Expedia 2012 Annual Report Download - page 22

• Lower levels of credit card usage and increased payment and fraud risk;
• Longer payment cycles, and difficulties in collecting accounts receivable;
• Increased risk and limits on our ability to enforce intellectual property rights;
• Possible preferences by local populations for local providers;
• Restrictions on, or adverse tax and other consequences related to, the withdrawal of
non-U.S. investments, cash balances and earnings;
• Currency exchange restrictions or costs;
• Restrictions on our ability to repatriate cash as well as restrictions on our ability to invest in our
operations in certain countries;
• Exchange rate fluctuations and the risks and costs inherent in hedging such exposures;
• Financial risk arising from transactions in multiple currencies;
• Slower adoption of the internet as an advertising, broadcast and commerce medium in those markets as
compared to the United States;
• Our ability to support new technologies, including mobile devices, that may be more prevalent in
international markets;
• Regulatory, contractual and other limitations and costs of operating in international markets as a
non-local company;
• Difficulties in managing staffing and operations due to distance, time zones, language and cultural
differences; and
• Uncertainty regarding liability for services and content, including uncertainty as a result of local laws
and lack of precedent.
We are subject to particular risks and uncertainties relating to our operations in China, which are primarily
through eLong, which is the second largest online travel service provider in China and is a separately listed
company on Nasdaq. The success of this business and of any future investments we make in China is subject to
commercial risks relating to the highly competitive market in China, as well as to risks and uncertainties
regarding the application, development and interpretation of China’s laws and regulations. Significant
uncertainties exist regarding the interpretation and enforcement of Chinese laws and regulations including
permits and license requirements, and such uncertainties could limit the available legal protections relating to our
investments. Moreover, we cannot predict the effect of future developments in China’s legal system, particularly
with respect to the travel industry, the internet and online commerce, media, foreign investment, taxation, labor,
and currency exchange and regulation, including the introduction of new laws, changes to existing laws or the
interpretation or enforcement of current or future laws and regulations. In addition, the laws and regulations of
China restrict foreign investment in areas including air-ticketing, travel agency, internet content provision,
mobile communication and related businesses. Although we have established effective control through a series of
agreements between the companies in which our Chinese investments are held and their affiliated Chinese
entities, future developments in the interpretation or enforcement of Chinese laws and regulations or a dispute
relating to these agreements could restrict our ability to control, operate or restructure these entities or to engage
in strategic transactions. Capitalization of our Chinese entities is also subject to extensive government oversight
and regulation and there can be no assurance that we can provide adequate financing for these entities or provide
for the successful repatriation of cash balances and investments. Finally, China does not have treaties with the
United States or most other western countries providing for the reciprocal recognition and enforcement of
judgments of courts. As a result, court judgments obtained in jurisdictions with which China does not have
treaties on reciprocal recognition of judgment may be difficult or impossible to enforce in China.
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