Expedia 2013 Annual Report Download - page 23

• 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 we conduct
primarily through eLong, which is a leading online travel service provider in China and is a separately listed
company on Nasdaq. The success of eLong and of our other current and future business and investments in China
is subject to commercial risks relating to the highly dynamic and increasingly competitive market in China. Our
business and investments in China are also subject to numerous risks and significant uncertainties regarding the
application, development and interpretation of China’s laws and regulations, which could limit the legal
protections available to us. Moreover, we cannot predict the effect of future developments in China’s legal
system, including the introduction of new laws, changes to existing laws or the interpretation or enforcement of
current or future laws and regulations in areas such as the travel industry, the internet and online commerce,
foreign investment, taxation, labor, and foreign currency exchange. In addition, Chinese law restricts foreign
investment in areas including air-ticketing, travel agency, internet content provision and telecommunications, and
requires certain licenses and permits related to our business to be held by legal entities owned by PRC citizens or
Chinese-owned companies, rather than our subsidiaries. Although we have established effective control over
such Chinese entities through a series of agreements future developments in the interpretation or enforcement of
Chinese laws and regulations or a dispute relating to these agreements could adversely affect our control over,
and the operations of, our businesses in China. Capitalization of our Chinese entities is also subject to regulation
and there can be no assurance that we can provide adequate financing for these entities or repatriate cash
balances and investments. China also 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 such treaties may be difficult or impossible
to enforce in China. As we are the controlling shareholder of eLong, we may also be subject to legal or
regulatory investigations or claims relating to any alleged improper conduct or violations of U.S. law, Nasdaq, or
SEC regulations or other applicable law or regulations by eLong, which may result in significant costs, fines or
penalties being assessed against eLong and us. In early 2014, an SEC administrative law judge issued an initial
decision censuring certain Chinese audit firms, including eLong’s external auditor, for failing to comply with
document requests from the SEC, and suspending such firms from practicing before the SEC for six months. The
firms in question have indicated that they intend to appeal, and the decision and the suspension will not become
effective until the resolution of any such appeal. In addition, the Public Company Accounting Oversight Board
(or “PCAOB”) may choose to administer sanctions or take other actions against Chinese audit firms, including
eLong’s auditor, due to the inability of the PCAOB to conduct inspections of audit firms in China. If Chinese
audit firms, including eLong’s external auditor, are suspended or otherwise unable to practice before the SEC or
maintain registration with the PCAOB, eLong may be unable to meet the ongoing reporting requirements under
the Exchange Act, which may ultimately result in eLong’s delisting from Nasdaq.
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