engaging in other marketing and educational services aimed at acquiring customers. We offer discounts to distributors as consideration for their services. We have relied on distributors for
several reasons. Our P4P customer base in China is geographically diverse and fragmented, as many of our P4P customers are SMEs located in different regions in China. Moreover, SMEs are generally less experienced with online marketing as compared to
large companies and therefore benefit from the extensive services provided by distributors. Finally, secure online payment and credit card systems are in early stages of development in China. Distributors serve as an important channel to reach SME
customers throughout China and collect payments from them. We offer our online marketing services to medium and large corporate customers through third-party agencies and our direct sales force. We have also engaged third-party agencies to identify
and reach the potential customers outside of China.
Transaction services reach customers and promote our transaction
services via distributors in most cities because customers in these areas are geographically diverse and fragmented. Our distributors identify customers and assist customers to set up accounts in order to improve market share and penetrate rate in
these areas. We also provide transaction services directly in several first and second tier cities based on the high population concentration and well-constructed infrastructure.
We focus on continually improving the quality of our products and services, as we believe satisfied users and customers are
more likely to recommend our products and services to others. Through these efforts and the increased use of internet in China, we have built our brand with modest marketing expenditures.
We have implemented a number of marketing initiatives designed to promote our brand awareness among potential users, customers
and Baidu Union members. In addition to our brand positioning in the market, we have also initiated a series of marketing activities to promote our products and technologies among existing and potential users and customers. In the Baidu World
Conference held in September 2016, we showcased Baidu artificial intelligence platform, Baidu Brain, and its key functions, and announced that we would open its key capabilities and underlying technologies to developers and enterprises.
At the Wuzhen Internet Conference held in November 2016, we operated the first experience station for Baidu autonomous driving cars and demonstrated the technology capacities and concepts of Baidu autonomous driving cars. In November 2016, we held
Baidu Moments Sales Summit and published a new Baidu commercial brand powered by intelligence and promoted our Baidu Newsfeed advertisement strategy. At the ABC Summit held on November 30, 2016, we introduced the ABC concept of
future information technology development, i.e., AI, big data, and cloud computing.
The internet search, transaction service and internet video service industries in China are rapidly evolving and highly
For internet search, our primary competitors include U.S.-based internet search providers providing Chinese
language internet search services and China-based internet companies. We compete with these entities for both users and customers on the basis of user traffic, quality (relevance) and safety and user experience of search results, availability and
ease of use of products and services, the number of customers, distribution channels and the number of associated third-party websites. We also face competition from traditional advertising media.
U.S.-based Internet Search Providers. U.S.-based internet search providers such as Google have a strong global
presence, well established brand names, more users and customers and significantly greater financial resources than we do. We may also continue to face competition from other existing competitors and new entrants in the Chinese language search