BAIDU, INC. filed this Form 20-F on 03/31/2017
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may adversely affect our revenues. If we fail to attract additional Baidu Union members, our revenue growth may be adversely affected. In addition, if we have to share a larger portion of our revenues to retain existing Baidu Union members or attract additional members, our profitability may be adversely affected.

There is no assurance that our expansions into services provided by Baidu Nuomi and Baidu Deliveries will be successful.

Baidu Nuomi and Baidu Deliveries are important components of our transaction services. We have limited experiences in operating these services, as we started to participate in the relevant market in recent years. The success of Baidu Nuomi and Baidu Deliveries depends on our ability to:



respond to the changes in the rapidly developing market in China;



adopt a business model or adapt the existing model to meet the marketing demands;



expand the selection, price and popularity of local deals available on our platform;



acquire new users who purchase local deals on our platform, and retain our existing users and have them continue to purchase local deals on our platform;



attract new local merchants and retain existing local merchants to offer more local deals on our platform;



attract, train and retain qualified personnel, particularly management, technical, marketing, sales and customer service personnel with expertise that we need for our transaction services;



combat fraudulent or fictitious transactions, such as those aiming to artificially inflate the third-party sellers’ or service providers’ ratings on our platform and obtain sales-based monetary incentives provided by our platform; and



effectively compete with other companies that are currently in, or may in the future enter the businesses of providing transaction services.

We operate Baidu Nuomi and Baidu Deliveries in a highly competitive market. The players in this market may compete with us in a variety of ways, including adopting more aggressive pricing policies, devoting greater resources to marketing and promotional campaigns, investing more heavily in research and development, and making acquisitions for the expansion of their products and services. Increased competition such as the price war in the market may force us to lower the price we charge local merchants or provide more subsidized discounts to users, and require us to increase our marketing and promotional efforts and capital commitment, which would negatively affect our profitability. There can be no assurance that we will be able to compete effectively against current or future competitors, and such competitive pressures may have an adverse impact on our business, financial condition and results of operations.

Our overseas operations may not be successful.

We have launched products and services in local languages to internet users in several countries. It is uncertain when the operation will become profitable, if at all. In particular, we rely on local telecommunication operators and service providers to provide us with network services and data center hosting services, and our systems for these international products and services are not redundant across different regions and data centers. Any interruption to the internet infrastructure or any data center may render our products and services in the region unavailable.

We face certain risks inherent in doing business internationally, including:



difficulties in developing, staffing and simultaneously managing a foreign operation as a result of distance, language and cultural differences;