Alibaba IPO Filing (Form F1 5/6/2014)

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5/6/2014 Form F-1 http://www.sec.gov/Archives/edgar/data/1577552/000119312514184994/d709111df1.htm 1/343 F-1 1 d709111df1.htm FORM F-1 Table of Contents As filed with the Securities and Exchange Commission on May 6, 2014 Registration No. 333 SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 Form F1 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 Alibaba Group Holding Limited (Exact name of Registrant as Specified in its Charter) Cayman Islands 5961 Not Applicable (State or Other Jurisdiction of Incorporation or Organization) (Primary Standard Industrial Classification Code Number) (I.R.S. Employer Identification Number) c/o Alibaba Group Services Limited 26/F Tower One, Times Square 1 Matheson Street Causeway Bay Hong Kong Telephone: +85222155100 (Address and Telephone Number, Including Area Code, of Registrant’s Principal Executive Offices) Corporation Service Company 1180 Avenue of the Americas, Suite 210 New York, New York 10036 (800) 9279801 (Name, Address, Including Zip Code, and Telephone Number, Including Area Code, of Agent for Service) Copies to: Timothy A. Steinert, Esq. Alibaba Group Holding Limited c/o Alibaba Group Services Limited 26/F Tower One, Times Square 1 Matheson Street, Causeway Bay Hong Kong +85222155100 Leiming Chen, Esq. Daniel Fertig, Esq. Simpson Thacher & Bartlett LLP c/o 35th Floor, ICBC Tower 3 Garden Road Central Hong Kong +85225147600 William H. Hinman, Jr., Esq. Simpson Thacher & Bartlett LLP 2475 Hanover Street Palo Alto, California 94304 U.S.A. 6502515000 William Y. Chua, Esq. Sullivan & Cromwell LLP 28th Floor Nine Queen’s Road Central Hong Kong +85228268688 Jay Clayton, Esq. Sarah P. Payne, Esq. Sullivan & Cromwell LLP 1870 Embarcadero Road Palo Alto, California 94303 U.S.A. 6504615700 Approximate date of commencement of proposed sale to the public: As soon as practicable after the effective date of this registration statement. If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, check the following box. If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a posteffective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. If this Form is a posteffective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. CALCULATION OF REGISTRATION FEE Title of Each Class of Securities to be Registered (1)(2) Proposed Maximum Aggregate Offering Price (3) Amount of Registration Fee Ordinary shares, par value US$0.000025 per share US$1,000,000,000 US$128,800 (1) American depositary shares, or ADSs, evidenced by American depositary receipts issuable upon deposit of the ordinary shares registered hereby will be registered under a separate registration statement on Form F6. Each ADS represents ordinary shares. (2) Includes (a) ordinary shares represented by ADSs that may be purchased by the underwriters pursuant to their option to purchase additional ADSs and (b) all ordinary shares represented by ADSs initially offered or sold outside the United States that are thereafter resold from time to time in the United States. Offers and sales of shares outside the United States are being made pursuant to Regulation S under the Securities Act of 1933 and are not covered by this Registration Statement. (3) Estimated solely for the purpose of computing the amount of the registration fee pursuant to Rule 457(o) under the Securities Act of 1933, as amended. The registrant hereby amends this Registration Statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this Registration Statement shall thereafter become effective in accordance with Section 8(a) of the Securities Act of

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Transcript of Alibaba IPO Filing (Form F1 5/6/2014)

  • 5/6/2014 Form F-1

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    F-1 1 d709111df1.htm FORM F-1

    Table of Contents

    AsfiledwiththeSecuritiesandExchangeCommissiononMay6,2014RegistrationNo.333

    SECURITIESANDEXCHANGECOMMISSION

    Washington,D.C.20549

    FormF1REGISTRATIONSTATEMENT

    UNDERTHESECURITIESACTOF1933

    AlibabaGroupHoldingLimited(ExactnameofRegistrantasSpecifiedinitsCharter)

    CaymanIslands 5961 NotApplicable(StateorOtherJurisdictionofIncorporationorOrganization)

    (PrimaryStandardIndustrialClassificationCodeNumber)

    (I.R.S.EmployerIdentificationNumber)

    c/oAlibabaGroupServicesLimited26/FTowerOne,TimesSquare

    1MathesonStreetCausewayBayHongKong

    Telephone:+85222155100(AddressandTelephoneNumber,IncludingAreaCode,ofRegistrantsPrincipalExecutiveOffices)

    CorporationServiceCompany

    1180AvenueoftheAmericas,Suite210NewYork,NewYork10036

    (800)9279801(Name,Address,IncludingZipCode,andTelephoneNumber,IncludingAreaCode,ofAgentforService)

    Copiesto:

    TimothyA.Steinert,Esq.AlibabaGroupHoldingLimited

    c/oAlibabaGroupServicesLimited26/FTowerOne,TimesSquare

    1MathesonStreet,CausewayBayHongKong

    +85222155100

    LeimingChen,Esq.DanielFertig,Esq.

    SimpsonThacher&BartlettLLPc/o35thFloor,ICBCTower3GardenRoadCentral

    HongKong+85225147600

    WilliamH.Hinman,Jr.,Esq.SimpsonThacher&BartlettLLP

    2475HanoverStreetPaloAlto,California94304

    U.S.A.6502515000

    WilliamY.Chua,Esq.Sullivan&CromwellLLP

    28thFloorNineQueensRoadCentralHongKong

    +85228268688

    JayClayton,Esq.SarahP.Payne,Esq.

    Sullivan&CromwellLLP1870EmbarcaderoRoad

    PaloAlto,California94303U.S.A.

    6504615700

    Approximatedateofcommencementofproposedsaletothepublic:Assoonaspracticableaftertheeffectivedateofthisregistrationstatement.IfanyofthesecuritiesbeingregisteredonthisFormaretobeofferedonadelayedorcontinuousbasispursuanttoRule415undertheSecuritiesActof1933,checkthe

    followingbox.IfthisFormisfiledtoregisteradditionalsecuritiesforanofferingpursuanttoRule462(b)undertheSecuritiesAct,pleasecheckthefollowingboxandlisttheSecurities

    Actregistrationstatementnumberoftheearliereffectiveregistrationstatementforthesameoffering.IfthisFormisaposteffectiveamendmentfiledpursuanttoRule462(c)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesActregistration

    statementnumberoftheearliereffectiveregistrationstatementforthesameoffering.IfthisFormisaposteffectiveamendmentfiledpursuanttoRule462(d)undertheSecuritiesAct,checkthefollowingboxandlisttheSecuritiesActregistration

    statementnumberoftheearliereffectiveregistrationstatementforthesameoffering.

    CALCULATIONOFREGISTRATIONFEE

    TitleofEachClassofSecuritiestobeRegistered(1)(2)

    ProposedMaximumAggregate

    OfferingPrice(3) Amountof

    RegistrationFeeOrdinaryshares,parvalueUS$0.000025pershare US$1,000,000,000 US$128,800(1) Americandepositaryshares,orADSs,evidencedbyAmericandepositaryreceiptsissuableupondepositoftheordinarysharesregisteredherebywillberegisteredunder

    aseparateregistrationstatementonFormF6.EachADSrepresentsordinaryshares.(2) Includes(a)ordinarysharesrepresentedbyADSsthatmaybepurchasedbytheunderwriterspursuanttotheiroptiontopurchaseadditionalADSsand(b)allordinary

    sharesrepresentedbyADSsinitiallyofferedorsoldoutsidetheUnitedStatesthatarethereafterresoldfromtimetotimeintheUnitedStates.OffersandsalesofsharesoutsidetheUnitedStatesarebeingmadepursuanttoRegulationSundertheSecuritiesActof1933andarenotcoveredbythisRegistrationStatement.

    (3) EstimatedsolelyforthepurposeofcomputingtheamountoftheregistrationfeepursuanttoRule457(o)undertheSecuritiesActof1933,asamended.

    TheregistrantherebyamendsthisRegistrationStatementonsuchdateordatesasmaybenecessarytodelayitseffectivedateuntiltheregistrantshallfileafurtheramendmentwhichspecificallystatesthatthisRegistrationStatementshallthereafterbecomeeffectiveinaccordancewithSection8(a)oftheSecuritiesActof

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    1933,asamended,oruntiltheRegistrationStatementshallbecomeeffectiveonsuchdateastheSecuritiesandExchangeCommission,actingpursuanttosuchSection8(a),maydetermine.

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    Theinformationinthispreliminaryprospectusisnotcompleteandmaybechanged.NeitherwenorthesellingshareholdersmaysellthesesecuritiesuntiltheregistrationstatementfiledwiththeUnitedStatesSecuritiesandExchangeCommissionisdeclaredeffective.Thispreliminaryprospectusisnotanoffertosellthesesecuritiesanditisnotsolicitinganyoffertobuythesesecuritiesinanyjurisdictionwheretheofferorsaleisnotpermitted.

    SubjecttoCompletion,Dated,2014

    AmericanDepositaryShares

    RepresentingOrdinaryShares

    AlibabaGroupHoldingLimitedThisistheinitialpublicofferingofAlibabaGroupHoldingLimited,orAlibabaGroup.WeareofferingAmericanDepositary

    Shares,orADSs,andthesellingshareholdersnamedinthisprospectusareofferingADSs.EachADSrepresentsordinaryshares,parvalueUS$0.000025pershare.WeexpectthattheinitialpublicofferingpriceoftheADSswillbebetweenUS$andUS$perADS.WewillnotreceiveanyproceedsfromtheADSssoldbythesellingshareholders.

    Pursuanttoourmemorandumandarticlesofassociation,apartnership,ortheAlibabaPartnership,comprisedofcertainmanagementmembersofourcompanyandourrelatedcompaniesandaffiliates,willhavetheexclusiverighttonominateasimplemajorityoftheboardofdirectorsofourcompany.SeeAlibabaPartnershipandDescriptionofShareCapitalOrdinarySharesNomination,ElectionandRemovalofDirectors.

    Priortothisoffering,therehasbeennopublicmarketforourADSsorordinaryshares.WewillapplyforlistingofourADSsontheNewYorkStockExchangeortheNasdaqGlobalMarketunderthesymbol.

    InvestinginourADSsinvolvesrisk.SeeRiskFactorsbeginningonpage20.

    PerADS Total Pricetopublic US$ US$Underwritingdiscountsandcommissions US$ US$ Proceeds,beforeexpenses,tous US$ US$ Proceeds,beforeexpenses,tothesellingshareholders US$ US$

    WeandcertainsellingshareholdershavegrantedtheunderwriterstherighttopurchaseuptoanaggregateofadditionalADSs.

    NeithertheUnitedStatesSecuritiesandExchangeCommissionnoranystatesecuritiescommissionoranyotherregulatorybodyhasapprovedordisapprovedofthesesecurities,ordeterminedifthisprospectusistruthfulorcomplete.Anyrepresentationtothecontraryisacriminaloffense.

    TheunderwritersexpecttodelivertheADSsagainstpaymentinU.S.dollarstopurchasersonorabout,2014

    CreditSuisse DeutscheBank GoldmanSachs J.P.Morgan MorganStanley Citi

    ,2014.

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    TABLEOFCONTENTS PageProspectusSummary 1RiskFactors 20SpecialNoteRegardingForwardLookingStatements 58IndustryDataandUserMetrics 59UseofProceeds 60DividendPolicy 61Capitalization 62Dilution 64ExchangeRateInformation 66EnforcementofCivilLiabilities 67OurHistoryandCorporateStructure 69SelectedConsolidatedFinancialandOperatingData 76ManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations 82Business 122Regulation 174AlibabaPartnership 186OurDirectors 189OurExecutiveOfficers 193PrincipalandSellingShareholders 198RelatedPartyTransactions 200DescriptionofShareCapital 206DescriptionofAmericanDepositaryShares 222SharesEligibleforFutureSale 231Taxation 233Underwriting 240ExpensesRelatedtothisOffering 246LegalMatters 247Experts 247WhereYouCanFindMoreInformation 248IndextoFinancialStatements F1

    Youshouldrelyonlyontheinformationcontainedinthisprospectus.Wehavenotauthorizedanyonetoprovideinformationdifferentfromthatcontainedinthisprospectus.Weareofferingtosell,andseekingofferstobuy,ADSsonlyinjurisdictionswhereoffersandsalesarepermitted.Theinformationcontainedinthisprospectusisaccurateonlyasofthedateofthisprospectus,regardlessofthetimeofdeliveryofthisprospectusorofanysaleofourADSs.

    Until,2014(25daysafterthedateofthisprospectus),alldealersthateffecttransactionsinthesesecurities,whetherornotparticipatinginthisoffering,mayberequiredtodeliveraprospectus.Thisisinadditiontothedealersobligationtodeliveraprospectuswhenactingasanunderwriterandwithrespecttounsoldallotmentsorsubscriptions.

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    PROSPECTUSSUMMARY

    Thissummaryhighlightsselectedinformationcontainedingreaterdetailelsewhereinthisprospectus.ThissummarymaynotcontainalloftheinformationthatyoushouldconsiderbeforeinvestinginourADSs.Youshouldcarefullyreadtheentireprospectus,includingRiskFactorsandthefinancialstatements,beforemakinganinvestmentdecision.

    OurMission

    Ourmissionistomakeiteasytodobusinessanywhere.

    Ourfoundersstartedourcompanytochampionsmallbusinesses,inthebeliefthattheInternetwouldleveltheplayingfieldbyenablingsmallenterprisestoleverageinnovationandtechnologytogrowandcompetemoreeffectivelyinthedomesticandglobaleconomies.Ourdecisionsareguidedbyhowtheyserveourmissionoverthelongterm,notbythepursuitofshorttermgains.

    OurBusiness

    Wearethelargestonlineandmobilecommercecompanyintheworldintermsofgrossmerchandisevolumein2013,accordingtoindustrysources.Weoperateourecosystemasaplatformforthirdparties,andwedonotengageindirectsales,competewithourmerchantsorholdinventory.

    WeoperateTaobaoMarketplace,Chinaslargestonlineshoppingdestination,Tmall,Chinaslargestthirdpartyplatformforbrandsandretailers,ineachcaseintermsofgrossmerchandisevolume,andJuhuasuan,Chinasmostpopulargroupbuyingmarketplacebyitsmonthlyactiveusers,ineachcasein2013accordingtoiResearch.Thesethreemarketplaces,whichcompriseourChinaretailmarketplaces,generatedacombinedGMVofRMB1,542billion(US$248billion)from231millionactivebuyersand8millionactivesellersinthetwelvemonthsendedDecember31,2013.Asignificantportionofourcustomershavebeguntransactingonourmobileplatform,andwearefocusedoncapturingthisopportunity.InthethreemonthsendedDecember31,2013,mobileGMVaccountedfor19.7%ofourGMV,upfrom7.4%inthesameperiodinthepreviousyear.

    InadditiontoourthreeChinaretailmarketplaces,whichaccountedfor82.7%ofourrevenuesintheninemonthsendedDecember31,2013,weoperateAlibaba.com,Chinaslargestglobalonlinewholesalemarketplacein2013byrevenue,accordingtoiResearch,1688.com,ourChinawholesalemarketplace,andAliExpress,ourglobalconsumermarketplace,aswellasprovidecloudcomputingservices.

    Asaplatform,weprovidethefundamentaltechnologyinfrastructureandmarketingreachtohelpbusinessesleveragethepoweroftheInternettoestablishanonlinepresenceandconductcommercewithconsumersandbusinesses.WehavebeenaleaderindevelopingonlinemarketplacestandardsinChina.Giventhescalewehavebeenabletoachieve,anecosystemhasdevelopedaroundourplatformthatconsistsofbuyers,sellers,thirdpartyserviceproviders,strategicalliancepartners,andinvesteecompanies.Ourplatformandtheroleweplayinconnectingbuyersandsellersandmakingitpossibleforthemtodobusinessanytimeandanywhereisatthenexusofthisecosystem.Muchofoureffort,ourtimeandourenergyisspentoninitiativesthatareforthegreatergoodoftheecosystemandthevariousparticipantsinit.Wefeelastrongresponsibilityforthecontinueddevelopmentoftheecosystemandwetakeownershipforthisdevelopment.Accordingly,werefertothisasourecosystem.

    Ourecosystemhasstrongselfreinforcingnetworkeffectsthatbenefitourmarketplaceparticipants,whoareinvestedinourecosystemsgrowthandsuccess.Throughthisecosystem,wehavetransformedhowcommerceisconductedinChinaandbuiltareputationasatrustedpartnerfortheparticipantsinourecosystem.

    Wehavemadesignificantinvestmentsinproprietarytechnologiesandinfrastructureinordertosupportourgrowingecosystem.Ourtechnologyandinfrastructureallowustoharnessthesubstantialvolumeofdatageneratedfromourmarketplacesandtofurtherdevelopandoptimizetheproductsandservicesofferedonourplatform.

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    Through,ourrelatedcompany,Alipay,weofferpaymentandescrowservicesforbuyersandsellers,providingsecurity,trustandconveniencetoourusers.WetakeaplatformapproachtoshippinganddeliverybyworkingwiththirdpartylogisticsserviceprovidersthroughacentrallogisticsinformationsystemoperatedbyZhejiangCainiaoSupplyChainManagementCo.,Ltd.,orChinaSmartLogistics,our48%ownedaffiliate.ThroughourinvestmentinUCWeb,weareabletoleverageitsexpertiseasadeveloperandoperatorofmobilewebbrowserstoenhanceourmobileofferingsbeyondecommerce,suchasgeneralmobilesearch.

    Ourrevenueisprimarilygeneratedfrommerchantsthroughonlinemarketingservices(viaAlimama,ourproprietaryonlinemarketingplatform),commissionsontransactionsandfeesforonlineservices.Wealsogeneraterevenuesthroughfeesfrommemberships,valueaddedservicesandcloudcomputingservices.IntheninemonthsendedDecember31,2013,wegeneratedrevenueofRMB40.5billion(US$6.5billion)andnetincomeofRMB17.7billion(US$2.9billion).OurfiscalyearendsonMarch31.

    OurKeyMetrics

    WehaveexperiencedsignificantgrowthacrossvariouskeymetricsforourChinaretailmarketplaces:

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    Ourbusinessandourecosystemasawholehaveachievedsignificantscaleandsize:

    OurScaleandSize

    ScaleandSizeofOurEcosystemParticipants

    Unlessotherwiseindicated,allfiguresintheabovechartsareforthetwelvemonthsended,orasof,December31,2013,andinthecaseofourscaleandsize,on

    ourChinaretailmarketplaces.(1) ForthethreemonthsendedDecember31,2013.(2) AccordingtoiResearch.Excludingvirtualitems.(3) ForthemonthendedDecember31,2013.BasedontheaggregatemobileMAUsofappsthatcontributetoGMVonourChinaretailmarketplaces.(4) Representing54%ofthe9.2billionpackagesdeliveredin2013bydeliveryservicesinChinameetingcertainminimumrevenuethresholds,accordingtotheState

    PostBureauofthePRC.(5) AlibabaCloudComputingprocessingcapabilityasofDecember31,2013.(6) Thesumofmerchantsonour(i)Chinaretailmarketplaceswhopaidfeesand/orcommissionstousin2013,plus(ii)wholesalemarketplaceswithcurrentpaid

    membershipsasofDecember31,2013.Amerchantmayhavemorethanonepayingrelationshipwithus.(7) Includesregisteredcountriesandterritoriesof(i)buyersthatsentatleastoneinquirytoaselleronAlibaba.comand(ii)buyersthatsettledatleastonetransaction

    onAliExpressthroughAlipay,ineachcasein2013.(8) ForthetwelvemonthsendedDecember31,2013.Approximately37.6%ofAlipaystotalpaymentvolumein2013representedpaymentsprocessedforourChina

    retailmarketplaces.(9) MarketingaffiliateswhoreceivedarevenuesharefromusinthethreemonthsendedDecember31,2013.(10) Basedondataprovidedbyour14strategicdeliverypartnerscompaniesasofMarch2014.

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    TheNetworkEffectonandacrossOurMarketplaces

    Theinteractionsbetweenbuyersandsellerscreatenetworkeffectsinthatmoremerchantsattractmoreconsumers,andmoreconsumersattractmoremerchants.Inaddition,ourmarketplacesareinterconnectedinthatmanybuyersandsellersononemarketplacealsoparticipateintheactivitiesonourothermarketplaces,therebycreatingasecondordernetworkeffectthatfurtherstrengthensourecosystem.

    Thechartbelowdepictsthisnetworkeffectdynamicinourecosystem.

    Buyers

    ChineseconsumersbuyonTaobaoMarketplace,TmallandJuhuasuan

    WhilebrowsingorsearchingonTaobaoMarketplace,consumersseeproductlistingsfrombothTaobaoMarketplaceandTmall

    GlobalconsumersbuyonAliExpress

    GlobalwholesalersbuyonAlibaba.com

    Retailsellers

    SmallsellersinChinasellonTaobaoMarketplaceandAliExpress

    ChinesebrandssellonTaobaoMarketplace,Tmall,JuhuasuanandAliExpressandglobalbrandssellonTmallGlobal

    Sellerssourceproductson1688.com

    Wholesalesellers

    ChinesewholesalersandmanufacturerssupplyretailmerchantsinChinaon1688.comandglobalwholesalebuyersonAlibaba.com

    ChinesewholesalersandmanufacturerssupplydirectlytoglobalconsumersonAliExpress

    GlobalwholesalersandmanufacturerssupplyglobalwholesalebuyersonAlibaba.com

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    OurMarketOpportunity

    Ourmarketopportunityisprimarilydrivenbythefollowingfactors:

    OurbusinessbenefitsfromtherisingspendingpowerofChineseconsumers.Chinasrealconsumptionin2013was36.5%oftotalGDP,whichisaratethatissignificantlylowerthanthatofothercountries,suchastheUnitedStates,whichhadaconsumptionpenetrationrateof66.8%in2013,accordingtoEuromonitorInternational.Webelievethatgrowthinconsumptionwilldrivehigherlevelsofonlineandmobilecommerce.

    Chinasonlineshoppingpopulationisrelativelyunderpenetrated.AccordingtotheChinaInternetNetworkInformationCenter,orCNNIC,ChinahadtheworldslargestInternetpopulationwith618millionusersasofDecember31,2013.AccordingtoCNNIC,Chinahad302milliononlineshoppersin2013.Webelievethenumberofonlineshopperswillincrease,drivenbycontinuedgrowthinInternetusersaswellasbythehigherpercentageofInternetusersmakingpurchasesonline.

    Webelievethatconsumersareexpandingthecategoriesofproductsandservicestheyarepurchasingonline,whichwillfurtherincreaseonlineandmobilecommerceactivity.

    WebelievethattheincreasedusageofmobiledeviceswillmakeaccesstotheInternetevenmoreconvenient,drivehigheronlineshopperengagementandenablenewapplications.ChinahastheworldslargestmobileInternetuserbasewith500millionusersasofDecember31,2013,accordingtoCNNIC,andmobileusageisexpectedtoincrease,drivenbythegrowingadoptionofmobiledevices.

    Chinasofflineretailmarketfacessignificantchallengesduetofewnationwidebrickandmortarretailers,anunderdevelopedphysicalretailinfrastructure,limitedproductselectionandinconsistentproductquality.ThesechallengesinChinasretailinfrastructure,whichwebelieveareparticularlyacuteoutsideoftier1and2cities,arecausingconsumerstoleapfrogtheofflineretailmarketinfavorofonlineandmobilecommerce.

    Chinahasanincreasinglyextensiveandrapidlyimprovinglogisticsinfrastructureconsistingofnationwide,regionalandlocaldeliveryservices.WebelievethattherapiddevelopmentofChinasdistributedlogisticsinfrastructureandnationwideexpressdeliverynetworkshasbeendriveninpartbythegrowthofecommerceandwillcontinuetosupporttheuniquedemandsofconsumersandmerchantsconductingecommercetransactionsonmarketplaces.

    Overall,onlineshopping,whichrepresented7.9%oftotalChinaconsumptionin2013,isprojectedtogrowatacompoundannualgrowthrate,orCAGR,of27.2%from2013to2016,accordingtoiResearch,asmoreconsumersshoponlineandecommercespendingperconsumerincreases.

    OurStrengths

    Webelievethatthefollowingstrengthscontributetooursuccessandaredifferentiatingfactorsthatsetusapartfromourpeers.

    ManagementTeamwithOwnerMentalityandProvenTrackRecord.Ourmanagementteamsclearsenseofmission,longtermfocusandcommitmenttothevaluesthatdefinetheAlibabaculturehavebeencentraltooursuccessfultrackrecord.Ourmanagementteamhascreatedandgrownleadingbusinessesorganically,includingTaobaoMarketplace,Tmall,Alibaba.com,AlibabaCloudComputingandourrelatedcompanyAlipay.

    TrustedBrands.Alibaba,Taobao,TmallandAlipayarewellrecognizedandtrustedbrandsinChina.Duetothestrengthofthese

    brands,amajorityofourcustomersnavigatedirectlytoourChinaretailmarketplacestofindtheproductsandservicestheyareseekinginsteadofviathirdpartysearchengines.

    ThrivingEcosystemwithPowerfulNetworkEffects.Wearethestewardofathrivingecosystem,whichprovidesuswiththefollowingkeyadvantages:

    participantsinourecosystemareinvestedinitssuccessandgrowth

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    interactionsamongparticipantscreatevalueforoneanotherasourecosystemexpandsandgeneratesstrongnetworkeffectsand

    thescopeofourecosystemandthenetworkeffectsitcreates,includingthesignificantbuyertrafficgeneratedbyourTaobao

    Marketplace,providelowcostorganictrafficforourothermarketplacesandservicesandsignificantlyreduceourrelianceonasalesforceforourmarketingservices.

    MobileLeadership.WearetheleaderinmobilecommerceinChinaintermsofmobileretailGMV,withmobileGMVtransactedonourChinaretailmarketplacesaccountingfor76.2%oftotalmobileretailGMV(excludingvirtualitems)inChinainthetwelvemonthsendedDecember31,2013,accordingtoiResearch.OurMobileTaobaoApphasbeenthemostpopularmobilecommerceappinChinabymobileMAUseverymonthsinceAugust2012,accordingtoiResearch.

    ScalableLogisticsPlatform.Weoffersellersonourmarketplacesthebenefitsofadistributedandscalablelogisticsplatformandinformationsystemtoprovidehighqualitydeliveryservicestosellersandbuyersonalargescale.OurplatformapproachhelpstoaddresstherequirementsoffacilitatingthedeliveryofpackagesacrossawiderangeofproductcategoriesfrommillionsofsellerstomillionsofbuyersindispersedlocationsacrossChina.Thescalabilityofthisnetworkwasdemonstratedbyitssuccessinhandlingof156millionpackagesgeneratedonourSinglesDaypromotionin2013comparedtoadailyaverageof13.7millionpackagesgeneratedfromtransactionsonourChinaretailmarketplacesin2013.

    Reliable,ScalableandCosteffectiveProprietaryTechnology.Wehavedevelopedproprietarytechnologythatisreliable,scalable

    andcosteffective.Ourtechnologyisdesignedtohandlethelargevolumeoftransactionsonourmarketplaces.Forexample,wesuccessfullyprocessed254millionorderswithin24hoursduringourSinglesDaypromotiononNovember11,2013.

    DataInsights.Datafromconsumerbehaviorandtransactionscompletedonourmarketplacesandinteractionsamongparticipantsin

    ourecosystemprovideuswithvaluableinsightstohelpusandoursellersimprovethebuyerexperience,operatemoreefficientlyandcreateinnovativeproductsandservices.

    ThirdpartyPlatformBusinessModel.Ourexclusivelythirdpartyplatformbusinessmodelallowsustoscalerapidlywithouttherisksandcapitalrequirementsofsourcing,merchandisingandholdinginventorybornebydirectsalescompanies.Thisbusinessmodeldrivesourprofitabilityandstrongcashflow,whichgiveustheflexibilitytofurtherinvestinandimproveourplatform,expandourecosystemandaggressivelyinvestinpeople,technology,innovativeproductsandstrategicallyimportantassets.

    OurStrategies

    Thekeyelementsofourstrategytogrowourbusinessinclude:

    IncreaseActiveBuyersandWalletShare.In2013,theaverageactivebuyeronourChinaretailmarketplacesplaced49orders,upfrom39ordersin2012and33ordersin2011.Wewillcontinuetodevelopandmarketthevaluepropositionofourretailmarketplacestoattractnewbuyersaswellastoincreasethewalletshareofexistingbuyersthroughmorefrequentbuyingandbuyingacrossmoreproductcategories.Weintendtoachievegrowththroughcustomerloyaltyprograms,highqualitycustomerservice,marketingandpromotionalcampaigns,andexpansionofmarketingaffiliates,aswellasbypromotingtheusageofourvariousmobilecommerceappssuchasourMobileTaobaoApp.

    ExpandCategoriesandOfferings.Weaimtoenhancetheshoppingexperienceforconsumers,increaseconsumerengagementandcreateadditionalopportunitiesformerchantsbydevelopingandpromotingadditionalcategoriesandofferings.WebelievethatgrowthinthenumberofproductandservicecategoriesandproductsandservicespurchasedwithineachcategorycontributestohigheraveragespendingpercustomerandincreasesGMV.

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    ExtendOurMobileLeadership.Weintendtobuilduponourstrengthinmobilecommercetodevelopabroaderspectrumofconsumerofferings,suchaslocationbasedservices,O2Oservicesanddigitalcontent,inordertofulfillourvisionofbecomingcentraltotheeverydaylivesofourcustomers.Wewillalsocontinuetolookforwaystoincreaseourmobileuserbaseandengagementthroughstrategicalliances,investmentsandacquisitions.

    EnhancetheSuccessofSellersonaBroadBasis.Weaimtoincreasethesuccessofabroadbaseofsellersonourmarketplacesby

    increasingtheirexposuretorelevantbuyerdemandandprovidingthemwithmoretoolssuchasdatascienceapplicationstomanagetheirrelationshipswithcustomers.

    EnhanceDataandCloudComputingTechnologies.Wewillcontinuetoimplementourdatastrategythroughtheapplicationofdataintelligenceanddeeplearningtechnologiestoseveralfields,includingmarketplacedesign,userinterface,search,targetedmarketing,logistics,locationbasedservicesandfinancialservices,amongothers.Inaddition,wewillcontinuetoinvestheavilyinourcloudcomputingplatformtosupportourownbusinessesandthoseofthirdparties.

    DevelopCrossborderCommerceOpportunities.Ourinternationalstrategyisfocusedonleveragingnaturalcrossborderlinkagestoourecosystem.Forexample,wewillcontinuetogrowourinternationalbusinessbyconnectingoverseasbrandedretailerstoChineseconsumers(TmallGlobal),connectingChinesesupplierstointernationalretailmarkets(AliExpress)andinternationalwholesalemarkets(Alibaba.com).

    AlibabaPartnership

    SinceourfoundersfirstgatheredinJackMasapartmentin1999,theyandourmanagementhaveactedinthespiritofpartnership.Weviewourcultureasfundamentaltooursuccessandourabilitytoserveourcustomers,developouremployeesanddeliverlongtermvaluetoourshareholders.InJuly2010,inordertopreservethisspiritofpartnershipandtoensurethesustainabilityofourmission,visionandvalues,wedecidedtoformalizethispartnershipasLakesidePartners,namedaftertheLakesideGardensresidentialcommunitywhereJackandourotherfoundersstartedourcompany.WerefertothepartnershipastheAlibabaPartnership.

    Webelievethatourpartnershipapproachhashelpedustobettermanageourbusiness,withthepeernatureofthepartnershipenablingseniormanagerstocollaborateandoverridebureaucracyandhierarchy.TheAlibabaPartnershipcurrentlyhas28memberscomprisedof22membersofourmanagementandsixmembersofthemanagementofourrelatedcompaniesandaffiliates.Thepartnershipoperatesunderprinciples,policiesandproceduresthathaveevolvedwithourbusinessandaredescribedbelow.

    Ourpartnershipisadynamicbodythatrejuvenatesitselfthroughadmissionofnewpartnerseachyear,ensuringexcellence,innovationandsustainability.Unlikedualclassownershipstructuresthatemployahighvoteclassofsharestoconcentratecontrolinafewfounders,ourapproachisdesignedtoembodythevisionofalargegroupofmanagementpartners.Thisstructureisoursolutionforpreservingthecultureshapedbyourfounderswhileatthesametimeaccountingforthefactthatfounderswillinevitablyretirefromthecompany.

    Newpartnersareelectedannuallyafteranominationprocessbasedonanumberofcriteriaincluding,inmostcases,notlessthanfiveyearsoftenure,andthatrequirea75%approvalofallofthepartners.Partnershipvotesaremadeonaonepartneronevotebasis.

    Partnersareevangelistsforourmission,visionandvalues,bothwithinourorganizationandexternallytocustomers,businesspartnersandotherparticipantsinourecosystem.

    Werequireeachpartnertomaintainameaningfullevelofequityinterestsinourcompanyduringsuchindividualstenureasapartner.

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    TheAlibabaPartnershipwillhavetheexclusiverighttonominateforshareholderapprovalasimplemajorityofthemembersofourboardofdirectors.IfanAlibabaPartnershipdirectornomineeisnotelectedbyourshareholdersordepartsourboardofdirectorsforanyreason,theAlibabaPartnershiphastherighttoappointadifferentpersontoserveasaninterimdirectoruntilournextscheduledannualgeneralmeetingofshareholders.

    OurChallenges

    Webelievesomeofthemajorrisksanduncertaintiesthatmaymateriallyandadverselyaffectusincludethefollowing:

    anyfailuretomaintainthetrustedstatusofourecosystemcouldseverelydamageourreputationandbrand

    wemaynotbeabletomaintainorimprovethenetworkeffectsofourecosystem

    ouroperatingphilosophymaynegativelyinfluenceourshorttermfinancialperformance

    wemaynotbeabletosuccessfullymonetizeourmobiletraffic

    wemaynotbeabletomaintainourculture,whichhasbeenakeytooursuccess

    wemaynotbeabletoinnovateorcompeteeffectively

    iftheservicesAlipayprovidestousarelimitedorrestricted,ourbusinesswouldbeharmed

    wemaynotbeabletosustainourrevenuegrowthrate,andincreasedinvestmentsinourbusinessmaynegativelyaffectourmargins

    ourrevenueandnetincomemaybemateriallyandadverselyaffectedbyanyeconomicslowdowninChinaaswellasglobally

    therearerisksanduncertaintiesassociatedwithourvariableinterestentitystructureand

    theregulatoryandlegalsysteminChinaiscomplexanddeveloping,andfutureregulationsmayimposeadditionalrequirementsonourbusiness.

    Wealsofaceotherchallenges,risksanduncertaintiesthatmaymateriallyandadverselyaffectourbusiness,financialcondition,resultsofoperationsandprospects.YoushouldconsidertherisksdiscussedinRiskFactorsandelsewhereinthisprospectusbeforeinvestinginourADSs.

    CorporateHistoryandStructure

    Wehaveademonstratedtrackrecordofsuccessfulorganicbusinesscreationsinceourfoundingin1999.

    In1999,wefoundedAlibaba.comandAlibaba.com.cn,thepredecessorof1688.com.

    In2003,welaunchedTaobaoMarketplace.

    In2004,weestablishedAlipaytoaddresstheissueoftrustbetweenbuyersandsellersonline.

    In2007,welaunchedAlimama,ouronlinemarketingtechnologyplatform.

    In2008,welaunchedTmalltoaddressanincreasingconsumerneedforbrandedproductsandapremiumshoppingexperience.

    In2009,weestablishedAlibabaCloudComputingtohandletheincreasingdatamanagementneedsonourplatform.

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    In2010,welaunchedtheMobileTaobaoApp.

    AlibabaGroupHoldingLimitedisaCaymanIslandsholdingcompanyestablishedonJune28,1999,andweconductourbusinessinChinathroughoursubsidiariesandvariableinterestentities.

    DuetoPRClegalrestrictionsonforeignownershipandinvestmentin,amongotherareas,valueaddedtelecommunicationsservices,whichincludeInternetcontentproviders,orICPs,we,similartoallotherentitieswithforeignincorporatedholdingcompanystructuresoperatinginourindustryinChina,operateourInternetbusinessesandotherbusinessesinwhichforeigninvestmentisrestrictedorprohibitedinthePRCthroughwhollyforeignownedenterprises,majorityownedentitiesandvariableinterestentities.Therelevantvariableinterestentities,whichare100%ownedbyPRCcitizensorbyPRCentitiesownedbyPRCcitizens,holdtheICPlicensesandoperatethevariouswebsitesforourInternetbusinesses.Specifically,ourvariableinterestentitiesaregenerallymajorityownedbyJackMa,ourleadfounder,executivechairmanandoneofourprincipalshareholders,andminorityownedbySimonXie,oneofourfoundersandamemberofourmanagement.Thesecontractualarrangementscollectivelyenableustoexerciseeffectivecontrolover,andrealizesubstantiallyalloftheeconomicrisksandbenefitsarisingfrom,thevariableinterestentities.SeeOurHistoryandCorporateStructureContractualArrangementsamongOurWhollyforeignOwnedEnterprises,VariableInterestEntitiesandtheVariableInterestEntityEquityHolders.Thecontractualarrangementsmaynotbeaseffectiveinprovidingoperationalcontrolasdirectownership.SeeRiskFactorsRisksRelatedtoOurCorporateStructure.

    Asaresult,weincludethefinancialresultsofeachofthevariableinterestentitiesinourconsolidatedfinancialstatementsinaccordancewithgenerallyacceptedaccountingprinciplesintheUnitedStates,orU.S.GAAP,asiftheywereourwhollyownedsubsidiaries.

    OtherthantheICPlicensesandotherlicensesandapprovalsforbusinessesinwhichforeignownershipisrestrictedorprohibitedheldbyourvariableinterestentities,weholdourmaterialassetsin,andconductourmaterialoperationsthrough,ourwhollyforeignownedandmajorityforeignownedenterprises,whichprimarilyprovidetechnologyandotherservicestoourcustomers.Wegeneratethesignificantmajorityofourrevenuedirectlythroughourwhollyforeignownedenterprises,whichdirectlycapturetheprofitsandassociatedcashflowfromoperationswithouthavingtorelyoncontractualarrangementstotransfersuchcashflowfromthevariableinterestentitiestothewhollyforeignownedenterprises.

    OurCorporateInformation

    Theprincipalexecutiveofficesofourmainoperationsarelocatedat969WestWenYiRoad,YuHangDistrict,Hangzhou311121,PeoplesRepublicofChina.Ourtelephonenumberatthisaddressis+8657185022077.OurregisteredofficeintheCaymanIslandsislocatedattheofficesofTridentTrustCompany(Cayman)Limited,FourthFloor,OneCapitalPlace,P.O.Box847,GeorgeTown,GrandCayman,CaymanIslands.OuragentforserviceofprocessintheUnitedStatesisCorporationServiceCompanylocatedat1180AvenueoftheAmericas,Suite210,NewYork,NewYork10036.Ourcorporatewebsiteiswww.alibabagroup.com.Theinformationcontainedinourwebsitesisnotapartofthisprospectus.

    ConventionsthatApplytothisProspectus

    Unlessthecontextotherwiserequires,referencesinthisprospectusto:

    activebuyersinagivenperiodaretouseraccountsthatconfirmedoneormoreordersontherelevantmarketplaceinthatperiod,regardlessofwhetherornotthebuyerandsellersettlethetransaction

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    activesellersinagivenperiodaretoselleraccounts(representingstorefronts)thathadoneormoreordersconfirmedbyabuyeron

    therelevantmarketplaceinthatperiodandthatwereactiveattheendoftheperiod,regardlessofwhetherthebuyerorsellersettlethetransaction

    AlipayaretoAlipay.comCo.,Ltd.,acompanywithwhichwehavealongtermcontractualrelationship,andthatisawholly

    ownedsubsidiaryofSmallandMicroFinancialServicesCompanyor,wherethecontextrequires,itspredecessorentities.Wedonothaveanyownershipinterestin,orcontrolover,eitherSmallandMicroFinancialServicesCompanyorAlipay

    ADRsaretotheAmericandepositaryreceipts,which,ifissued,evidenceourADSs

    ADSsaretoourAmericandepositaryshares,eachofwhichrepresentsordinaryshares

    ChinaandthePRCaretothePeoplesRepublicofChina,excluding,forthepurposesofthisprospectusonly,TaiwanandthespecialadministrativeregionsofHongKongandMacau

    ChinaretailmarketplacesaretoTaobaoMarketplace,TmallandJuhuasuan,collectively

    GMVaretothevalueofconfirmedordersofproductsandservicesonourmarketplaces,regardlessofhow,orwhether,thebuyerandsellersettlethetransaction.Unlessotherwisestated,GMVinreferencetoourmarketplacesincludesonlyGMVtransactedonourChinaretailmarketplaces.OurcalculationofGMVforourChinaretailmarketplacesincludesshippingchargespaidbybuyerstosellersandexcludesvehicleandpropertytransactionswithlistpricesexceedingRMB500,000(US$80,432)andanyotherproductsorserviceswithlistpricesaboveRMB100,000(US$16,086),aswellastransactionsconductedbybuyerswhomakepurchasesexceedingRMB1,000,000(US$160,865)intheaggregateinasingleday

    mobileGMVaretothatportionofGMVgeneratedbyordersthatwereconfirmedusingamobileapporwirelessapplicationprotocol,orWAP,website

    mobileMAUsinagivenmontharetothenumberofuniquemobiledevicesthatwereusedtovisitoraccesscertainofourmobileapplicationsatleastonceduringthatmonth

    O2Oaretoonlinetoofflineandofflinetoonlinecommerce

    ordersaretoeachconfirmedorderfromatransactionbetweenabuyerandasellerforproductsandservicesonourChinaretailmarketplaces,evenifsuchorderincludesmultipleitems,duringthespecifiedperiod,whetherornotthetransactionissettled

    retailmarketplacesaretoTaobaoMarketplace,Tmall,JuhuasuanandAliExpress,collectively

    RMBandRenminbiaretothelegalcurrencyofChina

    SmallandMicroFinancialServicesCompanyaretoZhejiangAlibabaECommerceCo.,Ltd.,acompanyorganizedunderthelawsofthePRC

    SoftBankaretoSoftBankCorp.,SoftBankBBCorp.andSBChinaHoldingsPteLtd.,collectively

    tier1citiesaretothetermusedbytheNationalBureauofStatisticsofChinaandrefertoBeijing,Shanghai,ShenzhenandGuangzhou

    tier2citiesaretothe32majorcities,otherthantier1cities,ascategorizedbytheNationalBureauofStatisticsofChina,including

    provincialcapitals,administrativecapitalsofautonomousregions,directcontrolledmunicipalitiesandothermajorcitiesdesignatedasmunicipalitieswithindependentplanningbytheStateCouncil

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    totalpaymentvolumearetothetotalvalueamountofthetransactionsfrom,toorthroughanyservice,offering,systemorplatformofAlipayduringtheperiod

    variableinterestentitiesaretoourvariableinterestentitiesthatare100%ownedbyPRCcitizensorbyPRCentitiesownedbyPRCcitizens,whereapplicable,thatholdtheInternetcontentproviderlicenses,orICPlicensesorotherbusinessoperationlicensesorapprovals,andgenerallyoperatethevariouswebsitesforourInternetbusinessesorotherbusinessesinwhichforeigninvestmentisrestrictedorprohibited,andareconsolidatedintoourconsolidatedfinancialstatementsinaccordancewithU.S.GAAPasiftheywereourwhollyownedsubsidiaries

    we,us,ourcompanyandouraretoAlibabaGroupHoldingLimitedanditsconsolidatedsubsidiariesanditsaffiliatedconsolidatedentities,includingourvariableinterestentitiesandtheirsubsidiaries

    wholesalemarketplacesareto1688.comandAlibaba.com,collectively

    YahooaretoYahoo!Inc.andYahoo!HongKongHoldingsLimited,collectivelyand

    US$,dollarsandU.S.dollarsaretothelegalcurrencyoftheUnitedStates.

    OurreportingcurrencyistheRenminbi.ThisprospectusalsocontainstranslationsofcertainforeigncurrencyamountsintoU.S.dollarsfortheconvenienceofthereader.Unlessotherwisestated,alltranslationsofRenminbiintoU.S.dollarsweremadeatRMB6.2164toUS$1.00,theexchangeratesetforthintheH.10statisticalreleaseoftheFederalReserveBoardonMarch31,2014.WemakenorepresentationthattheRenminbiorU.S.dollaramountsreferredtointhisprospectuscouldhavebeenorcouldbeconvertedintoU.S.dollarsorRenminbi,asthecasemaybe,atanyparticularrateoratall.OnMay2,2014,thenoonbuyingrateforRenminbiwasRMB6.2591toUS$1.00.

    Thenumberofourordinarysharesthatwillbeoutstandingafterthisofferingiscalculatedbasedon2,321,114,237ordinaryshares(whichincludesconversionofalloutstandingconvertiblepreferencesharesand12,077,421issuedbutunvestedrestrictedsharesasofDecember31,2013)outstandingasofDecember31,2013,andexcludes:

    54,279,500ordinarysharesissuableupontheexerciseofoutstandingoptionstopurchaseordinarysharesasofDecember31,2013

    47,670,100ordinarysharessubjecttounvestedrestrictedshareunits,orRSUs,asofDecember31,2013and

    anadditional77,861,552ordinarysharesreservedforfutureissuanceunderourequityincentiveplans.

    Exceptasotherwiseindicated,allinformationinthisprospectusassumes:

    theautomaticconversionofalloutstandingconvertiblepreferencesharesinto91,243,243ofourordinarysharesconcurrentlywiththecompletionofthisoffering

    thefilingandeffectivenessofouramendedandrestatedmemorandumandarticlesofassociation,whichwilloccurimmediatelypriortothecompletionofthisofferingand

    noexercisebytheunderwritersoftheiroptiontopurchaseuptoanadditionalADSsrepresentingordinarysharesfromusandcertainsellingshareholders.

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    THEOFFERING ADSsofferedbyus ADSs ADSsofferedbythesellingshareholders ADSs ADSsoutstandingimmediatelyafterthisoffering ADSs(orADSsiftheunderwritersexerciseinfulltheiroptiontopurchase

    additionalADSs). Ordinarysharesoutstandingimmediatelyafterthisoffering

    ordinaryshares.

    OptiontopurchaseadditionalADSs Weandcertainsellingshareholdershavegrantedtotheunderwritersanoption,

    exercisablefor30daysfromthedateofthisprospectus,topurchaseuptoanaggregateofadditionalADSsattheinitialpublicofferingprice,lessunderwritingdiscountsandcommissions.

    TheADSs EachADSrepresentsordinaryshares.TheADSswillbeevidencedbyADRs.

    ThedepositarywillbetheholderoftheordinarysharesunderlyingtheADSsandyouwillhavetherightsofanADRholderasprovidedinthedepositagreementamongus,thedepositaryandholdersandbeneficialownersofADSsfromtimetotime.

    YoumaysurrenderyourADSstothedepositarytowithdrawtheordinarysharesunderlyingyourADSs.Thedepositarywillchargeyouafeeforsuchanexchange.

    Wemayamendorterminatethedepositagreementforanyreasonwithoutyourconsent.AnyamendmentthatimposesorincreasesfeesorchargesorwhichmateriallyprejudicesanysubstantialexistingrightyouhaveasanADSholderwillnotbecomeeffectiveastooutstandingADSsuntil30daysafternoticeoftheamendmentisgiventoADSholders.Ifanamendmentbecomeseffective,youwillbeboundbythedepositagreementasamendedifyoucontinuetoholdyourADSs.

    TobetterunderstandthetermsoftheADSs,youshouldcarefullyreadthesectioninthisprospectusentitledDescriptionofAmericanDepositaryShares.Wealsoencourageyoutoreadthedepositagreement,whichisanexhibittotheregistrationstatementthatincludesthisprospectus.

    Useofproceeds WeestimatethatwewillreceivenetproceedsofapproximatelyUS$millionfrom

    thisoffering,assuminganinitialpublicofferingpriceofUS$perADS,themidpointoftheestimated

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    rangeoftheinitialpublicofferingpriceshownonthecoverpageofthisprospectus,afterdeductingestimatedunderwritingdiscountsandcommissionsandestimatedofferingexpensespayablebyus.Weplantousethenetproceedswewillreceivefromthisofferingforgeneralcorporatepurposes.

    WewillnotreceiveanyoftheproceedsfromthesaleoftheADSsbythesellingshareholders. Riskfactors SeeRiskFactorsandotherinformationincludedinthisprospectusforadiscussionof

    therisksrelatingtoinvestinginourADSs.YoushouldcarefullyconsidertheserisksbeforedecidingtoinvestinourADSs.

    NewYorkStockExchangeorNasdaq

    GlobalMarkettradingsymbol Lockup We,ourexecutiveofficers,directors,thesellingshareholdersandcertainoftheother

    holdersofourordinarysharesholdingintheaggregate%ofourordinaryshareshaveagreedwiththeunderwritersnottosell,transferordisposeofanyADSs,ordinarysharesorsimilarsecuritiesforaperiodofdaysafterthedateofthisprospectussubjecttocertainexceptions.SeeSharesEligibleforFutureSaleandUnderwriting.

    Depositary

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    SummaryConsolidatedFinancialandOperatingData

    ThesummaryconsolidatedstatementsofoperationsdatafortheyearsendedMarch31,2012and2013,andthesummaryconsolidatedbalancesheetdataasofMarch31,2012and2013havebeenderivedfromourauditedconsolidatedfinancialstatementsincludedelsewhereinthisprospectus.OurfinancialstatementshavebeenpreparedinaccordancewithU.S.GAAP.

    ThesummaryconsolidatedstatementofoperationsdatafortheninemonthsendedDecember31,2012and2013andthesummaryconsolidatedbalancesheetdataasofDecember31,2013havebeenderivedfromourunauditedinterimconsolidatedfinancialstatementsincludedelsewhereinthisprospectus.Theunauditedinterimconsolidatedfinancialstatementshavebeenpreparedonthesamebasisasourauditedconsolidatedfinancialstatementsandincludeallnormalrecurringadjustmentsthatweconsidernecessaryforafairstatementofourfinancialpositionandoperatingresultsfortheperiodspresented.

    ThefollowingsummaryconsolidatedfinancialdatafortheperiodsandasofthedatesindicatedarequalifiedbyreferencetoandshouldbereadinconjunctionwithourconsolidatedfinancialstatementsandrelatednotesandManagementsDiscussionandAnalysisofFinancialConditionandResultsofOperations,bothofwhichareincludedelsewhereinthisprospectus.

    Ourhistoricalresultsforanypriorperioddonotnecessarilyindicateourresultstobeexpectedforanyfutureperiod.

    SummaryConsolidatedStatementsofOperationsData: YearendedMarch31, NinemonthsendedDecember31, 2012 2013 2012 2013 RMB RMB US$ RMB RMB US$ (inmillions,exceptpersharedata) Revenue

    Chinacommerce 15,637 29,167 4,692 21,925 35,167 5,657Internationalcommerce 3,765 4,160 669 3,117 3,557 572CloudcomputingandInternetinfrastructure 515 650 105 484 560 90Others 108 540 87 317 1,189 192

    Total 20,025 34,517 5,553 25,843 40,473 6,511Costofrevenue (6,554) (9,719) (1,563) (7,442) (9,899) (1,592)Productdevelopmentexpenses (2,897) (3,753) (604) (2,899) (3,893) (626)Salesandmarketingexpenses (3,058) (3,613) (581) (3,092) (3,267) (526)Generalandadministrativeexpenses(1) (2,211) (2,889) (465) (2,344) (3,704) (596)Amortizationofintangibleassets (155) (130) (21) (105) (197) (32)Impairmentofgoodwillandintangibleassets (135) (175) (28) (175) (44) (7)YahooTIPLAamendmentpayment(2) (3,487) (561) (3,487)

    Incomefromoperations 5,015 10,751 1,730 6,299 19,469 3,132Interestandinvestmentincome(loss),net 258 39 6 (25) 1,080 174Interestexpense (68) (1,572) (253) (1,113) (1,842) (296)Otherincome,net 327 894 144 593 1,178 189

    Incomebeforeincometaxandshareofresultsofequityinvestees 5,532 10,112 1,627 5,754 19,885 3,199

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    YearendedMarch31, NinemonthsendedDecember31, 2012 2013 2012 2013 RMB RMB US$ RMB RMB US$ (inmillions,exceptpersharedata) Incometaxexpenses (842) (1,457) (234) (1,362) (1,969) (317)Shareofresultsofequityinvestees (25) (6) (1) (9) (174) (28)

    Netincome 4,665 8,649 1,392 4,383 17,742 2,854Netincomeattributabletononcontrollinginterests (437) (117) (19) (108) (29) (5)

    NetincomeattributabletoAlibabaGroupHoldingLimited 4,228 8,532 1,373 4,275 17,713 2,849Accretionofconvertiblepreferenceshares (17) (3) (9) (24) (4)Dividendsaccruedonconvertiblepreferenceshares (111) (18) (59) (156) (25)

    Netincomeattributabletoordinaryshareholders 4,228 8,404 1,352 4,207 17,533 2,820

    Earningspershareattributabletoordinaryshareholders: Basic 1.71 3.66 0.59 1.80 8.08 1.30Diluted 1.67 3.57 0.57 1.76 7.63 1.23

    Supplementalinformation:(3) AdjustedEBITDA 7,274 16,607 2,672 11,698 23,845 3,836Adjustedincomefromoperations 6,269 15,497 2,494 10,820 22,657 3,645Adjustednetincome 5,919 13,395 2,156 8,904 20,930 3,367Freecashflow 8,752 19,745 3,177 17,389 29,936 4,816

    (1) IntheninemonthsendedDecember31,2013,theseexpensesincludedanequitysettleddonationexpenseofRMB1,269million(US$204million)relatingtothe

    grantofoptionstopurchase50,000,000ofourordinarysharestoanonprofitorganizationdesignatedbyJackMaandJoeTsai.(2) WeenteredintotheTechnologyandIntellectualPropertyLicensingAgreementwithYahoo,ortheYahooTIPLA,inOctober2005,pursuanttowhichwepay

    royaltyfeestoYahoo.WeandYahooamendedtheexistingTIPLAinSeptember2012,pursuanttowhichwemadealumpsumpaymentintheamountofUS$550million,whichisreflectedasUS$561millionintheconveniencetranslationinthetableaboveasaresultofthechangeintheRenminbitoU.S.dollarexchangeratesincethedateofpayment.

    (3) SeeNonGAAPMeasuresbelow.

    NonGAAPMeasures

    WeusethenonGAAPfinancialmeasuresofadjustedEBITDA,adjustedincomefromoperations,adjustednetincomeandfreecashflowinevaluatingouroperatingresultsandforfinancialandoperationaldecisionmakingpurposes.

    WebelievethatadjustedEBITDA,adjustedincomefromoperationsandadjustednetincomehelpidentifyunderlyingtrendsinourbusinessthatcouldotherwisebedistortedbytheeffectoftheexpensesthatweexcludeinadjustedEBITDA,adjustedincomefromoperationsandadjustednetincome.WebelievethatadjustedEBITDA,adjustedincomefromoperationsandadjustednetincomeprovideusefulinformationaboutouroperatingresults,enhancetheoverallunderstandingofourpastperformanceandfutureprospectsandallowforgreatervisibilitywithrespecttokeymetricsusedbyourmanagementinitsfinancialandoperationaldecisionmaking.

    Weconsiderfreecashflowtobealiquiditymeasurethatprovidesusefulinformationtomanagementandinvestorsabouttheamountofcashgeneratedbyourbusinessthatcanbeusedforstrategiccorporatetransactions,includinginvestinginournewbusinessinitiatives,makingstrategicinvestmentsandacquisitionsandstrengtheningourbalancesheet.Weusefreecashflowtomanageourbusiness,makeplanningdecisions,evaluateourperformanceandallocateresources.Alimitationoftheutilityoffreecashflowasameasureof

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    financialperformanceisthatitdoesnotrepresentthetotalincreaseordecreaseinourcashbalanceforareportingperiod.

    AdjustedEBITDA,adjustedincomefromoperations,adjustednetincomeandfreecashflowshouldnotbeconsideredinisolationorconstruedasanalternativetonetincome,cashflowsoranyothermeasureofperformanceorasanindicatorofouroperatingperformance.AdjustedEBITDA,adjustedincomefromoperations,adjustednetincomeandfreecashflowpresentedheremaynotbecomparabletosimilarlytitledmeasurespresentedbyothercompanies.Othercompaniesmaycalculatesimilarlytitledmeasuresdifferently,limitingtheirusefulnessascomparativemeasurestoourdata.

    AdjustedEBITDArepresentsincomefromoperations(whichexcludesinterestandinvestmentincome(loss),net,interestexpense,otherincome,net,incometaxexpensesandshareofresultsofequityinvestees)before(i)certainnoncashexpenses,consistingofsharebasedcompensationexpense,amortizationofintangibleassets,depreciationandimpairmentofgoodwillandintangibleassetsaswellas(ii)onetimeexpenseitemsconsistingoftheYahooTIPLAamendmentpaymentandanequitysettleddonationexpensethatwedonotbelievearereflectiveofourcoreoperatingperformanceduringtheperiodpresented.

    Adjustedincomefromoperationsrepresentsincomefromoperations(whichexcludesinterestincomeandinvestmentincome(loss),net,interestexpense,otherincome,net,incometaxexpensesandshareofresultsofequityinvestees)beforesharebasedcompensationexpense,onetimeexpenseitemsconsistingoftheYahooTIPLAamendmentpaymentandanequitysettleddonationexpensethatwedonotbelievearereflectiveofourcoreoperatingperformanceduringtheperiodpresented.

    Adjustednetincomerepresentsnetincomebeforesharebasedcompensationexpense,onetimeexpenseitemsconsistingoftheYahooTIPLAamendmentpayment,aswellasanequitysettleddonationexpense.

    Freecashflowrepresentsnetcashprovidedbyoperatingactivitiesaspresentedinourconsolidatedcashflowstatementlesspurchasesofpropertyandequipment(excludingacquisitionoflanduserightsfor,andconstructionof,ourofficecampusesinChina)andintangibleassets,adjustedforchangesinloanreceivablesrelatingtomicroloansofourSMEloanbusinessandtheYahooTIPLAamendmentpayment.Wepresenttheadjustmentforchangesinloanreceivablesbecausesuchreceivablesarereflectedundercashflowfromoperatingactivities,whereasthesecuredborrowingsandotherbankborrowingsusedtofinancethemarereflectedundercashflowsfromfinancingactivities,andaccordingly,theadjustmentismadetoshowcashflowsfromoperatingactivitiesnetoftheeffectofchangesinloanreceivables.

    ThetablebelowsetsforthareconciliationofourincomefromoperationstoadjustedEBITDAfortheperiodsindicated: YearendedMarch31, NinemonthsendedDecember31, 2012 2013 2012 2013 RMB RMB US$ RMB RMB US$ (inmillions) Incomefromoperations 5,015 10,751 1,730 6,299 19,469 3,132

    Add:Sharebasedcompensationexpense 1,254 1,259 203 1,034 1,919 309Add:Amortizationofintangibleassets 155 130 21 105 197 32Add:Depreciationandamortizationofpropertyandequipmentand

    landuserights 715 805 129 598 947 152Add:Impairmentofgoodwillandintangibleassets 135 175 28 175 44 7Add:YahooTIPLAamendmentpayment 3,487 561 3,487 Add:Equitysettleddonationexpense 1,269 204

    AdjustedEBITDA 7,274 16,607 2,672 11,698 23,845 3,836

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    Thefollowingtablesetsforthareconciliationofourincomefromoperationstoadjustedincomefromoperationsfortheperiodsindicated: YearendedMarch31, NinemonthsendedDecember31, 2012 2013 2012 2013 RMB RMB US$ RMB RMB US$ (inmillions) Incomefromoperations 5,015 10,751 1,730 6,299 19,469 3,132

    Add:Sharebasedcompensationexpense 1,254 1,259 203 1,034 1,919 309Add:YahooTIPLAamendmentpayment 3,487 561 3,487 Add:Equitysettleddonationexpense 1,269 204

    Adjustedincomefromoperations 6,269 15,497 2,494 10,820 22,657 3,645

    Thefollowingtablesetsforthareconciliationofournetincometoadjustednetincomefortheperiodsindicated: YearendedMarch31, NinemonthsendedDecember31, 2012 2013 2012 2013 RMB RMB US$ RMB RMB US$ (inmillions) Netincome 4,665 8,649 1,392 4,383 17,742 2,854

    Add:Sharebasedcompensationexpense 1,254 1,259 203 1,034 1,919 309Add:YahooTIPLAamendmentpayment 3,487 561 3,487 Add:Equitysettleddonationexpense 1,269 204

    Adjustednetincome 5,919 13,395 2,156 8,904 20,930 3,367

    Thefollowingtablesetsforthareconciliationofnetcashprovidedbyoperatingactivitiestofreecashflowfortheperiodsindicated: YearendedMarch31, NinemonthsendedDecember31, 2012 2013 2012 2013 RMB RMB US$ RMB RMB US$ (inmillions) Netcashprovidedbyoperatingactivities 9,275 14,476 2,329 12,396 24,579 3,954Less:Purchaseofproperty,equipmentandintangibleassets(excluding

    landuserightsandconstructioninprogress) (749) (1,046) (168) (953) (3,010) (484)Add:Changesinloanreceivables,net 226 2,828 455 2,459 8,367 1,346Add:YahooTIPLAamendmentpayment 3,487 561 3,487

    Freecashflow 8,752 19,745 3,177 17,389 29,936 4,816

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    SummaryConsolidatedBalanceSheetData AsofMarch31, AsofDecember31,

    2012 2013 2013 2013

    (Proforma)(1)

    2013(Proforma

    asadjusted)(2) RMB RMB US$ RMB US$ RMB US$ RMB US$ (inmillions)Cashandcashequivalentsandshortterm

    investments(3) 21,744 32,686 5,258 48,962 7,876 48,962 7,876 Investmentsecuritiesandinvestmentin

    equityinvestees(4) 2,483 2,426 390 15,311 2,463 15,311 2,463 Propertyandequipment,net 2,463 3,808 612 5,973 961 5,973 961 Goodwillandintangibleassets 11,791 11,628 1,871 13,250 2,131 13,250 2,131 Totalassets 47,210 63,786 10,261 107,058 17,222 107,058 17,222 Currentbankborrowings 1,283 3,350 539 1,200 193 1,200 193 Securedborrowings 2,098 337 8,884 1,429 8,884 1,429 Redeemablepreferenceshares 5,191 835 Noncurrentbankborrowings 22,462 3,613 30,226 4,862 30,226 4,862 Totalliabilities 12,797 52,740 8,484 72,805 11,712 72,805 11,712 Convertiblepreferenceshares 10,447 1,680 10,235 1,647 Totalequity(5) 34,383 513 83 23,892 3,843 34,127 5,490 (1) Reflectstheautomaticconversionofallofourconvertiblepreferencesharesinto91,243,243ordinarysharesconcurrentlywiththecompletionofthisoffering.(2) Reflects(i)theautomaticconversionofallofourconvertiblepreferencesharesinto91,243,243ordinarysharesconcurrentlywiththecompletionofthisoffering

    and(ii)thesaleofordinarysharesintheformofADSsbyusinthisofferingatanassumedinitialpublicofferingpriceofUS$perADS,themidpointoftheestimatedrangeoftheinitialpublicofferingpriceshownonthefrontcoverofthisprospectus,afterdeductingtheestimatedunderwritingdiscountsandcommissionsandestimatedofferingexpensespayablebyus.

    (3) Includesbothcashandcashequivalentsandshortterminvestments,whichcomprisefixeddepositswithoriginalmaturitiesofbetweenthreemonthsandoneyear.(4) Includesbothcurrentandnoncurrentinvestmentsecuritiesandinvestmentinequityinvestees.(5) ThedecreasefromMarch31,2012toMarch31,2013wasprimarilyduetotherepurchaseofourordinarysharesfromYahooinSeptember2012andthe

    privatizationofAlibaba.com,partiallyoffsetbytheissuanceofordinarysharestofinancetherepurchase.

    SummaryOperatingData

    GMV

    ThefollowingchartsetsforththeGMVtransactedonourChinaretailmarketplacesandmobileGMVasapercentageofGMVfortheperiodsindicated: Threemonthsended

    Jun.30,2012

    Sep.30,2012

    Dec.31,2012

    Mar.31,2013

    Jun.30,2013

    Sep.30,2013

    Dec.31,2013

    GMV(inbillionsofRMB) 209 228 346 294 345 374 529MobileGMV(asapercentageofGMV) 4.6% 5.6% 7.4% 10.7% 12.0% 14.7% 19.7%

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    Activebuyers

    ThefollowingchartsetsforththenumberofactivebuyersonourChinaretailmarketplacesfortheperiodsindicated: Twelvemonthsended

    Jun.30,2012

    Sep.30,2012

    Dec.31,2012

    Mar.31,2013

    Jun.30,2013

    Sep.30,2013

    Dec.31,2013

    Activebuyers(inmillions) 133 145 160 172 185 202 231

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    RISKFACTORS

    Youshouldconsidercarefullyalloftheinformationinthisprospectus,includingtherisksanduncertaintiesdescribedbelowandourconsolidatedfinancialstatementsandrelatednotes,beforemakinganinvestmentinourADSs.Anyofthefollowingrisksanduncertaintiescouldhaveamaterialadverseeffectonourbusiness,financialcondition,resultsofoperationsandprospects.ThemarketpriceofourADSscoulddeclinesignificantlyasaresultofanyoftheserisksanduncertainties,andyoumayloseallorpartofyourinvestment.Additionalrisksoruncertaintiesnotpresentlyknowntousorthatwecurrentlydeemimmaterialmayalsoharmourbusiness.

    RisksRelatedtoOurBusinessandIndustry

    Maintainingthetrustedstatusofourecosystemiscriticaltooursuccess,andanyfailuretodosocouldseverelydamageourreputationandbrand,whichwouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.

    WehaveestablishedastrongbrandnameandreputationforourecosysteminChina.Anylossoftrustinourplatformcouldharmthevalueofourbrandandresultinbuyersandsellersceasingtotransactbusinessonourmarketplacesaswellasparticipantsreducingtheleveloftheircommercialactivityinourecosystem,whichcouldmateriallyreduceourrevenueandprofitability.Ourabilitytomaintainourpositionasatrustedplatformforonlineandmobilecommerceisbasedinlargepartupon:

    thereliabilityandsecurityofourplatform

    thefunctionalityofproductsandthewiderangeofservicesandfunctionalitywemakeavailabletoparticipantsonourplatform

    therulesgoverningourmarketplaces

    thequalityandbreadthofproductsandservicesofferedbysellersthroughourmarketplaces

    thestrengthofourconsumerprotectionmeasuresand

    ourabilitytoprovidereliableandtrustedpaymentandescrowservicesthroughourarrangementswithourrelatedcompanyAlipay.

    Wemaynotbeabletomaintainandimprovethenetworkeffectsofourecosystem,whichcouldnegativelyaffectourbusinessandprospects.

    Ourabilitytomaintainahealthyandvibrantecosystemthatcreatesstrongnetworkeffectsbetweenbuyers,sellersandotherparticipantsiscriticaltooursuccess.Theextenttowhichweareabletomaintainandstrengthenthesenetworkeffectsdependsonourabilityto:

    offerasecureandopenplatformforallparticipants

    providetoolsandservicesthatmeettheevolvingneedsofbuyersandsellers

    provideawiderangeofhighqualityproductandserviceofferingstobuyers

    providesellerswithahighleveloftrafficflowwithstrongcommercialintentandeffectiveonlinemarketingservices

    enhancetheattractivenessofourmobileplatform

    arrangesecureandtrustedpaymentsettlementandescrowservices

    coordinatefulfillmentanddeliveryserviceswiththirdpartylogisticsanddeliverycompanies

    attractandretainthirdpartyserviceproviderswhoareabletoprovidequalityservicesoncommerciallyreasonabletermstooursellers

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    maintainthequalityofourcustomerserviceand

    continueadaptingtothechangingdemandsofthemarket.

    Inaddition,changeswemaymaketoenhanceandimproveourecosystemandbalancetheneedsandinterestsofthevariousparticipantsonourecosystemmaybeviewedpositivelyfromoneparticipantgroupsperspective(suchasbuyers)butmayhavenegativeeffectsfromanothergroupsperspective(suchassellers).Ifwefailtobalancetheinterestsofallparticipantsinourecosystem,buyers,sellersandotherparticipantsmaystopvisitingourmarketplaces,conductfewertransactionsorusealternativeplatforms,anyofwhichcouldresultinamaterialdecreaseinourrevenueandnetincome.

    Ouroperatingphilosophyandinterestinmaintainingthehealthofourecosystemmaynegativelyinfluenceourshorttermfinancialperformance.

    Consistentwithouroperatingphilosophyandfocusonthelongterminterestsofourecosystemparticipants,wemaytakeactionsthatfailtogenerateshorttermfinancialresultsandwecannotassureyouthattheseactionswillproducelongtermbenefits.Forexample,inordertofocusoncreatingathrivingmarketplace,wehavenotintroducedacommissionbasedfeeormandatoryfeeforTaobaoMarketplace.WealsoshareasignificantportionoftherevenuegeneratedfromtheTaobaoAffiliateNetworkwithourthirdpartymarketingpartners.Inaddition,oureffortsrelatingtoourmobileplatformhaveemphasizedexpandingouruserbaseandenhancinguserexperience,ratherthanprioritizingmonetizationofusertrafficonourmobileplatform.Wealsomakeinvestmentsinnewproductsandservicesthatmaynotprovideeconomicbenefitstousintheshorttermoratall.

    Userbehavioronmobiledevicesisrapidlyevolving,andifwefailtosuccessfullyadapttothesechanges,ourcompetitivenessandmarketpositionmaysuffer.

    Buyers,sellersandotherparticipantsareincreasinglyusingmobiledevicesinChinaforawiderangeofpurposes,includingforecommerce.Whileasignificantandgrowingportionofparticipantsaccessourplatformsthroughmobiledevices,thisareaisrelativelynewanddevelopingrapidlyandwemaynotbeabletocontinuetoincreasethelevelofmobileaccesstoandengagementonourmarketplaces.Thevarietyoftechnicalandotherconfigurationsacrossdifferentmobiledevicesandplatformsincreasesthechallengesassociatedwiththisenvironment.Ourabilitytosuccessfullyexpandtheuseofmobiledevicestoaccessourplatformisaffectedbythefollowingfactors:

    ourabilitytocontinuetoprovidecompellingcommerceplatformsandtoolsinamultideviceenvironment

    thequalityofourmobileofferings,ormobilebasedpaymentservicesprovidedbyourrelatedcompanyAlipay

    ourabilitytosuccessfullydeployappsonpopularmobileoperatingsystemsthatwedonotcontrol,suchasiOSandAndroid

    ourabilitytoadapttothedevicestandardsusedbythirdpartymanufacturersanddistributorsand

    theattractivenessofalternativeplatforms.

    Ifweareunabletoattractsignificantnumbersofnewmobilebuyersandincreaselevelsofmobileengagement,ourabilitytomaintainorgrowourbusinesswouldbemateriallyandadverselyaffected.

    Wemaynotbeabletosuccessfullymonetizetrafficonourmobileplatform,whichcouldhaveamaterialadverseeffectonourbusiness.

    Anincreasingpercentageofourusersareaccessingourmarketplacesthroughmobiledevices,atrendthatweexpecttocontinue.Ourabilitytomonetizeourmobileusertrafficiscriticaltoourbusinessandourgrowth.Wefaceanumberofchallengestosuccessfullymonetizingourmobileusertraffic,including:

    providingmarketingservicesinacompellingandeffectivemanneronmobiledevices

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    developingalternativesourcesofrevenuegeneratedfrommobileaccesstoourmarketplaces

    offeringacomprehensiveuserexperienceonourmobileappsand

    ensuringthatthemobileservicesweprovidearesecureandtrusted.

    Ifweexperienceincreaseduseofmobiledevicesformobilecommercebutareunabletomonetizethatincreaseduse,ourbusinessmaynotgroworcoulddecline,andourrevenuesandnetincomewouldbemateriallyreduced.Forinstance,wehavechosennottodisplayasmanymarketingimpressionsonourmobileappsascomparedtoonourpersonalcomputerbasedwebsites.Althoughwedonotbelievetheincreasinguseofmobiledevicestoconductcommercehashadanadverseeffectonourbusiness,ourrapidoverallgrowthmaymakelessapparentanyadverseeffectsofthistrendonourneartermfinancialperformance.WeexpectmobileGMVasapercentageoftotalGMVwillgrowandthatourmonetizationratesformobileinterfacesintheneartermwillbelowerthanthosewehaveachievedfromwebsitesbecauseourcurrentfocusisnotonmaximizingshorttermmobilemonetization.Goingforwardwebelieveourfinancialresultswillbecomeincreasinglydependentonourabilitytomonetizetheuseofmobiledevicestoaccessourmarketplaces.Weexpectthistrendwillhaveagreatereffectonourbusinesstotheextentthatshoppingonmobiledevicesdisplacestransactionsthatcouldhaveoccurredonpersonalcomputers.

    Wemaynotbeabletomaintainourculture,whichhasbeenakeytooursuccess.

    Sinceourfounding,ourculturehasbeendefinedbyourmission,visionandvalues,andwebelievethatourculturehasbeencriticaltooursuccess.Inparticular,ourculturehashelpedusservethelongterminterestsofourcustomers,attract,retainandmotivateemployeesandcreatevalueforourshareholders.Wefaceanumberofchallengesthatmayaffectourabilitytosustainourcorporateculture,including:

    failuretoidentifyandpromotepeopleinleadershippositionsinourorganizationwhoshareourculture,valuesandmission

    failuretoexecuteamanagementsuccessionplantoreplaceourcurrentgenerationofmanagementleaders

    theincreasingsizeandgeographicdiversityofourworkforce

    competitivepressurestomoveindirectionsthatmaydivertusfromourmission,visionandvalues

    thecontinuedchallengesofaneverchangingbusinessenvironment

    thepressurefromthepublicmarketstofocusonshorttermresultsinsteadoflongtermvaluecreation

    theincreasingneedtodevelopexpertiseinnewareasofbusinessthataffectusand

    theintegrationofnewpersonnelandbusinessesfromacquisitions.

    Ifwearenotabletomaintainourcultureorifourculturefailstodeliverthelongtermresultsweexpecttoachieve,ourbusiness,financialcondition,resultsofoperationsandprospectscouldbemateriallyandadverselyaffected.

    Ifweareunabletocompeteeffectively,ourbusiness,financialconditionandresultsofoperationswouldbemateriallyandadverselyaffected.

    WefaceintensecompetitionfromChineseandglobalInternetcompaniesaswellasfromofflineretailers,particularlythoseestablishingonlinemarketplaces.Wecompetetoattract,engageandretainbuyersbasedonthevarietyandvalueofproductsandserviceslistedonourmarketplaces,overalluserexperienceandconvenienceandavailabilityofpaymentsettlementandlogisticsservices.Wecompetetoattractandretainsellersbasedonoursizeandtheengagementofbuyers,andtheeffectivenessandvalueofthemarketingservicesweoffer.Wealsocompetebasedontheusefulnessoftheservicesweprovide,includingmarketingdataanddatascience,cloudcomputingservices,theavailabilityofsupportingservicesincludingpaymentsettlementandlogisticsservicesandthequalityofourcustomerservice.Wealsocompeteformotivatedandeffectivetalentandpersonnel,includingengineersandproductdevelopersthatservecriticalfunctionsinthedevelopmentofourproductsandourecosystem.

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    Ourabilitytocompetedependsonanumberofotherfactorsaswell,someofwhichmaybeoutofourcontrol,including:

    thetimelyintroductionandmarketacceptanceoftheservicesweoffer,comparedtothoseofourcompetitors

    ourabilitytoinnovateanddevelopnewtechnologies

    ourabilitytomaintainandenhanceourleadingpositioninmobilecommerceinChina

    ourabilitytobenefitfromnewbusinessinitiativesand

    alliances,acquisitionsorconsolidationswithintheInternetindustrythatmayresultinstrongercompetitors.

    Ifwearenotabletocompeteeffectively,theGMVtransactedonourmarketplacesandtheuseractivitylevelonourplatformmaydecreasesignificantly,whichcouldmateriallyandadverselyaffectourbusiness,financialconditionandresultsofoperationsaswellasourbrand.

    WerelyonAlipaytoconductsubstantiallyallofthepaymentprocessingandescrowservicesonourmarketplaces.Alipaysbusinessishighlyregulated,anditisalsosubjecttoarangeofrisks.IfAlipaysservicesarelimited,restricted,curtailedordegradedinanywayorbecomeunavailabletousforanyreason,ourbusinessmaybemateriallyandadverselyaffected.

    Alipayisourrelatedcompanythatprovidespaymentprocessingandescrowservicesthatarecriticaltoourplatform.InthetwelvemonthsendedDecember31,2013,78.6%ofGMVonourChinaretailmarketplaceswassettledthroughAlipay,andthesettlementandescrowservicesandconvenientpaymentmechanismsprovidedbyAlipayareacriticalfactorcontributingtooursuccessandthedevelopmentofourecosystem.PursuanttoouragreementwithAlipay,Alipayprovidespaymentservicestousontermspreferentialtous.SeeRelatedPartyTransactionsAgreementsandTransactionsRelatedtoSmallandMicroFinancialServicesCompanyanditsSubsidiaries.

    Alipaysbusinessishighlyregulated,anditisalsosubjecttoanumberofrisksthatcouldmateriallyandadverselyaffectitsabilitytoprovidepaymentprocessingandescrowservicestous,including:

    increasedregulatoryfocusandtherequirementtocomplywithnumerouscomplexandevolvinglaws,rulesandregulations

    increasingcoststoAlipay,includingfeeschargedbybankstoprocessfundsthroughAlipay,whichwouldalsoincreaseourcostofrevenues

    dissatisfactionwithAlipaysservicesorloweruseofAlipaybyconsumersandmerchants

    changestorulesorpracticesapplicabletopaymentcardsystemsthatlinktoAlipay

    leakageofcustomerspersonalinformationandconcernsovertheuseandsecurityofanycollectedinformation

    systemfailuresorfailuretoeffectivelyscalethesystemtohandlelargeandgrowingtransactionvolumes

    failuretomanagefundsaccuratelyorlossoffunds,whetherduetoemployeefraud,securitybreaches,technicalerrorsorotherwiseand

    failuretomanagebusinessandregulatoryrisks.

    RegulatorsandthirdpartiesinChinahavebeenincreasingtheirfocusononlineandmobilepaymentservices,suchasthoseprovidedbyAlipay,andrecentregulatoryandotherdevelopmentscouldreducetheconvenienceorutilityofAlipayusersaccounts,includingthefollowing:

    InMarch2014,itwasreportedthatthePeoplesBankofChina,orthePBOC,hadpreparedafurtherdraftofregulationsrelatingtoonlineandmobilepaymentservices.Thenewdraftoftheregulations

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    includesanumberofproposedprovisionsrelatingtoaccountmanagement,securitymeasuresandothermatters.Theseprovisionswould,ifadopted,prohibitindividualsfromusingthefundsintheironlineandmobilepaymentaccountswiththirdpartypaymentproviderssuchasAlipaytomakepurchasesinexcessofRMB5,000(US$804)inanysingletransactionoroverRMB10,000(US$1,609)inaggregatepurchasespermonth.Inaddition,theseprovisions,ifadopted,wouldlimittransferswithoutanyunderlyingecommercetransactionfromanindividualsaccountwiththirdpartypaymentproviderstootheraccountstoRMB1,000(US$161)pertransactionandRMB10,000(US$1,609)inaggregatetransfersperyear.Ifthedraftregulationsweretobeadoptedintheircurrentorsimilarform,orotherlimitswereimposedonthesizeoftransactionsthatmaybeprocessedthroughAlipay,theabilityofbuyerstopayforpurchasesonourmarketplacesusingAlipaypaymentaccountscouldbemateriallylimited.Thedraftregulations,however,donotaffectAlipaysescrowservices.Buyersonourmarketplacescouldcontinuetopayforpurchasesthroughothermeans,suchasonlinebanktransfersandcreditcards,andcontinuetofundtheirAlipayescrowaccounts.SolongaspaymentsarenotmadeoutsideoftheAlipayescrowsystem,wewouldcontinuetocollectcommissionsonsuchpurchasesiftheyweremadeonmarketplacesonwhichwecollectcommissions.ThePBOChasindicatedthatthepurposeoftheseprovisionsandotherpartsofthedraftregulationsisprudentialandthatfinalregulations,includingtheseprovisions,wouldbesubjecttopublicconsultationandrevision.

    InMarch2014,certainlargecommercialbanksinChinareducedtheirexistinglimitsontheamountsthatmaybetransferredby

    automaticpaymentfromcustomersbankaccountstotheirlinkedaccountswiththirdpartypaymentservices.CertainofthesebanksimposedlowerlimitsonAlipaythanonotherpaymentservices.

    InApril2014,theChinaBankingRegulatoryCommission,ortheCBRC,andthePBOCissuedJointCircular10,which,effectiveJune30,2014,willrequirecommercialbanksandotherfinancialinstitutionsinChinatoconductadditionalcustomerverificationprocedurespriortoestablishinganautomaticpaymentlinkbetweencustomersbankaccountsandtheiraccountswiththirdpartypaymentservices,suchasAlipay.AsofMarch31,2014,Alipayhadestablishedautomaticpaymentlinkswithapproximately70%ofAlipaysactiveaccounts.Oncetheaccountshavebeenlinked,JointCircular10alsorequirescommercialbanksandotherfinancialinstitutionsinChinato,uponthecustomersrequest,adjustanylimitsimposedontheamountsthatmaybetransferredtothelinkedaccounts.Itisunclearhowcommercialbanksandotherfinancialinstitutionswillimplementtheadditionalcustomerverificationproceduresortherequirementtoadjustthetransferlimits.

    WerelyontheconvenienceandeaseofusethatAlipayprovidestoourusers.Ifthequality,utility,convenienceorattractivenessofAlipaysservicesdeclinesasaresultoftheselimitationsorforanyotherreason,theattractivenessofourmarketplacescouldbemateriallyandadverselyaffected.

    Ifweneedtomigratetoanotherthirdpartypaymentserviceforanyreason,thetransitionwouldrequiresignificanttimeandmanagementresources,andthethirdpartypaymentservicemaynotbeaseffective,efficientorwellreceivedbybuyersandsellersonourmarketplaces.Thesethirdpartypaymentservicesalsomaynotprovideescrowservices,andwemaynotbeabletoreceivecommissionsbasedonGMVtransactedthroughthesesystems.Inaddition,wewouldnolongerhavethebenefitofthetermspreferentialtousunderourcommercialagreementwithAlipayandwouldlikelyberequiredtopaymoreforpaymentprocessingandescrowservicesthanwearecurrentlypaying.Therecanbenoassurancethatwewouldbeabletoreachagreementwithanalternativeonlinepaymentsserviceonacceptabletermsoratall.

    Moreover,becauseofourcloseassociationwithAlipayandoverlappinguserbase,eventsthatnegativelyaffectAlipaycouldalsonegativelyaffectcustomers,regulatorsandotherthirdpartiesperceptionofus.Inaddition,anyactualorperceivedconflictofinterestbetweenusandAlipayoranyotherrelatedcompanycouldalsomateriallyharmourreputationaswellasourbusinessandprospects.

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    Ifwearenotabletocontinuetoinnovateorifwefailtoadapttochangesinourindustry,ourbusiness,financialconditionandresultsofoperationswouldbemateriallyandadverselyaffected.

    TheInternetindustryischaracterizedbyrapidlychangingtechnology,evolvingindustrystandards,newserviceandproductintroductionsandchangingcustomerdemands.Furthermore,ourcompetitorsareconstantlydevelopinginnovationsinInternetsearch,onlinemarketing,communications,socialnetworkingandotherservicestoenhanceusersonlineexperience.Wecontinuetoinvestsignificantresourcesinourinfrastructure,researchanddevelopmentandotherareasinordertoenhanceourplatformtechnologyandourexistingproductsandservicesaswellastointroducenewhighqualityproductsandservicesthatwillattractmoreparticipantstoourmarketplaces.Thechangesanddevelopmentstakingplaceinourindustrymayalsorequireustoreevaluateourbusinessmodelandadoptsignificantchangestoourlongtermstrategiesandbusinessplan.Ourfailuretoinnovateandadapttothesechangeswouldhaveamaterialadverseeffectonourbusiness,financialconditionandresultsofoperations.

    Ourbusinessgeneratesandprocessesalargeamountofdata,andtheimproperuseordisclosureofsuchdatacouldharmourreputationaswellashaveamaterialadverseeffectonourbusinessandprospects.

    Ourmarketplacesandplatformgenerateandprocessalargequantityoftransaction,demographicandbehavioraldata.Wefacerisksinherentinhandlinglargevolumesofdataandinprotectingthesecurityofsuchdata.Inparticular,wefaceanumberofchallengesrelatingtodatafromtransactionsandotheractivitiesonourplatform,including:

    protectingthedatainandhostedonoursystem,includingagainstattacksonoursystembyoutsidepartiesorfraudulentbehaviorbyouremployees

    addressingconcernsrelatedtoprivacyandsharing,safety,securityandotherfactorsand

    complyingwithapplicablelaws,rulesandregulationsrelatingtothecollection,use,disclosureorsecurityofpersonalinformation,includinganyrequestsfromregulatoryandgovernmentauthoritiesrelatingtosuchdata.

    Anysystemsfailureorsecuritybreachorlapsethatresultsinthereleaseofuserdatacouldharmourreputationandbrandand,consequently,ourbusiness,inadditiontoexposingustopotentiallegalliability.

    Asweexpandouroperations,wemaybesubjecttotheselawsinotherjurisdictionswhereoursellers,buyersandotherparticipantsarelocated.Thelaws,rulesandregulationsofotherjurisdictionsmayimposemorestringentorconflictingrequirementsandpenaltiesthanthoseinChina,compliancewithwhichcouldrequiresignificantresourcesandcosts.Ourprivacypoliciesandpracticesconcerningthecollection,useanddisclosureofuserdataarepostedonourwebsites.Anyfailure,orperceivedfailure,byustocomplywithourpostedprivacypoliciesorwithanyregulatoryrequirementsorprivacyprotectionrelatedlaws,rulesandregulationscouldresultinproceedingsoractionsagainstusbygovernmentalentitiesorothers.Theseproceedingsoractionsmaysubjectustosignificantpenaltiesandnegativepublicity,requireustochangeourbusinesspractices,increaseourcostsandseverelydisruptourbusiness.

    Wemaynotbeabletomaintainorgrowourrevenueorourbusiness.

    Weprimarilyderiveourrevenuefromonlinemarketingservices,commissionsbasedontransactionvaluederivedfromcertainofourmarketplacesandfeesfromthesaleofmembershipsonourwholesalemarketplaces,andwehaveexperiencedsignificantgrowthinourrevenue.Inparticular,ourrevenuegrew72.4%fromfiscalyear2012tofiscalyear2013,and56.6%fromtheninemonthsendedDecember31,2012totheninemonthsendedDecember31,2013.

    Ourmarketingcustomersaretypicallybrandowners,distributorsandmerchantswhoaresellersonourmarketplaces.Marketingcustomersdonothavelongtermmarketingcommitmentswithus.Thepriceamerchantis

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    Table of Contents

    willingtopayforonlinemarketingservicesgenerallydependsonitsexpectedGMV,profitmarginsandlifetimevalueofcustomersderivedfromsuchmarketinginvestment.Ifthoseservicesdonotgeneratetherateofreturnexpectedbythesellerorratesthatarecompetitivetoalternatives,thesellermayreduceitsspendingonthemarketingservicesweoffer.Inaddition,aswecurrentlydisplayfewermarketingimpressionsonourmobileapplicationsascomparedtoourpersonalcomputerbasedapplications,ourrevenuegrowthratemaybeaffectedbytherisingusageofmobiledevices.

    SellersonTmallandJuhuasuanarerequiredtopayacommissiontypicallyrangingfrom0.5%to5%ofGMVsettledthroughAlipaydependingontheproductcategory.IflessGMVistransactedthroughsuchmarketplacesormoreGMVisgeneratedfromproductcategorieswithlowercommissionrates,orifmoretransactionsaresettleddirectlybetweenbuyersandsellerswithoutusingAlipayspaymentprocessingandescrowservices,thecommissionswereceivefromtransactionswoulddecrease.

    Forourwholesalemarketplaces,weprimarilyderiverevenuesfrommembershipfees.Potentialchangesinourstrategyformonetizingourwholesalemarketplacescouldresultinprolongedreductionsinrevenuefromthosemarketplaces.

    Inaddition,ourrevenuegrowthmaysloworourrevenuesmaydeclineforotherreasons,includingdecreasingconsumerspending,increasingcompetition,slowinggrowthoftheChinaretailorChinaonlineretailindustry,changesingovernmentpoliciesorgeneraleconomicconditions.Inaddition,ourrevenuegrowthratewilllikelydeclineasourrevenuegrowstohigherlevels.

    Increasedinvestmentsinourbusinessmaynegativelyaffectourmargins.

    Wehaveexperiencedsignificantgrowthinourprofitmarginsandnetincome.Forexample,ouroperatingprofitandnetincomegrew114.4%and85.4%fromfiscalyear2012tofiscalyear2013,respectively.Ouroperatingprofitandnetincomegrew209.1%and304.8%fromtheninemonthsendedDecember31,2012tothesameperiodin2013,respectively.Wecannotassureyouthatwewillbeabletomaintainourgrowthattheselevels,oratall.

    Furthermore,wehavemade,andintendtocontinuetomake,strategicinvestmentsandacquisitionstoexpandouruserbase,enhanceourcloudcomputingbusiness,addcomplementaryproductsandtechnologiesandfurtherstrengthenourecosystem.Forexample,weexpecttocontinuetomakestrategicinvestmentsandacquisitionsrelatingtomobile,O2Oservices,digitalmedia,categoryexpansionaswellaslogisticsservices.Ourstrategicinvestmentsandacquisitionsmayaffectourfuturefinancialresults,includingbydecreasingourmarginsandnetincome.Historically,ourcostshaveincreasedeachyearduetothesefactorsandweexpecttocontinuetoincurincreasingcosts,whichmaybegreaterthanweanticipate.Increasesinourcostsmaymateriallyandadverselyaffectourbusinessandprofitabilityandtherecanbenoassurancethatwewillbeabletosustainournetincomegrowthratesorourmargins.

    Failuretomaintainorimproveourtechnologyinfrastructurecouldharmourbusinessandprospects.

    Weareconstantlyupgradingourmarketplacesandplatformtoprovideincreasedscale,improvedperformanceforbothonlineandmobileuseofourplatform,additionalbuiltinfunctionalityandadditionalcapacityforourcloudcomputingservices.Toadapttonewproductsandupgradeourecosysteminfrastructurerequiressignificantinvestmentoftimeandresources,includingaddingnewhardware,updatingsoftwareandrecruitingandtrainingnewengineeringpersonnel.Maintainingandimprovingourtechnologyinfrastructurerequiressignificantlevelsofinvestment.Adverseconsequencescouldincludeunanticipatedsystemdisruptions,slowerresponsetimes,impairedqualityofbuyersandsellersexperiencesanddelaysinreportingaccurateoperatingandfinancialinformation.Forexample,onSinglesDay,thereissignificantlyhigherthannormalactivityonourmarketplacesthatoursystemsmusthandle.Inaddition,muchofthesoftwareandinterfacesweuseareinternallydevelopedandproprietarytechnology.Ifweexperienceproblemswiththefunctionalityand

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  • 5/6/2014 Form F-1

    http://www.sec.gov/Archives/edgar/data/1577552/000119312514184994/d709111df1.htm 34/343

    Table of Contents

    effectivenessofoursoftwareorplatforms,orareunabletomaintainandconstantlyimproveourtechnologyinfrastructuretohandleourbusinessneeds,ourbusiness,financialcondition,resultsofoperationandprospects,aswellasourreputation,couldbemateriallyandadverselyaffected.

    ThesuccessfuloperationofourbusinessdependsupontheperformanceandreliabilityoftheInternetinfrastructureinChina.

    OurbusinessdependsontheperformanceandreliabilityoftheInternetinfrastructureinChina.AlmostallaccesstotheInternetismaintainedthroughstateownedtelecommunicationoperatorsundertheadministrativecontrolandregulatorysupervisionoftheMinistryofIndustryandInformationTechnologyofChina.Inaddition,thenationalnetworksinChinaareconnectedtotheInternetthroughstateownedinternationalgateways,whicharetheonlychannelsthroughwhichadomesticusercanconnecttotheInternetoutsideofChina.Wemaynothaveaccesstoalternativenetworksintheeventofdisruptions,failuresorotherproblemswithChinasInternetinfrastructure.Inaddition,theInternetinfrastructureinChinamaynotsupportthedemandsassociatedwithcontinuedgrowthinInternetusage.

    Thefailureoftelecommunicationsnetworkoperatorstoprovideuswiththerequisitebandwidthcouldalsointerferewiththespeedandavailabilityofourwebsites.Wehavenocontroloverthecostsoftheservicesprovidedbythenationaltelecommunicationsoperators.IfthepricesthatwepayfortelecommunicationsandInternetservicesrisesignificantly,ourgrossmarginscouldbeadverselyaffected.Inaddition,ifInternetaccessfeesorotherchargestoInternetusersincrease,ourusertrafficmaydecrease,whichinturnmaysignificantlydecreaseourrevenues.

    Ourecosystemcouldbedisruptedbynetworkinterruptions.

    Ourecosystemdependsontheefficientanduninterruptedoperationofourcomputerandcommunicationssystems.SubstantiallyallofourcomputerhardwareandourcloudcomputingservicesiscurrentlylocatedinChina.Inaddition,alargenumberofsellersmaintaintheirenterpriseresourceplanning,orERP,andcustomerrelationshipmanagement,orCRM,systemsonourcloudcomputingplatform,whichcontainssubstantialquantitiesofdatarelatingtotheiraccounts,transactiondata,buyerinformationandotherdatathatenablessellerstooperateandmanagetheirbusinesses.Althoughwehavepreparedforcontingenciesthroughredundancymeasuresanddisasterrecoveryplans,suchpreparationmaynotbesufficientandwedonotcarrybusinessinterruptioninsurance.Despiteanyprecautionswemaytake,theoccurrenceofanaturaldisaster,suchasanearthquake,floodorfire,orotherunanticipatedproblemsatourfacilitiesinChina,includingpoweroutages,telecommunicationsdelaysorfailures,breakinstooursystemsorcomputerviruses,couldresultindelaysorinterruptionstoourmarketplacesandplatforms,lossofourandcustomersdataandbusinessinterruptionforusandourcustomers.Anyoftheseeventscoulddamageourreputation,significantlydisruptouroperationsandtheoperationsofthesellersandotherparticipantsinourecosystemandsubjectustoliability,whichcouldmateriallyandadverselyaffectourbusiness,financialconditionandresultsofoperations.

    Oursellersusethirdpartylogisticsanddeliverycompaniestofulfillanddelivertheirorders.Iftheselogisticsanddeliverycompaniesfailtoprovidereliabledeliveryservices,orourlogisticsinformationplatformweretomalfunction,sufferanoutageorotherwisefail,ourbusinessandprospects,aswellasourfinancialconditionandresultsofoperations,maybemateriallyandadverselyaffected.

    Wecooperatewithanumberofthirdpartylogisticsanddeliverycompaniestohelpoursellersfulfillordersanddelivertheirproductstobuyers.WehaveestablishedalogisticsinformationplatformthatisoperatedbyChinaSmartLogistics,our48%ownedaffiliate,thatlinksourinformationsystemtothoseofourlogisticspartners.Interruptionstoorfailuresinthesethirdpartieslogisticsanddeliveryservices,orinourlogisticsinformationplatform,couldpreventthetimelyorproperdeliveryofproductstobuyers,whichwouldharmthereputationofourmarketplacesandourecosystem.Theseinterruptionsmaybeduetoeventsthatarebeyondourcontrolorthecontroloftheselogisticsanddeliverycompanies,suchasinclementweather,naturaldisasters,transportationdisruptionsorlaborunrest.Theselogisticsanddeliveryservicescouldalsobeaffectedor

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    http://www.sec.gov/Archives/edgar/data/1577552/000119312514184994/d709111df1.htm 35/343

    Table of Contents

    interruptedbyindustryconsolidation,insolvencyorgovernmentshutdowns.Wedonothaveagreementswithlogisticsanddeliverycompaniesthatrequirethemtoofferservicestooursellers.Thesellersonourmarketplacesmaynotbeabletofindalternativelogisticsanddeliverycompaniestoprovidelogisticsanddeliveryservicesinatimelyandreliablemanner,oratall.Ifthelogisticsinformationplatformweuseweretofailforanyreason,ourlogisticsproviderswouldbeseverelyhinderedfromorunabletoconnectwithoursellers,andtheirservicesandthefunctionalityofourecosystemcouldbeseverelyaffected.Iftheproductssoldonourmarketplacesarenotdeliveredinpropercondition,onatimelybasisoratshippingratesthatmarketplaceparticipantsarewillingtobear,ourbusinessandprospects,aswellasourfinancialconditionandresultsofoperationscouldbemateriallyandadverselyaffected.

    Ifthirdpartyserviceprovidersonourecosystemfailtoprovidereliableorsatisfactoryservices,ourbusiness,financialconditionandresultsofoperationsmaybemateriallyandadverselyaffected.

    InadditiontotheservicesprovidedtoourecosystembyAlipayandlogisticsproviders,anumberofthirdpartyparticipants,includingmarketingaffiliates,retailoperationalpartners,independentsoftwarevendors,orISVs,andvariousprofessionalserviceproviders,alsoprovideservicestosellers.Wedonothaveanyagreementsthatrequirethesethirdpartyparticipantstoprovideservicestosellers.Totheextentthesethirdpartyserviceprovidersareunabletoprovidesatisfactoryservicestosellersoncommerciallyacceptabletermsoratallorifwefailtoretainexistingorattractnewqualityserviceproviderstoourmarketplaces,ourabilitytoretainorattractsellersandbuyersmaybeseverelylimited,whichmayhaveamaterialandadverseeffectonourbusiness,financialconditionandresultsofoperations.

    Wedependonkeymanagementaswellasexperiencedandcapablepersonnelgenerally,andanyfailuretoattract,motivateandretainourstaffcouldseverelyhinderourabilitytomaintainandgrowourbusiness.

    Ourfuturesuccessissignificantlydependentuponthecontinuedserviceofourkeyexecutivesandotherkeyemployees.Ifwelosetheservicesofanymemberofmanagementorkeypersonnel,wemaynotbeabletolocatesuitableorqualifiedreplacements,andmayincuradditionalexpensestorecruitandtrainnewstaff,whichcouldseverelydisruptourbusinessandgrowth.Inparticular,JackMa,ourleadfounder,executivechairmanandoneofourprincipalshareholders,hasbeencrucialtothedevelopmentofourcultureandstrategicdirection.

    Inaddition,wehaveanumberofemployees,includingmanymembersofmanagement,whoseequityownershipinourcompanycouldgivethemasubstantialamountofpersonalwealthfollowingourinitialpublicoffering.Asaresult,itmaybedifficultforustocontinuetoretainandmotivatetheseemployees,andthisw


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