
reduction of revenue when the coupons and vouchers are utilized to purchase travelling products or as selling and
marketing expenses when membership points are redeemed for merchandises. For customer incentives offered from prior
purchase, the Group estimates the amount associated with the future obligation to customers, and records as a reduction of
revenue when the prior purchase revenue is initially recognized. Unredeemed incentives are recorded in other current
liabilities in the consolidated balance sheets. The Group estimates liabilities under the customer loyalty program based on
accumulated customer incentives, and the estimate of probability of redemption in accordance with the historical
redemption pattern. The actual expenditure may differ from the estimated liability recorded. As of December 31, 2019 and
2020, liabilities recorded related to membership points and cash rewards were RMB9,374 and RMB10,369, respectively.
Value-added tax and surcharges
The Group’s business is subject to value-added tax (“VAT”), and the Group is permitted to offset input VAT (VAT that
is paid in the acquisition of goods or services, and which is supported by valid VAT invoices received from vendors)
against their VAT liability. VAT on the taxable revenue collected by the Group on behalf of tax authorities in respect of
services provided, net of VAT paid for purchases, is recorded as a liability until it is paid to the tax authorities. The Group
is also subject to certain government surcharges on VAT payable in the PRC and these surcharges are recorded in cost of
revenues.
(u) Cost of Revenues
Cost of revenues mainly consists of salaries and other compensation expenses related to the Group’s tour advisors,
customer services representatives, and other personnel related to tour transactions, and other expenses directly attributable
to the Group’s principal operations, primarily including payment processing fees, telecommunication expenses, rental
expenses, depreciation expenses and other service fee for financial service. For the arrangements where the Group secures
availabilities of tours and bears substantive inventory risks and for the self-operated local tour operator business, from
which revenues are recognized on a gross basis, cost of revenues also includes the amount paid to tour operators or
suppliers.
(v) Advertising Expenses
Advertising expenses, which primarily consist of online marketing expenses and brand marketing expenses through
various forms of media, are recorded in sales and marketing expenses as incurred. Advertising expenses were
RMB222,073, RMB223,522 and RMB50,662 for the years ended December 31, 2018, 2019 and 2020, respectively.
(w) Research and Product Development Expenses
Research and product development expenses include salaries and other compensation-related expenses for the Group’s
research and product development personnel, as well as office rental, depreciation and related expenses and travel-related
expenses for the Group’s research and product development team. The Group recognizes software development costs in
accordance with ASC 350-40 “Software—internal use software”. The Group expenses all costs that are incurred in
connection with the planning and implementation phases of development, and costs that are associated with maintenance of
the existing websites or software for internal use. Certain costs associated with developing internal-use software are
capitalized when such costs are incurred within the application development stage of software development (Note 2(n)).
F-27
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(x) Leases
The Company applied ASC 842, Leases, on January 1, 2019 by using the optional transition method at the adoption
date without recasting comparative periods. The Company determines if an arrangement is a lease at inception. Operating
leases are primarily for office and operation space and are included in operating lease right-of-use (“ROU”) assets, net,
operating lease liabilities, current and operating lease liabilities, non-current on its consolidated balance sheets. ROU assets
represent the Company’s right to use an underlying asset for the lease term and lease liabilities represent its obligation to
make lease payments arising from the lease. The operating lease ROU assets and liabilities are recognized at lease
commencement date based on the present value of lease payments over the lease term. As most of the Company’s leases do
not provide an implicit rate, the Company uses its incremental borrowing rate based on the information available at lease
commencement date in determining the present value of lease payments. The operating lease ROU asset also includes any
lease payments made and excludes lease incentives. The Company’s lease terms may include options to extend or terminate
the lease. Renewal options are considered within the ROU assets and lease liability when it is reasonably certain that the
Company will exercise that option. Lease expense for lease payments is recognized on a straight-line basis over the lease
term.
For operating leases with a term of one year or less, the Company has elected to not recognize a lease liability or ROU
asset on its consolidated balance sheet. Instead, it recognizes the lease payments as expense on a straight-line basis over the
lease term. Short-term lease costs are immaterial to its consolidated statements of operations and cash flows.
(y) Share-based Compensation
The Company applies ASC 718, “Compensation — Stock Compensation” to account for its share-based compensation
program including share options and restricted shares. In accordance with the guidance, the Company determines whether a
share-based award should be classified and accounted for as a liability award or equity award. All grants of share-based
awards to employees classified as equity awards are recognized in the financial statements based on their grant date fair
values. For options, the fair values are calculated using the binominal option pricing model. Share-based compensation
expenses are recorded net of an estimated forfeiture rate over the required service period using the straight-line method.
The modifications of the terms or conditions of the shared-based award are treated as an exchange of the original award for
a new award. The incremental compensation expense is equal to the excess of the fair value of the modified award
immediately after the modification over the fair value of the original award immediately before the modification. For
options already vested as of the modification date, the Company immediately recognized the incremental value as
compensation expenses. For options still unvested as of the modification date, the incremental compensation expenses are
recognized over the remaining service period of these options.
(z) Income Taxes
Current income taxes are provided on the basis of net income for financial reporting purposes, adjusted for income and
expense items which are not assessable or deductible for income tax purposes, in accordance with the regulations of the
relevant tax jurisdictions. Deferred income taxes are provided using the liability method. Under this method, deferred
income taxes are recognized for the tax consequences of temporary differences by applying enacted statutory rates
applicable to future years to differences between the financial statement carrying amounts and the tax bases of existing
assets and liabilities. The tax base of an asset or liability is the amount attributed to that asset or liability for tax purposes.
The effect on deferred taxes of a change in tax rates is recognized in the interim condensed consolidated statements of
comprehensive loss in the period of change. A valuation allowance is provided to reduce the amount of deferred tax assets
if it is considered more likely than not that some portion of, or all of the deferred tax assets will not be realized.
F-28
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TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(z) Income Taxes - continued
Uncertain tax positions
U.S. GAAP prescribes a more likely than not threshold for financial statement recognition and measurement of a tax
position taken or expected to be taken in a tax return. The guidance also provides for the derecognition of income tax assets
and liabilities, classification of current and deferred income tax assets and liabilities, accounting for interest and penalties
associated with tax positions, accounting for income taxes in interim periods, and income tax disclosures. Significant
judgment is required in evaluating the Group’s uncertain tax positions and determining its provision for income taxes. As
of December 31, 2019 and 2020, the Group did not have any significant unrecognized uncertain tax positions or any
interest or penalties associated with tax positions.
In order to assess uncertain tax positions, the Group applies a more likely than not threshold and a two-step approach
for the tax position measurement and financial statement recognition. Under the two-step approach, the first step is to
evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely
than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. The
second step is to measure the tax benefit as the largest amount that is more than 50% likely of being realized upon
settlement.
(aa) Employee Benefits
Full-time employees of the Group in the PRC are entitled to welfare benefits including pension, work-related injury
benefits, maternity insurance, medical insurance, unemployment benefit and housing fund plans through a PRC
government-mandated defined contribution plan. Chinese labor regulations require that the Group makes contributions to
the government for these benefits based on certain percentages of employees’ salaries, up to a maximum amount specified
by the local government. The Group has no legal obligation for the benefits beyond the contributions. The Group recorded
employee benefit expenses of RMB222,304 , RMB217,199 and RMB56,396 for the years ended December 31, 2018, 2019
and 2020, respectively.
(ab) Government Subsidies
Government subsidies are cash subsidies received by the Group’s entities in the PRC from provincial and local
government authorities. The government subsidies are granted from time to time at the discretion of the relevant
government authorities. These subsidies are granted for general corporate purposes and to support the Group’s ongoing
operations in the region. Cash subsidies are recorded in other operating income on the consolidated statements of
comprehensive loss when received and when all conditions for their receipt have been satisfied. The Group recognized
government subsidies of RMB51,357, RMB24,608 and RMB22,398 for the years ended December 31, 2018, 2019 and
2020, respectively.
F-29
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TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(ac) Earnings (Loss) Per Share
Basic earnings (loss) per share is computed by dividing net income (loss) attributable to ordinary shareholders by the
weighted average number of ordinary shares outstanding during the period. Accretion of the redeemable noncontrolling
interests is deducted from the net income (loss) to arrive at net income (loss) attributable to the Company’s ordinary
shareholders. Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to ordinary
shareholders by the weighted average number of ordinary and dilutive ordinary equivalent shares outstanding during the
period. Ordinary equivalent shares consist of unvested restricted shares and shares issuable upon the exercise of share
options using the treasury stock method. Ordinary equivalent shares are not included in the denominator of the diluted loss
per share calculation when inclusion of such shares would be anti-dilutive. Except for voting rights, Class A and Class B
shares have all the same rights and therefore the Group has elected not to use the two-class method.
(ad) Comprehensive Income (Loss)
Comprehensive income (loss) is defined as the change in equity of the Group during a period arising from transactions
and other events and circumstances excluding transactions resulting from investments by shareholders and distributions to
shareholders. Comprehensive income or loss is reported in the consolidated statements of comprehensive loss.
Accumulated other comprehensive income (loss), as presented on the accompanying consolidated balance sheets, consists
of accumulated foreign currency translation adjustments.
(ae) Treasury stock
On January 12, 2018, the Company’s board of directors authorized a share repurchase program under which the
Company was authorized to repurchase up to US$100 million worth of the Company’s ordinary shares or American
depositary shares representing ordinary shares over the next 12 months. On September 30, 2020, the Company’s board of
directors authorized a share repurchase program under which the Company may repurchase up to US$10 million worth of
the Company’s ordinary shares or American depositary shares representing ordinary shares over the next 12 months. The
share repurchase programs permitted the Company to purchase shares from time to time on the open market at prevailing
market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means,
depending on market conditions and in accordance with applicable rules and regulations. The repurchased shares were
accounted for under the cost method and presented as “treasury stock” in equity on the Group’s consolidated balance
sheets. For the year ended December 31, 2020, the Group reissued 625,167 shares to employees upon their exercise of
share options or vesting of restricted share units under the Group’s share compensation plans. The Company recognizes the
difference between the reissuance price and the average cost the Company paid for repurchase in additional paid-in capital
when reissuing the shares.
(af) Segment Reporting
In accordance with ASC 280, Segment Reporting, the Group’s chief operating decision maker, the Chief Executive
Officer, reviews the consolidated results when making decisions about allocating resources and assessing performance of
the Group as a whole and hence, the Group has only one reportable segment.
The Group does not distinguish between markets or segments for the purpose of internal reporting. The Group’s long-
lived assets are substantially all located in the PRC and substantially all the Group’s revenues are derived from within the
PRC, therefore, no geographical segments are presented.
F-30
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TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2. Principal Accounting Policies – continued
(ag) Recently Issued Accounting Pronouncements
In December 2019, the FASB issued ASU 2019-12—Income Taxes (Topic 740): Simplifying the Accounting for
Income Taxes. This ASU provides an exception to the general methodology for calculating income taxes in an interim
period when a year-to-date loss exceeds the anticipated loss for the year. This update also (1) requires an entity to recognize
a franchise tax (or similar tax) that is partially based on income as an income-based tax and account for any incremental
amount incurred as a non-income-based tax, (2) requires an entity to evaluate when a step-up in the tax basis of goodwill
should be considered part of the business combination in which goodwill was originally recognized for accounting
purposes and when it should be considered a separate transaction, and (3) requires that an entity reflect the effect of an
enacted change in tax laws or rates in the annual effective tax rate computation in the interim period that includes the
enactment date. The standard is effective for the Group for fiscal years beginning after December 15, 2020, with early
adoption permitted. The Group does not expect a significant impact on its consolidated financial statements.
In January 2020, the FASB issued Accounting Standards Update No. 2020-01, Investments— Equity Securities (Topic
321), Investments—Equity Method and Joint Ventures (Topic 323), and Derivatives and Hedging (Topic 815): Clarifying
the Interactions between Topic 321, Topic 323, and Topic 815. The amendments clarified that an entity should consider
observable transactions that require it to either apply or discontinue the equity method of accounting for the purposes of
applying the measurement alternative in accordance with Topic 321 immediately before applying or upon discontinuing the
equity method. The amendments also clarified that for the purpose of applying paragraph 815-10-15-141(a) an entity
should not consider whether, upon the settlement of the forward contract or exercise of the purchased option, individually
or with existing investments, the underlying securities would be accounted for under the equity method in Topic 323 or the
fair value option in accordance with the financial instruments guidance in Topic 825. An entity also would evaluate the
remaining characteristics in paragraph 815-10-15-141 to determine the accounting for those forward contracts and
purchased options. The standard is effective for the Group for fiscal years beginning after December 15, 2020, and interim
periods within those fiscal years. The standard is effective for the Group for fiscal years beginning after December 15,
2020, with early adoption permitted. The Group does not expect a significant impact on its consolidated financial
statements.
3. Risks and Concentration
(a) Credit and Concentration Risks
The Group’s credit risk arises from cash and cash equivalents, restricted cash, short-term investments, prepayments
and other current assets, accounts receivables balances amounts, due from related parties and long-term investments. The
maximum exposure of such assets to credit risk is their carrying amounts as of the balance sheet dates.
The Group expects that there is no significant credit risk associated with the cash and cash equivalents, restricted cash
and time deposits, which are held by reputable financial institutions in the jurisdictions where the Company, its subsidiaries
and the Affiliated Entities are located. The Group believes that it is not exposed to unusual risks as these financial
institutions have high credit quality.
The Group has no significant concentrations of credit risk with respect to its customers, as customers usually prepay
for travel services. Accounts receivable are typically unsecured and are primarily derived from revenue earned from
individual customers, corporate customers, travel agents, insurance companies and travel boards or bureaus. The risk with
respect to accounts receivable is mitigated by credit evaluations performed on those customers and ongoing monitoring
processes on outstanding balances. No individual customer accounted for more than 10% of net revenues for the years
ended December 31, 2018, 2019 and 2020.
F-31
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
3. Risks and Concentration - continued
(a) Credit and Concentration Risks - continued
The Group has purchased financial products issued by banks, companies and other financial institutions. The Group
also provided account receivables factoring service and cash lending service to customers. The Group has set up a risk
evaluation system on the issuers of credit quality, ultimate borrowers of asset management schemes, and conducts
collectability assessment of the financial assets and loan receivables on timely basis.
The Group’s collectability assessment considers duration of credit periods, the credit standing of the borrowers and
parties that have guaranteed the repayment of the debts, the quality of assets pledged, the borrowers’ repayment plans,
forward looking information and an evaluation of default risk by reference to relevant information that is publicly
available.
(b) Foreign Currency Risk
The Group’s operating transactions and its assets and liabilities are mainly denominated in RMB. RMB is not freely
convertible into foreign currencies. The value of RMB is subject to changes influenced by central government policies, and
international economic and political developments. In the PRC, certain foreign exchange transactions are required by law
to be transacted only by authorized financial institutions at exchange rates set by the People’s Bank of China (the
“PBOC”). Remittances in currencies other than RMB by the Group in China must be processed through the PBOC or other
China foreign exchange regulatory bodies which require certain supporting documentation in order to affect the remittance.
4. Business acquisition
Travel agencies
During the year ended December 31, 2019, the Group acquired 51% and 63.51% of controlling equity interests in an
offline travel agency and an online travel agency, respectively. The Group expanded its tours market and improved its
capability of direct procurement of travel related products by means of these acquisitions. The total purchase price of
RMB59,981 including cash consideration of RMB52,640 and an accrual in the amount of RMB7,341 representing the fair
value of contingent consideration to be made based on the achievement of profit target over the next four years. The fair
value of the contingent cash consideration was estimated using a probability-weighted scenario analysis method. Key
assumptions included probabilities assigned to each scenario and the discount rate. During the year ended December 31,
2019, the Group made an upward adjustment of the fair value of the contingent consideration by RMB2,265 based on the
reassessment of achievement of profit target. The contingent consideration is due in installments annually over the next
four years. During the year ended December 31, 2020, the Group paid RMB1,776 of the contingent consideration, and
made an downward adjustment of the fair value of the contingent consideration by RMB3,715 based on the reassessment
of achievement of profit target. As of December 31, 2020, the carrying value of total unpaid contingent consideration was
RMB4,115, which is expected to be paid in increments annually over the next three years.
F-32
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
4. Business acquisition – continued
Travel agencies - continued
The business acquisition was accounted for using purchase accounting. The following is the summary of the fair
values of the assets acquired and liabilities assumed:
Net assets (including cash acquired of RMB18.9 million)
Including:
Customer Relationship
Technology
Goodwill
Deferred tax liability
Noncontrolling interests
Total consideration
Amount Estimated useful lives
5.75-11.2 years
5.5 years
37,712
16,889
9,230
72,598
(6,530)
(43,799)
59,981
During the year ended December 31, 2018, the Group acquired 80% of controlling equity interests of an online travel
agency to expand Tuniu’s overseas business network and further enhance the Company’s competitive position. The total
purchase price of RMB20,234 including cash consideration of RMB9,852 and an accrual in the amount of RMB10,382
representing the fair value of contingent consideration to be made based on the achievement of profit target over the next
four years. The fair value of the contingent consideration was estimated using a probability-weighted scenario analysis
method. Key assumptions included probabilities assigned to each scenario and the discount rate. During the year ended
December 31, 2019, the Group paid RMB3,800 of the contingent consideration, and made an downward adjustment of the
fair value of the contingent consideration by RMB2,311 based on the reassessment of achievement of profit target. During
the year ended December 31, 2020, the Group made another downward adjustment of the fair value of the contingent
consideration by RMB1,736 based on the reassessment of achievement of profit target. As of December 31, 2020, the
carrying value of total unpaid contingent consideration was RMB2,535, which is expected to be paid in increments
annually over the next two years.
The business acquisition was accounted for using purchase accounting. The following is the summary of the fair
values of the assets acquired and liabilities assumed:
Net assets (including cash acquired of RMB6.4 million)
Including:
Technology
Goodwill
Deferred tax liability
Noncontrolling interests
Total consideration
Amount
13,430
Estimated useful lives
9.4 years
4,300
11,770
(1,075)
(3,891)
20,234
As of December 31, 2020, the Group has total unpaid contingent consideration of RMB4,100 resulting from
acquisitions completed in 2016, which amount is expected to be paid in 2021.
Pro forma results of operations for the acquisitions described above have not been presented because they are not
material to the Group’s consolidated income statements, either individually or in aggregate.
F-33
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
5. Transaction with JD.com, Inc.
On May 8, 2015, the Company entered into a share subscription agreement with Fabulous Jade Global Limited, an
affiliate of JD.com, Inc., and a Business Cooperation Agreement (“BCA”) with JD. Com, Inc. (“JD”) for a period of
five years. Pursuant to these agreements, the Company issued 65,625,000 Class A ordinary shares for a cash consideration
of RMB1,528.2 million (US$250 million) and the business resource contributed by JD. According to BCA, the business
resource includes the exclusive rights to operate the leisure travel channel for both JD’s website and mobile application and
JD’s preferred partnership for hotel and air ticket reservation service, the internet traffic support and marketing support for
the leisure travel channel for a period of five years started from August 2015.
The acquisition of BCA is considered as assets acquisition and the intangible assets acquired include the exclusive
operation right of leisure travel channel, preferred partnership of hotel and air ticket reservation service, traffic and
marketing supports. The Group estimated the fair value of exclusive operation right and preferred partnership using a form
of the income approach known as excess earning method. The key assumption includes expected revenue attributable to
assets, margin discount rate and the remaining useful life. The Group estimated the fair value of internet traffic support and
marketing support using a form of income approach known as operating cost saving method. Key assumption includes the
market price of the services to be provided, the volume of the services to be provided, discount rate and the remaining
useful life. The Group made estimates and judgments in determining the fair value of the assets with assistance from an
independent valuation firm.
The summary of the fair value of acquired intangible assets as of the transaction date was as follows:
Exclusive operation right of leisure travel channel
Preferred partnership of hotel and air ticket reservation service
Internet traffic support
Marketing support
Total consideration
Amount
405,406
1,431
139,358
114,020
660,215
Estimated useful lives
5 years
5 years
5 years
5 years
The Group assessed the economic benefits to generated from these intangible assets using the excess earning method
with certain key assumptions including revenue, EBIT margin and discount rate. Accordingly, the Group wrote down
RMB32,014 and RMB9,554 for these intangible assets for the year ended December 31, 2019 and 2020, respectively. As of
December 31, 2020, the five-year agreement has expired, and the carrying value of above intangible assets were nil, so the
Group wrote off these intangible assets.
F-34
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
6. Prepayments and other current assets
The following is a summary of prepayments and other current assets:
Prepayments to suppliers
Interest income receivable
Prepayment for advertising expenses
Receivables in relation to factoring business
Loan receivables
Value-added tax receivables
Receivables from employees
Others
Total
As of December 31,
2020
2019
RMB
475,828 232,906
278
1,514
—
22,934
78,218
19,337
23,517
1,300,284 378,704
RMB US$ (Note 2(d))
35,694
43
232
—
3,515
11,987
2,964
3,603
58,038
14,876
8,417
204,954
439,189
67,931
32,870
56,219
Receivable in relation to factoring business and loan receivable are recorded in connection with the Group’s account
receivable factoring service and cash lending service.
The Group recognized a net provision for prepayments and other current assets of RMB124,581 and RMB170,639 for
the years ended December 31, 2019 and 2020, respectively, and had a net reversal of RMB731 for the year ended
December 31, 2018.
For the year ended December 31, 2020, the Group provided a full provision for receivable in relation to factoring
business from a third party with the amount of RMB101,641, as this third party did not made repayment according to the
extended schedule and no settlement plans was reached for the outstanding balance. Based on the assessment of all
currently available information, the Group considered there were no assurance as to whether the collection of the
outstanding receivables are probable as of December 31, 2020.
The following table summarized the details of the Group’s provision for prepayments and other current assets:
Balance at the beginning of year
Cumulative effect of adoption of new accounting standard
Addition
Reversal
Balance at the end of year
F-35
2018
RMB
30,632
—
6,009
(6,740)
29,901
2019
RMB
29,901
For the Years Ended December 31,
2020
US$ (Note 2(d))
23,675
2,646
28,020
(1,868)
52,473
RMB
154,482
17,262
182,829
(12,190)
342,383
132,825
(8,244)
154,482
—
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
7. Long-term investments
The Group’s long-term investments consist of equity investments, held-to-maturity investments and other long-term
investments.
Equity investments – equity method
Equity investments – measurement alternative
Held-to-maturity investments
Other long-term investments
Total
Equity investments
2019
RMB
99,338
200,850
10,502
994,922
1,305,612
As of December 31,
2020
US$ (Note 2(d))
6,696
21,793
406
12,004
40,899
RMB
43,689
142,199
2,653
78,325
266,866
In February 2019, the Group invested RMB54,616 for 21.33% of equity interest in Nanjing Tengbang Jinhong
Tourism Industry Investment Fund Partnership ("Tengbang"). The investment was accounted for as an equity-method
investment because the Group has significant influence over the operating and financial policies of Tengbang as the Group
has one of the five board seats of Tengbang. In December 2020, the Group withdrew this investment and recognized a gain
of RMB799 for the year ended December 31, 2020 from this investment.
In December 2016, Nanjing Zhongshan Financial Leasing Co., Ltd. (“Zhongshan”) was established and the Group
invested RMB42,500 for 25% of equity interest in Zhongshan. This investment was accounted for as an equity-method
investment because the Group has significant influence over the operating and financial policies of Zhongshan as the
Group has one of the five board seats of Zhongshan. The Group recognized a loss of RMB2 for the year ended December
31, 2020 from this investment. As of December 31, 2020, the carrying value of its equity investment was RMB43,689.
Financial information of the investees described above have not been presented because they are not material to the
Group’s consolidated income statements, either individually or in aggregate.
With the adoption of ASU 2016-01 effective from January 1, 2018, the Group elected a measurement alternative for
equity investments that do not have readily determinable fair values and where the Group does not have the ability to
exercise significant influence over operating and financial policies of the entity. During the years ended December 31, 2019
and 2020, the Group remeasured certain equity investments based on the information obtained from observable
transactions and recognized a gain of RMB18,356 and a loss of RMB9,021, respectively.
During the year ended December 31, 2020, the Group recognized impairment losses of RMB49,502 on certain equity
investments based on the Group’s assessment of current economic conditions with the considerations of COVID-19
impacts, as well as the operating performance of the investees. The impairment was recorded in other income/(loss). No
impairment loss was recognized for long-term investments for the years ended December 31, 2018 and 2019.
Held-to-maturity investments
During 2018, the Group made investments in time deposits that the Group has intention and ability to hold until
maturity. The Group classified these investments as held-to-maturity investments. As of December 31, 2019 and 2020, the
carrying value of RMB10,502 and RMB2,653, respectively.
Other long-term investments
The Group also made several investments in financial products with maturities over one year. The Group measured
these other long-term investments at their fair value and the carrying value was RMB994,922 and RMB78,325 as of
December 31, 2019 and 2020, respectively.
F-36
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
8. Property and equipment, net
The following is a summary of property and equipment, net:
Computers and equipment
Leasehold improvements
Buildings
Furniture and fixtures
Vehicles
Software
Others
Subtotal
Less: Accumulated depreciation
Property and equipment subject to depreciation
Construction in progress
Total
2019
RMB
149,191
119,934
4,466
18,339
15,483
184,282
2,044
493,739
(325,304)
168,435
54,905
223,340
As of December 31,
2020
US$ (Note 2(d))
21,805
20,218
660
2,584
3,054
28,371
322
77,014
(66,728)
10,286
6,832
17,118
RMB
142,277
131,923
4,308
16,860
19,925
185,118
2,102
502,513
(435,393)
67,120
44,577
111,697
Depreciation expense for the years ended December 31, 2018, 2019 and 2020 was RMB67,077, RMB84,273 and
RMB127,836, respectively.
9. Intangible assets, net
Intangible assets, net, consist of the following:
Travel license
Insurance agency license
Software
Technology
Trade names
Business Cooperation Agreements
Supplier relationship
Customer relationship
Non-compete agreements
Subtotal
Less: Accumulated amortization
Less: Impairment
Total
2019
RMB
31,056
11,711
74,535
4,300
41,634
660,215
8,560
21,787
6,399
860,197
(661,916)
(32,014)
166,267
RMB
31,056
11,711
73,721
4,300
41,634
—
As of December 31,
2020
US$ (Note 2(d))
4,760
1,795
11,297
659
6,381
—
1,312
3,339
981
30,524
(16,166)
(3,421)
10,937
8,560
21,787
6,399
199,168
(105,484)
(22,322)
71,362
Amortization expenses for intangible assets were RMB153,087, RMB152,941 and RMB64,536 for the years ended
December 31, 2018, 2019 and 2020, respectively.
Impairment charges for Business Cooperation Agreements were RMB32,014 and RMB9,554 for the year ended
December 31, 2019 and 2020, respectively. As of December 31, 2020, the five-year agreement has expired and the carrying
value of above intangible assets were nil, so the Group wrote off these intangible assets (Note 5).
F-37
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
9. Intangible assets, net – continued
The Group provided impairment charges for trade names and customer relationship of RMB15,482 and RMB6,840,
respectively, for the year ended December 31, 2020, as the Group believes the future economic benefit generated from
these intangible assets were limited.
The annual estimated amortization expense for the above intangible assets for the following years is as follows:
Years Ending December 31,
2021
2022
2023
2024
2025
Thereafter
Total
10. Land use right, net
Land use right, net, consist of the following:
Land use right
Less: Accumulated amortization
Net book value
RMB
Amortization for Intangible Assets
US$ (Note 2(d))
2,503
1,690
1,367
943
654
3,780
10,937
16,334
11,026
8,917
6,155
4,270
24,660
71,362
2019
As of December 31,
2020
RMB RMB US$ (Note 2(d))
15,480
101,007 101,007
(4,294)
(658)
14,822
96,713
(2,233)
98,774
In December 2018, the Group obtained the certificate for a land use right, which had been fully paid, and started to
amortize over the remaining period of the right to use the land. Amortization expenses for land use right were RMB171,
RMB2,062 and RMB2,061 for the years ended December 31, 2018, 2019 and 2020, respectively.
11. Goodwill
The changes in the carrying amount of goodwill for the years ended December 31, 2019 and 2020 were as follows:
Balance at the beginning of year
Increase in goodwill related to acquisitions during the year
Accumulated impairment loss
Balance at the end of year
F-38
2019
RMB
159,409
72,598
—
232,007
As of December 31,
2020
US$ (Note 2(d))
35,557
—
—
35,557
RMB
232,007
—
—
232,007
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
12. Other non-current assets
Other non-current assets consist of the following:
Deposits
Loans receivables
Long-term prepayments to a supplier (a)
Others
Total
2019
RMB
42,357
36,003
—
5,563
83,923
As of December 31,
2020
US$ (Note 2(d))
2,513
2,695
8,482
284
13,974
RMB
16,395
17,586
55,348
1,851
91,180
(a) This represents the prepayment of hotel resources the Group prepaid to a third party supplier which are expected to
be utilized over one year.
The Group recognized a net provision for other loans receivable carried in non-current assets of RMB1,181 and
RMB8,377 for the years ended December 31, 2019 and 2020. The following table summarized the details of the Group’s
provision:
Balance at the beginning of year
Cumulative effect of adoption of new accounting standard
Addition
Reversal
Balance at the end of year
13. Short-term and long-term borrowings
For the Years Ended December 31,
2018
2019
2020
RMB RMB RMB US$(Note 2 (d))
—
—
—
—
—
—
—
1,181
—
1,181
1,181
294
8,805
(428)
9,852
181
45
1,349
(66)
1,509
The following is a summary of short-term and long-term borrowings:
Short-term borrowings
Long-term borrowings
2019
RMB
203,845
9,689
As of December 31,
2020
US$ (Note 2(d))
9,299
3,460
RMB
60,679
22,577
As of December 31, 2019 and 2020, the Group had short-term borrowings from banks which were repayable within
one year, with interests charged at rates ranging from 0.4% to 6.3% and 0.2% to 5.8% per annum, respectively.
As of December 31, 2019 and 2020, the Group had long-term borrowings from banks which were repayable over one
year, with interests charged at rates ranging from 0.4% to 6.0% and 0.2% to 6.0% per annum, respectively, among which
RMB2,300 long-term borrowings were guaranteed by a subsidiary of the Group and pledged with the land use right owned
by the Group. The repayment terms of Group’s long-term borrowings from banks ranged from three years to ten years and
the principals and interests are repaid on monthly or quarterly basis or upon maturity.
The above borrowings contain certain standard covenants including, among others, limitation on liens, liquidation and
dissolution of the Group, significant change of the Group’s capital structure and external investments. The Group was in
compliance with all of the loan covenants as of December 31, 2019 and 2020.
F-39
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
13. Short-term and long-term borrowings – continued
The following table summarizes the aggregate required repayments of the principal amounts of the Group’s long-term
borrowing:
2021
2022
2023
2024
2025 and thereafter
Total
14. Leases
As of December 31,
2020
RMB
—
5,249
4,499
6,161
6,668
22,577
The Group has operating leases primarily for office and operation space. The Group’s operating lease arrangements
have remaining lease terms of one month to fourteen years.
Total lease costs were RMB110,993 and RMB39,327 for the year ended December 31, 2019 and 2020, including
short-term lease costs within 12 months of RMB21,726 and RMB6,653, respectively.
Consolidated balance sheet information related to leases is presented as follows:
ASSETS
Operating lease right-of-use assets, net
LIABILITIES
Operating lease liabilities, current
Operating lease liabilities, non-current
Total
Supplemental cash flow information related to leases is as follows:
Cash paid for amounts included in the measurement of lease liabilities
Right-of-use assets obtained in exchange for operating lease liabilities
F-40
2019
RMB
As of December 31,
2020
US$ (Note 2(d))
RMB
105,839
42,293
57,490
54,718
112,208
18,264
34,367
52,631
6,482
2,799
5,267
8,066
As of December 31,
2019
RMB
73,315
68,825
2020
RMB
38,399
28,444
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
14. Leases – continued
Other information related to lease is as follows:
Weighted average remaining lease term(years)
Weighted average discount rate
As of December 31,
2019
2020
4.85
5 %
6.97
5 %
As of December 31, 2020, maturities of lease liabilities (excluding lease payments of RMB1,154 for the leases with
lease terms less than one year) are as follows:
2021
2022
2023
2024
2025 and thereafter
Total minimum lease payments
Less: interest
Present value of lease obligations
As of December 31,
2020
RMB
17,817
9,009
4,917
3,526
26,300
61,569
(8,938)
52,631
For the years ended December 31, 2018, the Group recognized lease expense for RMB71,379 under ASC 840.
15. Accrued expenses and other current liabilities
The following is a summary of accrued expenses and other current liabilities:
Deposits from packaged-tour users (a)
Payable for business acquisition
Accrued liabilities related to customers incentive program
Accrued professional service fees
Accrued advertising expenses
Deposits received from suppliers
Accrued operating expenses
Advanced payment from banks (b)
Discounted bank acceptance notes (c)
Others
Total
2019
RMB
32,416
20,032
9,374
15,298
34,755
164,456
29,840
25,095
537,000
38,853
907,119
As of December 31,
2020
US$ (Note 2(d))
2,789
1,247
1,589
1,764
2,882
12,575
1,537
1,657
73,870
3,768
103,678
RMB
18,195
8,138
10,369
11,513
18,804
82,054
10,032
10,812
482,000
24,584
676,501
(a) Deposits from packaged-tour users represent cash paid to the Group as a deposit for overseas tours, and such
amount is refundable upon completion of the tours.
F-41
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
15. Accrued expenses and other current liabilities – continued
(b) Advanced payment from banks represent cash received by the Group for promotional and marketing campaigns.
Banks participating in these campaigns would reimburse the Group for tours sold to their credit card holders at a specified
discount. Such advanced payment is recognized as revenues when revenues from the related tour are recognized.
(c) Discounted bank acceptance notes represent cash received from financial institutions by discounting of bank
acceptance notes issued between the Company’s subsidiaries, which are repayable within one year with interest ranging
from 2.5% to 3.3%. The issuance of notes payable is pledged by the Group’s bank deposits of RMB415,000 and
RMB482,000 as of December 31, 2019 and 2020, which were recorded in short-term investments.
16. Income Taxes
The Company is registered in the Cayman Islands. The Company generates substantially all of its income (loss) from
its PRC operations for the years ended December 31, 2018, 2019 and 2020.
Cayman Islands (“Cayman”)
Under the current laws of the Cayman Islands, the Company is not subject to tax on income or capital gain.
Additionally, upon payments of dividends to shareholders, no Cayman Islands withholding tax will be imposed.
Hong Kong
Entities incorporated in Hong Kong are subject to Hong Kong profits tax at a rate of 16.5% since January 1, 2010. The
operations in Hong Kong have incurred net accumulated operating losses for income tax purposes.
PRC
On March 16, 2007, the National People’s Congress of the PRC enacted an Enterprise Income Tax Law (“EIT Law”),
under which Foreign Investment Enterprises (“FIEs”) and domestic companies are subject to EIT at a uniform rate of 25%.
The EIT law became effective on January 1, 2008.
The EIT Law also imposes a withholding income tax of 10% on dividends distributed by a FIE to its immediate
holding company outside of China, if such immediate holding company is considered as a non-resident enterprise without
any establishment or place within China or if the received dividends have no connection with the establishment or place of
such immediate holding company within China, unless such immediate holding company’s jurisdiction of incorporation
has a tax treaty with China that provides for a different withholding arrangement. The Cayman Islands, where the
Company incorporated, does not have such tax treaty with China. According to the arrangement between Mainland China
and Hong Kong Special Administrative Region on the Avoidance of Double Taxation and Prevention of Fiscal Evasion in
August 2006, dividends paid by a FIE in China to its immediate holding company in Hong Kong will be subject to
withholding tax at a rate of no more than 5% if the immediate holding company in Hong Kong owns directly at least 25%
of the shares of the FIE and could be recognized as a Beneficial Owner of the dividend from PRC tax perspective.
Nanjing Tuniu originally obtained its HNTE certificate in 2010 with a valid period of three years and successfully
obtained the third renewal of such certificate in December 2019 for another three years. Tuniu Nanjing Information
Technology obtained its HNTE certificate in 2017 with a valid period of three years and successfully obtained the first
renewal of such certificate in December 2020 for another three years. Beijing Tuniu also obtained their HNTE certificates
in November 2018. Therefore, Nanjing Tuniu, Tuniu Nanjing Information Technology and Beijing Tuniu are eligible to
enjoy a preferential tax rate of 15% in 2020 to the extent they have taxable income under the EIT Law, as long as they
maintain the HNTE qualifications and duly conduct relevant EIT filing procedures with the relevant tax authorities. If
Nanjing Tuniu, Tuniu Nanjing Information Technology and Beijing Tuniu fail to maintain their HNTE qualifications or
renew their qualifications when their current terms expire, their applicable enterprise income tax rates may increase to
25%, which could have an adverse effect on our financial condition and results of operations.
F-42
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
16. Income Taxes – continued
A reconciliation between the effective income tax rate and the PRC statutory income tax rate is as follows:
PRC Statutory income tax rates
Change in valuation allowance
R&D expenses super-deduction
Non-deductible expenses and non-taxable income incurred
Difference in EIT rates of certain subsidiaries
Effect of preferential income tax rates
Total
For the Years Ended December 31,
2020
2019
2018
%
%
%
25.0
(20.9)
(0.7)
(2.2)
0.1
(0.8)
0.5
25.0
(37.7)
(20.5)
39.9
(0.1)
(6.5)
(0.1)
25.0
(15.8)
(3.8)
(2.1)
(0.3)
(3.1)
(0.1)
The aggregate amount and per share effect of the preferential income tax rates are as follows:
For the Years Ended December 31,
2018
2019
2020
Aggregate amount
Basic net loss per share effect
Diluted net loss per share effect
RMB RMB RMB US$ (Note 2(d))
1,722
—
—
12,877
—
—
22,274
—
—
11,239
—
—
The following table sets forth the significant components of deferred tax assets and liabilities:
Non-current deferred tax assets:
Accruals and others
Net operating loss carry forwards
Carryforwards of deductible advertising expenses
Allowance for doubtful accounts
Subtotal
Less: valuation allowance
Total non-current deferred tax assets, net
2019
RMB
As of December 31,
2020
US$ (Note 2(d))
RMB
10,485
1,161,298
12,237
62,276
1,246,296
(1,246,296)
—
7,596
1,044,010
11,500
269,615
1,332,721
(1,332,721)
—
1,164
160,002
1,762
41,320
204,248
(204,248)
—
Non-current deferred tax liabilities:
Recognition of intangible assets arising from business combination
Total non-current deferred tax liabilities, net
(23,658)
(23,658)
(14,861)
(14,861)
(2,278)
(2,278)
As of December 31, 2020, the Group had net operating loss carryforwards of RMB4,327,114 which can be carried
forward to offset taxable income. The carryforwards period for net operating losses under the EIT Law is five years. The
net operating loss carry forward of the Group will start to expire in 2021 for the amount of RMB1,665,669 if not utilized.
The remaining net operating loss carryforwards will expire in varying amounts between 2022 and 2025. Other than the
expiration, there are no other limitations or restrictions upon the Group’s ability to use these operating loss carryforwards.
There is no expiration for the advertising expenses carryforwards.
F-43
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
16. Income Taxes – continued
A valuation allowance is provided against deferred tax assets when the Group determines that it is more likely than not
that the deferred tax assets will not be utilized in the future. In making such determination, the Group evaluates a variety of
factors including the Group’s operating history, accumulated deficit, existence of taxable temporary differences and
reversal periods.
As of December 31, 2019 and 2020, valuation allowances of RMB1,246,296 and RMB1,332,721 were provided
because it was more likely than not that the Group will not be able to utilize certain tax losses carry forwards and other
deferred tax assets generated by its subsidiaries and Affiliated Entities. If events occur in the future that allow the Group to
realize more of its deferred tax assets than the presently recorded amount, an adjustment to the valuation allowances will
increase income when those events occur.
Movement of valuation allowance
Balance at the beginning of the year
Additions
Written-off for expiration of net operating losses
Utilization of previously unrecognized tax losses and deductible
advertising expenses
Balance at the end of the year
17. Redeemable noncontrolling interests
2018
RMB
2019
RMB
1,198,872 1,207,426 1,246,296
396,582
(304,939)
For the Years Ended December 31,
2020
US$ (Note 2(d))
191,002
60,780
(46,734)
143,227
(98,818)
128,464
(10,584)
RMB
(109,326)
(5,218)
1,207,426 1,246,296 1,332,721
(5,539)
(800)
204,248
In December 2016, the Group entered into an investment agreement with certain investors (“noncontrolling
shareholders”) to establish a subsidiary. The noncontrolling shareholders contributed RMB90,000 and held 30% equity
interest. Pursuant to the investment agreement, the noncontrolling shareholders have the option to request the Group to
redeem their equity interests at an agreed price after three years of the investment. In April 2018, the Group agreed with
one of the noncontrolling shareholders to purchase its 10% equity interest of the subsidiary at the cost of RMB30,000. In
December 2019, the Group agreed with one of the noncontrolling shareholders to purchase its 10% equity interest of the
subsidiary at the cost of RMB37,733. In September 2020, this subsidiary decreased its share capital and the Group made
payment to the noncontrolling shareholder of RMB10,000.
The Group recorded the noncontrolling interests as redeemable noncontrolling interests, outside of permanent equity in
the Group’s consolidated balance sheets in accordance with ASC 480. The Group uses the effective interest method for the
changes of redemption value over the period from the date of issuance to the earliest redemption date of the noncontrolling
interests. The accretion, which increases the carrying value of the redeemable noncontrolling interests, is recorded against
additional paid-in capital.
F-44
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
17. Redeemable noncontrolling interests – continued
The change in the carrying amount of redeemable noncontrolling interests for the years ended December 31, 2018,
2019 and 2020 is as follows:
Balance as of January 1
Repurchase of redeemable noncontrolling interests
Net income attributable to redeemable noncontrolling interests
Accretion on redeemable noncontrolling interests
Balance as of December 31
18. Ordinary Shares
2018
RMB
RMB
2019
RMB
For the Years Ended December 31,
2020
US$ (Note 2(d))
5,702
(1,533)
—
—
4,169
69,319
(37,733)
980
4,634
37,200
37,200
(10,000)
—
—
27,200
96,719
(30,000)
178
2,422
69,319
Upon inception, each ordinary share was issued at a par value of US$0.0001 per share. Various numbers of ordinary
shares were issued to share-based compensation award recipients. As of December 31, 2019 and 2020, the authorized share
capital of the Company is US$100,000 divided into 1,000,000,000 shares, comprising of 780,000,000 Class A Ordinary
Shares and 120,000,000 Class B Ordinary Shares, each at a par value of US$0.0001 per share, and 100,000,000 shares of a
par value of US$0.0001 each of such class or classes as the board of directors may determine.
As of December 31, 2019 and 2020, 1,000,000,000 ordinary shares were authorized. 389,331,544 were issued and
outstanding, comprising of 371,958,044 Class A shares and 17,373,500 Class B shares as of December 31, 2019 and 2020.
19. Share-based Compensation Expenses
The Company’s 2008 Incentive Compensation Plan (the “2008 Plan”) allows the plan administrator to grant share
options and restricted shares to the Company’s employees, directors, and consultants, up to a maximum of 11,500,000
ordinary shares. In December 2012, the Board of Directors approved an increase in the number of shares available for
issuance under the plan to 18,375,140 ordinary shares. In April 2014 the Company adopted the 2014 Share Incentive Plan
(the “2014 Plan”). The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014
Plan was initially 5,500,000 ordinary shares as of the date of its approval. The number of shares reserved for future
issuances under the 2014 Plan will be increased automatically if and whenever the ordinary shares reserved under the 2014
Plan account for less than1% of the total then-issued and outstanding ordinary shares on an as-converted basis, as a result
of which increase the ordinary shares reserved under the 2014 Plan immediately after each such increase shall equal 5% of
the then-issued and outstanding ordinary shares on an as-converted basis. Pursuant to the Evergreen Provision, the
maximum aggregate number of shares which may be issued under the 2014 Plan increased automatically by an aggregate
of 36,464,263 Class A ordinary shares in December 2014, August 2015 and December 2016, respectively, reaching a total
of 41,964,263 Class A ordinary shares.
The share options and restricted shares granted under the 2008 plan initially have a contractual term of six years, and
grants under the 2014 plan have a contractual term of ten years. The incentive awards under both 2008 plan and 2014 plan
generally vest over a period of four years of continuous service, one fourth (1/4) of which vest upon the first anniversary of
the stated vesting commencement date and the remaining vest ratably over the following 36 months. Under the 2008 plan,
incentive awards are only exercisable upon occurrence of certain defined exercisable events. The Group did not recognize
any share-based compensation expense for the awards granted until the completion of the Company’s IPO on May 9, 2014
upon which the performance condition was satisfied. As of December 31, 2020, 19,299,717 options and 74,406 restricted
shares were outstanding under the 2008 and 2014 plan.
F-45
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
19. Share-based Compensation Expenses - continued
The Group recognized share-based compensation expense of RMB68,738, RMB61,736 and RMB20,464 for the years
ended December 31, 2018, 2019 and 2020, respectively, which was classified as follows:
For the Years Ended December 31,
2018
2019
2020
Cost of revenue
Research and product development
Sales and marketing
General and administrative
Total
Share options
The following table summarizes the Company’s option activities:
RMB RMB RMB US$ (Note 2(d))
160
667
168
2,141
3,136
1,483
9,124
1,305
56,826
68,738
1,044
4,349
1,099
13,972
20,464
4,006
12,057
3,321
42,352
61,736
Outstanding at January 1, 2020
Granted
Exercised
Forfeited
Modified
Outstanding at December 31, 2020
Vested and expected to vest at December 31, 2020
Exercisable at December 31, 2020
Number of
share options
Weighted Weighted
Average
Remaining
Contractual Life
In Years
Average
Exercise
Price
US$
Aggregate
Intrinsic
Value
US$’000
19,872,396
—
(572,679)
—
—
19,299,717
15,769,304
17,544,597
1.74
—
0.01
—
—
1.80
1.78
1.81
5.85
—
—
—
—
4.92
4.63
4.68
3,914
—
—
—
—
2,339
2,091
2,339
In June 2019, the Company completed a one-time modification of share options, pursuant to which certain eligible
employees were offered to replace certain unvested share options granted to them with cash awards. The price of cash
awards were the same as the fair value of share options on grant date and still requires the same employees’ continuous
employments with the Company for the remaining period and will be paid in installment. As a result, 2,342,913 options
were replaced. The incremental compensation cost of this modification was immaterial. As of December 31, 2020, all of
these cash awards were paid.
The total intrinsic value of options exercised for the years ended December 31, 2018, 2019 and 2020 was RMB11,026,
RMB6,857 and RMB2,290 (US$351), respectively.
The weighted-average grant date fair value for options granted during the years ended December 31, 2018 and 2019
was US$1.28 and US$1.50, respectively, computed using the binomial option pricing model.
The total fair value of share options vested during the years ended December 31, 2018, 2019, and 2020 was
RMB73,997 RMB25,461 and RMB25,038 (US$3,837), respectively.
F-46
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
19. Share-based Compensation Expenses - continued
The Company estimated the expected volatility at the date of grant date and each option valuation date based on the
annualized standard deviation of the daily return embedded in historical share prices of comparable companies. Risk free
interest rate was estimated based on the yield to maturity of US treasury bonds denominated in US$ at the option valuation
date. The exercise multiple is estimated as the ratio of fair value of underlying shares over the exercise price as at the time
the option is exercised, based on a consideration of research study regarding exercise pattern based on empirical studies on
the actual exercise behavior of employees. The Company has never declared or paid any cash dividends on its capital
stock, and the Company does not anticipate any dividend payments on its ordinary shares in the foreseeable future. Time to
maturity is the contract life of the option, and estimated forfeiture rates are determined based on historical employee
turnover rate.
The Company uses the binominal option pricing model to estimate the fair value of stock options. There was no option
granted for the year ended December 31, 2020. The assumptions used to value the Company’s option grants for the years
ended December 31, 2018 and 2019 were as follows:
Expected volatility
Risk-free interest rate
Exercise multiple
Expected dividend yield
Time to maturity (in years)
Expected forfeiture rate (post-vesting)
Fair value of the common share on the date of option grant
2018
2019
49.9 %
2.97 %
2.2-2.8
0 %
10
0%-20 %
48.05 %
2.72 %
2.2-2.8
0 %
10
0%-20 %
US$1.24-1.35
(RMB8.54-9.31)
US$1.5 (RMB10.42)
As of December 31, 2020, there was RMB16,252 in total unrecognized compensation expense related to unvested
options, which is expected to be recognized over a weighted-average period of 1.55 years.
Restricted shares
The total intrinsic value of restricted shares vested for the years ended December 31, 2018, 2019 and 2020 were
RMB1,470, RMB610 and RMB161 (US$25), respectively.
The fair value of restricted shares with service conditions is based on the fair market value of the underlying ordinary
shares on the date of grant.
The following table summarizes the Company’s restricted shares activity under the plans:
Restricted shares as of January 1, 2020
Granted
Vested
Forfeited
Restricted shares as of December 31, 2020
Vested and expected to vest at December 31, 2020
Weighted average
126,894
—
(52,488)
Numbers of
restricted shares grant date fair value
2.23
—
2.23
—
2.23
2.23
74,406
74,406
—
As of December 31, 2020, there was RMB1,030 in total unrecognized compensation expense related to restricted
shares, which is expected to be recognized over a weighted-average period of 1.35 years.
F-47
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
20. Loss Per Share
The following table sets forth the computation of basic and diluted loss per share for the periods indicated:
Numerator:
Net loss attributable to Tuniu Corporation
Accretion on redeemable noncontrolling interests
Numerator for basic and diluted net loss per share
Denominator:
Weighted average number of ordinary shares outstanding-
basic and diluted
Loss per share-basic and diluted
For the Years Ended December 31,
2018
RMB
2019
RMB
RMB
2020
US$ (Note 2(d))
(185,512)
(2,422)
(187,934)
(694,565)
(4,634)
(699,199)
(1,307,956)
—
(1,307,956)
(200,453)
—
(200,453)
377,744,381 369,472,880 370,240,040 370,240,040
(0.54)
(0.50)
(1.89)
(3.53)
The Company had securities which could potentially dilute basic loss per share in the future, which were excluded
from the computation of diluted loss per share as their effects would have been anti-dilutive. Such outstanding securities
consist of the share options and unvested restricted shares with the number of 8,316,843, 8,776,330 and 3,027,586, for
the years ended December 31, 2018, 2019 and 2020, respectively.
21. Restricted Net Assets
Pursuant to laws applicable to entities incorporated in the PRC, the Group’s subsidiaries and Affiliated Entities in the
PRC must make appropriations from after-tax profit to non-distributable reserve funds. These reserve funds include one or
more of the following: (i) a general reserve, (ii) an enterprise expansion fund and (iii) a staff bonus and welfare fund.
Subject to certain cumulative limits, the general reserve fund requires an annual appropriation of 10% of after tax profit (as
determined under accounting principles generally accepted in the PRC at each year-end) until the accumulative amount of
such reserve fund reaches 50% of a company’s registered capital; the other fund appropriations are at the subsidiaries’
discretion. These reserve funds can only be used for specific purposes of enterprise expansion and staff bonus and welfare
and are not distributable as cash dividends. In addition, due to restrictions on the distribution of share capital from the
Group’s PRC subsidiaries and Affiliated Entities and also as a result of these entities’ unreserved accumulated losses, total
restrictions placed on the distribution of the Group’s PRC subsidiaries and Affiliated Entities’ net assets was RMB70
million, or 5.0% of the Group’s total consolidated net assets as of December 31, 2020.
22. Commitments and Contingencies
(a) Capital Commitments
As of December 31, 2020, capital commitments relating to leasehold improvement, purchase of equipment and
construction of office building were approximately RMB211,297.
(b) Contingencies
From time to time, the Group is involved in claims and legal proceedings that arise in the ordinary course of business.
Based on currently available information, management does not believe that the ultimate outcome of these unresolved
matters, individually and in the aggregate, is likely to have a material adverse effect on the Group’s financial position,
results of operations or cash flows. However, litigation is subject to inherent uncertainties and the Group’s view of these
matters may change in the future. If an unfavorable outcome were to occur, there exists the possibility of a material adverse
impact on the Group’s financial position and results of operations for the periods in which the unfavorable outcome occurs.
F-48
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
22. Commitments and Contingencies - continued
(c) Other commitments
Deposits or guarantees are required by the Group’s business partners for air ticketing and tourist attraction tickets.
Letters of guarantee are issued by banks to the Group’s business partners with total amount of RMB446 million and
RMB84 million as of December 31, 2019 and 2020, respectively.
23. Related party transactions and balances
Parties are considered to be related if one party has the ability, directly or indirectly, to control the other party or
exercise significant influence over the other party in making financial and operational decisions. Parties are also considered
to be related if they are subject to common control or common significant influence. Related parties may be individuals or
corporate entities.
The following entities are considered to be related parties to the Group:
Name of related parties
Ctrip Investment Holding Co., Ltd. (“Trip.com”)
JD.com, Inc. (“JD”)
Hopeful Tourism Limited (“Caissa", a wholly-owned
subsidiary of Caissa Sega Tourism Culture
Investment Limited)
Relationship with the Group
one board director of the Group
one board director of the Group
a principal shareholder of the Group
HNA Tourism Holdings Group Co., Ltd. (“HNA
two board directors of the Group
Tourism”)
Fullshare Holdings Limited (“Fullshare”)
a principal shareholder of the Group
a) Transactions with related parties:
Trip.com
Trip.com purchased 5,000,000 Class A ordinary shares in a private placement concurrent with the Group’s initial
public offering, an additional 3,731,034 Class A ordinary shares for a total of US$15 million through a private placement
transaction in December 2014 as well as an additional 3,750,000 Class A ordinary shares for a total of US$20 million
through a private placement transaction in May 2015.
The Group sells packaged tours through Trip.com’s online platform and the commission fees to Trip.com were
insignificant. The Group purchased travelling products from Trip.com’s online platform, which were insignificant.
Revenues from Trip.com consist of commission fees for the booking of hotel rooms and air tickets through the Group’s
online platform, amounted of RMB161.7 million, RMB65.7 million and RMB16.9 million (US$2.6 million) for the years
ended December 31, 2018, 2019 and 2020, respectively.
JD
On May 8, 2015, the Company issued 65,625,000 Class A ordinary shares to Fabulous Jade Global Limited, a
subsidiary of JD, for cash consideration of RMB1,528.2 million (US$250 million) and RMB660.2 million representing the
fair value of business resource contributed by JD, which include the exclusive rights to operate the leisure travel channel
for both JD’s website and mobile application, JD’s preferred partnership for hotel and air ticket reservation service, internet
traffic support and marketing support for the leisure travel channel for a period of five years starting from August 2015.
F-49
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
23. Related party transactions and balances - continued
The Group also purchased travelling products from JD’s channels at the amount of RMB23,509, RMB49,399 and
RMB25 for the years ended December 31, 2018, 2019 and 2020, respectively.
Caissa
On November 20, 2020, pursuant to a share purchase agreement and certain amendements, Caissa completed the
purchase of all Class A ordinary shares held by JD.
On November 20, 2020, JD completed transfer of all its equity interest in the Group to Caissa. Subsequently on
February 9, 2021, Caissa assigned a director to the Group’s board of directors to replace the director previsouly assigned by
JD and since then, JD was no longer a related party of the Group.
The Group sold packaged tours through Caissa’s platform and the commission fees to Caissa were insignificant.
HNA Tourism
On January 21, 2016, the Company issued 90,909,091 Class A ordinary shares to HNA Tourism for total consideration
of RMB3,279 million (US$500 million).
HNA Tourism agreed to provide the Group with access to its premium airlines and hotels resources at a preferential
rate, under fair competition market rules, and the Group undertook to acquire no less than US$100 million products and
services sourced from HNA Tourism over the next two years. The Group purchased RMB588.9 million, RMB443.1 million
and RMB164.4 million (US$25.2 million)air tickets from HNA Tourism for the year ended December 31, 2018, 2019 and
2020, respectively. The Group sold travelling products through an affiliate of HNA Tourism’s distribution channels and the
revenues were insignificant.
In December 2017, the Group provided financing to an affiliate of HNA Tourism (the “HNA Affiliate”) amounting to
RMB40.0 million (US$6.1 million) by purchasing private placement notes issued by the HNA Affiliate (the "Notes
Financing"), with the interest rate of 8.5%, which was repayable in one year. The Notes Financing was guaranteed by
another affiliate of HNA Tourism. The Notes Financing was extended for one year upon original maturity in December
2018 with the same interest rate and was further pledged by certain equity investment held by HNA Affiliate. In May 2018,
the Group provided financing in the form of accounts receivable factoring arrangement (the "Loan Financings") to another
affiliate of HNA Tourism amounting to RMB500 million (US$76.6 million) with the average interest rate of 14% per
annum and service fee rate of 6%, which were repayable in one year. The Loan Financings were guaranteed by another
affiliate of HNA Tourism. The Loan Financings were extended for one year upon original maturity in May 2019 with
interest rate decreased to 6% per annum. The Group has received requests from these borrowers for extension of maturity
of the Notes Financing and Loan Financings for another one year to December 2020 and May 2021, respectively.
F-50
Table of Contents
TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
23. Related party transactions and balances - continued
As of December 31, 2019, the Group reviewed the recoverability of above Notes Financing and Loan Financings to
reflect the credit risk associated with the respective outstanding balances. As of December 31, 2019, the Group recorded an
allowance provision of RMB1.9 million and RMB21.3 million for the Notes Financing and the Loan Financings,
respectively. As of December 31, 2019, the carrying value of the Notes Financing and the Loan Financings were RMB44.8
million and RMB512.8 million, respectively, which were presented in non-current assets, based on management’s estimates
of time for collection. By the ended of 2020, the Group did not receive the repayment of RMB40 million from the affiliate
of HNA Tourism according to the extended schedule and no settlement plans were reached for the outstanding balance. In
addition, HNA Group, HNA Tourism’s ultimate holding company, received a formal bankruptcy and restructuring notice
from the Hainan Province High People’s Court following creditors’ action against HNA Group due to its failure to pay
overdue debts. Based on the assessment of all currently available information of HNA Group’s restructuring plan, the
Group considered it was unlikely to collect the outstanding receivables as of December 31, 2020.Accordingly, the Group
provided a full allowance for current expected credit losses on the remaining balance at the amount of RMB44.8 million
and RMB512.8 million for the Notes Financing and the Loan Financings, respectively. Moreover, the Group provided full a
allowance of RMB30.8 million for the current amounts due from HNA Tourism.
The interest income and service fee for the Notes Financing and the Loan Financings were RMB27.8 million and nil
for the years ended 2019 and 2020, respectively.
Fullshare
On May 25, 2018, Fullshare completed the purchase of 4,104,137 Class A ordinary shares and 6,949,997 Class B
ordinary shares from the Group’s previous principal shareholder Mr. Haifeng Yan. Since then, Haifeng Yan was no longer
the Group’s principal shareholder and Black Fish founded by Mr. Haifeng Yan ceased to be the Group’s related party.
During the year ended December 31, 2018, Fullshare made several prepayments to the Group for travelling products,
which was RMB1.6 million in 2018. Fullshare has not made any prepayments to the Group in 2019 and 2020.
F-51
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TUNIU CORPORATION
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(All amounts in thousands, except for share and per share data, or otherwise noted)
23. Related party transactions and balances - continued
b) Balances with related parties:
Current:
Amounts due from Trip.com
Amounts due from JD
Amounts due from HNA Tourism (i)
Amounts due from Caissa
Total
Non-Current:
Long-term amounts due from HNA Tourism
Total
Current:
Amounts due to Trip.com
Amounts due to JD
Amounts due to HNA Tourism (i)
Amounts due to Caissa
Total
2019
RMB
As of December 31,
2020
US$ (Note 2(d))
RMB
23,759
3,685
37,664
—
65,108
13,977
1,644
—
8,292
23,913
557,582
557,582
—
—
27,128
136
2,491
—
29,755
18,240
112
746
1,936
21,034
2,142
252
—
1,271
3,665
—
—
2,795
17
114
298
3,224
(i)
For amounts due from HNA Tourism, refer to disclosure in Note 23 (a) above.
24. Subsequent events
The Group has evaluated the subsequent events through the date of issuance of the financial statements.
F-52
Table of Contents
FINANCIAL STATEMENT SCHEDULE I
TUNIU CORPORATION
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
CONDENSED BALANCE SHEETS
(All amounts in thousands, except for share and per share data, or otherwise noted)
ASSETS
Current assets
Cash and cash equivalents
Amounts due from subsidiaries and Affiliated Entities
Prepayments and other current assets
Total current assets
Non-current assets
Intangible assets
Total non-current assets
Total assets
LIABILITIES AND EQUITY
Current liabilities
Accrued expenses and other current liabilities
Total current liabilities
Non-current liabilities
Investment deficit in subsidiaries and Affiliated Entities
Total non-current liabilities
Total liabilities
Equity
2019
RMB
As of December 31,
2020
RMB
US$ (Note 2(d))
336
7,082,315
237
7,082,888
598
6,909,695
228
6,910,521
92
1,058,957
35
1,059,084
47,484
47,484
7,130,372
—
—
6,910,521
—
—
1,059,084
9,102
9,102
7,449
7,449
4,410,640
4,410,640
4,419,742
5,518,393
5,518,393
5,525,842
1,142
1,142
845,731
845,731
846,873
Ordinary shares (US$0.0001 par value; 1,000,000,000 shares (including
780,000,000 Class A shares, 120,000,000 Class B shares and 100,000,000
shares to be designated by the Board of Directors) authorized as of
December 31, 2019 and 2020; 389,331,544 shares (including 371,958,044
Class A shares and 17,373,500 Class B shares) issued and outstanding as of
December 31, 2019 and 2020)
Less: Treasury stock
Additional paid-in capital
Accumulated other comprehensive income
Accumulated deficit
Total Tuniu Corporation shareholders’ equity
Total liabilities and equity
249
(310,942)
9,113,512
293,784
(6,385,974)
2,710,629
7,130,371
249
(302,916)
9,125,689
275,012
(7,713,355)
1,384,679
6,910,521
38
(46,424)
1,398,573
42,147
(1,182,123)
212,211
1,059,084
F-53
Table of Contents
FINANCIAL STATEMENT SCHEDULE I
TUNIU CORPORATION
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
CONDENSED STATEMENTS OF COMPREHENSIVE LOSS
(All amounts in thousands, except for share and per share data, or otherwise noted)
2018
RMB
For the Years Ended December 31,
2020
US$ (Note 2(d))
2019
RMB
RMB
Operating expenses
General and administrative
Share of loss of subsidiaries and affiliated entities
Total operating expenses
Loss from operations
Other income/(expenses)
Interest income
Foreign exchange (losses)/gains, net
Other income, net
Loss before income tax expense
Net loss
Accretion on redeemable noncontrolling interests
Net loss attributable to ordinary shareholders
(3,147)
(183,670)
(186,817)
(186,817)
(3,903)
(689,252)
(693,155)
(693,155)
(4,293)
(1,301,972)
(1,306,265)
(1,306,265)
—
—
1,305
(185,512)
—
(2,457)
1,047
(694,565)
—
(2,922)
1,231
(1,307,956)
(185,512)
(2,422)
(187,934)
(694,565)
(4,634)
(699,199)
(1,307,956)
—
(1,307,956)
(658)
(199,536)
(200,194)
(200,194)
—
(448)
189
(200,453)
(200,453)
—
(200,453)
Net loss
Other comprehensive income/(loss)
Foreign currency translation adjustment, net of nil tax
Comprehensive loss
(185,512)
(694,565)
(1,307,956)
(200,453)
11,693
(173,819)
9,705
(684,860)
(18,772)
(1,326,728)
(2,877)
(203,330)
F-54
Table of Contents
FINANCIAL STATEMENT SCHEDULE I
TUNIU CORPORATION
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
CONDENSED STATEMENTS OF CASH FLOWS
(All amounts in thousands, except for share and per share data, or otherwise noted)
For the Years Ended December 31,
Cash provided by/ (used in) operating activities
Cash provided by investing activities
Cash used in financing activities
Effect of exchange rate changes on cash, cash equivalents and
restricted cash
Net (decrease)/increase in cash, cash equivalents and restricted cash
Cash, cash equivalents and restricted cash at the beginning of year
Cash, cash equivalents and restricted cash at the end of year
Supplemental disclosure of non-cash investing and financing
activities
2018
RMB
1,266
133,189
(134,485)
2019
2020
RMB RMB US$ (Note 2(d))
(732)
(4,779)
811
5,292
(38)
(250)
(4,739)
18,268
(13,438)
(13)
(43)
293
250
(5)
86
250
336
(1)
262
336
598
—
41
51
92
Receivables related to exercise of stock option
(23)
(55)
(45)
(7)
F-55
Table of Contents
FINANCIAL STATEMENT SCHEDULE I
TUNIU CORPORATION
CONDENSED FINANCIAL INFORMATION OF THE PARENT COMPANY
Note to Financial Statement Schedule I
Schedule I has been provided pursuant to the requirements of Rule 12-04(a) and 5-04-(c) of Regulation S-X, which
require condensed financial information as to the financial position, change in financial position and results of operations
of a parent company as of the same dates and for the same periods for which audited consolidated financial statements have
been presented when the restricted net assets of consolidated subsidiaries exceed 25 percent of consolidated net assets as of
the end of the most recently completed fiscal year.
The condensed financial information has been prepared using the same accounting policies as set out in the
accompanying consolidated financial statements except that the equity method has been used to account for investments in
its subsidiaries and Affiliated Entities. Such investments in subsidiaries and Affiliated Entities are presented as investment
deficit in subsidiaries and Affiliated Entities and the loss of the subsidiaries and Affiliated Entities is presented as share of
loss of subsidiaries and Affiliated Entities.
Certain information and footnote disclosures normally included in financial statements prepared in accordance with
accounting principles generally accepted in the United States of America have been condensed or omitted. The footnote
disclosures to the consolidated financial statements contain information relating to the operations of the parent company
and, as such, this schedule should be read in conjunction with the notes to the accompanying consolidated financial
statements.
As of December 31, 2020, the parent company had no significant capital and other commitments, long-term
obligations, or guarantee, except for those which have separately disclosed in the consolidated financial statements.
F-56
Description of rights of each class of securities
registered under Section 12 of the Securities Exchange Act of 1934 (the “Exchange Act”)
Exhibit 2.4
American Depositary Shares (“ADSs”) each representing three Class A ordinary shares of Tuniu Corporation (we, our, or the
“Company”) are listed and traded on the Nasdaq Global Market under the symbol of "TOUR" and, in connection with this listing (but not
for trading), the Class A ordinary shares are registered under Section 12(b) of the Exchange Act. This exhibit contains a description of
the rights of (i) the holders of Class A ordinary shares and (ii) the holders of ADSs. Class A ordinary shares underlying the ADSs are
held by JPMorgan Chase Bank, N.A., as depositary, and holders of ADSs will not be treated as holders of the Class A ordinary shares.
Class A Ordinary Shares
We are a Cayman Islands company and our affairs are governed by our memorandum and articles of association and the Companies Act
(Revised) of the Cayman Islands. The following are summaries of material provisions of our fifth amended and restated memorandum
and articles of association, insofar as they relate to the material terms of our ordinary shares. For more complete information, you should
read the entire memorandum and articles of association, which has been filed with the SEC as an exhibit to our annual report on Form
20-F for the financial year ended December 31, 2020 (the “2020 Form 20-F”) .
Type and Class of Securities (Item 9.A.5 of Form 20-F)
Each Class A ordinary share has a par value of US$0.0001 per share. The number of Class A ordinary shares that have been issued as of
the last day of the financial year ended December 31, 2020 is provided on the cover of the 2020 Form 20-F. Certificates representing the
ordinary shares are issued in registered form. The Company shall not issue Shares to bearer. Subject to the applicable securities laws,
regulations and listing rules where the securities of the Company are listed, you may refer to “Item 10.B. Additional Information—
Memorandum and Articles of Association—Ordinary Shares—Transfer of Ordinary Shares" for restrictions on share transfer.
Preemptive Rights (Item 9.A.3 of Form 20-F)
The shareholders of the Company do not have preemptive rights.
Limitations or Qualifications (Item 9.A.6 of Form 20-F)
We keep and intend to maintain a dual-class share structure. The Company’s other share class is Class B ordinary shares of par value
$0.0001 per share (the “Class B ordinary shares”).
Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled
to one vote per share, while holders of Class B ordinary shares are entitled to ten votes per share, with Class A and Class B ordinary
shares voting together as one class on all matters subject to a shareholders’ vote.
As a result of the dual class share structure and the concentration of ownership, holders of our Class B ordinary shares have substantial
influence over our business, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets,
election of directors and other significant corporate actions. Holders of our Class B ordinary shares may take actions that are not in the
best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our
company, which could deprive our other shareholders of an opportunity to receive a premium for their shares as part of a sale of our
company and may reduce the price of our ADSs. This concentrated control will limit other shareholders' ability to influence corporate
matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of
Class A ordinary shares and ADSs may view as beneficial.
For other limitations and qualifications, see “Item 8. Financial Information – A. Consolidated Statements and other Financial Information
– Dividend Policy,” “Item 10. Additional Information – B. Memorandum and Articles of Association” and “Item 12. Description of
Securities Other than Equity Securities – D. American Depositary Shares” of the 2020 Form 20-F, as well as the disclosure below on
American Depositary Shares as required by Items 12.D.1 and 12.D.2 of the 2020 Form 20-F.
Other Rights (Item 9.A.7 of Form 20-F)
Not applicable.
Rights of the Class A Ordinary Shares (Item 10.B.3 of Form 20-F)
See “Item 10.B. Additional Information—Memorandum and Articles of Association—Ordinary Shares" and "Item 8. Financial
Information – A. Consolidated Statements and Other Financial Information – Dividend Policy" and “Item 10.E. Additional Information
—Taxation" of the 2020 Form 20-F.
Requirements for Amendments (Item 10.B.4 of Form 20-F)
See “Item 10.B. Additional Information—Memorandum and Articles of Association—Ordinary Shares—Variations of Rights of Shares”
of the 2020 Form 20-F.
Limitations on the Rights to Own Class A Ordinary Shares (Item 10.B.6 of Form 20-F)
See “Item 10.D. Additional Information – Exchange Controls” and “Item 12. Description of Securities Other than Equity Securities – D.
American Depositary Shares” of the 2020 Form 20-F, as well as the disclosure below on American Depositary Shares as required by
Items 12.D.1 and 12.D.2 of the 2020 Form 20-F.
Provisions Affecting Any Change of Control (Item 10.B.7 of Form 20-F)
See “Item 10.B. Additional Information—Memorandum and Articles of Association—Ordinary Shares—Anti-Takeover Provisions” of
the 2020 Form 20-F.
2
Ownership Threshold (Item 10.B.8 of Form 20-F)
There are no provisions under the laws of the Cayman Islands or the Memorandum and Articles of Association that govern the ownership
threshold above which shareholder ownership must be disclosed. Shareholders, however, are required to disclose shareholder ownership
in according with the applicable securities laws, regulations and listing rules where the securities of the Company are listed.
Differences Between the Law of Different Jurisdictions (Item 10.B.9 of Form 20-F)
See “Item 10.B. Additional Information—Memorandum and Articles of Association—Differences in Corporate Law” of the 2020 Form
20-F. Also see “Item 16G – Corporate Governance” of the 2020 Form 20-F on disclosure of a concise summary of the significant ways in
which our corporate governance practices differ from those followed by domestic companies under the Nasdaq listing standards.
Changes in Capital (Item 10.B.10 of Form 20-F)
See “Item 10.B. Additional Information—Memorandum and Articles of Association— Ordinary Shares— Alteration of Share Capital”
of the 2020 Form 20-F.
American Depositary Shares (Items 12.D.1 and 12.D.2 of Form 20-F)
JPMorgan Chase Bank, N.A., as depositary, issues the ADSs. Each ADS represents an ownership interest of three Class A ordinary
shares, deposited with the custodian, as agent of the depositary, under the deposit agreement among the Company, the depositary, and the
holders of the American Depositary Receipts (“ADRs”) thereunder. Each ADS also represents ownership of any securities, cash or other
property deposited with the depositary but which have not been distributed directly to you. Unless you specifically request certificated
ADSs, all ADSs will be issued on the books of the depositary in book-entry form and periodic statements will be mailed to you which
reflect the your ownership interest in such ADSs. In this description, references to American depositary receipts or ADRs shall include
the statements you will receive which reflect your ownership of ADSs.
The depositary’s office is located at 383 Madison Avenue, Floor 11, New York, NY10179.
You may hold ADSs either directly or indirectly through your broker or other financial institution. If you hold ADSs directly, by having
ADSs registered in your name on the books of the depositary, you are an ADR holder. This description assumes you hold your ADSs
directly. If you hold the ADSs indirectly through your broker or financial institution nominee, you must rely on the procedures of such
broker or financial institution to assert the rights of an ADR holder described in this section. You should consult with your broker or
financial institution to find out what those procedures are.
As an ADR holder, we will not treat you as a shareholder of ours and you will not have any shareholder rights. Cayman Islands law
governs shareholder rights. Because the depositary or its nominee is the shareholder of record for the shares represented by all
outstanding ADSs, shareholder rights rest with such record holder. Your rights are those of an ADR holder. Such rights derive from the
terms of the deposit agreement. The obligations of the depositary and its agents are also set out in the deposit agreement. Because the
depositary or its nominee will actually be the registered owner of the shares, you must rely on it to exercise the rights of a shareholder on
your behalf. The deposit agreement and the ADSs are governed by New York law. Under the deposit agreement, as an ADR holder, you
agree that any legal suit, action or proceeding against or involving us or the depositary, arising out of or based upon the deposit
agreement or the transactions contemplated thereby, may only be instituted in a state or federal court in New York, New York, and you
irrevocably waive any objection which you may have to the laying of venue of any such proceeding and irrevocably submit to the
exclusive jurisdiction of such courts in any such suit, action or proceeding.
3
The following is a summary of the material provisions of the deposit agreement. For more complete information, you should read both
deposit agreement and form of ADRs. The amended and restated deposit agreement, inclusive of the form of ADR as its Exhibit A, has
been filed with the SEC on December 1, 2020 as an exhibit to the Post-Effective Amendment No.1 to the Registration Statement on
Form F-6 (File No. 333-195515).
Dividends and Other Distributions
How will you receive dividends and other distributions on the shares underlying your ADSs?
We may make various types of distributions with respect to our securities. Cash distributions will be made in U.S. dollars. The depositary
has agreed that, to the extent practicable, it will pay to you the cash dividends or other distributions it or the custodian receives on shares
or other deposited securities, after converting any cash received into U.S. dollars (if it determines such conversion may be made on a
reasonable basis) and, in all cases, making any necessary deductions provided for in the deposit agreement. The depositary may utilize a
division, branch or affiliate of JPMorgan Chase Bank, N.A. to direct, manage and/or execute any public and/or private sale of securities
under the deposit agreement. Such division, branch and/or affiliate may charge the depositary a fee in connection with such sales, which
fee is considered an expense of the depositary. You will receive these distributions in proportion to the number of underlying securities
that your ADSs represent.
Except as stated below, the depositary will deliver such distributions to ADR holders in proportion to their interests in the following
manner:
Cash. The depositary will distribute any U.S. dollars available to it resulting from a cash dividend or other cash distribution or the net
proceeds of sales of any other distribution or portion thereof (to the extent applicable), on an averaged or other practicable basis, subject
to (i) appropriate adjustments for taxes withheld, (ii) such distribution being impermissible or impracticable with respect to certain
registered ADR holders, and (iii) deduction of the depositary’s and/or its agents’ expenses in (1) converting any foreign currency to U.S.
dollars to the extent that it determines that such conversion may be made on a reasonable basis, (2) transferring foreign currency or U.S.
dollars to the United States by such means as the depositary may determine to the extent that it determines that such transfer may be
made on a reasonable basis, (3) obtaining any approval or license of any governmental authority required for such conversion or transfer
that is obtainable at a reasonable cost and within a reasonable time and (4) making any sale by public or private means in any
commercially reasonable manner. If exchange rates fluctuate during a time when the depositary cannot convert a foreign currency, you
may lose some or all of the value of the distribution.
4
Shares. In the case of a distribution in shares, the depositary will issue additional ADRs to evidence the number of ADSs representing
such shares. Only whole ADSs will be issued. Any shares which would result in fractional ADSs will be sold and the net proceeds will
be distributed in the same manner as cash to the ADR holders entitled thereto.
Rights to receive additional shares. In the case of a distribution of rights to subscribe for additional shares or other rights, if we timely
provide evidence satisfactory to the depositary that it may lawfully distribute such rights, the depositary will distribute warrants or other
instruments in the discretion of the depositary representing such rights. However, if we do not timely furnish such evidence, the
depositary may:
sell such rights if practicable and distribute the net proceeds in the same manner as cash to the ADR holders entitled
·
thereto; or
if it is not practicable to sell such rights, do nothing and allow such rights to lapse, in which case ADR holders will
·
receive nothing.
We have no obligation to file a registration statement under the Securities Act in order to make any rights available to ADR holders.
Other distributions. In the case of a distribution of securities or property other than those described above, the depositary may either
(i) distribute such securities or property in any manner it deems equitable and practicable or (ii) to the extent the depositary deems
distribution of such securities or property not to be equitable and practicable, sell such securities or property and distribute any net
proceeds in the same way it distributes cash.
If the depositary determines in its discretion that any distribution described above is not practicable with respect to any specific
registered ADR holder, the depositary may choose any method of distribution that it deems practicable for such ADR holder, including
the distribution of foreign currency, securities or property, or it may retain such items, without paying interest on or investing them, on
behalf of the ADR holder as deposited securities, in which case the ADSs will also represent the retained items.
Any U.S. dollars will be distributed by checks drawn on a bank in the United States for whole dollars and cents. Fractional cents will be
withheld without liability and dealt with by the depositary in accordance with its then current practices. The depositary is not responsible
if it decides that it is unlawful or not reasonably practicable to make a distribution available to any ADR holders. There can be no
assurance that the depositary will be able to convert any currency at a specified exchange rate or sell any property, rights, shares or other
securities at a specified price, nor that any of such transactions can be completed within a specified time period.
5
Deposit, Withdrawal and Cancellation
How does the depositary issue ADSs?
The depositary will issue ADSs if you or your broker deposit shares or evidence of rights to receive shares with the custodian and pay the
fees and expenses owing to the depositary in connection with such issuance.
Shares deposited with the custodian must be accompanied by certain delivery documentation and shall, at the time of such deposit, be
registered in the name of JPMorgan Chase Bank, N.A., as depositary for the benefit of holders of ADRs or in such other name as the
depositary shall direct.
The custodian will hold all deposited shares for the account of the depositary. ADR holders thus have no direct ownership interest in the
shares and only have such rights as are contained in the deposit agreement. The custodian will also hold any additional securities,
property and cash received on or in substitution for the deposited shares. The deposited shares and any such additional items are referred
to as “deposited securities”.
Upon each deposit of shares, receipt of related delivery documentation and compliance with the other provisions of the deposit
agreement, including the payment of the fees and charges of the depositary and any taxes or other fees or charges owing, the depositary
will issue an ADR or ADRs in the name or upon the order of the person entitled thereto evidencing the number of ADSs to which such
person is entitled. All of the ADSs issued will, unless specifically requested to the contrary, be part of the depositary’s direct registration
system, and a registered holder will receive periodic statements from the depositary which will show the number of ADSs registered in
such holder’s name. An ADR holder can request that the ADSs not be held through the depositary’s direct registration system and that a
certificated ADR be issued.
How do ADR holders cancel an ADS and obtain deposited securities?
When you turn in your ADR certificate at the depositary’s office, or when you provide proper instructions and documentation in the case
of direct registration ADSs, the depositary will, upon payment of certain applicable fees, charges and taxes, deliver the underlying shares
to you or upon your written order. Delivery of deposited securities in certificated form will be made at the custodian’s office. At your
risk, expense and request, the depositary may deliver deposited securities at such other place as you may request.
The depositary may only restrict the withdrawal of deposited securities in connection with:
·
·
·
temporary delays caused by closing our transfer books or those of the depositary or the deposit of shares in connection with
voting at a shareholders’ meeting, or the payment of dividends;
the payment of fees, taxes and similar charges; or
compliance with any U.S. or foreign laws or governmental regulations relating to the ADRs or to the withdrawal of deposited
securities.
6
This right of withdrawal may not be limited by any other provision of the deposit agreement.
Record Dates
The depositary may, after consultation with us if practicable, fix record dates (which, to the extent applicable, shall be as near as
practicable to any corresponding record dates set by us) for the determination of the registered ADR holders who will be entitled (or
obligated, as the case may be):
·
·
to receive any distribution on or in respect of shares,
to give instructions for the exercise of voting rights at a meeting of holders of shares,
to pay the fee assessed by the depositary for administration of the ADR program and for any expenses as provided for in the
·
ADR, or
·
to receive any notice or to act in respect of other matters
all subject to the provisions of the deposit agreement.
Voting Rights
How do you vote?
If you are an ADR holder and the depositary asks you to provide it with voting instructions, you may instruct the depositary how to
exercise the voting rights for the shares which underlie your ADSs. As soon as practicable after receiving notice of any meeting or
solicitation of consents or proxies from us, the depositary will distribute to the registered ADR holders a notice stating such information
as is contained in the voting materials received by the depositary and describing how you may instruct the depositary to exercise the
voting rights for the shares which underlie your ADSs, including instructions for giving a discretionary proxy to a person designated by
us. For instructions to be valid, the depositary must receive them in the manner and on or before the date specified. The depositary will
try, as far as is practical, subject to the provisions of and governing the underlying shares or other deposited securities, to vote or to have
its agents vote the shares or other deposited securities as you instruct.
Holders are strongly encouraged to forward their voting instructions to the depositary as soon as possible. Voting instructions will not be
deemed to be received until such time as the ADR department responsible for proxies and voting has received such instructions
notwithstanding that such instructions may have been physically received by the depositary prior to such time. The depositary will not
itself exercise any voting discretion. Furthermore, neither the depositary nor its agents are responsible for any failure to carry out any
voting instructions, for the manner in which any vote is cast or for the effect of any vote. Notwithstanding anything contained in the
deposit agreement or any ADR, the depositary may, to the extent not prohibited by law or regulations, or by the requirements of the stock
exchange on which the ADSs are listed, in lieu of distribution of the materials provided to the depositary in connection with any meeting
of, or solicitation of consents or proxies from, holders of deposited securities, distribute to the registered holders of ADRs a notice that
provides such holders with, or otherwise publicizes to such holders, instructions on how to retrieve such materials or receive such
materials upon request (for example, by reference to a website containing the materials for retrieval or a contact for requesting copies of
the materials).
7
We have advised the depositary that under the Cayman Islands law and our constituent documents, each as in effect as of the date of the
deposit agreement, voting at any meeting of shareholders is by show of hands unless a poll is (before or on the declaration of the results
of the show of hands) demanded. In the event that voting on any resolution or matter is conducted on a show of hands basis in
accordance with our constituent documents, the depositary will refrain from voting and the voting instructions (or the deemed voting
instructions) received by the depositary from holders shall lapse. The depositary will not demand a poll or join in demanding a poll,
whether or not requested to do so by holders of ADSs. There is no guarantee that you will receive voting materials in time to instruct the
depositary to vote and it is possible that you, or persons who hold their ADSs through brokers, dealers or other third parties, will not have
the opportunity to exercise a right to vote.
Reports and Other Communications
Will ADR holders be able to view our reports?
The depositary will make available for inspection by ADR holders at the offices of the depositary and the custodian the deposit
agreement, the provisions of or governing deposited securities, and any written communications from us which are both received by the
custodian or its nominee as a holder of deposited securities and made generally available to the holders of deposited securities.
Additionally, if we make any written communications generally available to holders of our shares, and we furnish copies thereof (or
English translations or summaries) to the depositary, it will distribute the same to registered ADR holders.
Further, we are subject to periodic reporting and other informational requirements of the Exchange Act as applicable to foreign private
issuers and, accordingly, file certain reports with the SEC. All information filed with or furnished to the SEC can be obtained over the
internet at the SEC’s website at www.sec.gov.
Reclassifications, Recapitalizations and Mergers
If we take certain actions that affect the deposited securities, including (i) any change in par value, split-up, consolidation, cancellation or
other reclassification of deposited securities or (ii) any distributions of shares or other property not made to registered holders of ADRs
or (iii) any recapitalization, reorganization, merger, consolidation, liquidation, receivership, bankruptcy or sale of all or substantially all
of our assets, then the depositary may choose to, and shall if reasonably requested by us choose:
·
·
to amend the form of ADR;
to distribute additional or amended ADRs;
8
·
·
·
to distribute cash, securities or other property it has received in connection with such actions;
to sell any securities or property received and distribute the proceeds as cash; or
none of the above.
If the depositary chooses to do none of the above, any of the cash, securities or other property it receives will constitute part of the
deposited securities and each ADS will then represent a proportionate interest in such property.
Amendment and Termination
How may the deposit agreement be amended?
We may agree with the depositary to amend the deposit agreement and the ADSs without your consent for any reason. Registered ADR
holders must be given at least 30 days notice of any amendment that imposes or increases any fees or charges (other than stock transfer
or other taxes and other governmental charges, transfer or registration fees, cable, telex or facsimile transmission costs, delivery costs or
other such expenses), or otherwise prejudices any substantial existing right of registered ADR holders. Such notice need not describe in
detail the specific amendments effectuated thereby, but must identify to registered ADR holders a means to access the text of such
amendment. If a registered ADR holder continues to hold an ADR or ADRs after being so notified, such registered ADR holder is
deemed to agree to such amendment and to be bound by the deposit agreement as so amended. Notwithstanding the foregoing, if any
governmental body or regulatory body should adopt new laws, rules or regulations which would require amendment or supplement of the
deposit agreement or the form of ADR to ensure compliance therewith, we and the depositary may amend or supplement the deposit
agreement and the ADR at any time in accordance with such changed laws, rules or regulations, which amendment or supplement may
take effect before a notice is given or within any other period of time as required for compliance. No amendment, however, will impair
your right to surrender your ADSs and receive the underlying securities, except in order to comply with mandatory provisions of
applicable law.
How may the deposit agreement be terminated?
The depositary may, and shall at our written direction, terminate the deposit agreement and the ADRs by mailing notice of such
termination to the registered holders of ADRs at least 30 days prior to the date fixed in such notice for such termination; provided,
however, if the depositary shall have (i) resigned as depositary under the deposit agreement, notice of such termination by the depositary
shall not be provided to registered holders unless a successor depositary shall not be operating under the deposit agreement within 60
days of the date of such resignation, and (ii) been removed as depositary under the deposit agreement, notice of such termination by the
depositary shall not be provided to registered holders of ADRs unless a successor depositary shall not be operating under the deposit
agreement on the 120th day after our notice of removal was first provided to the depositary. After the date so fixed for termination, (a) all
direct registration ADRs shall cease to be eligible for the direct registration system and shall be considered ADRs issued on the ADR
Register and (b) the depositary shall use its reasonable efforts to ensure that the ADSs cease to be DTC eligible so that neither DTC nor
any of its nominees shall thereafter be a registered holder of ADRs. At such time as the ADSs cease to be DTC eligible and/or neither
DTC nor any of its nominees is a registered holder of ADRs, the depositary shall (a) instruct its custodian to deliver all shares to us along
with a general stock power that refers to the names set forth on the ADR Register and (b) provide us with a copy of the ADR Register.
Upon receipt of such shares and the ADR Register, we have agreed to use our best efforts to issue to each registered holder a Share
certificate representing the Shares represented by the ADSs reflected on the ADR Register in such registered holder’s name and to
deliver such Share certificate to the registered holder at the address set forth on the ADR Register. After providing such instruction to the
custodian and delivering a copy of the ADR Register to us, the depositary and its agents will perform no further acts under the Deposit
Agreement and the ADRs and shall cease to have any obligations under the Deposit Agreement and/or the ADRs. After we receive the
copy of the ADR Register and the deposited securities, we shall be discharged from all obligations under the deposit agreement except (i)
to distribute the shares to the registered ADR holders entitled thereto and (ii) for its obligations to the depositary and its agents.
9
Limitations on Obligations and Liability to ADR Holders
Limits on our obligations and the obligations of the depositary; limits on liability to ADR holders and holders of ADSs
Prior to the issue, registration, registration of transfer, split-up or combination of any ADR, the delivery of any distribution in respect
thereof, or, subject to the restrictions on withdrawal of deposited securities, the withdrawal of any deposited securities, and from time to
time in the case of production of proofs as described below, we, the depositary or the custodian may require:
·
·
·
payment with respect thereto of (i) any stock transfer or other tax or other governmental charge, (ii) any stock transfer or
registration fees in effect for the registration of transfers of shares or other deposited securities upon any applicable register and
(iii) any applicable charges as provided in the ADR;
the production of proof satisfactory to it of (i) the identity of any signatory and genuineness of any signature and (ii) such other
information, including without limitation, information as to citizenship, residence, exchange control approval, beneficial
ownership of any securities, compliance with applicable law, regulations, provisions of or governing deposited securities and
terms of the Deposit Agreement and the ADR, as it may deem necessary or proper; and
compliance with such regulations as the depositary may establish consistent with the deposit agreement.
The issuance of ADRs, the acceptance of deposits of shares, the registration, registration of transfer, split-up or combination of ADRs or,
subject to the restrictions on withdrawal of deposited securities, the withdrawal of deposited securities may be suspended, generally or in
particular instances, when the ADR Register or any register for deposited securities is closed or when any such action is deemed
advisable by the depositary; provided that the ability to withdraw shares may only be limited under the following circumstances:
(i) temporary delays caused by closing transfer books of the depositary or our transfer books or the deposit of shares in connection with
voting at a shareholders’ meeting, or the payment of dividends, (ii) the payment of fees, taxes, and similar charges, and (iii) compliance
with any laws or governmental regulations relating to ADRs or to the withdrawal of deposited securities.
10
The deposit agreement expressly limits the obligations and liability of the depositary, ourselves and our respective agents, provided,
however, that no such disclaimer of liability under the Securities Act is intended by any of the limitations of liabilities provisions of the
deposit agreement. In the deposit agreement it provides that neither we nor the depositary nor any such agent will be liable if:
·
·
·
·
·
any present or future law, rule, regulation, fiat, order or decree of the United States, the Cayman Islands, the People’s Republic
of China or any other country, or of any governmental or regulatory authority or securities exchange or market or automated
quotation system, the provisions of or governing any deposited securities, any present or future provision of the depositary’s
charter, any act of God, war, terrorism, nationalization or other circumstance beyond our, the depositary’s or our respective
agents’ control shall prevent or delay, or shall cause any of them to be subject to any civil or criminal penalty in connection
with, any act which the deposit agreement or the ADRs provide shall be done or performed by us, the depositary or our
respective agents (including, without limitation, voting);
the depositary exercises or fails to exercise discretion under the deposit agreement or the ADR including, without limitation,
any failure to determine that any distribution or action may be lawful or reasonably practicable;
the depositary performs its obligations under the deposit agreement and ADRs without gross negligence or willful misconduct;
the depositary takes any action or refrains from taking any action in reliance upon the advice of or information from legal
counsel, accountants, any person presenting shares for deposit, any registered holder of ADRs, or any other person believed by
it to be competent to give such advice or information; or
the depositary relies upon any written notice, request, direction, instruction or document believed by it to be genuine and to have
been signed, presented or given by the proper party or parties.
Neither the depositary nor its agents have any obligation to appear in, prosecute or defend any action, suit or other proceeding in respect
of any deposited securities or the ADRs. We shall only be obligated to appear in, prosecute or defend any action, suit or other proceeding
in respect of any deposited securities or the ADRs, which in our opinion may involve us in expense or liability, if indemnity satisfactory
to us against all expense (including fees and disbursements of counsel) and liability is furnished as often as may be required. The
depositary and its agents may fully respond to any and all demands or requests for information maintained by or on its behalf in
connection with the deposit agreement, any registered holder or holders of ADRs, any ADRs or otherwise related to the deposit
agreement or ADRs to the extent such information is requested or required by or pursuant to any lawful authority, including without
limitation laws, rules, regulations, administrative or judicial process, banking, securities or other regulators. The depositary shall not be
liable for the acts or omissions made by, or the insolvency of, any securities depository, clearing agency or settlement system.
Furthermore, the depositary shall not be responsible for, and shall incur no liability in connection with or arising from, the insolvency of
any custodian that is not a branch or affiliate of JPMorgan Chase Bank, N.A. Notwithstanding anything to the contrary contained in the
deposit agreement or any ADRs, the depositary shall not be responsible for, and shall incur no liability in connection with or arising
from, any act or omission to act on the part of the custodian except to the extent that the custodian committed fraud or willful misconduct
in the provision of custodial services to the depositary or failed to use reasonable care in the provision of custodial services to the
depositary as determined in accordance with the standards prevailing in the jurisdiction in which the custodian is located. The depositary
and the custodian(s) may use third party delivery services and providers of information regarding matters such as pricing, proxy voting,
corporate actions, class action litigation and other services in connection with the ADRs and the deposit agreement, and use local agents
to provide extraordinary services such as attendance at annual meetings of issuers of securities. Although the depositary and the
custodian will use reasonable care (and cause their agents to use reasonable care) in the selection and retention of such third party
providers and local agents, they will not be responsible for any errors or omissions made by them in providing the relevant information
or services. The depositary shall not have any liability for the price received in connection with any sale of securities, the timing thereof
or any delay in action or omission to act nor shall it be responsible for any error or delay in action, omission to act, default or negligence
on the part of the party so retained in connection with any such sale or proposed sale.
11
The depositary has no obligation to inform ADR holders or other holders of an interest in any ADSs about the requirements of Cayman
Islands or People’s Republic of China law, rules or regulations or any changes therein or thereto.
Additionally, none of us, the depositary or the custodian shall be liable for the failure by any registered holder of ADRs or beneficial
owner therein to obtain the benefits of credits on the basis of non-U.S. tax paid against such holder’s or beneficial owner’s income tax
liability. Neither we nor the depositary shall incur any liability for any tax consequences that may be incurred by holders or beneficial
owners on account of their ownership of ADRs or ADSs.
Neither the depositary nor its agents will be responsible for any failure to carry out any instructions to vote any of the deposited
securities, for the manner in which any such vote is cast or for the effect of any such vote. The depositary may rely upon instructions
from us or our counsel in respect of any approval or license required for any currency conversion, transfer or distribution. The depositary
shall not incur any liability for the content of any information submitted to it by us or on our behalf for distribution to ADR holders or for
any inaccuracy of any translation thereof, for any investment risk associated with acquiring an interest in the deposited securities, for the
validity or worth of the deposited securities, for the credit-worthiness of any third party, for allowing any rights to lapse upon the terms
of the deposit agreement or for the failure or timeliness of any notice from us. The depositary shall not be liable for any acts or omissions
made by a successor depositary whether in connection with a previous act or omission of the depositary or in connection with any matter
arising wholly after the removal or resignation of the depositary, provided that in connection with the issue out of which such potential
liability arises the depositary performed its obligations without negligence while it acted as depositary. Neither the depositary nor any of
its agents shall be liable to registered holders of ADRs or beneficial owners of interests in ADSs for any indirect, special, punitive or
consequential damages (including, without limitation, lost profits) of any form incurred by any person or entity, whether or not
foreseeable and regardless of the type of action in which such a claim may be brought.
12
In the deposit agreement each party thereto (including, for avoidance of doubt, each holder and beneficial owner and/or holder of
interests in ADRs) irrevocably waives, to the fullest extent permitted by applicable law, any right it may have to a trial by jury in any
suit, action or proceeding against the depositary and/or us directly or indirectly arising out of or relating to the shares or other deposited
securities, the ADSs or the ADRs, the deposit agreement or any transaction contemplated therein, or the breach thereof (whether based
on contract, tort, common law or any other theory).
The depositary and its agents may own and deal in any class of our securities and in ADSs.
Disclosure of Interest in ADSs
To the extent that the provisions of or governing any deposited securities may require disclosure of or impose limits on beneficial or
other ownership of deposited securities, other shares and other securities and may provide for blocking transfer, voting or other rights to
enforce such disclosure or limits, you agree to comply with all such disclosure requirements and ownership limitations and to comply
with any reasonable instructions we may provide in respect thereof. We reserve the right to instruct you to deliver your ADSs for
cancellation and withdrawal of the deposited securities so as to permit us to deal with you directly as a holder of shares and, by holding
an ADS or an interest therein, you will be agreeing to comply with such instructions.
Books of Depositary
The depositary or its agent will maintain a register for the registration, registration of transfer, combination and split-up of ADRs, which
register shall include the depositary’s direct registration system. Registered holders of ADRs may inspect such records at a designated
transfer office ("Transfer Office") at all reasonable times, but solely for the purpose of communicating with other holders in the interest
of the business of our company or a matter relating to the deposit agreement. Such register may be closed from time to time, when
deemed expedient by the depositary.
The depositary will maintain facilities for the delivery and receipt of ADRs.
Description of Other Types of Securities
Debt Securities (Item 12.A of Form 20-F)
Not applicable.
Warrants and Rights (Item 12.B of Form 20-F)
Not applicable.
Other Securities (Item 12.C of Form 20-F)
Not applicable.
13
COOPERATION AGREEMENT
Exhibit 4.5
This Cooperation Agreement (this “Agreement”) is entered into on February 19, 2021 in Beijing by and between:
(1) Nanjing Tuniu Technology Co., Ltd., with its registered address at 3-5/F Building No.6, Southeast
University Science Park, 6 Changjianghou Street, Xuanwu District, Nanjing and its legal representative being
Yu Dunde (“Party A”);
(2) Beijing Tuniu Technology Co., Ltd., with its registered address at R1006 10/F Building No.4, Yard No.1 of
Shangdishi Street, Haidian District, Beijing and its legal representative being Yu Dunde (“Party B”).
WHEREAS
1. Party A is a company with exclusively domestic capital incorporated under the laws of the People’s Republic
of China, mainly engaged in the internet-based sale, promotion of tour products, room reservation and
conference affairs services.
2. Party B is a limited liability company incorporated under the laws of the People’s Republic of China, mainly
engaged in research and development of computer software technology, technology transfer, technical
consultancy and technical services, computer technology training, technical services and business consultancy
services in relation to the internet-based sale and promotion of tour products.
3. Party A intends to authorize Party B to provide to Party A and its subsidiaries the technical services and
business consultancy services in relation to the internet-based sale and promotion of tour products, including
but not limited to development, operation, maintenance of internet technology platform as well as consultancy
services relating to sale and promotion of tour products or cooperation provided by Party B in other forms as
required under this Agreement, and Party B agrees to accept such authorization.
4. After an amiable consideration, the Parties unanimously agree that the establishment of a long-term and close
cooperation relationship is in the best interests of the Parties and their beneficiaries.
NOW, THEREFORE, the Parties unanimously agree on Business Cooperation matters
(as defined below) through friendly negotiation as follows:
1. Business Cooperation
Party A and Party B unanimously agree that the proposed cooperation shall be the internet-based sale and
promotion of tour products conducted by Party A and its subsidiaries, other value-added business carried out
by Party A and all of the business activities operated and developed by Party A now and at any time during the
validity term hereof. Party B shall provide the business consultancy and technical services as well as the
technical consultancy as set forth in Article 3 hereinafter to Party A and its subsidiaries to facilitate them to
conduct the aforementioned business and supply relevant products and services (“Business Cooperation”).
2. Exclusive Cooperation
2.1 Party A irrevocably undertakes that Party A will take Party B as its exclusive and sole partner to provide
the business consultancy and technical services as well as technical consultancy to Party A and its
subsidiaries. Party A shall not establish any same or similar cooperative relationship with any third party in
respect of such businesses nor shall it make any same or similar arrangement, unless with the prior written
consent of Party B.
2.2 Party A irrevocably undertakes that it will make best efforts to assist and endeavor to achieve the exclusive
operation of the cooperative business to the extent permitted by laws.
2.3 Party A irrevocably undertakes that, without Party B’s consent, Party A shall not conduct any other
business or make any commercial arrangement, including without limitation being engaged in or otherwise
participating in any commercial activities and businesses independently or together with any other person
or entity, nor shall it carry out any activities that may be competitive with or cause adverse effect to Party
B’s business.
3. Party B’s Services
Party B undertakes to provide the following technical consultancy and services to Party A and its subsidiaries in
respect of the cooperative business (collectively referred to as “Party B’s Services”):
3.1 Research, development, production, test, operation and maintenance, upgrade and other services of
relevant technology;
3.2 Development, construction, operation and maintenance, upgrade and other services of relevant internet
platform and system;
3.3 Design the relevant tour products plan, and provide relevant training, implementation and upgrade and
other services;
3.4 Consultancy services related to sale and promotion of tour products;
3.5 Providing to Party A the information technology/overall management and operation solution as required
for Party A’s business;
3.6 Other relevant services provided from time to time at Party A’s request
Party A agrees that Party B may, at its own discretion, provide the aforementioned Party B’s Services to Party A
and its subsidiaries, or purchase the required services from any third party and provide the services to Party A and
its subsidiaries.
Party A shall cause its subsidiaries to accept Party B’s Services. The Parties agree that the subsidiaries of Party A
may otherwise enter into an agreement with Party B in respect of Party B’s Services in accordance with this
Agreement.
4. Cooperation Remuneration
4.1 Party A and Party B unanimously agree that they will allocate the proceeds generated from cooperation in
accordance with the following provisions:
Party B shall have the right to charge, on a quarterly basis, the service fee (“Service Fee”) from Party A or
its subsidiaries who have accepted Party B’s Services, or designate another person or entity to charge
Service Fee from Party A or its subsidiaries who have accepted Party B’s Services. The total sum of
Service Fee shall be equal to the amount of profits gained by Party A or its subsidiaries who have accepted
Party B’s Services. Party B shall have the right to adjust the amount of Service Fee at its own discretion,
without the prior consent of Party A or its subsidiaries.
Party A shall cause its subsidiaries to pay the Service Fee in respect of Party B’s Services provided to such
subsidiaries.
4.2 The Service Fee of the last quarter shall be paid prior to the seventh business day following the
commencement of the next quarter. Such Service Fee shall be paid to the bank account designated by Party
B in writing. If Party B intends to change its bank account, it shall send a written notice to Party A seven
business days in advance.
4.3 Except as otherwise agreed hereunder, if Party A or its subsidiaries fail to pay the Service Fee in full on
schedule according to provisions of Article 4.1 and Article 4.2, then Party A or its subsidiaries shall, in
addition to the continuance
of the payment of Service Fee in full, it shall pay Party B the liquidated damages at a daily interest rate of
0.03% in respect of the outstanding Service Fee.
5. Term of Cooperation
This Agreement shall be formed as from the date when it is duly executed by the Parties. Party A and Party B
agree and confirm that once formed, the effectiveness of this Agreement shall be retrospective to January 24,
2014,and that the term of cooperation under this Agreement shall commence from January 24, 2014 and end on
the expiration date of the operation term of Party B (“Term of Cooperation”).
6. Termination
6.1 Prior to the expiration of the Term of Cooperation , this Agreement shall only be terminated upon
occurrence of the following circumstances:
6.1.1 Party B shall have the right to terminate this Agreement in advance without the prior written
consent from Party A, by sending a written notice to Party A but Party A may not terminate or
rescind this Agreement;
6.1.2 One Party requests to terminate this Agreement when the other Party is declared bankrupt in
accordance with the laws;
6.1.3 Party B fails to provide Party B’s Services to Party A for more than three consecutive years due to
the force majeure event.
6.2 Rights and Obligations of the Parties upon Termination
6.2.1 If this Agreement is terminated according to the aforementioned Article 6.1.1, neither Party shall
assume any obligations or liabilities to the other Party as of the termination hereof, unless as
otherwise agreed by the Parties, provided that the liabilities for breach occurring prior to the
termination shall not be exempted;
6.2.2 If this Agreement is terminated according to the aforementioned Article 6.1.2, the rights and
obligations of the Parties at the time of termination hereof shall be subject to the relevant
bankruptcy laws;
6.2.3 If this Agreement is terminated according to the aforementioned Article 6.1.3, neither Party shall
assume any obligations or liabilities to the other Party as of the termination hereof, provided that
the liabilities for breach that occured prior to the force majeure event shall not be exempted.
6.3 Each Party hereby irrevocably waives other rights to terminate this Agreement it may have under any
applicable laws, except for the rights of the Parties agreed under this Article 6.
6.4 Party A hereby expressly undertakes that it waives the right to request amendment and revocation of any
term of this Agreement on the ground of material misunderstanding or unconscionability, regardless of
whether such request is based on the percentage and amount of payment specified hereunder or the
quantity and quality of any service provided by Party B, or is raised against the provisions under which
Party A is prohibited from having any cooperation with a third party and conducting any businesses other
than those agreed hereunder.
7. Representations, Warranties and Undertakings
7.1 Each Party hereby represents, warrants and undertakes to the other Party that:
7.1.1 It has sufficient capacity for action, power and authorization (including necessary government
approval and internal permit of corporation) to execute and perform this Agreement;
7.1.2 This Agreement shall be legally binding on the Parties as of the execution date hereof; and
7.1.3 There is no outstanding litigation, arbitration or other legal or governmental proceedings, or to the
knowledge of that Party, there is no litigation, arbitration or other legal or governmental
proceedings threatening or affecting the performance of obligations of that Party hereunder.
7.2 Other than those set forth in Section 7.1, Party A hereby represents, and warrants and undertakes to Party
B that:
7.2.1 It shall timely inform Party B of any circumstance which has or is likely to have a material adverse
effect on Party A’s business or operation thereof and shall use its best efforts to prevent the
occurrence of such circumstance and/or the expansion of losses.
7.2.2 Without written consent of Party B, Party A will not dispose of its material assets or change its
current shareholding structure in whatsoever manner.
7.2.3 When this Agreement takes effect, it has complete licenses and certificates necessary for conduct
of its business, full rights and qualifications to carry out business currently conducted by it within
the PRC.
7.2.4 Once requested by Party B in writing, Party A will use all receivables then in its possession and/or
other assets lawfully owned by it and at its disposal to provide security for performance of its
payment obligation of the Services Fees agreed in Article 4 hereof in a manner then permissible by
Laws.
7.2.5 It will indemnify and hold harmless Party B against all losses suffered or likely to be suffered by
Party B as a result of provision of the Services, including, without limitation, any losses arising out
of any suit, recourse, arbitration, claim brought by any third party against it or any administrative
investigation or sanction by any governmental authorities, but exclusive of any losses arising out of
any willful misconduct or gross negligence of Party B.
7.2.6 Without written consent of Party B, Party A shall not enter into any other agreement or
arrangement conflicting with this Agreement or likely to impair the rights and interests of Party B
hereunder.
7.3 Each Party shall be responsible for and hold the other Party harmless from any loss, damages and claim
arising out of violation of any representations, warranties and Undertakings hereunder.
8. Breach
The Parties agree and acknowledge that:
8.1 If any Party commits any act in violation of this Agreement, such Party shall assume the liabilities for
breach according to this Agreement and applicable laws. If both Parties breach this Agreement, they shall
each assume their own liabilities for breach respectively. Notwithstanding the foregoing provisions, neither
Party shall be responsible to the other Party in respect of any indirect loss or damage caused hereunder.
8.2 The demand for liquidated damages and specific performance in respect of any breach during the Term of
Cooperation are all remedies that the non-breaching Party shall have under this Agreement. The non-
breaching Party shall waive the right to request termination of this Agreement it may have according to
any applicable laws as a result of the violation acts committed by the breaching Party.
9. Governing Law
This Agreement shall be governed by and interpreted pursuant to the laws of the
People’s Republic of China that are promulgated and are publicly available, provided that the general international
business practices shall apply if the laws of the People’s Republic of China that are promulgated and are publicly
available do not involve any matter in relation to this Agreement.
10. Force Majeure
The force majeure hereunder shall mean the natural disaster, war, political event, and adjustment of laws,
regulations and state policies. If the performance of this Agreement by one Party or the Parties according to
provisions agreed hereunder is directly affected by the force majeure event, the affected Party shall immediately
notify the other Party or its attorney-in-fact of the situation of the force majeure event, and shall, within fifteen
(15) days, provide the detailed information of the force majeure event or the reason for non-performance or partial
performance or delay of performance of this Agreement as well as valid evidence thereof (which shall be issued
by the notarization authority at the place where the force majeure event occurs). The Parties shall negotiate to
decide the performance of this Agreement depending on to what degree the performance of this Agreement is
influenced by the force majeure, and decide on whether the affected Party may partially perform or postpone the
performance of its obligations hereunder. Except as provided for under Article 6.1.3 hereof, neither Party shall
exercise the right to termination this Agreement that it may have under any applicable laws on the ground of
occurrence of force majeure event.
11. Dispute Resolution
11.1 All disputes arising out of or in connection with this Agreement shall be first settled by the related Parties
through amiable consultations; If the related Parties fail to resolve the dispute through consultations, the
dispute shall be submitted to China International Economic and Trade Arbitration Commission (CIETAC)
for arbitration according to CIETAC arbitration rules in effect at the time of applying for arbitration. The
seat of arbitration shall be in Beijing. The arbitration award shall be final and binding on the related
Parties. Except as otherwise required by the arbitration award, the arbitration fees shall be borne by the
losing party. The losing party shall also indemnify for the attorneys’ fee and other expenses incurred by the
winning party.
11.2 Pending the resolution of such dispute, the Parties shall continue to perform the remaining provisions of
this Agreement other than the disputed matters..
12. Miscellaneous
12.1 This Agreement shall take effect as of the date when the authorized representatives of the Parties sign
hereon. The Parties agree and confirm that this Agreement shall constitute all understanding, interpretation
and intentions of the Parties in respect of the Cooperative Business. Once executed, this Agreement shall
replace any other legal documents previously entered into by the Parties in respect of the same subject
matter hereof.
12.2 The rights and obligations of each Party under this Agreement shall not be transferred, except for the
transfer by Party B to its affiliates.
12.3 The Parties agree that any and all intellectual property researched and developed, created and invented by
the Parties (including their employees) in the course of performance of this Agreement shall be owned by
Party B. For the purpose of this Article 12.3, “Intellectual Property” means the patent, patent application
right, trademark, service mark, logo, image, trade name, internet domain name, design right, copyright
(including copyright of computer software) and moral rights, database right, right of semiconductor design
drawing, utility model, proprietary technology and other intellectual property that are registered and
unregistered including those that have applied for registration, as well as all other rights or protection
methods with same or similar effect on a global scope.
12.4 To the extent permitted under the laws of the People’s Republic of China, the failure or delay of
performance of any right under this Agreement by any Party shall not be deemed as a waive of such right,
and any single or partial exercise of any right shall not preclude the further exercise of such right in the
future.
12.5 This Agreement shall constitute an entire agreement between the Parties in respect of the subject matter of
this Agreement and supersede any and all prior expression of intention or understanding reached by the
Parties in relation to this Agreement. This Agreement shall not be amended or modified unless the
authorized representatives of the Parties sign a written agreement thereof.
12.6 This Agreement shall be executed in two (2) copies, each of which shall have the same legal effect.
12.7 Any notice or written communication sent by a Party to the other Party under this Agreement shall be
made in writing and delivered by courier service or by facsimile accompanied with a confirmation hard
copy delivered by courier service. The notice, communication or letter sent under this Agreement shall be
deemed as effectively received on the seventh (7) day after sending to the courier service, or shall be
deemed as effectively received on the first (1) day after delivered by facsimile, which shall be evidenced
by the transmission
confirmation. All notice and communication shall be sent to the following addresses until a Party notify
the other Party in writing to change such addresses:
Party A: Nanjing Tuniu Technology Co., Ltd.
Address: Tuiniu Building, 699-32Xuanwu Avenue, Xuanwu District, Nanjing
Fax No.: (86 25) 86853999
Attention: General Manager
Party B: Beijing Tuniu Technology Co., Ltd.
Address: Tuiniu Building, 699-32Xuanwu Avenue, Xuanwu District, Nanjing
Fax No.: (86 25) 86853999
Attention: General Manager
12.8 Confidentiality Obligations
12.8.1 Neither Party shall disclose the financial and technical information obtained in the course of
conclusion of this Agreement to any third party nor use such information for matters irrelevant to
this Agreement, regardless of written or oral information, unless the other Party gives a prior
written consent thereto.
12.8.2 The Parties shall be obligated to take measures (including without limitation preparing the
confidentiality rules, entering into the confidentiality agreement, establishing the archive
management system and etc.) to ensure their respective employees will observe the confidentiality
obligations specified hereunder.
(The remaining of this page is intentionally left blank)
In witness whereof, this Agreement has been executed by the duly authorized representatives of the Parties on the
date first mentioned above.
Party A:
Nanjing Tuniu Technology Co., Ltd.
By: /s/ Yu Dunde
Name: Yu Dunde
Title: Chairman
Party B:
Beijing Tuniu Technology Co., Ltd.
By: /s/ Yu Dunde
Name: Yu Dunde
Title: Chairman
Exhibit 4.6
SHAREHOLDER’S VOTING RIGHTS AGREEMENT
DATED
February 19, 2021
SHAREHOLDER’S VOTING RIGHTS AGREEMENT
THIS SHAREHOLDER’S VOTING RIGHTS AGREEMENT (this “Agreement”) is made in Beijing on
February 19, 2021(“Execution Date”)
BY AND AMONG:
(1) Beijing Tuniu Technology Co., Ltd. ( “Wholly-owned Company”);
Registered Address: Room 1006, 10th Floor, Building 4, Yard 1, Shangdi 10th Street, Haidian District,
Beijing
Legal Representative: Yu Dunde
(2) Yu Dunde;
Domicile: ***
ID number: ***
(3) Chen Anqiang (together with Yu Dunde, each a "Existing Shareholder" and collectively “Existing
Shareholders”); and
Domicile: ***
ID number: ***
(4) Nanjing Tuniu Technology Co., Ltd. (“Company”)
Registered Address: 3rd to 5th Floor, Building 6, Dongda Science Park, No.6 Changjiang Back Street,
Xuanwu District, Nanjing City
Legal Representative: Yu Dunde
In this Agreement, the aforementioned parties are referred to individually as a “Party” and collectively as the
“Parties”.
WHEREAS:
1. The Existing Shareholders are the shareholders of the Company as of the Execution Date, holding 100% of the
equity interest in the Company.
2. Each of the Existing Shareholders intends to entrust the Wholly-owned Company or the individual designated
by it with the exercise of its voting rights and decision-making rights in the Company, and the Wholly-owned
Company intends
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to accept such entrustment. Each of the Existing Shareholders also consents to such entrust from the other
Existing Shareholder.
NOW, THEREFORE, upon consensus through consultation, the Parties agree as follows:
ARTICLE I VOTING RIGHTS ENTRUSTMENT
1.1 The Existing Shareholders hereby irrevocably undertake to execute a irrevocable powers of attorney in the
form and substance of Schedule 1 hereto upon execution of this Agreement whereby it shall authorize the
Wholly-owned Company or the individual designated by it (“Proxy”) to exercise, on its behalf, the
following rights available to it in its capacity as shareholder of the Company under the then effective articles
of association of the Company (collectively, “Proxy Rights”):
(a) to propose to convene and attend shareholders’ meeting as the Proxy of each Existing Shareholders
in accordance with the Articles of Association of the Company;
(b) to exercise voting rights and decision-making rights on behalf of the Existing Shareholders on all
matters required to be resolved by the shareholder, including, without limitation, the appointment
and designation of the directors and other officers to be appointed and removed by the shareholders;
(c) to exercise other shareholder’s voting rights under the articles of association of the Company
(inclusive of any other shareholder’s voting rights arising after an amendment to such articles of
association); and
(d) when the Existing Shareholders transfer the equity interest held by it in the Company according to
the Purchase Option Agreement executed by it on the same day as the Execution Date, to execute, on
behalf of the Existing Shareholders, relevant equity transfer agreement, resolutions of shareholders
and other relevant documents and complete the governmental approval, registration and filing
procedures as required for such transfer.
1.2 The Proxy shall, acting with care and diligence, lawfully fulfill the entrusted duties within the scope of
authorization hereunder; the Existing Shareholders acknowledge, and assume liability for, any legal
consequences arising out of the exercise by the Proxy of the foregoing Proxy Rights.
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1.3 The Existing Shareholders hereby acknowledge that the Proxy will not be required to solicit the opinions of
the Existing Shareholders when exercising the foregoing Proxy Rights, provided that the Proxy shall
promptly inform the Existing Shareholders (on an ex-post basis) of all resolutions adopted by the
shareholder and the proposal for an interim shareholders' meeting.
ARTICLE II RIGHT TO INFORMATION
2 For the purposes of the exercise of the Proxy Rights hereunder, the Proxy shall have the right to be
informed of the operations, business, customers, finances, employees and other matters of the Company
and to access relevant documents of the Company; the Company and the Existing Shareholders shall
provide full cooperation with respect thereto.
ARTICLE III EXERCISE OF PROXY RIGHTS
3.1 The Existing Shareholders shall provide full assistance with respect to the exercise by the Proxy of the
Proxy Rights, including, where necessary (e.g., in order to meet the document submission requirements in
connection with governmental authority approval, registration and filing), executing the shareholder’s
resolutions adopted by the Proxy or other relevant legal documents.
3.2 If at any time during the term hereof, the grant or exercise of the Proxy Rights hereunder cannot be realized
for any reason (other than a breach by the Existing Shareholders or the Company), the Parties shall
immediately seek an alternative scheme closest possible to the unrealizable provisions and shall, to the
extent necessary, enter into a supplementary agreement to amend or modify the terms hereof so that the
purpose of this Agreement may continue to be achieved.
ARTICLE IV RELEASE OF LIABILITY AND INDEMNIFICATION
4.1 The Parties acknowledge that in no event shall the Wholly-owned Company be required to bear any
liability or provide any economic or other compensation to the other Parties or to any third party in
connection with the exercise of the Proxy Rights hereunder by itself or the individual(s) designated by it.
4.2 The Existing Shareholders and the Company agree to indemnify and hold the Wholly-owned Company
harmless against any and all losses suffered or likely to be suffered by it as a result of the exercise of the
Proxy Rights, including, without limitation, any losses arising out of any suit, recourse, arbitration,
demand for compensation or claims brought by any third party against it or
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any administrative investigation or sanction by any governmental authorities, but exclusive of any losses
arising out of any willful misconduct or gross negligence of the Proxy.
ARTICLE V REPRESENTATIONS, WARRANTIES AND UNDERTAKINGS
5.1 The Existing Shareholders hereby, severally and jointly, represent and warrant that:
(a) Each of the Existing Shareholders is a Chinese citizen with full and independent legal status and
capacity to execute, deliver and perform this Agreement and may sue or be sued as an independent
party.
(b) The Company is a limited liability company duly registered and lawfully existing under the PRC
laws with independent legal personality; and has full and independent legal status and capacity to
execute, deliver and perform this Agreement and may sue or be sued as an independent party.
(c) it has full power and authority to execute, deliver and perform this Agreement and all other
documents to be executed by it in connection with the transactions contemplated hereunder as well
as full power and authority to consummate the transactions contemplated hereunder. This
Agreement will be lawfully and duly executed and delivered by the Existing Shareholders and will
constitute its legal and binding obligations enforceable against them in accordance with its terms.
(d) Each of the Existing Shareholders is a legal owner of record of the Company as of the time of
effectiveness of this Agreement; other than the rights created under this Agreement and the Equity
Pledge Agreement and the PurchaseOption Agreement by and among the Existing Shareholders
and the Wholly-owned Company, the Proxy Rights are free from any third party rights. In
accordance with this Agreement, the Proxy may fully and completely exercise the Proxy Rights
under the then effective articles of association of the Company.
(e) Without the consent of the Wholly-owned Company, the Existing Shareholders shall not take any
measures to propose, take initiative or request to amend, modify, terminate or otherwise alter the
articles of association of the Company.
5.2 The Existing Shareholders hereby, severally and jointly, undertake to the Wholly-owned Company on an
irrevocable basis that, once it knows or
4
should have known any possible transfer of the equity interest held by it in the Company to any third
parties other than the Wholly-owned Company or any individual or entity designated by it as a result of
applicable laws or any judgment or award rendered by a court or arbitral body or for any other reasons, it
shall notify the Wholly-owned Company immediately and without delay.
5.3 The Wholly-owned Company and the Company hereby severally but not jointly represent and warrant
that:
(a) They are each a limited liability company duly registered and lawfully existing under the PRC laws
with independent legal personality, have full and independent legal status and capacity to execute,
deliver and perform this Agreement and may sue or be sued as an independent party;
(b) They each have full internal corporate power and authority to execute and deliver this Agreement
and all other documents to be executed by them in connection with the transactions contemplated
hereunder as well as full power and authority to consummate the transactions contemplated
hereunder.
5.4 The Company further represents and warrants that:
(a) The Existing Shareholders are the legal owners of record of the Company as of the time of
effectiveness of this Agreement; other than the rights created under this Agreement and the Equity
Pledge Agreement and the PurchaseOption Agreement by and among the Existing Shareholders,
the Company and the Wholly-owned Company, the Proxy Rights are free from any third party
rights. In accordance with this Agreement, the Proxy may fully and completely exercise the Proxy
Rights under the then effective articles of association of the Company.
5.5 The Company hereby irrevocably undertakes to the Wholly-owned Company that, once it knows or
should have known any possible transfer of the equity interest held by any Existing Shareholders in the
Company to any third parties other than the Wholly-owned Company or any individual or entity
designated by it as a result of applicable laws or any judgment or award rendered by a court or arbitral
body or any other reasons, it shall notify the Wholly-owned Company immediately and without any
delay.
ARTICLE VI TERM OF AGREEMENT
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6.1 This Agreement shall be formed and effective as from the date when it is duly executed by the Parties,
and shall remain in full force and effect for the duration of each Existing Shareholder's shareholding in
the Company.
ARTICLE VII NOTICES
7.1 Any notice, request, demand and other correspondences required by or made pursuant to this Agreement
shall be made in writing and delivered to the relevant Parties.
7.2 Such notice or other correspondences shall be deemed delivered when it is transmitted if transmitted by
fax or email; or upon delivery if delivered in person; or two (2) days after posting if delivered by mail.
ARTICLE VIII CONFIDENTIALITY OBLIGATIONS
8.1 Irrespective of whether this Agreement has been terminated, each of the Parties shall maintain in strict
confidence the business secrets, proprietary information, customer information and all other information of
a confidential nature of the other Parties coming into its knowledge during the entry into and performance
of this Agreement (“Confidential Information”). Except where prior written consent has been obtained
from the Party disclosing the Confidential Information or where disclosure to a third party is mandated by
relevant laws or regulations or by the rules of the place of listing of an affiliate of a Party, the Party
receiving the Confidential Information shall not disclose any Confidential Information to any third party;
the Party receiving the Confidential Information shall not use, either directly or indirectly, any Confidential
Information other than for the purpose of performing this Agreement.
8.2 The Parties acknowledge that the following information shall not constitute the Confidential Information:
(a) any information which, as shown by written evidence, has previously been known to the receiving
Party by way of legal means;
(b) any information which enters the public domain other than as a result of a fault of the receiving
Party; or
(c) any information lawfully acquired by the receiving Party from another source subsequent to the
receipt of relevant information.
8.3 A receiving Party may disclose the Confidential Information to its relevant employees, agents or its
appointed professionals, provided that such receiving Party shall ensure that such persons shall comply
with relevant terms and conditions of this Agreement and that it shall assume any liability
6
arising out of any breach by such persons of relevant terms and conditions of this Agreement.
8.4 Notwithstanding any other provisions of this Agreement, the validity of this article shall not be affected
by any termination of this Agreement.
ARTICLE IX LIABILITY FOR DEFAULT
9.1 The Parties agree and acknowledge that if any Party (“Defaulting Party”) substantially breaches any
provision hereunder, or substantially fails to perform or substantially delays in performing any
obligations hereunder, such breach, failure or delay shall constitute a default hereunder (“Default”) and
that in such event, any of the non-defaulting Parties (“Non-Defaulting Party”) shall have the right to
demand the Defaulting Party to cure such Default or take remedial measures within a reasonable time. If
the Defaulting Party fails to cure such Default or take remedial measures within such reasonable time or
within ten (10) days after the Non-Defaulting Party notifies the Defaulting Party in writing and requests it
to cure such Default, then:
(a) If either of the Existing Shareholders or the Company is the Defaulting Party, the Wholly-owned
Company shall be entitled to terminate this Agreement and demand the Defaulting Party to
indemnify for damage;
(b) If the Wholly-owned Company is the Defaulting Party, the Non-Defaulting Party shall be entitled
to demand the Defaulting Party to indemnify for damage, provided that unless otherwise
mandatorily stipulated by law, the Non-Defaulting Party shall in no event be entitled to terminate or
revoke this Agreement.
For the purpose of this Section 9.1, the Company and the Existing Shareholders further acknowledge and
agree that their breach of Article V hereof shall constitute their material breach of this Agreement.
9.2 Notwithstanding any other provisions of this Agreement, the validity of this article shall not be affected
by any suspension or termination of this Agreement.
ARTICLE X MISCELLANEOUS
10.1 This Agreement is made in Chinese in five (5) originals, of which one (1) copy shall be held by the
Company, one (1) copy shall be used for governmental approval/registration purposes and the remaining
copies shall be kept by the Wholly-owned Company.
7
10.2 The entry into, effectiveness and interpretation of, and resolution of disputes under, this Agreement shall
be governed by the PRC laws.
10.3 Dispute Resolution
(a) All disputes arising out of or in connection with this Agreement shall be first settled by the relevant
Parties through amiable consultations; if such Parties fail to resolve the dispute through
consultations, the dispute shall be submitted to China International Economic and Trade Arbitration
Commission (CIETAC) for arbitration according to CIETAC arbitration rules in effect at the time of
applying for arbitration. The seat of arbitration shall be in Beijing. The arbitration award shall be
final and binding on the relevant Parties. Except as otherwise required by the arbitration award, the
arbitration fees shall be borne by the losing party. The losing party shall also indemnify for the
attorneys’ fee and other expenses incurred by the winning party.
(b) Pending the resolution of such dispute, the Parties shall continue to perform the remaining provisions
of this Agreement other than the disputed matters.
10.4 No right, power or remedy empowered to any Party by any provision of this Agreement shall preclude
any other right, power or remedy enjoyed by such Party in accordance with law or any other provisions
hereof and no exercise by a Party of any of its rights, powers and remedies shall preclude its exercise of
its other rights, powers and remedies.
10.5 No failure or delay by a Party in exercising any right, power or remedy under this Agreement or laws
(“Party’s Rights”) shall result in a waiver of such rights; and no single or partial waiver by a Party of the
Party’s Rights shall preclude such Party from exercising such rights in any other way or exercising the
remaining part of the Party’s Rights.
10.6 The section headings herein are inserted for convenience of reference only and shall in no event be used
in or affect the interpretation of the provisions hereof.
10.7 Each provision contained herein shall be severable and independent of any other provisions hereof, and if
at any time any one or more provisions hereof become invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof shall not be affected thereby.
8
10.8 Once executed, this Agreement shall replace any other legal documents previously entered into by the
Parties in respect of the same subject matter hereof. Any amendments or supplements to this Agreement
shall be made in writing. Except for the transfer of rights hereunder by the Wholly-owned Company
according to Section 10.9 hereof, such amendments or supplements shall become effective only if they
are duly signed by the Parties hereto.
10.9 Without prior written consent of the Wholly-owned Company, the other Parties shall not assign any of
their rights and/or obligations hereunder to any third party. The other Parties agree that the Wholly-
owned Company shall have the right to unilaterally transfer any right and/or obligation hereunder to any
third party without written consent of the other Parties, provided that a written notification to this effect
shall be sent to the other Parties.
10.10 This Agreement shall be binding upon the legal assignees or successors of the Parties. The Existing
Shareholders warrant to the Wholly-owned Company that it has made all appropriate arrangements and
executed all necessary documents to ensure that, in the event of his death, incapacity, bankruptcy, divorce
or occurrence of other circumstances that might affect exercise of its shareholder rights, its legal
assignee, successor, heir, devisee, guardian and executor, creditor, spouses and other persons that might
consequently acquire the equity interest in or relevant rights of the Company cannot affect or impede the
performance of this Agreement. For this purpose, (i) the Existing Shareholders shall, and the Existing
Shareholders and Company shall cause the spouses of the Existing Shareholders to, promptly execute a
marital property agreement in such form and content satisfactory to the Wholly-owned Company as
required by the Wholly-owned Company after the Execution Date; and (ii) the Existing Shareholders and
the Company shall promptly sign all other documents and take all other actions (including, without
limitation, notarization of this Agreement) as required by the Wholly-owned Company.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK.]
9
[SIGNATURE PAGE ATTACHED SEPARATELY]
This Agreement in executed by the parties on the date first mentioned above.
Beijing Tuniu Technology Co., Ltd.
/s/ Yu Dunde
Name: YU Dunde
Title: Legal Representative
YU Dunde
/s/ Yu Dunde
CHEN Anqiang
/s/ Chen Anqiang
Nanjing Tuniu Technology Co., Ltd.
/s/ Yu Dunde
Name: YU Dunde
Title: Legal Representative
[Signature page to Shareholder’S Voting Rights Agreement]
SCHEDULE 1
IRREVOCABLE POWERS OF ATTORNEY
THIS IRREVOCABLE POWERS OF ATTORNEY (this “Letter”), executed by _____( ID Card No.: _______)
as of ________, is being issued in favor of [ ] (ID Card No.: _______) (“Proxy”).
We hereby grant to the Proxy a general proxy, authorizing the Proxy to exercise, as our proxy and on our behalf,
the following rights enjoyed by us in our capacity as the shareholders of Nanjing Tuniu Technology Co., Ltd.
(“Company”):
(i) to propose to convene and attend the shareholders’ meeting as our Proxy in accordance with the Articles
of Association of the Company;
(ii) to exercise, as our proxy, voting rights on all matters deliberated and resolved at the shareholders’
meeting, including, without limitation, the appointment and designation of the directors and other officers
to be appointed or removed by the shareholders’ meeting;
(iii) to exercise, as our proxy, other shareholder’s voting rights under the articles of association of the
Company (inclusive of any other shareholder’s voting rights arising after an amendment to such articles of
association); and
(iv) when the Proxy, in the capacity of our proxy, transfers the equity interest held by us in the Company
according to the Purchase Option Agreement executed on the same day as the Execution Date, to execute
relevant equity transfer agreement and other relevant documents, and complete the governmental approval,
registration and filing procedures as required for such transfer.
We hereby irrevocably confirm that unless the Wholly-owned Company has issued an instruction requesting the
replacement of the Proxy, this Letter shall remain valid until the expiry or early termination of the Shareholder’s
Voting Rights Agreement, dated_________, by the Wholly-owned Company, the Company and the Existing
Shareholders of the Company.
This Letter is hereby issued.
[THE REMAINING OF THIS PAGE IS INTENTIONALLY LEFT BLANK]
Schedule 1 to Shareholder’s Voting Rights Agreement
Name of Shareholder:
Date:
Schedule 1 to Shareholder’s Voting Rights Agreement
IRREVOCABLE POWERS OF ATTORNEY
Exhibit 4.7
THIS IRREVOCABLE POWERS OF ATTORNEY (this “Letter”), executed by Yu Dunde ( ID Card No.: ***) as
of February 19, 2021, is being issued in favor of Beijing Tuniu Technology Co., Ltd. (Registered Address: Room
1006, 10/F, Building No. 4, 1 Shangdi Tenth Street, Haidian District, Beijing) (“Proxy”).
I hereby grant to the Proxy a general proxy, authorizing the Proxy to exercise, as my proxy and on my behalf, the
following rights enjoyed by me in my capacity as the shareholder of Nanjing Tuniu Technology Co., Ltd.
(“Company”):
(i)
(ii)
(iii)
(iv)
to propose to convene and attend the shareholders’ meeting as my Proxy in accordance with the Articles of
Association of the Company;
to exercise, as my proxy, voting rights on all matters deliberated and resolved at the shareholders’ meeting,
including, without limitation, the appointment and designation of the directors and other officers to be
appointed or removed by the shareholders’ meeting;
to exercise, as my proxy, other shareholder’s voting rights under the articles of association of the Company
(inclusive of any other shareholder’s voting rights arising after an amendment to such articles of
association); and
when the Proxy, in the capacity of my proxy, transfers the equity interest held by us in the Company
according to the Purchase Option Agreement executed on the same day as the Execution Date, to execute
relevant equity transfer agreement and other relevant documents, and complete the governmental approval,
registration and filing procedures as required for such transfer.
We hereby irrevocably confirm that unless the Wholly-owned Company has issued an instruction requesting the
replacement of the Proxy, this Letter shall remain valid until the expiry or early termination of the Shareholder’s
Voting Rights Agreement, dated February 19, 2021, by the Wholly-owned Company, the Company and the
Existing Shareholders of the Company.
This Letter is hereby issued.
Name: Yu Dunde
By: /s/ Yu Dunde
Date: February 19, 2021
IRREVOCABLE POWERS OF ATTORNEY
THIS IRREVOCABLE POWERS OF ATTORNEY (this “Letter”), executed by Chen Anqiang ( ID Card No.:
***) as of February 19, 2021, is being issued in favor of Beijing Tuniu Technology Co., Ltd. (Registered Address:
Room 1006, 10/F, Building No. 4, 1 Shangdi Tenth Street, Haidian District, Beijing) (“Proxy”).
I hereby grant to the Proxy a general proxy, authorizing the Proxy to exercise, as my proxy and on my behalf, the
following rights enjoyed by me in my capacity as the shareholder of Nanjing Tuniu Technology Co., Ltd.
(“Company”):
(v)
(vi)
(vii)
to propose to convene and attend the shareholders’ meeting as my Proxy in accordance with the Articles of
Association of the Company;
to exercise, as my proxy, voting rights on all matters deliberated and resolved at the shareholders’ meeting,
including, without limitation, the appointment and designation of the directors and other officers to be
appointed or removed by the shareholders’ meeting;
to exercise, as my proxy, other shareholder’s voting rights under the articles of association of the Company
(inclusive of any other shareholder’s voting rights arising after an amendment to such articles of
association); and
(viii) when the Proxy, in the capacity of my proxy, transfers the equity interest held by us in the Company
according to the Purchase Option Agreement executed on the same day as the Execution Date, to execute
relevant equity transfer agreement and other relevant documents, and complete the governmental approval,
registration and filing procedures as required for such transfer.
We hereby irrevocably confirm that unless the Wholly-owned Company has issued an instruction requesting the
replacement of the Proxy, this Letter shall remain valid until the expiry or early termination of the Shareholder’s
Voting Rights Agreement, dated February 19, 2021, by the Wholly-owned Company, the Company and the
Existing Shareholders of the Company.
This Letter is hereby issued.
Name: Chen Anqiang
By: /s/ Chen Anqiang
Date: February 19, 2021
Exhibit 4.8
Execution Version
BEIJING TUNIU TECHNOLOGY CO., LTD.
CHEN ANQIANG
AND
NANJING TUNIU TECHNOLOGY CO., LTD.
EQUITY INTEREST PLEDGE AGREEMENT
FOR
NANJING TUNIU TECHNOLOGY CO., LTD.
DATED
February 19, 2021
EQUITY INTEREST PLEDGE AGREEMENT
THIS EQUITY INTEREST PLEDGE AGREEMENT FOR NANJING TUNIU TECHNOLOGY CO., LTD.
(this “Agreement”) is made on February 19, 2021 (“Execution Date”) in Beijing
BY AND AMONG:
1. Chen Anqiang with his domicile at *** and ID number being *** ( “Pledgor” );
2. Beijing Tuniu Technology Co., Ltd. (“Pledgee”) ; and
Registered Address: Room 1006, 10/F, Building No. 4, 1 Shangdi Tenth Street, Haidian District, Beijing
Legal Representative: Yu Dunde
3. Nanjing Tuniu Technology Co., Ltd. (“Company” or “Tuniu Technology”)
Registered Address: 3-5/F, Building No. 6, Dongda Science Park, No. 6 Changjiang Back Street, Xuanwu
District, Nanjing
Legal Representative: Yu Dunde
In this Agreement, the aforementioned parties are referred to individually as a “Party” and collectively as the
“Parties”.
WHEREAS:
1. The Pledgor is the registered shareholder of the Company and lawfully holds 19.11% of theequity interest in
the Company together (“Company Equity”).
2. The Parties hereto entered into a Shareholder’s Voting Rights Proxy Agreement (“Proxy Agreement”) on
February 19, 2021, pursuant to which the Pledgor has irrevocably granted a general power of attorney to such
persons as may then be appointed by the Pledgee to exercise its entire shareholder voting rights in the
Company on behalf of the Pledgor.
3. The Company and the Pledgee entered into a Cooperation Agreement (“Cooperation Agreement”) on
February 19, 2021, pursuant to which the Company has, on an exclusive basis, engaged the Pledgee to
provide it with relevant services and agrees to pay relevant service fees to the Pledgee for such services.
4. The Parties hereto and other relevant parties entered into an Purchase Option Agreement for Nanjing Tuniu
Technology Co., Ltd. (“Purchase Option Agreement”) on February 19, 2021, pursuant to which the Pledgor
and the Company shall, to the extent permitted by the PRC Laws, transfer, at the request of the Pledgee, all or
part of its equity interest in the Company respectively to the
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Pledgee and/or any entity and/or individual designated by it.
5. As security for the debt of Pledgors to Pledgee (the amount of debt is defined below), the performance by the
Pledgor of its Contractual Obligations (as defined below) and its repayment of the Secured Indebtedness (as
defined below), the Pledgor is willing to pledge all of its Company Equity to the Pledgee and create first
priority pledge in favor of the Pledgee; and the Company has agreed to such equity pledge arrangement.
NOW, THEREFORE, upon consensus through consultation, the Parties agree as follows:
ARTICLE I DEFINITIONS
1.1 Unless otherwise required by the context, the following terms shall have the following meanings in this
Agreement:
“Contractual Obligations” means all of the Pledgor’s contractual obligations under the Proxy
Agreement and the Purchase Option Agreement; all of the
Company’s contractual obligations under the Proxy Agreement, the
Cooperation Agreement and the Purchase Option Agreement; and all
of the contractual obligations of the Pledgor and the Company under
this Agreement.
“Secured Indebtedness” means all direct, indirect or consequential losses and loss of
projectable benefits suffered by the Pledgee as a result of any Event
of Default (as defined below) of the Pledgor and/or the Company,
and the basis for determining the amounts of such losses shall
include, without limitation, reasonable commercial plans and profit
forecasts of the Pledgee and all costs incurred by the Pledgee in
connection with its enforcement of the Contractual Obligations of
the Pledgor and/or the Company.
“Transaction Agreements” means the Proxy Agreement, the Cooperation Agreementand the
Purchase Option Agreement.
“Event of Default”
means a breach by the Pledgor of any of its Contractual Obligations
under the Proxy Agreement, the Purchase Option Agreement and/or
this Agreement, and a breach by the Company of any of its
Contractual Obligations under
the
Cooperation Agreement, the Purchase Option Agreement and/or this
Agreement.
the Proxy Agreement,
“Pledged Equity”
means all of the Company Equity lawfully owned by the Pledgor as
of the effectiveness of this Agreement and to be pledged hereunder
to the Pledgee as security
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for the performance by the Pledgor and the Company of their
capital
respective Contractual Obligations
contribution amounts and dividends under Sections 2.6 and 2.7
hereof.
increased
and
“PRC Laws”
the
then effective
regulations,
means
administrative rules, local regulations, judicial interpretations and
other binding regulatory documents of the People’s Republic of
China.
laws, administrative
1.2 In this Agreement, any reference to any PRC Law shall be deemed to include (i) a reference to such PRC
Law as modified, amended, supplemented or reenacted, effective either before or after the date hereof;
and (ii) a reference to any other decision, circular or rule made thereunder or effective as a result thereof.
1.3 Unless otherwise required by the context, a reference to an article, section, clause or paragraph herein
shall be a reference to an article, section, clause or paragraph of this Agreement.
ARTICLE II EQUITY PLEDGE
2.1 The Pledgor hereby agrees to pledge, in accordance with the terms hereof, its lawfully owned and
rightfully disposable 19.11% Equity in the Company, corresponding to the Company's registered capital
of 515,976 yuan (the “Pledged Equity”) to the Pledgee, as security for the Pledgor’s debt of RMB
464,378.40 to the Pledgee. The Pledgor hereby agrees that, in addition to providing guarantee for the
aforesaid debt, the Pledged Equity also provides guarantee for the performance by the Pledgor of its
Contractual Obligations and its repayment of the Secured Indebtedness. The Company hereby agrees for
the Pledgor to so pledge the Pledged Equity to the Pledgee in accordance with the terms hereof.
2.2 The Pledgor covenants that it will assume the responsibility of recording the equity pledge arrangement
(“Equity Pledge”) hereunder in the shareholder’s register of the Company on the Execution Date. The
Pledgor further covenants that it will use its best efforts and take all necessary measures to register the
Equity Pledge as soon as possible with the competent administrative authority for market regulation of
the Company after the Execution Date.
2.3 During the validity term hereof, the Pledgee shall not be liable in whatsoever manner for any diminution
in value of the Pledged Equity and the Pledgor shall have no right to seek any form of recourse or bring
any claims against the Pledgee in connection therewith, except where such diminution arises out of any
willful conduct of the Pledgee or its gross negligence having immediate causal link with such result.
2.4 Subject to Section 2.3 above, if the Pledged Equity is likely to suffer such a
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manifest value diminution as to impair the rights of the Pledgee, the Pledgee may at any time auction or
sell the Pledged Equity on behalf of the Pledgor and may, as agreed with the Pledgor, apply the proceeds
from such auction or sale towards early repayment of the Secured Indebtedness, or deposit (entirely at the
cost of the Pledgee) such proceeds with a notary organ of the place of the Pledgee. In addition, upon
request by the Pledgee, the Pledgor shall provide other property as security for the Secured Indebtedness.
2.5 Upon occurrence of any Event of Default, the Pledgee shall be entitled to dispose of the Pledged Equity
in such manner as prescribed by Article IV hereof.
2.6 The Pledgor may not increase the capital of the Company except with prior consent of the Pledgee. Any
increase in the capital contribution made by the Pledgor to the registered capital of the Company as a
result of any capital increase shall equally become part of the Pledged Equity, and the Pledgor shall
register the pledge of the Company Equity corresponding to such capital contribution with the competent
administrative authority for market regulation of the Company.
2.7 The Pledgor may not receive any dividend or profit distribution in respect of the Pledged Equity except
with prior consent of the Pledgee. Any dividend or profit distribution received by the Pledgor in respect
of the Pledged Equity shall be deposited into an account designated by the Pledgee, monitored by the
Pledgee and first applied towards repayment of the Secured Indebtedness.
2.8 Upon occurrence of an Event of Default, the Pledgee shall be entitled to dispose of any Pledged Equity of
the Pledgor in accordance with the terms hereof.
ARTICLE III RELEASE OF PLEDGE
3.1 Upon full and complete performance by the Pledgor and the Company of all of their Contractual
Obligations and full repayment of the Secured Indebtedness, the Pledgee shall, at the request of the
Pledgor, release the Equity Pledge hereunder and cooperate with the Pledgor in relation to both the
deregistration of the Equity Pledge in the shareholder’s register of the Company and the deregistration of
the Equity Pledge with the relevant administrative authority for market regulation; reasonable costs
arising out of such release of the Equity Pledge shall be borne by the Pledgee.
ARTICLE IV DISPOSAL OF PLEDGED EQUITY
4.1 The Parties hereby agree that upon occurrence of any Event of Default, the Pledgee shall be entitled to
exercise, upon written notice to the Pledgor, all of the remedies, rights and powers available to it under
the PRC Laws, the Transaction Agreements and this Agreement, including, without limitation, the right
to auction or sell the Pledged Equity for prior satisfaction of claims. The Pledgee shall not be held liable
for any losses resulting from its reasonable exercise of such rights and powers.
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For the avoidance of doubt, in the event that the Pledgor dies or is declared dead according to law, the
Company shall, at the request of the Pledgee, buy back the equity of the Company held by the Pledgor
according to the paid in registered capital corresponding to the equity held by the Pledgor to the
Company, and the buyback price shall be given priority to pay off the Secured Indebtedness.
The Pledgor further acknowledges and agrees that its breach of Article IX hereof shall constitute its
material breach of this Agreement; the Company further acknowledges and agrees that its breach of
Article X hereof shall constitute its material breach of this Agreement.
4.2 The Pledgee shall be entitled to appoint, in writing, its counsels or other agents to exercise any and all of
its foregoing rights and powers, and neither the Pledgor nor the Company shall object thereto.
4.3 The Pledgee shall have the right to fully deduct all reasonable costs incurred by it in connection with its
exercise of any or all of its foregoing rights and powers from the proceeds obtained as a result of such
exercise of rights and powers.
4.4 The proceeds obtained as a result of the exercise by the Pledgee of its rights and powers shall be applied
in the following order of precedence:
(i) towards payment of all costs arising out of the disposal of the Pledged Equity and the exercise by
the Pledgee of its rights and powers (including fees paid to its counsels and agents);
(ii) towards payment of the taxes payable in connection with the disposal of the Pledged Equity; and
(iii) towards repayment of the Secured Indebtedness to the Pledgee.
Any balance after the deduction of the foregoing payments shall either be returned by the Pledgee to the
Pledgor or any other person who may be entitled to such balance under relevant laws and regulations or
be deposited by the Pledgee with a notary organ of the place of the Pledgee (any costs arising out of such
deposit shall be borne by the Pledgee).
4.5 The Pledgee shall have the right to exercise, at its option, concurrently or successively, any of its breach
of contract remedies; the Pledgee shall not be required to first exercise other breach of contract remedies
prior to the exercise of its right to auction or sell the Pledged Equity hereunder.
ARTICLE V COSTS AND EXPENSES
5.1 All actual costs and expenses arising in connection with the creation of the Equity Pledge hereunder,
including, without limitation, the stamp duty, any other taxes and all legal costs, shall be borne by the
Parties severally.
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ARTICLE VI CONTINUING GUARANTEE AND NON-WAIVER
6.1 The Equity Pledge created hereunder shall constitute a continuing guarantee and shall remain valid until
full performance of the Contractual Obligations or full repayment of the Secured Indebtedness,
whichever occurs later. Neither any waiver or grace granted by the Pledgee with respect to any breach by
the Pledgor nor any delay of the Pledgee in its exercise of any of its rights under the Transaction
Agreements and this Agreement shall affect the right of the Pledgee under this Agreement, relevant PRC
Laws and the Transaction Agreements to require at any time thereafter the Pledgor to strictly perform the
Transaction Agreements and this Agreement or any right that may be available to the Pledgee as a result
of any subsequent breach by the Pledgor of the Transaction Agreements and/or this Agreement.
ARTICLE VII REPRESENTATIONS AND WARRANTIES BY THE PLEDGOR
The Pledgor represents and warrants to the Pledgee that:
7.1 The Pledgor is a Chinese citizen, has full capacity for civil conduct, has the legal rights and ability to sign
this Agreement, perform obligations in accordance with this Agreement, and bear corresponding legal
responsibilities, and may sue or be sued as an independent party.
7.2 All reports, documents and information provided by it to the Pledgee prior to the effectiveness of this
Agreement with respect to all matters pertaining to the Pledgor or required by this Agreement are true,
correct, complete and not misleading in all material respects as of the effectiveness of this Agreement.
7.3 All reports, documents and information provided by it to the Pledgee subsequent to the effectiveness of
this Agreement with respect to all matters pertaining to the Pledgor or required by this Agreement are
true and valid in all material respects as of the time of provision of the same.
7.4 As of the effectiveness of this Agreement, the Pledgor is the sole lawful owner of the Pledged Equity free
from any ongoing or potential dispute or any third party claim as to the ownership thereof; and the
Pledgor has the right to dispose of the Pledged Equity or any part thereof.
7.5 Other than the security interest created on the Pledged Equity hereunder and the rights created under the
Transaction Agreements, the Pledged Equity is free from any other security interests, third party rights or
interests or any other restrictions.
7.6 The Pledged Equity may be lawfully pledged and assigned, and the Pledgor has full rights and powers to
pledge the Pledged Equity to the Pledgee in accordance with the terms hereof.
7.7 Once duly executed by the Pledgor, this Agreement will constitute lawful,
6
valid and binding obligations of the Pledgor.
7.8 Other than the registration of the Equity Pledge with the relevant administrative authority for market
regulation, any consents, permissions, waivers or authorizations by any third party or any approval,
license or exemption from or any registration or filing formalities with any governmental body (if
required by law), requisite in each case for the execution and performance of this Agreement and the
creation of the Equity Pledge hereunder, have been obtained or completed and will remain fully valid
during the validity term hereof.
7.9 The execution and performance by the Pledgor of this Agreement do not violate or conflict with any law
applicable to the Pledgor, any agreement to which the Pledgor is a party or by which he is bound, any
court judgment, any arbitral award, or any decision of any administrative authority.
7.10 The pledge hereunder constitutes a first priority security interest on the Pledged Equity.
7.11 All taxes and costs payable in connection with the acquisition of the Pledged Equity have been paid in
full by the Pledgor.
7.12 There are no pending, or to the knowledge of the Pledgor, threatened, suits, legal proceedings or claims
before any court or arbitral tribunal or by any governmental body or administrative authority against the
Pledgor or its property or the Pledged Equity having a material or adverse effect on the financial
condition of the Pledgor or its ability to perform its obligations and the guarantee liability hereunder.
7.13 The Pledgor hereby warrants to the Pledgee that the foregoing representations and warranties will remain
true and correct and be fully complied with under all circumstances at any time prior to the full
performance of the Contractual Obligations or full repayment of the Secured Indebtedness.
ARTICLE VIII REPRESENTATIONS AND WARRANTIES BY THE COMPANY
The Company represents and warrants to the Pledgee that:
8.1 It is a limited liability company duly registered and lawfully existing under the PRC Laws with
independent legal personality; and has full and independent legal status and capacity to execute, deliver
and perform this Agreement and may sue or be sued as an independent party.
8.2 All reports, documents and information provided by it to the Pledgee prior to the effectiveness of this
Agreement with respect to all matters pertaining to the Pledged Equity or required by this Agreement are
true, correct, complete and not misleading in all material respects as of the effectiveness of this
Agreement.
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8.3 All reports, documents and information provided by it to the Pledgee subsequent to the effectiveness of
this Agreement with respect to all matters pertaining to the Pledged Equity or required by this Agreement
are true and valid in all material respects as of the time of provision of the same.
8.4 Once duly executed by it, this Agreement will constitute lawful, valid and binding obligations of the
Company.
8.5 It has full internal corporate power and authority to execute and deliver this Agreement and all other
documents to be executed by it in connection with the transactions contemplated hereunder as well as full
power and authority to consummate the transactions contemplated hereunder.
8.6 There are no pending, or to the knowledge of the Company, threatened, suits, legal proceedings or claims
before any court or arbitral tribunal or by any governmental body or administrative authority against the
Pledged Equity, the Company or its assets having a material or adverse effect on the financial condition
of the Company or the ability of the Pledgor to perform its obligations and the guarantee liability
hereunder.
8.7 The Company hereby agrees to be severally and jointly liable to the Pledgee for the representations and
warranties made by the Pledgor under Sections 7.4, 7.5, 7.6, 7.8 and 7.10 hereof.
8.8 The Company hereby warrants to the Pledgee that the foregoing representations and warranties will
remain true and correct and be fully complied with under all circumstances at any time prior to the full
performance of the Contractual Obligations or full repayment of the Secured Indebtedness.
ARTICLE IX UNDERTAKINGS BY THE PLEDGOR
The Pledgor hereby agrees and irrevocably undertakes to the Pledgee that:
9.1 Without prior written consent of the Pledgee, the Pledgor will not create or permit to be created any new
pledge or any other security interest on the Pledged Equity, and any pledge or any other security interest
created on all or part of the Pledged Equity without prior written consent of the Pledgee shall be null and
void.
9.2 Without prior written notice to and prior written consent of the Pledgee, (i) the Pledgor will not assign or
otherwise dispose of the Pledged Equity or request the Company to decrease its capital, and any of such
actions taken by the Pledgor without prior consent of the Pledgee shall be null and void; (ii) the Pledgor
will not assist or permit other existing shareholders (as applicable) to take any of the foregoing actions
without prior written consent of the Pledgee. The proceeds received by the Pledgor from the assignment
or other disposal of the Pledged Equity shall be first applied towards early full repayment of the Secured
Indebtedness to the Pledgee or deposited with a
8
third party to be agreed with the Pledgee.
9.3 Should there arise any suit, arbitration or other claims which are likely to have an adverse effect on the
interests of the Pledgor or the Pledgee under the Transaction Agreements and this Agreement or on the
Pledged Equity, the Pledgor warrants that it will notify the Pledgee in writing of the same as soon as
possible and without delay and will, in accordance with the reasonable request of the Pledgee, take all
necessary actions to ensure the Pledgee’s pledge rights and interests in and to the Pledged Equity.
9.4 The Pledgor warrants that it shall complete the business term extension registration formalities of the
Company within three (3) months prior to the expiry of the business term of the Company such that the
validity of this Agreement shall be maintained.
9.5 The Pledgor shall not do or permit to be done any act or action likely to have an adverse effect on the
interests of the Pledgee under the Transaction Agreements and this Agreement or on the Pledged Equity.
9.6 The Pledgor will use its best efforts and take all necessary measures to register the Equity Pledge
hereunder as soon as possible with the relevant administrative authority for market regulation after the
execution of this Agreement, and the Pledgor warrants, in accordance with the reasonable request of the
Pledgee, to take all necessary actions and execute all necessary documents (including, without limitation,
any supplement hereto) to ensure the Pledgee’s pledge rights and interests in and to the Pledged Equity as
well as the exercise and realization by the Pledgee of such rights and interests.
9.7 Should the exercise of the pledge rights hereunder result in an assignment of any Pledged Equity, the
Pledgor warrants that it will take all actions to realize such assignment.
9.8 The Pledgor ensures that the shareholder’s resolutions adopted, convening procedures of, the methods of
voting at and the contents of the shareholders’ meeting and board meetings of the Company held in
connection with the execution of this Agreement and the creation and exercise of the pledge rights
hereunder shall not violate laws, administrative regulations or the articles of association of the Company.
9.9 Once the Pledgor knows or should have known any possible transfer of the Pledged Equity held by him
to any third parties other than the Pledgee or any individual or entity designated by the Pledgee as a result
of applicable PRC Laws or any judgment or award rendered by a court or arbitral body or for any other
reasons, it shall notify the Pledgee immediately and without delay.
ARTICLE X UNDERTAKINGS BY THE COMPANY
The Company hereby agrees and irrevocably undertakes to the Pledgee that:
10.1 The Company will use every effort to assist with the obtainment of any
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consents, permissions, waivers or authorizations by any third party or any approval, license or exemption
from any governmental body or the completion of any registration or filing formalities with any
governmental body (if required by law), requisite in each case for the execution and performance of this
Agreement and the creation of the Equity Pledge hereunder, and the maintenance of the same in full force
and effect during the validity term hereof.
10.2 Without prior written consent of the Pledgee, the Company will not assist or permit the Pledgor to create
any new pledge or any other security interest on the Pledged Equity.
10.3 Without prior written consent of the Pledgee, the Company will not assist or permit the Pledgor to assign
or otherwise dispose of the Pledged Equity.
10.4 Should there arise any suit, arbitration or other claims which are likely to have an adverse effect on the
Company, the Pledged Equity or the interests of the Pledgee under the Transaction Agreements and this
Agreement, the Company warrants that it will notify the Pledgee in writing of the same as soon as
possible and without delay and will, in accordance with the reasonable request of the Pledgee, take all
necessary actions to ensure the Pledgee’s pledge rights and interests in and to the Pledged Equity.
10.5 The Company warrants that it shall complete its business term extension registration formalities within
three (3) months prior to the expiry of its business term such that the validity of this Agreement shall be
maintained.
10.6 The Company shall not do or permit to be done any act, action or omission likely to have an adverse
effect on the interests of the Pledgee under the Transaction Agreements and this Agreement or on the
Pledged Equity.
10.7 The Company will, during the first month of each calendar quarter, submit to the Pledgee the financial
statements of the Company for the preceding calendar quarter, including, without limitation, the balance
sheet, the income statement and the cash flow statement.
10.8 The Company warrants, in accordance with the reasonable request of the Pledgee, to take all necessary
actions and execute all necessary documents (including, without limitation, any supplement hereto) to
ensure the Pledgee’s pledge rights and interests in and to the Pledged Equity as well as the exercise and
realization by the Pledgee of such rights and interests.
10.9 Should the exercise of the pledge rights hereunder result in an assignment of any Pledged Equity, the
Company warrants that it will take all actions to realize such assignment.
10.10 The Company covenants that it will assist the Pledgor to register the Equity Pledge hereunder with the
competent administrative authority for market regulation of the Company as soon as possible after the
execution of this Agreement and provide all necessary cooperation to complete such
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registration in a timely manner.
10.11 Once the Company knows or should have known any possible transfer of the Pledged Equity held by the
Pledgor to any third parties other than the Pledgee or any individual or entity designated by the Pledgee
as a result of applicable PRC Laws or any judgment or award rendered by a court or arbitral body or for
any other reasons, it shall notify the Pledgee immediately and without delay.
ARTICLE XI FUNDAMENTAL CHANGES OF CIRCUMSTANCES
11.1 As a supplementary agreement and without contravening other provisions of the Transaction Agreements
and this Agreement, if, at any time, in the opinion of the Pledgee, as a result of any promulgation of or
amendment to any PRC Laws, regulations or rules, or any change in the interpretation or application of
such laws, regulations or rules, or any change in relevant registration procedures, the maintenance of the
validity of this Agreement and/or the disposal of the Pledged Equity in the manner prescribed hereby
becomes illegal or contravenes such laws, regulations or rules, the Pledgor and the Company shall, based
on the Pledgee’s written instructions and in accordance with its reasonable request, immediately take any
actions and/or execute any agreements or other documents so as to:
(a) maintain the validity of this Agreement;
(b) facilitate the disposal of the Pledged Equity in the manner prescribed hereby; and/or
(c) maintain or realize the security created or purported to be created hereunder.
ARTICLE XII EFFECTIVENESS AND TERM OF AGREEMENT
12.1 This Agreement shall become effective upon due execution by the Parties.
12.2 The term of this Agreement shall end when the Contractual Obligations have been fully performed or the
Secured Indebtedness have been fully repaid, whichever is later.
ARTICLE XIII NOTICES
13.1 Any notice, request, demand and other correspondences required by or made pursuant to this Agreement
shall be made in writing and delivered to the relevant Parties.
13.2 Such notice or other correspondences shall be deemed delivered when it is transmitted if transmitted by
fax or email; or upon delivery if delivered in person; or two (2) days after posting if delivered by mail.
ARTICLE XIV MISCELLANEOUS
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14.1 The Pledgor and the Company agree that the Pledgee may, immediately upon notice to the Pledgor and
the Company, assign its rights and/or obligations hereunder to any third party; provided that without prior
written consent of the Pledgee, neither the Pledgor nor the Company may assign their respective rights,
obligations or liabilities hereunder to any third party.
14.2 The sum of the Secured Indebtedness determined by the Pledgee in its discretion in connection with its
exercise of its pledge rights to the Pledged Equity in accordance with the terms hereof shall constitute the
conclusive evidence for the Secured Indebtedness hereunder.
14.3 This Agreement is made in Chinese in four (4) originals, of which one (1) copy shall be held by the
Company, one (1) copy shall be used for governmental approval/registration purposes and the remaining
copies shall be kept by the Pledgee.
14.4 The entry into, effectiveness and interpretation of, and resolution of disputes under, this Agreement shall
be governed by the PRC Laws.
14.5 Dispute Resolution
(a) All disputes arising out of or in connection with this Agreement shall be first settled by the
relevant Parties through amiable consultations; if such Parties fail to resolve the dispute through
consultations, the dispute shall be submitted to China International Economic and Trade
Arbitration Commission (CIETAC) for arbitration according to CIETAC arbitration rules in
effect at the time of applying for arbitration. The seat of arbitration shall be in Beijing. The
arbitration award shall be final and binding on the relevant Parties. Except as otherwise required
by the arbitration award, the arbitration fees shall be borne by the losing party. The losing party
shall also indemnify for the attorneys’ fee and other expenses incurred by the winning party.
(b) Pending the resolution of such dispute, the Parties shall continue to perform the remaining
provisions of this Agreement other than the disputed matters.
14.6 No right, power or remedy empowered to any Party by any provision of this Agreement shall preclude
any other right, power or remedy enjoyed by such Party in accordance with law or any other provisions
hereof and no exercise by a Party of any of its rights, powers and remedies shall preclude its exercise of
its other rights, powers and remedies.
14.7 No failure or delay by a Party in exercising any right, power or remedy under this Agreement or laws
(“Party’s Rights”) shall result in a waiver of such rights; and no single or partial waiver by a Party of the
Party’s Rights shall preclude such Party from exercising such rights in any other way or exercising the
remaining part of the Party’s Rights.
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14.8 The section headings herein are inserted for convenience of reference only and shall in no event be used
in or affect the interpretation of the provisions hereof.
14.9 Each provision contained herein shall be severable and independent of any other provisions hereof, and if
at any time any one or more provisions hereof become invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof shall not be affected thereby.
14.10 Once executed, this Agreement shall replace any other legal documents previously entered into by the
Parties in respect of the same subject matter hereof. Any amendments or supplements to this Agreement
shall be made in writing. Except for the transfer of rights hereunder by the Pledgee according to Section
14.1 hereof, such amendments or supplements shall become effective only if they are duly signed by the
Parties hereto.
14.11 This Agreement shall be binding upon the legal assignees or successors of the Parties. The successors or
permitted assignees (if any) of the Pledgor and the Company shall continue to perform the respective
obligations of the Pledgor and the Company hereunder. The Pledgor warrants to the Pledgee that he has
made all appropriate arrangements and executed all necessary documents to ensure that, in the event of
its death, incapacitation, bankruptcy, divorce or occurrence of other circumstances that might affect
exercise of its shareholder rights, his legal assignee, successor, heir, guardians, executors, creditors,
spouse and other persons that might consequently acquire the Company Equity or relevant rights cannot
affect or impede the performance of this Agreement. For this purpose, (a) as soon as practicable after the
date of this Agreement, upon request by the Pledgee, the Pledgor shall execute, the Pledgor and the
Company shall procure the spouse of the Pledgor to execute a husband and wife property agreement in
form and substance satisfactory to the Pledgee; (b) the Pledgor and the Company shall promptly sign all
other documents and take all other actions (including, without limitation, notarization of this Agreement)
as required by the Pledgee.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. EXECUTION PAGE FOLLOWS]
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This Agreement is entered into as of the date first written above in Beijing by and between the following parties:
Beijing Tuniu Technology Co., Ltd
By: /s/ Yu Dunde
Name: Yu Dunde
Title: Legal Representative
Chen Anqiang
Signature: /s/ Chen Anqiang
Nanjing Tuniu Technology Co., Ltd
By: /s/ Yu Dunde
Name: Yu Dunde
Title: Legal Representative
Exhibit 4.9
Execution Version
BEIJING TUNIU TECHNOLOGY CO., LTD.
YU DUNDE
AND
NANJING TUNIU TECHNOLOGY CO., LTD.
EQUITY INTEREST PLEDGE AGREEMENT
FOR
NANJING TUNIU TECHNOLOGY CO., LTD.
DATED
February 19, 2021
EQUITY INTEREST PLEDGE AGREEMENT
THIS EQUITY INTEREST PLEDGE AGREEMENT FOR NANJING TUNIU TECHNOLOGY CO., LTD.
(this “Agreement”) is made on February 19, 2021 (“Execution Date”) in Beijing
BY AND AMONG:
1. Yu Dunde with his domicile at *** and ID number being *** (“Pledgor”);
2. Beijing Tuniu Technology Co., Ltd. (“Pledgee”) ; and
Registered Address: Room 1006, 10/F, Building No. 4, 1 Shangdi Tenth Street, Haidian District, Beijing
Legal Representative: Yu Dunde
3. Nanjing Tuniu Technology Co., Ltd. (“Company” or “Tuniu Technology”)
Registered Address: 3-5/F, Building No. 6, Dongda Science Park, No. 6 Changjiang Back Street, Xuanwu
District, Nanjing
Legal Representative: Yu Dunde
In this Agreement, the aforementioned parties are referred to individually as a “Party” and collectively as the
“Parties”.
WHEREAS:
1. The Pledgor is the registered shareholder of the Company and lawfully holds 80.89% of theequity interest in
the Company together (“Company Equity”).
2. The Parties hereto entered into a Shareholder’s Voting Rights Proxy Agreement (“Proxy Agreement”) on
February 19, 2021, pursuant to which the Pledgor has irrevocably granted a general power of attorney to such
persons as may then be appointed by the Pledgee to exercise its entire shareholder voting rights in the
Company on behalf of the Pledgor.
3. The Company and the Pledgee entered into a Cooperation Agreement (“Cooperation Agreement”) on
February 19, 2021, pursuant to which the Company has, on an exclusive basis, engaged the Pledgee to
provide it with relevant services and agrees to pay relevant service fees to the Pledgee for such services.
4. The Parties hereto and other relevant parties entered into a Purchase Option Agreement for Nanjing Tuniu
Technology Co., Ltd. (“PurchaseOption Agreement”) on February 19, 2021, pursuant to which the Pledgor
and the Company shall, to the extent permitted by the PRC Laws, transfer, at the request of the Pledgee, all or
part of its equity interest in the Company respectively to the Pledgee and/or any entity and/or individual
designated by it.
1
5. As security for the debt of Pledgor to Pledgee (the amount of debt is defined below), the performance by the
Pledgor of its Contractual Obligations (as defined below) and its repayment of the Secured Indebtedness (as
defined below), the Pledgor is willing to pledge all of its Company Equity to the Pledgee and create first
priority pledge in favor of the Pledgee; and the Company has agreed to such equity pledge arrangement.
NOW, THEREFORE, upon consensus through consultation, the Parties agree as follows:
ARTICLE I DEFINITIONS
1.1 Unless otherwise required by the context, the following terms shall have the following meanings in this
Agreement:
“Contractual
Obligations”
the PurchaseOption Agreement; all of
means all of the Pledgor’s contractual obligations under the Proxy
the
Agreement and
Company’s contractual obligations under the Proxy Agreement, the
Cooperation Agreement and the Purchase Option Agreement; and
all of the contractual obligations of the Pledgor and the Company
under this Agreement.
“Secured Indebtedness” means all direct, indirect or consequential losses and loss of
projectable benefits suffered by the Pledgee as a result of any
Event of Default (as defined below) of the Pledgor and/or the
Company, and the basis for determining the amounts of such losses
shall include, without limitation, reasonable commercial plans and
profit forecasts of the Pledgee and all costs incurred by the Pledgee
in connection with its enforcement of the Contractual Obligations
of the Pledgor and/or the Company.
“Transaction
Agreements”
means the Proxy Agreement, the Cooperation Agreementand the
Purchase Option Agreement.
“Event of Default”
“Pledged Equity”
means a breach by the Pledgor of any of its Contractual
Obligations under the Proxy Agreement, the Purchase Option
Agreement and/or this Agreement, and a breach by the Company
of any of its Contractual Obligations under the Proxy Agreement,
the Cooperation Agreement, the Purchase Option Agreement
and/or this Agreement.
means all of the Company Equity lawfully owned by the Pledgor as
of the effectiveness of this Agreement and to be pledged hereunder
to the Pledgee as security for the performance by the Pledgor and
the Company
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“PRC Laws”
of their respective Contractual Obligations and increased capital
contribution amounts and dividends under Sections 2.6 and 2.7
hereof.
the
then effective
laws, administrative regulations,
means
administrative rules, local regulations, judicial interpretations and
other binding regulatory documents of the People’s Republic of
China.
1.2 In this Agreement, any reference to any PRC Law shall be deemed to include (i) a reference to such PRC
Law as modified, amended, supplemented or reenacted, effective either before or after the date hereof;
and (ii) a reference to any other decision, circular or rule made thereunder or effective as a result thereof.
1.3 Unless otherwise required by the context, a reference to an article, section, clause or paragraph herein
shall be a reference to an article, section, clause or paragraph of this Agreement.
ARTICLE II EQUITY PLEDGE
2.1 The Pledgor hereby agrees to pledge, in accordance with the terms hereof, its lawfully owned and
rightfully disposable 80.89% Equity in the Company, corresponding to the Company's registered capital
of 2,184,024 yuan (the “Pledged Equity”) to the Pledgee, as security for the Pledgor’s debt of RMB
1,965,621.60 to the Pledgee. The Pledgor hereby agrees that, in addition to providing guarantee for the
aforesaid debt, the Pledged Equity also provides guarantee for the performance by the Pledgor of its
Contractual Obligations and its repayment of the Secured Indebtedness. The Company hereby agrees for
the Pledgor to so pledge the Pledged Equity to the Pledgee in accordance with the terms hereof.
2.2 The Pledgor covenants that it will assume the responsibility of recording the equity pledge arrangement
(“Equity Pledge”) hereunder in the shareholder’s register of the Company on the Execution Date. The
Pledgor further covenants that it will use its best efforts and take all necessary measures to register the
Equity Pledge as soon as possible with the competent administrative authority for market regulation of
the Company after the Execution Date.
2.3 During the validity term hereof, the Pledgee shall not be liable in whatsoever manner for any diminution
in value of the Pledged Equity and the Pledgor shall have no right to seek any form of recourse or bring
any claims against the Pledgee in connection therewith, except where such diminution arises out of any
willful conduct of the Pledgee or its gross negligence having immediate causal link with such result.
2.4 Subject to Section 2.3 above, if the Pledged Equity is likely to suffer such a manifest value diminution as
to impair the rights of the Pledgee, the Pledgee
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may at any time auction or sell the Pledged Equity on behalf of the Pledgor and may, as agreed with the
Pledgor, apply the proceeds from such auction or sale towards early repayment of the Secured
Indebtedness, or deposit (entirely at the cost of the Pledgee) such proceeds with a notary organ of the
place of the Pledgee. In addition, upon request by the Pledgee, the Pledgor shall provide other property as
security for the Secured Indebtedness.
2.5 Upon occurrence of any Event of Default, the Pledgee shall be entitled to dispose of the Pledged Equity
in such manner as prescribed by Article IV hereof.
2.6 The Pledgor may not increase the capital of the Company except with prior consent of the Pledgee. Any
increase in the capital contribution made by the Pledgor to the registered capital of the Company as a
result of any capital increase shall equally become part of the Pledged Equity, and the Pledgor shall
register the pledge of the Company Equity corresponding to such capital contribution with the competent
administrative authority for market regulation of the Company.
2.7 The Pledgor may not receive any dividend or profit distribution in respect of the Pledged Equity except
with prior consent of the Pledgee. Any dividend or profit distribution received by the Pledgor in respect
of the Pledged Equity shall be deposited into an account designated by the Pledgee, monitored by the
Pledgee and first applied towards repayment of the Secured Indebtedness.
2.8 Upon occurrence of an Event of Default, the Pledgee shall be entitled to dispose of any Pledged Equity of
the Pledgor in accordance with the terms hereof.
ARTICLE III RELEASE OF PLEDGE
3.1 Upon full and complete performance by the Pledgor and the Company of all of their Contractual
Obligations and full repayment of the Secured Indebtedness, the Pledgee shall, at the request of the
Pledgor, release the Equity Pledge hereunder and cooperate with the Pledgor in relation to both the
deregistration of the Equity Pledge in the shareholder’s register of the Company and the deregistration of
the Equity Pledge with the relevant administrative authority for market regulation; reasonable costs
arising out of such release of the Equity Pledge shall be borne by the Pledgee.
ARTICLE IV DISPOSAL OF PLEDGED EQUITY
4.1 The Parties hereby agree that upon occurrence of any Event of Default, the Pledgee shall be entitled to
exercise, upon written notice to the Pledgor, all of the remedies, rights and powers available to it under
the PRC Laws, the Transaction Agreements and this Agreement, including, without limitation, the right
to auction or sell the Pledged Equity for prior satisfaction of claims. The Pledgee shall not be held liable
for any losses resulting from its reasonable exercise of such rights and powers.
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For the avoidance of doubt, in the event that the Pledgor dies or is declared dead according to law, the
Company shall, at the request of the Pledgee, buy back the equity of the Company held by the Pledgor
according to the paid in registered capital corresponding to the equity held by the Pledgor to the
Company, and the buyback price shall be given priority to pay off the Secured Indebtedness.
The Pledgor further acknowledges and agrees that its breach of Article IX hereof shall constitute its
material breach of this Agreement; the Company further acknowledges and agrees that its breach of
Article X hereof shall constitute its material breach of this Agreement.
4.2 The Pledgee shall be entitled to appoint, in writing, its counsels or other agents to exercise any and all of
its foregoing rights and powers, and neither the Pledgor nor the Company shall object thereto.
4.3 The Pledgee shall have the right to fully deduct all reasonable costs incurred by it in connection with its
exercise of any or all of its foregoing rights and powers from the proceeds obtained as a result of such
exercise of rights and powers.
4.4 The proceeds obtained as a result of the exercise by the Pledgee of its rights and powers shall be applied
in the following order of precedence:
(i) towards payment of all costs arising out of the disposal of the Pledged Equity and the exercise by
the Pledgee of its rights and powers (including fees paid to its counsels and agents);
(ii) towards payment of the taxes payable in connection with the disposal of the Pledged Equity; and
(iii) towards repayment of the Secured Indebtedness to the Pledgee.
Any balance after the deduction of the foregoing payments shall either be returned by the Pledgee to the
Pledgor or any other person who may be entitled to such balance under relevant laws and regulations or
be deposited by the Pledgee with a notary organ of the place of the Pledgee (any costs arising out of such
deposit shall be borne by the Pledgee).
4.5 The Pledgee shall have the right to exercise, at its option, concurrently or successively, any of its breach
of contract remedies; the Pledgee shall not be required to first exercise other breach of contract remedies
prior to the exercise of its right to auction or sell the Pledged Equity hereunder.
ARTICLE V COSTS AND EXPENSES
5.1 All actual costs and expenses arising in connection with the creation of the Equity Pledge hereunder,
including, without limitation, the stamp duty, any other taxes and all legal costs, shall be borne by the
Parties severally.
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ARTICLE VI CONTINUING GUARANTEE AND NON-WAIVER
6.1 The Equity Pledge created hereunder shall constitute a continuing guarantee and shall remain valid until
full performance of the Contractual Obligations or full repayment of the Secured Indebtedness,
whichever occurs later. Neither any waiver or grace granted by the Pledgee with respect to any breach by
the Pledgor nor any delay of the Pledgee in its exercise of any of its rights under the Transaction
Agreements and this Agreement shall affect the right of the Pledgee under this Agreement, relevant PRC
Laws and the Transaction Agreements to require at any time thereafter the Pledgor to strictly perform the
Transaction Agreements and this Agreement or any right that may be available to the Pledgee as a result
of any subsequent breach by the Pledgor of the Transaction Agreements and/or this Agreement.
ARTICLE VII REPRESENTATIONS AND WARRANTIES BY THE PLEDGOR
The Pledgor represents and warrants to the Pledgee that:
7.1 The Pledgor is a Chinese citizen, has full capacity for civil conduct, has the legal rights and ability to
sign this Agreement, perform obligations in accordance with this Agreement, and bear corresponding
legal responsibilities, and may sue or be sued as an independent party.
7.2 All reports, documents and information provided by it to the Pledgee prior to the effectiveness of this
Agreement with respect to all matters pertaining to the Pledgor or required by this Agreement are true,
correct, complete and not misleading in all material respects as of the effectiveness of this Agreement.
7.3 All reports, documents and information provided by it to the Pledgee subsequent to the effectiveness of
this Agreement with respect to all matters pertaining to the Pledgor or required by this Agreement are
true and valid in all material respects as of the time of provision of the same.
7.4 As of the effectiveness of this Agreement, the Pledgor is the sole lawful owner of the Pledged Equity
free from any ongoing or potential dispute or any third party claim as to the ownership thereof; and the
Pledgor has the right to dispose of the Pledged Equity or any part thereof.
7.5 Other than the security interest created on the Pledged Equity hereunder and the rights created under the
Transaction Agreements, the Pledged Equity is free from any other security interests, third party rights or
interests or any other restrictions.
7.6 The Pledged Equity may be lawfully pledged and assigned, and the Pledgor has full rights and powers to
pledge the Pledged Equity to the Pledgee in accordance with the terms hereof.
7.7 Once duly executed by the Pledgor, this Agreement will constitute lawful, valid and binding obligations
of the Pledgor.
6
7.8 Other than the registration of the Equity Pledge with the relevant administrative authority for market
regulation, any consents, permissions, waivers or authorizations by any third party or any approval,
license or exemption from or any registration or filing formalities with any governmental body (if
required by law), requisite in each case for the execution and performance of this Agreement and the
creation of the Equity Pledge hereunder, have been obtained or completed and will remain fully valid
during the validity term hereof.
7.9 The execution and performance by the Pledgor of this Agreement do not violate or conflict with any law
applicable to the Pledgor, any agreement to which the Pledgor is a party or by which he is bound, any
court judgment, any arbitral award, or any decision of any administrative authority.
7.10 The pledge hereunder constitutes a first priority security interest on the Pledged Equity.
7.11 All taxes and costs payable in connection with the acquisition of the Pledged Equity have been paid in
full by the Pledgor.
7.12 There are no pending, or to the knowledge of the Pledgor, threatened, suits, legal proceedings or claims
before any court or arbitral tribunal or by any governmental body or administrative authority against the
Pledgor or its property or the Pledged Equity having a material or adverse effect on the financial
condition of the Pledgor or its ability to perform its obligations and the guarantee liability hereunder.
7.13 The Pledgor hereby warrants to the Pledgee that the foregoing representations and warranties will remain
true and correct and be fully complied with under all circumstances at any time prior to the full
performance of the Contractual Obligations or full repayment of the Secured Indebtedness.
ARTICLE VIII REPRESENTATIONS AND WARRANTIES BY THE COMPANY
The Company represents and warrants to the Pledgee that:
8.1 It is a limited liability company duly registered and lawfully existing under the PRC Laws with
independent legal personality; and has full and independent legal status and capacity to execute, deliver
and perform this Agreement and may sue or be sued as an independent party.
8.2 All reports, documents and information provided by it to the Pledgee prior to the effectiveness of this
Agreement with respect to all matters pertaining to the Pledged Equity or required by this Agreement are
true, correct, complete and not misleading in all material respects as of the effectiveness of this
Agreement.
7
8.3 All reports, documents and information provided by it to the Pledgee subsequent to the effectiveness of
this Agreement with respect to all matters pertaining to the Pledged Equity or required by this Agreement
are true and valid in all material respects as of the time of provision of the same.
8.4 Once duly executed by it, this Agreement will constitute lawful, valid and binding obligations of the
Company.
8.5 It has full internal corporate power and authority to execute and deliver this Agreement and all other
documents to be executed by it in connection with the transactions contemplated hereunder as well as full
power and authority to consummate the transactions contemplated hereunder.
8.6 There are no pending, or to the knowledge of the Company, threatened, suits, legal proceedings or claims
before any court or arbitral tribunal or by any governmental body or administrative authority against the
Pledged Equity, the Company or its assets having a material or adverse effect on the financial condition
of the Company or the ability of the Pledgor to perform its obligations and the guarantee liability
hereunder.
8.7 The Company hereby agrees to be severally and jointly liable to the Pledgee for the representations and
warranties made by the Pledgor under Sections 7.4, 7.5, 7.6, 7.8 and 7.10 hereof.
8.8 The Company hereby warrants to the Pledgee that the foregoing representations and warranties will
remain true and correct and be fully complied with under all circumstances at any time prior to the full
performance of the Contractual Obligations or full repayment of the Secured Indebtedness.
ARTICLE IX UNDERTAKINGS BY THE PLEDGOR
The Pledgor hereby agrees and irrevocably undertakes to the Pledgee that:
9.1 Without prior written consent of the Pledgee, the Pledgor will not create or permit to be created any new
pledge or any other security interest on the Pledged Equity, and any pledge or any other security interest
created on all or part of the Pledged Equity without prior written consent of the Pledgee shall be null and
void.
9.2 Without prior written notice to and prior written consent of the Pledgee, (i) the Pledgor will not assign or
otherwise dispose of the Pledged Equity or request the Company to decrease its capital, and any of such
actions taken by the Pledgor without prior consent of the Pledgee shall be null and void; (ii) the Pledgor
will not assist or permit other existing shareholders (as applicable) to take any of the foregoing actions
without prior written consent of the Pledgee. The proceeds received by the Pledgor from the assignment
or other disposal of the Pledged Equity shall be first applied towards early full repayment of the Secured
Indebtedness to the Pledgee or deposited with a third party to be agreed with the Pledgee.
8
9.3 Should there arise any suit, arbitration or other claims which are likely to have an adverse effect on the
interests of the Pledgor or the Pledgee under the Transaction Agreements and this Agreement or on the
Pledged Equity, the Pledgor warrants that it will notify the Pledgee in writing of the same as soon as
possible and without delay and will, in accordance with the reasonable request of the Pledgee, take all
necessary actions to ensure the Pledgee’s pledge rights and interests in and to the Pledged Equity.
9.4 The Pledgor warrants that it shall complete the business term extension registration formalities of the
Company within three (3) months prior to the expiry of the business term of the Company such that the
validity of this Agreement shall be maintained.
9.5 The Pledgor shall not do or permit to be done any act or action likely to have an adverse effect on the
interests of the Pledgee under the Transaction Agreements and this Agreement or on the Pledged Equity.
9.6 The Pledgor will use its best efforts and take all necessary measures to register the Equity Pledge
hereunder as soon as possible with the relevant administrative authority for market regulation after the
execution of this Agreement, and the Pledgor warrants, in accordance with the reasonable request of the
Pledgee, to take all necessary actions and execute all necessary documents (including, without limitation,
any supplement hereto) to ensure the Pledgee’s pledge rights and interests in and to the Pledged Equity as
well as the exercise and realization by the Pledgee of such rights and interests.
9.7 Should the exercise of the pledge rights hereunder result in an assignment of any Pledged Equity, the
Pledgor warrants that it will take all actions to realize such assignment.
9.8 The Pledgor ensures that the shareholder’s resolutions adopted, convening procedures of, the methods of
voting at and the contents of the shareholders’ meeting and board meetings of the Company held in
connection with the execution of this Agreement and the creation and exercise of the pledge rights
hereunder shall not violate laws, administrative regulations or the articles of association of the Company.
9.9 Once the Pledgor knows or should have known any possible transfer of the Pledged Equity held by him
to any third parties other than the Pledgee or any individual or entity designated by the Pledgee as a result
of applicable PRC Laws or any judgment or award rendered by a court or arbitral body or for any other
reasons, it shall notify the Pledgee immediately and without delay.
ARTICLE X UNDERTAKINGS BY THE COMPANY
The Company hereby agrees and irrevocably undertakes to the Pledgee that:
10.1 The Company will use every effort to assist with the obtainment of any consents, permissions, waivers or
authorizations by any third party or any
9
approval, license or exemption from any governmental body or the completion of any registration or
filing formalities with any governmental body (if required by law), requisite in each case for the
execution and performance of this Agreement and the creation of the Equity Pledge hereunder, and the
maintenance of the same in full force and effect during the validity term hereof.
10.2 Without prior written consent of the Pledgee, the Company will not assist or permit the Pledgor to create
any new pledge or any other security interest on the Pledged Equity.
10.3 Without prior written consent of the Pledgee, the Company will not assist or permit the Pledgor to assign
or otherwise dispose of the Pledged Equity.
10.4 Should there arise any suit, arbitration or other claims which are likely to have an adverse effect on the
Company, the Pledged Equity or the interests of the Pledgee under the Transaction Agreements and this
Agreement, the Company warrants that it will notify the Pledgee in writing of the same as soon as
possible and without delay and will, in accordance with the reasonable request of the Pledgee, take all
necessary actions to ensure the Pledgee’s pledge rights and interests in and to the Pledged Equity.
10.5 The Company warrants that it shall complete its business term extension registration formalities within
three (3) months prior to the expiry of its business term such that the validity of this Agreement shall be
maintained.
10.6 The Company shall not do or permit to be done any act, action or omission likely to have an adverse
effect on the interests of the Pledgee under the Transaction Agreements and this Agreement or on the
Pledged Equity.
10.7 The Company will, during the first month of each calendar quarter, submit to the Pledgee the financial
statements of the Company for the preceding calendar quarter, including, without limitation, the balance
sheet, the income statement and the cash flow statement.
10.8 The Company warrants, in accordance with the reasonable request of the Pledgee, to take all necessary
actions and execute all necessary documents (including, without limitation, any supplement hereto) to
ensure the Pledgee’s pledge rights and interests in and to the Pledged Equity as well as the exercise and
realization by the Pledgee of such rights and interests.
10.9 Should the exercise of the pledge rights hereunder result in an assignment of any Pledged Equity, the
Company warrants that it will take all actions to realize such assignment.
10.10 The Company covenants that it will assist the Pledgor to register the Equity Pledge hereunder with the
competent administrative authority for market regulation of the Company as soon as possible after the
execution of this Agreement and provide all necessary cooperation to complete such registration in a
timely manner.
10
10.11 Once the Company knows or should have known any possible transfer of the Pledged Equity held by the
Pledgor to any third parties other than the Pledgee or any individual or entity designated by the Pledgee
as a result of applicable PRC Laws or any judgment or award rendered by a court or arbitral body or for
any other reasons, it shall notify the Pledgee immediately and without delay.
ARTICLE XI FUNDAMENTAL CHANGES OF CIRCUMSTANCES
11.1 As a supplementary agreement and without contravening other provisions of the Transaction Agreements
and this Agreement, if, at any time, in the opinion of the Pledgee, as a result of any promulgation of or
amendment to any PRC Laws, regulations or rules, or any change in the interpretation or application of
such laws, regulations or rules, or any change in relevant registration procedures, the maintenance of the
validity of this Agreement and/or the disposal of the Pledged Equity in the manner prescribed hereby
becomes illegal or contravenes such laws, regulations or rules, the Pledgor and the Company shall, based
on the Pledgee’s written instructions and in accordance with its reasonable request, immediately take any
actions and/or execute any agreements or other documents so as to:
(a) maintain the validity of this Agreement;
(b) facilitate the disposal of the Pledged Equity in the manner prescribed hereby; and/or
(c) maintain or realize the security created or purported to be created hereunder.
ARTICLE XII EFFECTIVENESS AND TERM OF AGREEMENT
12.1 This Agreement shall become effective upon due execution by the Parties.
12.2 The term of this Agreement shall end when the Contractual Obligations have been fully performed or the
Secured Indebtedness have been fully repaid, whichever is later.
ARTICLE XIII NOTICES
13.1 Any notice, request, demand and other correspondences required by or made pursuant to this Agreement
shall be made in writing and delivered to the relevant Parties.
13.2 Such notice or other correspondences shall be deemed delivered when it is transmitted if transmitted by
fax or email; or upon delivery if delivered in person; or two (2) days after posting if delivered by mail.
ARTICLE XIV MISCELLANEOUS
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14.1 The Pledgor and the Company agree that the Pledgee may, immediately upon notice to the Pledgor and
the Company, assign its rights and/or obligations hereunder to any third party; provided that without prior
written consent of the Pledgee, neither the Pledgor nor the Company may assign their respective rights,
obligations or liabilities hereunder to any third party.
14.2 The sum of the Secured Indebtedness determined by the Pledgee in its discretion in connection with its
exercise of its pledge rights to the Pledged Equity in accordance with the terms hereof shall constitute the
conclusive evidence for the Secured Indebtedness hereunder.
14.3 This Agreement is made in Chinese in four (4) originals, of which one (1) copy shall be held by the
Company, one (1) copy shall be used for governmental approval/registration purposes and the remaining
copies shall be kept by the Pledgee.
14.4 The entry into, effectiveness and interpretation of, and resolution of disputes under, this Agreement shall
be governed by the PRC Laws.
14.5 Dispute Resolution
(a) All disputes arising out of or in connection with this Agreement shall be first settled by the
relevant Parties through amiable consultations; if such Parties fail to resolve the dispute through
consultations, the dispute shall be submitted to China International Economic and Trade
Arbitration Commission (CIETAC) for arbitration according to CIETAC arbitration rules in
effect at the time of applying for arbitration. The seat of arbitration shall be in Beijing. The
arbitration award shall be final and binding on the relevant Parties. Except as otherwise required
by the arbitration award, the arbitration fees shall be borne by the losing party. The losing party
shall also indemnify for the attorneys’ fee and other expenses incurred by the winning party.
(b) Pending the resolution of such dispute, the Parties shall continue to perform the remaining
provisions of this Agreement other than the disputed matters.
14.6 No right, power or remedy empowered to any Party by any provision of this Agreement shall preclude
any other right, power or remedy enjoyed by such Party in accordance with law or any other provisions
hereof and no exercise by a Party of any of its rights, powers and remedies shall preclude its exercise of
its other rights, powers and remedies.
14.7 No failure or delay by a Party in exercising any right, power or remedy under this Agreement or laws
(“Party’s Rights”) shall result in a waiver of such rights; and no single or partial waiver by a Party of the
Party’s Rights shall preclude such Party from exercising such rights in any other way or exercising the
remaining part of the Party’s Rights.
12
14.8 The section headings herein are inserted for convenience of reference only and shall in no event be used
in or affect the interpretation of the provisions hereof.
14.9 Each provision contained herein shall be severable and independent of any other provisions hereof, and if
at any time any one or more provisions hereof become invalid, illegal or unenforceable, the validity,
legality and enforceability of the remaining provisions hereof shall not be affected thereby.
14.10 Once executed, this Agreement shall replace any other legal documents previously entered into by the
Parties in respect of the same subject matter hereof. Any amendments or supplements to this Agreement
shall be made in writing. Except for the transfer of rights hereunder by the Pledgee according to Section
14.1 hereof, such amendments or supplements shall become effective only if they are duly signed by the
Parties hereto.
14.11 This Agreement shall be binding upon the legal assignees or successors of the Parties. The successors or
permitted assignees (if any) of the Pledgor and the Company shall continue to perform the respective
obligations of the Pledgor and the Company hereunder. The Pledgor warrants to the Pledgee that he has
made all appropriate arrangements and executed all necessary documents to ensure that, in the event of
its death, incapacitation, bankruptcy, divorce or occurrence of other circumstances that might affect
exercise of its shareholder rights, his legal assignee, successor, heir, guardians, executors, creditors,
spouse and other persons that might consequently acquire the Company Equity or relevant rights cannot
affect or impede the performance of this Agreement. For this purpose, (a) as soon as practicable after the
date of this Agreement, upon request by the Pledgee, the Pledgor shall execute, the Pledgor and the
Company shall procure the spouse of the Pledgor to execute a husband and wife property agreement in
form and substance satisfactory to the Pledgee; (b) the Pledgor and the Company shall promptly sign all
other documents and take all other actions (including, without limitation, notarization of this Agreement)
as required by the Pledgee.
[THE REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK. EXECUTION PAGE FOLLOWS]
13
This Agreement is entered into as of the date first written above in Beijing by and between the following parties:
Beijing Tuniu Technology Co., Ltd
By: /s/ Yu Dunde
Name: Yu Dunde
Title: Legal Representative
Yu Dunde
Signature: /s/ Yu Dunde
Nanjing Tuniu Technology Co., Ltd
By: /s/ Yu Dunde
Name: Yu Dunde
Title: Legal Representative
Exhibit 4.10
BEIJING TUNIU TECHNOLOGY CO., LTD.
YU DUNDE, CHEN ANQIANG
AND
NANJING TUNIU TECHNOLOGY CO., LTD.
PURCHASE OPTION AGREEMENT
FOR
NANJING TUNIU TECHNOLOGY CO., LTD.
February 19, 2021
Purchase Option Agreement
This Purchase Option Agreement for Nanjing Tuniu Technology Co., Ltd. (this “Agreement”) is entered into as
of February 19, 2021 (“Execution Date”) in Beijing by and among the following Parties:
（1） Beijing Tuniu Technology Co., Ltd., with its registered address at Suite 1006, 10F, Building 4, Courtyard
1, 10 Shangdi Street, Haidian District, Beijing, and legal representative being Yu Dunde (“Party A”);
（2） Yu Dunde, with his domicile at *** and ID number being ***;
（3） Chen Anqiang, with his domicile at *** and ID number being *** (together with Yu Dunde, severally and
jointly, referred to as “Party B”);
（4） Nanjing Tuniu Technology Co., Ltd., with its registered address at 3rd to 5th Floor, Building 6, Dongda
Science Park, No.6 Changjiang Back Street, Xuanwu District, Nanjing City, and legal representative being Yu
Dunde (“Party C”, “Company” or “Nanjing Tuniu”)
In this Agreement, the aforementioned parties are referred to individually as a “Party” and collectively as the
“Parties”.
Whereas:
1. Party B consists of the shareholders of Nanjing Tuniu, who jointly holds 100% of capital contribution in
Nanjing Tuniu. The current shareholders and shareholding status of Nanjing Tuniu are as follows:
Shareholders
Yu Dunde
Chen Anqiang
Total:
Contribution
(RMB)
2,184,024
515,976
2,700,000
Shareholding
Percentages (%)
80.89%
19.11%
100%
2. Party B intends to grant an exclusive right to Party A, allowing Party A to accept, when proper, the equity
interest to be transferred by Party B representing all the capital contribution made by Party B in Nanjing
Tuniu (“Target Equity”).
NOW, THEREFORE, upon friendly consultation, with respect to Party B's granting of the Share Option to Party
A (as defined below), the Parties agree as follows:
1. Grant of Purchase Option
Party B hereby irrevocably grants the following exclusive right to Party A (the “Purchase Option”):
1.1 During the term hereof, as long as the then-applicable laws of the People’s Republic of China (the “PRC
laws”) and/or restrictions placed by the relevant industrial policy are not violated, Party A shall be
entitled, in accordance with the terms and conditions provided herein, to exercise the option as set forth
in Article 4 hereof, by acquiring all the Target Equity from Party B at the price of RMB 1 yuan for each
RMB 0.9 yuan of capital contribution in Nanjing Tuniu (“Exercise Price”). Party A shall be entitled to
purchase all or any part of the Target Equity in one or multiple times at its own choice. Party B hereby
undertakes to cooperate in the execution of the above proceedings by transferring all or any part of the
Target Equity to Party A.
1.2 Party A shall be entitled to request Party B at any time, to transfer all or any part of the Target Equity to
Party A or any one or multiple entities (or individuals) designated by Party A that is eligible under the
then-applicable PRC laws and/or industry policy, at the Exercise Price; and Party B hereby undertakes to
cooperate with the performance.
1.3 Where permissible under the then-applicable PRC laws and/or industrial policy, Party A shall have the
absolute discretion to determine the specific time, method and number of occasions for the exercise of the
Purchase Option.
1.4 The Company hereby agrees that Party B shall grant Party A such Share Option in accordance with
Article 1.1 above and other provisions of this Agreement.
2. Exercise
2.1 Within the term hereof, Party A may issue to Party B and the Company a Notice of Exercise (the “Notice
of Exercise”), requesting to exercise its Purchase Option hereunder and acquire all or part of the Target
Equity.
2.2 Once Party B receives the Notice of Exercise sent by Party A according to Article 2.1 hereof, Party B
shall immediately and no later than 5 business days after receiving the Notice of Exercise:
2.2.1 execute the Equity Transfer Agreement in the form and substance of Appendix 1 hereof
according to the requirements in the Notice of Exercise, together with Party A and/or any of its
designated entities (or individuals);
2.2.2 adopt a shareholder resolution in the form and substance as shown in Appendix 2 hereof, or
other resolutions of the shareholders' meeting as required by the registration authority at the time,
according to the Equity Transfer Agreement, together with Party A and/or any of its designated
entities (or individuals) as well as all other shareholders of Nanjing Tuniu at that time (if any), for
the approval of the Equity Transfer Agreement and amendment to the Articles of Association of
Nanjing Tuniu;
2.2.3 work together with Party A and/or any of its designated entities (or
individuals) as well as all other shareholders of Nanjing Tuniu at that time (if any) to procure
Nanjing Tuniu to submit the Equity Transfer Agreement and the amended Articles of Association
of Nanjing Tuniu to the competent approval authority for approval and provide assistance in
obtaining necessary approvals;
2.2.4 work together with Party A and/or its any designated entities (or individuals) as well as all other
shareholders of Nanjing Tuniu at that time (if any) to procure and assist Nanjing Tuniu to proceed
with amendment registration formalities with the applicable business registration authority, and
2.2.5 handle any other matters necessary for the completion of the equity interest transfer
contemplated hereunder.
2.3 Upon receipt by Party B of the Notice of Exercise issued by Party A in accordance with Article 2.1
above, the Company shall immediately, and no later than 5 business days upon receipt of the Notice of
Exercise, procure and cooperate with Party B to perform the obligations set forth in Article 2.2 hereof.
3. Payment of Exercise Price
3.1 Party A and Party B agree that, unless otherwise required by the applicable law, the aggregate exercise
price for the Target Equity shall be Renminbi 2,430,000 (RMB 2,430,000) as calculated based on the
Exercise Price set forth in Article 1.1 hereof (“Aggregate Exercise Price”).
3.2 In case it is required by the applicable law that the price for the Target Equity shall be appraised, and the
appraisal value of the Target Equity shall be higher than the Aggregate Exercise Price, then Party B
hereby irrevocably waives the amount of difference between such appraisal value and Aggregate Exercise
Price, or, if such difference has already been paid by Party A to Party B, Party B shall refund it to Party
A.
3.3 Party A and Party B hereby confirm that Party A has paid the Aggregate Exercise Price to Party B in full.
Either of the Party B shall, within 5 business days after the Execution Date, execute and deliver to Party
A the Receipt of Exercise Price in the form and substance as set forth in Appendix 3 hereto.
4. Business Termination of Nanjing Tuniu
4.1. Where the business of Nanjing Tuniu is terminated within the term hereof due to bankruptcy, dissolution
or closure by order under law, any and all obligations of Party B hereunder shall be terminated at the time
of occurrence of such termination.
4.2. Party B further undertakes that it will not take any actions that may cause the business of Nanjing Tuniu
to be terminated within the term hereof due to bankruptcy, dissolution or closure by order under law.
5. Representations and Warranties of Party B
5.1 Either of the Party B is a Chinese citizen with full and independent legal status and capacity to execute,
deliver and perform this Agreement and may sue or be sued as an independent party
5.2 Party B has full power and authority to execute, deliver and perform this Agreement and all other
documents to be executed by it in connection with the transactions contemplated hereunder as well as full
power and authority to consummate the transactions contemplated hereunder.
5.3 This Agreement will constitute legal and binding obligations enforceable against Party B in accordance
with its terms.
5.4 Party B legally holds the Target Equity of Nanjing Tuniu.
5.5 Party B has strictly complied with all obligations set forth in the Articles of Association of Nanjing
Tuniu, and there is no circumstance that could affect the legitimate status of Party B as a shareholder of
Nanjing Tuniu, or affect the exercise of the Purchase Option hereunder by Party A.
5.6 Other than the pledge of all the equity in Nanjing Tuniu held by Party B to Party A according to Article 7
hereof, no security in any form or other encumbrance has been created on the Target Equity of Nanjing
Tuniu held by Party B, nor is there any dispute, litigation, arbitration or any administrative or judicial
enforcement measures in other forms regarding the Target Equity, and no person could raise any claims
regarding the Target Equity.
5.7 Party B has already disclosed to Party A all information or materials which may have any material
adverse effect on the ability of Party B to perform the obligations hereunder, or any material adverse
effect on the willingness of Party A to enter into this Agreement.
6. Representations and Warranties of the Company
6.1. The Company is limited liability company duly registered and lawfully existing under the PRC laws
with independent legal personality, have full and independent legal status and capacity to execute,
deliver and perform this Agreement and may sue or be sued as an independent party;
6.2. The Company has full power and authority to execute, deliver and perform this Agreement and all
other documents to be executed by it in connection with the transactions contemplated hereunder as
well as full power and authority to consummate the transactions contemplated hereunder.
6.3. This Agreement is duly executed and delivered by the Company, and will constitute legal and binding
obligations enforceable against the Company in accordance with its terms.
7. Further Undertakings of Party B
Party B hereby, severally and jointly, undertakes to Party A that during the term hereof:
7.1 Without express prior written consent of Party A, Party B will not assign, transfer or pledge the Target
Equity in whole or in part, except for the transfer of all or any part of the Target Equity to Party A or its
designated entity (or individual) according to the provisions hereof.
7.2 Except for the pledge created according to Article 7 hereof and the Equity Interest Pledge Agreement,
Party B will not create any other security interest on the Target Equity without prior written consent of
Party A.
7.3 In case of any circumstances causing the Target Equity to be frozen, or any dispute, litigation,
arbitration or any administrative or judicial enforcement measures in other forms regarding the Target
Equity or the bankruptcy, dissolution of Nanjing Tuniu or its closure by order under law, it shall
forthwith adopt necessary remedial measures and immediately notify Party A in writing.
7.4 Without express prior written consent of Party A, Party B shall not take any act or action (including any
omission) that may affect the effective existence of the Company, nor take any action that may cause the
termination, liquidation or dissolution of the Company.
7.5 Without prior confirmation of Party A, Party B will not approve the engagement by Nanjing Tuniu in
operation under contract, operation under lease, merger, division, joint operation, shareholding reform
or any other arrangement to change the form of operation and ownership structure, or the disposal of all
or substantially all assets or equity of Nanjing Tuniu by means of transfer, assignment, share purchase
based on asset valuation or otherwise.
7.6 Without express prior written consent of Party A, Party B shall not terminate or cause the management
of the Company to terminate any material agreement entered into by the Company, or enter into any
other agreement in conflict with any existing material agreements.
7.7 Without express prior written consent of Party A, Party B shall not appoint or replace any director,
supervisor or other management personnel of the Company to be appointed and removed by Party B.
7.8 Without prior express written consent of Party A, Party B shall not cause the Company to declare or
actually pay any distributable profits or dividends.
7.9 Without express prior written consent of Party A, Party B shall not amend the Articles of Association of
the Company.
7.10 Without express prior written consent of Party A, Party B shall not take any act or action (including any
omission) to cause the Company to lend or borrow loans, or to provide guarantees or other forms of
securities, or
undertake any substantive obligations other than normal business activities.
7.11 The Party B shall use its best efforts to develop the business of the Company and ensure the legal and
compliant operation of the Company. It will not take any action or omission that may damage the assets
and goodwill of the Company or affect the effectiveness of the business license of the Company; and
7.12 The Party B shall timely inform Party A of any situation that may have a material adverse effect on the
existence, business operation, financial condition, assets or goodwill of the Company, and promptly
take all measures approved by Party A to eliminate such adverse situation or take effective remedial
measures against it.
8. Guarantee for Performance of Obligations by Party B
In order to secure the performance by Party B of all its obligations hereunder according to the provisions
herein, Party B hereby agrees to pledge all of its Target Equity in Nanjing Tuniu to Party A. For this purpose,
Party A shall enter into the Equity Interest Pledge Agreement with Party B, and proceed with all necessary
pledge registration formalities according with the relevant PRC laws and regulations.
9. Liabilities for Breach
9.1 Where Party B breaches any provisions in this Agreement or this Agreement and/or the Equity Interest
Pledge Agreement is or becomes invalid or unenforceable, Party A may adopt the following measures:
9.1.1 demand Party B to transfer all the Target Equity or any part thereof immediately to Party A
or its designated entities (or individuals) at the Exercise Price;
9.1.2 enforce the pledge under the Equity Interest Pledge Agreement.
9.2 Once Party A enforces the pledge according to Article 4 of the Equity Interest Pledge Agreement, and
receives all proceeds and funds in connection with the enforcement of pledge, Party B shall then be
deemed to have completely fulfilled the main obligations hereunder, and Party A will no longer make
further payment requests to Party B.
10. Term
This Agreement shall terminate after all the Target Equity is duly assigned to Party A and/or its designated
entities or individuals according to the provisions herein.
11. Termination of Agreement
11.1 At any time within the term hereof, in case Party A is unable to exercise the option according to Article
2 hereof because of the then-applicable laws, Party A may, at its sole discretion, unconditionally
terminate this Agreement
by notifying Party B in writing, without assuming any liabilities therefrom.
11.2 At any time within the term hereof, Party B shall not have the right to unilaterally terminate this
agreement.
12. Governing Law and Dispute Resolution
12.1 The execution, validity, interpretation and performance of this Agreement shall be governed by the
PRC laws.
12.2 All disputes arising out of or in connection with this Agreement shall be first settled by the relevant
Parties through amiable consultations; if such Parties fail to resolve the dispute through consultations,
the dispute shall be submitted to China International Economic and Trade Arbitration Commission
(CIETAC) for arbitration according to CIETAC arbitration rules in effect at the time of applying for
arbitration. The seat of arbitration shall be in Beijing. The arbitration award shall be final and binding
on the relevant Parties. Except as otherwise required by the arbitration award, the arbitration fees shall
be borne by the losing party. The losing party shall also indemnify for the attorneys’ fee and other
expenses incurred by the winning party.
12.3 Pending the resolution of such dispute, the Parties shall continue to perform the remaining provisions of
this Agreement other than the disputed matters.
13. Notice
Party A: Beijing Tuniu Technology Co., Ltd.
Address: Tuniu Building, 699-32 Xuanwu Avenue, Xuanwu District, Nanjing
Fax: (86 21) 86853999
Attention: General Manager
Email: yudunde@tuniu.com
Party B: Yu Dunde
Address: ***
Fax: ***
Email: ***
Party B: Chen Anqiang
Address: ***
Fax: ***
Email: ***
Party C: Nanjing Tuniu Technology Co., Ltd.
Address: Tuniu Building, 699-32 Xuanwu Avenue, Xuanwu District, Nanjing
Fax: (86 25) 86853999
Attention: General Manager
Email: yudunde@tuniu.com
14. Miscellaneous
14.1 No party shall refuse to perform its obligations hereunder, nor shall any party hinder or delay the
enforcement by other Parties of their legal rights and interests hereunder.
14.2 Supplementary agreements may be entered into regarding any matters not addressed herein. Any
supplementary agreements of this Agreement entered into by the Parties in writing shall be an integral
part of this Agreement.
14.3 Any Party is not allowed to modify or terminate this Agreement without consent of other Parties. In
case of modification or termination of this Agreement, an agreement shall be reached upon consultation
between the Parties, and a written contract or agreement shall be entered into thereon.
14.4 If Party A fails to exercise or delays in exercising any rights or remedial measures, it shall not be
deemed as a waiver by Party A of such rights or remedial measures, nor shall it affect the right of Party
A to claim at any time for such rights and remedial measures according to this Agreement and the
applicable laws and regulations.
14.5 The invalidity of any part of the provisions herein shall not affect the validity of other provisions.
15. Counterparts and Effectiveness
15.1 This Agreement shall be executed in four (4) original copies, each copy shall have equal validity.
15.2 This Agreement shall take effect from the date of execution by all the Parties. The Parties agree and
confirm that this agreement constitutes the complete understanding interpretation and mutual agreement
on the matters in connection with the purchase option. Once executed, this Agreement shall replace any
other legal documents previously entered into by the Parties in respect of the same subject matter
hereof.
[Remainder of page intentionally left blank.]
[SIGNATURE PAGE ATTACHED SEPARATELY]
This Agreement in executed by the Parties on the date first mentioned above.
Beijing Tuniu Technology Co., Ltd.
/s/ Yu Dunde
Name: YU Dunde
Title: Legal Representative
YU Dunde
/s/ Yu Dunde
CHEN Anqiang
/s/ Chen Anqiang
Nanjing Tuniu Technology Co., Ltd.
/s/ Yu Dunde
Name: YU Dunde
Title: Legal Representative
[Signature page to Purchase Option Agreement]
Appendix 1
EQUITY TRANSFER AGREEMENT
This Equity Transfer Agreement (the “Agreement”) is made on by and between:
(1) [*], a Chinese Citizen, with ID number of [*] (the “Seller”); and
(2) Beijing Tuniu Technology Co., Ltd., a limited liability company incorporated and validly existing under the
laws of the People's Republic of China (“PRC Laws”), with the unified social code of 91110108678755052K
(“Buyer”).
WHEREAS：
(A) Nanjing Tuniu Technology Co., Ltd. (“Target Company”) is a limited liability company incorporated and
validly existing under the laws of the People's Republic of China, with its registered address at the 3rd to 5th
Floor, Building 6, Dongda Science Park, No. 6 Changjiang Back Street, Xuanwu District, Nanjing, and its legal
representative being Yu Dunde.
(B) The registered capital of the Target Company is RMB 2.7 million, and as of the date of this Agreement, the
Seller holds the registered capital of RMB [*] in the Target Company, which has been fully paid.
(C) The Seller intends to sell the Equity (as defined below) in accordance with the terms and conditions of this
Agreement, and the Buyer intends to purchase the Equity in accordance with the terms and conditions of this
Agreement.
IT IS HEREBY AGREED AS FOLLOWS:
1 Definitions
Unless otherwise defined in this Agreement, the following terms shall have the following meanings:
“Consideration” means the Consideration for the Transfer of Equity as set out in Article 3.
“Equity” means the equity interest of RMB [*] held by the Seller in the registered capital of the Target Company,
and all rights and interests therewith.
“Transfer of Equity” or “Equity Transfer” means the transfer of equity from the Seller to the Buyer under this
Agreement.
“Closing” means the completion of the Transfer of Equity under this Agreement.
“Closing Date” means the date on which all conditions set out in Article 4.1 are satisfied or (where practicable)
waived.
“Renminbi” means the Chinese legal currency Renminbi Yuan.
“Parties” means the parties to this Agreement, and “Party” means any of them.
“Business Day” means any day other than a Saturday, a Sunday or a public holiday in China.
“China” means the People's Republic of China and, for the purpose of this Agreement, does not include the Hong
Kong Special Administrative Regions, Macao Special Administrative Regions or the Taiwan Region.
2 Equity Transfer
2.1 Subject to and in accordance with the terms and conditions of this Agreement, the Seller shall transfer the
Equity to the Buyer and the Buyer shall purchase the Equity from the Seller.
3 Price
3.1 The Buyer shall pay to the Seller Renminbi [*] (RMB[*]) (the “Consideration”) as consideration for the
Transfer of Shares; [The Consideration shall include the seller's income tax.]
3.2 The reference date of this Equity Transfer is .
3.3 The Buyer and the Seller confirm that the Buyer has paid to the Seller in full the Equity Transfer
Consideration agreed herein.
4 Conditions
4.1 Completion of the Equity Transfer shall be subject to the satisfaction or waiver of the following (where
practicable) by the Buyer in writing:
(a) the Equity Transfer has been reflected in the register of shareholders of the Target Company (i.e. the register of
shareholders has shown that the Buyer is the shareholder holding the Equity); and
(b) a resolution formally approving the Equity Transfer has been passed in the shareholders' meeting of the Target
Company.
4.2 Each Party shall, to the extent relevant to such Party, use its reasonable efforts to procure satisfaction of the
conditions set forth in Article 4.1.
5 Closing
5.1 The Closing shall take place on the Closing Date at the registered address of the Target Company or such other
place as may be agreed upon by the Parties.
5.2 At Closing, the Seller shall deliver to the Buyer an updated register of shareholders of the Target Company
and other corporate documents reflecting the Buyer's ownership of the Equity.
6 Further Undertakings
6.1 Each party undertakes that it shall execute all documents and take all actions or measures that may be
necessary for the full implementation of this Agreement.
6.2 The Seller and the Buyer shall cooperate with each other to complete all amendment and/or filling registration
formalities with the applicable business registration authority in connection with the Equity Transfer as soon as
possible after the Closing (including but not limited to obtaining a new business license of the Target Company
and filing with business registration authority the amendment of the Articles of Association or the amended and
restated Articles of Association of the Target Company).
7 Confidentiality
7.1 Irrespective of whether this Agreement has been terminated, each of the Parties shall maintain in strict
confidence the business secrets, proprietary information, customer information and all other information of a
confidential nature of the other Parties coming into its knowledge during the entry into and performance of this
Agreement (“Confidential Information”). Except where prior written consent has been obtained from the Party
disclosing the Confidential Information or where disclosure to a third party is mandated by relevant laws or
regulations or by the rules of the place of listing of an affiliate of a Party, the Party receiving the Confidential
Information shall not disclose any Confidential Information to any third party; the Party receiving the Confidential
Information shall not use, either directly or indirectly, any Confidential Information other than for the purpose of
performing this Agreement.
7.2 The Parties acknowledge that the following information shall not constitute the Confidential Information:
(a) any information which, as shown by written evidence, has previously been known to the receiving Party
by way of legal means;
(b) any information which enters the public domain other than as a result of a fault of the receiving Party; or
(c) any information lawfully acquired by the receiving Party from another source subsequent to the receipt of
relevant information.
7.3 A receiving Party may disclose the Confidential Information to its relevant employees, agents or its appointed
professionals, provided that such receiving Party shall ensure that such persons shall comply with relevant terms
and conditions of this Agreement and that it shall assume any liability arising out of any breach by such persons of
relevant terms and conditions of this Agreement.
7.4 Notwithstanding any other provisions of this Agreement, the validity of this article shall not be affected by the
suspension or termination of this Agreement.
8 Fees and Taxes
Each Party shall bear its own legal and other costs and expenses in connection with this
Agreement and shall pay its own taxes payable under applicable tax laws (including but not limited to income tax
and stamp duty). The Buyer may, in accordance with the law, withhold such taxes on behalf of the Seller and
deduct such taxes when paying the Consideration to the Seller.
9 Notice
All notices under or in connection with this Agreement shall be in writing and shall be delivered in person or by
fax, E-mail or postage prepaid airmail. Such notices shall be deemed delivered at the time of delivery if delivered
in person; or upon completion of transmission, if transmitted by fax or E-mail; or three (3) business days after
mailing, if delivered by airmail.
10 Liability for Default
If either party breaches any provision of this Agreement, the breaching party shall indemnify the other party for
all losses caused by the breach.
11 Assignment
Neither party shall assign or transfer any of its rights or obligations under this Agreement without the prior written
consent of the other Party.
12 Governing Law and Dispute Resolution
12.1 This Agreement shall be governed by the PRC laws.
12.2 All disputes arising out of or in connection with this Agreement shall be first settled by the relevant Parties
through amiable consultations; if such Parties fail to resolve the dispute through consultations, the dispute shall be
submitted to China International Economic and Trade Arbitration Commission (CIETAC) for arbitration
according to CIETAC arbitration rules in effect at the time of applying for arbitration. The seat of arbitration shall
be in Beijing. The arbitration award shall be final and binding on the relevant Parties.
13 Originals
This Agreement is made in three (3) originals, one (1) original for registration purposes, and one (1) original shall
be retained by the Buyer and the Seller respectively.
14 Effectiveness
This agreement shall come into effect after executed by both Parties.
[Remainder of page intentionally left blank.]
[SIGNATURE PAGE ATTACHED SEPARATELY]
This Agreement in executed by the Parties on the date first mentioned above in Beijing.
[*]
Beijing Tuniu Technology Co., Ltd.
Name: YU Dunde
Title: Legal Representative
Appendix 2
RESOLUTIONS OF SHAREHOLDERS MEETING
of
NANJING TUNIU TECHNOLOGY CO., LTD
In accordance with relevant provisions of the Company Law and the Articles of Association of Nanjing Tuniu
Technology Co., Ltd. (the “Company”), the Company convened a shareholders meeting at on . The
Company notified all shareholders fifteen (15) days in advance that this shareholders meeting will be held. The
required quorum is two and the number of shareholders actually attending this meeting is two, which represents
100% of the voting rights in the Company. It is hereby resolved that:
1. Agree that the registered capital of RMB held by in the Company be transferred to .
2. All shareholders of the Company hereby waive their preemptive rights of the abovementioned Transferred
Equity in accordance with Company Law, Articles of Association of the Company or other laws and regulations.
The above resolutions are passed by unanimous vote of all shareholders.
Signature or seal of all shareholders
Yu Dunde
Chen Anqiang
Appendix 3
Beijing Tuniu Technology Co., Ltd. (the “Company”)
RECEIPT OF EXERCISE PRICE
The undersigned, with its ID number of , hereby acknowledges that he/she has received the Exercise Price
(as defined in the Purchase Option Agreement) of RMB prepaid by the Company in accordance with Article
3.1 and Article 3.3 of the Purchase Option Agreement entered into by the undersigned, the Company and other
relevant parties on February 19, 2021.
Yours Faithfully,
Name:
List of Principal Subsidiaries, Consolidated Affiliated Entity and its Principal Subsidiaries
Subsidiaries
Tuniu (HK) Limited
Tuniu (Nanjing) Information Technology Co., Ltd.
Beijing Tuniu Technology Co., Ltd.
Jiangsu Kaihui Commercial Factoring Co., Ltd
Xiamen Suiwang International Travel Service Co., Ltd.
Tianjin Tuniu International Travel Service Co., Ltd.
Guangzhou Kaihui Internet Microcredit Co., Ltd.
Nanjing Kaihui Internet Microcredit Co., Ltd.
Consolidated Affiliated Entity and its Subsidiaries
Nanjing Tuniu Technology Co., Ltd.
Beijing Tuniu International Travel Service Co., Ltd.
Nanjing Tuniu International Travel Service Co., Ltd.
Shanghai Tuniu International Travel Service Co., Ltd.
Nanjing Tuzhilv Tickets Sales Co., Ltd.
Beijing Global Tour International Travel Service Co., Ltd.
Tuniu Insurance Brokers Co., Ltd.
EXHIBIT 8.1
Place of Incorporation
Hong Kong
PRC
PRC
PRC
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Exhibit 12.1
Certification by the Principal Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Dunde Yu, certify that:
1. I have reviewed this annual report on Form 20-F of Tuniu Corporation;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in
this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the company, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred
during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing
the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the company’s internal control over financial reporting.
Date:April 29, 2021
By:
/s/ Dunde Yu
Name:Dunde Yu
Title: Chief Executive Officer
Exhibit 12.2
Certification by the Principal Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
I, Anqiang Chen, certify that:
1. I have reviewed this annual report on Form 20-F of Tuniu Corporation.;
2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material
fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with
respect to the period covered by this report;
3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in
all material respects the financial condition, results of operations and cash flows of the company as of, and for, the periods presented in
this report;
4. The company’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in
Exchange Act Rules 13a-15(f) and 15d-15(f)) for the company and have:
(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be
designed under our supervision, to ensure that material information relating to the company, including its consolidated
subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being
prepared;
(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting
to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
(c) Evaluated the effectiveness of the company’s disclosure controls and procedures and presented in this report our
conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report
based on such evaluation; and
(d) Disclosed in this report any change in the company’s internal control over financial reporting that occurred
during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the
company’s internal control over financial reporting; and
5. The company’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control
over financial reporting, to the company’s auditors and the audit committee of the company’s board of directors (or persons performing
the equivalent functions):
(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial
reporting which are reasonably likely to adversely affect the company’s ability to record, process, summarize and report
financial information; and
(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in
the company’s internal control over financial reporting.
Date:April 29, 2021
By:
/s/ Anqiang Chen
Name: Anqiang Chen
Title: Financial Controller
Certification by the Principal Executive Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 13.1
In connection with the Annual Report of Tuniu Corporation (the “Company”) on Form 20-F for the year ended December 31,
2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Dunde Yu, Chief Executive Officer of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to
my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date:April 29, 2021
By:/s/ Dunde Yu
Name:Dunde Yu
Title: Chief Executive Officer
Certification by the Principal Financial Officer
Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
Exhibit 13.2
In connection with the Annual Report of Tuniu Corporation (the “Company”) on Form 20-F for the year ended December 31,
2020 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Anqiang Chen, financial controller of
the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to
my knowledge:
(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.
Date:April 29, 2021
By: /s/ Anqiang Chen
Name:Anqiang Chen
Title: Financial Controller
Consent of Independent Registered Public Accounting Firm
EXHIBIT 15.1
We hereby consent to the incorporation by reference in the Registration Statements on Form S-8 (No. 333-198111 and No. 333-
251283) of Tuniu Corporation of our report dated April 29, 2021 relating to the consolidated financial statements, financial statement
schedule I, and the effectiveness of internal control over financial reporting, which appears in this Form 20-F.
/s/ PricewaterhouseCoopers Zhong Tian LLP
Shanghai, the People’s Republic of China
April 29, 2021
Office: +852 2801 6066
Mobile:+852 9718 8740
Email: rthorp@tta.lawyer
Tuniu Building no. 699-32
Xuanwudadao, Xuanwu District
Nanjing, Jiangsu Province 210042
People’s Republic of China
Dear Sirs
Re: Tuniu Corporation
EXHIBIT 15.2
April 29, 2021
We have acted as legal advisers as to the laws of the Cayman Islands to Tuniu Corporation, an exempted limited liability company
incorporated in the Cayman Islands (the "Company"), in connection with the filing by the Company with the United States Securities
and Exchange Commission (the "SEC") of an annual report on Form 20-F for the year ended 31 December 2020 ("Form 20-F").
We hereby consent to the reference of our name under the headings, "Item 10.E Additional Information—Taxation—Cayman Islands
Taxation" and "Item 16G. Corporate Governance" in the Form 20-F, and further consent to the incorporation by reference of the
summaries of our opinions under these captions into Tuniu Corporation’s registration statement on Form S-8 (File No. 333-198111) that
was filed on August 13, 2014, Tuniu Corporation’s Post-Effective Amendment No. 1 to Form S-8 (File No. 333-198111) that was filed
on December 11, 2020 and Tuniu Corporation’s registration statement on Form S-8 (File No. 333-251283) that was filed on
December 11, 2020.
Yours faithfully
/s/ TRAVERS THORP ALBERGA
TRAVERS THORP ALBERGA
EXHIBIT 15.3
FANGDA PARTNERS
上海 Shanghai ⚫ 北京 Beijing ⚫ 深圳 Shenzhen ⚫ 广州 Guangzhou ⚫ 香港 Hong Kong
http://www.fangdalaw.com
电 子 邮 件 Email: email@fangdalaw.com
电 话 Tel.: 861057695600
传 真 Fax: 861057695788
文 号 Ref.: 20GC0010
Consent of Fangda Partners
April 29, 2021
中 国 北 京 市 朝 阳 区 光 华 路 1 号
嘉 里 中 心 北 楼 27 层
邮 政 编 码 : 100020
27/F, North Tower, Kerry Center
No. 1, Guanghua Road, Chaoyang District
Beijing 10020, PRC
Tuniu Corporation
Tuniu Building No. 699-32
Xuanwudadao, Xuanwu District
Nanjing, Jiangsu Province 210042
The People’s Republic of China
Dear Sirs:
We hereby consent to the reference of our name under the heading "Item 3.D. Key Information—Risk Factors", “Item 4.B. Information
on the Company—Business Overview—PRC Regulation”, “Item 7.B. Major Shareholders and Related Party Transactions—Related
Party Transactions—Contractual Arrangements” and “Item 18. Financial Statements—Notes to the Consolidated Financial Statements”
in Tuniu Corporation’s Annual Report on Form 20-F for the year ended December 31, 2020 (the “Annual Report”), which is filed with
the Securities and Exchange Commission (the “SEC”) on April 29, 2021. We also consent to the filing of this consent letter with the SEC
as an exhibit to the Annual Report and further consent to the incorporation by reference of the summaries of our opinions under these
captions into Tuniu Corporation’s registration statement on Form S-8 (File No. 333-198111) that was filed on August 13, 2014, Tuniu
Corporation’s Post-Effective Amendment No. 1 to Form S-8 (File No. 333-198111) that was filed on December 11, 2020 and Tuniu
Corporation’s registration statement on Form S-8 (File No. 333-251283) that was filed on December 11, 2020.
In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7
of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated
thereunder.
Very truly yours,
/s/ Fangda Partners
Fangda Partners