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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
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<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>UNITED STATES SECURITIES AND EXCHANGE COMMISSION</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>WASHINGTON, D.C. 20549</B>
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<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>FORM 20-F</B>
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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">(Mark One)

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    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g)&nbsp;OF THE
SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>OR</B></DIV>

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    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the fiscal year ended December&nbsp;31, 2005
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>OR</B></DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
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<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 12%"><B>For the transition period from <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U> to <U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U>
</B>
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<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>OR</B></DIV>

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    <TD width="7%">&nbsp;</TD>
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    <TD width="88%">&nbsp;</TD>
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<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Date of event requiring this shell company report </B><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U><U>&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;</U></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Commission file number: 0-50841</B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>51job, Inc.</B>
</DIV>

<DIV align="center" style="font-size: 10pt"><B>(Exact name of Registrant as specified in its charter)</B></DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>N/A<BR>
(Translation of Registrant&#146;s name into English)</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Cayman Islands<BR>
(Jurisdiction of incorporation or organization)</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>21st Floor, Wen Xin Plaza<BR>
755 Wei Hai Road<BR>
Shanghai 200041<BR>
People&#146;s Republic of China<BR>
(Address of principal executive offices)</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Securities registered or to be registered pursuant to Section&nbsp;12(b) of the Act:<BR>
None.</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Securities registered or to be registered pursuant to Section&nbsp;12(g) of the Act:</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>American Depositary Shares<BR>
(each representing two common shares, par value US$0.0001 per share)<BR>
(Title of Class)</B></DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Securities for which there is a reporting obligation pursuant to Section&nbsp;15(d) of the Act:<BR>
None.</B></DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate the number of outstanding shares of each of the issuer&#146;s classes of capital or common
stock as of the close of the period covered by the annual report: 54,876,079 common shares, par
value US$0.0001 per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule&nbsp;405 of
the Securities Act. <FONT face="Wingdings">&#111;</FONT> Yes <FONT face="Wingdings">&#254;</FONT> No
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If this is an annual or transitional report, indicate by check mark if the registrant is not
required to file reports pursuant to Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934.
<FONT face="Wingdings">&#111;</FONT> Yes <FONT face="Wingdings">&#254;</FONT> No
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days. <FONT face="Wingdings">&#254;</FONT> Yes <FONT face="Wingdings">&#111;</FONT> No
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of &#147;accelerated filer and large accelerated
filer&#148; in Rule&nbsp;12b-2 of the Exchange Act. (Check one):
</DIV>

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    <TD width="30%">&nbsp;</TD>
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<TR valign="bottom">
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT> Large accelerated filer
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#254;</FONT> Accelerated filer
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><FONT face="Wingdings">&#111;</FONT> Non-accelerated filer</TD>
</TR>
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</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark which financial statement item the registrant has elected to follow:
<FONT face="Wingdings">&#111;</FONT> Item&nbsp;17 <FONT face="Wingdings">&#254;</FONT> Item&nbsp;18
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">If this is an annual report, indicate by check mark whether the registrant is a shell company (as
defined in Rule&nbsp;12b-2 of the Exchange Act). <FONT face="Wingdings">&#111;</FONT> Yes <FONT face="Wingdings">&#254;</FONT> No
</DIV>


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<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





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<A name="tocpage"></A>
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<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
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    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Page</TD>
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<TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#129">FORWARD-LOOKING
STATEMENTS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">ii</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">CERTAIN TERMS AND CONVENTIONS </A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">iii</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">PART I</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#103">Item&nbsp;1. Identity of Directors, Senior Management and Advisers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#104">Item&nbsp;2. Offer Statistics and Expected Timetable</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#105">Item&nbsp;3. Key Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#106">Item&nbsp;4. Information on the Company</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#107">Item&nbsp;5. Operating and Financial Review and Prospects</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#108">Item&nbsp;6. Directors, Senior Management and Employees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#109">Item&nbsp;7. Major Shareholders and Related Party Transactions</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#110">Item&nbsp;8. Financial Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">66</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#111">Item&nbsp;9. The Offer and Listing</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">67</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#112">Item&nbsp;10. Additional Information</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#113">Item&nbsp;11. Quantitative and Qualitative Disclosures About Market Risk</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#114">Item&nbsp;12. Description of Securities Other than Equity Securities</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#115">PART II</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#116">Item&nbsp;13. Defaults, Dividend Arrearages and Delinquencies</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#117">Item&nbsp;14. Material Modifications to the Rights of Security Holders and Use of Proceeds</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#118">Item&nbsp;15. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#119">Item&nbsp;16A. Audit Committee Financial Expert</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#120">Item&nbsp;16B. Code of Ethics</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#121">Item&nbsp;16C. Principal Accountant Fees and Services</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#122">Item&nbsp;16D. Exemptions from the Listing Standards for Audit Committees</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#123">Item&nbsp;16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#124">PART III</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#125">Item&nbsp;17. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#126">Item&nbsp;18. Financial Statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px"><A href="#127">Item&nbsp;19. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78</TD>
    <TD>&nbsp;</TD>
</TR>
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<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv4w4.txt">EX-4.4 Lease Agreements</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv4w5.txt">EX-4.5 Lease Agreement dated as of March 11, 2005</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv4w6.txt">EX-4.6 Lease Agreements dated as of February 21, 2005</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv4w7.txt">EX-4.7 Summary of the Shanghai Commercial Building Advance Sale Contracts dated as of December 31, 2005</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv4w14.txt">EX-4.14 Amendment Notice to the Cooperation Agreement dated as of April 1, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv4w18.txt">EX-4.18 Business Alliance Agreement dated as of April 5, 2006</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv8w1.txt">EX-8.1 List of Subsidiaries of 51job, Inc.</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv12w1.txt">EX-12.1 CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv12w2.txt">EX-12.2 CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv13w1.txt">EX-13.1 CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="h00614exv13w2.txt">EX-13.2 CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002</A></FONT></TD></TR>
</TABLE>
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<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;i&nbsp;

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="129"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>FORWARD-LOOKING STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This annual report on Form 20-F contains statements of a forward-looking nature. These
statements are made within the meaning of Section&nbsp;27A of the Securities Act of 1933, as amended,
and Section&nbsp;21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private
Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by
terminology such as &#147;may,&#148; &#147;will,&#148; &#147;should,&#148; &#147;expect,&#148; &#147;intend,&#148; &#147;plan,&#148; &#147;anticipate,&#148; &#147;believe,&#148;
&#147;estimate,&#148; &#147;predict,&#148; &#147;potential,&#148; &#147;continue&#148; or the negative of these terms or other comparable
terminology. The accuracy of these statements may be impacted by a number of business risks and
uncertainties that could cause actual results to differ materially from those projected or
anticipated, including the following risks:
</DIV>

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<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>market acceptance of our services;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to expand into other recruitment and human resource services
such as business process outsourcing;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to control our operating costs and expenses;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our potential need for additional capital and the availability of such capital;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>behavioral and operational changes of our customers in meeting their human
resource needs as they respond to evolving social, economic and political changes in
China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in our management team and other key personnel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>introduction by our competitors of new or enhanced products and services;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>price competition in the market for the various human resource services that we provide in China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>seasonality of our business;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fluctuations in the value of the Renminbi against the U.S. dollar and other currencies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to develop or introduce new products and services outside of the human resources industry;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>fluctuations in general economic conditions; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other risks outlined in our filings with the Securities and Exchange
Commission, including our registration statement on Form F-1, as amended.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except as required by law, we undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future events or otherwise. All
forward-looking statements contained in this annual report are qualified by reference to this
cautionary statement.
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;ii&nbsp;

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTAIN TERMS AND CONVENTIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise indicated, references in this annual report to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;ADRs&#148; are to the American depositary receipts that evidence our ADSs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;ADSs&#148; are to our American depositary shares, each of which represents two common shares;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;China&#148; or the &#147;PRC&#148; are to the People&#146;s Republic of China, excluding for
the purpose of this annual report Hong Kong, Macau and Taiwan;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Nasdaq&#148; are to the Nasdaq National Market;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;RMB&#148; are to Renminbi, the legal currency of the PRC;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;shares&#148; or &#147;common shares&#148; are to our common shares, with par value US$0.0001 per share;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;U.S. GAAP&#148; are to the generally accepted accounting principles in the United States of America; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;US$&#148; are to U.S. dollars, the legal currency of the United States of America.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless the context indicates otherwise, &#147;we,&#148; &#147;us,&#148; &#147;our company,&#148; &#147;our&#148; and &#147;51job&#148; refer to
51job, Inc., its predecessor entities and subsidiaries, and, in the context of describing our
operations, also include our affiliated entities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, unless otherwise indicated, references in this annual report to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;51net&#148; are to 51net.com Inc.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;AdCo&#148; are to Shanghai Qianjin Advertising Co., Ltd., formerly known as
Shanghai Qianjin Culture Communication Co., Ltd.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;AdCo Subsidiaries&#148; are to the subsidiaries of AdCo that conduct advertising businesses;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Qian Cheng&#148; are to Beijing Qian Cheng Si Jin Advertising Co., Ltd.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;RAL&#148; are to Shanghai Run An Lian Information Consultancy Co., Ltd.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Run An&#148; are to Beijing Run An Information Consultancy Co., Ltd.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Tech JV&#148; are to Qianjin Network Information Technology (Shanghai) Co., Ltd.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Wang Cai AdCo&#148; are to Shanghai Wang Cai Advertising Co. Ltd., formerly
known as Shanghai Jin Lian Advertising Co., Ltd.;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;WFOE&#148; are to Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd.; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>&#147;Wuhan AdCo&#148; are to Wuhan Mei Hao Qian Cheng Advertising Co., Ltd.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Unless otherwise indicated, our financial information presented in this annual report has been
prepared in accordance with U.S. GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Solely for your convenience, this annual report contains translations of certain Renminbi
amounts into U.S. dollar amounts at specified rates. All translations from Renminbi to U.S. dollars
were made at the noon buying rate in The City of New York for cable transfers of Renminbi as
certified for customs purposes by the Federal Reserve Bank of New York. Unless otherwise stated,
the translations of Renminbi amounts into U.S. dollar amounts have been made at the noon buying
rate in effect on December&nbsp;30, 2005, which was RMB8.0702 to US$1.00. We make no representation that
the Renminbi or U.S. dollar amounts referred to in this annual report could have been or could be
converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. See
&#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151; Risks Related to the People&#146;s Republic of China &#151;
Governmental control of currency conversion may affect the value of your investment&#148; and &#147;&#151; The
fluctuation of the Renminbi may materially and adversely affect your investment&#148; for discussions of
the effects of currency control and fluctuating exchange rates on the value of our ADSs. On June
26, 2006, the noon buying rate was RMB7.9995 to US$1.00.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We calculate the number of our print advertising pages by physically counting the number of
paid advertising pages in each of our editions of <I>51job Weekly</I>, which we formerly translated into
English as <I>Career Post Weekly</I>. In calculating the number of paid advertising pages, we make
adjustments to take into account differing page sizes and pages with mixed advertising and
non-advertising content. This is a manual process that is subject to error, including errors in
judgment as to the appropriate adjustments to be made.
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;iii&nbsp;

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We define a unique employer in our online recruitment business as a customer that purchases
our online recruitment services during a specified period. We make adjustments for multiple
purchases by the same customer within a city to avoid double counting. Each employer is assigned a
unique identification number in our management information system. Affiliates and branches of a
given employer may, under certain circumstances, be counted as separate unique employers. Our
calculation of the number of unique employers is subject to misidentification and other forms of
error, including errors in judgment as to appropriate adjustments to be made to the data.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We cannot assure you that our methodology, page counting, employer identification,
calculations and analyses are accurate, or that they yield results that are comparable between
periods or give a correct approximation of the actual revenues we generate per page or actual
numbers of customers, as the case may be.
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt">&nbsp;iv&nbsp;

</DIV>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART I</B>
</DIV>

<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>
<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>
<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 3. KEY INFORMATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Selected Financial Data</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents the selected consolidated financial information for our business.
You should read the following information in conjunction with &#147;Item&nbsp;5. &#151; Operating and Financial
Review and Prospects.&#148; The selected consolidated statement of operations data for the years ended
December&nbsp;31, 2003, 2004 and 2005, and the selected consolidated balance sheet data as of December
31, 2004 and 2005, are derived from our audited consolidated financial statements, which are
included in this annual report beginning on page F-1, prepared in accordance with U.S. GAAP and are
qualified by reference to these consolidated financial statements and related notes. The selected
consolidated statement of operations data for the year ended December&nbsp;31, 2002 and the selected
consolidated balance sheet data as of December&nbsp;31, 2002 and 2003 have been derived from our audited
consolidated financial statements, which are not included in this annual report. The selected
consolidated statement of operations data for the year ended December&nbsp;31, 2001 and the selected
consolidated balance sheet data as of December&nbsp;31, 2001 are derived from our unaudited financial
statements prepared in accordance with U.S. GAAP. The historical results presented below do not
necessarily indicate results expected for any future period.
</DIV>

<P align="center" style="font-size: 10pt">1
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>US$</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Selected Consolidated Statement of
Operations Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Print advertising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,940,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,989,356</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182,606,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,651,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">356,284,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,148,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Online recruitment services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,586,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,938,327</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,960,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,508,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159,494,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,763,441</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Executive search</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,126,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,726,300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,748,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,907,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,306,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,259,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other human resource related
revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,305,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,895,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,019,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,875,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,507,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,630,293</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,958,721</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165,549,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">293,334,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">479,943,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">595,594,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,801,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121,970,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158,039,700</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">280,118,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">456,119,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">562,026,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,642,168</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(84,208,642</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(92,220,940</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(151,477,142</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(224,606,635</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(269,328,384</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(33,373,198</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,762,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,818,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,641,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231,513,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">292,697,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,268,970</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,503,675</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(24,356,157</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(38,619,523</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(67,271,096</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(113,656,714</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,083,507</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(33,732,311</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(30,382,850</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(38,135,612</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(55,175,493</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(88,978,985</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(11,025,623</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation &#151;
share option<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,482,546</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,678,238</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(13,073,480</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,619,970</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation &#151;
founder shares<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,808,931</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,808,931</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(4,622,466</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(61,044,917</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(63,547,938</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(94,860,147</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(141,124,827</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(215,709,179</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(26,729,100</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(23,282,836</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,270,822</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,781,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,388,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,988,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,539,870</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income (loss)&nbsp;before income tax
provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22,957,650</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,686,608</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,792,274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,201,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,367,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,321,570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax benefit (expense)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,259,194</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,192,011</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(34,058,184</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(29,945,033</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3,710,569</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income (loss)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(22,957,650</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,945,802</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,611,001</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings (loss)&nbsp;per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.72</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.09</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1.72</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings (loss)&nbsp;per ADS:<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.44</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.18</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Diluted<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(3.44</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Other Financial Information:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate share-based compensation
expense<SUP style="font-size: 85%; vertical-align: text-top">(6)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,808,931</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(8,808,931</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(18,701,563</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(20,489,734</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(14,553,322</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">(1,803,341</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="22" style="border-bottom: 1px solid #000000"><B>As of December 31,</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2001</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="2"><B>US$</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Selected Consolidated Balance
Sheet Data:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,339,579</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,637,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,084,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">848,292,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">830,633,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,926,018</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,661,081</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,635,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145,573,376</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">893,647,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">892,544,201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110,597,531</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total non-current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,509,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,025,881</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,830,903</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,735,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,875,359</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,782,356</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,170,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103,661,564</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185,404,279</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">937,382,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">963,419,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,379,887</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,806,795</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,025,436</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,096,191</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,564,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109,540,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,573,405</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Total non-current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">849,621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,080</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,656,416</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,057,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,119,724</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,564,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109,540,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,573,405</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,514,202</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,604,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,284,555</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">851,818,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">853,879,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,806,482</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities and
shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,170,618</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103,661,564</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">185,404,279</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">937,382,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">963,419,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,379,887</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Translations from Renminbi to U.S. dollars were made at the noon buying rate in The City of
New York for cable transfers of Renminbi as certified for customs purposes by the Federal
Reserve Bank of New York. The translations of Renminbi amounts into U.S. dollar amounts have
been made at the noon buying rate in effect on December&nbsp;30, 2005, which was RMB8.0702 to
US$1.00.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In 2003, RMB0.4&nbsp;million of this portion of our share-based compensation expense for share
options was attributable to sales and marketing expenses and RMB13.1&nbsp;million was attributable
to our general and administrative expenses. In 2004, RMB1.8&nbsp;million of this portion of our
share-based compensation expense was attributable to sales and marketing expenses and RMB16.9
million was attributable to general and administrative expenses. In 2005, RMB1.4&nbsp;million
(US$0.2&nbsp;million) of this portion of our share-based compensation expense was attributable to
sales and marketing expenses and RMB11.6&nbsp;million (US$1.4&nbsp;million) was attributable to general
and administrative expenses.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(3)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All share-based compensation &#151; founder shares is attributable to general and administrative
expenses.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(4)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Diluted earnings (loss)&nbsp;per share is calculated by dividing net income (loss)&nbsp;attributable to
holders of common shares as adjusted for the effect of dilutive common shares, if any, by the
sum of (1)&nbsp;the weighted average number of common shares outstanding and (2)&nbsp;the weighted
average number of common equivalent shares, which consist of common shares from the conversion
of Series&nbsp;A preference shares and common shares issuable upon the exercise of outstanding
share options as calculated under the treasury stock method. In the case of diluted earnings
(loss)&nbsp;per ADS, the data are adjusted to reflect the ratio of two common shares to one ADS.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(5)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Each ADS represents two common shares.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">(6)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Aggregate share-based compensation expense includes share-based compensation expense
attributable to cost of services and operating expenses. We have recognized share-based
compensation in connection with our historical grant of options to employees and certain
directors, and the historical issuance of restricted common shares to our founders and one of
our directors. We recognized an aggregate of RMB35.2&nbsp;million in deferred share-based
compensation in 2000 in connection with the acquisition by 51job, Inc. of all of the operating
assets of our various operating entities, whereby 51job, Inc. became the holding company of
our corporate group and entered into a purchase agreement with each of our founders to issue
to each founder restricted common shares. These shares were placed in escrow and were subject
to repurchase by us between 2000 and 2003 at a price equal to, at our option, either US$0.0001
per share or the fair market value of such shares, in the event that such founder&#146;s employment
with us terminated. We amortized all of this deferred share-based compensation as an expense
from 2000 through 2003. All such shares have subsequently been released from escrow and we
will not recognize additional share-based compensation expense with respect to these
issuances. In addition, we recognized an aggregate of RMB76.9&nbsp;million in immediate or deferred
share-based compensation in 2003 and 2004 in connection with the grant of options to employees
and directors, the sale of common shares to one of our directors at a price below fair market
value, and the extension of the exercise period of options held by certain terminated
employees. This resulted in additional share-based compensation expense of RMB14.1&nbsp;million in
2003, RMB20.5&nbsp;million in 2004 and RMB14.6&nbsp;million (US$1.8&nbsp;million) in 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>In our consolidated financial statements, portions of our share-based compensation expense are
allocated separately to our cost of services and operating expenses. Since we evaluate our
performance, make determinations regarding the expansion of our operations, allocate resources
among our operations and determine the compensation of employees and management based on our
financial results before the overall effect of our aggregate share-based compensation expense,
we have separately disclosed our aggregate share-based compensation expense for each of the
periods presented. We recorded a substantial amount of our historical share-based compensation
expense in connection with our repurchase arrangement with respect to the common shares issued
to our founders. We believe that disclosure of our aggregate share-based compensation expense
allows investors to better understand the primary financial measures that we use to manage our
business. In addition, separate disclosure of our aggregate share-based compensation expense
provides a useful approximation of our taxable income for purposes of determining PRC
enterprise income tax, or EIT, which is calculated based on our income prior to any deduction
for share-based compensation expense.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Exchange Rate Information</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We publish our financial statements in Renminbi. This annual report contains translations of
Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader.
Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the noon buying
rate in The City of New York for cable transfers of Renminbi per U.S. dollar as certified for
customs purposes by the Federal Reserve Bank of New York as of December&nbsp;30, 2005, which was
RMB8.0702 to US$1.00. The prevailing rate on June&nbsp;26, 2006 was RMB7.9995 to US$1.00. We make no
representation that the Renminbi or U.S. dollar amounts referred to in this annual report could
have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any
particular rate, the rates stated below, or at all. The Chinese government imposes control over its
foreign currency reserves in part through direct regulation of the conversion of Renminbi into
foreign exchange and through restrictions on foreign trade.
</DIV>

<P align="center" style="font-size: 10pt">3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following tables set forth information regarding the noon buying rates in The City of New
York for cable transfers of Renminbi per U.S. dollar as certified for customs purposes by the
Federal Reserve Bank of New York for the periods indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>Renminbi per U.S. dollar</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><B>Fiscal year ended December 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Average</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Period-end</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2001</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2676</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2766</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2002</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2770</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2669</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2800</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2772</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2767</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2764</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2765</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.1826</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.2765</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0702</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Renminbi per U.S. dollar</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 0px solid #000000"><B>Month</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Period-end</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0702</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0702</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0608</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0616</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0415</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0415</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0505</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0167</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0165</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0300</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0215</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;2006 (through June&nbsp;26, 2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.0225</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9963</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.9995</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>The average of the daily noon buying rates on the last business day of each month during the
year.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>B. Capitalization and Indebtedness</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>C. Reasons for the Offer and Use of Proceeds</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>D. Risk Factors</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Risks Related to Our Business</B>

</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>Because we face significant competition, including intense competition in several of our
markets, we may lose market share and our results of operations may be materially and adversely
affected.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We face significant competition in our <I>51job Weekly </I>and <I>www.51job.com </I>businesses as well as in
our executive search and other human resource businesses. <I>51job Weekly </I>currently faces intense
competition in many of our largest markets. Competitors of <I>51job Weekly </I>primarily consist of local
newspaper publishers and specialized recruitment advertising publications. In addition, <I>51job
Weekly </I>faces competition from online job search websites and other online businesses seeking to
expand into print recruitment advertising.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our online recruitment services face competition from other dedicated job search websites such
as <I>ChinaHR.com</I>, <I>Cjol.com </I>and <I>Zhaopin.com</I>, as well as from local job search websites and to a lesser
extent, from national Internet portals in China, such as <I>NetEase.com</I>, <I>Sina.com</I>, <I>Sohu.com </I>and
<I>Tom.com</I>. In 2005, it was reported that business collaborations had been formed between dedicated
job search websites and national Internet portals with a partnership between <I>ChinaHR.com </I>and
<I>Sina.com </I>and one between <I>Zhaopin.com </I>and <I>Sohu.com</I>. In addition, many executive search firms and
other competitors currently engaged in print advertising have started to internally develop or
acquire online capabilities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive search and other human resource related businesses face significant competition
from a variety of Chinese and foreign firms in all of our markets, including certain firms that
compete with us in the market for online
recruitment advertising.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many of our competitors or potential competitors have long operating histories, may have
greater financial, management, technological development, sales, marketing and other resources than
we do, and may be able to adopt our business model. As a result of competition, we may experience
reduced margins, loss of market share or less use of our services by job seekers and businesses. We
cannot assure you that existing or future competitors will not develop or offer
</DIV>

<P align="center" style="font-size: 10pt">4
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">services and products which provide significant performance, price, creative or other advantages
over our services. If we are unable to compete effectively with current or future competitors as a
result of these or other factors, our market share and our results of operations may be materially
and adversely affected.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>New competitors face low entry barriers to our industries, and successful entry by new
competitors may cause us to lose market share and materially and adversely affect our results
of operations.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the future, we may face competition from new entrants in the recruitment advertising
industry and other human resource industries in which we operate. We may face greater competition
from Internet portals, newspapers, dedicated recruitment advertising websites and publications, and
other human resource services providers who may enter the market for any or all of our services.
Our businesses are characterized by relatively low start-up and fixed costs, modest capital
requirements, short start-up lead times and an absence of significant proprietary technology that
would prevent or significantly inhibit the entry of competitors. As a result, potential market
entrants, both in China and from abroad, face relatively low barriers to entry to all of our
businesses and in all of our markets. In addition, we believe that there are relatively low
existing penetration rates in our markets, and that competitors could acquire significant numbers
of clients and establish significant market share within a relatively short period. Furthermore,
the newspaper and print media industry in China is highly regulated at present which may have the
effect of limiting competition and keeping prices, including print advertising prices, at higher
levels. Any deregulation of this industry may result in increased competition and a material
decrease in advertising rates, including prices we charge for our print advertising services.
Increased competition could result in loss of market share and revenues, and have a material
adverse effect on our business, financial condition and results of operations.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>If we are unable to achieve or maintain economies of scale with respect to our recruitment
advertising businesses, our results of operations from these businesses may be materially and
adversely affected.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We incur fixed costs such as printing, distribution, direct marketing, advertising,
management, staff, office, infrastructure and utilities in each of our geographic markets in
connection with operating our print advertising business. In addition, we incur fixed costs
relating to website maintenance, design and operation in our online businesses. Our ability to
realize our desired margins in our recruitment advertising businesses depends largely on our
success in posting a high volume of print and online recruitment advertisements to generate
sufficient revenues to offset associated fixed costs. Further, we need to reach and maintain a
critical mass of recruitment advertisements in order for <I>51job Weekly </I>and <I>www.51job.com </I>to build
and maintain acceptance among employers and job seekers as attractive vehicles for posting and
seeking jobs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In some of our markets, <I>51job Weekly </I>has not achieved the necessary economies of scale and
these operations have not achieved profitability despite our having operated in these markets for a
significant period of time. We believe that this is due primarily to significant competition from
rival print advertising publications. We may be unable to achieve and maintain sufficient economies
of scale in any or all of our geographic markets in connection with our recruitment advertising
businesses. Any failure to do so could materially and adversely affect our results of operations
from these businesses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>A slowdown or other adverse developments in the PRC economy may materially and adversely affect
our customers, demand for our services and our business.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of our operations are conducted in China and substantially all of our
revenues are generated from providing recruitment advertising and search services for PRC
businesses or divisions of firms operating in China. Although the PRC economy has grown
significantly in recent years, we cannot assure you that such growth will continue. Print
advertising, online recruitment services, executive search and our other human resource related
businesses are all relatively new industries in China, and we do not know with any degree of
certainty how sensitive we are to a slowdown in economic growth or other adverse changes in the PRC
economy. In response to adverse economic developments, employers might hire fewer permanent
employees, engage in hiring freezes, lay off employees, or reduce spending on print advertising,
online recruitment services and executive search services. Employers may decide to rely more
heavily on traditional recruitment methods such as referrals and job fairs, and utilize more
&#147;in-house&#148; resources to conduct training and perform other human resource functions, or otherwise modify their behavior in
ways that may have a significant negative impact on our business. As a result, a slowdown in
overall economic growth, an economic downturn or recession or other adverse economic developments
in China may materially reduce the demand for our services and materially and adversely affect our
business.
</DIV>

<P align="center" style="font-size: 10pt">5
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>If the use of advertising to conduct recruitment does not achieve broader acceptance in China,
we may be unable to expand our recruitment advertising businesses.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The use of advertising services to recruit employees is relatively new in China. Due to
significant control and regulation by the national and local governments, the private sector
recruiting process in China continues to be largely characterized by the use of personal referrals
and large job fairs. We believe that the use of advertising by employers and job seekers remains
relatively low. As a result, we face considerable challenges in promoting greater use of
advertising, which involves, among other things, significant changes in the way that employers
disseminate information about jobs, the way that prospective employees search and apply for jobs,
and the way in which hiring decisions are made. We cannot assure you that recruitment advertising
will achieve broader acceptance in China. Any significant failure of advertising to gain acceptance
among employers and job seekers may substantially limit our ability to expand our recruitment
advertising businesses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>If the Internet, and online advertising in particular, does not achieve broad acceptance in
China as a medium for recruitment, our online recruitment services business may be adversely
affected.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generate a significant portion of our revenues from online recruitment services, which are
targeted toward employers and job seekers who use the Internet. As part of our online recruitment
services, we offer general online advertising on our website, which is an important element in our
ability to sell online recruitment advertisements to employers and which generates a material
portion of our revenues. China has only recently begun to develop the Internet as a commercial
medium and has a relatively low Internet penetration rate compared to most developed countries. Our
future results of operations from online recruitment services will depend substantially upon an
increase in Internet penetration and an increase in acceptance and use of the Internet for the
distribution of services and for the facilitation of commerce in China. In addition, unless they
are resolved, telecommunication capacity constraints may impede further development of the Internet
to the extent that users experience delays, transmission errors and other difficulties. Any
negative perceptions as to the effectiveness of online recruitment services, or online advertising
generally, or any significant failure of the Internet to gain acceptance as a medium for
recruitment may adversely affect our online recruitment services business and our ability to
further integrate our online and print recruitment advertising businesses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>The markets for executive search services and business process outsourcing are still in the
development stage in China and we may be unable to expand these businesses.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Many employers in China are not familiar with the executive search model or may not accept the
value of a targeted, professional search. Many employers may be unwilling to pay a commission of up
to 30% of a candidate&#146;s annual compensation. Similarly, the market for the third party outsourcing
of business processes is also still developing in China. Companies may not be willing to use third
parties for significant administrative functions and may instead choose to continue to perform such
operations in-house. If these services do not gain wider acceptance in China, we may be unable to
expand these businesses.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>We are dependent on local newspaper contractors in each of our geographic markets to publish
and distribute 51job Weekly.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the PRC, entities engaged in publishing activities are required by the government to have a
publishing license. We do not have any publishing licenses and we are, and will continue to be,
dependent on contractual arrangements with local newspapers in each of our geographic markets in
order to publish and distribute <I>51job Weekly</I>. Our arrangements with our local newspaper contractors
require them to print, publish and distribute <I>51job Weekly </I>as an insert in their newspaper, and in
some cases to contribute marketing support. The successful execution of our business plan is highly
dependent on establishing and maintaining relationships with newspapers in all of our existing
markets as well as the new markets in which we intend to offer recruitment advertising services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The term of our agreements with local newspaper contractors is generally two years, and six of
these agreements will expire in 2006. In addition, certain of these agreements are subject to early
termination by either party on various grounds. We cannot assure you that our local newspaper
contractors will conduct their activities in full compliance with applicable laws and regulations
governing the publishing, distribution and sale of newspapers. In addition, we cannot
assure you that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our local newspaper contractors will fulfill their obligations under our agreements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="2%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the agreements will be renewed on terms acceptable to us or at all;</TD>
</TR>

</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">6
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our current contractors will not, upon termination of our agreements, seek
to compete directly against us or establish relationships with one or more of our
competitors; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>in the event that we wish to do so or it is necessary to do so, we will be
able to locate and enter into an agreement with a suitable alternative local newspaper on
a timely basis or at all.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we may experience lower levels of readership and circulation if we lose the
marketing support of a local newspaper contractor. Any adverse developments involving our local
newspaper contractors could significantly disrupt or impair the publication, promotion and
distribution of <I>51job Weekly</I>, which in turn could damage our <I>51job Weekly </I>brand name and materially
and adversely affect our recruitment advertising business and our results of operations.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We are dependent on our Internet service provider, and we are vulnerable to failures of the
Internet, fixed line telecommunications networks in China and our technology platform.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our online businesses are heavily dependent on the performance and reliability of China&#146;s
Internet infrastructure, the continual accessibility of bandwidth and servers to our service
providers&#146; networks, and the continuing performance, reliability and availability of our technology
platform.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We rely on affiliates of China Telecommunications Corporation, or China Telecom, to provide us
with bandwidth and server custody service for our services. We are unlikely to have any access to
alternative networks or services in the event of disruptions, failures or other problems with
China&#146;s Internet infrastructure or China Telecom&#146;s fixed telecommunications networks, or if China
Telecom or its affiliates otherwise fail to provide such services. In addition, we have no control
over the costs of the services provided by China Telecom or its affiliates. If China Telecom or its
affiliates fail to provide these services, we would be required to seek other providers, and there
is no assurance that we will be able to find alternative providers willing or able to provide high
quality services and there is no assurance that such providers will not charge us higher prices for
their services. If the prices that we are required to pay for Internet services rise significantly,
our results of operations could be adversely affected.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>If we are unable to protect or promote our brand names and reputation, our business may be
materially and adversely affected.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we fail to generate a high volume of recruitment advertisements, maintain our relationships
with local newspaper contractors, successfully promote and develop the perception of <I>www.51job.com</I>
as a &#147;destination site,&#148; undertake effective marketing and promotional activities, and generally
provide high quality services, we may not be successful in protecting or promoting our brand names
and reputation in a cost-effective manner or at all. We may dedicate significantly greater
resources in the future to advertising, marketing and other promotional efforts aimed at building
awareness of our brands. Any significant damage to our reputation, the perceived quality or
awareness of our brand names or services, or any significant failure on our part to promote and
protect our brand names and reputation could make it more difficult for us to successfully attract
job seekers, compete for customers or retain qualified personnel, which may have a material adverse
effect on our business.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>If we are unable to prevent others from using our intellectual property, our business may be
materially and adversely affected.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our intellectual property has been, and will continue to be, subject to various forms of theft
and misappropriation. Competitors copy and distribute content from our <I>www.51job.com </I>website, from
<I>51job Weekly </I>and from the training materials that we use, and utilize misleadingly similar Internet
domain names and URLs in an effort to divert Internet traffic away from our website. We are also
susceptible to others copying our business model and methods. The legal protection of trademarks,
trade names, copyrighted material, domain names, trade secrets, know-how and other forms of
intellectual property in the PRC is significantly more limited than in the United States and many
other countries and may afford us little or no effective protection. Preventing unauthorized use of
our intellectual property is difficult, time consuming and expensive, and may divert significant
management and staff resources from our business operations, and yield limited and uncertain
results. Misappropriation of our content, trademarks and other intellectual property could divert
significant business to our competitors, damage our brand name and reputation, and require us to
initiate litigation that could be expensive and require us to divert management resources from the
operation of our businesses.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We rely heavily on our senior management team and key personnel, and the loss of any of their
services could severely disrupt our business.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our future success is highly dependent on the ongoing efforts of the members of our senior
management and key personnel, in particular on Rick Yan, our chief executive officer. We rely
heavily on his management skills, his expertise
</DIV>

<P align="center" style="font-size: 10pt">7
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">in consumer products, marketing and technology, and
his relationships with many of our clients and local contractors. We do not maintain key man life
insurance on any of our senior management or key personnel, other than Mr.&nbsp;Yan and Kathleen Chien,
our chief financial officer. The loss of the services of one or more of our senior executives or
key personnel, Mr.&nbsp;Yan in particular, may have a material adverse effect on our business, financial
condition and results of operations. Competition for senior management and key personnel is
intense, and the pool of suitable candidates is very limited, and we may not be able to retain the
services of our senior executives or key personnel, or attract and retain senior executives or key
personnel in the future.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, if Mr.&nbsp;Yan, any other members of our senior management or any of our other key
personnel joins a competitor or forms a competing company, we may not be able to replace them
easily and we may lose customers, business partners, key professionals and staff members. Each of
our senior executives and key personnel has entered into an employment agreement with us, which
contains confidentiality and non-competition provisions. In the event of a dispute between any of
our senior executives or key personnel and us, we cannot assure you as to the extent, if any, that
these provisions may be enforceable in the PRC due to uncertainties involving the PRC legal system.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Our business may suffer if we do not successfully manage our current and potential future
growth.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have experienced rapid expansion since we commenced operations in 1998 and we intend to
continue to expand in size and increase the number of services we provide. We have established 11
new offices from the beginning of 2003 to the date of this annual report. Our anticipated future
growth will place significant demands on our management and operations. Our success in managing
this growth will depend to a significant degree on the ability of our executive officers and other
members of senior management to operate effectively both independently and as a group, and on our
ability to improve and develop our financial and management information systems, controls and
procedures. In addition, we will have to successfully adapt our existing systems and introduce new
systems, expand, train and manage our workforce, and improve and expand our sales and marketing
capabilities. Mismanagement of any of our services in our new or existing markets or the
deterioration of the quality of our services could significantly damage our brand name and
reputation, adversely affecting our ability to expand our client base.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a &#147;one-stop&#148; human resource services provider, we will be required to provide high quality
executive search and other human resource related services. As we are currently in the process of
developing many of these businesses, we may encounter initial difficulties in ensuring the high
quality of our services. In particular, we may be unable to provide our <I>eSearch </I>clients with
acceptable candidates, we may provide clients with candidates whom they subsequently perceive as
poor performers, and/or we may provide clients with candidates whom they subsequently fail to
retain. With respect to our business process outsourcing service, we may be unable to establish a
substantial nationwide capability, accurately monitor ongoing changes in PRC laws and regulations,
acquire, develop and use up-to-date business and management technology and software, including
sophisticated computer and technology systems that could require significant capital expenditures,
and maintain the integrity and security of our systems. If we are unable to provide high quality
services, if material mistakes occur, or if we are unable to price these services properly, our
brand name and reputation could be damaged and we could incur legal liability to our clients and
their employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The management of our business involves the collection by our employees and agents of cash
payments from our customers, which constitute a significant portion of our total revenues. As a
result, we are exposed to theft, embezzlement and other criminal and fraudulent activity by our
employees, our agents and third parties. If we are unable to successfully detect and prevent such
activity, our results of operations and financial condition may be materially and adversely
affected.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Our limited operating history may not serve as an adequate basis to judge our future prospects
and results of operations.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We began operations in 1998. Our limited operating history may not provide a meaningful basis
on which to evaluate our business. Although our revenues have grown rapidly since inception, we
incurred net losses prior to 2002. We cannot assure you that we will maintain our profitability or
that we will not incur net losses in the future. We expect that our operating expenses will
increase as we expand. Any significant failure to realize anticipated revenue growth could result
in significant operating losses. We will continue to encounter risks and difficulties frequently
experienced by companies at a similar stage of development, including our potential failure to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>implement our business model and strategy and adapt and modify them as needed;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>increase awareness of our brands, protect our reputation and develop customer loyalty;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">




</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">8
</DIV>

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</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>anticipate with any degree of certainty the behavioral and operational changes of our
customers that have a significant impact on our business from time to time as they respond
to evolving social, economic and political changes in China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>manage our expanding operations and service offerings, including the
integration of any future acquisitions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>maintain adequate control of our expenses;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>adequately and efficiently operate, maintain, upgrade and develop our
website and the other systems and equipment we utilize in providing our services;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>attract, retain and motivate qualified personnel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>maintain our current, and develop new, contractual arrangements with local
newspapers and other important operational relationships; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>anticipate and adapt to changing conditions in the print, online and other
markets in which we operate as well as the impact of any changes in government regulation,
mergers and acquisitions involving our competitors, technological developments and other
significant competitive and market dynamics.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are not successful in addressing any or all of these risks, our business may be
materially and adversely affected.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We rely on our print advertising business to provide a significant majority of our revenues and
any adverse development in this business could materially and adversely affect our overall
results of operations.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generate a significant majority of our revenues from <I>51job Weekly</I>, which generated
approximately 62.3% of our revenues in 2003, 62.7% of our revenues in 2004 and 59.8% of our
revenues in 2005. While we have experienced significant growth in our <I>51job Weekly </I>business in
recent years, online advertisement may cause print media such as <I>51job Weekly </I>to become less
desirable as a form of advertising. To the extent this occurs and if we are not able to generate
sufficient revenues from our online recruitment services to offset any loss of revenues from our
print advertisement business, our overall results of operations could be materially and adversely
affected.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Our recruitment advertising business is subject to weekly fluctuations which hamper our ability
to predict when revenue will ultimately be recognized, if at all.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Due to the nature of recruitment advertising, we are not able to predict future revenue
streams with any degree of certainty. More specifically, the majority of our revenues is derived
from print advertising and we do not recognize advertising revenue until an advertisement is
actually printed. Orders for print advertisements are generally placed week-to-week and advertisers
may cancel or postpone their print advertisements within days of publication. Delays or
cancellations by advertisers hamper our ability to predict when revenue will ultimately be
recognized, if at all. Such uncertainty makes it difficult for us to accurately forecast revenues
for a particular quarter. Therefore, actual results may differ significantly from our targets or
estimated quarterly results, which could cause the price of our ADSs to fall.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Due to seasonal variations in demand for human resource services, we experience significant
fluctuations in our revenue streams which affect our ability to predict our quarterly results
and which may also cause quarterly results to vary from period to period.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant fluctuations in our revenue streams, particularly during the peak hiring periods
around the Chinese New Year holidays and the beginning of May and October, affect our ability to
predict quarterly results. During these peak periods, demand for recruitment advertising and other
human resource related services may or may not rise significantly depending on the needs of
employers as well as their perceptions of the job market. In addition, the dates of the Chinese New
Year holidays vary from year to year. We have also experienced a trend of lower fourth quarter
revenues as compared to revenues from the immediately preceding third quarter in recent years. As a
result of these factors, our revenues may vary from quarter to quarter and quarterly results may
not be comparable to the corresponding quarters of prior years. Such uncertainty makes it difficult
for us to predict revenues for a particular quarter. Therefore, actual results may differ
significantly from our targets or estimated quarterly results, which could cause the price of our
ADSs to fall.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We may not be able to successfully execute future acquisitions or efficiently manage any
acquired business.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may decide to expand, in part, by acquiring certain complementary businesses in the future.
The success of any material acquisition will depend upon several factors, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to identify and acquire businesses on a cost-effective basis;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">




</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">9
</DIV>

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<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to integrate acquired personnel, operations, products and technologies
into our organization effectively; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our ability to retain and motivate key personnel and to retain the clients
of acquired firms.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any such acquisition may require a significant commitment of management time, capital
investment and other management resources. There is a possibility that we will not be successful in
identifying and negotiating acquisitions on terms favorable to us. In addition, we cannot be
certain that any acquisition, if completed, will be successfully integrated into our existing
operations. If we are unable to effectively integrate an acquired business, our business, financial
condition and results of operations may be materially and adversely affected. In addition, if we
use our equity securities as consideration for acquisitions, we may dilute the value of your common
shares or ADSs. We have not engaged in any material acquisitions.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>If we are unable to attract and retain qualified personnel, our executive search, training and
business process outsourcing businesses may be materially and adversely affected.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The success of our executive search, training and business process outsourcing services
depends heavily on our ability to attract and retain skilled personnel. Successful expansion of our
executive search business depends on a dedicated team of consultants with expertise and
relationships in the geographic markets and industries in which our clients seek candidates.
Likewise, the success of our training business depends on personnel with the necessary skills to
conduct and support our training seminars and our other activities and services in this business.
Our business of outsourcing traditional human resource department functions such as payroll,
benefits and compliance management and related services depends on personnel with expertise in
local and national PRC government employment regulations, payroll management and other human
resource department functions. If we are unable to attract and retain critical skilled personnel,
our executive search, training and business process outsourcing businesses may be materially and
adversely affected.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>If we choose to develop or introduce new products and services outside of the human resource
services industry in China, these efforts may not be successful, which could materially and
adversely affect our financial condition and results of operations.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, we formed a business alliance with Recruit Co., Ltd., or Recruit, a privately
held human resource services company in Japan, to collaborate on the development of our human
resource products and services in China. Under the terms of our business alliance agreement, we
have also established an internal corporate planning group with Recruit to explore potential
business opportunities outside of the human resource services industry in China. We lack experience
and expertise in operating businesses outside of the human resource services industry. If we choose
to begin any such business, we cannot assure you that our efforts will be successful. We cannot
assure you that we will be able to deliver new products or services outside of the human resource
services industry on a commercially viable basis or in a timely manner, or at all. If any of our
efforts to begin businesses outside of the human resource services industry are not successful, our
financial condition and results of operations may be materially and adversely affected.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We may be subject to liability for placing advertisements with content that is deemed
inappropriate.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PRC laws and regulations prohibit advertising companies from producing, distributing or
publishing any advertisement that contains any content that violates laws and regulations, impairs
the national dignity of the PRC, involves designs of the national flag, national emblem or national
anthem or the music of the national anthem of the PRC, is reactionary, obscene, superstitious or
absurd, is fraudulent, or disparages similar products. If we are deemed to be in violation of such
regulations, we may be subject to penalties including confiscation of the illegal revenues, levying
of fines and suspension or revocation of our business license or advertising license, any of which
may materially and adversely affect our business.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We are subject to potential legal liability from both employers and job seekers with respect to
our executive search businesses and other human resource related services.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are exposed to potential claims associated with the recruitment process, including claims
by clients seeking to hold us liable for recommending a candidate who subsequently proves to be
unsuitable for the position filled, claims by current or previous employers of our candidates
alleging interference with employment contracts, claims by candidates against us alleging our
failure to maintain the confidentiality of their employment search or alleging discrimination or
other violations of employment law or other laws or regulations by our clients, and claims by
either employers or candidates alleging the failure of our business process outsourcing services to
comply with laws or regulations relating to
</DIV>

<P align="center" style="font-size: 10pt">10
</DIV>

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<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">employment, employee&#146;s insurance or benefits,
individual income taxes or other matters. Any such claims, regardless of merit, may force us to
participate in time-consuming, costly litigation or investigation, divert significant management
and staff attention, and damage our reputation and brand names. We do not maintain insurance
coverage for liabilities arising from claims by employers, candidates or third parties.</DIV>


<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We may be exposed to infringement or misappropriation claims by third parties, which, if
successful, could cause us to pay significant damage awards.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Third parties may bring claims against us alleging infringement of patents, trademarks or
copyrights, or misappropriation of their creative ideas or formats, or other infringement of their
proprietary intellectual property rights. Any such claims, regardless of merit, may involve us in
time-consuming, costly litigation or investigation, divert significant management and staff
resources, require us to enter into expensive royalty or licensing arrangements, prevent us from
using important technologies, business methods, content or other intellectual property, result in
monetary liability, or otherwise disrupt our operations. We expect that the likelihood of such
claims may increase, particularly in our online businesses, as the number of competitors in our
markets grows and as related patents and trademarks are registered or copyrights are obtained by
such competitors.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We rely heavily on our information systems, and if our access to technology supporting our
information systems is impaired or interrupted, or if we fail to further develop our
technology, our operations may be seriously disrupted.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our success depends in large part upon our ability to store, retrieve, process and manage
substantial amounts of information, including our client and candidate databases. To achieve our
strategic objectives and to remain competitive, we must continue to develop and enhance our
information systems. This may require the acquisition of equipment and software and the
development, either internally or through independent consultants, of new proprietary software. Our
inability to design, develop, implement and utilize, in a cost-effective manner, information
systems that provide the capabilities necessary for us to compete effectively, or any interruption
or loss of our information processing capabilities, for any reason, could materially disrupt our
operations.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>If we are not able to respond successfully to technological or industry developments, our
business may be materially and adversely affected.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market for online products and services is characterized by rapid technological
developments, frequent launches of new products and services, the introduction of new business
models, changes in customer needs and behavior, and evolving industry standards. These developments
may make our existing online recruitment services obsolete or less competitive. In order to respond
to such developments, we may be required to undertake substantial efforts and incur significant
costs. In the event that we do not successfully respond to such developments in a timely and
cost-effective manner, our business may be materially and adversely affected.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Computer viruses and &#147;hacking&#148; may cause delays or interruptions on our systems and may reduce
use of our services and damage our reputation and brand names.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Computer viruses and hacking may cause delays or other service interruptions on our systems.
&#147;Hacking&#148; involves efforts to gain unauthorized access to information or systems or to cause
intentional malfunctions, loss or corruption of data, software, hardware or other computer
equipment. In addition, the inadvertent transmission of computer viruses could expose us to a
material risk of loss or litigation and possible liability. Hacking and computer viruses could
result in significant damage to our hardware and software systems and databases, disruptions to our
business activities, including
to our e-mail and other communications systems, breaches of security and the inadvertent
disclosure of confidential or sensitive information, interruptions in access to our website through
the use of &#147;denial of service&#148; or similar attacks, and other material adverse effects on our
operations. We may incur significant costs to protect our systems and equipment against the threat
of, and to repair any damage caused by, computer viruses and hacking. Moreover, if a computer virus
or hacking affects our systems and is highly publicized, our reputation and brand names could be
materially damaged and usage of our services may decrease.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Our business could be adversely affected if our software contains bugs.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our online systems, including the <I>www.51job.com </I>website, and our other software applications,
products and systems could contain undetected errors or &#147;bugs&#148; that could adversely affect their
performance. Additionally, we regularly update and enhance our website and our other online systems
and introduce new versions of our software
</DIV>

<P align="center" style="font-size: 10pt">11
</DIV>

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<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">products and applications. The occurrence of errors in
any of these may cause us to lose market share, injure our reputation and brand names, and
materially and adversely affect our business.</DIV>


<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We are controlled by a small number of our existing shareholders and our board of directors has
the power to discourage a change of control.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of April&nbsp;30, 2006, six shareholders beneficially owned approximately 72.7% of our
outstanding common shares, including common shares underlying options outstanding.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;These shareholders are:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Rick Yan, our chief executive officer and a director, who beneficially owned
approximately 25.5% of our outstanding common shares, including common share underlying
options outstanding;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>entities affiliated with DCM &#150; Doll Capital Management, or DCM, which owned
approximately 16.7%, and which is affiliated with David K. Chao, one of our directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Recruit, which owned approximately 14.5%;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Michael Lei Feng, one of our executive officers, who owned approximately 7.6%;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Norman Lui, one of our executive officers, who owned approximately 5.3%; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Kathleen Chien, one of our executive officers, who owned approximately 3.1%.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While these shareholders have advised us that they do not consider themselves to be a &#147;group&#148;
as defined under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act,
individually these shareholders could have significant influence in determining the outcome of any
corporate transaction or other matter submitted to the shareholders for approval, including
mergers, consolidations and the sale of all or substantially all of our assets, election of
directors and other significant corporate actions. In cases where their interests are aligned and
they vote together, these shareholders will also have the power to prevent or cause a change in
control. Without the consent of some or all of these shareholders, we may be prevented from
entering into transactions that could be beneficial to us. In addition, these persons could violate
their non-competition or employment agreements with us or otherwise violate their fiduciary duties
by diverting business opportunities from us to themselves or others. The interests of our largest
shareholders may differ from the interests of our other shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, entities affiliated with DCM, Rick Yan, Michael Lei Feng and Norman Lui, and
Kathleen Chien entered into a share purchase agreement with Recruit. Under the terms and conditions
of the share purchase agreement, Recruit completed a purchase of 8,452,918 common shares, which
represented approximately 15% of our outstanding common shares as of December&nbsp;31, 2005, from these
shareholders in April&nbsp;2006. The share purchase agreement also provides for an option that would
allow Recruit to purchase up to an additional 14,862,313 common shares from these shareholders over
a three-year period beginning April&nbsp;2006 and result in Recruit owning approximately 40% of our
fully diluted common shares outstanding as of December&nbsp;31, 2005. In addition, under the share
purchase agreement, each of these selling shareholders has agreed that it will use its commercially
reasonable best efforts in cooperating with Recruit to have a representative of Recruit nominated
to stand for election to our board of directors and that it will vote all of its shares in favor of
the election of such nominee to our board of directors at any annual or extraordinary general
meetings
of our members at which such nominee may stand for election for the duration of the agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, our board of directors has the authority, without further action by our
shareholders, to issue common and preferred shares of up to 20% by par value of all issued shares
and to fix the powers and rights of these shares, including dividend rights, conversion rights,
voting rights, terms of redemption and liquidation preferences, any or all of which may be greater
than the rights associated with our common shares. These provisions could have the effect of
depriving you of an opportunity to sell your ADSs at a premium over prevailing market prices by
discouraging third parties from seeking to obtain control of us in a tender offer or similar
transaction.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>When the preferential tax treatment elected by some of the AdCo Subsidiaries and other
subsidiaries expire, we will incur higher tax rates for these entities which could adversely
affect our overall results of operations</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under current rules, newly organized PRC entities conducting advertising businesses are
entitled to elect to receive a tax exemption for their first two years of operation and may carry
forward tax losses accumulated in those years, if any, to future periods. A number of our AdCo
Subsidiaries have elected to receive these two-year tax exemptions. Upon the expiration of these
tax exemptions, these AdCo Subsidiaries will be taxed at the full statutory tax rate, currently
33%. Starting in 2004, tax exemptions granted to several of our AdCo Subsidiaries began to expire
which resulted in our higher effective tax rates in 2004 and 2005 compared to prior years. However,
a number of our AdCo Subsidiaries and other
</DIV>

<P align="center" style="font-size: 10pt">12
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">subsidiaries continue to receive tax exemptions which
are due to expire in 2006 and 2007, and as our business expands, we may establish new entities from
time to time which, depending on applicable tax laws, may be entitled to certain tax incentives,
including these tax exemptions. As these tax exemptions expire, the effective tax rate of our PRC
subsidiaries and our consolidated effective tax rate will increase, which could adversely and
materially affect our net income.</DIV>


<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Our earnings have been and will continue to be adversely affected by the change in our
accounting policies with respect to the expensing of stock options.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to January&nbsp;1, 2006, we accounted for share-based compensation transactions, such as
stock option grants, using the intrinsic value method (based on the discount to fair market value
on the date of grant) as prescribed by Accounting Principles Board, or APB, Opinion No.&nbsp;25,
&#147;Accounting for Stock Issued to Employees.&#148; On December&nbsp;16, 2004, the Financial Accounting
Standards Board, or FASB, issued Statement of Financial Accounting Standards No.&nbsp;123R (revised
2004), &#147;Share-Based Payment,&#148; or SFAS No.&nbsp;123R, which requires that such transactions be accounted
for using a fair value based method and recognized as expenses in our consolidated statement of
operations, effective as of the start of annual periods commencing after June&nbsp;15, 2005, the
effective date. Under SFAS No.&nbsp;123R, we can select from three transition methods: (1)&nbsp;the modified
prospective method, where the expenses related to unvested but still outstanding options as
calculated under the original SFAS No.&nbsp;123, &#147;Accounting for Stock-Based Compensation,&#148; or SFAS No.
123, be charged to expense without any change in previously calculated measurement; (2)&nbsp;a variation
of the modified prospective method, where in addition to (1), we restate for prior interim periods
using prior SFAS No.&nbsp;123 pro forma disclosure amounts; and (3)&nbsp;the modified retrospective method,
where all prior period financial statements are retroactively restated based on pro forma
disclosures as calculated under SFAS No.&nbsp;123.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under SFAS No.&nbsp;123R, we are required to expense the fair value of our stock option grants
effective January&nbsp;1, 2006 and have selected the modified prospective method as the transitional
method. This change in accounting policy with respect to the treatment of employee stock option
grants increased our share-based compensation expense in our consolidated statement of operations
in the first quarter of 2006 and we expect the implementation of SFAS No.&nbsp;123R may adversely affect
our earnings in the future.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Failure to achieve and maintain effective internal control over financial reporting in
accordance with Section&nbsp;404 of the Sarbanes-Oxley Act of 2002 could have a material adverse
effect on our business, results of operations and the market price of our ADSs.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to reporting obligations under the U.S. securities laws. We will be required by
the U.S. Securities and Exchange Commission as directed by Section&nbsp;404 of the Sarbanes-Oxley Act of
2002, or Sarbanes-Oxley Act, to include a report by our management on our internal control over
financial reporting in our annual reports on Form 20-F that contains an assessment by our principal
executive officer and principal financial officer of the effectiveness of our
internal control over financial reporting. In addition, our independent auditors must attest
to and report on their assessment of the effectiveness of our internal control over financial
reporting. These requirements will first apply to our annual report on Form 20-F for the fiscal
year ending December&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal executive officer and principal financial officer may not conclude that our
internal controls are effective. Moreover, even if they conclude that our internal controls over
our financial reporting are effective, our independent auditors may disagree. If our independent
auditors are not satisfied with our internal controls over financial reporting or the level at
which our internal controls over financial reporting are documented, designed, operated or
reviewed, or if the independent auditors interpret the requirements, rules or regulations different
from us, then it may decline to attest to our principal executive officer and principal financial
officer&#146;s assessment or may issue an adverse opinion. Any of these possible outcomes could result
in an adverse reaction in the financial marketplace due to a loss of investor confidence in the
reliability of our consolidated financial statements, which ultimately could have a material
adverse effect on the market price of our ADSs. We also may need to incur significant costs and use
significant management and other resources in an effort to comply with Section&nbsp;404 of the
Sarbanes-Oxley Act and other requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Moreover, internal controls over financial reporting may not prevent or detect misstatements
because of their inherent limitations, including the possibility of human error, the circumvention
or overriding of controls, or fraud. Therefore, even effective internal controls over financial
reporting can provide only reasonable assurance with respect to the preparation and fair
presentation of financial statements. In the past, our independent auditors have identified several
areas of our internal controls that require improvement, and we are in the process of implementing
changes to strengthen our internal controls. These measures may not be sufficient to address the
areas that require improvement or ensure that our internal controls are effective. If we fail to
maintain the adequacy of our internal controls over financial reporting,
</DIV>

<P align="center" style="font-size: 10pt">13
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">including any failure to
implement required new or improved controls, or if we experience difficulties in their
implementation, our business and operating results could be harmed, we could fail to meet our
reporting obligations, and there could be a material adverse effect on the market price of our
ADSs.</DIV>


<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We have no business insurance coverage.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than insurance for some of our properties, we do not maintain any insurance. Insurance
companies in China offer limited business insurance products and we do not have any business
liability insurance coverage for our operations. Any business disruption, litigation or natural
disaster might result in substantial costs and diversion of resources.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We are vulnerable to natural disasters and other calamities.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our servers are currently hosted in Shanghai. We have backup systems, but we cannot
assure you that such backup systems will be adequate if there are problems, or that they will
adequately protect us from the effects of fire, floods, typhoons, earthquakes, power loss,
telecommunications failures, break-ins, war, terrorist acts or similar events. Any of the foregoing
events may give rise to server interruptions, breakdowns, system failures, technology platform
failures and Internet failures, which could cause the loss or corruption of data or malfunctions of
software or hardware. Any such event could adversely affect our ability to provide our services to
users. See &#147;Item&nbsp;4. &#151; Information on the Company &#151; Business Overview &#151; Technology.&#148;
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We may become a passive foreign investment company, which could result in adverse U.S. tax
consequences to U.S. investors.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may be a passive foreign investment company for U.S. federal income tax purposes for any
year. Such classification could result in adverse U.S. tax consequences to U.S. investors. For
example, if we are a passive foreign investment company for any year, our U.S. investors may be
subject to increased tax liabilities under U.S. tax laws and regulations and may be subject to
additional reporting requirements. The determination of whether we are a passive foreign investment
company will be made on an annual basis and will depend on the composition of our income and
assets, including goodwill. The calculation of goodwill will be based, in part, on the market value
of our ADSs from time to time, which may be volatile. In general, we will be classified as a
passive foreign investment company for any taxable year in which either (1)&nbsp;at least 75% of our
gross income is passive income or (2)&nbsp;at least 50% of the value (determined
on the basis of a quarterly average) of our assets is attributable to assets that produce or
are held for the production of passive income. For purposes of these tests, cash, including working
capital, and investments are considered assets that produce or are held for the production of
passive income. If our retained cash or investments and any other passive assets comprised at least
50% of the value of our assets, we could be a passive foreign investment company. Our determination
of whether we are a passive foreign investment company is not binding on the Internal Revenue
Service. We cannot assure you that we will not be a passive foreign investment company for the
current or any future taxable year. If we are a passive foreign investment company in any year that
a U.S. investor holds shares or ADSs, we generally will continue to be treated as a passive foreign
investment company for that investor in all succeeding years. We urge U.S. investors to consult
their own tax advisors concerning the availability and making of a mark-to-market election. See
&#147;Item&nbsp;10. &#151; Additional Information &#151; Taxation &#151; United States Federal Income Taxation &#151; Passive
foreign investment company rules.&#148;
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Our subsidiaries face limitations on paying dividends or making other distributions to us.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a holding company and do not have any assets or conduct any business operations other
than our holding of the equity interests in, directly and indirectly:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd., or
WFOE, a wholly foreign owned enterprise in China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Qianjin Network Information Technology (Shanghai) Co., Ltd., or Tech JV; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Shanghai Qianjin Advertising Co., Ltd., or AdCo, and its subsidiaries.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of our holding company structure, we rely entirely on dividends, royalty payments
and license fees paid under trademark license agreements and certain other contractual arrangements
paid to us by our subsidiaries and affiliated entities in the PRC to finance our operations and to
pay dividends to our shareholders. These royalty payments and license fees paid under trademark
license agreements and certain other contractual arrangements do not require governmental or other
third party approval. However, the payment of dividends in China is subject to certain
restrictions. PRC regulations currently permit payment of dividends only out of accumulated profits
as determined in accordance with
</DIV>

<P align="center" style="font-size: 10pt">14
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">PRC accounting standards and regulations. Our subsidiaries and
affiliated entities in the PRC are also required to set aside a portion of their after-tax profits
according to PRC accounting standards and regulations to fund certain reserve funds that are not
distributable as cash dividends. The PRC government also imposes controls on the convertibility of
Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC.
We may also experience difficulties in completing the administrative procedures necessary to obtain
and remit foreign currency. See &#147;Item&nbsp;4. &#151; Information on the Company &#151; Business Overview &#151;
Regulation &#151; Regulation of Foreign Currency Exchange and Dividend Distribution.&#148; If we or any of
our subsidiaries are unable to receive all of the revenues from our operations through these
contractual or dividend arrangements, we may be unable to effectively finance our operations or pay
dividends on our common shares.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Our Corporate Structure</B>
</DIV>


<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>If the PRC authorities determine that our past ownership structure was inconsistent with the
requirements for operating certain of our businesses, we could be subject to sanctions.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC government regulates foreign ownership in entities providing advertising and human
resource related services. Prior to March&nbsp;2004, PRC laws and regulations prohibited foreign persons
from owning a controlling interest in advertising entities. This foreign ownership restriction was
subsequently relaxed in December&nbsp;2005 and foreign persons are now permitted to own 100% of
advertising entities. In addition, until November&nbsp;2003, there were no PRC laws or regulations
explicitly prohibiting or limiting foreign ownership in entities providing human resource related
services. Since November&nbsp;2003, foreign ownership in entities providing human resource related
services has been limited to 49%.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to our restructuring, 51net, our BVI subsidiary and a foreign entity, owned 99% of Tech
JV, which in turn owned, and continues to own, 80% of AdCo. AdCo owned, and continues to own, 90%
of the principal AdCo Subsidiaries. During this period, Tech JV, AdCo and the AdCo Subsidiaries
conducted a portion of our advertising and
human resource services businesses. We have been advised by Jun He Law Offices, our PRC
counsel, that the foreign ownership percentage of Tech JV, AdCo and the AdCo Subsidiaries prior to
our restructuring was above the maximum foreign ownership permitted for an entity conducting
advertising operations. In addition, we have been advised by our PRC counsel that, prior to our
restructuring, the foreign ownership percentage of Tech JV was above the maximum foreign ownership
permitted for an entity conducting human resource operations. In May&nbsp;2004, we restructured our
operations to comply with the foregoing PRC laws and regulations governing foreign ownership in
entities conducting advertising and human resource related services. In connection with our
restructuring, we informed relevant PRC governmental authorities that, historically, our foreign
ownership percentage of Tech JV, AdCo and the AdCo Subsidiaries was not in compliance with
limitations on foreign ownership of entities conducting advertising and human resources operations.
However, we have not received any waiver from the PRC government with respect to our past
non-compliance with foreign ownership laws limitations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There remains uncertainty regarding whether foreign owned PRC entities, such as AdCo, are
required to obtain special governmental approval in order to establish subsidiaries in the PRC or
otherwise invest in PRC entities. Following the formation of the AdCo Subsidiaries, in connection
with our restructuring we made inquiries with relevant PRC governmental authorities as to whether
AdCo was required to obtain such approval before establishing the AdCo Subsidiaries. We have been
unable to obtain any governmental ruling or advice on this matter. As a result, it is uncertain
whether special governmental approval, which we did not obtain, was necessary for the establishment
by AdCo of the AdCo Subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC government may determine that our ownership structure is or was inconsistent with or
insufficient for the proper operation of our businesses, or that our business licenses or other
approvals are or were not properly issued or not sufficient. For a discussion of the limitations on
foreign ownership governing our businesses, see &#147;Item&nbsp;4. &#151; Information on the Company &#151; Business
Overview &#151; Regulation &#151; Limitations on Foreign Ownership of Our Businesses.&#148; Furthermore, if new
governmental regulations arise in the future, the AdCo Subsidiaries may be subject to new
requirements and approvals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we or any of our subsidiaries or affiliated entities were found to be or to have been in
violation of PRC laws or regulations governing foreign ownership of advertising or human resource
services businesses, the relevant regulatory authorities would likely have broad discretion in
dealing with such violation, including but not limited to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>levying fines;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>revoking business licenses;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">




</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">15
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>restricting or prohibiting our use of proceeds from our initial public offering and
any future offerings to finance our business and operations in China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>requiring us to restructure the ownership structure or operations of our
subsidiaries or affiliated entities; and/or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>requiring us to discontinue all or a portion of our business.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any of these or similar actions could cause significant disruption to our business operations
or render us unable to conduct a substantial portion of our business operations and may materially
and adversely affect our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We rely on our agreements with an affiliated entity to provide human resource related services
and to act as an Internet content provider, and we rely on agreements with an affiliated entity
and its shareholders to receive all of the beneficial interest of this entity.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current PRC laws and regulations limit foreign investment in entities providing human resource
related services and in entities operating as Internet content providers. We currently provide
technical, consulting and human resource related services in conjunction with our affiliated
entity, RAL, which is wholly owned by Michael Lei Feng and Tao Wang, two of our executive officers.
RAL holds a license to provide human resource related services and we rely on RAL to provide human
resource related services to our clients under a contractual arrangement between RAL and our
majority owned subsidiary Tech JV. Similarly, RAL holds a license to operate as an Internet content
provider. While we provide all of our online recruitment services through Tech JV, we rely on RAL
to provide certain Internet content provider services to support Tech JV&#146;s online recruitment
services through a contractual arrangement with RAL. We have entered into agreements with RAL&#146;s
shareholders which enable us to effectively control RAL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tech JV, AdCo and the AdCo Subsidiaries recognize substantially all of our revenues. The
minority interests in Tech JV, AdCo and the AdCo Subsidiaries, which are direct or indirect
subsidiaries of Tech JV, are held by Qian Cheng, which is wholly owned by Michael Lei Feng and Tao
Wang. Through agreements with Qian Cheng and its shareholders, we have the substantial ability to
control, bear all the economic risks of, and receive all the economic rewards from, Qian Cheng. As
a result, we consolidate all of its interests for U.S. GAAP reporting purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As we rely on these agreements with RAL and Qian Cheng to enable us to provide certain
critical services to our clients as well as to receive all the economic benefits of Qian Cheng, a
significant disruption in these contractual relationships as a result of governmental sanction or
otherwise could result in our being required to restructure our operations which could result in a
significant expenditure of resources. If we are unable to restructure our operations to provide
those services through a different entity, we may experience significant disruptions in our ability
to provide online recruitment services or human resource related services to our customers. In
addition, if we are unable to consolidate the minority interests in Tech JV, AdCo and the AdCo
Subsidiaries, our results of operations would reflect Qian Cheng&#146;s minority interest in these
entities which, if not otherwise consolidated, would result in a significant reduction in our
reported net income. For a description of our contractual arrangements with these entities, see
&#147;Item&nbsp;4. &#151; Information on the Company &#151; Organizational Structure.&#148;
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>If our affiliated entity RAL is found to be operating in jurisdictions outside of Shanghai
without a business license, we could be subject to sanctions and our revenues could be
adversely affected.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RAL&#146;s existing human resource services license is limited to Shanghai. In 2005, revenues from
human resource related services provided to customers outside Shanghai accounted for approximately
2% of our total revenues. It is possible that government authorities in jurisdictions outside
Shanghai where certain of RAL&#146;s customers are located may assert that RAL is providing human
resource related services in such jurisdictions without a necessary license and is required to
obtain a human resource services license in such jurisdictions. As a result, RAL could be required
to cease providing human resource services to customers in such locations which could result in a
reduction in human resource related revenues. In addition, RAL may be subject to sanctions in the
form of forfeiture of profits, fines, or both.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Our contractual arrangements with RAL and Qian Cheng may not be as effective in providing
operational control as direct ownership of these businesses.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Because the percentage of foreign ownership in human resource and Internet content businesses
in China is limited under PRC laws and regulations, we depend substantially on RAL, in which we
have no direct ownership interest, and its contractual arrangements with us to provide those
services. Similarly, we rely on our contractual arrangements with Qian Cheng, in which we have no
direct ownership interest, to realize all of the economic rewards from Qian Cheng&#146;s minority
interests in Tech JV, AdCo and the AdCo Subsidiaries. Our contractual arrangements with RAL, Qian
Cheng and their
</DIV>

<P align="center" style="font-size: 10pt">16
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">respective shareholders may not be as effective as direct ownership in providing
control over their operations. RAL may fail to perform its contractual obligations required for us
to operate our business, such as keeping in good standing under its business licenses. Qian Cheng
and its shareholders may refuse to make payments or otherwise refuse to perform their contractual
obligations necessary for us to realize the economic rewards relating to Qian Cheng&#146;s minority
interests in Tech JV, AdCo and the AdCo Subsidiaries. In addition, the contractual arrangements
which provide us with the substantial ability to control these entities may be unenforceable and
the shareholders of these entities may refuse to renew these contractual arrangements. In any such
event, we will have to rely on the PRC legal system to enforce our rights. In many cases, the laws
and regulations governing the enforcement and performance of contractual arrangements are
significantly more limited than in the United States and many other countries and may afford us
little or no effective protection. If we are unable to enforce our rights, we may be unable to
operate our human resource and Internet content businesses through RAL or receive all of the
economic rewards from Qian Cheng. As a result, we may be required to restructure our operations
which would likely entail a significant expenditure of resources. We cannot assure you that any
such restructuring would be effective or would not result in similar or other difficulties. For a
description of these contractual arrangements, see &#147;Item&nbsp;4. &#151; Information on the Company &#151;
Organizational Structure.&#148;</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we or any of our subsidiaries or affiliated entities were found to be in violation of PRC
laws or regulations, the relevant regulatory authorities would likely have broad discretion in
dealing with such violation, including but not limited to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>levying fines;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>revoking business licenses;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>restricting or prohibiting our use of proceeds from our initial public
offering and any future offerings to finance our business and operations in China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>requiring us to restructure the ownership structure or operations of our
subsidiaries or affiliated entities; and/or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>requiring us to discontinue all or a portion of our business.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any of these or similar actions could cause significant disruption to our business operations
or render us unable to conduct a substantial portion of our business operations and may materially
and adversely affect our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>The PRC laws and regulations governing our current business operations and contractual
arrangements are uncertain, and if we are found to be in violation, we could be subject to
sanctions. In addition, any changes in such PRC laws and regulations may have a material and
adverse effect on our business.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are substantial uncertainties regarding the interpretation and application of PRC laws
and regulations, including but not limited to the laws and regulations governing our business, or
the enforcement and performance of our contractual arrangements in the event of the imposition of
statutory liens, death, bankruptcy and criminal proceedings. We and our subsidiaries are considered
foreign persons or foreign funded enterprises under PRC laws, and, as a result, we are required to
comply with PRC laws and regulations, including those governing foreign ownership in the
advertising, human resource services and Internet content industries. These laws and regulations
are relatively new and may be subject to future changes, and their official interpretation and
enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws,
regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors.
New laws and regulations that affect existing and proposed future businesses may also be applied
retroactively. In addition, the PRC authorities retain broad discretion in dealing with violations
of laws and regulations, including levying fines, revoking business licenses and requiring actions
necessary for compliance. In particular, licenses, permits and beneficial treatments issued or
granted to us by relevant governmental bodies may be revoked at a later time under contrary
findings of higher regulatory bodies. We cannot predict what effect the interpretation of existing
or new
PRC laws or regulations may have on our businesses. We cannot assure you that any such
restructuring would be effective or would not result in similar or other difficulties. We may be
subject to sanctions, including fines, and could be required to restructure our operations. As a
result of these substantial uncertainties, we cannot assure you that we will not be found in
violation of any current or future PRC laws or regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we or any of our subsidiaries or affiliated entities or any of our contractual arrangements
are found to be or to have been in violation of any existing or future PRC laws or regulations, the
relevant regulatory authorities would likely have broad discretion in dealing with such violation,
including but not limited to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>levying fines;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>revoking business licenses;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">17
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>restricting or prohibiting our use of proceeds from our initial public
offering and any future offerings to finance our business and operations in China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>requiring us to restructure the ownership structure or operations of our
subsidiaries or affiliated entities; and/or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>requiring us to discontinue all or a portion our business.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any of these or similar actions could cause significant disruption to our business operations
or render us unable to conduct a substantial portion of our business operations and may materially
and adversely affect our business, financial condition and results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are unable to quantify the likelihood that any sanctions would be imposed or the magnitude
of the effect of any such sanctions on our business, financial condition or results of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to the People&#146;s Republic of China</B>
</DIV>


<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Our business could be affected by changes in China&#146;s economic, political or social conditions
or government policies.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC economy differs from the economies of most developed countries in many respects,
including with respect to the:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>amount of government involvement;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>level of development;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>growth rate;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>control of foreign exchange; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>allocation of resources.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;While the PRC economy has experienced significant growth in the past 20&nbsp;years, growth has been
uneven, both geographically and among various sectors of the economy. The PRC government has
implemented various measures to encourage economic growth and guide the allocation of resources.
Some of these measures benefit the overall PRC economy, but may also have a negative effect on us.
For example, our financial condition and results of operations may be adversely affected by
government control over capital investments or changes in tax regulations that are applicable to
us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC economy has been transitioning from a planned economy to a more market-oriented
economy. Although in recent years the PRC government has implemented measures emphasizing the
utilization of market forces for economic reform, the reduction of state ownership of productive
assets and the establishment of sound corporate governance in business enterprises, a substantial
portion of the productive assets in China is still owned by the PRC government. The continued
control of these assets and other aspects of the national economy by the PRC government could
materially and adversely affect our business. For example, the PRC government could determine to
limit the extent to which government controlled entities may use private sector businesses such as
ours to service their human resource requirements. The PRC government could also determine to
develop and support government owned or controlled human resource enterprises in direct competition
with us. In addition, the PRC government continues to play a significant role in
regulating industry development by imposing industrial policies. It also exercises significant
control over PRC economic growth through the allocation of resources, controlling payment of
foreign currency-denominated obligations, setting monetary policy and providing preferential
treatment to particular industries or companies. Efforts by the PRC government to slow the pace of
growth in the Chinese economy could result in reduced job growth and recruitment activity, which in
turn could reduce demand for our recruitment advertising services. In addition, the PRC government
could determine to more closely regulate the advertising, Internet content delivery or human
resource industries, which could impose additional regulatory costs and burdens on us.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 2%"><B><I>PRC laws and regulations governing operators of Internet websites are unclear and the
regulation of the telecommunications and Internet industries may become more burdensome, and if
we are found to be in violation of PRC laws and regulations, we could be subject to sanctions.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The interpretation and application of existing PRC laws and regulations, the stated positions
of the main governing authority, the PRC Ministry of Information Industry, and the possibility of
new laws or regulations being adopted, have created significant uncertainty regarding the legality
of existing and future foreign investments in, and the businesses and activities of, companies with
Internet operations, including those of our company. In particular, the PRC Ministry of Information
Industry has stated that the activities of Internet
content providers, or entities providing
delivery of Internet
</DIV>

<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">content, are subject to regulation by various PRC government authorities,
depending on the specific activities conducted by the Internet content provider. We cannot be
certain that the commercial Internet content provider license issued by the local Shanghai
Municipal Telecommunications Bureau and held by RAL will satisfy these requirements. For example,
we may be required to obtain an inter-provincial Internet content provider license in order to
operate online businesses in multiple provinces, autonomous regions and centrally administered
municipalities. In addition, PRC government regulation of the telecommunications and Internet
industries is burdensome and may become even more so. New regulations could increase our costs of
doing business and prevent us from efficiently delivering our services. We have been informed that
the PRC Ministry of Information Industry is in the process of preparing a draft of a national
telecommunications law to provide a uniform regulatory framework for the telecommunications
industry. We do not know the nature or scope of these new laws and regulations and we cannot
predict whether they will have a positive or negative effect on any or all aspects of our business.
Our failure to comply with applicable PRC Internet regulations could subject us to severe
sanctions.</DIV>


<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>The continued growth of the Chinese Internet market depends on the establishment of an adequate
telecommunications infrastructure.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although private sector Internet service providers currently exist in China, almost all access
to the Internet is maintained through ChinaNet, which is owned by China Telecom under the
administrative control and regulatory supervision of the PRC Ministry of Information Industry. In
addition, the national networks in China connect to the Internet through a government-controlled
international gateway. This international gateway is the only channel through which a domestic user
can connect to the international Internet network. We rely on this infrastructure and China Telecom
to provide data communications capacity, primarily through local telecommunications lines. We
cannot assure you that this infrastructure will be developed. We have no access to alternative
networks or services, on a timely basis or if at all, in the event of disruptions, failures or
other problems with China&#146;s Internet infrastructure or telecommunications networks. The Internet
infrastructure in China may not support the demands associated with continued growth in Internet
usage.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>The PRC legal system has inherent uncertainties that could materially and adversely affect us.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC legal system is based upon written statutes. Prior court decisions may be cited for
reference but are not binding on subsequent cases and have limited value as precedents. Since 1979,
the PRC legislative bodies have promulgated laws and regulations dealing with economic matters such
as foreign investment, corporate organization and governance, commerce, taxation and trade.
However, the PRC has not developed a fully integrated legal system and the array of new laws and
regulations may not be sufficient to cover all aspects of economic activities in the PRC. In
particular, because these laws and regulations are relatively new, and because of the limited
volume of published decisions and their non-binding nature, the interpretation and enforcement of
these laws and regulations involve
uncertainties. In addition, published government policies and internal rules may have
retroactive effects and, in some cases, the policies and rules are not published at all. As a
result, we may be unaware of our violation of these policies and rules until some time later. Our
contractual arrangements with our affiliated entities are governed by the laws of the PRC. The
enforcement of these contracts and the interpretation of the laws governing these relationships is
subject to uncertainty. See &#147;&#151; Risks Related to Our Corporate Structure &#151; The PRC laws and
regulations governing our current business operations and contractual arrangements are uncertain,
and if we are found to be in violation, we could be subject to sanctions.&#148;
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>You may experience difficulties in effecting service of legal process, enforcing foreign
judgments or bringing original actions in China based on United States or other foreign laws
against us or our management.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We conduct substantially all of our operations in China and the majority of our assets are
located in China. In addition, the majority of our directors and executive officers reside within
China. As a result, it may not be possible to effect service of process within the United States or
elsewhere outside China upon these directors or executive officers, including with respect to
matters arising under U.S. federal securities laws or applicable state securities laws. Moreover,
our PRC counsel has advised us that the PRC does not have treaties with the United States or many
other countries providing for the reciprocal recognition and enforcement of judgment of courts.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Governmental control of currency conversion may affect the value of your investment.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC government imposes controls on the convertibility of Renminbi into foreign currencies
and, in certain cases, the remittance of currency out of China. We receive substantially all of our
revenues in Renminbi, which is currently not a freely convertible currency. Under our current
structure, our income will be primarily derived from
</DIV>

<P align="center" style="font-size: 10pt">19
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">dividend payments from our PRC subsidiaries
and other payments such as royalty and licensing fees. Shortages in the availability of foreign
currency may restrict the ability of our PRC subsidiaries and our affiliated entities to remit
sufficient foreign currency to pay dividends, royalty payments or other fees to us, or otherwise
satisfy their foreign currency dominated obligations. Under existing PRC foreign exchange
regulations, payments of current account items, including profit distributions, interest payments
and expenditures from the transaction, can be made in foreign currencies without prior approval
from the PRC State Administration of Foreign Exchange by complying with certain procedural
requirements. However, approval from appropriate governmental authorities is required where
Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses
such as the repayment of bank loans denominated in foreign currencies. The PRC government may also
at its discretion restrict access in the future to foreign currencies for current account
transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign
currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies
to our shareholders, including holders of our ADSs.</DIV>


<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>The fluctuation of the Renminbi may materially and adversely affect your investment.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is
affected by, among other things, changes in the PRC&#146;s political and economic conditions. On July
21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S.
dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed
band against a basket of certain foreign currencies. This change in policy resulted in an
approximately 2.5% appreciation in the value of the Renminbi against the U.S. dollar as of December
31, 2005, which resulted in a loss from foreign currency translation of RMB11.3&nbsp;million (US$1.4
million) for us in 2005. While the international reaction to the Renminbi revaluation has generally
been positive, there remains significant international pressure on the PRC government to adopt an
even more flexible currency policy, which could result in further and more significant revaluations
of the Renminbi. As a portion of our assets are denominated in U.S. dollars, any future upward
revaluations of the Renminbi may result in charges to our income statement and reductions in the
value of these U.S. dollar denominated assets when translated into Renminbi.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, as we rely entirely on dividends, royalty payments and other fees paid to us in
Renminbi by our subsidiaries and affiliated entities in the PRC, any significant downward
revaluation of the Renminbi may materially and adversely affect our cash flows, revenues and
financial condition, and the value of, and any dividends payable on, our
ADSs in foreign currency terms. Conversely, if we decide to convert our Renminbi into U.S.
dollars for the purpose of making payments for dividends on our common shares or for other business
purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of the
Renminbi we convert would be reduced. For further information on our foreign exchange risks and
certain exchange rates, see &#147;Item&nbsp;3. &#151; Key Information &#151; Selected Financial Data &#151; Exchange Rate
Information&#148; and &#147;Item&nbsp;11. &#151; Quantitative and Qualitative Disclosures about Market Risk &#151; Foreign
exchange risk.&#148;
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>We face risks related to health epidemics and other outbreaks.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our business could be adversely affected by the effects of avian flu, Severe Acute Respiratory
Syndrome, or SARS, or another epidemic or outbreak on the economic and business climate. In 2005,
there have been reports on the occurrences of avian flu in various parts of China, including
confirmed human cases. Restrictions on travel resulting from any prolonged recurrence of avian flu,
SARS or another epidemic or outbreak could adversely affect our ability to market and service new
and existing customers throughout China. Our business operations could be disrupted if one of our
employees is suspected of having avian flu, SARS, or another health epidemic, which would require
that a certain number of our employees be quarantined and/or our offices be disinfected. In
addition, our results of operations could be adversely affected to the extent that avian flu, SARS
or another outbreak harms the Chinese economy in general. We have not adopted any written
preventive measures or contingency plans to combat any future outbreak of avian flu, SARS or any
other epidemic.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Recent regulations relating to offshore investment activities by PRC residents may increase the
administrative burden we face and create regulatory uncertainties that may limit our ability to
acquire PRC companies.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of our growth strategy, we may decide to expand, in part, by acquiring certain
complementary businesses in the future, including companies incorporated in the PRC. In 2005, the
PRC State Administration of Foreign Exchange, or SAFE, issued various regulations that will require
approvals from, and registrations with, PRC government authorities in connection with direct or
indirect offshore investment activities by PRC residents and PRC corporate entities. A SAFE
regulation, effective from November&nbsp;1, 2005, retroactively requires registration of direct or
indirect investments previously made by PRC residents in offshore companies before March&nbsp;31, 2006.
In the event that a PRC shareholder</DIV>

<P align="center" style="font-size: 10pt">20
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="margin-left: 0%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt">
 with a direct or indirect stake in an offshore parent company
fails to make the required registration, the failure would subject such PRC shareholder
to personal
liability and may also limit such offshore parent company&#146;s ability to contribute additional
capital into its PRC subsidiaries or its PRC subsidiaries&#146; ability to distribute dividends to the
offshore parent, or otherwise adversely affect its business.</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Current regulations are still uncertain and unclear. It is possible that the relevant
government authorities may promulgate new legislation to interpret, amend or implement these
regulations in various ways. As a result, we cannot assure you that we or the owners of any target
PRC business we may acquire, as the case may be, will be able to complete the necessary approval,
filings and registrations for a proposed acquisition. This may restrict our ability to implement
our acquisition strategy and adversely affect our operations. For more information about SAFE
regulations, see &#147;Item&nbsp;10. &#151; Additional Information &#151; Exchange Controls.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Risks Related to Our ADSs</B>
</DIV>


<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>The market price for our ADSs may be volatile.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The market prices of the securities of companies with Internet related and online businesses
have been extremely volatile and may be subject to wide fluctuations in response to factors
including the following:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>actual or anticipated fluctuations in our quarterly operating results;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes or revisions by us to previously released operating and financial targets;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements of new services by us or our competitors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>changes in financial estimates or recommendations by securities analysts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>conditions in our industry, which is the market for recruitment advertising
services and other human resource
related services in China;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>announcements by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures or capital commitments;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>additions or departures of key personnel;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>release of transfer restrictions on our outstanding common shares or ADSs or
sales of additional common shares or ADSs; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pending or potential litigation or regulatory investigations.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the securities market has from time to time experienced significant price and
volume fluctuations that are not related to the operating performance of particular companies.
These market fluctuations may also materially and adversely affect the market price of our ADSs.
The price of our ADSs has experienced significant volatility since our initial public offering and
we expect the price and volume volatility with respect to our ADSs to continue in the future.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>The future sales, or perceived future sales, by our existing shareholders of a substantial
number of our ADSs in the public market could adversely affect the price of our ADSs.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If our shareholders sell, or are perceived as intending to sell, substantial amounts of our
common shares or ADSs, including those issued upon the exercise of outstanding options, in the
public market, the market price of our ADSs could fall. Such sales, or perceived potential sales,
also might make it more difficult for us to sell equity or equity related securities in the future
at a time and price that we deem appropriate. Common shares held by our existing shareholders and
our affiliates may also be sold in the public market in the future under, and subject to the
restrictions contained in, Rule&nbsp;144 under the U.S. Securities Act of 1933, as amended, or the
Securities Act. In addition, see &#147;Item&nbsp;6. &#151; Directors, Senior Management and Employees &#151;
Compensation &#151; Stock-Based Compensation Plans&#148; for a description of outstanding options to purchase
our common shares.
</DIV>

<DIV align="left" style="margin-left: 2%; text-indent: 0%; margin-right: 0%; font-size: 10pt; margin-top: 6pt"><B><I>Your right to participate in any future rights offerings may be limited, which may cause
dilution of your holdings.</I></B></DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may from time to time distribute rights to our shareholders, including rights to acquire
our securities. Under the deposit agreement, the depositary bank will not offer you those rights
unless the distribution to ADS holders of both the rights and any related securities is either
registered under the Securities Act, or exempt from registration under the Securities Act. We are
under no obligation to file a registration statement with respect to any such rights or securities
or to endeavor to cause such a registration statement to be declared effective. Moreover, we may
not be able to establish an exemption from registration under the Securities Act. Accordingly, you
may be unable to participate in our rights offerings and may experience dilution in your holdings.
</DIV>


<P align="center" style="font-size: 10pt">21
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">





<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B><I>You may not be able to exercise your right to vote.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a holder of ADSs, you may only exercise the voting rights with respect to the underlying
common shares in accordance with the provisions of the deposit agreement. Under the deposit
agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your
voting instructions, the depositary will vote the underlying common shares in accordance with these
instructions. Otherwise, you will not be able to exercise your right to vote unless you withdraw
the shares. Under our fifth amended and restated memorandum and articles of association, the
minimum notice period required for convening either an annual meeting or a general meeting called
to vote on matters requiring the approval of two thirds of the voting shares is 20&nbsp;days. The
minimum notice period for other general meetings is 14&nbsp;days. When a general meeting is convened,
you may not receive sufficient advance notice to withdraw the shares to allow you to vote with
respect to any specific matter. If we ask for your instructions, the depositary will notify you of
the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you
that you will receive the voting materials in time to ensure that you can instruct the depositary
to vote your shares. In addition, the depositary and its agents are not responsible for failing to
carry out voting instructions or for the manner of carrying out voting instructions. This means
that you may not be able to exercise your right to vote and there may be nothing you can do if the
shares underlying your ADSs are not voted as you requested.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B><I>You may not receive distributions on common shares or any value for them if it is illegal or
impractical to make them available to you.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions
it or the custodian receives on common shares or other deposited securities after deducting its
fees and expenses. You will receive these distributions in proportion to the number of common
shares your ADSs represent. However, the depositary is not responsible if it decides that it is
inequitable or impractical to make a distribution available to any holders of ADSs. For example,
the depositary may determine that it is not feasible to distribute certain property through the
mail. Additionally, the value of certain distributions may be less than the cost of mailing them.
In these cases, the depositary may determine not to distribute such property. We have no obligation
to register under U.S. securities laws any ADSs, common shares, rights or other securities received
through such distributions. We also have no obligation to take any other action to permit the
distribution of ADSs, common shares, rights or anything else to holders of ADSs. This means that
you may not receive the distribution we make on our common shares or any value for them if it is
illegal or impractical for us to make them available to you. These restrictions may have a material
adverse effect on the value of your ADSs.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B><I>You may be subject to limitations on transfer of your ADSs.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Your ADSs represented by the ADRs are transferable on the books of the depositary. However,
the depositary may close its transfer books at any time or from time to time when it deems
expedient in connection with the performance of its duties. In addition, the depositary may refuse
to deliver, transfer or register transfers of ADSs generally when our books or the books of the
depositary are closed, or at any time if we or the depositary thinks it advisable to do so because
of any requirement of law or of any government or governmental body, or under any provision of the
deposit agreement, or for any other reason.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt; margin-left: 3%"><B><I>You may face difficulties in protecting your interests, and your ability to protect your rights
through the U.S. federal courts may be limited, because we are incorporated under Cayman
Islands law.</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are a company incorporated under the laws of the Cayman Islands, and the majority of our
assets are located outside the United States. In addition, a majority of our directors and
executive officers are nationals or residents of jurisdictions other than the United States and all
or a substantial portion of their assets are located outside the United States. As a result, it may
be difficult for investors to effect service of process within the United States upon our directors
or executive officers, or enforce judgments obtained in the United States courts against our
directors or executive officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our corporate affairs are governed by our memorandum and articles of association, the Cayman
Islands Companies Law (2004 Revision) and the common law of the Cayman Islands. The rights of
shareholders to take action against the directors, actions by minority shareholders and the
fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent
governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived
in part from comparatively limited judicial precedent in the Cayman Islands as well as from English
common law, the decisions of whose courts are of persuasive authority, but are not binding on a
court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of
our directors under Cayman Islands law are not as clearly established as they would be under
statutes or judicial precedent in some jurisdictions in the United States. In particular,
</DIV>

<P align="center" style="font-size: 10pt">22
</DIV>

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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">the Cayman Islands has a less developed body of securities laws as compared to the United
States, and some states, such as Delaware, have more fully developed and judicially interpreted
bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a
shareholder derivative action in a federal court of the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Cayman Islands courts are also unlikely:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to recognize or enforce against us judgments of courts of the United States
based on certain civil liability provisions of U.S. securities laws; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>to impose liabilities against us, in original actions brought in the Cayman
Islands, based on certain civil liability provisions of U.S. securities laws that are
penal in nature.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no statutory recognition in the Cayman Islands of judgments obtained in the United
States, although the courts of the Cayman Islands will in certain circumstances recognize and
enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the
merits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As a result of all of the above, public shareholders may have more difficulty in protecting
their interests in the face of actions taken by management, members of the board of directors or
controlling shareholders than they would as public shareholders of a U.S. company.
</DIV>
<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4. INFORMATION ON THE COMPANY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. History and Development of the Company</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We commenced our business in 1998. Since our inception, we have conducted substantially all of
our operations in China. In March&nbsp;2000, our founders incorporated a new holding company, now called
51job, Inc., as an exempted limited liability company in the Cayman Islands under the Cayman
Islands Companies Law (2004 Revision). Subsequently, 51job, Inc. acquired 51net.com Inc., or 51net,
a British Virgin Islands company, and other subsidiaries to become the holding company of our
corporate group. We operate as a foreign investment enterprise in China through our wholly owned
subsidiaries, 51net, which is the registered owner of some of our trademarks and our domain name,
51net Beijing, which is a Cayman Islands company, and 51net HR, which is a dormant entity
incorporated in the Cayman Islands, as well as our affiliated Chinese entities, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Shanghai Qianjin Advertising Co., Ltd. (whose name we changed from Shanghai
Qianjin Culture Communications Co., Ltd. in November&nbsp;2005), or AdCo, and AdCo&#146;s fifteen
branch offices, seven majority owned subsidiaries and one jointly owned subsidiary with
Tech JV, or, collectively, the AdCo Subsidiaries. AdCo and the AdCo Subsidiaries hold
licenses and permits to conduct advertising businesses;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Shanghai Run An Lian Information Consultancy Co., Ltd., or RAL, which holds
human resource related services and Internet content provision licenses;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Qianjin Network Information Technology (Shanghai) Co., Ltd., or Tech JV,
which is allowed to conduct online advertising and holds a human resource related services
license;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd., or
WFOE, which is wholly owned by 51net Beijing and owns certain of our trademarks and
registered copyrights;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Beijing Qian Cheng Si Jin Advertising Co., Ltd., or Qian Cheng, which is our
joint venture partner in Tech JV;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Beijing Run An Information Consultancy Co., Ltd., or Run An, which holds a
minority interest in Qian Cheng;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Shanghai Wang Cai Advertising Co., Ltd. (whose name we changed from Shanghai
Jin Lian Advertising Co., Ltd. in July&nbsp;2005), or Wang Cai AdCo, which is jointly owned by
AdCo and TechJV and a AdCo Subsidiary that holds licenses to conduct advertising
businesses;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Wuhan Mei Hao Qian Cheng Advertising Co., Ltd., or Wuhan AdCo, which holds a
minority interest in Tech JV and our AdCo Subsidiary in the city of Wuhan that conducts
advertising businesses; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Wang Jin Information Technology (Shanghai) Co., Ltd., which is wholly owned
by 51net and has no current operations.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2004, we engaged in a restructuring to comply with current PRC foreign ownership
limitation. Since 2002, substantially all of our business and operations have been conducted
through Tech JV and its branches, AdCo and the AdCo Subsidiaries. For a discussion on our group
structure and the contractual arrangements among our entities, see &#147;Item&nbsp;4. &#151; Information on the
Company &#151; Organizational Structure.&#148;
</DIV>

<P align="center" style="font-size: 10pt">23
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We completed the initial public offering of 6,037,500 American depositary shares, each
representing two of our common shares, par value US$0.0001 per share, on October&nbsp;4, 2004. On
September&nbsp;29, 2004, the trading of our ADSs on the Nasdaq National Market, or Nasdaq, under the
symbol &#147;JOBS,&#148; commenced.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, we formed a business alliance with Recruit, a privately held human resource
services company in Japan, to collaborate on the development of our human resource products and
services in China. Under the terms of our business alliance agreement, we have also established an
internal corporate planning group with Recruit to explore potential business opportunities outside
of the human resource services industry in China although to date we have not begun to offer any
such products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal executive offices are located at 21st Floor, Wen Xin Plaza, 755 Wei Hai Road,
Shanghai 200041, People&#146;s Republic of China. Our telephone number at this address is &#043;(86-21)
3201-4888. Our agent for service of process in the United States is National Registered Agents,
Inc., located at 875 Avenue of the Americas, Suite&nbsp;501, New York, New York 10001.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our principal capital expenditures for 2003 and 2004 consisted of purchases of computers,
network equipment, software and other intellectual property rights for a total of approximately
RMB9.6&nbsp;million and RMB13.8&nbsp;million, respectively. Our principal capital expenditures for 2005 were
approximately RMB54.4&nbsp;million (US$6.7&nbsp;million) and included installment payments toward the
purchase of a new office complex and purchases of office equipment and software. In October&nbsp;2005,
we signed a letter of intent to purchase a new office complex in Zhangjiang High Technology Park in
Shanghai for approximately RMB114&nbsp;million (US$14.1&nbsp;million).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our capital expenditure plans for 2006 have not yet been fixed, but we completed the purchase
of the new office complex in Zhangjiang Technology Park in April&nbsp;2006 and intend to purchase
computers, technology-related equipment and software. Regarding the new office complex, we expect
to incur additional expenses associated with renovations, relocation and other related items. We
plan to move our national technology and online service center as well as our principal executive
offices to the new premises in late 2006. In addition, in March&nbsp;2006, we signed a letter of intent
to purchase our current principal executive offices at 21st Floor, Wen Xin Plaza, 755 Wei Hai Road,
which we expect will become our Shanghai sales office, for an aggregate consideration of RMB27
million (US$3.3&nbsp;million). Capital expenditures in 2006 have been, and are expected to continue to
be, funded through operating cash flows and through our existing capital resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Business Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that we are a leading provider of integrated human resource services in China, with
a strong focus on recruitment related services. Our recruitment related services are delivered in
both print and online formats, and we closely integrate these two services to allow us to reach a
wide and diverse audience. Critical aspects in providing our services include the Internet,
web-based applications and human resource software.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that we are the only significant nationwide provider of integrated print and online
recruitment advertising services in China. We believe that our integrated advertising services
allow us to attract a broad base of advertisers and job seekers and provide us with a platform from
which we can market our other human resource related services. In addition to recruitment
advertising services, we also provide executive search and other complementary human resource
related services for large and small employers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our goal is to be a &#147;one-stop&#148; solution to human resource departments by providing recruitment
and other human resource related services to employers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Although we provide services to both employers and job seekers, we derive substantially all of
our revenues from employers. We receive a majority of our revenues in the form of fees from
employers for placing job advertisements on <I>51job Weekly </I>and <I>www.51job.com</I>. We also receive fees
from employers for access to our <I>www.51job.com </I>resum&#233; database, use of <I>eHire </I>and in connection with
<I>eSearch </I>and other human resource related services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our Product and Services</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide a range of human resource services in the following categories:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>recruitment related services, including print advertising, online
recruitment and executive search services; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>other human resource related services, such as training and business process
outsourcing.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our recruitment related services consist of our integrated print advertising and online
recruitment services as well as our executive search services. We generate the substantial majority
of our revenues from these businesses. Our print advertising business generated 62.3% of our
revenues in 2003, 62.7% of our revenues in 2004 and 59.8% of our revenues
</DIV>

<P align="center" style="font-size: 10pt">24
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">in 2005. Our online recruitment services business generated 26.2% of our revenues in 2003,
23.2% of our revenues in 2004 and 26.8% of our revenues in 2005. Our executive search business
generated 5.4% of our revenues in 2003, 5.2% of our revenues in 2004 and 4.4% of our revenues in
2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We offer a number of other value-added human resource services in areas such as training and
business process outsourcing. Other human resource related services generated 6.1% of our revenues
in 2003, 8.9% of our revenues in 2004 and 9.0% of our revenues in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Recruitment related services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Print advertising &#151; 51job Weekly. 51job Weekly</I>, which we formerly translated into English as
<I>Career Post Weekly</I>, is a city-specific recruitment advertising publication which is published once
a week and is distributed as an insert in local newspapers and/or on a stand-alone basis. As of
March&nbsp;31, 2006, <I>51job Weekly </I>was published in 24 major cities in China. We established operations
in the cities of Changchun in February&nbsp;2005, Suzhou in June&nbsp;2005, Fuzhou in July&nbsp;2005, Zhengzhou in
September&nbsp;2005 and Tianjin in January&nbsp;2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The 24 cities where <I>51job Weekly </I>is published and our newspaper contractor in each city as of
March&nbsp;31, 2006 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="18%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="31%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>City</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Newspaper contractor</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>City</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Newspaper contractor</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Beijing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>China Trade News</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Kunming</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Chuncheng Evening News</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changchun</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>City Evening News</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Nanjing</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Modern Express</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Changsha</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Sanxiang Metropolitan News</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Ningbo</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Modern Golden News</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chengdu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Hua Xi Metropolitan News</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Qingdao</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Qingdao Financial Times</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Chongqing<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Human Resource News</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shanghai</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>China Trade News</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Guangzhou</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Guangzhou Youth Daily</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shenyang</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Friendly Times</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dalian</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Dalian Evening News</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Shenzhen</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Nan Fang Metropolitan News</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fuzhou</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Straits Talent News</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Suzhou</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Modern Express</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hangzhou</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>News Information Daily</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Tianjin</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Metro Express</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Harbin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Harbin Lifestyle Daily</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wuhan</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>News Information Daily</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Hefei</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Hefei Evening News</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Xian</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>China Merchant News</I></TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jinan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Jinan Times</I></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Zhengzhou</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top"><I>Youth Herald</I></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>English translations of the Chinese names.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>In February&nbsp;2006, we changed our newspaper contractor in Chongqing from <I>Chongqing Business
Daily</I>.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>51job Weekly </I>is not published in Hong Kong.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A different version of <I>51job Weekly </I>is published in each of our markets, with each version
containing city-specific recruitment advertisements. We closely coordinate <I>51job Weekly </I>with our
<I>www.51job.com </I>online recruitment website and post substantially all of the recruitment
advertisements appearing in <I>51job Weekly </I>on <I>www.51job.com </I>as well. <I>51job Weekly </I>contains
recruitment advertisements for the full range of job categories that are available on our website,
including sections for professional, middle management and technical personnel. Advertisements
placed in <I>51job Weekly </I>are primarily in Chinese language.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employers use <I>51job Weekly </I>both as a recruitment tool and as an advertising and publicity
medium to promote their brand name and corporate awareness among job seekers. <I>51job Weekly</I>
recruitment advertisements come in a variety of formats, from large, multi-color advertisements
using graphics and corporate trademarks, often placed by international and large domestic
companies, to simple text job announcements, typically posted by smaller, local businesses. <I>51job
Weekly </I>is divided into a number of separate sections, with certain sections targeted at higher
income and more educated job seekers containing large, colorful advertisements on glossy, high
quality paper. Other sections contain simpler text-only advertisements targeted at middle and lower
income job seekers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In China, entities engaged in publishing activities are required by the government to have a
publishing license. Since we do not have any publishing licenses, we have established a
relationship with a local newspaper in each market where <I>51job Weekly </I>is produced. These newspapers
provide us with printing and publishing services on a contractual basis, generally for a term of
two years. These newspapers also generally provide us with distribution and marketing support in
our local markets, although we sometimes undertake marketing independently. <I>51job Weekly </I>is
distributed as an insert in our contractor&#146;s newspaper in an effort to increase our circulation and
help us establish our brand name. As an
</DIV>

<P align="center" style="font-size: 10pt">25
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">insert in these newspapers, <I>51job Weekly </I>is sold at newsstands, kiosks, convenience stores,
supermarkets and other venues. We provide vendors with marketing materials such as posters, display
racks and other promotional items. We also circulate <I>51job Weekly </I>independently through our direct
marketing campaigns. Our direct marketing includes offering free copies of <I>51job Weekly </I>at
self-help kiosks at job fairs, in the lobbies of major office buildings, at post offices, on
university campuses and in other public areas where the public circulation of newspapers is
permitted. We have entered into exclusive marketing arrangements to offer free copies of <I>51job
Weekly </I>in subway stations in Beijing, Guangzhou and Shanghai and in light rail stations in
Chongqing.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We may change our newspaper contractor in a city when we are able to obtain more favorable
terms or higher quality service from a different newspaper contractor. From inception, we have
changed our newspaper contractor a total of eight times across the 24 cities in which we had a
contract with local newspapers as of March&nbsp;31, 2006. See &#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors
&#151; Risk Related to Our Business &#151; We are dependent on local newspaper contractors in each of our
geographic markets to publish and distribute <I>51job Weekly</I>.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The advertising fees that we charge depend on a variety of factors, including the size,
placement, format, and use of color and graphics in the advertisement, the length of time the
advertisement is to appear, and the market in which the advertisement is placed. As we grow in our
existing markets and expand into new cities, we increase our client base and the number of
advertising pages that we produce. Our print advertising revenues are primarily affected by the
number of print advertising pages and the fees that we charge. Pricing for specific products can
vary significantly from city to city.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our print advertising business is characterized by seasonal variations, particularly during
the peak hiring periods around the Chinese New Year holidays and the beginning of May and October.
As a result, our print advertising revenues may fluctuate significantly from quarter to quarter
depending on customer demand and needs. See &#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151; Risk
Related to Our Business &#151; Due to seasonal variations in demand for human resource services, we
experience significant fluctuations in our revenue streams which affect our ability to predict our
quarterly results and which may also cause quarterly results to vary from period to period.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the estimated number of print advertising pages we generated
and the cities where <I>51job Weekly </I>was published for the periods and as of the dates indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Estimated number of print advertising pages<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,635</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,884</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Number of cities where <I>51job Weekly </I>was published<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>For the years ended December&nbsp;31, 2003, 2004 and 2005.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>As of December&nbsp;31, 2003, 2004 and 2005.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Increases in our estimated number of print advertising pages generally reflect our
geographic expansion as well as further penetration of existing markets. However, there is no
direct correlation between the growth in the number of cities in which we operate and in the
overall number of our print advertising pages.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Online recruitment services &#151; www.51job.com</I>. We established our online recruitment website,
<I>www.51job.com</I>, in 1999. <I>www.51job.com </I>provides online recruitment advertisements in both Chinese
and English on a city-by-city basis and covers many different job categories ranging from
professional and middle management positions to clerical, industrial and hourly jobs. We regularly
maintain and update our <I>www.51job.com </I>with job search, training and general career management
content.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that <I>www.51job.com </I>is one of the largest dedicated national recruitment websites in
China in terms of the number of recruitment advertisements. We also believe that <I>www.51job.com </I>is
among the largest in terms of the number of registered job user accounts and posted job seeker
resum&#233;s, with approximately 13&nbsp;million user accounts established since the launch of our website in
1999 and more than 8&nbsp;million resum&#233;s posted online as of March&nbsp;31, 2006. We believe that
<I>www.51job.com </I>is perceived as a &#147;destination site&#148; by job seekers because of its large volume of
advertisements and the job search, training and general career management and advisory content
available on the website.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that <I>www.51job.com </I>provides employers with a cost-effective means of reaching their
target audience. As our website contains nationwide recruitment advertisements, employers can
access a large pool of potential candidates from a wide geographic area. Certain employers post
advertisements solely online when they consider the demographics of their target audience to favor
the use of the Internet for recruitment advertising. As a result, <I>www.51job.com </I>includes a higher
number of technology related positions than <I>51job Weekly </I>as well as recruitment
</DIV>

<P align="center" style="font-size: 10pt">26
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">advertisements targeted at younger job seekers that are more likely to use the Internet. We
generally update the advertisements on our website several times each hour, which allows employers
to receive responses more rapidly than is generally possible using print advertisements. Employers
also use our website as a marketing tool, placing advertising banners, trademarks, logos, website
hyperlinks and other devices to promote their image for a fee that varies depending on the size and
graphics in their presentation. We believe that certain employers view this image promotion as a
significant means of attracting online job seekers to their recruitment advertisements on our
website. As a result, we believe that our ability to offer these devices is an important element in
our ability to attract online recruitment advertising business, which generates a material portion
of our revenues. However, in the event of any adverse change in the actual or perceived
effectiveness of online image promotion, or online advertising in general, our online recruitment
advertising business may be adversely affected. See &#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151;
Risks Related to Our Business &#151; If the Internet, and online advertising in particular, does not
achieve broad acceptance in China as a medium for recruitment, our online recruitment services
business may be adversely affected.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Employers can use our <I>eHire </I>web-based platform to search our job candidate database and
download resum&#233;s for a fee. In addition, <I>eHire </I>contains other tools that enable employers to
manage, organize and streamline the recruitment and hiring process. We also offer website design as
an additional value-added service and marketing tool for corporate customers. We can build
customized &#147;private label&#148; recruitment websites with the &#147;look and feel&#148; of a dedicated website. We
design these sites in-house to client specifications and operate and maintain these sites for our
clients. These client sites, together with our <I>www.51job.com </I>website, are hosted by China Telecom.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the estimated number of unique employers who used our online
recruitment services for the periods indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Estimated unique employers using online recruitment services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,880</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,317</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,599</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>www.51job.com </I>provides job seekers with online tools to search for job opportunities and
allows them to:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>search and review all current recruitment advertisements;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>receive e-mails of advertisements matching the job seeker&#146;s profile and preferences;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>submit resum&#233;s directly to prospective employers to apply for a desired position;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>organize and track job related information and applications; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>obtain information about upcoming job fairs and career development and other job related information.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide job seekers access to <I>www.51job.com </I>free of charge.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We closely coordinate <I>51job Weekly </I>with our <I>www.51job.com </I>online recruitment website, and we
post substantially all of the recruitment advertisements appearing in <I>51job Weekly </I>on <I>www.51job.com</I>
as well. We place a basic description of a <I>51job Weekly </I>recruitment advertisement on our website as
a complimentary service to our customers. This practice also allows us to introduce our online
recruitment website to customers who have only purchased print recruitment advertising to increase
potential cross-selling opportunities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Executive search &#151; eSearch</I>. To meet employers&#146; recruitment needs, we supplement our
recruitment advertising service with our <I>eSearch </I>executive search services. We conduct searches
principally for employers seeking to fill mid-level professional, managerial and junior executive
positions. We generally charge corporate clients a total assignment fee of approximately 30% of the
candidate&#146;s annual compensation, including a minimum upfront retainer. We maintain a team of
specialized executive search consultants whom we dedicate exclusively to providing this service,
while working closely with our recruitment and other sales staff to cross-sell our products and
develop client relationships. Substantially all of our executive search assignments are engaged
locally in China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that as companies expand and need to hire qualified and more experienced
professional and managerial personnel, including those who are not active job seekers, demand for
executive search services market may increase. We believe that we are well positioned in this
market as we may attract employers that have used our <I>www.51job.com </I>website or <I>51job Weekly </I>but are
first-time executive search users. In addition, our search consultants can access our extensive
online candidate resum&#233; database which other search firms are restricted from using.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other human resource related services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We conduct training seminars in business management, leadership, sales and marketing, human
resource,
</DIV>

<P align="center" style="font-size: 10pt">27
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">negotiation skills, financial planning and analysis, public administration, manufacturing,
secretarial and other skills. We provide our seminars to the general public and on a customized,
in-house basis for corporate clients. In addition, we provide outdoor-based training exercises and
programs for corporate clients to promote personal development, team building and communication. We
believe that our training services build our brand awareness as a leading provider of integrated
human resource services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We perform business process outsourcing services by managing human resource administrative
functions for employers on an outsourced basis. Currently, we provide business process outsourcing
services to a limited number of corporate clients with respect to social insurance and welfare
payment processing, tracking compliance with local governmental employment regulations and payroll
processing. We continue to build our outsourcing capability and expertise.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We seek to develop business process outsourcing services as part of our strategy to become a
&#147;one-stop&#148; solution to our clients. While the market for these services in China is still limited
compared to developed economies like the United States, we expect to further expand and develop
these services as the market for these services in China grows. We believe that there is
significant future potential for these services as more companies in China become accustomed to
using third parties to perform human resource administrative functions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We also organize and host annual human resource conferences in many of our cities. These
conferences include lectures, seminars, workshops and networking events for human resource
professionals. Although we do not generate significant revenues from hosting these conferences,
this service provides us with exposure to, and interaction with, existing and prospective clients.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide our monthly human resource trade magazine called <I>Human Capital </I>to clients on a
subscription or complimentary basis. This magazine, which has been produced since August&nbsp;2002, is
targeted principally at corporate human resource personnel and contains articles, commentary,
interviews and reports on human capital management topics.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide general and customized salary survey studies with analysis on compensation and
benefits packages across various cities, industries and positions. Human resource departments
utilize our information to understand the market for compensation levels and to determine
compensation and benefits packages for employees and candidates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have developed a proprietary assessment system to assist human resource departments in
evaluating capabilities and dispositions of job candidates and existing employees, in aiding
employee placement and in allocating employee resources. We have also developed a human resource
management software that allows employers to track attendance, payroll, vacation and other employee
related information.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Technology</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We design and update our website and develop our proprietary software entirely in-house. Our
website is hosted by China Telecom, China&#146;s principal telecommunications and Internet service
provider. We own the copyrights, software, trademarks and other intellectual property with respect
to the design and content of our website, other than the advertisements and trademarks provided by
our advertisers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We employ a large staff of website designers and technicians to update and enhance our website
as well as to design, build and provide assistance to customers that are creating their own
recruitment website. We update the advertisements on our website from our central offices in
Shanghai. We also have technicians in Beijing, Guangzhou and Shenzhen to service key accounts and
to supplement our central operations in the event of an emergency. New recruitment advertisements
provided to us by employers who have purchased and registered online accounts generally appear on
our website within several hours. Complimentary online postings for advertisements in <I>51job Weekly</I>
generally appear on <I>www.51job.com </I>within one to two days.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time we experience slower Internet service from our Internet service provider as
a result of technical difficulties associated with high traffic volumes, computer viruses, the
proliferation of &#147;spam&#148; e-mail traffic and other difficulties that generally affect Internet
traffic. To date, we have not been subject to significant targeted disruptions or &#147;hacking&#148; and we
believe that difficulties we have experienced relating to the speed of the Internet service and
web-hosting provided by China Telecom are consistent with the difficulties that affect Internet
service in China generally. To date, our website has not gone off-line or been shut down for any
significant period of time. We do not believe that our business has been materially disrupted or
negatively affected by technical difficulties with respect to our website. However, we cannot
assure you that our business will not face material disruptions or damage from spam, viruses,
hacking or other technical difficulties. See &#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151; Risks
Related to Our
</DIV>

<P align="center" style="font-size: 10pt">28
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Business &#151; Computer viruses and &#147;hacking&#148; may cause delays or interruptions on our systems and
may reduce use of our services and damage our reputation and brand names;&#148; &#147;&#151; We are vulnerable to
natural disasters and other calamities;&#148; and &#147;&#151; We are dependent on our Internet service provider,
and we are vulnerable to failures of the Internet, fixed line telecommunications networks in China
and our technology platform.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Competition</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We face significant competition in each of our markets with respect to each of our lines of
business. See &#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151; Risks Related to Our Business &#151; Because
we face significant competition, including intense competition in several of our markets, we may
lose market share and our results of operations may be materially and adversely affected.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Print advertising</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>51job Weekly </I>is published in 24 cities across China as of March&nbsp;31, 2006 and our core markets
include Beijing, Guangzhou, Shanghai and Shenzhen. We face intense competition within all of our
markets. Our competitors typically consist of one or more large local newspapers that include a
help-wanted circular as a section. Our competitors in our core markets include <I>Beijing Youth Daily</I>,
<I>Guangzhou Daily</I>, <I>Shanghai Talent Market </I>and <I>Shenzhen Special Zone Daily</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Online recruitment services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We experience intense competition in our online recruitment services businesses from dedicated
online recruitment websites and, to a lesser extent, from national Internet portals in China. With
the exception of <I>Zhaopin.com </I>which has begun print advertising operations in a few cities in China,
we are not aware of any other online competitor that also operates a significant print advertising
business. We view our principal existing online competitors to be <I>ChinaHR.com</I>, <I>Cjol.com </I>and
<I>Zhaopin.com</I>, which are primarily dedicated online recruitment websites.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None of the well established nationwide Internet portals, including <I>NetEase.com</I>, <I>Sina.com</I>,
<I>Sohu.com </I>and <I>Tom.com</I>, are dedicated providers of recruitment advertising or other human resource
products, and each offers a wide variety of other online services. However, any or all of our
online or print competitors may decide to allocate significant additional resources to providing
recruitment advertising or other human resource services. For example, following Monster
Worldwide&#146;s acquisition of a 40% stake in <I>ChinaHR.com </I>for US$50&nbsp;million in February&nbsp;2005,
<I>ChinaHR.com </I>has been purported in recent media reports to be significantly increasing its sales and
marketing efforts in China. In 2005, it was also reported that a business collaboration had been
formed between <I>ChinaHR.com </I>and <I>Sina.com </I>and one between <I>Zhaopin.com </I>and <I>Sohu.com</I>. As a result of
such events, we could encounter significantly increased competition in some or all of our markets.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that the competition for our other human resource related services, especially for
executive search and training services, is largely fragmented and localized. The main competitors
in our market for executive search services in China include entities such as B&#243;-L&#232; Associates,
Ltd., Horton International, Hudson Highland Group, which is a spin-off from Monster Worldwide, and
Sterling, each of which provides executive search services on a nationwide basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Customers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our customers consist of large multinational corporations, large national PRC corporations and
local PRC enterprises of all sizes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Sales and Marketing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our sales and marketing strategy is focused on promoting our brand names and further
establishing our reputation as an integrated provider of high quality human resource services.
Through direct marketing, event marketing, mass media advertising, online marketing,
cross-marketing and media promotions, we target three key groups:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>employers with hiring needs;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>job seekers; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>human resource departments with actual or potential outsourcing needs.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">29
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Direct marketing</I>. We target employers principally through direct marketing. As of December&nbsp;31,
2005, we employed over 1,200 sales and account management representatives across our cities that
identify and contact potential customers directly via telephone, personal sales visits, the
Internet and the mail. We train our sales staff to cross-sell all of our services and to design
comprehensive packages of human resource services for potential clients to meet their specific
requirements. We believe that direct marketing has been highly effective in attracting new
customers. In addition, we believe that, by providing significant contact with potential clients,
direct marketing enables us to understand the current and evolving needs of our existing and
prospective customers and helps us develop new services and products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Event marketing</I>. We organize customer events such as recruiting workshops and product
information seminars as well as networking social events to provide our sales team an opportunity
to interact with employers and better understand their needs. To attract potential job seekers, we
provide complimentary copies of <I>51job Weekly </I>at job fairs, at office buildings, in subway stations
in select cities and in other public and commercial areas. We believe that offering complimentary
copies of <I>51job Weekly </I>to job seekers is also a highly effective means to cross-promote our
<I>www.51job.com </I>website.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Mass media advertising</I>. We use traditional mass media advertising on a selective basis to
increase our visibility and profile. We advertise using various media, including television, radio,
and outdoor advertising on billboards, bus stops and buses. In addition, we advertise on print
media such as newspapers, magazines and industry publications and telephone directories.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Online marketing</I>. We use Internet advertising, including banners, keyword and hyperlink
purchases and paid listings, to promote our brand names. We also conduct online promotion campaigns
such as prize drawings and giveaways with the goal of attracting traffic to our website and
enhancing the loyalty of job seekers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cross-marketing</I>. We cross-market our brand names, services and products in <I>51job Weekly</I>, on
<I>www.51job.com </I>and in <I>Human Capital</I>. We also establish cross-marketing relationships with a variety
of partners. We believe that we also benefit from recommendations and referrals by our large
existing base of <I>51job Weekly </I>and jobs seekers and employers who have used <I>www.51job.com</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Media promotions</I>. We produce studies on job market trends that are regularly featured and
published in magazines, in newspapers and online. We believe this exposure heightens our profile
among both employers and job seekers, and attracts interest and generates sales inquiries for our
services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Intellectual Property and Proprietary Rights</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We regard our copyrights, trademarks, trade secrets and other intellectual property rights as
critical to our business. We rely on trademark and copyright law, trade secret protection,
non-competition and confidentiality and/or licensing agreements with our executive officers,
clients, contractors and others to protect our intellectual property rights. We have registered our
<I>www.51job.com </I>Internet domain name as well as a number of similar domain names in an effort to
prevent entities from diverting online traffic away from our website.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have registered trademarks with the Trademark Office of the PRC State Administration for
Industry and Commerce, including
<IMG src="h00614h0061403.gif" alt="(CHINESE CHARACTER)">,
<IMG src="h00614h0061404.gif" alt="(CHINESE CHARACTER)">, <I>51job.com</I>,
<IMG src="h00614h0061405.gif" alt="(CHINESE CHARACTER)">, <I>eHire</I>, <IMG src="h00614h0061406.gif" alt="(CHINESE CHARACTER)"> and <I>eSearch</I>. In
addition, our wholly owned British Virgin Islands subsidiary 51net has registered our trademarks
<IMG src="h00614h0061407.gif" alt="(CHINESE CHARACTER)">, <I>51job.com
</I>and <IMG src="h00614h0061408.gif" alt="(CHINESE CHARACTER)"> with the Patents Registry, Intellectual Property Department of the Hong
Kong Special Administrative Region. 51net is also the registered
owner of our trademarks <IMG src="h00614h0061413.gif" alt="(CHINESE CHARACTER)">
and <I>51job.com </I>with the Intellectual Property Bureau of the Taiwan Ministry of Economy.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All of our trademarks and the <I>www.51job.com </I>domain name are owned or registered in the PRC by
51net and WFOE. Under a trademark license agreement between 51net, as licensor, and RAL, as
licensee, RAL has the right to use certain trademarks in the PRC, with no right of assignment or
sublicense. Under a domain name license agreement between 51net, as licensor, and RAL, as licensee,
RAL has the right to use the <I>www.51job.com </I>domain name in connection with the operation of our
website. See &#147;Item&nbsp;4. &#151; Information on the Company &#151; Organizational Structure.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our intellectual property is subject to theft and other unauthorized use, and our ability to
protect our intellectual property from unauthorized use is limited. In addition, we may in the
future be subject to claims that we have infringed the intellectual property rights of others. See
&#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151; Risks Related to Our Business &#151; If we are unable to
prevent others from using our intellectual property, our business may be materially and adversely
affected&#148; and &#147;&#151; We may be exposed to infringement or misappropriation claims by third parties,
which, if successful, could cause us to pay significant damage awards.&#148;
</DIV>

<P align="center" style="font-size: 10pt">30
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Regulation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Advertising agencies, human resource services firms and Internet content providers are subject
to substantial regulation by the PRC government. An &#147;Internet content provider&#148; is a commercial
operator providing the delivery of Internet content. This section sets forth a summary of the most
significant PRC regulations that affect the business and the industries in which we operate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition to laws and regulations that apply generally to advertising agencies, human
resource firms and Internet content providers, special limitations apply to foreign ownership of
businesses engaged in advertising, human resource and Internet content providing services in China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Limitations on Foreign Ownership of Our Businesses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Advertising companies</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal regulations governing foreign ownership of advertising companies in China
include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Foreign Investment Industry Guide Catalogue (2004); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Regulations on Administration of Foreign Investment in Advertising Enterprises (2004).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Starting December&nbsp;10, 2005, foreign investors, individually or in the aggregate, are permitted
to own 100% of the equity interest in an advertising company in the PRC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Human resource services companies</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal regulation governing ownership in human resource services companies in China is
the Interim Regulations on the Administration of Sino-foreign Equity Joint Venture as Human
Resource Agencies (2003), jointly promulgated by the PRC Ministry of Personnel, the PRC Ministry of
Commerce and the PRC State Administration for Industry and Commerce. Under this regulation, the
percentage of foreign ownership in the equity interest of a foreign invested human resource
services company cannot be less than 25% or more than 49%. Investors from Hong Kong and Macau can
have up to 70% ownership in a foreign invested human resource services company pursuant to the
special arrangements between China and Hong Kong and Macau, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Internet content providers</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the PRC, entities that coordinate with Internet service providers (such as
telecommunications companies) to effect the online placement of content provided by either
themselves or third parties are defined as &#147;Internet content providers&#148; and require a special
license. An entity may provide online services to customers, including selling recruitment
advertising and other online services, without being required to have an &#147;Internet content
provider&#148; license. However, the act of coordinating with the Internet service provider to effect
the placement of such content requires an &#147;Internet content provider&#148; license.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal regulations governing foreign ownership in Internet content providers in China
include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Administrative Rules for Foreign Investments in Telecommunications Enterprises (2001); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Foreign Investment Industry Guidance Catalogue (2004).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under these regulations, foreign investors, individually or in the aggregate, are prohibited
from owning more than 50% of a PRC entity that provides value-added telecommunications services,
which include the service of providing Internet content.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Recent changes in regulation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with its commitments made in connection with the PRC&#146;s entry into the World
Trade Organization, or WTO, the PRC government has reduced the limitations on foreign investment in
advertising businesses in China. Beginning in December&nbsp;2005, advertising agencies may be wholly
owned by foreign entities. Investors from Hong Kong and Macau can have up to 70% ownership in a
foreign invested human resource services company pursuant to the special arrangements between China
and Hong Kong and Macau, respectively. There are no laws or regulations setting forth any schedule
for future relaxation of limitations in the human resource and Internet content businesses.
</DIV>

<P align="center" style="font-size: 10pt">31
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>General Regulation of Our Businesses</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Advertising</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC State Administration for Industry and Commerce is responsible for regulating
advertising activities in the PRC. The principal regulations governing advertising (including
online advertising) in China include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Advertising Law (1994);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Administration of Advertising Regulations (1987); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Measures for the Administration of Advertising Business Licenses (2005).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;An entity providing advertising services must obtain an approval from the PRC State
Administration for Industry and Commerce or one of its local offices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Human resource</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Human resource services firms in China are mainly regulated by the PRC Ministry of Personnel.
The principal regulation applicable to human resource services firms is the Regulations on
Administration of Human Resource Markets (2001, as amended in 2005), jointly promulgated by the PRC
Ministry of Personnel and the PRC State Administration for Industry and Commerce. Under this
regulation, any entity providing human resource services in China must obtain a human resource
services license from the local Administration of Personnel at the provincial level. Each of these
Administrations may adopt rules, with some degrees of variation among provinces, to regulate human
resource services operations conducted within the province.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Internet content services and online commerce</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The delivery of content on our website is subject to PRC laws and regulations applicable to
telecommunications and Internet service providers. We are also within the regulatory jurisdiction
of various governmental bodies, including the PRC Ministry of Information Industry and the PRC
State Administration for Industry and Commerce. The principal regulations applicable to
telecommunications and Internet service providers include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Telecommunications Regulations (2000);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Administrative Measures for Telecommunications Business Operating Licenses (2001); and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Internet Information Services Administrative Measures (2000).</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under these regulations, delivery of Internet content is classified as a value-added
telecommunications service, and a commercial operator of such services must obtain an Internet
content provider license from the appropriate telecommunications authorities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no PRC laws that have national applicability to online commerce relating to
advertising and human resource services. However, local authorities may impose requirements on
online business activities conducted within its jurisdiction, such as registration or filing
requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Regulations Relating to Our Intellectual Property Rights</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China has adopted comprehensive legislation governing intellectual property rights, including
trademarks, patents and copyrights. China has adhered to the main international conventions on
intellectual property rights and has become a member of the Agreement on Trade Related Aspects of
Intellectual Property Rights upon its accession to the WTO in December&nbsp;2001.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC amended its Copyright Law in 2001 to widen the scope of works that are eligible for
copyright protection. The amended Copyright Law extends copyright protection to cover Internet
activities and products disseminated over the Internet. Copyrighted software is protected under the
Copyright Law and other regulations. In addition, there is a voluntary registration system
administered by the China Copyright Protection Center.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Registered trademarks are protected under the Trademark Law adopted in 1982 and revised in
2001. Trademarks can be registered with the Trademark Office of the PRC State Administration for
Industry and Commerce for renewable ten-year periods. Trademark license agreements are required to
be filed with the Trademark Office of the PRC State Administration for Industry and Commerce for
the record.
</DIV>

<P align="center" style="font-size: 10pt">32
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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Domain name disputes are governed by the Measures of China Internet Network Information Center
for Resolving Disputes Regarding Domain Names promulgated by the Chinese Internet Network
Infrastructure Center, or CNNIC, on February&nbsp;14, 2006 and effective on March&nbsp;17, 2006, under which
CNNIC can authorize domain name dispute resolution institutions to decide disputes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Regulations Relating to Internet Privacy</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Constitution of the PRC provides that PRC law protects the freedom and privacy of
communications of citizens and that infringement of such rights is not permitted. While PRC laws do
not prohibit Internet content providers from collecting personal information of their users, in
recent years, the relevant government authorities have enacted legislation on the use of the
Internet that recognizes the protection of personal information from unauthorized disclosure. Under
the Regulation on Internet Information Service, Internet information service providers are
prohibited from producing, copying, publishing or distributing information that is humiliating or
slanderous to others or that trespasses the lawful rights and interests of others. Depending on the
nature of their violation, Internet content providers that violate this provision may face criminal
charges or be sanctioned by security authorities. In addition, they may be ordered to temporarily
suspend their service, or their licenses may be revoked. While PRC laws do not prohibit Internet
content providers from collecting personal information of their users, under the Administration
Regulation on the Internet BBS Service, Internet content providers that provide electronic
messaging services must keep users&#146; personal information confidential and must not disclose such
personal information to any third party without the consent of the users, unless the law requires
such disclosure. The regulations further authorize the relevant telecommunications authorities to
order Internet content providers to rectify an unauthorized disclosure. Internet content providers
could be subject to legal liability if the unauthorized disclosure causes damages or losses to the
users. To comply with these regulations, we provide subscribers to our website with a range of
confidentiality options. They may choose to authorize us to disclose their personal information to
third parties, or to instruct us to keep this information strictly confidential. Our systems are
designed to maintain information received from these subscribers in accordance with their
instructions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, the PRC government retains the power and authority to order Internet content
providers to turn over personal information of Internet users if the users post any prohibited
content or engage in illegal activities on the Internet.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B><I>Regulation of Foreign Currency Exchange and Dividend Distribution</I></B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Foreign currency exchange</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal regulation governing foreign currency exchange in the PRC is the Foreign
Currency Administration Rules (1996), as amended. Under these rules, Renminbi is freely convertible
for payments of current account items, such as trade and service related foreign exchange
transactions and dividend payments, but not for expenses of capital, such as direct investment,
loan or investment in securities, outside the PRC unless the prior approval of the State
Administration for Foreign Exchange of the PRC is obtained.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Foreign Currency Administration Rules, foreign-invested enterprises in the PRC may
purchase foreign exchange without the approval of the State Administration for Foreign Exchange of
the PRC for trade and service related foreign exchange transactions by providing commercial
documents evidencing these transactions. They may also retain foreign exchange (subject to a cap
approved by the State Administration for Foreign Exchange of the PRC) to satisfy foreign exchange
liabilities or to pay dividends. However, the relevant PRC government authorities, which have
significant administrative discretion in implementing the laws, may restrict or eliminate the
ability of foreign-invested enterprises to purchase and retain foreign currencies in the future. In
addition, foreign exchange transactions involving direct investment, loan and investment in
securities outside the PRC are subject to limitations and require approvals from the State
Administration for Foreign Exchange of the PRC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Dividend distribution</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The principal regulations governing distribution of dividends paid by wholly foreign owned
enterprises and Sino-foreign equity joint ventures include:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Wholly Foreign Owned Enterprise Law (1986), as amended;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Wholly Foreign Owned Enterprise Law Implementing Rules (1990), as amended;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Sino-foreign Equity Joint Venture Enterprise Law (1979), as amended; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Sino-foreign Equity Joint Venture Enterprise Law Implementing Rules (1983), as amended.</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">33
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">



</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under these regulations, foreign-invested enterprises in the PRC may pay dividends only out of
their accumulated profits, if any, determined in accordance with PRC accounting standards and
regulations. In addition, foreign-invested enterprises in the PRC are required to set aside certain
amounts out of their accumulated profits each year, if any, to fund certain reserve funds. These
reserves are not distributable as cash dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Organizational Structure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to the formation of our company, due to PRC restrictions on the foreign ownership of
advertising businesses, our businesses were principally operated by two PRC entities, Beijing Run
An Information Consultancy Co., Ltd., or Run An, and Beijing Qian Cheng Si Jin Advertising Co.,
Ltd., or Qian Cheng. Run An and Qian Cheng were formed in 1997 and 1999, respectively, and both are
controlled and owned by Michael Lei Feng and Tao Wang, two PRC citizens who serve as our executive
officers. Run An&#146;s original market research and insurance agency businesses, unrelated to our
current operations, were discontinued in 1999. Run An began providing executive search services in
2000. Qian Cheng was established by Michael Lei Feng and Run An to provide advertising services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In January&nbsp;2000, Qianjin Network Information Technology (Shanghai) Co., Ltd., or Tech JV, was
formed as a joint venture between Qian Cheng and 51net.com Inc., or 51net, a British Virgin Islands
company established by Rick Yan and Norman Lui. Subsequently, Tech JV established a majority owned
subsidiary, Shanghai Qianjin Advertising Co., Ltd. (whose name we changed from Shanghai Qianjin
Culture Communications Co., Ltd. in November&nbsp;2005), or AdCo, with Qian Cheng as the sole minority
shareholder. AdCo in turn established several majority owned subsidiaries with Qian Cheng as the
sole minority shareholder and a jointly owned entity with Tech JV called Shanghai Wang Cai
Advertising Co., Ltd. (whose name we changed from Shanghai Jin Lian Advertising Co., Ltd. in July
2005), or Wang Cai AdCo, which we refer to collectively as the AdCo Subsidiaries. Prior to our May
2004 restructuring discussed below, 51net owned 99% of the equity interest in Tech JV. After Tech
JV and its branches, AdCo and the AdCo Subsidiaries obtained the necessary business licenses, the
business and operations of Run An and Qian Cheng were transferred to Tech JV and its branches, AdCo
and the AdCo Subsidiaries over a period of time. This transfer was effected through the transfer of
customers, employees and operations to these entities and did not involve a formal sale of assets
or equity. Since 2002, substantially all of our business and operations have been conducted through
Tech JV and its branches, AdCo and the AdCo Subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On March&nbsp;24, 2000, our company was incorporated as an exempted limited liability company in
the Cayman Islands by our founders, Rick Yan, Michael Lei Feng, Norman Lui and Kathleen Chien. An
exempted company under Cayman Islands law is a company that carries on its business mainly outside
the Cayman Islands and is exempt from certain requirements of the Companies Law of the Cayman
Islands. Subsequently, we acquired 51net and became the holding company of our corporate group. We
also formed a wholly owned subsidiary in the Cayman Islands, 51net Beijing, and a wholly owned
subsidiary in the PRC, Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd., or
WFOE, to hold some of our intellectual property rights and generally facilitate our operations
through network and software related technical support services. 51net Beijing holds all of the
equity interest in WFOE.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our relationships with Run An and Qian Cheng, our affiliated entities, have been governed by a
series of agreements. As a result of these agreements, under which we have borne all of the
economic risks and received all of the economic rewards in these affiliated entities, the
historical financial results of these entities have been consolidated in our financial statements
as variable interest entities under FASB Interpretation No.&nbsp;46, &#147;Consolidation of Variable Interest
Entities, an Interpretation of ARB No.&nbsp;51,&#148; or FIN 46.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of the material entities in our group, including our material affiliated entities that we
use to operate our businesses and in which we hold no equity interest, is described below under &#147;&#151;
Description of the Material Group Entities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Our May&nbsp;2004 Restructuring and Arrangements with Affiliated Entities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC government regulates foreign ownership in entities that provide advertising and human
resource related services. Prior to March&nbsp;2004, PRC laws and regulations prohibited foreign persons
from owning a controlling interest in advertising entities. This foreign ownership limitation was
relaxed to permit foreign ownership of up to 70% of a PRC advertising entity, and starting in
December&nbsp;2005, foreign investors are permitted to own 100% of a PRC advertising entity. In
addition, until November&nbsp;2003, there were no PRC laws or regulations explicitly prohibiting or
limiting foreign ownership in entities providing human resource related services. Since November
2003, foreign ownership in entities providing human resource related services has been limited to
49%. Tech JV obtained an online advertising license in May&nbsp;2000 and a license to conduct human
resource related services in September&nbsp;2002. In addition, AdCo, an 80% owned subsidiary of Tech JV,
obtained an advertising license in June&nbsp;2001 and various AdCo branches and subsidiaries
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">received additional advertising licenses as we expanded into new cities. Tech JV and its
branches, AdCo and the AdCo Subsidiaries obtained these licenses in accordance with what we believe
to be prescribed procedures under then applicable PRC regulations. Over a period of time, beginning
when Tech JV and its branches, AdCo and the AdCo Subsidiaries acquired these licenses, we
transferred the business and operations conducted by our affiliated entities to Tech JV and its
branches, AdCo and the AdCo Subsidiaries. From 2002, Tech JV and its branches, AdCo and the AdCo
Subsidiaries have conducted substantially all of our advertising and human resource related
businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2004, we engaged in a restructuring which, among other things, reduced our effective
interest in Tech JV to 69.7%. In addition, Michael Lei Feng and Tao Wang formed Shanghai Run An
Lian Information Consultancy Co., Ltd., or RAL, an affiliated entity in which we hold no equity
interest. As part of our restructuring, RAL entered into a series of agreements with us that permit
us to consolidate all of its financial results under FIN 46. As a result, we consolidate RAL and
continue to consolidate Qian Cheng and Run An under our new structure.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our services are currently provided through the following group entities:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>online recruitment services are provided by Tech JV, which does not act as
an Internet content provider;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>print advertising services are provided by AdCo and the AdCo Subsidiaries,
which are all direct and indirect majority owned PRC subsidiaries of Tech JV;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>human resource related services are provided by RAL, which holds a license
to provide human resource related services; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Internet content provider services are provided by RAL through a contractual
arrangement with Tech JV; RAL holds a license to act as an Internet content provider and
operates our <I>www.51job.com </I>website.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a description of the distinction between an entity that provides online services and an
&#147;Internet content provider,&#148; see &#147;Item&nbsp;4. &#151; Information on the Company &#151; Business Overview &#151;
Regulation &#151; Limitations on Foreign Ownership of Our Businesses &#151; Internet content providers.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We no longer provide services together with Run An or Qian Cheng.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tech JV and its branches, AdCo and the AdCo Subsidiaries recognize substantially all of our
revenues and receive substantially all of the cash payments from our clients. Under the terms of
our contractual arrangements with Qian Cheng, WFOE receives all of the economic rewards and bears
all of the economic risks of Qian Cheng&#146;s minority interest in Tech JV, AdCo and the AdCo
Subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have been advised by Jun He Law Offices, our PRC counsel, that the foreign ownership
percentage of Tech JV, AdCo and the AdCo Subsidiaries prior to our restructuring was above the
maximum foreign ownership permitted for entities conducting advertising and human resource
operations at that time. For a description of the risks associated with our past ownership
structure, please see &#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151; Risks Related to Our Corporate
Structure &#151; If the PRC authorities determine that our past ownership structure was inconsistent
with the requirements for operating certain of our businesses, we could be subject to sanctions.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, there remains uncertainty regarding whether foreign owned PRC entities, such as
AdCo, are required to obtain special governmental approval in order to establish subsidiaries in
the PRC or otherwise invest in PRC entities. Following the formation of the AdCo Subsidiaries, in
connection with our restructuring we made inquiries with relevant PRC governmental authorities as
to whether AdCo was required to obtain such approval before establishing the AdCo Subsidiaries. We
have been unable to obtain any governmental ruling or advice on this matter. As a result, it is
uncertain whether special governmental approval, which we did not obtain, was necessary for the
establishment by AdCo of the AdCo Subsidiaries.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We intend to continue to evaluate from time to time the PRC regulatory environment with
respect to the foreign ownership of, and foreign participation in, advertising businesses, human
resource related services and Internet content provider services, and plan to continue to
streamline our ownership structure and operations as and when permitted by PRC laws and
regulations.
</DIV>

<P align="center" style="font-size: 10pt">35
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Group Ownership Structure</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The chart below sets forth our current ownership structure.<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><IMG src="h00614h0061401.gif" alt="(STRUCTURE&nbsp;CHART)">
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Does not include 51net HR, a dormant entity incorporated in the Cayman Islands and wholly
owned by 51job, Inc. and Wang Jin Information Technology (Shanghai) Co., Ltd., a wholly owned
subsidiary of 51net established in the PRC with no current operations.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes the subsidiaries and branches of AdCo that conduct advertising businesses and
Shanghai Cheng An Human Resources Co., Ltd., which provides outsourcing services.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Excludes Wuhan AdCo and Wang Cai AdCo, which are set out separately in the chart.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our subsidiary, 51net, directly holds 51% of the outstanding shares of Tech JV, Qian
Cheng directly holds 1% of the outstanding shares of Tech JV, and our AdCo Subsidiary located in
the city of Wuhan, Wuhan Mei Hao Qian Cheng Advertising Co., Ltd., or Wuhan AdCo, directly holds
the remaining 48% of the outstanding shares of Tech JV. As a result of 51net&#146;s indirect majority
ownership of Wuhan AdCo and Qian Cheng&#146;s direct minority ownership of Wuhan AdCo, 51net is deemed
to effectively hold 69.7% of the equity interest in Tech JV and Qian Cheng is deemed to effectively
hold 30.3% of the equity interest in Tech JV.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Qian Cheng, Run An and RAL are each owned by Michael Lei Feng and Tao Wang, each an executive
officer of our company and a PRC citizen. Qian Cheng is 87% owned by Michael Lei Feng and 13% owned
by Run An. Run An and RAL are each 80% owned by Michael Lei Feng and 20% owned by Tao Wang. As a
result of their ownership interest in Run An, Michael Lei Feng and Tao Wang effectively holds 97%
and 3%, respectively, of the equity interest in Qian Cheng.
</DIV>

<P align="center" style="font-size: 10pt">36
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Description of the Material Group Entities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>51net</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;51net is an intermediate-level holding company that is the registered owner of some of our
trademarks and our domain name and holds direct and indirect equity interests in several of our PRC
subsidiaries. Our wholly owned subsidiary 51net is an international business company incorporated
in the British Virgin Islands. Specifically, 51net owns the
trademarks <IMG src="h00614h0061410.gif" alt="(CHINESE CHARACTER)">,
<IMG src="h00614h0061411.gif" alt="(CHINESE CHARACTER)">, <I>51job.com</I>
and <IMG src="h00614h0061412.gif" alt="(CHINESE CHARACTER)"> under certain categories specified by relevant PRC trademark regulations, and the
domain name <I>www.51job.com</I>. All of these trademarks have been registered with the Trademark Office
of the PRC State Administration for Industry and Commerce and are protected under the PRC Trademark
Law adopted in 1982 and revised in 2001. For a description of PRC regulations relating to
intellectual property rights, see &#147;Item&nbsp;4. &#151; Information on the Company &#151; Business Overview &#151;
Regulation &#151; Regulations Relating to Our Intellectual Property Rights.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Tech JV</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide online recruitment services through Tech JV. Tech JV was initially established as
an equity joint venture between 51net and Qian Cheng. Immediately before our May&nbsp;2004
restructuring, 51net held 99% of the equity interest in Tech JV and Qian Cheng held the remaining
1%. As part of our restructuring, 51net transferred 48% of its equity interest in Tech JV to Wuhan
AdCo. Since 51net indirectly holds a majority equity interest in Wuhan AdCo, and Qian Cheng
directly and indirectly holds a minority interest in Wuhan AdCo, 51net holds 69.7% of the effective
equity interest and Qian Cheng holds 30.3% of the effective equity interest in Tech JV. Because
51net is a British Virgin Islands company, Tech JV is deemed a foreign invested enterprise and its
business activities are subject to the PRC regulatory limitations on foreign ownership as discussed
in &#147;Item&nbsp;4. &#151; Information on the Company &#151; Business Overview &#151; Regulation &#151; Limitations on Foreign
Ownership of Our Businesses.&#148; Tech JV has obtained a permit to conduct online advertising from the
PRC State Administration for Industry and Commerce. The scope of its business license also includes
software development, multimedia and network system design and information technology.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Qian Cheng</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Qian Cheng is our joint venture partner in Tech JV and holds a 30.3% effective equity interest
in Tech JV. Qian Cheng is an affiliated entity in which we hold no equity interest. Qian Cheng was
established by, and is wholly owned directly and indirectly by, two of our executive officers,
Michael Lei Feng and Tao Wang, both of whom are PRC citizens. Qian Cheng holds a license issued by
the Beijing Municipal Administration for Industry and Commerce to provide advertising services,
including designing, producing and publishing advertisements for Chinese and multinational
companies in China and contracting for advertising projects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>RAL</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide human resource related and Internet content provider services through RAL. RAL
operates our <I>www.51job.com </I>website. RAL is a PRC limited liability company and is an affiliated
entity in which we hold no equity interest. RAL was established by, and since its inception has
been wholly owned by, Michael Lei Feng and Tao Wang. RAL holds a permit issued by the Shanghai
Bureau of Personnel, which allows it to provide certain human resource related services. RAL has
also obtained a permit from the Shanghai Municipal Telecommunications Bureau, which allows it to
provide Internet content provider services applicable to our businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>AdCo and the AdCo Subsidiaries</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide print advertising services through Shanghai Qianjin Advertising Co., Ltd., or AdCo,
and AdCo&#146;s fifteen branch offices, seven majority owned subsidiaries and one jointly owned
subsidiary with Tech JV, or the AdCo Subsidiaries, located in different cities and provinces in
China. AdCo is a PRC equity joint venture company. Tech JV and Qian Cheng own 80% and 20%,
respectively, of the equity interest in AdCo. AdCo and the AdCo Subsidiaries have obtained permits
from the local Administrations for Industry and Commerce in the cities where they operate, which
allow them to conduct advertising business, including the designing and production of
advertisements and the contracting of domestic advertising projects.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>WFOE</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide advertising related technical and consulting services to Qian Cheng and software
and web related technical and consulting services to RAL through WFOE, our wholly owned PRC
subsidiary. WFOE is registered in the
</DIV>

<P align="center" style="font-size: 10pt">37
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">PRC with the relevant regulatory authorities as a wholly foreign owned enterprise. WFOE owns
certain of our trademarks and registered copyrights and its principal business is network and
software related technical support services.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Contractual Arrangements Among Our Group Entities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The relationships and economic arrangements among our group entities are governed by a series
of agreements. As part of our May&nbsp;2004 restructuring, we amended or terminated certain existing
agreements and entered into certain additional agreements. The material agreements which currently
govern the relationships and economic arrangements among our group entities are illustrated in the
following chart and described in greater detail below.
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><IMG src="h00614h0061402.gif" alt="(FLOW CHART)">
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Contractual arrangements with RAL</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>RAL technical and consulting service agreement</I>. The technical and consulting service agreement
between RAL and WFOE provides that WFOE has the exclusive right to provide software and web related
technical and consulting services to RAL. RAL will pay service fees to WFOE based on the extent and
nature of the services provided by WFOE, as set forth in invoices issued by WFOE to RAL from time
to time. The agreement has a term of ten years and may be extended with the consent of the parties.
This agreement is not subject to early termination, other than by WFOE solely upon a default by
RAL. RAL has no early termination rights with respect to this agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>RAL equity pledge agreement. </I>As security for RAL&#146;s obligations under the technical and
consulting service agreement, the shareholders of RAL have pledged all of their equity interest in
RAL to WFOE under an equity pledge agreement. Upon the occurrence of certain defaults by RAL as
defined in the RAL equity pledge agreement, including any default by RAL in respect of any
provisions of the RAL technical and consulting service agreement, WFOE, as pledgee, will be
entitled to certain rights, including the right to sell the pledged equity interest. The
shareholders of RAL have agreed that they will not dispose of the pledged equity interest or take
any actions that will prejudice WFOE&#146;s interest under the RAL equity pledge agreement. The pledge
cannot be released until the discharge of all of RAL&#146;s obligations under the RAL technical and
consulting service agreement. The parties have further agreed that WFOE has the right to approve
the appointment of directors and to recommend candidates to the board for positions of the general
manager and senior executives of RAL. The board may only choose from the candidates so recommended
by WFOE. In addition, during the ten-year term of the agreement, WFOE has the option to purchase
the equity interest in RAL to the maximum extent permitted under PRC laws. Upon the expiration of
the term, if and to the extent the option has not been exercised, WFOE is obligated to purchase the
equity interest in RAL to the extent permitted under PRC laws. In the case of an option held by a
foreign entity, PRC law requires that the exercise price of the option be determined at the time of
exercise by reference to the appraised value of the underlying equity interest. The exercise price
determined by the parties may not be significantly lower than this appraised value and must also be
approved by relevant PRC regulatory
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">authorities. To comply with these regulations, the parties to
the RAL equity pledge agreement have agreed that the exercise price of the equity interest in RAL
shall be the lowest price permitted by PRC law.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tech JV and RAL cooperation agreement. </I>Tech JV and RAL have entered into a cooperation
agreement under which RAL agrees to provide human resource related services to Tech JV&#146;s customers
and post human resource related information on its website <I>www.51job.com</I>, and Tech JV agrees to pay
RAL an amount equal to the direct operating costs incurred by RAL, plus a 5% margin, subject to a
total payment cap of RMB1,000,000 per quarter. In addition, Tech JV agrees to provide technical
support to RAL in connection with its provision of human resource related services and the
development, construction and maintenance of RAL&#146;s website. The cooperation agreement has a term of
ten years and may be extended with the consent of the parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Domain name license agreement. </I>51net has entered into a domain name license agreement with RAL
under which 51net has granted to RAL the right to use the <I>www.51job.com </I>domain name in the PRC in
connection with RAL&#146;s operation of its website. RAL is not permitted to assign its right under this
agreement to any third party. The license fee to be paid under the domain name license agreement
will be agreed to by both parties. The domain name license agreement has a term of two years and is
renewable upon the written consent of 51net.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Contractual arrangements with Qian Cheng</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Qian Cheng technical and consulting service agreement. </I>WFOE and Qian Cheng have entered into a
technical and consulting services agreement under which WFOE has the exclusive right to provide
advertising related technical and consulting services to Qian Cheng. Qian Cheng will pay service
fees to WFOE based on the extent and nature of the services provided by WFOE, as set forth in
invoices issued by WFOE to Qian Cheng from time to time. The Qian Cheng
technical and consulting service agreement has a term of ten years and may be extended with
the consent of the parties. This agreement is not subject to early termination, other than by WFOE
solely upon a default by Qian Cheng. Qian Cheng has no early termination rights with respect to
this agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Qian Cheng equity pledge agreement. </I>As security for Qian Cheng&#146;s obligations under the
technical and consulting service agreement, the shareholders of Qian Cheng have pledged all of
their equity interest in Qian Cheng to WFOE under an equity pledge agreement. Upon the occurrence
of certain defaults by Qian Cheng as defined in the Qian Cheng equity pledge agreement, including
any default by Qian Cheng in respect of any provisions of the Qian Cheng technical and consulting
service agreement, WFOE, as pledgee, will be entitled to certain rights, including the right to
sell the pledged equity interest. The shareholders of Qian Cheng have agreed that they will not
dispose of the pledged equity interest or take any actions that will prejudice WFOE&#146;s interest
under the Qian Cheng equity pledge agreement. The pledge cannot be released until the discharge of
all of Qian Cheng&#146;s obligations under the Qian Cheng technical and consulting service agreement.
The parties have further agreed that WFOE has the right to approve the appointment of directors and
to recommend candidates to the board for positions of the general manager and senior executives of
Qian Cheng. The board may only choose from the candidates so recommended by WFOE. In addition,
during the ten-year term of the agreement, WFOE has the option to purchase the equity interest in
Qian Cheng to the maximum extent permitted under PRC laws. Upon the expiration of the term, if and
to the extent the option has not been exercised, WFOE is obligated to purchase the equity interest
in Qian Cheng to the extent permitted under PRC laws. In all cases, the purchase price shall be the
lowest price permitted under PRC laws.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Call option agreement. </I>51net has entered into a call option agreement with Qian Cheng dated as
of August&nbsp;1, 2002, and supplemented and amended as of May&nbsp;3, 2004, under which 51net or its
designee is granted an irrevocable option to purchase all of Qian Cheng&#146;s equity interest in Tech
JV and AdCo for RMB1.2&nbsp;million or, if such purchase price is not permissible under the applicable
PRC laws, the lowest price permitted under then applicable PRC laws. In addition, Qian Cheng
granted 51net an irrevocable option to purchase any and all of its equity interests in the AdCo
Subsidiaries, including, without limitation, Wuhan AdCo, at the lowest price permitted under PRC
laws. The call option agreement has a term of ten years, which may be extended upon written consent
of the parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each of the above agreements, except the call option agreement, is dated as of May&nbsp;3, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the opinion of Jun He Law Offices, our PRC legal counsel:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our current ownership structure is in compliance with existing PRC laws and
regulations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the agreements among our subsidiaries, affiliated entities and their
respective shareholders are valid and binding, and are enforceable under, and will not
result in any violation of, existing PRC laws or regulations; and</TD>
</TR>

</TABLE>
</DIV>


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</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our current business operations as described in this annual report are not
in violation of existing PRC laws, rules and regulations.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are, however, substantial uncertainties regarding the interpretation and application of
PRC laws and regulations, including but not limited to the laws and regulations governing our
business or the enforcement and performance of our contractual arrangements in the event of the
imposition of statutory liens, death, bankruptcy and criminal proceedings. Accordingly, we cannot
assure you that PRC regulatory authorities will not take a view contrary to the opinion of our PRC
legal counsel. See &#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151; Risks Related to Our Corporate
Structure &#151; If the PRC authorities determine that our past ownership structure was inconsistent
with the requirements for operating certain of our businesses, we could be subject to sanctions&#148;
and &#147; &#151; Risks Related to the People&#146;s Republic of China &#151; The PRC legal system has inherent
uncertainties that could materially and adversely affect us.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Property, Plants and Equipment</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our executive offices as well as our principal customer service, sales, marketing and
development facilities are currently located at Wen Xin Plaza, 755 Wei Hai Road, Shanghai 200041,
People&#146;s Republic of China. We also lease space for our network of sales offices in Beijing,
Changchun, Changsha, Chengdu, Chongqing, Dalian, Dongguan, Fuzhou, Guangzhou, Hangzhou, Harbin,
Hefei, Jinan, Kunming, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Tianjin,
Wuhan, Xian, Zhengzhou and Hong Kong. As of the date of this annual report, we have leases for
office space totaling approximately 23,360 square meters. We believe that we will be able to obtain
adequate facilities, principally through the leasing of appropriate properties, to accommodate our
expansion plans in the near future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, we signed a letter of intent to purchase our current principal executive
offices at 21st Floor, Wen Xin Plaza, 755 Wei Hai Road, which we expect will become our Shanghai
sales office, for an aggregate consideration of RMB27&nbsp;million (US$3.3&nbsp;million). We have not made
any cash payments toward this purchase as of May&nbsp;31, 2006. We expect to fund this purchase through
operating cash flows and through our existing capital resources.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, we completed the purchase a new office complex of approximately 12,600 square
meters in Zhangjiang High Technology Park in Shanghai&#146;s New Pudong Area. The purchase price for the
new premises is approximately RMB114&nbsp;million (US$14.1&nbsp;million), of which we have paid RMB108
million (US$13.4&nbsp;million) as of May&nbsp;31, 2006. We also expect to incur additional expenses
associated with renovations, relocation and other related items. Expenditures related to the new
office complex are expected to be funded by through operating cash flows and through our existing
capital resources. We plan to move our national technology and online service center as well as our
principal executive offices to the new office complex and expect to begin occupying the new
premises in late 2006.
</DIV>
<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following discussion of our financial condition and results of operations is based upon
and should be read in conjunction with our consolidated financial statements and their related
notes included elsewhere in this annual report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>A. Overview</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that we are a leading provider of integrated human resource services in China.
Increases in revenues from our recruitment related businesses have been the primary driver of our
financial results. We receive a majority of our revenues in the form of fees from employers for
placing job advertisements on <I>51job Weekly </I>and <I>www.51job.com</I>. We also receive fees from employers
for access to our <I>www.51job.com </I>resum&#233; database, use of <I>eHire </I>and in connection with <I>eSearch </I>and
other human resource related services. The increases in our revenues reflect greater penetration in
our existing markets as well as expansion into new markets across China. In addition, our net
income has increased each year since we became profitable in 2002 on a full-year basis. The
increases in net income in 2003 and 2004 reflect both our revenue growth as well as the reduction
as a percentage of net revenues of our cost of services and operating expenses driven by improved
economies of scale and operational efficiencies. Net income was relatively unchanged from 2004 to
2005 as our revenue growth was offset by an increase in operating expenses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Revenues</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our total revenues in 2005 were RMB595.6&nbsp;million (US$73.8&nbsp;million), a 24.1% increase from
RMB479.9&nbsp;million in 2004. The substantial majority of our revenues come from employers who purchase
our <I>51job Weekly </I>and
</DIV>

<P align="center" style="font-size: 10pt">40
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>www.51job.com </I>recruitment services. The revenue growth we have achieved in our
recruitment advertising services have been principally characterized by expansion of these
businesses in existing cities as well as our entry into new cities. We believe that our revenue
growth will continue to be driven by further development and liberalization of the Chinese economy
and other macroeconomic factors such as the growing number of companies, increasing competition
amongst companies for skilled and experienced workers, and significant growth in job openings in
China. We believe these factors should lead to increased use and growing acceptance of recruitment
advertising and other human resource services by employers in China. In addition, we believe that
an increasingly skilled, educated and urbanized workforce in China will drive the demand for and
usage of our services.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth the revenues from our principal lines of business as a
percentage of our total revenues for the periods indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Print advertising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">62.3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">62.7</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">59.8</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Online recruitment services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Executive search</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other human resource related services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our revenue growth rates by business line for the periods
indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="70%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>compared to</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>compared to</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>compared to</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2002</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Print advertising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">56.1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">64.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">18.5</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Online recruitment services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Executive search</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">58.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other human resource related services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">137.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.8</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">77.2</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">63.6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">24.1</TD>
    <TD nowrap>%</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Recruitment related revenues</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our recruitment related revenues are comprised of fees from employers for our <I>51job Weekly</I>
print advertising business, our <I>www.51job.com </I>online recruitment services and our <I>eSearch </I>executive
search services. Because a large portion of our costs associated with providing our recruitment
related services are fixed, we believe these services present a significant potential for economies
of scale and improvement in our profitability as we increase our volume of advertisements and
services and the prices that we charge. We expect that we will continue to earn the substantial
majority of our revenues and profits from our recruitment related services in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Print advertising revenues. </I>Our print advertising revenues are generated from fees that we
charge employers for placing recruitment and related advertisements in editions of <I>51job Weekly</I>
across our markets in China. We do not receive revenues from the sale of <I>51job Weekly </I>at
distribution locations such as newsstands, kiosks and post offices. Employers sign print
advertising contracts with us for single or multiple advertisements in one or more markets. These
contracts as well as the time between the signing of a contract and the publishing of an
advertisement in <I>51job Weekly </I>are generally short-term in nature.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our advertising fees vary and depend on a number of factors including the size, placement,
format and use of color and graphics in the advertisement, the length of time the advertisement is
to appear and the market in which the advertisement is placed. As we have increased penetration in
our existing markets and expanded into new cities, our client base and the number of print
advertising pages have grown. Our print advertising revenues are primarily affected by the number
of print advertising pages and the fees that we charge.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We expect that future growth of our print advertising business will be primarily driven by a
combination of increases in the volume of our print advertising pages and in average revenue per
page. Our print advertising prices vary considerably between individual markets due to differences
in local competitive environments, purchasing power and other conditions. Historically, the print
advertising businesses in our individual markets have not been subject to significant or prolonged
price competition. While the prices we charge for print advertising in each city have been
</DIV>

<P align="center" style="font-size: 10pt">41
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">generally stable or have moderately increased, we have from time to time initiated or discontinued
special promotions or sales campaigns in certain cities which may impact the overall average
revenues per page. In addition, our overall average revenues per page are affected to some extent
by differences in relative growth rates in individual markets, with growth in higher priced markets
tending to increase our overall average revenues per page and growth in lower priced markets
tending to reduce the overall average.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We calculate the number of our print advertising pages by physically counting the number of
paid advertising pages in each of our editions of <I>51job Weekly</I>. In calculating the number of paid
advertising pages, we make adjustments to take into account differing page sizes and pages with
mixed advertising and non-advertising content. This is a manual process that is subject to error,
including errors in judgment as to the appropriate adjustments to be made. We cannot assure you
that our methodology, page counting, calculations and analyses are accurate, or that they yield
results that are comparable between periods or give a correct approximation of the actual revenues
we generate per page.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As our customers usually place orders for print advertisements on a week-to-week basis, our
print advertising business is subject to weekly fluctuations. We do not recognize advertising
revenue until an advertisement is actually printed in <I>51job Weekly</I>. As a result, delays or
cancellations by advertisers hamper our ability to predict revenue for future periods and makes it
difficult for us to accurately forecast revenues with any degree of certainty. See &#147;Item&nbsp;3. &#151; Key
Information &#151; Risk Factors &#151; Risks Related to Our Business &#151; Our recruitment advertising business
is subject to weekly fluctuations which hamper our ability to predict when revenue will ultimately
be recognized, if at all.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We generally require that all advertising fees be paid in advance of posting an advertisement,
although we may offer credit terms to select clients on a case-by-case basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Online recruitment services revenues. </I>Our online recruitment services revenues are generated
from fees we charge employers for placing recruitment and related advertisements on our
<I>www.51job.com </I>website and for accessing our <I>eHire </I>web-based online resum&#233; and recruitment
management platform. We also generate online revenues for website design and hosting services that
we provide to businesses that wish to create their own dedicated recruitment website. We do not
charge job seekers for using <I>www.51job.com</I>.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that the increase of our online recruitment services revenues have been
characterized by increased acceptance of online advertising as a recruitment medium in China and
our effectiveness in penetrating the growing online recruitment services market. In addition, we
believe that, by offering online advertising in connection with our print advertising service, we
are able to attract print advertising customers to our online recruitment services, as well as new
customers seeking the broader coverage offered by our integration of these two channels.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The growth of our online recruitment services revenues has been primarily driven by a higher
number of unique employers using these services rather than an increase in average revenue per
unique employer. Average revenue per unique employer has been principally affected by offsetting
factors. New customers tend to use basic, lower priced online recruitment services and significant
increases in these customers generally result in higher aggregate online recruitment services
revenues but lower average revenue per unique employer. We may also choose to offer introductory or
promotional packages at reduced prices from time to time which will also lead to a reduction in
average revenue per unique employer. Offsetting these factors that lower our average revenue per
unique employer is our ability to retain customers and migrate them over time to higher-priced
products. In addition, as more customers become increasingly
familiar and comfortable with our online platform, our ability to sell them a package of
multiple online recruitment services increases our average revenue per unique employer. Our ability
to retain customers and migrate them to higher priced products or multiple purchases may be
adversely affected by, among other things, difficulties we may encounter in developing or launching
higher priced services as well as offerings of similar services by competitors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We define a unique employer as a customer that purchases our online recruitment services
during a specified period. We make adjustments for multiple purchases by the same customer within a
city to avoid double counting. Each employer is assigned a unique identification number in our
management information system. Affiliates and branches of a given employer may, under certain
circumstances, be counted as separate unique employers. Our calculation of the number of unique
employers is subject to misidentification and other forms of error, including errors in judgment as
to appropriate adjustments to be made to the data. We cannot assure you that our methodology,
employer identification, calculations and analyses are accurate, or that they yield results that
are comparable between periods or give a correct approximation of actual numbers of customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As with <I>51job Weekly</I>, we generally require that all advertising fees be paid in advance of
posting an advertisement on our website, although we may offer credit terms to select clients on a
case-by-case basis.
</DIV>

<P align="center" style="font-size: 10pt">42
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Executive search revenues. </I>Our <I>eSearch </I>executive search revenues are generated from fees and
commissions paid by employers. We generally charge a total assignment fee of approximately 30% of
the candidate&#146;s annual compensation, including a minimum upfront retainer. We offer executive
search services to employers as a part of our &#147;one-stop&#148; solution strategy and although we believe
that we have been able to develop this business through sales and marketing efforts, we do not
expect that this business will contribute significantly to our revenues in the foreseeable future.
In addition, our ability to expand this business will depend on further acceptance of executive
search by employers in China as an effective recruitment tool. As a result, as our recruitment
advertising businesses expand, we expect that our executive search service revenues may continue to
decline as a percentage of our overall revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Other human resource related revenues</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Revenues from our other human resource related services are principally generated from fees
paid for attending our training seminars and industry conferences, for contracting our business
processing outsourcing services and for using our assessment services, our salary survey studies
and <I>eHR </I>software product. We expect to continue to develop additional human resource related
services and products for our corporate clients. While revenues from other human resource related
services currently represent less than 10% of our total revenues, we believe that these products
and services complement our &#147;one-stop&#148; human resource solution strategy and raise our brand
awareness as an industry innovator and thought leader.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Growth of our other human resource related services will be dependent on our ability to
successfully develop, introduce and increase adoption of these types of products and services in
China&#146;s rapidly evolving human resource services market. We believe the increase in other human
resource related revenues has been primarily driven by growing customer acceptance of these
products and services as well as our sales and marketing efforts. In addition, we believe that our
expansion of training and business process outsourcing services to new customers and additional
cities have contributed to the growth of this segment. As we believe these newer services and the
overall human resource industry in China are in the early stages of development, we believe there
may be significant market potential in the future but we are unable to quantify the size at this
time.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Net revenues and business taxes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our net revenues reflect a PRC business tax of 5% and other related surcharges which are
levied on our revenues, after certain deductible expenses, generated from services we provide in
China. A portion of the business taxes that we had previously paid was refunded in 2003, 2004 and
2005 as a result of local government financial incentives. These refunds are recognized as other
income in our statement of operations. We cannot assure you that we will continue to receive such
financial incentives in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Costs</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate and manage our various businesses as a single segment. In addition, we share
operating costs and management resources amongst these businesses. As a result, we do not account
for our results of operations on a geographical or other basis, and we are unable to allocate costs
among our various businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our cost of services and total operating expenses as a
percentage of our net revenues for the periods indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(54.1</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(49.2</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(47.9</TD>
    <TD nowrap>%)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(33.9</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(30.9</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38.4</TD>
    <TD nowrap>%)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our cost of services has declined as a percentage of our net revenues from 2003 to 2005. We
believe this has been a result of increased economies of scale in our recruitment related services,
particularly our print advertising and online recruitment services businesses, and of improved
operating efficiencies. As we have expanded our operations and enlarged our infrastructure and
service platforms, we believe that we have been able to attract new corporate clients and
to increase sales opportunities with existing customers across our various markets. This has
allowed us to achieve greater economies of scale as our revenues have increased faster than our
customer service costs. In addition, expansion of our online recruitment services business requires
limited additional fixed costs and the significant revenue growth of this business has contributed
to our overall improved operating efficiency. We believe that our online recruitment services
business will achieve higher profit margins than our other recruitment related businesses in the
longer term.
</DIV>

<P align="center" style="font-size: 10pt">43
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our operating expenses declined as a percentage of our net revenues in 2003
and 2004 as a result of improved operating efficiencies primarily due to increased productivity of
our infrastructure and staff. In 2005, we believe that operating expenses increased as a percentage
of our net revenues due to expansion of our sales force, higher marketing expenses and greater
general administrative expenses following our becoming a public company in September&nbsp;2004. As we
aim to decrease our cost of services and total operating expenses as a percentage of our net
revenues, we continue to identify areas in our businesses that will allow us to benefit from
economies of scale and operating efficiencies. However, significant uncertainties may impact out
ability to lower these costs and expenses and we cannot assure you that we will be able to decrease
these costs as a percentage of our net revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cost of services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our cost of services primarily includes printing related expenses, employee compensation and
depreciation. The majority of our costs of services are printing related costs, which principally
consist of printing, publishing and distribution expenses that we pay to our newspaper contractors.
Our printing related costs are characterized by both fixed and variable components. These costs
also have tended not to increase or decrease proportionately to increases or decreases in our print
advertising revenues and as a result, we have been able to grow our print advertising businesses
while incurring lower printing related costs relative to our print advertising revenues. We aim to
lower our printing related costs and continuously seek opportunities to secure more favorable terms
with newspaper contractors. In addition, as we have grown our online recruitment services, we have
been able to leverage our existing infrastructure, allowing us to incur limited additional costs
relative to the higher revenues we have generated. The majority of our employee, depreciation and
other costs of services are largely shared across our various business lines.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Operating expenses</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operating expenses include sales and marketing expenses, general and administrative
expenses, and share-based compensation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our operating expenses as a percentage of our net revenues for
the periods indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13.8</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14.7</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20.2</TD>
    <TD nowrap>%)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation &#151; share options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation &#151; founder shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(33.9</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(30.9</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38.4</TD>
    <TD nowrap>%)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our sales and marketing expenses primarily include employee compensation for our sales and
marketing staff, advertising and promotion expenses, and expenses for our management and staff
related to our new market expansion as well as existing operations. The sales and marketing
strategies we employ in each city to promote our brand and services depends on a number of factors
such as local competitive conditions and the cost, popularity and effectiveness of various media
formats. In addition, we receive marketing support for <I>51job Weekly </I>from many of our newspaper
contractors. However, since we record all costs associated with our relationships with our
newspaper contractors under cost of services, our sales and marketing expenses do not reflect costs
incurred in connection with this marketing support.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our general and administrative expenses primarily include rent and property management fees,
employee compensation, administrative office expenses, professional services fees and depreciation.
General and administrative expenses increased from 2003 to 2005 due to our expansion into new
markets, the introduction of new services and the overall expansion of our businesses. In addition,
following the completion of our initial public offering in October&nbsp;2004, we have incurred
additional general and administrative expenses due to the various additional legal, accounting and
other requirements applicable to operating as a public company listed in the United States.
Although we have purchased
directors&#146; and officers&#146; liability insurance, we also expect to incur significant legal
expenses in defending class action lawsuits filed against us. See &#147;Item&nbsp;8. &#151; Financial Information
&#151; Consolidated Statements and Other Financial Information &#151; Legal Proceedings.&#148; However, we aim to
lower our general and administrative expenses as a percentage of net revenues but due to
significant uncertainties, we cannot assure you we will be able to do so.
</DIV>

<P align="center" style="font-size: 10pt">44
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Income Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We file separate income tax returns because we and our affiliated entities are incorporated in
different jurisdictions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the current laws of the Cayman Islands, we are not subject to income or capital gain
taxes. In addition, upon payments of dividends by us to our shareholders, no Cayman Islands
withholding tax will be imposed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the current laws of the British Virgin Islands, we are exempt from income tax on foreign
derived income. In addition, there are no withholding taxes in the British Virgin Islands.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with &#147;Income Tax Law of China for Enterprises with Foreign Investment and
Foreign Enterprises,&#148; foreign-invested enterprises that are incorporated in China are generally
subject to enterprise income tax, or EIT, at a rate of 33%. As opposed to our business taxes which
is based on our total revenues and which is discussed above in &#147;&#151; Revenues &#151; Net revenues and
business taxes,&#148; EIT is a separate tax based on our taxable income. Under current rules, newly
organized PRC entities conducting advertising businesses are entitled to elect a tax exemption for
their first two years of operation and may carry forward tax losses incurred, if any, during this
two-year period to future periods. A number of our AdCo Subsidiaries have elected to receive the
two-year tax exemption treatment. The majority of these exemptions expired in 2004 and 2005, and
others will expire in 2006 and 2007. Upon the expiration of their tax exemptions with the exception
of AdCo&#146;s subsidiary in Shenzhen and Wang Cai AdCo&#146;s subsidiaries in Shanghai and Shenzhen, each of
which have obtained a preferential tax rate of 15%, the other AdCo Subsidiaries will be taxed at
the statutory tax rate, currently 33%. These expirations of the tax exemptions caused our effective
tax rate to increase significantly in 2004. In addition, so long as we continue to recognize
share-based compensation expense in future periods, our effective tax rate may exceed the statutory
tax rate as a result of such expense, since share-based compensation is not deductible for PRC tax
purposes. The amount of income tax payable by our PRC subsidiaries in the future will depend on
various factors, including, among other things, the results of operations and taxable income of,
and the statutory tax rate applicable to, each of the subsidiaries, and our effective tax rate
depends in part on the extent of each of our subsidiaries&#146; relative contribution to our
consolidated taxable income. As our business expands, we may establish new entities from time to
time which, depending on applicable law, may be entitled to certain tax incentives, including tax
exemptions. We intend to continue to explore opportunities to take advantage of available tax
incentives. In addition, some of our PRC subsidiaries and affiliated entities have accumulated tax
loss carryforwards that have not previously been recognized as deferred tax assets because there
was significant uncertainty as to whether we would be able to realize the benefit from those loss
carryforwards. To the extent permitted by PRC tax rules, we may undertake further reorganizations
or transactions among our subsidiaries and affiliated entities or with third parties to utilize
some or all of these tax loss carryforwards before they expire, or qualify for additional tax
benefits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our foreign-invested Chinese subsidiary, Tech JV, has been granted a preferential 30% EIT rate
with no expiration date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Policies</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We prepare financial statements in conformity with U.S. GAAP, which requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities on the date of the financial statements, and the reported amounts
of revenues and expenses during the financial reporting period. We continually evaluate these
estimates and assumptions based on the most recently available information, our own historical
experience and various other assumptions that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Since the use of estimates is an
integral component of the financial reporting process, actual results could differ from those
estimates. Some of our accounting policies require higher degrees of judgment than others in their
application. We consider the policies discussed below to be critical to an understanding of our
financial statements as their application assists management in making their business decisions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We operate and manage our various businesses as a single segment. In addition, since our
revenues are primarily generated from customers in the PRC, we do not account for our results of
operations on a geographical or other basis. Since many of our management and staff provide
services with respect to many or all of our businesses, and since our infrastructure and operations
are designed to facilitate all of our businesses as an integrated unit, we are unable to allocate
costs among our various businesses or present our financial results in terms of multiple
business segments.
</DIV>

<P align="center" style="font-size: 10pt">45
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Income taxes</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We account for income taxes under the provisions of Statement of Financial Accounting
Standards No.&nbsp;109, &#147;Accounting for Income Taxes,&#148; or SFAS No.&nbsp;109. Under SFAS No.&nbsp;109, income taxes
are accounted for under the asset and liability method. Deferred taxes are determined based upon
differences between the financial reporting and tax bases of assets and liabilities at currently
enacted statutory tax rates for the years in which the differences are expected to reverse. The
effect on deferred taxes of a change in tax rates is recognized in income in the period of change.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide a valuation allowance on our deferred tax assets to the extent we consider it to be
more likely than not that we will be unable to realize all or part of such assets. Our future
realization of our deferred tax assets is dependent on many factors, including our ability to
generate taxable income within the period during which temporary differences reverse or before our
tax loss carryforwards expire, the outlook for the Chinese economy and overall outlook for our
industry. We consider these factors at each balance sheet date and determine whether valuation
allowances are necessary.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had deferred tax assets of RMB4.6&nbsp;million as of December&nbsp;31, 2003, RMB7.8&nbsp;million as of
December&nbsp;31, 2004 and RMB6.3&nbsp;million (US$0.8&nbsp;million) as of December&nbsp;31, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2003, 2004 and 2005, we recognized aggregate valuation allowances of RMB7.8
million, RMB7.1&nbsp;million and RMB5.8&nbsp;million (US$0.7&nbsp;million), respectively. As a result of our
current expectations as to our ability to generate taxable income, we currently do not expect to
provide significant further valuation allowances with respect to our net deferred tax assets. In
the event that unexpected developments prevent us from realizing some or all of our deferred tax
assets, we will be required to take a charge against our net income for the period in which such
events occur.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Share-based compensation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Prior to January&nbsp;1, 2006, we accounted for share-based compensation arrangements under
Accounting Principles Board Opinion No.&nbsp;25, &#147;Accounting for Stock Issued to Employees,&#148; or APB No.
25, and complied with the disclosure provisions of SFAS No.&nbsp;123, &#147;Accounting for Stock-Based
Compensation,&#148; or SFAS No.&nbsp;123. In general, compensation cost under APB No.&nbsp;25 was recognized based
on the difference, if any, between the estimated fair value or market value of our common shares
and the amount an employee was required to pay to acquire the shares, as determined on the date the
option was granted. Compensation cost, if any, was recorded in shareholders&#146; equity as additional
paid-in capital with an offsetting entry recorded to deferred share-based compensation. Deferred
share-based compensation was amortized and charged to expense based on the vesting terms of the
underlying options.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;When estimating the fair value of our common shares on the grant date, we reviewed both
internal and external sources of information. As a private company before the completion of our
initial public offering in October&nbsp;2004, the sources we used to determine the fair value of the
underlying shares at the date of measurement were subjective in nature and were based on, among
other factors:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our financial condition as of the date of grant;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>our financial and operating prospects at that time;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>comparable market indicators; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an independent third party analysis of the historical value of our underlying common shares.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We recognized an aggregate of RMB35.2&nbsp;million in deferred share-based compensation in 2000 in
connection with our issuance of restricted common shares to each of our founders in that year. As
these shares were placed in escrow and were subject to repurchase by us between 2000 and 2003 in
the event of termination of employment by our founders, we considered this arrangement to
constitute share-based compensation to be accounted for in accordance with APB No.&nbsp;25, and
accordingly, we amortized all of this deferred share-based compensation as an expense over this
period. This resulted in share-based compensation expense related to these issuances of RMB8.8
million in 2001, RMB8.8&nbsp;million in 2002 and RMB4.6&nbsp;million in 2003. All such shares have
subsequently been released from escrow and we will not recognize additional share-based
compensation expense with respect to these issuances.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, we recognized share-based compensation in connection with the grant of options to
employees and
directors, the sale of common shares to one of our directors at a price below fair market
value, and the extension of the exercise period of options held by certain terminated employees.
This resulted in additional share-based compensation expense of RMB14.1&nbsp;million in 2003, RMB20.5
million in 2004 and RMB14.6&nbsp;million (US$1.8&nbsp;million) in 2005.
</DIV>

<P align="center" style="font-size: 10pt">46
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued Statement of Financial Accounting Standards No.&nbsp;123R
(revised 2004), &#147;Share-Based Payment,&#148; or SFAS No.&nbsp;123R, that requires companies to expense the
value of employee stock options and similar awards. Under SFAS No.&nbsp;123R, share-based compensation
will be (1)&nbsp;measured at fair value on the awards&#146; grant date, based on the estimated number of
awards that are expected to vest and (2)&nbsp;required as awards vest. Under SFAS No.&nbsp;123R, we could
select from three transition methods: (1)&nbsp;the modified prospective method, where the expenses
related to unvested but still outstanding options as calculated under the original SFAS No.&nbsp;123 be
charged to expense without any change in previously calculated measurement; (2)&nbsp;a variation of the
modified prospective method, where in addition to (1), we restate for prior interim periods using
prior SFAS No.&nbsp;123 pro forma disclosure amounts; and (3)&nbsp;the modified retrospective method, where
all prior period financial statements are retroactively restated based on pro forma disclosures as
calculated under SFAS No.&nbsp;123.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have adopted SFAS No.&nbsp;123R effective from January&nbsp;1, 2006 and selected the modified
prospective method as the transitional method. Consequently, our share-based compensation expense
relating to the unvested portion of the outstanding grants is recognized based on the fair value of
the options as determined under SFAS No.&nbsp;123 as disclosed in note 2(m) to our consolidated
financial statements included elsewhere in this annual report. New options to be issued after the
effective date are recognized based on the provisions of SFAS No.&nbsp;123R. The adoption of SFAS No.
123R increased our share-based compensation expense in our consolidated statement of operations in
the first quarter of 2006 and we expect the implementation of SFAS No.&nbsp;123R may adversely affect
our earnings in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Basis for consolidation and our relationships with our affiliated variable interest entities</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We consolidate 100% of the interests of all of our subsidiaries and affiliated entities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Historically, certain of our operations were conducted by two affiliated entities, Run An and
Qian Cheng, in which we have not held any equity interest. These entities were, and continue to be,
wholly owned, directly and indirectly, by two of our executive officers. We entered into
contractual arrangements with these two entities under which we bore all of their economic risk and
received all of their economic rewards. In our consolidated financial statements, we have
consolidated all of the interests of Run An and Qian Cheng under FASB Interpretation No.&nbsp;46,
&#147;Consolidation of Variable Interest Entities, an Interpretation of ARB No.&nbsp;51,&#148; or FIN 46.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;FIN 46 requires a &#147;variable interest entity&#148; to be consolidated by the primary beneficiary of
such entity. An entity is considered to be a variable interest entity if certain conditions are
present, including where the equity investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the entity to finance
its activities without additional subordinated financial support from other parties. Under various
agreements with Run An and Qian Cheng, we were considered the primary beneficiary of Run An and
Qian Cheng, and all of their interests have been consolidated in our financial statements. In
addition, as a result of our consolidation of Qian Cheng, its minority interests in Tech JV and its
subsidiaries have been consolidated in our financial statements. All significant transactions and
balances between us, our subsidiaries, Run An and Qian Cheng have been eliminated upon
consolidation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with our restructuring in May&nbsp;2004, we terminated or modified the agreements
referred to above and entered into new agreements with these entities and RAL, a new entity formed
by two of our executive officers. We bear all of the economic risks and receive all of the economic
rewards of these entities under these agreements. Consequently, we have consolidated the interests
of RAL and continue to consolidate the interests of Run An and Qian Cheng under FIN 46. In the
opinion of Jun He Law Offices, our PRC legal counsel, these contractual arrangements and our
current business operations are not in violation of existing PRC laws, rules and regulations. There
are, however, substantial uncertainties regarding the interpretation and application of PRC laws
and regulations, including but not limited to the laws and regulations governing our business or
the enforcement and performance of our contractual arrangements in the event of the imposition of
statutory liens, death, bankruptcy and criminal proceedings. Accordingly, we cannot assure you that
PRC regulatory authorities will not take a view contrary to the opinion of our PRC legal counsel.
See &#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151; Risks Related to Our Corporate Structure &#151; If the
PRC authorities determine that our past ownership structure was inconsistent with the requirements
for operating certain of our businesses, we could be subject to sanctions&#148; and &#147;&#151; Risks Related to
the People&#146;s Republic of China &#151; The PRC legal system has inherent uncertainties that could
materially and adversely affect us.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not believe that our restructuring has had an impact on our financial statements or how
our results are reported in the future. For additional information with respect to our
relationships with RAL, Run An and Qian Cheng, see &#147;Item&nbsp;4. &#151; Information on the Company &#151;
Organizational Structure.&#148;
</DIV>

<P align="center" style="font-size: 10pt">47
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Allowances for doubtful accounts</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We provide general and specific provisions for bad debts when facts and circumstances indicate
that the receivable is unlikely to be collected. If the financial condition of our customers were
to deteriorate, resulting in an impairment of their ability to make payments, additional allowances
may be required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Long-lived assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our accounting for long-lived assets, including property and equipment, is described in note
2(g) to our consolidated financial statements included elsewhere in this annual report. The
recorded value of long-lived assets is affected by a number of management estimates, including
estimated useful lives, residual values and impairment charges. We assess impairment for long-lived
assets whenever the net book value for these assets is more than the estimated future cash flows
attributable to them. During each of the years ended December&nbsp;31, 2003, 2004 and 2005, we did not
record any impairment charges. If different judgments or estimates had been utilized, material
differences could have resulted in the amount and timing of the impairment charge and the related
depreciation and amortization charges.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth a summary of our audited consolidated statements of operations
for the periods indicated both in Renminbi and as a percentage of net revenues:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="23" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>%</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>%</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Print advertising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182,606,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">65.2</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,651,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">65.9</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">356,284,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">63.4</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Online recruitment services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,960,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,508,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159,494,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Executive search</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,748,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,907,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,306,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other human resource
related revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,019,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,875,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,507,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">293,334,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">104.7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">479,943,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105.2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">595,594,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Business and related tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,215,419</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(23,823,953</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(33,567,880</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">280,118,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">456,119,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">562,026,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">100.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(151,477,142</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(54.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(224,606,635</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(49.2</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(269,328,384</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(47.9</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,641,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231,513,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">292,697,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38,619,523</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(67,271,096</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(113,656,714</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20.2</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38,135,612</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13.6</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(55,175,493</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(88,978,985</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15.8</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation &#151;
share option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,482,546</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.8</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,678,238</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,073,480</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation &#151;
founder shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,622,466</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(94,860,147</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(33.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(141,124,827</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(30.9</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(215,709,179</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,781,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,388,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,988,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from foreign currency
translation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,456</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,158</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(0.0</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,320,194</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.0</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest and investment income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">930,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,846,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,385,151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,083,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,968,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,313,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income tax
provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,792,274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12.8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,201,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20.9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,367,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,192,011</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1.1</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(34,058,184</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(29,945,033</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5.4</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">11.7</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">13.4</TD>
    <TD nowrap>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.9</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Financial Information:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate share-based
compensation
expense<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,701,563</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6.7</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20,489,734</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4.5</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14,553,321</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2.6</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Aggregate share-based compensation expense includes share-based compensation expense
attributable to cost of services and operating expenses.</TD>
</TR>

</TABLE>


<P align="center" style="font-size: 10pt">48
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">






<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>2005 compared to 2004</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total revenues. </I>Our total revenues increased 24.1% to RMB595.6&nbsp;million (US$73.8&nbsp;million) in
2005 from RMB479.9&nbsp;million in 2004. This increase was primarily driven by growth in our print
advertising revenues and our online recruitment services revenues. We derived our total revenues
from:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Print advertising. </I>Our print advertising revenues increased 18.5% to
RMB356.3&nbsp;million (US$44.1&nbsp;million) in 2005 from RMB300.7&nbsp;million in 2004. This increase
was primarily due to a higher number of recruitment advertisements placed in our editions
of <I>51job Weekly </I>as we entered into four new markets in 2005 and increased our penetration
of our existing markets. We estimate that the number of print advertising pages increased
32.0% to 11,884 in 2005 from 9,001 in 2004. The increase in revenues from higher
advertisement volumes was partially offset by a decline in our overall average revenue per
page. Our overall average revenue per page declined principally as a result of an increase
in revenue contribution from certain markets in which local prices were lower than our
average. Although the prices that we charged for our print advertising in each city
remained generally stable or moderately increased, we may adjust our sales policy on
promotions and discounts in our cities from time to time.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Online recruitment services. </I>Our online recruitment services revenues
increased 43.0% to RMB159.5&nbsp;million (US$19.8&nbsp;million) in 2005 from RMB111.5&nbsp;million in
2004. This increase was mainly attributable to substantial growth in the number of unique
employers using our online recruitment services. We estimate that the number of unique
employers increased 44.0% to 56,599 in 2005 from 39,317 in 2004. This growth primarily
consisted of an increase in employers placing recruitment advertisements on <I>www.51job.com</I>
and, to a lesser extent, reflected an increase in the use of our <I>eHire </I>web-based online
resum&#233; and recruitment management platform. Our average revenue per unique employer in
2005 was relatively unchanged from the level in 2004. We believe that the increase in new
online customers, who generally purchase basic, lower priced recruitment advertisements
which drive a decline in our average revenue per unique employer was primarily offset by
the greater number of customers purchasing multiple online recruitment services and the
migration of customers to higher priced products, both factors which would increase our
average revenue per unique employer.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Executive search. </I>Our executive search revenues increased 5.6% to RMB26.3
million (US$3.3&nbsp;million) in 2005 from RMB24.9&nbsp;million in 2004, primarily as a result of
greater sales efforts.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Other human resource related revenues</I>. Our revenues from other human
resource related services increased 24.8% to RMB53.5&nbsp;million (US$6.6&nbsp;million) in 2005 from
RMB42.9&nbsp;million in 2004. This increase was primarily attributable to an increase in
training revenues as we conducted a greater number of seminars and courses. In addition,
we believe the increase reflected growing customer acceptance of new services,
particularly our business process outsourcing services. In November&nbsp;2004, we discontinued
the sale of stationery and offices supplies to our business customers which contributed
revenues of RMB2.2&nbsp;million (US$0.3&nbsp;million) in 2005 and RMB12.7&nbsp;million in 2004.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net revenues. </I>Our net revenues increased 23.2% to RMB562.0&nbsp;million (US$69.6&nbsp;million) in 2005
from RMB456.1&nbsp;million in 2004. Our net revenues reflected our total revenues less the amounts paid
as business taxes of RMB33.6&nbsp;million (US$4.2&nbsp;million) in 2005 and RMB23.8&nbsp;million in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of services. </I>Our cost of services increased 19.9% to RMB269.3&nbsp;million (US$33.4&nbsp;million)
in 2005 from RMB224.6&nbsp;million in 2004. The majority of this increase was a result of higher
printing related expenses associated with the expansion of <I>51job Weekly </I>into four new cities in
2005 as well as greater page volumes in existing markets. In addition, our employee compensation
expense increased principally as a result of new staff additions to support our
growing operations. Our cost of services in 2005 also included share-based compensation
expense of approximately RMB1.5&nbsp;million (US$0.2&nbsp;million), a decrease from RMB1.8&nbsp;million in 2004.
Our cost of services declined as a percentage of revenues as we benefited from increasing economies
of scale and operating efficiencies in our businesses.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Gross profit. </I>As a result of the above factors, our gross profit increased 26.4% to RMB292.7
million (US$36.3&nbsp;million) in 2005 from RMB231.5&nbsp;million in 2004. Our gross profit margin, which is
equal to our gross profit divided by our net revenues, was 52.1% in 2005 compared to 50.8% in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating expenses. </I>Our total operating expenses increased 52.9% to RMB215.7&nbsp;million (US$26.7
million) in 2005 from RMB141.1&nbsp;million in 2004. The increase in our operating expenses was
primarily due to an increase in sales and marketing expenses as well as general and administrative
expenses, which was partially offset by a decrease in share-based compensation expense. Our
operating expenses consisted of:
</DIV>

<P align="center" style="font-size: 10pt">49
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Sales and marketing expenses. </I>Our sales and marketing expenses increased 69.0% to
RMB113.7&nbsp;million (US$14.1&nbsp;million) in 2005 from RMB67.3&nbsp;million in 2004. This increase was
due to the expansion of our sales and marketing staff, increases in commissions paid to
sales personnel, increases in advertising and promotional expenses, and the addition of
four new sales offices in Changchun, Suzhou, Fuzhou and Zhengzhou in 2005. We calculate the
commissions paid to sales personnel based on a percentage of total revenues generated by
the employee. In addition, we pay bonuses to account executives for achieving and exceeding
certain sales targets. Our advertising and promotion expenses in 2005 increased 72.7% to
RMB21.4&nbsp;million (US$2.6&nbsp;million) from RMB12.4&nbsp;million in 2004 due to a greater number of
promotional events and other activities principally in connection with our expansion into
new markets, and also in connection with a national television advertising campaign we
conducted in early 2005.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>General and administrative expenses. </I>Our general and administrative expenses
increased 61.3% to RMB89.0&nbsp;million (US$11.0&nbsp;million) in 2005 from RMB55.2&nbsp;million in 2004.
This increase was primarily due to greater costs incurred in connection with operating as
a public company, higher professional services expenses, and costs associated with the
opening of four new offices opened in 2005, including rent, the hiring of new personnel
and the purchase of office equipment. Contributing also to the increase was compensation
to additional office staff and depreciation and amortization.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Share-based compensation. </I>Our share-based compensation expense included in
operating expenses decreased 30.0% to RMB13.1&nbsp;million (US$1.6&nbsp;million) in 2005 from
RMB18.7&nbsp;million in 2004. We did not recognize any additional deferred share-based
compensation in 2005. Upon adoption of SFAS No.&nbsp;123R effective January&nbsp;1, 2006, we expect
to incur higher share-based compensation expense.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Loss from foreign currency translation. </I>We recognized a loss of RMB11.3&nbsp;million (US$1.4
million) from foreign currency translation in 2005 as a result of a change in PRC foreign exchange
policy and a revaluation of the Renminbi in July&nbsp;2005. For more information about China&#146;s foreign
exchange policy, see &#147;Item&nbsp;10. &#151; Additional Information &#151; Exchange Controls.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest and investment income. </I>Our interest and investment income increased 616% to RMB20.4
million (US$2.5&nbsp;million) in 2005 from RMB2.8&nbsp;million in 2004 due to higher average balances in our
interest bearing bank deposits and higher interest rates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income tax expense. </I>We recorded an income tax expense of RMB29.9&nbsp;million (US$3.7&nbsp;million) in
2005 compared to RMB34.1&nbsp;million in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net income. </I>As a result of the above factors, our net income increased 0.5% to RMB61.4&nbsp;million
(US$7.6&nbsp;million) in 2005 from RMB61.1&nbsp;million in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>2004 compared to 2003</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Total revenues. </I>Our total revenues increased 63.6% to RMB479.9&nbsp;million in 2004 from RMB293.3
million in 2003. This increase was primarily due to the growth in our print advertising revenues
and our online recruitment services revenues. We derived our total revenues from:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Print advertising. </I>Our print advertising revenues increased 64.6% to
RMB300.7&nbsp;million in 2004 from RMB182.6&nbsp;million in 2003. This increase was primarily due to
significant growth in recruitment advertisements placed in our editions of <I>51job Weekly</I>,
which reflected the revenue contribution of the three new markets we entered in 2004, and
our increased penetration of our existing markets through greater direct sales and
marketing efforts. As a result, our estimated number of print advertising pages increased
94.2% to 9,001 in 2004 from 4,635 in 2003. The increase in revenues was largely driven by
the increase in the number of print advertising pages, which was partially offset by a
decline in our overall average revenue per page. Our overall average revenue per page
declined primarily due to an increase in revenue contribution from some of our markets
that generally have lower local prices for recruitment advertisement compared to those
which we realize on average in our other markets and additional revenue contribution from
three new, lower priced markets.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Online recruitment services. </I>Our online recruitment services revenues
increased 44.9% to RMB111.5&nbsp;million in 2004 from RMB77.0&nbsp;million in 2003. This increase
was primarily attributable to significant growth in the number of unique employers using
our online recruitment services, partially offset by a decrease in our average revenue per
unique employer. We estimate that the number of unique employers using our online
recruitment services increased 51.9% to 39,317 in 2004 from 25,880 in 2003, primarily as a
result of increased </TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">50
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR valign="top" style="font-size: 10pt; color: #textcolor#; background: #bgcolor#">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>sales and marketing efforts promoting our <I>www.51job.com </I>website and
online recruitment services. We estimate that our average revenue per unique employer
decreased primarily as a result of price reductions in 2004 for certain online products,
generally in the form of discounted introductory and promotional online recruitment
services packages, as well as a significant increase in the number of first-time online
customers, who generally purchase basic, lower priced recruitment advertisements.<br><br></TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Executive search. </I>Our executive search revenues increased 58.2% to RMB24.9
million in 2004 from RMB15.7&nbsp;million in 2003, primarily as a result of greater sales and
marketing efforts and also, we believe an increased acceptance by employers of executive
search as a recruitment tool.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Other human resource related revenues</I>. Our revenues from other human
resource related services increased 138% to RMB42.9&nbsp;million in 2004 from RMB18.0&nbsp;million
in 2003. This increase was primarily driven by growth in training revenues due to an
increase in the number of seminars and human resource conferences we conducted in 2004. In
addition, revenues in 2004 reflected the contribution of new services we introduced in
mid-2003, including our <I>eHR </I>human resource management software and business process
outsourcing services, which gained increasing customer acceptance in 2004. In November
2004, we discontinued the sale of stationery and offices supplies to our business
customers which contributed revenues of RMB12.7&nbsp;million in 2004 and RMB2.2&nbsp;million in
2003.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net revenues. </I>Our net revenues increased 62.8% to RMB456.1&nbsp;million in 2004 from RMB280.1
million in 2003. Our net revenues reflected our total revenues less the amounts paid as business
taxes of RMB23.8&nbsp;million in 2004 and RMB13.2&nbsp;million in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cost of services. </I>Our cost of services increased 48.3% to RMB224.6&nbsp;million in 2004 from
RMB151.5&nbsp;million in 2003. The majority of this increase was represented by printing related
expenses associated with the expansion of <I>51job Weekly</I>. In addition, our employee compensation
expense increased primarily due to the hiring of additional staff to support our growing
operations. Our cost of services in 2004 also included an increase in share-based compensation
expense to approximately RMB1.8&nbsp;million from RMB0.6&nbsp;million in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Gross profit. </I>As a result of the above factors, our gross profit increased 80.0% to RMB231.5
million in 2004 from RMB128.6&nbsp;million in 2003. Our gross profit margin was 50.8% in 2004 compared
to 45.9% in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating expenses. </I>Our total operating expenses increased 48.8% to RMB141.1&nbsp;million in 2004
from RMB94.9&nbsp;million in 2003. The increase in our operating expenses was primarily due to an
increase in sales and marketing expenses as well as general and administrative expenses. Our
operating expenses consisted of:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Sales and marketing expenses. </I>Our sales and marketing expenses increased
74.2% to RMB67.3&nbsp;million in 2004 from RMB38.6&nbsp;million in 2003. This increase was due to
the hiring of additional sales and marketing personnel, commissions to sales personnel,
increased spending on advertising and promotional campaigns, and the addition of three new
offices in Changsha, Hefei and Ningbo in 2004. Our advertising and promotion expenses in
2004 increased 75.2% to RMB12.4&nbsp;million from RMB7.1&nbsp;million in 2003 as we increased our
use of direct marketing, event marketing and other forms of promotion principally in
connection with our expansion into new markets.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>General and administrative expenses. </I>Our general and administrative expenses
increased 44.7% to RMB55.2&nbsp;million in 2004 from RMB38.1&nbsp;million in 2003. This increase was
primarily due to costs incurred in connection with the operation of the three new offices
opened in 2004. In addition, the increase reflected compensation to additional office
staff, professional services expenses, and depreciation and amortization.</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD><I>Share-based compensation. </I>Our share-based compensation expense included in
operating expenses increased 3.2% to RMB18.7&nbsp;million in 2004 from RMB18.1&nbsp;million in 2003.
This increase was due to our recognition of
RMB6.6&nbsp;million of additional deferred share-based compensation in 2004, principally as a
result of the sale of common shares to one of our directors at a price below fair market
value, which was partially offset by the full amortization of the deferred share-based
compensation that we recognized in connection with our issuance of common shares to our
founders in 2000. For further discussion with respect to our share-based compensation, see
&#147;&#151; Critical Accounting Policies &#151; Share-based compensation.&#148;</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Interest and investment income. </I>Our interest and investment income increased 206% to RMB2.8
million in 2004 from RMB0.9&nbsp;million in 2003 due to higher cash balances of outstanding bank
deposits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Income tax expense. </I>We recorded an income tax expense of RMB34.1&nbsp;million in 2004 compared to
RMB3.2&nbsp;million in 2003. Both our income tax expense and effective tax rate increased significantly
in 2004. These increases were
</DIV>

<P align="center" style="font-size: 10pt">51
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">primarily the result of an overall increase in taxable income we
recognized in the period and the expiration of tax exemptions with respect to certain subsidiaries
of AdCo. In addition, share-based compensation expense is not deductible for purposes of
calculating PRC enterprise income tax, causing our effective income tax rate in 2004 to exceed our
statutory enterprise income tax rate of 33%.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Net income. </I>As a result of the above factors, our net income increased 87.6% to RMB61.1
million in 2004 from RMB32.6&nbsp;million in 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Unaudited Quarterly Results of Operations</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have presented our unaudited quarterly results of operations for the four fiscal quarters
of 2005. You should read the following table in conjunction with the consolidated financial
statements and related notes contained elsewhere in this annual report. We have prepared the
unaudited information on the same basis as our audited consolidated financial statements. This
information reflects all adjustments, consisting only of normal recurring adjustments, which are in
the opinion of our management necessary for fair presentation of our results of operations for the
quarters presented. Because the recruitment advertising and human resource industries in China are
new and rapidly evolving, and because our business is also relatively new, operating results for
any quarter are not necessarily indicative of results for any future quarters or for a full year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table presents our unaudited quarterly results of operations for 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>For the three months ended,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>March 31,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>June 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>September 30,</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Print advertising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,690,402</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,502,452</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,099,031</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,992,763</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Online recruitment services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,805,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">38,864,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,443,053</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,382,236</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Executive search</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,938,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,054,774</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,326,391</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,987,354</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other human resource related revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,256,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,998,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,883,951</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,369,692</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">142,689,867</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">147,419,761</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,752,426</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">144,732,045</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">134,437,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">139,164,212</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151,589,980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">136,834,223</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(69,005,139</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(69,249,300</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(68,736,494</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(62,337,450</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,432,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,914,912</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">82,853,486</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">74,496,773</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(31,703,792</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(26,978,660</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(27,570,088</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(27,404,175</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22,358,405</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(21,207,581</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(22,198,570</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(23,214,429</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation &#151; share option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,290,803</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,349,954</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,237,445</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,195,278</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(57,353,000</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(51,536,195</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(53,006,103</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(53,813,882</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,079,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,378,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,847,383</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,682,891</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income tax provision</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,375,127</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,173,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,940,902</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,877,650</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,199,835</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,281,976</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,910,392</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,552,830</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,175,292</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,891,682</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,030,510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,324,820</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other Financial Information:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Aggregate share-based compensation expense<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,671,596</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,759,343</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,597,976</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,524,406</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Aggregate share-based compensation expense includes share-based compensation expense
attributable to cost of services and operating expenses.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Liquidity and Capital Resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our current cash and cash equivalents and cash flow from operations will be
sufficient to meet our anticipated cash needs, including our cash needs for working capital and
capital expenditures, for the foreseeable future. We may, however, require additional cash
resources due to changing business conditions or other future developments, including any
investments or acquisitions we may decide to pursue.
</DIV>

<P align="center" style="font-size: 10pt">52
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our liquidity has been principally affected by our significant increases in net cash from
operating activities and from our initial public offering in 2004, our repurchases of ADSs in the
open market, and our purchases of property, equipment and software.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth a summary of our cash flows for the periods indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>For the year ended December 31,</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,966,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,812,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,025,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,120,558</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20,343,047</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,804,765</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(54,391,335</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,739,775</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">746,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640,964,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(74,097,969</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,181,677</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net increase (decrease)&nbsp;in cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,446,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">733,208,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,659,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,188,189</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cash flows from operating activities. </I>Our increase in net cash provided by operating
activities from 2003 to 2004 was primarily the result of an increase in net income. The substantial
majority of this increase was due to growth in our print advertising revenues and our online
recruitment services revenues. Our increase in net cash provided by operating activities in 2004
also reflected an adjustment for share-based compensation of RMB20.5&nbsp;million for share-based
compensation expense and RMB24.6&nbsp;million in taxes payable. Our net cash provided by operating
activities in 2005 increased to RMB122.0&nbsp;million (US$15.1&nbsp;million) from RMB105.8&nbsp;million in 2004.
The increase was primarily attributable to an increase in advance from customers and salary and
employee related accrual, which were partially offset by a decrease in taxes payable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cash flows from investing activities. </I>Our net cash used in investing activities from 2003 to
2005 reflected purchases of property, equipment, software and other intellectual property rights in
these years in connection with the general growth of our businesses and the opening of new offices.
We established three new offices in 2003, three new offices in 2004 and four new offices in 2005.
In 2003, our net cash used in investing activities reflected our investment of RMB10.7&nbsp;million of
our excess cash in an interest bearing bank deposit. Our net cash used in investing activities in
2004 included RMB635.5&nbsp;million of cash proceeds from our initial public offering in interest
bearing bank deposits. In 2005, we made installment payments totaling RMB22.8&nbsp;million (US$2.8
million) toward our purchase of an office complex in Zhangjiang High Technology Park.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Cash flows from financing activities. </I>Our net cash from financing activities has been
primarily affected by our initial public offering in 2004. Our net cash provided by financing
activities in 2003 consisted of proceeds from the exercise of stock options by certain directors
and executive officers. In 2004, our net cash provided by financing activities consisted of net
proceeds of RMB635.5&nbsp;million from the sale of 6,037,500 ADSs in our initial public offering and
RMB5.5&nbsp;million proceeds from the exercise of warrants to purchase Series&nbsp;A preference shares by one
of our principal shareholders and from the exercise of options by certain directors and officers.
In 2005, our net cash used in financing activities consisted of our repurchase of 686,438 ADSs in
the open market for an aggregate consideration of RMB75.6&nbsp;million (US$9.4&nbsp;million), which was
partially offset by the exercise of options by employees and certain directors and officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Capital resources</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have financed our operations primarily through cash flows from operations as well as equity
investments by certain of our founders and current shareholders. To date, we have not financed our
operations through significant borrowings, and as of December&nbsp;31, 2005, we had no material debt
obligations outstanding to unrelated parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our external financing has consisted primarily of the proceeds from our initial public
offering and the sale of our Series&nbsp;A preference shares and warrants to purchase Series&nbsp;A
preference shares. In October&nbsp;2004, we raised net proceeds of RMB635.5&nbsp;million from the sale of
6,037,500 ADSs in our initial public offering. From June&nbsp;2000 to January&nbsp;2002, we sold an aggregate
of 13,678,466 Series&nbsp;A preference shares for aggregate net proceeds of approximately US$14.0
million (RMB116.4&nbsp;million), including a warrant to purchase 10,000 Series&nbsp;A preference shares which
was exercised in
May&nbsp;2001. We also issued warrants to purchase 380,000 Series&nbsp;A preference shares which were
exercised in March&nbsp;2004. All of the warrants have been exercised and all Series&nbsp;A preference shares
were converted into an aggregate of 14,058,466 of our common shares upon the completion of our
initial public offering in 2004. Our operations from inception through 2000 were financed primarily
by equity and debt financing from our chief executive officer and director, Rick Yan, as well as
equity financing by our other three founders.
</DIV>

<P align="center" style="font-size: 10pt">53
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our operations are conducted primarily through Tech JV and its subsidiaries. As a result, our
ability to finance our operations and any debt that we, or our subsidiaries, may incur is
dependent, in part, upon the flow of dividends from, and the payment of royalties and other fees
by, our subsidiaries. The payment of dividends in China is subject to restrictions. PRC regulations
currently permit payment of dividends only out of accumulated profits as determined in accordance
with PRC accounting standards and regulations. Our subsidiaries and affiliated entities in the PRC
are also required to set aside a portion of their after-tax profits according to PRC accounting
standards and regulations to fund certain reserve funds that are not distributable as cash
dividends. Through certain contractual arrangements, we are able to require Qian Cheng to pay us
any cash it receives as dividends or other distributions with respect to its minority shareholding
in Tech JV and its subsidiaries. Our ability to obtain cash or other assets under these contracts
depends on their effectiveness and enforceability. For a description of these agreements and our
PRC counsel&#146;s opinion as to their enforceability, see &#147;Item&nbsp;4. &#151; Information on the Company &#151;
Organizational Structure.&#148; If we or any of our subsidiaries are unable to receive all of the
revenues from our operations through these contractual arrangements or dividends, we may be unable
to effectively finance our operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, we signed a letter of intent to purchase our current principal executive
offices at 21st floor, Wen Xin Plaza, 755 Wei Hai Road, which we expect to become our Shanghai
sales office, for an aggregate consideration of RMB27&nbsp;million (US$3.3&nbsp;million). In addition, in
April&nbsp;2006, we completed the purchase of a new office complex in Zhangjiang High Technology Park in
Shanghai&#146;s New Pudong Area for approximately RMB114&nbsp;million (US$14.1&nbsp;million). For a discussion of
our capital expenditures, see &#147;Item&nbsp;4. &#151; Information on the Company &#151; History and Development of
the Company.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that our current cash and cash equivalents and cash flow from operations will be
sufficient to meet our anticipated cash needs, including our cash needs for working capital and
capital expenditures, for the foreseeable future. We may, however, require additional cash
resources due to changing business conditions or other future developments, including any
investments or acquisitions we may decide to pursue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Research and Development</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We employ a large staff of website designers and software developers to design and update our
website and create our proprietary software. We did not incur material expenditures with respect to
our research and development activities in any of the three years ended December&nbsp;31, 2003, 2004 or
2005. For more information on our technology operations, see &#147;Item&nbsp;4 &#151; Information on the Company &#151;
Business Overview &#151; Technology.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Trend Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than as disclosed elsewhere in this annual report, we are not aware of any trends,
uncertainties, demands, commitments or events for the period from January&nbsp;1, 2003 to December&nbsp;31,
2005 that are reasonably likely to have a material effect on our net revenues, income,
profitability, liquidity or capital resources, or that caused the disclosed financial information
to be not necessarily indicative of future operating results or financial conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Off-Balance Sheet Arrangements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Other than our operating leases commitments, we do not have any outstanding derivative
financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign
currency forward contracts. We do not engage in trading activities involving non-exchange traded
contracts.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Contractual Obligations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into non-cancelable agreements with initial or remaining terms in excess of
one year for the publication of <I>51job Weekly</I>, the lease of office premises, and the lease of office
equipment. Our contractual cash obligations consist largely of obligations under property lease
agreements for office premises. Payments made under operating leases, net of any incentive
discounts that we receive from the leasing company, are charged to our income statement on a
straight-line basis over the lease periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have also a capital commitment for the purchase of office space and leasehold improvement
associated with a letter of intent we executed for the purchase of an office complex in Zhangjiang
High Technology Park.
</DIV>


<P align="center" style="font-size: 10pt">54
</DIV>


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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth our future minimum payments with respect to non-cancelable
agreements as of December&nbsp;31, 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="28%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Operating Lease Commitment</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Capital Commitment</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Publication</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Office</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Office</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Leasehold</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>fees</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>premises</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>complex</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>improvement</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less than one year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,958,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,452,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,982,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">168,602,272</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">1-3&nbsp;years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,784,942</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,500,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">151,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,436,757</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">3-5&nbsp;years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,865,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,370,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,236,260</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">More than 5&nbsp;years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,609,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,323,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,982,370</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,182</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231,275,289</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our publication fees and office lease agreements are generally for a term of two years. We
expect to renew substantially all of these agreements as they expire, although we cannot predict
the terms and conditions of such renewals.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rental expenses incurred under operating leases were RMB10.5&nbsp;million in 2003, RMB13.9&nbsp;million
in 2004 and RMB28.7&nbsp;million (US$3.6&nbsp;million) in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;WFOE, our wholly owned PRC subsidiary, entered into equity pledge agreements with the
shareholders of Qian Cheng and RAL, respectively. Under each of these equity pledge agreements,
WFOE has an option, exercisable during a term of ten years, to purchase the equity interests in
each of Qian Cheng and RAL, respectively, when and if, and at the lowest price, permitted by PRC
law. At the end of the term, if and to the extent these options have not been exercised, WFOE is
obligated to purchase the maximum amount of the equity interest in Qian Cheng and RAL,
respectively, as permitted by applicable PRC law. For a detailed description of these equity pledge
agreements, see &#147;Item&nbsp;4. &#151; Information on the Company &#151; Organizational Structure &#151; Contractual
Arrangements Among Our Group Entities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We do not have material contractual obligations in currencies other than Renminbi.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Recent Accounting Pronouncements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised 2004), &#147;Share-Based Payment,&#148; or SFAS
No.&nbsp;123R, which replaced SFAS No.&nbsp;123 and superseded APB No.&nbsp;25. SFAS No.&nbsp;123R requires the
measurement of all employee share-based payments to employees, including grants of employee stock
options, using a fair-value-based method and the recording of such expense in the consolidated
statements of operations. The pro forma disclosures previously permitted under SFAS No.&nbsp;123 no
longer will be an alternative to financial statement recognition. In March&nbsp;2005, the SEC issued
Staff Accounting Bulletin No.&nbsp;107 regarding the SEC&#146;s interpretation of SFAS No.&nbsp;123R and the
valuation of share-based payments for public companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We adopted SFAS No.&nbsp;123R and related FASB Staff Positions starting January&nbsp;1, 2006 and have
recognized stock-based compensation expense using the modified prospective method, which requires
that compensation expense be recorded for all unvested stock options upon adoption of SFAS No.
123R. We have applied the Black-Scholes valuation model in determining the fair value of
share-based payments to employees, and are recognizing compensation expense on a straight-line
basis over the requisite service period. The adoption of SFAS No.&nbsp;123R increased our share-based
compensation expense in our consolidated statement of operations in the first quarter of 2006 and
we expect the implementation of SFAS No.&nbsp;123R may adversely affect our earnings in the future.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2005, the FASB issued SFAS No.&nbsp;154, &#147;Accounting Changes and Error Corrections,&#148; or SFAS
No.&nbsp;154, which replaces APB Opinion No.&nbsp;20, &#147;Accounting Changes,&#148; and SFAS No.&nbsp;3, &#147;Reporting
Accounting Changes in Interim Financial Statements.&#148; SFAS No.&nbsp;154 provides guidance on the
accounting for and reporting of accounting changes and error corrections. It establishes
retrospective application as the required method for reporting a change in accounting principle and
the reporting of a correction of an error. SFAS No.&nbsp;154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December&nbsp;15, 2005. We do not expect that
the adoption of SFAS No.&nbsp;154 will have a material effect on our financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2005, the FASB ratified the Emerging Issues Task Forces&#146; Issue No.&nbsp;05-06, &#147;Determining
the Amortization Period for Leasehold Improvements,&#148; or EITF No.&nbsp;05-06. EITF No.&nbsp;05-06 provides
that the amortization period used for leasehold improvements acquired in a business combination or
purchased after the inception of a lease be the shorter of (a)&nbsp;the useful life of the assets or (b)
a term that includes required lease periods and renewals that are reasonably assured
</DIV>

<P align="center" style="font-size: 10pt">55
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">upon the acquisition or the purchase. The provisions of EITF No.&nbsp;05-06 should be applied to
leasehold improvements (within the scope of this issue) that are purchased or acquired in reporting
periods beginning after June&nbsp;29, 2005. We do not expect that the adoption of EITF No.&nbsp;05-06 will
have a material effect on our financial statements.
</DIV>

<DIV align="left">
<A name="108"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Directors and Senior Management</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Effective May&nbsp;30, 2006, Charles E. Phillips, Jr., an independent director and member of our
compensation committee and nominating and corporate governance committee, resigned from our board
of directors for personal reasons.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The names of our current directors and executive officers, their ages as of the date of this
annual report and the principal positions with 51job, Inc. held by them are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="26%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="61%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Name</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Age</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Position / Title</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Donald L. Lucas<SUP style="font-size: 85%; vertical-align: text-top">(1) (2)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">76</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chairman of the board and independent director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Rick Yan
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Director, chief executive officer, president and secretary</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">David K. Chao<SUP style="font-size: 85%; vertical-align: text-top">(1) (2)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">39</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Independent director</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Shan Li<SUP style="font-size: 85%; vertical-align: text-top">(1) (3)</SUP>
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">42</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Independent director</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kathleen Chien
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">36</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief financial officer and senior vice president</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Michael Lei Feng
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">37</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Senior vice president</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Norman Lui
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">35</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice president</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Tao Wang
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">43</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice president</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">David Weimin Jin
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">36</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice president</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Jones Haijun Yu
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">33</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Vice president</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of audit committee.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of compensation committee.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Member of nominating and corporate governance committee.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no family relationships among any of the directors or executive officers of our
company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The business address of each of our directors and executive officers listed below is 21st
Floor, Wen Xin Plaza, 755 Wei Hai Road, Shanghai 200041, People&#146;s Republic of China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Biographical Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Donald L. Lucas </I>is the chairman of the board of directors of our company. Mr.&nbsp;Lucas became an
independent director of our company in February&nbsp;2004. Mr.&nbsp;Lucas received his Bachelor of Arts
degree from Stanford University and his Master of Business Administration degree from the Stanford
Graduate School of Business. In 1960, Mr.&nbsp;Lucas began a seven-year participation, including acting
as both a general partner and a limited partner with Draper, Gaither &#038; Anderson, the first venture
capital firm organized on the West Coast in the United States. Since 1967, Mr.&nbsp;Lucas has been
actively engaged in venture capital activities as a private individual. Mr.&nbsp;Lucas currently serves
as a board member of Cadence Design Systems, Inc., DexCom, Inc., Oracle Corporation and Vimicro
International Corporation. He also serves as a director for several privately held companies. Mr.
Lucas is the former chairman of the board of the Stanford Institute for Economic Policy and
Research and a Trustee of the University of Santa Clara.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Rick Yan </I>is a director, chief executive officer and president of our company. Mr.&nbsp;Yan has been
a director and chief executive officer of our company since 2000. Mr.&nbsp;Yan is responsible for our
overall strategy and management. Mr.&nbsp;Yan received his Bachelor of Engineering degree and Master of
Philosophy degree from the University of Hong Kong and his Master of Business Administration degree
with distinction from INSEAD in France. Mr.&nbsp;Yan was an investor and advisor of our company from its
inception and prior to his appointment as chief executive officer. Prior to joining our company,
Mr.&nbsp;Yan was a Director and the Head of China Practice at Bain &#038; Company, an international strategy
consulting company. Mr.&nbsp;Yan joined the firm in London in 1989, returned to Asia and set up Bain &#038;
Company&#146;s Hong Kong and Beijing offices in 1991 and 1993, respectively. In his 11-year tenure with
Bain &#038; Company, Mr.&nbsp;Yan was widely acknowledged as an expert in the consumer products and
technology sectors. Prior to his affiliation with Bain &#038; Company, Mr.&nbsp;Yan worked at Hewlett-Packard
in Hong Kong for four years and was awarded Marketing Executive of the Year.
</DIV>

<P align="center" style="font-size: 10pt">56
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>David K. Chao </I>is a director of our company. Mr.&nbsp;Chao has been a director of our company since
2000. Mr.&nbsp;Chao received his Bachelor of Arts degree in Economics and East Asian Studies
(Anthropology) with high honors from Brown University and his Master of Business Administration
degree from Stanford University. Mr.&nbsp;Chao is a Co-founder and Managing General Partner of DCM &#151;
Doll Capital Management, a venture capital firm based in the Silicon Valley. Prior to joining DCM,
Mr.&nbsp;Chao was a founding executive of one of the largest mobile virtual network operators in Japan.
He also worked as a management consultant at McKinsey &#038; Company in San Francisco. Prior to that,
Mr.&nbsp;Chao worked in marketing and product management at Apple Computer and was one of the account
executives for Recruit. Mr.&nbsp;Chao serves on the boards of directors of numerous DCM portfolio
companies. He is a Management Board member of the Stanford Graduate School of Business Board of
Trustees and a member of The Thacher School Board of Trustees. He also serves on the board of
directors of Legend Capital and the board of advisors for Red Herring.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Shan Li </I>is a director of our company. Mr.&nbsp;Li became an independent director of our company in
February&nbsp;2004. Mr.&nbsp;Li holds a Bachelor of Science degree in Management Information Systems from
Qinghua University, a Master&#146;s degree in Economics from the University of California at Davis and a
Ph.D. in Economics from the Massachusetts Institute of Technology. Mr.&nbsp;Li is a founding partner of
San Shan Limited, a private equity firm. Mr.&nbsp;Li is a veteran of the banking industry, having held
various executive positions with Bank of China International Holdings, Goldman Sachs, Lehman
Brothers, Credit Suisse First Boston and China Development Bank.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Kathleen Chien </I>is chief financial officer and a senior vice president of our company. Ms.
Chien joined our company in 1999. Ms.&nbsp;Chien received her Bachelor of Science degree in Economics
from the Massachusetts Institute of Technology and her Master of Business Administration degree
from the Haas School of Business at the University of California, Berkeley. Prior to joining our
company, Ms.&nbsp;Chien worked in the financial services and management consulting industries, including
three years with Bain &#038; Company in Hong Kong and two years with Capital Securities Corp., a leading
investment bank in Taiwan. During her tenure at Bain &#038; Company, Ms.&nbsp;Chien was a consultant to a
number of companies on strategic and marketing issues, including entry into the Chinese market and
achieving cost and operational efficiencies. While at Capital Securities Corp., Ms.&nbsp;Chien completed
a number of equity and equity-linked transactions, including the first ever Swiss-franc convertible
bond issuance out of Taiwan, enabling client companies to raise significant capital from the
European and U.S. investment community.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Michael Lei Feng </I>is a senior vice president of our company. Mr.&nbsp;Feng has been with our company
since its inception. Mr.&nbsp;Feng received his Bachelor of Arts and Bachelor of Science degrees in Law
from China Foreign Affairs College. Prior to joining our company, Mr.&nbsp;Feng worked at Bain &#038; Company
in Beijing for three years and at the Ministry of Foreign Affairs in China for one year. During his
tenure at Bain &#038; Company, Mr.&nbsp;Feng was a consultant to companies in a number of industries and
advised them on their China strategies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Norman Lui </I>is a vice president of our company. Mr.&nbsp;Lui has been with our company since its
inception. Mr.&nbsp;Lui received his Bachelor of Science degree in Electrical Engineering with
distinction from Cornell University. Prior to joining our company, Mr.&nbsp;Lui was with Bain &#038; Company
for five years, working in the Hong Kong, Beijing and San Francisco offices. During his five-year
tenure at Bain &#038; Company, Mr.&nbsp;Lui was a consultant to companies in the consumer products and
telecommunications industries with respect to their sales, marketing and operating strategies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Tao Wang </I>is a vice president of our company. Mr.&nbsp;Wang joined our company in 2000. Mr.&nbsp;Wang
received a Bachelor of Science degree in Math from Shandong University and a Master of Engineering
degree from the Second Academy under the PRC Ministry of Aerospace Industry. Mr.&nbsp;Wang also holds a
Master of Business Administration degree from the Business School at University of Warwick in the
United Kingdom. Prior to joining our company, Mr.&nbsp;Wang spent four years as a Senior Consultant at
Bain &#038; Company. Also, Mr.&nbsp;Wang served as a Representative and the General Manager of a joint
venture company in Wuhan for TI Group Asia Pacific. Earlier in his career, Mr.&nbsp;Wang held
engineering and project management positions at the Ministry of Aerospace Industry in China.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>David Weimin Jin </I>is a vice president of our company. Mr.&nbsp;Jin joined our company in 2000. He
received a Bachelor of Science degree in Engineering from Xidian University. Prior to joining our
company, Mr.&nbsp;Jin held sales management positions in large multinational companies, including three
years at Shell and one year with Colgate Palmolive.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Jones Haijun Yu </I>is a vice president of our company. Mr.&nbsp;Yu joined our company in 1998. He
received a Bachelor of Science degree in Biochemistry from Wuhan University and in Business
Management from Beijing Jiaotong University. Prior to joining our company, Mr.&nbsp;Yu worked as a
technician with Guangzhou Zengcheng Biochemical Engineering Company for one year.
</DIV>

<P align="center" style="font-size: 10pt">57
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Compensation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Compensation of Directors and Executive Officers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2004, we approved an annual director&#146;s fee of US$15,000 for each director. In
addition, our directors receive a fee of US$2,000 for each board meeting attended in person and
US$1,000 for each committee meeting attended in person, or US$1,000 for each board meeting attended
by conference call and US$500 for each committee meeting attended by conference call. Our directors
are also reimbursed for reasonable travel expenses incurred in attending board meetings in person.
There are no arrangements between us and our directors providing for special benefits upon our
directors&#146; termination of service. For the year ended December&nbsp;31, 2005, the aggregate cash
compensation to our directors as a group was approximately US$119,000 (RMB960,000). In 2005, we
granted options to acquire 40,000 common shares at fair market value to one of our independent
directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For the year ended December&nbsp;31, 2005, the aggregate cash compensation to our executive
officers as a group was approximately RMB3.9&nbsp;million (US$0.5&nbsp;million). We granted options to
acquire an aggregate of 408,000 common shares to our executive officers in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Directors&#146; and Officers&#146; Liability Insurance</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We maintain directors&#146; and officers&#146; liability insurance for our directors and officers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Employment Agreements</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into employment agreements with each of our executive officers. The terms of
these agreements are substantially similar to each other. Under these agreements, each of our
executive officers is employed at will, and their employment may be terminated, with or without
cause, by either party. These agreements do not provide for any special termination benefits, nor
do we have other arrangements with these executive officers for special termination benefits. Each
executive officer has agreed to hold in strict confidence and not to use, except for the benefit of
our company, any proprietary information, technical data, trade secrets and know-how of our company
or the confidential or proprietary information of any third party, including our affiliated
entities and our subsidiaries, received by our company. Each of these executive officers has also
agreed not to engage in any other employment, occupation, consulting or other business activity
directly related to the business in which we are involved, or engage in any other activities that
conflict with his or her obligations to us during the term of his or her employment. For the
12-month period after any of these executive officers&#146; termination of employment with us for any
reason, such officer is prohibited from recruiting any of our employees or soliciting or inducing
our employees to leave their employment with us.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Stock-Based Compensation Plans</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2000, our board of directors and shareholders adopted our 2000 stock option plan. Under
this plan, our directors, officers and other employees and consultants are eligible to acquire
common shares under options. At the time of adoption, 4,010,666 common shares were reserved for
issuance under the plan. In February&nbsp;2004, our board of directors and shareholders approved an
increase in the number of authorized shares reserved under the plan of 1,519,912 common shares,
increasing the total number of authorized shares reserved under the plan to 5,530,578 common
shares. The plan has a term of ten years but may be terminated earlier by our board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock options granted under the 2000 stock option plan may be incentive stock options, or
ISOs, which are intended to qualify for favorable U.S. federal income tax treatment under the
provisions of Section&nbsp;422 of the U.S. Internal Revenue Code of 1986, as amended, or non-qualified
stock options, or NSOs, which do not so qualify.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The compensation committee of our board of directors administers the plan. Subject to the
provisions of the plan and, in the case of a committee, the specific duties delegated by the board
of directors to such committee, and subject to the approval of any relevant authorities, the board
of directors or the committee so appointed has the authority in its discretion to determine, among
other things, the fair market value of the common shares, select optionees, determine the number of
common shares to be covered by each award granted under the plan, and the terms and conditions of
any options or stock purchase rights granted under the plan.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Stock options granted under the plan become exercisable at a rate of not less than 20% per
year over five years from the date of the option grant. In the event of the termination of service
of an optionee, the unvested portion of a stock option is forfeited and the vested portion
terminates within the period of time as specified in the option agreement and, in the absence of a
specified time in the option agreement, within twelve months following the optionee&#146;s termination
in the case of the optionee&#146;s disability or death, and three months following the optionee&#146;s
termination in all other cases.
</DIV>

<P align="center" style="font-size: 10pt">58
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the event of a merger of our company, each outstanding stock option may be assumed or an
equivalent option or right may be substituted by the successor corporation. In the event the
successor corporation refuses to assume or substitute for the stock option, the outstanding stock
options will automatically vest and become exercisable for a period of 15&nbsp;days, after which the
stock options will terminate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the options granted to our directors, executive officers and
other employees under our 2000 stock option plan during the periods indicated.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="32%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="20%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Common shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>underlying options</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Exercise</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>granted</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date of grant</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Date of expiration</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Granted in 2003</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kathleen Chien</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">200,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 1, 2003</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March 31, 2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">460,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December 15, 2003</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December 14, 2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David Weimin Jin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 1, 2003</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March 31, 2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 1, 2003</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">March 31, 2009</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">September 1, 2003</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">August 31, 2009</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">364,450</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December 15, 2003</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">December 14, 2009</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,346,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Granted in 2004</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald L. Lucas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 17, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 16, 2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">138,264</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 28, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Not applicable</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shan Li</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 28, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 27, 2010</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Charles E. Phillips, Jr.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May 20, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">May 19, 2010</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 28, 2004</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">February 27, 2010</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">468,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Granted in 2005</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rick Yan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">160,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 22, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 21, 2011</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David K. Chao</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 25, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">July 24, 2011</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kathleen Chien</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">81,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 22, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 21, 2011</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael Lei Feng</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,400</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 22, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 21, 2011</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Norman Lui</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 22, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 21, 2011</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tao Wang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,600</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 22, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 21, 2011</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David Weimin Jin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,800</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 22, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 21, 2011</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jones Haijun Yu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 22, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 21, 2011</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other employees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">271,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 22, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">April 21, 2011</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November 6, 2005</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November 10, 2011</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">749,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>These relate to sales of common shares, from those authorized under the stock option plan,
below fair market value.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Board Practices</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The directors will hold office until the next annual general meeting of shareholders and until
such director&#146;s successor is elected and duly qualified, or until such director&#146;s earlier death,
resignation or removal. We have no specific policy with respect to director attendance at our board
meetings, committee meetings or annual general meetings of shareholders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Board Committees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To enhance our corporate governance, we have established three committees under the board of
directors: the audit committee, the nominating and corporate governance committee and the
compensation committee. We have adopted a charter for each of these committees. The committees have
the following functions and members.
</DIV>

<P align="center" style="font-size: 10pt">59
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Audit committee</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our audit committee reports to the board of directors regarding the appointment of our
independent public accountants, the scope and results of our annual audits, compliance with our
accounting and financial policies and management&#146;s procedures and policies relating to the adequacy
of our internal accounting controls. Our audit committee charter requires its members to satisfy
applicable Nasdaq corporate governance rules on independence. Since May&nbsp;2004, the members of our
audit committee have been Donald L. Lucas, who acts as the chairman of our audit committee, David
K. Chao and Shan Li. Our board of directors has determined that all of our audit committee members
are &#147;independent directors&#148; within the meaning of Nasdaq Marketplace Rule&nbsp;4200(a)(15) and meet the
criteria for independence set forth in Section&nbsp;10A(m)(3)(B)(i) of the Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our audit committee will be responsible for, among other things:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>the appointment, evaluation, compensation, oversight and termination of the
work of our independent auditor (including resolution of disagreements between management
and the independent auditor regarding financial reporting);</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>ensuring that it receives from our independent auditor a formal written
statement attesting to the auditor&#146;s independence and describing all relationships between
the auditor and us;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>pre-approving any audit and non-audit services, including tax services, to
be provided by our independent auditor in accordance with Nasdaq rules;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing our annual audited financial statements and quarterly financial
statements with management and our independent auditor;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing with our independent auditor all critical accounting policies and
practices to be used by us in preparing our financial statements, all alternative
treatments of financial information within U.S. GAAP, and other material communications
between our independent auditor and management;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing our policies with respect to risk assessment and risk management;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing, with management and counsel, any legal matters that may have a
material impact on us and any material reports or inquiries from regulatory or
governmental agencies; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>establishing procedures for the receipt, retention and treatment of
complaints regarding accounting, internal accounting controls, auditing matters or
potential violations of law, and the confidential, anonymous submission by our employees
of concerns regarding questionable accounting or auditing matters or potential violations
of law.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Nominating and corporate governance committee</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our nominating and corporate governance committee assists the board of directors in
identifying individuals qualified to become members of our board of directors and in determining
the composition of the board and its committees. Our board of directors has determined that the
member of our nominating and corporate governance committee is an &#147;independent director&#148; within the
meaning of Nasdaq Marketplace Rule&nbsp;4200(a)(15) and meets the criteria for independence set forth in
Section&nbsp;10A(m)(3)(B)(i) of the Exchange Act. The current member of our nominating and corporate
governance committee is Shan Li, who acts as the chairman of the committee.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our nominating and corporate governance committee will be responsible for, among other things:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>identifying and recommending to the board nominees for election or
re-election to the board, or for appointment to fill any vacancy;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing annually with the board the current composition of the board in
light of the characteristics of independence, age, skills, experience and availability of
service to us;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing the continued board membership of a director upon a significant
change in such director&#146;s principal occupation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>identifying and recommending to the board the names of directors to serve as
members of the audit committee and the compensation committee, as well as the nominating
and corporate governance committee itself;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>advising the board periodically with respect to significant developments in
the law and practice of corporate governance as well as our compliance with applicable
laws and regulations, and making recommendations to the board on all matters of corporate
governance and on any corrective action to be taken;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>establishing criteria and processes for, and leading the board and each
committee of the board in, its annual performance self-evaluation;</TD>
</TR>

</TABLE>
</DIV>
<P align="center" style="font-size: 10pt">60
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV style="margin-top: 6pt"><TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">


<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing and approving policies and procedures with respect to proposed
transactions between us and our related parties, and approving in advance all such
related-party transactions; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>monitoring compliance with our code of business conduct and ethics,
including reviewing the adequacy and effectiveness of our procedures to ensure proper
compliance.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Compensation committee</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our compensation committee assists the board in reviewing and approving the compensation
structure of our directors and executive officers, including all forms of compensation to be
provided to our directors and executive officers. In addition, the compensation committee reviews
stock compensation arrangements for all of our other employees. Members of the compensation
committee are not prohibited from direct involvement in determining their own compensation. Our
chief executive officer may not be present at any committee meeting during which his or her
compensation is deliberated. The current members of our compensation committee are David K. Chao,
who acts as the chairman of the committee, and Donald L. Lucas. Our board of directors has
determined that all members of our compensation committee are &#147;independent directors&#148; within the
meaning of Nasdaq Marketplace Rule&nbsp;4200(a)(15) and meet the criteria for independence set forth in
Section&nbsp;10A(m)(3)(B)(i) of the Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our compensation committee will be responsible for, among other things:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>approving and overseeing the total compensation package for our executives;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing and making recommendations to the board with respect to the compensation of our directors;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing and approving corporate goals and objectives relevant to the
compensation of our chief executive officer, evaluating the performance of our chief
executive officer in light of those goals and objectives, and setting the compensation
level of our chief executive officer based on this evaluation;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing the results of, and procedures for, the evaluation of the
performance of other executive officers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing periodically and making recommendations to the board regarding any
long-term incentive compensation or equity plans, programs or similar arrangements, and
administering these plans;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>reviewing and making recommendations to the board regarding all new
employment, consulting, retirement and severance agreements and arrangements proposed for
our executives; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>selecting peer groups of companies to be used for purposes of determining
competitive compensation packages.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Duties of Directors</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under Cayman Islands law, our directors have a duty to act honestly, in good faith and with a
view to our best interests. Our directors also have a duty to exercise the skills they actually
possess and the care and diligence that a reasonably prudent person would exercise in comparable
circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with
our memorandum and articles of association. A shareholder has the right to seek damages if a duty
owed by our directors is breached.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The functions and powers of our board of directors include, among others:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>convening shareholders&#146; annual general meetings and reporting its work to shareholders at such meetings;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>declaring dividends and distributions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>appointing officers and determining the term of office of the officers;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>exercising the borrowing powers of our company and mortgaging the property of our company; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>approving the transfer of shares in our company, including the registering
of such shares in our share register.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Interested Transactions</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A director may vote in respect of any contract or transaction in which he is interested,
provided that the nature of the interest of any director in such contract or transaction shall be
disclosed by him at or prior to its consideration and any vote on that matter. A general notice or
disclosure to the directors or otherwise contained in the minutes of a meeting or a written
resolution of the directors or any committee of directors that a director is a shareholder of any
specified firm or company and is to be regarded as interested in any transaction with such firm or
company will be sufficient disclosure, and, after such general notice, it will not be necessary to
give special notice relating to any particular transaction.
</DIV>

<P align="center" style="font-size: 10pt">61
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Remuneration and Borrowing</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The directors may determine remuneration to be paid to the directors. The compensation
committee will assist the directors in reviewing and approving the compensation structure for the
directors. We do not provide for any termination benefits for the directors, nor do we have other
arrangements with the directors for special termination benefits. The directors may exercise all
the powers of our company to borrow money and to mortgage or charge its undertaking, property and
uncalled capital or any part thereof and to issue debentures, debenture stock and other securities
whether outright or as security for any debt, liability or obligation of our company or of any
third party.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Qualification</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There is no shareholding qualification for directors. Further, shareholding qualification for
directors may not be fixed by our company in a general meeting.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Terms of Directors and Executive Officers</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;At each annual general meeting of the shareholders of our company, all of our directors at
such time are required to retire from office and are eligible for re-election. All of these
directors will retain office until the close of such general meeting. Our next annual general
meeting is currently scheduled for July&nbsp;28, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Limitation on Liability and Other Indemnification Matters</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cayman Islands law allows us to indemnify our directors, officers, auditors and trustee acting
in relation to any of our affairs against actions, costs, charges, losses, damages and expenses
incurred by reason of any act done or omitted in the execution of their duties as our directors,
officers, auditors and trustee, except to the extent that it may be held by the Cayman Islands
courts to be contrary to public policy such as to provide indemnification against civil fraud or
the consequences of committing a crime.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under our fifth amended and restated memorandum and articles of association adopted on April
26, 2004, we may indemnify our directors, officers, employees and agents against expenses
(including attorneys&#146; fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such persons in connection with actions, suits or proceedings to which they
are party or are threatened to be made a party by reason of their acting as our directors,
officers, employees or agents. To be entitled to indemnification, these persons must have acted in
good faith and in the best interest or not opposed to the interest of our company and must not have
acted in a manner willfully or grossly negligent, and, with respect to any criminal action, they
must have had no reasonable cause to believe their conduct was unlawful. Our fifth amended and
restated memorandum and articles of association also provides for indemnification of such person in
the case of a suit initiated by our company or in the right of our company. Such indemnification
covers expenses (including attorneys&#146; fees) actually and reasonably incurred in connection with the
defense or settlement of such suit. There are good faith and other similar conduct requirements for
such indemnification rights as those imposed on other types of suits described above. However, if
such persons are successful in the merits of the actions, suits or proceedings described above,
including suits initiated by or in the right of our company, then they may be indemnified for
actual and reasonable expenses without having to meet the conduct requirements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have entered into indemnification agreements with each of our directors under which we
agree to indemnify each of them to the fullest extent permitted by applicable law and our articles
of association, from and against all costs, charges, expenses, liabilities and losses (including
attorney&#146;s fees) incurred in connection with any litigation, suit or proceeding to which such
director is or is threatened to be made a party, witness or other participant. Within 20&nbsp;days after
our receipt of a written demand of such director, we will advance funds for the payment of
indemnification of these expenses.
</DIV>

<P align="center" style="font-size: 10pt">62
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Employees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We had 1,481 employees, 2,333 employees and 2,986 employees as of December&nbsp;31, 2003, 2004 and
2005, respectively. The following table sets forth the number of our employees categorized by
function as of December&nbsp;31, 2005.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sales and account management</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Marketing and merchandising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">620</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Technology and online operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">322</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer service and production</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">365</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Search and training consultants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">163</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">258</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap colspan="2" align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left">&nbsp;</TD>
    <TD align="right">2,986</TD>
    <TD nowrap>*</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
        <TD nowrap colspan="2" align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 675 temporary, part-time and contract employees.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that we maintain a good working relationship with our employees and we have
not experienced any significant labor disputes or any difficulty in recruiting staff for our
operations. Our employees are not represented by any collective bargaining agreements or labor
unions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Share Ownership</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no different voting rights among our shareholders. We are not aware of any
arrangement that may, at a subsequent date, result in a change of control of our company. For
information regarding the share ownership of our directors and officers, see &#147;Item&nbsp;7. &#151; Major
Shareholders and Related Party Transactions &#151; Major Shareholders.&#148;
</DIV>

<P align="center" style="font-size: 10pt">63
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Major Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth information with respect to the beneficial ownership of our
common shares as of April&nbsp;30, 2006:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>by each of our directors and executive officers; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>each person known to us to own beneficially more than 5% of our common shares.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beneficial ownership is determined in accordance with the rules of the Securities and Exchange
Commission and includes voting or investment power a person has with respect to the common shares.
A person is also deemed to be a beneficial owner of any securities of which that person has a right
to acquire beneficial ownership within 60&nbsp;days. Percentage of beneficial ownership is based on
58,244,681 common shares outstanding, including common shares underlying options outstanding as of
April&nbsp;30, 2006.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Common shares</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>beneficially owned</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>%</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Directors and executive officers:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rick Yan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,842,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">25.5</TD>
    <TD nowrap>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David K. Chao<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,155,396</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17.4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael Lei Feng</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,410,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Norman Lui</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,064,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Kathleen Chien<SUP style="font-size: 85%; vertical-align: text-top">(2)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,819,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tao Wang</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">573,900</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.0</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Donald L. Lucas</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201,157</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shan Li</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">David Weimin Jin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">59,565</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Jones Haijun Yu</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">*</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">All directors and executive officers as a group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,243,442</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Principal shareholders:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rick Yan</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,842,818</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Entities affiliated with DCM &#151; Doll Capital Management<SUP style="font-size: 85%; vertical-align: text-top">(3)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,754,329</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16.7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Recruit Co.,
Ltd.<SUP style="font-size: 85%; vertical-align: text-top">(4)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,462,916</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">FMR Corp.<SUP style="font-size: 85%; vertical-align: text-top">(5)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,864,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10.1</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Michael Lei Feng</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,410,660</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7.6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Norman Lui</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,064,403</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.3</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 3,201,171 common shares owned by DCM III, L.P., 84,817 common shares owned by DCM
III-A, L.P., 156,406 common shares owned by DCM Affiliates Fund III, L.P., 5,169,293 common
shares owned by Doll Technology Investment Fund II, L.P., 287,020 common shares owned by DCM
Network Fund, L.P., 530,892 common shares owned by DCM Internet Fund, L.P., and 324,730 Common
shares owned by Doll Technology Affiliates Fund II, L.P. The respective general partners of
these entities are DCM Investment Management III, L.L.C. and Doll Technology Investment
Management II, L.L.C. and share voting and investment power with respect to shares held by
each of the limited partnerships. The managing members of DCM Investment Management III,
L.L.C. are David K. Chao, Dixon R. Doll, Peter Moran and Robert Theis; the managing members of
Doll Technology Investment Management II, L.L.C. are David K. Chao and Dixon R. Doll. Each
managing member disclaims beneficial ownership of shares held by the limited partnerships,
except to the extent of their respective pecuniary interests therein. Also includes 401,067
common shares owned by David K. Chao.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>Includes 237,867 common shares acquired through early exercise of options. The exercise price
paid by Ms.&nbsp;Chien to us was recognized as a liability and the shares acquired upon exercise
were not considered issued for accounting purposes until vested.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Name and number of shares owned by each entity affiliated with DCM are described in Note (1)
above.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(4)</TD>
    <TD>&nbsp;</TD>
    <TD>In April&nbsp;2006, entities affiliated with DCM, Rick Yan, Michael Lei Feng, and Norman Lui, and
Kathleen Chien entered into a share purchase agreement with Recruit.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(5)</TD>
    <TD>&nbsp;</TD>
    <TD>Based on their Schedule&nbsp;13F-HR filing with the Securities and Exchange Commission for the
period ended March&nbsp;31, 2006.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Less than 1%.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of April&nbsp;30, 2006, 12,043,456 of our common shares including common shares underlying
options outstanding, representing 20.7% of our outstanding shares, were held by a total of 17
holders of record with addresses in the United
</DIV>

<P align="center" style="font-size: 10pt">64
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">States. As of the same date, 8,960,362 of our ADSs, representing 17,920,724 common shares, or
30.8% of our outstanding shares, were held by a total of two registered holders of record with
addresses in the United States. Since certain of these common shares and ADSs were held by brokers
or other nominees, the number of record holders in the U.S. may not be representative of the number
of beneficial holders or their country of residence.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, entities affiliated with DCM, Rick Yan, Michael Lei Feng and Norman Lui, and
Kathleen Chien entered into a share purchase agreement with Recruit. Under the terms and conditions
of the share purchase agreement, Recruit completed a purchase of 8,452,918 common shares, which
represented approximately 15% of our outstanding common shares as of December&nbsp;31, 2005, from these
shareholders in April&nbsp;2006. The share purchase agreement also provides for an option that would
allow Recruit to purchase up to an additional 14,862,313 common shares from these shareholders over
a three-year period beginning in April&nbsp;2006 and result in Recruit owing approximately 40% of our
fully diluted common shares outstanding as of December&nbsp;31, 2005. In addition, under the share
purchase agreement, each of these selling shareholders has agreed that it will use its commercially
reasonable best efforts in cooperating with Recruit to have a representative of Recruit nominated
to stand for election to our board of directors and that it will vote all of its shares in favor of
the election of such nominee to our board of directors at any annual or extraordinary general
meetings of our members at which such nominee may stand for election for the duration of the
agreement. Recruit has agreed not to sell or otherwise transfer an interest in any of the shares it
has purchased under the agreement for one year following the date of such purchase.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Related Party Transactions</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Stock Option Grants</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have granted options to purchase common shares in our company to certain of our employees,
directors and officers under our 2000 stock option plan. As of December&nbsp;31, 2005, there were
outstanding options to purchase an aggregate of 2,557,974 common shares in our company. For a
description of our 2000 stock option plan and these option grants, see &#147;Item&nbsp;6. &#151; Directors, Senior
Management and Employees &#151; Compensation &#151; Stock-Based Compensation Plans.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Loans and Advances</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2000, Rick Yan, a director and chief executive officer of our company, made a loan to us in
the principal amount of RMB3,476,214 for working capital purposes. In 2003, we recorded an
additional loan from Mr.&nbsp;Yan in the principal amount of RMB887,550 for working capital purposes.
These loans were unsecured, non-interest bearing and had no definite maturity. These loans were
paid in full in 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, we recorded RMB333,882 as loans made to us to account for the exercise price of
certain options exercised by Kathleen Chien, our chief financial officer, and David K. Chao, one of
our directors. Because the shares underlying the exercised options were not vested at the time of
the exercise, the exercise price paid by Ms.&nbsp;Chien and Mr.&nbsp;Chao to us was recognized as a
liability, and the exercised shares were not considered issued for accounting purposes. This
liability item will be re-characterized as share capital upon vesting of the shares. The amount
attributable to Ms.&nbsp;Chien in connection with this item was RMB248,301. The amount attributable to
Mr.&nbsp;Chao in connection with this item was RMB85,582.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, we recorded RMB1,907,276 as loans made to us to account for the exercise price of
certain options by Kathleen Chien. Because the shares underlying the exercised options were not
vested at the time of exercise, the exercise price paid by Ms.&nbsp;Chien to us was recognized as a
liability, and the shares were not considered issued for accounting purposes. This liability item
will be re-characterized as share capital upon vesting of the shares.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2005, Michael Lei Feng, an executive of our company, made an advance to us in the principal
amount of RMB500,000 in connection with increasing the registered capital of one of our variable
interest entities. This advance was repaid in full as of March&nbsp;31, 2006.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Business Alliance with Recruit</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, we formed a business alliance with Recruit, a privately held human resource
services company in Japan, to collaborate on the development of our human resource products and
services in China. Under the terms of our business alliance agreement, we have also established an
internal corporate planning group with Recruit to explore potential business opportunities outside
of the human resource services industry in China although to date we have not begun to offer any
such products.
</DIV>

<P align="center" style="font-size: 10pt">65
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In a separate transaction in April&nbsp;2006, entities affiliated with DCM, Rick Yan, Michael Lei
Feng and Norman Lui, and Kathleen Chien entered into a share purchase agreement with Recruit. Under
the terms and conditions of the share purchase agreement, Recruit completed a purchase of 8,452,918
common shares from these shareholders in April&nbsp;2006. The share purchase agreement also provides for
an option that would allow Recruit to purchase up to an additional 14,862,313 common shares from
these selling shareholders. As of April&nbsp;30, 2006, Recruit owned 8,462,916 common shares of our
company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Transactions Among Our Subsidiaries and Affiliated Entities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;For a description of transactions among our subsidiaries and affiliated entities, see &#147;Item&nbsp;4.
&#151; Information on the Company &#151; Organizational Structure &#151; Contractual Arrangements Among Our Group
Entities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Interests of Experts and Counsel</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>
<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 8. FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Consolidated Statements and Other Financial Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;See &#147;Item&nbsp;18. &#151; Financial Statements&#148; for our audited consolidated financial statements filed
as part of this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Legal Proceedings</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning in January&nbsp;2005, several complaints were filed against us, and certain of our senior
executive officers and directors, in the United States District Court for the Southern District of
New York, following our announcement of anticipated financial results for the fourth quarter of
2004. The complaints seek unspecified damages on alleged violations of federal securities laws
during the period from November&nbsp;4, 2004 to January&nbsp;14, 2005. The complaints allege violations of
the federal securities laws through the issuance of false or misleading statements during the class
period covered, including improperly recognizing third quarter advertising revenue and issuing
misleading guidance on our fourth quarter results. In connection with these actions, we have
engaged U.S. counsel to represent the defendants. On July&nbsp;26, 2005, the Court consolidated the
cases and appointed a lead plaintiff. On October&nbsp;13, 2005, we and all defendants moved to dismiss
the complaint. The motion to dismiss remains pending before the Court. We will continue to take all
appropriate action in response to these lawsuits. We cannot predict the outcome of the case at this
time and no provision has been made with respect to these lawsuits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;From time to time, we undertake legal action against entities that misappropriate the content
of our <I>www.51job.com </I>website, including recruitment advertisements and the design of our website,
our brands and trademarks, materials from our training courses and other proprietary intellectual
property. Our intellectual property is subject to theft and other unauthorized use, and our ability
to protect our intellectual property is limited. In addition, we may in the future be subject to
claims that we have infringed the intellectual property rights of others. See &#147;Item&nbsp;3. &#151; Key
Information &#151; Risk Factors &#151; Risks Related to Our Business &#151; We may be exposed to infringement or
misappropriation claims by third parties, which, if successful, could cause us to pay significant
damage awards.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Dividend Policy</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Since the incorporation of our company in 2000, we have never declared or paid any cash
dividends on our common shares, but it is possible that we may declare dividends in the future. We
have historically retained earnings to finance operations and the expansion of our business. The
timing, amount and form of future dividends, if any, will depend, among other things, on our future
results of operations and cash flow, our future prospects, our capital requirements and surplus,
the amount of distributions, if any, received by us from our subsidiaries and our affiliated
entities, and other factors deemed relevant by our board of directors. Any future dividends on our
common shares would be declared by and subject to the discretion of our board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Holders of ADSs will be entitled to receive dividends, if any, subject to the terms of the
deposit agreement, to the same extent as holders of common shares, less the fees and expenses
payable under the deposit agreement, and after deduction of any applicable taxes.
</DIV>

<P align="center" style="font-size: 10pt">66
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Significant Changes</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not experienced any significant changes since the date of our audited consolidated
financial statements included in this annual report.
</DIV>
<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 9. THE OFFER AND LISTING</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Offer and Listing Details</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ADSs, each representing two of our common shares, have been trading on the Nasdaq National
Market since September&nbsp;29, 2004. Our ADSs are traded under the symbol &#147;JOBS.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table provides the high and low trading prices for our ADSs on the Nasdaq
National Market for (1)&nbsp;the years ended December&nbsp;31, 2004 and 2005, (2)&nbsp;each of the six most recent
fiscal quarters and (3)&nbsp;each of the most recent six months.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Sales price</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>High</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Low</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="3"><B>US$</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="3"><B>US$</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Annual highs and lows</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2004<SUP style="font-size: 85%; vertical-align: text-top">(1)</SUP></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">55.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">18.61</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">53.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">9.71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Quarterly highs and lows</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth quarter 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">55.55</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">20.35</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First quarter 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">53.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">14.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Second quarter 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">21.22</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">12.21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Third quarter 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">15.91</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">12.25</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Fourth quarter 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">15.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">9.71</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">First quarter 2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">19.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">14.40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Monthly highs and lows</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">15.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">13.16</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">18.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">14.60</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">19.49</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">15.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">16.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">14.40</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">25.60</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">15.50</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May&nbsp;2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">31.90</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">23.54</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;2006 (through June&nbsp;26, 2006)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">28.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&nbsp;</TD>
    <TD align="right">18.75</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Our ADSs commenced trading on September&nbsp;29, 2004.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Plan of Distribution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Markets</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our ADSs, each representing two of our common shares, have been trading on the Nasdaq National
Market since September&nbsp;29, 2004 under the symbol &#147;JOBS.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Selling Shareholders</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Dilution</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Expenses of the Issue</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<P align="center" style="font-size: 10pt">67
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 10. ADDITIONAL INFORMATION</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>A. Share Capital</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>B. Memorandum and Articles of Association</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We incorporate by reference into this annual report the description of our amended and
restated memorandum and articles of association contained in our F-1 registration statement (File
No.&nbsp;333-117194) filed with the Commission on September&nbsp;29, 2004. Our shareholders adopted our
amended and restated memorandum and articles of association at an extraordinary shareholder meeting
on April&nbsp;26, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>C. Material Contracts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except for the agreement discussed below, we have not entered into any material contracts
other than in the ordinary course of business and other than those described in &#147;Item&nbsp;4. &#151;
Information on the Company&#148; or elsewhere in this annual report on Form 20-F.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, we formed a business alliance with Recruit, a privately held human resource
services company in Japan, to collaborate on the development of our human resource products and
services in China. Under the terms of our business alliance agreement, we have also established an
internal corporate planning group with Recruit to explore potential business opportunities outside
of the human resource services industry in China although to date we have not begun to offer any
such products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>D. Exchange Controls</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;China&#146;s government imposes control over the convertibility of Renminbi into foreign
currencies. Under the current unified floating exchange rate system, the People&#146;s Bank of China
publishes a daily exchange rate for Renminbi, or the PBOC Exchange Rate, based on the previous
day&#146;s dealings in the inter-bank foreign exchange market. Financial institutions authorized to deal
in foreign currency may enter into foreign exchange transactions at exchange rates within an
authorized range above or below the PBOC Exchange Rate according to market conditions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Foreign Exchange Control Regulations issued by the State Council on January&nbsp;29, 1996
and effective as of April&nbsp;1, 1996 (and amended on January&nbsp;14, 1997) and the Administration of
Settlement, Sale and Payment of Foreign Exchange Regulations which came into effect on July&nbsp;1, 1996
regarding foreign exchange control, or the Regulations, conversion of Renminbi into foreign
exchange by foreign investment enterprises for current account items, including the distribution of
dividends to foreign investors of foreign investment enterprises and payments for licensing fees or
services, is permissible. Foreign investment enterprises are permitted to remit foreign exchange
from their foreign exchange bank account in China on the basis of, inter alia, the terms of the
relevant joint venture contracts and the board resolutions declaring the distribution of the
dividend and payment of profits. Conversion of Renminbi into foreign currencies and remittance of
foreign currencies for capital account items, including direct investment, loans, security
investment, is still subject to the approval of the State Administration of Foreign Exchange, or
SAFE, in each such transaction. On January&nbsp;14, 1997, the State Council amended the Foreign Exchange
Control Regulations to provide, among other things, that the State shall not impose restrictions on
recurring international payments and transfers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the Regulations, foreign investment enterprises are required to open and maintain
separate foreign exchange accounts for capital account items (but not for other items). In
addition, foreign investment enterprises may only buy, sell and/or remit foreign currencies at
those banks authorized to conduct foreign exchange business upon the production of valid commercial
documents and, in the case of capital account item transactions, document approval from SAFE.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Currently, foreign investment enterprises are required to apply to SAFE for &#147;foreign exchange
registration certificates for foreign investment enterprises.&#148; With such foreign exchange
registration certificates (which are granted to foreign investment enterprises upon fulfilling
specified conditions and which are subject to review and renewal by SAFE on an annual basis) or
with the foreign exchange sales notices from the SAFE (which are obtained on a
transaction-by-transaction basis), foreign-invested enterprises may enter into foreign exchange
transactions at banks authorized to conduct foreign exchange business to obtain foreign exchange
for their needs.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>E. Taxation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Cayman Islands Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Cayman Islands currently levy no taxes on individuals or corporations based upon profits,
income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate
duty. There are no other taxes likely to be material to our company levied by the Government of the
Cayman Islands except for stamp duties that may be applicable on instruments executed in, or after
execution brought within the jurisdiction of, the Cayman Islands. The Cayman Islands are not party
to any double taxation treaties. There are no exchange control regulations or currency restrictions
in the Cayman Islands.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>United States Federal Income Taxation</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following summarizes the material U.S. federal income tax consequences to a U.S. Holder,
as defined below, of the ownership and disposition of our ADSs or common shares as of the date of
this annual report.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Except where noted, this summary deals only with ADSs and common shares that are held as
capital assets by U.S. Holders. This summary does not describe all of the U.S. federal income tax
consequences applicable to U.S. Holders that are subject to special treatment under the U.S.
federal income tax laws, including:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>dealers in securities or currencies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>financial institutions;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>real estate investment trusts;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>insurance companies;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>tax-exempt organizations;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>persons holding ADSs or common shares as part of a hedging, integrated or
conversion transaction, constructive sale or straddle;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>traders in securities that have elected the mark to market method of accounting;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>persons liable for the alternative minimum tax;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a partnership or other pass-through entity for United Stated federal income tax purposes;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>persons who own more than 10% of our voting shares; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>persons whose &#147;functional currency&#148; is not the U.S. dollar.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;This summary is based in part on representations by the depositary and assumes that each
obligation under the deposit agreement and any related agreement will be performed in accordance
with its terms. Furthermore, the discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended, and U.S. Treasury regulations, rulings and judicial decisions
thereunder at the date hereof, and such authorities may be replaced, revoked or modified, possibly
on a retroactive basis, so as to result in U.S. federal income tax consequences different from
those discussed below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder that holds or is considering the disposition of ADSs or common shares should
consult its own tax advisor concerning the U.S. federal income tax consequences as well as any
consequences arising under the laws of any other taxing jurisdiction in light of the particular
circumstances of the U.S. Holder.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder is a beneficial owner of ADSs or common shares that is a U.S. person. A U.S.
person is a person who is, for U.S. federal income tax purposes:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an individual citizen or resident of the United States;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a corporation or other entity taxable as a corporation created or organized
in or under the laws of the United States, any state thereof, or the District of Columbia;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>an estate the income of which is subject to U.S. federal income taxation,
regardless of its source; or</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a trust if it is subject to the primary supervision of a court within the
United States and one or more U.S. persons have the authority to control all substantial
decisions of the trust or if the trust has a valid election in effect under applicable
U.S. Treasury regulations to be treated as a U.S. person.</TD>
</TR>

</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a partnership holds ADSs or common shares, the tax treatment of a partner will generally
depend on the status of the partner and the activities of the partnership. A partner of a
partnership holding ADSs or common shares should consult its own tax advisors.
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>ADSs</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, for U.S. federal income tax purposes, a U.S. Holder of ADSs will be treated as the
owner of the underlying common shares that are represented by such ADSs. Deposits and withdrawals
of common shares in exchange for ADSs will not be subject to U.S. federal income taxation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Distributions on ADSs or common shares</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion under &#147;Passive foreign investment company rules&#148; below, the gross
amount of the distributions on the ADSs or common shares will be taxable to a U.S. Holder as
dividends to the extent of our current or accumulated earnings and profits, as determined under
U.S. federal income tax principles. Such income will be includable in a U.S. Holder&#146;s gross income
as ordinary income on the day actually or constructively received by a U.S. Holder, in the case of
common shares, or by the depositary, in the case of ADSs. Subject to certain limitations, dividends
paid to non-corporate U.S. Holders, including individuals, will be eligible for a reduced rate of
taxation if we are deemed to be a &#147;qualified foreign corporation&#148; for U.S. federal income tax
purposes. A qualified foreign corporation includes:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a foreign corporation that is eligible for the benefits of a comprehensive
income tax treaty with the United States that includes an exchange of information program;
and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR><TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left"><B>&#149;</B></TD>
    <TD width="1%">&nbsp;</TD>
    <TD>a foreign corporation if its stock with respect to which a dividend is paid
or its ADSs backed by such stock are readily tradable on an established securities market
within the United States,</TD>
</TR>

</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">but does not include an otherwise qualified corporation that is a passive foreign investment
company. We believe that we will be a qualified foreign corporation for so long as (1)&nbsp;we are not a
passive foreign investment company and (2)&nbsp;the ADSs are listed on the Nasdaq National Market or a
national securities exchange in the United States, and thus are considered to be readily tradable
on an established securities market. However, our status as a qualified foreign corporation may
change.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends paid on the ADSs or common shares will be treated as income from sources outside the
United States generally will constitute &#147;passive income&#148; for U.S. foreign tax credit limitation
purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;To the extent that the amount of any distribution exceeds our current or accumulated earnings
and profits, the distribution will first be treated as a tax-free return of capital, causing a
reduction in the adjusted basis of the ADSs or common shares (thereby increasing the amount of
gain, or decreasing the amount of loss, a U.S. Holder would recognize on a subsequent disposition
of the ADSs or common shares), and the balance in excess of adjusted basis will be taxed as capital
gain. We do not expect to provide U.S. Holders of common shares or ADSs with information regarding
the amount of our current or accumulated earnings and profits, as determined under U.S. federal
income tax principles.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Distributions of ADSs or common shares that are received as part of a pro rata distribution to
all of our common shareholders (including ADS holders) will not be subject to U.S. federal income
tax. The basis of the new ADSs or common shares so received will be determined by allocating a U.S.
Holder&#146;s basis in the old ADSs or common shares between the old ADSs or common shares and the new
ADSs or common shares received, based on their relative fair market values on the date of
distribution.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Sale, exchange or other disposition of ADSs or common shares</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Subject to the discussion under &#147;Passive foreign investment company rules&#148; below, upon the
sale, exchange or other disposition of ADSs or common shares, a U.S. Holder generally will
recognize capital gain or loss equal to the difference between the amount realized upon the sale,
exchange or other disposition and the adjusted tax basis of the U.S. Holder in the ADSs or common
shares. A U.S. Holder&#146;s tax basis in an ADS or a common share will be, in general, the price it
paid for that ADS or common share. The capital gain or loss generally will be long-term capital
gain or loss if, at the time of sale, exchange or other disposition, the U.S. Holder has held the
ADS or common share for more than one year. Net long-term capital gains of non-corporate U.S.
Holders, including individuals, are eligible for reduced rates of taxation. The deductibility of
capital losses is subject to limitations. Any gain or loss that a U.S. Holder recognizes generally
will be treated as gain or loss from sources within the United States for U.S. foreign tax credit
limitation purposes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Passive foreign investment company rules</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We believe that we were not a passive foreign investment company for 2005 and based on the
projected composition of our income and valuation of our assets, we do not expect to be a passive
foreign investment company for 2006. In addition, we do not expect to become one in the future,
although this may change. The determination of whether we are a passive foreign investment company
will be made on an annual basis and will depend on the composition of our income and assets,
including goodwill. The calculation of goodwill will be based, in part, on the market value of our
</DIV>

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</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">ADSs from time to time, which may be volatile. For a discussion of the risks related to the
possible tax effects should we be considered a passive foreign investment company, see &#147;Item&nbsp;3. &#151;
Key Information &#151; Risk Factors &#151; Risks Related to Our Business &#151; We may become a passive foreign
investment company, which could result in adverse U.S. tax consequences to U.S. investors.&#148;
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, we will be deemed to be a passive foreign investment company for any taxable year
in which either (1)&nbsp;at least 75% of our gross income is passive income or (2)&nbsp;at least 50% of the
value (determined on the basis of a quarterly average) of our assets is attributable to assets that
produce or are held for the production of passive income. For this purpose, passive income
generally includes dividends, interest, royalties, rents (other than rents and royalties derived in
the active conduct of a trade or business and not derived from a related person), annuities and
gains from assets that produce passive income. If we own at least 25% by value of the equity shares
of another corporation, we will be treated for purposes of the passive foreign investment company
tests as owning a proportionate share of the assets of the other corporation, and as receiving
directly a proportionate share of the other corporation&#146;s income.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If we are a passive foreign investment company for any taxable year during which a U.S. Holder
has an equity interest in our company, unless the U.S. Holder makes a mark-to-market election or a
qualified electing fund election, as discussed below, such U.S. Holder will be subject to the
following special tax rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Gain realized upon the sale or disposition of ADSs or common shares and distributions made to
a U.S. Holder by us during a taxable year with respect to the ADSs or common shares that are
&#147;excess distributions&#148; (defined generally as the excess of the amount received with respect to the
ADSs or common shares in the taxable year over 125% of the average amount received in the shorter
of either the three previous years or a U.S. Holder&#146;s holding period before the taxable year) must
be allocated ratably to each day of the U.S. Holder&#146;s holding period. The amount allocated to the
current taxable year or any year before we became a passive foreign investment company will be
included as ordinary income in a U.S. Holder&#146;s gross income for that year. The amount allocated to
other prior taxable years will be taxed as ordinary income at the highest rate in effect for the
class of U.S. Holder, corporate or non-corporate, in that prior year and the tax is subject to an
interest charge at the rate applicable to deficiencies in income taxes.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In certain circumstances, instead of being subject to the excess distribution rules discussed
above, a U.S. Holder may make an election to include gain on the ADSs or common shares of a passive
foreign investment company as ordinary income under a mark-to-market method, provided that the ADSs
or equity shares are regularly traded on a qualified exchange. Under current law, the
mark-to-market election is only available for ADSs or common shares that are regularly traded
within the meaning of U.S. Treasury regulations on certain designated U.S. exchanges and foreign
exchanges that meet trading, listing, financial disclosure and other requirements to be treated as
a qualified exchange under applicable U.S. Treasury regulations. The Nasdaq National Market is a
qualified exchange.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a U.S. Holder makes an effective mark-to-market election, the U.S. Holder will include each
year as ordinary income, rather than capital gain, the excess, if any, of the fair market value of
the U.S. Holder&#146;s ADSs or common shares at the end of the taxable year over such U.S. Holder&#146;s
adjusted basis in the ADSs or common shares, and will be permitted an ordinary loss in respect of
the excess, if any, of the adjusted basis of these ADSs or common shares over their fair market
value at the end of the taxable year, but only to the extent of the net amount previously included
in income as a result of the mark-to-market election. A U.S. Holder&#146;s basis in the ADSs or common
shares will be adjusted to reflect any such income or loss amounts. Any gain or loss on the sale of
the ADSs or common shares will be ordinary income or loss, except that this loss will be ordinary
loss only to the extent of the previously included net mark-to-market gain.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Instead of being subject to the excess distribution rules discussed above, a U.S. holder of
shares in a passive foreign investment company alternatively may elect to have the company treated
as a qualified electing fund, provided that the company provides certain information to make such
an election effective. This option will not be available to U.S. Holders because we do not intend
to provide such information to U.S. Holders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If a U.S. Holder owns ADSs or common shares during any year that we are a passive foreign
investment company, the U.S. Holder must file Internal Revenue Service Form&nbsp;8621.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A U.S. Holder should consult its own tax advisors concerning the availability and the making
of a mark-to-market election and the U.S. federal income tax consequences of holding the ADSs or
common shares if we are deemed to be a passive foreign investment company in any taxable year.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Information reporting and backup withholding</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In general, unless a U.S. Holder belongs to a category of certain exempt recipients (such as
corporations), information reporting requirements will apply to distributions on ADSs or common
shares made within the United States
</DIV>


<P align="center" style="font-size: 10pt">71
</DIV>


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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">and to the proceeds of sales of ADSs or common shares that are effected through the U.S.
office of a broker or the non-U.S. office of a broker that has certain connections with the United
States. Backup withholding may apply to these payments if a U.S. Holder fails to provide a correct
taxpayer identification number or certification of exempt status, fails to report in full dividend
and interest income or, in certain circumstances, fails to comply with applicable certification
requirements.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Any amounts withheld under the backup withholding rules will be allowed as a refund or a
credit against a U.S. Holder&#146;s U.S. federal income tax, provided the U.S. Holder furnishes the
required information to the Internal Revenue Service in a timely manner.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Enforceability of Civil Liabilities</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are an exempted limited liability company incorporated under the laws of the Cayman
Islands. We are incorporated in the Cayman Islands because of certain benefits associated with
being a Cayman Islands corporation, such as political and economic stability, an effective judicial
system, a favorable tax system, the absence of exchange control or currency restrictions and the
availability of professional and support services. However, the Cayman Islands has a less developed
body of securities laws as compared to the United States and provides protections for investors to
a significantly lesser extent. In addition, Cayman Islands companies may not have standing to sue
before the federal courts of the United States.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A substantial majority of our assets are located outside the United States. In addition, a
majority of our directors and officers are nationals and/or residents of countries other than the
United States, and all or a substantial portion of our or such persons&#146; assets are located outside
the United States. As a result, it may be difficult for investors to effect service of process
within the United States upon us or such persons or to enforce against them or against us,
judgments obtained in United States courts, including judgments predicated upon the civil liability
provisions of the securities laws of the United States or any state thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have appointed National Registered Agents, Inc. at 875 Avenue of the Americas, Suite&nbsp;501,
New York, New York 10001, as our agent to receive service of process with respect to any action
brought against us in the United States District Court for the Southern District of New York under
the federal securities laws of the United States or of any State of the United States or any action
brought against us in the Supreme Court of the State of New York in the County of New York under
the securities laws of the State of New York.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maples and Calder, our counsel as to Cayman Islands law and Jun He Law Offices, our counsel as
to PRC law, have advised us that there is uncertainty as to whether the courts of the Cayman
Islands and the PRC, respectively, would (1)&nbsp;recognize or enforce judgments of United States courts
obtained against us or our directors or officers predicated upon the civil liability provisions of
the securities laws of the United States or any state thereof, or (2)&nbsp;entertain original actions
brought in each respective jurisdiction, against us or our directors or officers predicated upon
the securities laws of the United States or any state thereof.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Maples and Calder has further advised us that a final and conclusive judgment in federal or
state courts of the United States under which a sum of money is payable, other than a sum payable
in respect of taxes, fines, penalties or similar charges, may be subject to enforcement proceedings
as a debt in the Courts of the Cayman Islands under the common law doctrine of obligation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Jun He Law Offices has advised us further that the recognition and enforcement of foreign
judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce
foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either
on treaties between the PRC and the country where the judgment is made or in reciprocity between
jurisdictions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>F. Dividends and Paying Agents</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>G. Statements by Experts</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>H. Documents on Display</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have previously filed with the Commission our registration statement on Form F-1 and
prospectus under the Securities Act of 1933, as amended, with respect to our ADSs.
</DIV>

<P align="center" style="font-size: 10pt">72
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are subject to the periodic reporting and other informational requirements of the
Securities Exchange Act of 1934, as amended, or the Exchange Act. Under the Exchange Act, we are
required to file reports and other information with the Securities and Exchange Commission.
Specifically, we are required to file annually a Form 20-F no later than six months after the close
of each fiscal year, which is December&nbsp;31. Copies of reports and other information, when so filed,
may be inspected without charge and may be obtained at prescribed rates at the public reference
facilities maintained by the Securities and Exchange Commission at Room&nbsp;1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. You can request copies of these documents upon payment
of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. The SEC also maintains a website at
<I>www.sec.gov </I>that contains reports, proxy and information statements, and other information
regarding registrants that make electronic filings with the SEC using its EDGAR system. As a
foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the
furnishing and content of quarterly reports and proxy statements, and officers, directors and
principal shareholders are exempt from the reporting and short-swing profit recovery provisions
contained in Section&nbsp;16 of the Exchange Act.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our financial statements have been prepared in accordance with U.S. GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We will furnish our shareholders with annual reports, which will include a review of
operations and annual audited consolidated financial statements prepared in conformity with U.S.
GAAP.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>I. Subsidiary Information</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>
<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Interest rate risk</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our exposure to interest rate risk for changes in interest rates relates primarily to the
interest income generated by excess cash deposited in banks. As of December&nbsp;31, 2005, we had cash
and cash equivalents of RMB830.6&nbsp;million (US$102.9&nbsp;million). Cash and cash equivalents consist of
cash on hand and in banks.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The carrying amounts of cash and cash equivalents, accounts receivable and other receivables
represent our principal exposure to credit risk in relation to our financial assets. As of December
31, 2005, approximately 30% of our cash and cash equivalents were held in uninsured accounts at
major financial institutions located in the United States and the remainder in uninsured accounts
located in China and Hong Kong that we believe are of acceptable credit quality. We have not used
any derivative financial instruments to hedge interest rate risk. We have not been exposed nor do
we anticipate being exposed to material risks due to changes in interest rates, although our future
interest income may fluctuate in line with changes in interest rates. The risk associated with
fluctuating interest rates is principally confined to our cash deposits in banks, and, therefore,
our exposure to interest rate risk is minimal.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Foreign exchange risk</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Substantially all of our revenue generating operations are transacted in the Renminbi, which
is not fully convertible into foreign currencies, and a significant portion of our liabilities are
denominated in Renminbi. As a result, the conversion of our revenues is subject to PRC regulatory
restrictions on currency conversion and we are exposed to risks posed by fluctuations in the
foreign exchange market. The value of the Renminbi against the U.S. dollar and other currencies may
fluctuate and is affected by, among other things, changes in the PRC&#146;s political and economic
conditions. On July&nbsp;21, 2005, the PRC government changed its policy of pegging the value of the
Renminbi to the U.S. dollar. Under the new policy, the Renminbi is permitted to fluctuate within a
narrow and managed band against a basket of certain foreign currencies. This change in policy
initially resulted in an approximately 2.5% appreciation in the value of the Renminbi against the
U.S. dollar as of December&nbsp;31, 2005, which resulted in a loss from foreign currency translation of
RMB11.3&nbsp;million (US$1.4&nbsp;million) for us in 2005. As a portion of our assets are denominated in U.S.
dollars, future upward revaluations of the Renminbi could result in charges to our income statement
and reductions in the value of these assets. In addition, as we rely entirely on dividends, royalty
payments and other fees paid to us in Renminbi by our subsidiaries and affiliated entities in the
PRC, future downward revaluations of the Renminbi may materially and adversely affect our cash
flows, revenues and financial condition, and the value of, and any dividends payable on, our ADSs
in foreign currency terms.
</DIV>

<P align="center" style="font-size: 10pt">73
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have not used any forward contracts or currency borrowings to hedge our exposure to foreign
currency risk. See &#147;Item&nbsp;3. &#151; Key Information &#151; Risk Factors &#151; Risks Related to the People&#146;s
Republic of China &#151; The fluctuation of the Renminbi may materially and adversely affect your
investment.&#148;
</DIV>
<DIV align="left">
<A name="114"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Not Applicable.
</DIV>

<P align="center" style="font-size: 10pt">74
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="115"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II</B>
</DIV>

<DIV align="left">
<A name="116"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;None.
</DIV>
<DIV align="left">
<A name="117"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM
14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Use of Proceeds</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following information regarding the use of proceeds relates to the registration statement
on Form F-1 (File No.&nbsp;333-117194) for our initial public offering and sale of 6,037,500 American
depositary shares, or ADSs, each representing two of our common shares, for an aggregate offering
price of US$84,525,000. Our registration statement was declared effective by the Commission on
September&nbsp;28, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We received net proceeds of approximately US$76.8&nbsp;million from our initial public offering
(after deducting underwriting discounts and other expenses related to the offering). We have
utilized a portion of the net proceeds from our initial public offering to fund capital
expenditures and our repurchases of ADSs in the open market. The remaining net proceeds are
currently held in interest bearing bank deposits. None of the net proceeds from the initial public
offering were paid, directly or indirectly, to any of our directors or officers of our company or
their associates, persons owning 10% or more of our equity securities or our affiliates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Morgan Stanley &#038; Co. International Limited, UBS Securities LLC, Piper Jaffray &#038; Co. and CLSA
Limited were the underwriters for our initial public offering.
</DIV>
<DIV align="left">
<A name="118"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 15. CONTROLS AND PROCEDURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Evaluation of Disclosure Controls and Procedures</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of the end of the period covered by this annual report, our principal executive officer and
principal financial officer have evaluated the effectiveness of our disclosure controls and
procedures, as that term is defined in Rules&nbsp;13a-15(e) and 15d-15(e) of the Securities Exchange Act
of 1934, as amended, or the Exchange Act. Based on this evaluation, they have concluded that, as of
the end of the period covered by this annual report, our disclosure controls and procedures were
effective in ensuring that the material information required to be disclosed by us in the report
that we file and furnish under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified by the Securities and Exchange Commission&#146;s rules and
regulations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;However, in the course of its audit of our 2005 financial statements, our independent auditors
have identified several areas of our internal controls relating to financial reporting matters that
require improvement, including risk management, personnel and process supervision, formal
documentation of internal controls and processes, and improvement of controls and access to
computer systems and servers. We are committed to taking appropriate steps to make these
improvements as soon as practicable. In addition, we are in the process of implementing
modifications to our internal controls to comply with the requirements of Section&nbsp;404 of the
Sarbanes-Oxley Act of 2002. Our board of directors and the audit committee have been advised of
these matters and are monitoring our progress to make the required improvements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Changes in Internal Controls</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There were no significant changes in our internal controls over financial reporting or in
other factors during the period that has materially affected, or is likely to materially affect,
these controls other than the steps we have taken to remedy the material weakness in internal
control over financial reporting previously reported in our annual report on Form 20-F for the
fiscal year ended December&nbsp;31, 2004. As described in that report, in January&nbsp;2005 we discovered a
clerical error related to certain accounting processes in which manual adjustments duplicated
automated entries, which we concluded was the result of a material weakness in internal control.
Following this discovery, we increased the level of supervision over accounting processes,
reinforced existing controls and improved interdepartmental communications and documentation.
</DIV>

<P align="center" style="font-size: 10pt">75
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="119"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has concluded that Mr.&nbsp;Donald L. Lucas, an independent director, meets
the criteria for an &#147;audit committee financial expert&#148; as established by the U.S. Securities and
Exchange Commission. See &#147;Item&nbsp;6. &#151; Directors, Senior Management and Employees &#151; Board
Practices.&#148;
</DIV>
<DIV align="left">
<A name="120"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16B. CODE OF ETHICS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our board of directors has adopted a code of ethics that applies to our directors, officers
and employees, including our principal executive officer, principal financial officer, principal
accounting officer or controller and any other persons who perform similar functions for us. We
have included a copy of our code of business conduct and ethics as an exhibit to this annual
report, and posted the code on our website at <I>ir.51job.com</I>.
</DIV>
<DIV align="left">
<A name="121"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Audit Fees</B>

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;PricewaterhouseCoopers Zhong Tian CPAs Ltd. Co., or PwC, were our independent auditors for the
years ended December&nbsp;31, 2004 and 2005. Audit fees relate to aggregate fees billed for professional
services rendered by PwC for the audit of our annual financial statements and the review of our
quarterly financial results. We paid PwC audit fees of RMB3,790,040 in 2004 and RMB3,080,932
(US$381,766) in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Audit Related Fees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Audit-related fees are aggregate fees billed for assurance and related services rendered by
PwC that were reasonably related to the performance of the audit or review of our financial
statements and are not reported under the caption &#147;Audit Fees&#148; above. In 2004, we paid RMB2,470,262
in audit-related fees to PwC for review work in connection with registration documents. We did not
pay any audit related fees to PwC in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Tax Fees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2004, we paid RMB9,960 (US$1,203) to PwC for tax advice services. We did not pay any tax
fees to PwC in 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>All Other Fees</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We did not purchase any other services from PwC in 2004 or 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Pre-Approved Policies and Procedures</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Our audit committee pre-approves audit engagement terms and fees prior to the commencement of
any audit work, other than that which may be necessary for the independent auditors to prepare the
proposed audit approach, scope and fee estimates. The independent auditors annually submit to us a
written proposal that details all audit and audit related services. Audit fees are fixed and
contained in the proposal, and the audit committee reviews the nature and dollar value of services
to be provided under such proposal. Any revisions to such proposal after the engagement has begun
are reviewed and pre-approved by the audit committee.
</DIV>
<DIV align="left">
<A name="122"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We are in compliance with applicable listing standards for the audit committee of our board of
directors.
</DIV>

<P align="center" style="font-size: 10pt">76
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="123"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table sets forth certain information related to purchases made by us of our ADSs
in 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Approximate dollar value of</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total number of</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Average price paid</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>ADSs that may yet be</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Period</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>ADSs purchased</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>per share</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>purchased
under the program</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B><SUP style="font-size: 85%; vertical-align: text-top"><B>(1)</B></SUP></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">January&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">February&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">March&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">April&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">May&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">June&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right"><B>&#151;</B></TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">July&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">August&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">201,905</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">112.98</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,173,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,941,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">September&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">114.68</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,746,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175,495,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">October&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,746,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">175,495,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">November&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">280,500</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.24</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">106.85</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,032,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">145,522,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">December&nbsp;2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">174,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13.62</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109.92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,661,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">126,387,000</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(1)</TD>
    <TD>&nbsp;</TD>
    <TD>Translations from U.S. dollars to Renminbi were made at the noon buying rate in The City of
New York for cable transfers of Renminbi as certified for customs purposes by the Federal
Reserve Bank of New York. The translations of U.S. dollar amounts into Renminbi amounts have
been made at the noon buying rate in effect on December&nbsp;30, 2005, which was US$1.00 to
RMB8.0702.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All ADSs purchased in 2005 were under a stock repurchase program which was approved by
our shareholders in May&nbsp;2005. Under the program, we are authorized to purchase up to US$25&nbsp;million
worth of outstanding ADSs. The program expired on May&nbsp;26, 2006.
</DIV>

<P align="center" style="font-size: 10pt">77
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="124"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART III</B>
</DIV>

<DIV align="left">
<A name="125"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 17. FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;We have elected to provide financial statements pursuant to Item&nbsp;18.
</DIV>
<DIV align="left">
<A name="126"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 18. FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements for 51job, Inc. and its subsidiaries are included at the
end of this annual report.
</DIV>
<DIV align="left">
<A name="127"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 19. EXHIBIT INDEX</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="4" style="border-bottom: 1px solid #000000"><B>Exhibits</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1.</TD>
    <TD nowrap align="left" valign="top">1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amended and Restated Memorandum and Articles of Association.
(Incorporated by reference to Exhibit&nbsp;3.1 from our
Registration Statement on Form&nbsp;F-1 (File No.&nbsp;333-117194)
filed with the Securities and Exchange Commission on July&nbsp;7,
2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.</TD>
    <TD nowrap align="left" valign="top">1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Specimen of Share Certificate. (Incorporated by reference to
Exhibit&nbsp;4.1 from our Registration Statement on Form&nbsp;F-1 (File
No.&nbsp;333-117194) filed with the Securities and Exchange
Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.</TD>
    <TD nowrap align="left" valign="top">2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Specimen of American Depositary Receipt. (Incorporated by
reference to Exhibit&nbsp;4.2 from our Registration Statement on
Form&nbsp;F-1 (File No.&nbsp;333-117194) filed with the Securities and
Exchange Commission on August&nbsp;2, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">2.</TD>
    <TD nowrap align="left" valign="top">3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Form of Deposit Agreement among 51job, Inc., JPMorgan Chase
Bank, as Depositary, and Holders and Beneficial Holders from
time to time of American Depositary Shares evidenced by
American Depositary Receipts issued thereunder, including the
form of American Depositary Receipt. (Incorporated by
reference to the Registration Statement on Form&nbsp;F-6 (File No.
333-117254) filed with the Securities and Exchange Commission
with respect to American Depositary Shares representing
common shares on July&nbsp;9, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">1</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">2000 Stock Option Plan. (Incorporated by reference to Exhibit
10.1 from our Registration Statement on Form&nbsp;F-1 (File No.
333-117194) filed with the Securities and Exchange Commission
on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">2</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Form of Employment, Confidential Information and Invention
Assignment Agreement. (Incorporated by reference to Exhibit
10.2 from our Registration Statement on Form&nbsp;F-1 (File No.
333-117194) filed with the Securities and Exchange Commission
on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">3</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Form of Indemnification Agreement. (Incorporated by reference
to Exhibit&nbsp;10.3 from our Registration Statement on Form&nbsp;F-1
(File No.&nbsp;333-117194) filed with the Securities and Exchange
Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">4*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lease Agreements between Shanghai Qianjin Culture
Communication Co., Ltd. (name changed to Shanghai Qianjin
Advertising Co., Ltd. in November&nbsp;2005) and (1)&nbsp;Shanghai
Wailao Property Management Service Co., Ltd. (dated as of
November&nbsp;21, 2003); and (2)&nbsp;Shanghai Xiesheng Industry Co.,
Ltd. (dated as of June&nbsp;3, 2003)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">5*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lease Agreement dated as of March&nbsp;11, 2005, as amended as of
July&nbsp;2005, between Shanghai Qianjin Culture Communication
Co., Ltd. (name changed to Shanghai Qianjin Advertising Co.,
Ltd. in November&nbsp;2005) and Zhang Ling</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">6*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lease Agreements dated as of February&nbsp;21, 2005 between
Qianjin Network Information Technology (Shanghai) Co., Ltd.
and Shanghai Golden Union Real Estate Management Co., Ltd.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">7*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Summary of the Shanghai Commercial Building Advance Sale
Contracts dated as of December&nbsp;31, 2005 between Shanghai
Zhangjiang Ji Cheng Dian Lu Industrial Area Development Co.,
Ltd. and entities of 51job, Inc.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">8</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Form of Investor Rights Agreement. (Incorporated by reference
to Exhibit&nbsp;10.5 from our Registration Statement on Form&nbsp;F-1
(File No.&nbsp;333-117194) filed with the Securities and Exchange
Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">78
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="4" style="border-bottom: 1px solid #000000"><B>Exhibits</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Description</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">9</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Technical and Consulting Service Agreement dated as of May&nbsp;3, 2004, as
amended as of July&nbsp;2, 2004, between Shanghai Run An Lian Information
Consultancy Co., Ltd. and Qian Cheng Wu You Network Information Technology
(Beijing) Co., Ltd. (Incorporated by reference to Exhibit&nbsp;10.7 from our
Registration Statement on Form&nbsp;F-1 (File No.&nbsp;333-117194) filed with the
Securities and Exchange Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">10</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Technical and Consulting Service Agreement dated as of May&nbsp;3, 2004, as
amended as of July&nbsp;2, 2004, between Beijing Qian Cheng Si Jin Advertising
Co., Ltd. and Qian Cheng Wu You Network Information Technology (Beijing)
Co., Ltd. (Incorporated by reference to Exhibit&nbsp;10.8 from our Registration
Statement on Form&nbsp;F-1 (File No.&nbsp;333-117194) filed with the Securities and
Exchange Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">11</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Equity Pledge Agreement dated as of May&nbsp;3, 2004 among Michael Lei Feng,
Tao Wang and Qian Cheng Wu You Network Information Technology (Beijing)
Co., Ltd. (Incorporated by reference to Exhibit&nbsp;10.9 from our Registration
Statement on Form&nbsp;F-1 (File No.&nbsp;333-117194) filed with the Securities and
Exchange Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">12</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Equity Pledge Agreement dated as of May&nbsp;3, 2004 among Michael Lei Feng,
Beijing Run An Information Consultancy Co., Ltd. and Qian Cheng Wu You
Network Information Technology (Beijing) Co., Ltd. (Incorporated by
reference to Exhibit&nbsp;10.10 from our Registration Statement on Form&nbsp;F-1
(File No.&nbsp;333-117194) filed with the Securities and Exchange Commission on
July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">13</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Cooperation Agreement dated as of May&nbsp;3, 2004 between Shanghai Run An Lian
Information Consultancy Co., Ltd. and Qianjin Network Information
Technology (Shanghai) Co., Ltd. (Incorporated by reference to Exhibit
10.11 from our Registration Statement on Form&nbsp;F-1 (File No.&nbsp;333-117194)
filed with the Securities and Exchange Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">14*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Amendment Notice to the Cooperation Agreement dated as of April&nbsp;1, 2006
between Shanghai Run An Lian Information Consultancy Co., Ltd. and Qianjin
Network Information Technology (Shanghai) Co., Ltd.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">15</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Domain Name License Agreement dated as of May&nbsp;3, 2004 between Shanghai Run
An Lian Information Consultancy Co., Ltd. and 51net.com Inc. (Incorporated
by reference to Exhibit&nbsp;10.12 from our Registration Statement on Form&nbsp;F-1
(File No.&nbsp;333-117194) filed with the Securities and Exchange Commission on
July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">16</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Call Option Agreement dated as of August&nbsp;1, 2002, as supplemented and
amended as of May&nbsp;3, 2004, between Beijing Qian Cheng Si Jin Advertising
Co., Ltd. and 51net.com Inc. (Incorporated by reference to Exhibit&nbsp;10.13
from our Registration Statement on Form&nbsp;F-1 (File No.&nbsp;333-117194) filed
with the Securities and Exchange Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">17</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Share Transfer Agreement dated as of April&nbsp;5, 2004 among Wuhan Mei Hao
Qian Cheng Advertising Co., Ltd., 51net.com Inc. and Beijing Qian Cheng Si
Jin Advertising Co., Ltd. (Incorporated by reference to Exhibit&nbsp;10.14 from
our Registration Statement on Form&nbsp;F-1 (File No.&nbsp;333-117194) filed with
the Securities and Exchange Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">4.</TD>
    <TD nowrap align="left" valign="top">18*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Business Alliance Agreement dated as of April&nbsp;5, 2006 between 51job, Inc.
and Recruit Co., Ltd.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">8.</TD>
    <TD nowrap align="left" valign="top">1*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">List of subsidiaries of 51job, Inc.</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">11.</TD>
    <TD nowrap align="left" valign="top">1</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Code of Business Conduct and Ethics. (Incorporated by reference to Exhibit
10.6 from our Registration Statement on Form&nbsp;F-1 (File No.&nbsp;333-117194)
filed with the Securities and Exchange Commission on July&nbsp;7, 2004)</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">12.</TD>
    <TD nowrap align="left" valign="top">1*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">CEO Certification pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">12.</TD>
    <TD nowrap align="left" valign="top">2*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">CFO Certification pursuant to Section&nbsp;302 of the Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13.</TD>
    <TD nowrap align="left" valign="top">1*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">CEO Certification pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">&nbsp;</TD>
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">13.</TD>
    <TD nowrap align="left" valign="top">2*</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">CFO Certification pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>Filed with this annual report on Form 20-F.</TD>
</TR>

</TABLE>




<P align="center" style="font-size: 10pt">79
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="128"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The registrant hereby certifies that it meets all of the requirements for filing its annual
report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual
report on its behalf.
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" valign="top" align="left">51job, Inc.</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Rick Yan</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Name:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Rick Yan</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Title:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">President and Chief Executive Officer
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Date: June&nbsp;29, 2006
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>INDEX TO CONSOLIDATED FINANCIAL STATEMENTS</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Page</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#300">Report of Independent Registered Public Accounting Firm</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-2</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#301">Consolidated Statements of Operations and Comprehensive Income for the years ended
December&nbsp;31, 2003, 2004 and 2005</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#302">Consolidated Balance Sheets as of December&nbsp;31, 2004 and 2005</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#303">Consolidated Statements of Shareholders&#146; Equity for the years ended December&nbsp;31, 2003, 2004
and 2005</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#304">Consolidated Statements of Cash Flows for the years ended December&nbsp;31, 2003, 2004 and 2005</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#305">Notes to the Consolidated Financial Statements for the years ended December&nbsp;31, 2003, 2004
and 2005</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-7</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#306">Additional Information &#151; Financial Statement Schedule&nbsp;I</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">F-25</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-1
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">
<DIV align="left">
<A name="300"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF<BR>
51JOB, INC.:</B>

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of operations and comprehensive income, of changes in shareholders&#146; equity and of cash
flows expressed in Renminbi present fairly, in all material respects, the financial position of
51job, Inc. (the &#147;Company&#148;) and its subsidiaries as of December&nbsp;31, 2004 and 2005, and the results
of their operations and their cash flows for each of the three years ended December&nbsp;31, 2005 in
conformity with accounting principles generally accepted in the United States of America. In
addition, in our opinion, the related Financial Statement Schedule&nbsp;I presents fairly, in all
material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements. These consolidated financial statements and Financial Statement
Schedule&nbsp;I are the responsibility of the Company&#146;s management. Our responsibility is to express an
opinion on these consolidated financial statements and Financial Statement Schedule&nbsp;I based on our
audits. We conducted our audits of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">/s/ PricewaterhouseCoopers Zhong Tian CPAs Ltd. Co.<BR>
Shanghai, People&#146;s Republic of China<BR>
June&nbsp;26, 2006

</DIV>

<P align="center" style="font-size: 10pt">F-2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>

<DIV align="left">
<A name="301"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$ (Note 2(c))</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Revenues:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Print advertising</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">182,606,297</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">300,651,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">356,284,649</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,148,181</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Online recruitment services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,960,121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">111,508,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">159,494,922</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,763,441</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Executive search</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,748,331</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,907,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,306,740</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,259,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other human resource related revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,019,611</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">42,875,597</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,507,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,630,293</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">293,334,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">479,943,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">595,594,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,801,653</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Business and related taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,215,419</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(23,823,953</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(33,567,880</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,159,485</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">280,118,941</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">456,119,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">562,026,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">69,642,168</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(151,477,142</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(224,606,635</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(269,328,384</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(33,373,198</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,641,799</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">231,513,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">292,697,836</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,268,970</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating expenses:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38,619,523</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(67,271,096</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(113,656,714</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14,083,507</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38,135,612</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(55,175,493</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(88,978,985</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,025,623</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation &#151; share option (1)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,482,546</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,678,238</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,073,480</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,619,970</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation &#151; founder shares (2)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,622,466</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(94,860,147</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(141,124,827</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(215,709,179</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(26,729,100</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">33,781,652</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,388,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,988,657</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,539,870</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from foreign currency translation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,456</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,158</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,320,194</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,402,715</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest and investment income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">930,288</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,846,422</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,385,151</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,525,978</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,083,790</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,968,532</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,313,723</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">658,437</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before provision for income tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,792,274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">95,201,216</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,367,337</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,321,570</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,192,011</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(34,058,184</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(29,945,033</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,710,569</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,611,001</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount allocated to participating preference
shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,615,466</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,986,417</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income attributable for common shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,984,797</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,156,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,611,001</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other comprehensive income:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Currency translation adjustments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">387,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,016</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Unrealized loss for investment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(279,532</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(299,451</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(204,011</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(25,280</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,397,695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,079,725</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,605,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,633,737</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Earnings per ADS (3)
&#151; Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.21</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.27</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average number of shares outstanding:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,594,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,593,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,607,716</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,607,716</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,323,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,483,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,254,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,254,454</TD>
    <TD>&nbsp;</TD>
</TR>


<TR>
    <TD colspan="21">
<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

</TD>
</TR>


<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">(1)&nbsp;Share-based compensation &#151; share options:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Included in cost of services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">596,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,811,496</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,479,841</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,371</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Included in operating expenses
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; Sales and marketing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">423,221</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,757,722</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,438,083</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">178,197</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 3pt">
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&#151; General and administrative</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,059,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,920,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,635,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,441,773</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR style="font-size: 3pt">
    <TD width="3%">&nbsp;</TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">(2)</TD>
    <TD>&nbsp;</TD>
    <TD>All share-based compensation &#151; founder shares is a component of general and administrative
expense.</TD>
</TR>

<TR style="font-size: 3pt"><TD>&nbsp;</TD></TR>

<TR valign="top">
    <TD nowrap align="left">(3)</TD>
    <TD>&nbsp;</TD>
    <TD>Each ADS represents two common shares.</TD>
</TR>

</TABLE>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt">The accompanying notes are an integral part of these financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>

<DIV align="left">
<A name="302"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED BALANCE SHEETS</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>AS OF DECEMBER 31, 2004 AND 2005</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$ (Note 2(c))</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">848,292,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">830,633,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,926,018</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Short-term investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2</TD>
    <TD nowrap>(f)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,554,529</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,307,840</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable (net of allowance
for doubtful accounts of RMB3,689,222
and RMB2,860,275 as of December&nbsp;31,
2004 and 2005, respectively)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,252,468</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,222,865</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,753,694</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepayments and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,675,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,265,437</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,882,882</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred tax assets, current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,426,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,867,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">727,097</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">893,647,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">892,544,201</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110,597,531</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">2</TD>
    <TD nowrap>(f)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,495,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,534,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,357,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,009,551</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,126,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,380,835</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,410,230</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other long-term assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,201,919</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,724,335</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,311,484</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax assets, non-current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">412,314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,091</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total non-current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">43,735,155</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">70,875,359</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,782,356</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">937,382,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">963,419,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,379,887</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,820,033</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,358,046</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">911,755</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due to related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,577,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,505,515</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">186,552</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Salary and employee related accrual</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,698,665</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,339,789</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,396,445</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,586,768</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,201,967</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,875,017</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advance from customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,777,757</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,619,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,033,273</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other payables and accruals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,933,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,515,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,170,363</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred tax liabilities, current</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">169,237</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,564,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109,540,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,573,405</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,564,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">109,540,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,573,405</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common shares (US$0.0001 par value;
500,000,000 shares authorized,
55,616,679 and 54,876,079 shares
issued and outstanding as of December
31, 2004 and 2005, respectively)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,632</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">869,125,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">848,423,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,130,365</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40,154,027</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(23,141,471</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,867,521</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Statutory reserves</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,756,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">456,086</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(501,659</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(318,174</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(39,426</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,545,696</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,189,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,121,346</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">851,818,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">853,879,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,806,482</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total liabilities and shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">937,382,341</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">963,419,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,379,887</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 0px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">The accompanying notes are an integral part of these financial statements.
</DIV>



<P align="center" style="font-size: 10pt">F-4
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<!-- LANDSCAPE -->

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>

<DIV align="left">
<A name="303"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF SHAREHOLDERS&#146; EQUITY</B>

</DIV>
<DIV align="center" style="font-size: 10pt"><B>FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B></DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="16%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Additional</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Deferred</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Series A Preference</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>paid-in</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share-based</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>share-based</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Retained</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Common shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>Shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>capital</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>compensation</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Other</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>earnings /</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>common</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>preference</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>founder</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>common</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Statutory</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>comprehensive</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>(Accumulated</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>shareholders'</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Par value</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Par value</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>reserves</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>income</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>deficit)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>equity</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of January&nbsp;1, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,304,781</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,427</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,678,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,504,160</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,364,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,622,466</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">871,270</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(235,783</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(71,312,408</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,604,048</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share-based compensation &#151;
founder shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,622,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,622,466</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share-based compensation &#151;
share option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,417,377</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(46,338,280</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,079,097</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of share options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467,334</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">389</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">580,860</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">581,249</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Appropriation of statutory
reserves</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,599,128</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,599,128</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustment of other
comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(202,568</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(202,568</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of December&nbsp;31, 2003</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,772,115</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,816</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,678,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,332</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">97,502,397</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">116,364,516</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(46,338,280</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,470,398</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(438,351</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(47,311,273</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">129,284,555</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of share options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">711,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">588</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,190,264</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,190,852</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">380,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">314</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,276,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,276,456</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Conversion of Series&nbsp;A
Preference Shares to common
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,058,466</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(14,058,466</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,646</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,640,658</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(119,640,658</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Issuance of common shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,075,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,994</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">635,487,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">635,497,001</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share-based compensation &#151;
share option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,305,481</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,184,253</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,489,734</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Appropriation of statutory
reserves</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,286,063</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,286,063</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustment of other
comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(63,308</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(63,308</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,616,679</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">869,125,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40,154,027</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,756,461</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(501,659</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,545,696</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">851,818,322</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Exercise of share options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">632,276</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">510</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,545,518</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,546,028</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Share-based compensation &#151;
share option</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,459,235</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,012,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,553,321</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reversal of statutory reserves</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,075,754</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,075,754</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repurchase of common shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,372,876</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,103</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(19,789,022</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(55,853,872</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(75,643,997</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustment of other
comprehensive income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,485</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">183,485</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of December&nbsp;31, 2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,876,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">848,423,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(23,141,471</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,680,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(318,174</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,189,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">853,879,463</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance as of December&nbsp;31,
2005 (US$ Note 2(c))</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,876,079</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,632</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,130,365</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,867,521</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">456,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(39,426</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,121,345</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,806,481</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">The accompanying notes are an integral part of these financial statements.
</DIV>



<P align="center" style="font-size: 10pt">F-5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>

<DIV align="left">
<A name="304"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONSOLIDATED STATEMENTS OF CASH FLOWS<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$ (Note 2(c))</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from operating activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,611,001</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments for:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,701,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,489,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,553,321</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,803,341</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,677,763</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,235,708</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,070,492</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,619,600</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Amortization of intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,230,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,383,828</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,234,693</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">400,819</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss due to disposal of fixed assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">85,717</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">259,064</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,101</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Loss from foreign currency translation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,320,193</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,402,715</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Increase) Decrease in accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12,441,388</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,833,220</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,029,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">127,581</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase in prepayments and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,882,969</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,018,815</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,589,489</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,064,346</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Increase) Decrease in deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,344,088</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,238,432</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,522,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">188,606</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase (Decrease) in accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,599,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,320,004</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,461,987</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(305,071</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase (Decrease) in due to related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,275,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,926,900</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(72,358</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,966</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase in salary and employee related accrual</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">869,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,234,180</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,641,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">946,832</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase (Decrease) in deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,305,435</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,168,278</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(169,237</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20,971</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase (Decrease) in taxes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,725,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,550,704</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(7,384,801</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(915,070</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase in advance from customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,652,869</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">329,926</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,841,759</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,830,383</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Increase in other payables and accruals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,720,404</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,428,733</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,581,578</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443,803</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">(Increase) Decrease in other long-term assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(723,096</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(563,501</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">227,584</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">65,966,668</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,812,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">122,025,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,120,558</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from investing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,839,759</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12,006,783</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(45,902,556</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,687,908</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(770,947</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,797,982</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,488,779</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,051,867</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,732,341</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash used in investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20,343,047</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,804,765</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(54,391,335</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,739,775</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash flows from financing activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from issuance of Series&nbsp;A Preference
Shares, net of issuance cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,276,456</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from initial public offering, net of
issuance cost paid</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">635,497,001</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Repurchase of common shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(75,643,997</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,373,249</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Proceeds from the exercise of options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">746,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,190,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,546,028</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">191,572</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">746,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640,964,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(74,097,969</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,181,677</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of foreign exchange rate changes on cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,195,747</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,387,295</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net increase (decrease)&nbsp;in cash</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,446,812</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">733,208,100</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(17,659,122</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,188,189</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash, beginning of year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">68,637,760</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,084,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">848,292,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,114,207</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash, end of year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">115,084,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">848,292,672</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">830,633,550</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,926,018</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplemental disclosure of cash flow information:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash paid during the years for:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,900,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,703,548</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">41,598,483</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,154,579</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Interest expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Supplemental disclosure of non-cash investing
activities:</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrual related to purchase of property, equipment
and software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,748,970</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,577,286</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Conversion of Series&nbsp;A Preference Shares to common
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">119,652,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accrual related to IPO costs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,053,164</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,053,164</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(254,413</TD>
    <TD nowrap>)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt">The accompanying notes are an integral part of these financial statements.
</DIV>


<P align="center" style="font-size: 10pt">F-6
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>

<DIV align="left">
<A name="305"></A>
</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1. ORGANIZATION AND NATURE OF OPERATIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying consolidated financial statements include the financial statements of 51job,
Inc. (the &#147;Company&#148;), its subsidiaries, which principally consist of 51net Beijing, 51net.com Inc.
(&#147;51net&#148;), Qianjin Network Information Technology (Shanghai) Co., Ltd. (&#147;Tech JV&#148;), Shanghai
Qianjin Advertising Co., Ltd. (&#147;AdCo&#148;), Shanghai Wang Cai Advertising Co., Ltd. (&#147;Wang Cai AdCo&#148;)
and Qian Cheng Wu You Network Information Technology (Beijing) Co. Ltd. (&#147;WFOE&#148;), and certain
variable interest entity subsidiaries (&#147;VIE subsidiaries&#148;), which consist of Beijing Run An
Information Consultancy Co., Ltd. (&#147;Run An&#148;), Beijing Qian Cheng Si Jin Advertising Co., Ltd.,
(&#147;Qian Cheng&#148;) and Shanghai Run An Lian Information Consultancy Co., Ltd. (&#147;RAL&#148;). The Company, its
subsidiaries, and VIE subsidiaries are hereinafter collectively referred to as the &#147;Group.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company changed its name from 51net.com Cayman Islands Inc. to 51job, Inc. effective from
April&nbsp;26, 2004. AdCo changed its name from Shanghai Qianjin Culture Communications Co., Ltd. to
Shanghai Qianjin Advertising Co., Ltd. in November&nbsp;2005. Wang Cai AdCo changed its name from
Shanghai Jin Lian Advertising Co., Ltd. in July&nbsp;2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group is an integrated human resource services provider in the People&#146;s Republic of China
(the &#147;PRC&#148;) and is principally engaged in recruitment related advertising services, including the
production of a city-specific publication of advertisement listings as newspaper inserts and
Internet recruitment services. The Group also provides executive search services and other human
resource related services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under relevant PRC laws and regulations, companies conducting businesses as stated in the
preceding paragraph require various licenses, including the advertisement license, HR services
license and the license for Internet content provision (&#147;ICP&#148;) from relevant government
authorities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company was incorporated in the Cayman Islands on March&nbsp;24, 2000 and accordingly is
considered as a foreign person under PRC law. As of December&nbsp;31, 2003, the Company owned a 99% and
a 79.2% equity interest in Tech JV and AdCo, respectively. The remaining equity interest in these
entities was owned by Qian Cheng and Run An, the Company&#146;s VIE subsidiaries. As PRC regulations
limited foreign ownership of companies that provide human resource related services, Internet
content provision and advertising services, the Group was dependent on certain licenses held by its
VIE subsidiaries and conducted a small portion of its human resource related operations through Run
An and Qian Cheng. The Company did not have any equity ownership interest in either of these
entities. After Tech JV obtained the necessary business licenses, the business and operations of
Run An and Qian Cheng were transferred to Tech JV and its branches, AdCo and AdCo&#146;s subsidiaries
over a period of time. Since 2002, substantially all of the Company&#146;s operations have been
conducted through Tech JV and its branches, AdCo and AdCo&#146;s subsidiaries. Additionally, Run An and
Qian Cheng held certain equity interest in the Company&#146;s subsidiaries. Under a series of technical
and consulting services agreements and undertaking by those equity owners, the Company bore all of
the risk and rewards of Run An and Qian Cheng, and RAL, a VIE subsidiary which was formed in April
2004 (Note 2(b)). Accordingly, for all periods presented, the Company, or its subsidiaries, as the
case may be, was considered the primary beneficiary of the VIE subsidiaries and their results are
consolidated in the Company&#146;s financial statements. No other party shares in any of the economic
risk or rewards of the Company&#146;s subsidiaries and VIE subsidiaries; therefore, no minority interest
is reflected on the Company&#146;s financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2004, the PRC government amended its limitation on foreign ownership of advertising
companies and permitted foreign equity ownership up to 70% of a PRC advertising entity.
Accordingly, the Company undertook a restructuring in May&nbsp;2004 (the &#147;Restructuring&#148;) and 51net, a
foreign entity, has transferred 48% of its equity interest in Tech JV to a subsidiary of AdCo,
which is also an indirect subsidiary of 51net. As a result, 51net effectively holds 69.7% of the
equity interest in Tech JV and Qian Cheng effectively holds the remaining 30.3% equity interest.
After the Restructuring, Tech JV can legally hold the necessary licenses to provide advertising
services in the PRC. Additionally, as part of the Restructuring, certain of the agreements with and
undertakings by the VIE subsidiaries were amended to enhance the Company&#146;s ability to control the
VIE subsidiaries (Note 2(b)). Starting December&nbsp;2005, the PRC government permits 100% foreign
ownership of a PRC advertising entity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;2004, the Company completed an initial public offering of American Depositary
Shares (ADSs). ADSs of the Company are traded on the Nasdaq National Market under the symbol &#147;JOBS&#148;
in the United States.
</DIV>

<P align="center" style="font-size: 10pt">F-7
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES
TO THE CONDENSED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. PRINCIPAL ACCOUNTING POLICIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(a)&nbsp;Basis of presentation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The accompanying consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America (&#147;U.S. GAAP&#148;).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the balance sheet dates and the reported
amounts of revenues and expenses during the reported years. Actual results may materially differ
from those estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(b)&nbsp;Basis of consolidation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The consolidated financial statements include the financial statements of the Company, its
subsidiaries, and VIE subsidiaries. All significant transactions and balances between the Company,
its subsidiaries and VIE subsidiaries have been eliminated upon consolidation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;A subsidiary is an entity in which the Company, directly or indirectly, controls more than one
half of the voting power; has the power to appoint or remove the majority of the members of the
board of directors; to cast majority of votes at the meeting of the board of directors or to govern
the financial and operating policies of the investee under a statute or agreement among the
shareholders or equity holders.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group has adopted Financial Accounting Standards Board (&#147;FASB&#148;) Interpretation No.&nbsp;46,
&#147;Consolidation of Variable Interest Entities, an Interpretation of ARB No.&nbsp;51,&#148; (&#147;FIN 46&#148;) for all
periods presented. FIN 46 requires VIEs to be consolidated by the primary beneficiary of the
entity. An entity is considered to be a VIE if certain conditions are present, such as if the
equity investors in the entity do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2004 and 2005 and for all years presented, the Group is the primary
beneficiary of three VIEs, Run An, Qian Cheng and RAL, which were established in January&nbsp;1997,
February&nbsp;1999 and April&nbsp;2004, respectively. Run An and Qian Cheng were in existence prior to the
establishment of the Company and are considered predecessors of the Group. The Group does not have
any ownership interest in the VIE subsidiaries but has control of such entities through certain
agreements and undertakings as described below. As a result of the Group&#146;s consolidation of Run An,
Qian Cheng and RAL for all periods presented, 100% of the interest of Tech JV and AdCo are included
in the consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Run An holds ICP and HR service licenses and also engages in provision of training services.
Two senior executives of the Company hold 80% and 20% of the equity interest in Run An,
respectively. As of December&nbsp;31, 2005, the registered capital of Run An was RMB1,000,000, which was
fully paid by the principal founder of the Company, and its accumulated loss was RMB4,046,181.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Qian Cheng holds an advertisement license necessary for recruitment advertising services. A
senior executive officer of the Company and Run An hold 87% and 13% of the equity interest in Qian
Cheng, respectively. As of December&nbsp;31, 2005, the registered capital of Qian Cheng was
RMB1,500,000, which was fully paid by the principal founder and a senior executive of the Company,
and its accumulated loss was RMB11,007,358.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;RAL holds a permit issued by the Shanghai human resources bureau which allows it to conduct
human resource related business including the collection and launch of, and consulting services
related to human resource supply and demand information (online human resource intermediary
service). RAL also obtained a permit from the Shanghai municipal telecommunications administration
bureau that allows it to provide Internet information services that do not relate to news,
publishing, education, healthcare, medicine and medical appliances. RAL conducts the Group&#146;s other
HR related services and operates as an Internet content provider. Two senior executives of the
Company hold 80% and 20% of the equity interest in RAL, respectively. As of December&nbsp;31, 2005, the
registered capital of RAL was RMB1,000,000, which was fully paid by the senior executives of the
Company, and its accumulated loss was RMB492,714.
</DIV>

<P align="center" style="font-size: 10pt">F-8
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES
TO THE CONDENSED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As part of the Restructuring (Note 1), the Group entered into and amended various agreements
as related to its VIE subsidiaries. While the substance of the previous agreements with the VIE
subsidiaries remain unchanged, the agreements and arrangements were amended in connection with the
Restructuring to (i)&nbsp;enhance the Company&#146;s ability to control the VIE subsidiaries and (ii)&nbsp;ensure
the agreements are legally enforceable in the PRC court of law. Accordingly, the Restructuring did
not change the Company&#146;s accounting of its VIE subsidiaries. The key provisions of the agreements
with the Company or its subsidiaries and the VIE subsidiaries or its shareholders are as follows:
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Technical and Consulting Service Agreements. </I>WFOE has entered into technical and consulting
service agreements with Run An, Qian Cheng and RAL, respectively, under which WFOE has the
exclusive right, subject to certain exceptions, to provide technical services to Run An, Qian Cheng
and RAL for service fees. The technical and consulting service agreements have a term of ten years
and can only be terminated by WFOE during the term. Such term is renewable upon the expiration of
the agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Pledge and Control Agreements. </I>As security for Run An, Qian Cheng and RAL&#146;s obligations under
the technical and consulting service agreements, the shareholders of Run An, Qian Cheng and RAL
have pledged all of their equity interest in Run An, Qian Cheng and RAL to WFOE. According to the
pledge agreement, WFOE has the right to sell the pledged equity. Additionally, the shareholders of
Run An, Qian Cheng and RAL have agreed that they will not dispose of the pledged equity or take any
actions that will prejudice WFOE&#146;s interest under the equity pledge agreements. They have further
agreed that they will obtain WFOE&#146;s consent regarding material decisions concerning the operation
of Run An, Qian Cheng and RAL, including the distribution of profits, the incurrence of debt and
the appointment of directors. Additionally, WFOE has the right to recommend candidates to the board
for the positions of general manager and senior executives of Run An, Qian Cheng and RAL. Under
such pledges, WFOE is obliged to purchase any and all of the equity interest in Run An, Qian Cheng
and RAL from their shareholders, if permitted by the PRC laws. The pledges cannot be released until
the discharge of all of Run An, Qian Cheng and RAL&#146;s obligations under the respective technical and
consulting service agreement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(c)&nbsp;Foreign currencies</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group&#146;s functional currency is the Renminbi (&#147;RMB&#148;). Transactions denominated in
currencies other than RMB are translated into RMB at the exchange rates quoted by the People&#146;s Bank
of China prevailing at the dates of the transactions. Gains and losses resulting from foreign
currency transactions are included in the consolidated statements of operations and comprehensive
income. Monetary assets and liabilities denominated in foreign currencies are translated into RMB
using the applicable exchange rates quoted by the People&#146;s Bank of China at the balance sheet
dates. All such exchange gains and losses are included in the statements of operations and
comprehensive income. The exchange differences for translation of group companies&#146; balances where
RMB is not their functional currency are included in cumulative translation adjustments, which is a
separate component of shareholders&#146; equity on the consolidated financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unaudited United States dollar (&#147;US$&#148;) amounts disclosed in the accompanying financial
statements are presented solely for the convenience of the readers. Translations of amounts from
RMB into United States dollars for the convenience of the reader were calculated at the noon buying
rate of US$1.00 = RMB8.0702 on December&nbsp;30, 2005 in The City of New York for cable transfers of RMB
as certified for customs purposes by the Federal Reserve Bank of New York. No representation is
made that the RMB amounts could have been, or could be, converted into US$ at that rate on December
30, 2005, or at any other certain rate.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(d)&nbsp;Cash</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cash represents cash on hand and demand deposits placed with banks or other financial
institutions. Included in the cash balance as of December&nbsp;31, 2004 and 2005 are amounts denominated
in United States dollars totaling US$79,267,318 and US$31,040,000, respectively (equivalent to
approximately RMB656,055,958 and RMB250,499,008, respectively). The Group receives substantially
all of its revenues in RMB, which currently is neither a freely convertible currency nor can it be
freely remitted out of China. However, there are no restrictions in the use of the cash and cash
equivalents in the PRC as the cash and cash equivalents are not restricted funds and are not
classified as restricted cash.
</DIV>

<P align="center" style="font-size: 10pt">F-9
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES
TO THE CONDENSED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(e)&nbsp;Accounts receivable</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Accounts receivable is presented net of allowance for doubtful accounts. The Company provides
specific provisions for bad debts when facts and circumstances indicate that the receivable is
unlikely to be collected. If the financial condition of its customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional allowances may be
required.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(f)&nbsp;Investments</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2004 and 2005, investments consist of a fixed-maturity instrument issued by
Hong Kong and Shanghai Banking Corporation Limited. The fixed-maturity instrument is negotiable,
bears interest at 1.35% per annum and will mature on June&nbsp;19, 2006. The financial instrument is
redeemable by the Group at its discretion. Investments are recorded at fair value as
available-for-sale securities in accordance with Statement of Financial Accounting Standards
(&#147;SFAS&#148;) No.&nbsp;115, &#147;Investment Securities.&#148;
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(g)&nbsp;Property and equipment</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Property and equipment are stated at cost less accumulated depreciation. Depreciation is
calculated on a straight-line basis to allocate the cost of the assets to their estimated residual
value over the following estimated useful lives:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="18%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Estimated useful lives</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Leasehold improvements
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom" nowrap>Lesser of the lease period or
the estimated useful life</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Computer equipment
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">5&nbsp;years</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Furniture and fixtures
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">5&nbsp;years</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Motor vehicles
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="bottom">5&nbsp;years</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(h)&nbsp;Intangible assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Intangible assets include purchased computer software, licenses and internally developed
software and are amortized on a straight-line basis over their estimated useful lives, which range
from three to ten years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group recognizes costs to develop software products to be marketed or sold in accordance
with SFAS No.&nbsp;86, &#147;Accounting for Costs of Computer Software to be Sold, Leased or Otherwise
Marketed.&#148; Costs incurred for the development of software products prior to the establishment of
technological feasibility are expensed when incurred and are included in product development
expense. Once the software product has reached technological feasibility, all subsequent product
development costs are capitalized until that product is available for marketing. Technological
feasibility is evaluated on a product-by-product basis.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group recognizes website and internally used software development costs in accordance with
Statement of Position (&#147;SOP&#148;) No.&nbsp;98  &#151;  1, &#147;Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use,&#148; and Emerging Issues Task Force (&#147;EITF&#148;) No.&nbsp;00-02,
&#147;Accounting for Website Development Cost,&#148; where applicable. As such, the Group expenses all costs
that are incurred in connection with the planning and implementation phases of development and
costs that are associated with repair or maintenance of the existing websites and software. Costs
incurred in the development phase are capitalized and amortized over the estimated product life.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(i)&nbsp;Impairment of long-lived assets</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group has adopted SFAS No.&nbsp;144, &#147;Accounting for the Impairment or Disposal of Long-Lived
Assets,&#148; (&#147;SFAS No.&nbsp;144&#148;) which addresses the financial accounting and reporting for the
recognition and measurement of impairment losses for long-lived assets. In accordance with SFAS No.
144, long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that carrying amount of an asset may not be recoverable. The Group may recognize
impairment of long-lived assets in the event the net book value of such assets exceeds the future
undiscounted cash flows attributable to these assets. No impairment of long-lived assets was
recognized for all years presented.
</DIV>

<P align="center" style="font-size: 10pt">F-10
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES
TO THE CONDENSED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(j)&nbsp;Revenue recognition</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Print advertising</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group provides recruitment advertising services through a weekly newspaper which is
distributed in various cities of the PRC. Arrangements for recruitment advertisement on the weekly
newspaper are generally short-term in nature. Fees for these types of print recruitment advertising
services are recognized as revenue when collectibility is reasonably assured and upon the
publication of the advertisements. Cash received in advance of services are recognized as advances
from customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Online recruitment services</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group provides online recruitment advertising and other technical services through its
<I>www.51job.com </I>website. The average display period of online recruitment services normally ranges
from one week to one year. Fees for its online recruitment advertisement and other technical
services are recognized as revenue ratably over the display period of the contract or when services
are provided and when collectibility is reasonably assured in accordance with Staff Accounting
Bulletin (&#147;SAB&#148;) No.&nbsp;104. Cash received in advance of services are recognized as advances from
customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Executive search</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group provides executive search services. Revenue is recognized when recruitment services
are substantially rendered and collectibility is reasonably assured, less an allowance for
individuals placed but not expected to meet the probation period. The allowance for search
placement is based on historical activities of search placement that do not complete the
contingency period. This contingency period varies on a contract by contract basis but is typically
90&nbsp;days. The Group has not had significant search placements that do not complete the contingency
period. Cash received in advance of services are recognized as advances from customers.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Other human resource related revenues</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group also provides other value-added human resource products. Additionally, the Group
sold stationery and office supplies to its business customers. Revenue is recognized when services
are rendered or products are sold. In November&nbsp;2004, the Group discontinued its stationery and
office supplies business. Revenue from selling of related products was RMB2,206,536, RMB12,679,995
and RMB2,188,714 during the years ended December&nbsp;31, 2003, 2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Business and related taxes</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s subsidiaries and its VIE subsidiaries are subject to business taxes and related
surcharges on the revenues earned for services provided in the PRC. The applicable rate of business
taxes is 5% after certain deductible expenses. In the accompanying statements of operations and
comprehensive income, business taxes and related surcharges for revenues earned are deducted from
gross revenues to arrive at net revenues.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(k)&nbsp;Cost of services</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Cost of services consist primarily of printing and publishing expenses, payroll compensation
and related employee costs, and other expenses incurred by the Group which are directly
attributable to the rendering of the Group&#146;s recruitment advertising and other human resource
services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(l)&nbsp;Sales and marketing</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Sales and marketing costs comprised primarily of the Group&#146;s sales and marketing personnel
payroll compensation and related employee costs and advertising and promotion expenses. Advertising
and promotion expenses generally represent the cost of promotions to create or stimulate a positive
image of the Group or a desire for the Group&#146;s services. Advertising and promotion expenses totaled
approximately RMB7,062,232, RMB12,372,664 and RMB21,367,227 during the years ended December&nbsp;31,
2003, 2004 and 2005, respectively, are charged to the statements of operations and comprehensive
income when incurred.
</DIV>

<P align="center" style="font-size: 10pt">F-11
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES
TO THE CONDENSED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(m)&nbsp;Share-based compensation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group accounts for share-based compensation arrangements with employees in accordance with
Accounting Principles Board (&#147;APB&#148;) Opinion No.&nbsp;25, &#147;Accounting for Stock Issued to Employees,&#148;
(&#147;APB No.&nbsp;25&#148;) and complies with the disclosure provisions of SFAS No.&nbsp;123, &#147;Accounting for
Stock-Based Compensation&#148; (&#147;SFAS No.&nbsp;123&#148;), and SFAS No.&nbsp;148, &#147;Accounting for Stock-Based
Compensation &#151; Transition and Disclosure.&#148; In general, compensation cost under APB No.&nbsp;25
is recognized based on the difference, if any, between the estimated fair value of the Company&#146;s
common shares and the amount an employee is required to pay to acquire the common shares, as
determined on the measurement date. Compensation cost, if any, is recorded in shareholders&#146; equity
as additional paid-in capital with an offsetting entry recorded to deferred share-based
compensation. Deferred share-based compensation is amortized and charged to expense based on the
vesting terms of the underlying options or share-based compensation arrangement.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;If the compensation cost for the Group&#146;s share-based compensation plans for employees had been
determined based on the estimated fair value on the measurement dates for the share option awards
and Founder Share escrow arrangements (Note 11) as prescribed by SFAS No.&nbsp;123, the Company&#146;s net
income attributable to common shareholders and earnings per share would have resulted in the pro
forma amounts for the years ended December&nbsp;31, 2003, 2004 and 2005 as disclosed below:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add: Share-based compensation expense under APB No.&nbsp;25</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,701,563</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,489,734</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,553,321</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Share-based compensation expense under SFAS No.&nbsp;123</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(19,184,475</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20,980,215</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(21,557,770</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,117,351</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,652,551</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">54,417,855</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic earnings per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.81</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.98</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic earnings per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.65</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.21</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.63</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.96</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted earnings per share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.07</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.74</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.95</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted earnings per ADS:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">As reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.52</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.48</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.90</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The effects of applying SFAS No.&nbsp;123 methodologies in this pro forma disclosure are not
indicative of future earnings or earnings per share. Additional share option awards in future years
are expected.
</DIV>

<P align="center" style="font-size: 10pt">F-12
</DIV>

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<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES
TO THE CONDENSED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company calculated the fair value of share options to employees on the date of grant based
on the minimum value method as allowed under SFAS No.&nbsp;123 for non-public entities prior to the
Company&#146;s initial public offering. Upon completion of the Company&#146;s initial public offering in
October&nbsp;2004, the Company adopted the Black-Scholes pricing method to calculate fair value of
options. For the years ended December&nbsp;31, 2003, 2004 and 2005, the fair value of options granted
was estimated with the following assumptions:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Risk-free interest rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2.65%</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">2.65%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" valign="bottom">3.87%-4.53%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected life (years)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">6</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">6</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">4</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Expected dividend yield</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">0%</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">0%</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">0%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Volatility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">0%</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">0%</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">90%-100%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted average of fair value of options at grant date</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">RMB37.59</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">RMB42.46</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="bottom">RMB44.42</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(n)&nbsp;Operating leases</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Leases where substantially all the rewards and risks of ownership of assets remain with the
leasing company are accounted for as operating leases. Payments made under operating leases, net of
any incentives received by the Group from the leasing company, are charged to the statements of
operations and comprehensive income on a straight-line basis over the lease periods.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(o)&nbsp;Taxation</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Deferred income taxes are provided using the balance sheet liability method. Under this
method, deferred income taxes are recognized for the differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities by applying enacted statutory
rates applicable to future years in which the differences are expected to reverse. The tax base of
an asset or liability is the amount attributed to that asset or liability for tax purposes. The
effect on deferred taxes of a change in tax rates is recognized in income in the period that
includes the enactment date. A valuation allowance is provided to reduce the amount of deferred tax
assets if it is considered more likely than not that some portion of, or all of, the deferred tax
assets will not be realized.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(p)&nbsp;Statutory reserves</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;All subsidiaries and VIE subsidiaries incorporated in the PRC, except for Tech JV which is
majority owned by 51net, a BVI company, are required on an annual basis to make an appropriation of
retained earnings as statutory common reserve fund equal to 10% of after-tax profit, calculated in
accordance with PRC accounting standards and regulations. Appropriations are classified in the
consolidated balance sheet as statutory common reserve fund, and are recorded beginning in the
first period in which after-tax profits exceed all prior year accumulated losses. Once the total
statutory common reserve fund reaches 50% of the registered capital of the respective companies,
further appropriations are discretionary. The statutory common reserve fund can be used to increase
the registered capital and eliminate future losses of the respective companies. The Group&#146;s
statutory common reserve fund is not distributable to shareholders except in the event of a
liquidation. During the years ended December&nbsp;31, 2003, 2004 and 2005, the Group made total
appropriations to their statutory common reserve fund of RMB5,732,752, RMB4,857,375 and RMB770,608,
respectively. During the year ended December&nbsp;31, 2005, the Group also made a discretionary reversal
of RMB9,487,777 from the common statutory reserve fund to retained earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In addition, the above subsidiaries are required on an annual basis to set aside at least 5%
of after-tax profit, calculated in accordance with PRC accounting standards and regulations, to the
statutory common welfare fund, which can be used for staff welfare of the Group. The Group&#146;s
subsidiaries made total appropriations of RMB2,866,376, RMB2,428,688 and RMB385,304 during the
years ended December&nbsp;31, 2003, 2004 and 2005, respectively. During the year ended December&nbsp;31,
2005, the Group also made a discretionary reversal of RMB4,743,889 from the statutory common
welfare fund to retained earnings.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tech JV is required on an annual basis to make appropriations of retained earnings, calculated
in accordance with PRC accounting standards and regulations, to non-distributable statutory
reserves, comprising of enterprise statutory reserve, employees&#146; bonus and welfare fund and
enterprise expansion fund. The percentages of the appropriation are
</DIV>

<P align="center" style="font-size: 10pt">F-13
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES
TO THE CONDENSED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">determined by the Board of
Directors of Tech JV. During the years ended December&nbsp;31, 2003, 2004 and 2005, Tech JV did not make
any appropriations to these statutory reserves.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Appropriations to the statutory common reserve fund and the statutory common welfare fund are
accounted for as a transfer from retained earnings or accumulated deficit to the statutory
reserves.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are no legal requirements in the PRC to fund these reserves by transfer of cash to any
restricted accounts, and the Group does not do so. These reserves are not distributable as cash
dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(q)&nbsp;Dividend</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Dividends are recognized when declared. PRC regulations currently permit payment of dividends
only out of accumulated profits as determined in accordance with PRC accounting standards and
regulations. Additionally, the Company&#146;s PRC subsidiaries and VIE subsidiaries can only distribute
dividends after they have met the PRC requirements for appropriation to statutory reserves (Note
2(p)). Aggregate net assets of the Company&#146;s PRC subsidiaries not distributable in the form of
dividends to the parent as a result of the aforesaid PRC regulations were RMB409&nbsp;million as of
December&nbsp;31, 2005. However, the PRC subsidiaries may transfer such net assets to the Company by
other means, including through royalty and trademark license agreements or certain other
contractual agreements, at the discretion of the Company without third party consent.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(r)&nbsp;Earnings per share</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In accordance with SFAS No.&nbsp;128, &#147;Computation of Earnings Per Share,&#148; and EITF Issue 03-06,
&#147;Participating Securities and the Two-Class&nbsp;Method under FASB Statement No.&nbsp;128,&#148; basic earnings
per share is computed by dividing net income attributable to common shareholders by the weighted
average number of unrestricted common shares outstanding during the period using the two-class
method. Under the two class method, net income is allocated between common shares and other
participating securities based on their participating rights. The Company&#146;s Series&nbsp;A Preference
Shares (Note 10) are participating securities. Diluted earnings per share is calculated by dividing
net income attributable to common shareholders as adjusted for the effect of dilutive common
equivalent shares, if any, by the weighted average number of common and dilutive common equivalent
shares outstanding during the period. Common equivalent shares consist of the common shares
issuable upon the conversion of the convertible preference shares (using the if-converted method),
common shares issuable upon the exercise of outstanding share options (using the treasury stock
method) and certain common shares held in escrow (Note 11) (using the treasury stock method).
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(s)&nbsp;Segment reporting</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group operates and manages its business as a single segment. As the Group primarily
generates its revenues from customers in the PRC, no geographical segments are presented.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>(t)&nbsp;Recent accounting pronouncements</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123 (revised 2004), &#147;Share-Based Payment&#148; (&#147;SFAS
No.&nbsp;123R&#148;), which replaced SFAS No.&nbsp;123 and superseded APB No.&nbsp;25. SFAS No.&nbsp;123R requires the
measurement of all employee share-based payments to employees, including grants of employee stock
options, using a fair-value-based method and the recording of such expense in the consolidated
statements of operations. The pro forma disclosures previously permitted under SFAS No.&nbsp;123 no
longer will be an alternative to financial statement recognition. In March&nbsp;2005, the SEC issued
Staff Accounting Bulletin No.&nbsp;107 regarding the SEC&#146;s interpretation of SFAS No.&nbsp;123R and the
valuation of share-based payments for public companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company adopted SFAS No.&nbsp;123R and related FASB Staff Positions starting January&nbsp;1, 2006
and have recognized stock-based compensation expense using the modified prospective method, which
requires that compensation expense be recorded for all unvested stock options upon adoption of SFAS
No.&nbsp;123R. The Company has applied the Black-Scholes valuation model in determining the fair value
of share-based payments to employees, and is recognizing compensation expense on a straight-line
basis over the requisite service period. The adoption of SFAS No.&nbsp;123R increased the Company&#146;s
share-based compensation expense in its consolidated statement of operations in the first quarter
of 2006. The Company expects the implementation of SFAS No.&nbsp;123R may adversely affect its earnings
in the future.
</DIV>

<P align="center" style="font-size: 10pt">F-14
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES
TO THE CONDENSED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In May&nbsp;2005, the FASB issued SFAS No.&nbsp;154, &#147;Accounting Changes and Error Corrections,&#148; (&#147;SFAS
No.&nbsp;154&#148;) which replaces APB Opinion No.&nbsp;20, &#147;Accounting Changes,&#148; and SFAS No.&nbsp;3, &#147;Reporting
Accounting Changes in Interim Financial Statements.&#148; SFAS No.&nbsp;154 provides guidance on the
accounting for and reporting of accounting changes and error corrections. It establishes
retrospective application as the required method for reporting a change in accounting principle and
the reporting of a correction of an error. SFAS No.&nbsp;154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December&nbsp;15, 2005. The Company does not
expect that the adoption of SFAS No.&nbsp;154 will have a material effect on its financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2005, the FASB ratified EITF Issue No.&nbsp;05-06, &#147;Determining the Amortization Period for
Leasehold Improvements.&#148; (&#147;EITF No.&nbsp;05-06&#148;) EITF No.&nbsp;05-06 provides that the amortization period
used for leasehold improvements acquired in a business combination or purchased after the inception
of a lease be the shorter of (a)&nbsp;the useful life of the assets or (b)&nbsp;a term that includes required
lease periods and renewals that are reasonably assured upon the acquisition or the purchase. The
provisions of EITF No.&nbsp;05-06 should be applied to leasehold improvements (within the scope of this
issue) that are purchased or acquired in reporting periods beginning after June&nbsp;29, 2005. The
Company does not expect that the adoption of EITF No.&nbsp;05-06 will have a material effect on its
financial statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>3. ACCOUNTS RECEIVABLE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group&#146;s accounts receivable balances, net of allowance for doubtful accounts, were
RMB23,252,468 and RMB22,222,865 as of December&nbsp;31, 2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The movement of allowance for doubtful accounts is analyzed as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at beginning of the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,318,528</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,689,222</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,370,694</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,799,717</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Write-offs</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,628,664</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,689,222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,860,275</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4. PREPAYMENTS AND OTHER CURRENT ASSETS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Rental and other deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,331,839</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,333,790</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepayments for rental and other expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,229,135</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,315,403</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Employee advances</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">868,497</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,507,761</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payments made on behalf of customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">189,449</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaid insurance premium</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,171,646</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,704,902</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Merchandise &#151; stationery</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,507,726</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Subsidy income receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,660,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,829,274</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,377,656</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,914,307</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,675,948</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,265,437</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-15
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS &#151; (Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>5. PROPERTY AND EQUIPMENT</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Leasehold improvements</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,091,521</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,085,141</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computer equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,758,707</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">36,185,945</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Furniture and fixtures</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,942,323</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,896,664</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Motor vehicles</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,646,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,886,016</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: accumulated depreciation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(18,903,692</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(30,695,891</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net book value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,534,875</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,357,875</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>6. INTANGIBLE ASSETS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Computer equipment software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,798,362</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,952,849</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Acquired training licenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,049,274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,571,253</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Internally developed software</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,568,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,568,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: accumulated amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,289,695</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(12,712,075</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net book value</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,126,749</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,380,835</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>7. OTHER PAYABLES AND ACCRUALS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Professional service fees</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,469,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,796,706</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Office expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,585,186</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,327,095</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deposit from customers</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,713,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,053,967</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Travelling expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103,190</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,420</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Payables to employees related to proceeds from share option exercises</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,872,776</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Others</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,062,730</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,440,300</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,933,686</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,515,264</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>8. TAXATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Cayman Islands</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the current laws of Cayman Islands, the Company and its subsidiaries that are
incorporated in Cayman Islands are not subject to tax on income or capital gain. In addition, upon
payments of dividends by those companies to their shareholders, no Cayman Islands withholding tax
will be imposed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>British Virgin Islands</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Under the current laws of British Virgin Islands, the Company&#146;s subsidiary that is
incorporated in British Virgin Islands is not subject to tax on income or capital gain. In
addition, upon payments of dividends by that company to its shareholders, no British Virgin Islands
withholding tax will be imposed.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Hong Kong</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s subsidiary that is incorporated in Hong Kong is subject to Hong Kong profits tax
at a rate of 17.5% on its assessable profit.
</DIV>


<P align="center" style="font-size: 10pt">F-16
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>China</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company&#146;s subsidiaries that are incorporated in the PRC are subject to Enterprise Income
Tax (&#147;EIT&#148;) on the taxable income as reported in their respective statutory financial statements
adjusted in accordance with the Enterprise Income Tax Law and the Income Tax Law of the People&#146;s
Republic of China Concerning Foreign Investment Enterprises and Foreign Enterprises (collectively,
the &#147;PRC Income Tax Laws&#148;), respectively. Under the PRC Income Tax Laws, these companies are
subject to EIT at a statutory rate of 33% except for the following entities: Tech JV, which is
subject to EIT at a rate of 30%; AdCo Shenzhen Branch, which is subject to EIT at a rate of 15%;
and Wang Cai AdCo&#146;s branches in Shanghai and Shenzhen, which are subject to EIT at a rate of 15%.
In addition, some of AdCo&#146;s branches and subsidiaries are granted by the local tax authorities a
right to elect a two-year EIT exemption on their taxable income, commencing from their
establishment. Total tax benefit recognized as a result of the tax exemption was RMB16,127,096,
RMB2,318,116 and RMB6,073,010 for the years ended December&nbsp;31, 2003, 2004 and 2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Composition of income tax expense</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The current and deferred portion of income tax expense included in the consolidated statement
of operations for the years ended December&nbsp;31, 2003, 2004 and 2005 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current income tax expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,230,664</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,464,894</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,592,183</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(38,653</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,406,710</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,352,850</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,192,011</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">34,058,184</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,945,033</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<B><I>Reconciliation of the differences between statutory tax rate and the effective tax rate</I></B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Reconciliation between the statutory EIT rate in the PRC and the Group&#146;s effective tax rate
for the years ended December&nbsp;31, 2003, 2004 and 2005 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">EIT statutory rate</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of tax holiday for certain subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(45</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6</TD>
    <TD nowrap>%)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Difference in EIT rates of certain subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3</TD>
    <TD nowrap>%)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-deductibility of expenses incurred outside the PRC</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">18</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">8</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other permanent differences</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">4</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision of valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reversal of valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>%)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1</TD>
    <TD nowrap>%)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effective EIT rate of the Group</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">9</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">36</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-17
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Significant components of deferred tax assets and liabilities as of December&nbsp;31, 2004 and 2005
are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deductible temporary differences related to revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,955,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deductible temporary differences related to accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">656,674</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,711,457</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deductible temporary differences related to advertising expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,984,085</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deductible temporary differences related to provision for
doubtful debts and slow moving merchandise</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,490,856</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,996,098</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,102,962</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,691,640</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(676,864</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(823,820</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net current deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,426,098</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,867,820</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Tax loss carryforwards</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,387,134</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,970,167</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deductible temporary differences related to amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">412,314</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total non-current deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,763,256</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,382,481</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Valuation allowance</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(6,387,134</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,970,167</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net non-current deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">376,122</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">412,314</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total deferred tax assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,802,220</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,280,134</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Taxable temporary differences related to accrued expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(169,237</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(169,237</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total deferred tax liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(169,237</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2004 and 2005, valuation allowances were provided on the deferred tax
assets to the extent that management believed it was more likely than not that such deferred tax
assets would not have been realized in the foreseeable future. Valuation allowances were provided
because it was more likely than not that the Group will not be able to utilize certain tax loss
carry forwards generated by certain subsidiaries or VIE subsidiaries. As those entities continue to
generate tax losses and tax planning strategies are not available to utilize those tax losses in
other group companies, management believes it is more likely than not that such losses will not be
utilized before they expire. However, certain valuation allowance was reversed in 2004 and 2005
when the Group generated sufficient taxable income to utilize the deferred tax assets. If events
occur in the future that prevent the Group from realizing some or all of its deferred tax assets,
an adjustment to the valuation allowances will be recognized when such events occur. In the PRC,
tax loss carry forwards generally expire after five years.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following represents a roll-forward of the valuation allowance for each of the years:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at beginning of the period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,802,306</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,063,998</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,723,945</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,782,902</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Reversals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,462,253</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,052,913</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,063,998</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,793,987</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>9. INITIAL PUBLIC OFFERING</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In October&nbsp;2004, the Company completed an initial public offering of 6,037,500 American
Depositary Shares (&#147;ADSs&#148;), including an over-allotment option to the underwriters to purchase an
additional 787,500 ADS, at US$14.00 per ADS. Each ADS represents two common shares which have par
value of US$0.0001 per share. Net proceeds of approximately RMB635.5&nbsp;million were credited to the
Company&#146;s common shares and additional paid-in capital.
</DIV>

<P align="center" style="font-size: 10pt">F-18
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>10. SERIES A PREFERENCE SHARES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In June&nbsp;2000 and October&nbsp;2001, the Company entered into certain Series&nbsp;A Preference Shares
Purchase Agreements, in which (i)&nbsp;the Company authorized 15,000,000 of the Company&#146;s Series&nbsp;A
Preference Shares (&#147;Series&nbsp;A Preference Shares&#148;), and (ii)&nbsp;the Company agreed to sell and the
investors agreed to purchase 13,668,466 Series&nbsp;A Preference Shares, subject to closing and
subscription, at an issuance price of US$1.0417 per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2001, the Company issued to Recruit Company Limited (&#147;Recruit&#148;) a warrant to purchase
10,000 Series&nbsp;A Preference Shares at exercise price of US$1.0417 in connection with obtaining
access to an online recruiting application developed by Recruit. The warrant was exercised
immediately and Recruit became a registered holder of 10,000 Series&nbsp;A Preference Shares as of May
2001.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In August&nbsp;2002, in connection with share repurchase from an executive officer the principal
Series&nbsp;A Preference shareholder received a warrant to purchase an additional 380,000 Series&nbsp;A
Preference Shares at an exercise price of US$1.0417 per share for no consideration. The fair value
of the warrants, RMB1,233,659, as determined based on the Black-Scholes option pricing model, was
deducted from 2002 net income as a deemed dividend to arrive at net income attributable to common
shareholders for earnings per share calculation. The warrant was exercised in March&nbsp;2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The holders of the Series&nbsp;A Preference Shares were entitled to receive, out of any funds
legally available therefore, when and as declared by the board of directors, dividends at a rate of
eight percent (8%) per annum. No dividends would be paid on the common shares of the Company until
all declared dividends on the preference shares were paid, and no dividend would be paid on any
common shares unless a dividend was paid with respect to each outstanding Series&nbsp;A Preference Share
equal to or greater than the amount of such dividend that would be payable on all common shares
into which such Series&nbsp;A Preference Share could then be converted. Such dividend rights were not
cumulative and no right to such dividend accrued unless declared by the board of directors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each holder of Series&nbsp;A Preference Shares was entitled to convert such preference shares at
any time, without the payment of any additional consideration, into common shares at an initial
conversion price of US$1.0417 (each Series&nbsp;A Preference Share was convertible into one common
share). The conversion price would be adjusted, in the event the Company was to issue any common
shares, or shares that were convertible into common shares, except for certain cases, including
issuances of employees share options, less than the conversion price in effect on the date
immediately prior to such issue.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Each Series&nbsp;A Preference Share would be automatically converted into common shares at the then
effective conversion price upon the closing of a qualified initial public offering.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On October&nbsp;4, 2004, 14,058,466 issued Series&nbsp;A Preference Shares were converted on a 1:1 basis
to the Company&#146;s common shares of US$0.0001 each upon the completion of the Company&#146;s initial
public offering
(Note 9).
</DIV>

<P align="center" style="font-size: 10pt">F-19
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>11. SHARE-BASED COMPENSATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2000, the Company issued a total of 28,399,021 common shares to the four founders of
the Group, at the price of US$0.0001 per share (&#147;Founder Shares&#148;). At the time of the issuance,
these common shares were placed into escrow with the chief executive officer and president of the
Company as escrow agent, and were subject to repurchase by the Company, at the Company&#146;s
discretion, upon the termination of employment of the applicable founders at a repurchase price of
US$0.0001 or the estimated fair value of the common shares on the date of repurchase, as determined
by the Company. During each of the subsequent years, certain percentage of the total number of
common shares so purchased by each founder was released from the repurchase option and the escrow
as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="83%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Shares issued</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Vesting</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">17,316,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">25% released from escrow on October&nbsp;1, 2000 and one forty
eighth released from escrow at the end of each calendar
month after October&nbsp;2000.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">6,307,021</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">26.9% released from escrow on April&nbsp;28, 2000 and one forty
eighth released from escrow at the end of each calendar
month after April&nbsp;2000.</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">3,696,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.25% released from escrow on April&nbsp;28, 2000 and one forty
eighth released from escrow at the end of each calendar
month after April&nbsp;2000.</DIV></TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">1,080,000</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">25% released from escrow on October&nbsp;1, 2000 and one forty
eighth released from escrow at the end of each calendar
month after October&nbsp;2000.</DIV></TD>
</TR>
<TR style="font-size: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top">28,399,021</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Balance at end of period</DIV></TD>
</TR>
<TR style="font-size: 1px">
    <TD nowrap align="right" valign="top">&nbsp;</TD>
    <TD align="right" valign="top" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD nowrap valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2003, all common shares so purchased by the founders had been released from
the repurchase option and the escrow.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The placement of the Founder Shares in escrow is recognized as a separate share-based
compensatory arrangement between the Company and the founders. Upon the issuance of the Founder
Shares, the Company recognized total deferred compensation of RMB35,235,724 based on the estimated
fair value of the common shares on the date of issuance. Such deferred compensation is recognized
over the period in which the shares are subject to repurchase by the Company. Total compensation
expense of RMB4,622,466, nil and nil was recognized for the years ended December&nbsp;31, 2003, 2004 and
2005, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;On September&nbsp;1, 2000, the Company adopted a share option plan (&#147;2000 Option Plan&#148;) which
provides for the issuance of up to 4,010,666 common shares. The total number of common shares
reserved under the plan was increased to 5,530,578 in February&nbsp;2004. Under the share option plan,
the directors may, at their discretion, issue share options to purchase the Company&#146;s common shares
to any senior executives, directors, employees or consultants of the Group. These share options can
be exercised within six years from the date of grant.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following table summarizes the Company&#146;s share options under the 2000 Option Plan:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at beginning of years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,317,102</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,919,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,520,444</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Granted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,346,232</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">468,192</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">749,200</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(467,334</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(711,097</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(632,276</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Forfeited</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(276,272</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(156,379</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(79,394</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Outstanding at end of years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,919,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,520,444</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,557,974</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Vested and exercisable at end of years</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,384,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,426,086</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,212,153</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-20
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The following is additional information relating to employee options outstanding as of
December&nbsp;31, 2005:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="16%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="6%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Outstanding</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="11" style="border-bottom: 1px solid #000000"><B>Exercisable</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted-</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>remaining</B></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Weighted-</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>remaining</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>contractual</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Number</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>average</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>contractual life</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="left" style="border-bottom: 1px solid #000000"><B>Exercise prices</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>exercise price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>life (years)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>of shares</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>exercise price</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>(years)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US$0.15</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,112,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.37</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">994,130</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">0.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US$0.50</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">424,756</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">0.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.96</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">78,725</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">0.50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3.96</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US$1.00</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">179,286</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.15</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,650</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">1.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.15</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US$3.25</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">92,176</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">3.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.38</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">48,648</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">3.25</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4.38</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US$6.00</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">6.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.86</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">6.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.86</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US$7.00</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">7.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.56</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">7.00</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.56</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">US$8.695</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">679,200</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.31</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">US$</TD>
    <TD align="right">8.695</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5.31</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,557,974</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,212,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with share options granted under the 2000 Option Plan during the years ended
December&nbsp;31, 2003, 2004 and 2005, the Company recognized deferred share-based compensation totaling
RMB60,417,377, RMB14,305,481 and nil, respectively, which is being amortized over the vesting
period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In 2003, the Company extended the exercise period for certain employees who were terminated
during the year. The modification to increase the life of the option results in a new measurement
date and an incremental share based compensation expense of RMB9,899,198 recognized for the year
ended December&nbsp;31, 2003.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In February&nbsp;2004, the Company sold 138,264 common shares to a director at a price of US$1.00
per share, which is below the then estimated fair market value of the common shares. This
transaction resulted in the recognition of share-based compensation expense of RMB5,699,236 for the
year ended December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Compensation expense for share options granted under the 2000 Option Plan recognized during
the years ended December&nbsp;31, 2003, 2004 and 2005, totaling RMB14,079,097, RMB20,489,734 and
RMB14,553,321, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>12. EMPLOYEE BENEFITS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The full-time employees of the Company&#146;s subsidiaries and VIE subsidiaries that are
incorporated in the PRC are entitled to staff welfare benefits including medical care, welfare
subsidies, unemployment insurance and pension benefits. These companies are required to accrue for
these benefits based on certain percentages of the employees&#146; salaries in accordance with the
relevant regulations, and make contributions to the state-sponsored pension and medical plans out
of the amounts accrued for medical and pension benefits. The total amounts charged to the
statements of operations and comprehensive income for such employee benefits amounted to
RMB11,733,119, RMB17,377,621 and RMB27,669,108 for the years ended December&nbsp;31, 2003, 2004 and
2005, respectively. The PRC government is responsible for the medical benefits and ultimate pension
liability to these employees.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>13. RELATED PARTY TRANSACTIONS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Balances with related parties for the periods indicated are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Due to related parties:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Principal shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">500,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advances for share options exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,577,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,005,515</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,577,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,505,515</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-21
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amounts and due to principal shareholders as of December&nbsp;31, 2005 mainly arose from an
advance from a principal shareholder in connection with increasing the registered capital of a VIE
subsidiary. This amount is unsecured, non-interest bearing and has no definite terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amount of advance for share options exercise arose from the exercise of options by the
Company&#146;s directors and executive officers. During the periods presented, certain directors and
executive officers of the Company made payments to exercise certain unvested options. In connection
with the early exercises, the Company has a call option to repurchase the shares that are not yet
vested if the employee&#146;s service terminates prior to the option&#146;s vesting at the original exercise
price. The early exercise of the options was not considered a substantial exercise for accounting
purposes on the date of exercise, and the cash paid for the exercise price is recognized as a
liability and such common shares are not considered issued. When the options are vested and the
call option expires, the shares are considered issued and cash paid for the exercise is transferred
to shareholders&#146; equity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>14. EARNINGS PER SHARE</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Basic earnings per share and diluted earnings per share have been calculated for the years
ended December&nbsp;31, 2003, 2004 and 2005 as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Numerator:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Amount allocated to participating preference shareholders</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(10,615,466</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,986,417</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Numerator for basic earnings per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,984,797</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,156,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilutive securities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Numerator for diluted earnings per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">21,984,797</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">47,156,615</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator for basic earnings per share &#151;
weighted-average common shares outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">26,594,228</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">35,593,374</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,607,716</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of Series&nbsp;A Preference Shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD nowrap>*</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of unvested Founder Shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,734,040</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilutive share options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">731,890</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,889,645</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,646,738</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of dilutive warrants</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">263,167</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator for diluted earnings per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">29,323,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">37,483,019</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,254,454</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic earnings per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.32</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted earnings per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">0.75</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.26</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1.07</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<DIV align="left">
<DIV style="font-size: 3pt; margin-top: 16pt; width: 18%; border-top: 1px solid #000000">&nbsp;</DIV>
</DIV>

<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">
<TR>
    <TD width="3%"></TD>
    <TD width="1%"></TD>
    <TD width="96"></TD>
</TR>

<TR valign="top">
    <TD nowrap align="left">*</TD>
    <TD>&nbsp;</TD>
    <TD>These potentially dilutive securities were not included in the calculation of dilutive
earnings (loss)&nbsp;per share because of their anti-dilutive effect.</TD>
</TR>

</TABLE>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Net income, after deducting deemed dividends to holders of preference shares, has been
allocated to the common share and preference share based on their respective rights to share in
dividends.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2000, the Company issued 28,399,021 Founder Shares (Note 11) which are subject to
repurchase by the Company at its discretion, upon the termination of employment of the applicable
founders. Accordingly, for calculating basic earnings per share, the shares held in escrow are not
included in the denominator for basic earnings per share.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Potentially dilutive securities included Series&nbsp;A Preference Shares, unvested Founder Shares,
warrants and share options granted to employees.
</DIV>

<P align="center" style="font-size: 10pt">F-22
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>15. COMMITMENTS AND CONTINGENCIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Operating lease commitments</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group has entered into non-cancelable agreements with initial or remaining terms in excess
of one year for the publication of <I>51job Weekly</I>, the rental of office premises and for the lease of
computer and other equipment. Future minimum payments with respect to these agreements as of
December&nbsp;31, 2005 are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Publication</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>Office</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>fees</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>premises</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Others</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Total</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">53,958,833</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,452,882</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140,005</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,551,720</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,886,771</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,843,097</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,809,984</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,898,171</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,657,454</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">71,148</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,626,773</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,865,850</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,370,410</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,236,260</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,609,625</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,323,843</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">291,269</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140,224,737</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Rental expenses for the years ended December&nbsp;31, 2003, 2004 and 2005 are RMB10,456,277,
RMB13,905,812 and RMB28,702,735, respectively.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Capital commitments</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;As of December&nbsp;31, 2005, capital commitments for purchase of an office complex and leasehold
improvements amounted to RMB91,050,552.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;<I>Contingencies</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;There are uncertainties regarding the legal basis of the Company&#146;s ability to operate the
Internet content service. Although the PRC has implemented a wide range of market-oriented economic
reforms, the telecommunication, information and media industries as well as certain sectors of the
HR service industries remain highly regulated. Not only are restrictions currently in place, but
also regulations are unclear regarding in what specific segments of these industries companies with
foreign investors, including the Company, may operate. Therefore, the Company might be required to
limit the scope of its operations in the PRC, and this could have an adverse effect on the
Company&#146;s financial position, results of operations and cash flows.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Tech JV obtained an advertising license in May&nbsp;2000, when Tech JV was a 98% foreign owned
entity, and a license to conduct human resource services in September&nbsp;2002, when Tech JV was a 99%
foreign owned entity. During the period from the date Tech JV acquired these licenses to the date
of the Restructuring (Note 1), Tech JV and its licensed PRC subsidiaries conducted all of the
advertising and human resource related services. Following the acquisition of these licenses and
commencing these operations, the PRC government enacted laws limiting foreign ownership in entities
conducting advertising and human resource related services.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The PRC government has not published an official ruling with respect to the status of foreign
ownership arrangements that were established prior to the enactment of these limitations and which
may be above these limitations. Prior to the Restructuring, the ownership percentage of Tech JV was
above the maximum foreign ownership permitted for an entity conducting advertising and human
resource operations. In addition, there is uncertainty regarding the regulation of PRC subsidiaries
in which subsidiaries of foreign owned PRC entities invest, such as the subsidiaries of AdCo which
are engaged in advertising or trade businesses. The PRC government may determine that the Group&#146;s
ownership structure was inconsistent with or insufficient for the proper operation of the Group&#146;s
businesses, or that the Group&#146;s business licenses or other approvals were not properly issued or
not sufficient.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In the opinion of management, the likelihood of loss in respect of the Group&#146;s current or past
ownership structure is remote.
</DIV>

<P align="center" style="font-size: 10pt">F-23
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>51JOB, INC.</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Beginning in January&nbsp;2005, several complaints were filed in the United States District Court
for the Southern District of New York against the Company and certain of its senior executive
officers and directors. The complaints seek unspecified damages on alleged violations of federal
securities laws during the period from November&nbsp;4, 2004 to January&nbsp;14, 2005. In connection with
these actions, the Company has engaged U.S. counsel to represent the defendants. On July&nbsp;26, 2005,
the Court consolidated the cases and appointed a lead plaintiff. On October&nbsp;13, 2005, the Company
and all defendants moved to dismiss the complaint. The motion to dismiss remains pending before the
Court. The Company cannot predict the outcome of the case at this time and no provision has been
made with respect to these lawsuits.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>16. FINANCIAL INSTRUMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial instruments of the Group primarily comprise investments, accounts receivable,
accounts payable, due to related parties, other payables and advance from customers. As of December
31, 2004 and 2005, their carrying values approximate their estimated fair values.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>17. CERTAIN RISKS AND CONCENTRATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Financial instruments that potentially subject the Group to significant concentrations of
credit risk consist primarily of cash and accounts receivable. As of December&nbsp;31, 2004 and 2005,
substantially all of the Group&#146;s cash was held in major financial institutions located in the
United States, the PRC and Hong Kong which management believes are of high credit quality. Accounts
receivable are typically unsecured and denominated in RMB, and are derived from revenues earned
from operations arising in the PRC.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Group&#146;s sales and purchase and expense transactions are generally denominated in RMB and a
significant portion of the Group&#146;s liabilities are denominated in RMB. RMB is not freely
convertible into foreign currencies. In the PRC, foreign exchange transactions are required by law
to be transacted only by authorized financial institutions at exchange rates set by the Bank of
China. Remittances in currencies other than RMB by the Group in the PRC must be processed through
the Bank of China or other PRC foreign exchange regulatory bodies and requires certain supporting
documentation in order to effect the remittance.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;No individual customer accounted for more than 10% of net revenues during the years ended
December&nbsp;31, 2003, 2004 and 2005. No individual customer accounted for more than 10% of accounts
receivable as of December&nbsp;31, 2004 and 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>18. SUBSEQUENT EVENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In March&nbsp;2006, the Company signed a letter of intent to purchase its current principal
executive offices at 21st Floor, Wen Xin Plaza, 755 Wei Hai Road for approximately RMB27&nbsp;million.
The Company plans to utilize this location as its Shanghai sales office following the Company&#146;s
move of its principal executive offices to a new office complex in Zhangjiang High Technology Park.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In April&nbsp;2006, the Company completed its purchase of a new office complex in Zhangjiang High
Technology Park in Shanghai&#146;s New Pudong Area. This office complex is intended to become the
Company&#146;s new principal executive offices. The Company signed a letter of intent to purchase this
complex in October&nbsp;2005 for RMB114&nbsp;million.
</DIV>

<P align="center" style="font-size: 10pt">F-24
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left">
<A name="306"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ADDITIONAL INFORMATION &#151; FINANCIAL STATEMENT SCHEDULE I</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>51JOB, INC.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED STATEMENTS OF OPERATIONS<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$ (Note 4)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net revenues</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of services</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross profit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total operating expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(19,085,436</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(24,270,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20,818,339</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,579,656</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss from operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(19,085,436</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(24,270,500</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(20,818,339</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,579,656</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Equity in profit of subsidiary companies, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">51,682,719</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83,415,592</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">79,223,274</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,816,767</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,980</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,997,940</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,017,369</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">373,890</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before provision for income tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,611,001</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income for the year</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">32,600,263</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,143,032</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,422,304</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,611,001</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-25
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ADDITIONAL INFORMATION &#151; FINANCIAL STATEMENT SCHEDULE I</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>51JOB, INC.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2005</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$ (Note 4)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>ASSETS</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current assets:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">648,576,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">247,940,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,722,978</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Receivables due from related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">837,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">838,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">103,939</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepayments and other current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,598,045</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,931,937</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">239,391</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">651,012,412</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">250,711,325</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,066,308</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long term receivables due from related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,508,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">362,450,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">44,912,154</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Investment in subsidiaries</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">165,799,867</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">251,535,177</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,168,394</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">856,321,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">864,696,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,146,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>LIABILITIES AND SHAREHOLDERS&#146; EQUITY</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Due to related parties</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,577,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,014,535</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">249,626</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other payables and accruals</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,924,958</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,802,572</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,090,748</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total current liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,502,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,817,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,340,374</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,502,831</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,817,107</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,340,374</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Shareholders&#146; equity:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Common shares (US$0.0001 par value;
500,000,000 shares authorized, 55,616,679
and 54,876,079 shares issued and
outstanding as of December&nbsp;31, 2004 and
2005, respectively)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,044</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">45,451</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,632</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Additional paid-in capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">869,125,807</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">848,423,068</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,130,365</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Deferred share-based compensation</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40,154,027</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(23,141,471</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,867,521</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Other comprehensive loss</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(501,659</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(318,174</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(39,426</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Retained earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23,302,157</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">28,870,589</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,577,432</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total shareholders&#146; equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">851,818,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">853,879,463</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">105,806,482</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total liabilities and shareholders&#146; equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">856,321,153</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">864,696,570</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,146,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-26
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ADDITIONAL INFORMATION &#151; FINANCIAL STATEMENT SCHEDULE I</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>51JOB, INC.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>CONDENSED STATEMENTS OF CASH FLOWS<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B>

</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Note</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2003</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>US$ (Note 4)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(375,103</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(891,852</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,598,852</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">941,594</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,420,016</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(322,941,195</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(40,016,504</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by (used in) financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">746,227</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">640,964,309</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(74,097,969</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(9,181,677</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Effect of foreign exchange rate changes on cash</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">76,964</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">236,144</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(11,195,747</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,387,296</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Net increase (decrease)&nbsp;in cash</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">448,088</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">647,728,617</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(400,636,059</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(49,643,883</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash, beginning of year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">399,934</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">848,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">648,576,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">80,366,861</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Cash, end of year</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">848,022</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">648,576,639</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">247,940,580</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">30,722,978</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">F-27
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ADDITIONAL
INFORMATION &#151; FINANCIAL STATEMENT SCHEDULE I</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>51JOB, INC.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONDENSED FINANCIAL STATEMENTS<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>1. BASIS OF PRESENTATION</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The condensed financial statements of 51job, Inc. (the &#147;Company&#148;) have been prepared in
accordance with accounting principles generally accepted in the United States of America except for
accounting of the Company&#146;s subsidiaries and certain footnote disclosures as described below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company is generally a holding company of certain subsidiaries and variable interest
entities (collectively &#147;Subsidiaries&#148;). The Company records it investment in its Subsidiaries under
the equity method of accounting as prescribed in Accounting Principles Board (&#147;APB&#148;) Opinion No.
18, &#147;The Equity Method of Accounting for Investments in Common Stock.&#148; Such investment is presented
on the balance sheet as &#147;Investment in subsidiaries&#148; and 100% of the Subsidiaries&#146; profit or loss
as &#147;Equity in profit of subsidiary companies, net&#148; on the statement of operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Subsidiaries did not pay any dividend to the Company for the periods presented.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Certain information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted. The footnote disclosures contain supplemental information
relating to the operations of the Company and, as such, these statements should be read in
conjunction with the notes to the consolidated financial statements of the Company.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>2. RELATED PARTY BALANCES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;Balances with related parties for the periods indicated are as follows:
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>2005</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3"><B>RMB</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Receivables due from related parties:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">51net HR</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">828,929</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">822,577</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">51net Beijing</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,021</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,231</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Qianjin Network Information Technology (Shanghai) Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,778</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">837,728</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">838,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long term receivables due from related parties:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">51net.com Inc.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">39,508,874</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">362,450,068</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">40,346,602</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">363,288,876</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Due to related parties:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Qianjin Network Information Technology (Shanghai) Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">73,519</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Shanghai Qianjin Advertising Co., Ltd.</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">935,501</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Advances for share options exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,577,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,005,515</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,577,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,014,535</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:30px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The amounts due from 51net.com Inc. relate to cash payments made by the Company to 51net.com
Inc. for investment in the Company&#146;s PRC entities. The amounts are unsecured, non-interest bearing
and have no definite terms.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>3. COMMITMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The Company does not have any significant commitments or long term obligations as of any of
the periods presented.
</DIV>

<P align="center" style="font-size: 10pt">F-28
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>ADDITIONAL
INFORMATION &#151; FINANCIAL STATEMENT SCHEDULE I</B>
</DIV>


<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>51JOB, INC.</B>

</DIV>

<DIV align="Center" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO THE CONDENSED FINANCIAL STATEMENTS </B>&#151; <B>(Continued)<BR>
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005</B><BR>
(Amounts expressed in RMB unless otherwise stated)

</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>4. FOREIGN CURRENCIES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;The unaudited United States dollar (&#147;US$&#148;) amounts disclosed in the financial statement are
presented solely for the convenience of the readers. Translations of amounts from RMB into United
States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00
= RMB8.0702 on December&nbsp;30, 2005 in The City of New York for cable transfers of RMB as certified
for customs purposes by the Federal Reserve Bank of New York. No representation is made that the
RMB amounts could have been, or could be, converted into US$ at that rate on December&nbsp;30, 2005, or
at any other certain rate.
</DIV>


<P align="center" style="font-size: 10pt">F-29
</DIV>


</BODY>
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{"company-data": {"conformed-name": "51job, Inc.", "cik": "0001295484", "assigned-sic": "7361", "irs-number": "000000000", "state-of-incorporation": "E9", "fiscal-year-end": "1231"}, "filing-values": {"form-type": "20-F", "act": "34", "file-number": "000-50841", "film-number": "06931704"}, "business-address": {"street1": "21ST FLOOR, WEN XIN PLAZA", "street2": "755 WEI HAI ROAD", "city": "SHANGHAI", "state": "F4", "zip": "200041", "phone": "8621-3201-4888"}, "mail-address": {"street1": "21ST FLOOR, WEN XIN PLAZA", "street2": "755 WEI HAI ROAD", "city": "SHANGHAI", "state": "F4", "zip": "200041"}}
51job, Inc.
Table of Contents
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 20-F
(Mark One)
o
REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE
SECURITIES EXCHANGE ACT OF 1934
OR
þ
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2005
OR
o
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from
to
OR
o
SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of event requiring this shell company report
Commission file number: 0-50841
51job, Inc.
(Exact name of Registrant as specified in its charter)
N/A
(Translation of Registrant's name into English)
Cayman Islands
(Jurisdiction of incorporation or organization)
21st Floor, Wen Xin Plaza
755 Wei Hai Road
Shanghai 200041
People's Republic of China
(Address of principal executive offices)
Securities registered or to be registered pursuant to Section 12(b) of the Act:
None.
Securities registered or to be registered pursuant to Section 12(g) of the Act:
American Depositary Shares
(each representing two common shares, par value US$0.0001 per share)
(Title of Class)
Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None.
Indicate the number of outstanding shares of each of the issuer's classes of capital or common
stock as of the close of the period covered by the annual report: 54,876,079 common shares, par
value US$0.0001 per share.
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of
the Securities Act.
o
Yes
þ
No
If this is an annual or transitional report, indicate by check mark if the registrant is not
required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
o
Yes
þ
No
Indicate by check mark whether the registrant (1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for
such shorter period that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
þ
Yes
o
No
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated
filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated
filer" in Rule 12b-2 of the Exchange Act. (Check one):
o
Large accelerated filer
þ
Accelerated filer
o
Non-accelerated filer
Indicate by check mark which financial statement item the registrant has elected to follow:
o
Item 17
þ
Item 18
If this is an annual report, indicate by check mark whether the registrant is a shell company (as
defined in Rule 12b-2 of the Exchange Act).
o
Yes
þ
No
TABLE OF CONTENTS
Page
FORWARD-LOOKING
STATEMENTS
ii
CERTAIN TERMS AND CONVENTIONS
iii
PART I
Item 1. Identity of Directors, Senior Management and Advisers
1
Item 2. Offer Statistics and Expected Timetable
1
Item 3. Key Information
1
Item 4. Information on the Company
23
Item 5. Operating and Financial Review and Prospects
40
Item 6. Directors, Senior Management and Employees
56
Item 7. Major Shareholders and Related Party Transactions
64
Item 8. Financial Information
66
Item 9. The Offer and Listing
67
Item 10. Additional Information
68
Item 11. Quantitative and Qualitative Disclosures About Market Risk
73
Item 12. Description of Securities Other than Equity Securities
74
PART II
Item 13. Defaults, Dividend Arrearages and Delinquencies
75
Item 14. Material Modifications to the Rights of Security Holders and Use of Proceeds
75
Item 15. Controls and Procedures
75
Item 16A. Audit Committee Financial Expert
76
Item 16B. Code of Ethics
76
Item 16C. Principal Accountant Fees and Services
76
Item 16D. Exemptions from the Listing Standards for Audit Committees
76
Item 16E. Purchases of Equity Securities by the Issuer and Affiliated Purchasers
77
PART III
Item 17. Financial Statements
78
Item 18. Financial Statements
78
Item 19. Exhibits
78
EX-4.4 Lease Agreements
EX-4.5 Lease Agreement dated as of March 11, 2005
EX-4.6 Lease Agreements dated as of February 21, 2005
EX-4.7 Summary of the Shanghai Commercial Building Advance Sale Contracts dated as of December 31, 2005
EX-4.14 Amendment Notice to the Cooperation Agreement dated as of April 1, 2006
EX-4.18 Business Alliance Agreement dated as of April 5, 2006
EX-8.1 List of Subsidiaries of 51job, Inc.
EX-12.1 CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-12.2 CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
EX-13.1 CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
EX-13.2 CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
i
Table of Contents
FORWARD-LOOKING STATEMENTS
This annual report on Form 20-F contains statements of a forward-looking nature. These
statements are made within the meaning of Section 27A of the Securities Act of 1933, as amended,
and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the Private
Securities Litigation Reform Act of 1995. You can identify these forward-looking statements by
terminology such as "may," "will," "should," "expect," "intend," "plan," "anticipate," "believe,"
"estimate," "predict," "potential," "continue" or the negative of these terms or other comparable
terminology. The accuracy of these statements may be impacted by a number of business risks and
uncertainties that could cause actual results to differ materially from those projected or
anticipated, including the following risks:
•
market acceptance of our services;
•
our ability to expand into other recruitment and human resource services
such as business process outsourcing;
•
our ability to control our operating costs and expenses;
•
our potential need for additional capital and the availability of such capital;
•
behavioral and operational changes of our customers in meeting their human
resource needs as they respond to evolving social, economic and political changes in
China;
•
changes in our management team and other key personnel;
•
introduction by our competitors of new or enhanced products and services;
•
price competition in the market for the various human resource services that we provide in China;
•
seasonality of our business;
•
fluctuations in the value of the Renminbi against the U.S. dollar and other currencies;
•
our ability to develop or introduce new products and services outside of the human resources industry;
•
fluctuations in general economic conditions; and
•
other risks outlined in our filings with the Securities and Exchange
Commission, including our registration statement on Form F-1, as amended.
Except as required by law, we undertake no obligation to update or revise publicly any
forward-looking statements, whether as a result of new information, future events or otherwise. All
forward-looking statements contained in this annual report are qualified by reference to this
cautionary statement.
ii
Table of Contents
CERTAIN TERMS AND CONVENTIONS
Unless otherwise indicated, references in this annual report to:
•
"ADRs" are to the American depositary receipts that evidence our ADSs;
•
"ADSs" are to our American depositary shares, each of which represents two common shares;
•
"China" or the "PRC" are to the People's Republic of China, excluding for
the purpose of this annual report Hong Kong, Macau and Taiwan;
•
"Nasdaq" are to the Nasdaq National Market;
•
"RMB" are to Renminbi, the legal currency of the PRC;
•
"shares" or "common shares" are to our common shares, with par value US$0.0001 per share;
•
"U.S. GAAP" are to the generally accepted accounting principles in the United States of America; and
•
"US$" are to U.S. dollars, the legal currency of the United States of America.
Unless the context indicates otherwise, "we," "us," "our company," "our" and "51job" refer to
51job, Inc., its predecessor entities and subsidiaries, and, in the context of describing our
operations, also include our affiliated entities.
In addition, unless otherwise indicated, references in this annual report to:
•
"51net" are to 51net.com Inc.;
•
"AdCo" are to Shanghai Qianjin Advertising Co., Ltd., formerly known as
Shanghai Qianjin Culture Communication Co., Ltd.;
•
"AdCo Subsidiaries" are to the subsidiaries of AdCo that conduct advertising businesses;
•
"Qian Cheng" are to Beijing Qian Cheng Si Jin Advertising Co., Ltd.;
•
"RAL" are to Shanghai Run An Lian Information Consultancy Co., Ltd.;
•
"Run An" are to Beijing Run An Information Consultancy Co., Ltd.;
•
"Tech JV" are to Qianjin Network Information Technology (Shanghai) Co., Ltd.;
•
"Wang Cai AdCo" are to Shanghai Wang Cai Advertising Co. Ltd., formerly
known as Shanghai Jin Lian Advertising Co., Ltd.;
•
"WFOE" are to Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd.; and
•
"Wuhan AdCo" are to Wuhan Mei Hao Qian Cheng Advertising Co., Ltd.
Unless otherwise indicated, our financial information presented in this annual report has been
prepared in accordance with U.S. GAAP.
Solely for your convenience, this annual report contains translations of certain Renminbi
amounts into U.S. dollar amounts at specified rates. All translations from Renminbi to U.S. dollars
were made at the noon buying rate in The City of New York for cable transfers of Renminbi as
certified for customs purposes by the Federal Reserve Bank of New York. Unless otherwise stated,
the translations of Renminbi amounts into U.S. dollar amounts have been made at the noon buying
rate in effect on December 30, 2005, which was RMB8.0702 to US$1.00. We make no representation that
the Renminbi or U.S. dollar amounts referred to in this annual report could have been or could be
converted into U.S. dollars or Renminbi, as the case may be, at any particular rate or at all. See
"Item 3. — Key Information — Risk Factors — Risks Related to the People's Republic of China —
Governmental control of currency conversion may affect the value of your investment" and "— The
fluctuation of the Renminbi may materially and adversely affect your investment" for discussions of
the effects of currency control and fluctuating exchange rates on the value of our ADSs. On June
26, 2006, the noon buying rate was RMB7.9995 to US$1.00.
We calculate the number of our print advertising pages by physically counting the number of
paid advertising pages in each of our editions of
51job Weekly
, which we formerly translated into
English as
Career Post Weekly
. In calculating the number of paid advertising pages, we make
adjustments to take into account differing page sizes and pages with mixed advertising and
non-advertising content. This is a manual process that is subject to error, including errors in
judgment as to the appropriate adjustments to be made.
iii
Table of Contents
We define a unique employer in our online recruitment business as a customer that purchases
our online recruitment services during a specified period. We make adjustments for multiple
purchases by the same customer within a city to avoid double counting. Each employer is assigned a
unique identification number in our management information system. Affiliates and branches of a
given employer may, under certain circumstances, be counted as separate unique employers. Our
calculation of the number of unique employers is subject to misidentification and other forms of
error, including errors in judgment as to appropriate adjustments to be made to the data.
We cannot assure you that our methodology, page counting, employer identification,
calculations and analyses are accurate, or that they yield results that are comparable between
periods or give a correct approximation of the actual revenues we generate per page or actual
numbers of customers, as the case may be.
iv
Table of Contents
PART I
ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
Not Applicable.
ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
Not Applicable.
ITEM 3. KEY INFORMATION
A. Selected Financial Data
The following table presents the selected consolidated financial information for our business.
You should read the following information in conjunction with "Item 5. — Operating and Financial
Review and Prospects." The selected consolidated statement of operations data for the years ended
December 31, 2003, 2004 and 2005, and the selected consolidated balance sheet data as of December
31, 2004 and 2005, are derived from our audited consolidated financial statements, which are
included in this annual report beginning on page F-1, prepared in accordance with U.S. GAAP and are
qualified by reference to these consolidated financial statements and related notes. The selected
consolidated statement of operations data for the year ended December 31, 2002 and the selected
consolidated balance sheet data as of December 31, 2002 and 2003 have been derived from our audited
consolidated financial statements, which are not included in this annual report. The selected
consolidated statement of operations data for the year ended December 31, 2001 and the selected
consolidated balance sheet data as of December 31, 2001 are derived from our unaudited financial
statements prepared in accordance with U.S. GAAP. The historical results presented below do not
necessarily indicate results expected for any future period.
1
Table of Contents
For the year ended December 31,
2001
2002
2003
2004
2005
2005
RMB
RMB
RMB
RMB
RMB
US$
(1)
Selected Consolidated Statement of
Operations Data:
Revenues:
Print advertising
90,940,220
116,989,356
182,606,297
300,651,791
356,284,649
44,148,181
Online recruitment services
22,586,591
28,938,327
76,960,121
111,508,533
159,494,922
19,763,441
Executive search
9,126,842
9,726,300
15,748,331
24,907,914
26,306,740
3,259,738
Other human resource related
revenues
5,305,068
9,895,734
18,019,611
42,875,597
53,507,789
6,630,293
Total revenues
127,958,721
165,549,717
293,334,360
479,943,835
595,594,100
73,801,653
Net revenues
121,970,723
158,039,700
280,118,941
456,119,882
562,026,220
69,642,168
Cost of services
(84,208,642
)
(92,220,940
)
(151,477,142
)
(224,606,635
)
(269,328,384
)
(33,373,198
)
Gross profit
37,762,081
65,818,760
128,641,799
231,513,247
292,697,836
36,268,970
Operating expenses:
Sales and marketing
(18,503,675
)
(24,356,157
)
(38,619,523
)
(67,271,096
)
(113,656,714
)
(14,083,507
)
General and administrative
(33,732,311
)
(30,382,850
)
(38,135,612
)
(55,175,493
)
(88,978,985
)
(11,025,623
)
Share-based compensation —
share option
(2)
—
—
(13,482,546
)
(18,678,238
)
(13,073,480
)
(1,619,970
)
Share-based compensation —
founder shares
(3)
(8,808,931
)
(8,808,931
)
(4,622,466
)
—
—
—
Total operating expenses
(61,044,917
)
(63,547,938
)
(94,860,147
)
(141,124,827
)
(215,709,179
)
(26,729,100
)
Income (loss) from operations
(23,282,836
)
2,270,822
33,781,652
90,388,420
76,988,657
9,539,870
Income (loss) before income tax
provision
(22,957,650
)
2,686,608
35,792,274
95,201,216
91,367,337
11,321,570
Income tax benefit (expense)
—
1,259,194
(3,192,011
)
(34,058,184
)
(29,945,033
)
(3,710,569
)
Net income (loss)
(22,957,650
)
3,945,802
32,600,263
61,143,032
61,422,304
7,611,001
Earnings (loss) per share:
Basic
(1.72
)
0.09
0.83
1.32
1.10
0.14
Diluted
(4)
(1.72
)
0.07
0.75
1.26
1.07
0.13
Earnings (loss) per ADS:
(5)
Basic
(3.44
)
0.18
1.65
2.65
2.21
0.27
Diluted
(4)
(3.44
)
0.15
1.50
2.52
2.15
0.27
Other Financial Information:
Aggregate share-based compensation
expense
(6)
(8,808,931
)
(8,808,931
)
(18,701,563
)
(20,489,734
)
(14,553,322
)
(1,803,341
)
As of December 31,
2001
2002
2003
2004
2005
2005
RMB
RMB
RMB
RMB
RMB
US$
(1)
Selected Consolidated Balance
Sheet Data:
Assets:
Cash
30,339,579
68,637,760
115,084,572
848,292,672
830,633,550
102,926,018
Total current assets
39,661,081
79,635,683
145,573,376
893,647,186
892,544,201
110,597,531
Total non-current assets
20,509,537
24,025,881
39,830,903
43,735,155
70,875,359
8,782,356
Total assets
60,170,618
103,661,564
185,404,279
937,382,341
963,419,560
119,379,887
Liabilities:
Total current liabilities
19,806,795
26,025,436
56,096,191
85,564,019
109,540,097
13,573,405
Total non-current liabilities
849,621
32,080
23,533
—
—
—
Total liabilities
20,656,416
26,057,516
56,119,724
85,564,019
109,540,097
13,573,405
Total shareholders' equity
39,514,202
77,604,048
129,284,555
851,818,322
853,879,463
105,806,482
Total liabilities and
shareholders' equity
60,170,618
103,661,564
185,404,279
937,382,341
963,419,560
119,379,887
(1)
Translations from Renminbi to U.S. dollars were made at the noon buying rate in The City of
New York for cable transfers of Renminbi as certified for customs purposes by the Federal
Reserve Bank of New York. The translations of Renminbi amounts into U.S. dollar amounts have
been made at the noon buying rate in effect on December 30, 2005, which was RMB8.0702 to
US$1.00.
2
Table of Contents
(2)
In 2003, RMB0.4 million of this portion of our share-based compensation expense for share
options was attributable to sales and marketing expenses and RMB13.1 million was attributable
to our general and administrative expenses. In 2004, RMB1.8 million of this portion of our
share-based compensation expense was attributable to sales and marketing expenses and RMB16.9
million was attributable to general and administrative expenses. In 2005, RMB1.4 million
(US$0.2 million) of this portion of our share-based compensation expense was attributable to
sales and marketing expenses and RMB11.6 million (US$1.4 million) was attributable to general
and administrative expenses.
(3)
All share-based compensation — founder shares is attributable to general and administrative
expenses.
(4)
Diluted earnings (loss) per share is calculated by dividing net income (loss) attributable to
holders of common shares as adjusted for the effect of dilutive common shares, if any, by the
sum of (1) the weighted average number of common shares outstanding and (2) the weighted
average number of common equivalent shares, which consist of common shares from the conversion
of Series A preference shares and common shares issuable upon the exercise of outstanding
share options as calculated under the treasury stock method. In the case of diluted earnings
(loss) per ADS, the data are adjusted to reflect the ratio of two common shares to one ADS.
(5)
Each ADS represents two common shares.
(6)
Aggregate share-based compensation expense includes share-based compensation expense
attributable to cost of services and operating expenses. We have recognized share-based
compensation in connection with our historical grant of options to employees and certain
directors, and the historical issuance of restricted common shares to our founders and one of
our directors. We recognized an aggregate of RMB35.2 million in deferred share-based
compensation in 2000 in connection with the acquisition by 51job, Inc. of all of the operating
assets of our various operating entities, whereby 51job, Inc. became the holding company of
our corporate group and entered into a purchase agreement with each of our founders to issue
to each founder restricted common shares. These shares were placed in escrow and were subject
to repurchase by us between 2000 and 2003 at a price equal to, at our option, either US$0.0001
per share or the fair market value of such shares, in the event that such founder's employment
with us terminated. We amortized all of this deferred share-based compensation as an expense
from 2000 through 2003. All such shares have subsequently been released from escrow and we
will not recognize additional share-based compensation expense with respect to these
issuances. In addition, we recognized an aggregate of RMB76.9 million in immediate or deferred
share-based compensation in 2003 and 2004 in connection with the grant of options to employees
and directors, the sale of common shares to one of our directors at a price below fair market
value, and the extension of the exercise period of options held by certain terminated
employees. This resulted in additional share-based compensation expense of RMB14.1 million in
2003, RMB20.5 million in 2004 and RMB14.6 million (US$1.8 million) in 2005.
In our consolidated financial statements, portions of our share-based compensation expense are
allocated separately to our cost of services and operating expenses. Since we evaluate our
performance, make determinations regarding the expansion of our operations, allocate resources
among our operations and determine the compensation of employees and management based on our
financial results before the overall effect of our aggregate share-based compensation expense,
we have separately disclosed our aggregate share-based compensation expense for each of the
periods presented. We recorded a substantial amount of our historical share-based compensation
expense in connection with our repurchase arrangement with respect to the common shares issued
to our founders. We believe that disclosure of our aggregate share-based compensation expense
allows investors to better understand the primary financial measures that we use to manage our
business. In addition, separate disclosure of our aggregate share-based compensation expense
provides a useful approximation of our taxable income for purposes of determining PRC
enterprise income tax, or EIT, which is calculated based on our income prior to any deduction
for share-based compensation expense.
Exchange Rate Information
We publish our financial statements in Renminbi. This annual report contains translations of
Renminbi amounts into U.S. dollars at specified rates solely for the convenience of the reader.
Unless otherwise noted, all translations from Renminbi to U.S. dollars were made at the noon buying
rate in The City of New York for cable transfers of Renminbi per U.S. dollar as certified for
customs purposes by the Federal Reserve Bank of New York as of December 30, 2005, which was
RMB8.0702 to US$1.00. The prevailing rate on June 26, 2006 was RMB7.9995 to US$1.00. We make no
representation that the Renminbi or U.S. dollar amounts referred to in this annual report could
have been or could be converted into U.S. dollars or Renminbi, as the case may be, at any
particular rate, the rates stated below, or at all. The Chinese government imposes control over its
foreign currency reserves in part through direct regulation of the conversion of Renminbi into
foreign exchange and through restrictions on foreign trade.
3
Table of Contents
The following tables set forth information regarding the noon buying rates in The City of New
York for cable transfers of Renminbi per U.S. dollar as certified for customs purposes by the
Federal Reserve Bank of New York for the periods indicated.
Renminbi per U.S. dollar
Fiscal year ended December 31,
Average
(1)
High
Low
Period-end
2001
8.2770
8.2786
8.2676
8.2766
2002
8.2770
8.2800
8.2669
8.2800
2003
8.2772
8.2800
8.2765
8.2767
2004
8.2768
8.2774
8.2764
8.2765
2005
8.1826
8.2765
8.0702
8.0702
Renminbi per U.S. dollar
Month
High
Low
Period-end
December 2005
8.0808
8.0702
8.0702
January 2006
8.0702
8.0596
8.0608
February 2006
8.0616
8.0415
8.0415
March 2006
8.0505
8.0167
8.0167
April 2006
8.0248
8.0040
8.0165
May 2006
8.0300
8.0005
8.0215
June 2006 (through June 26, 2006)
8.0225
7.9963
7.9995
(1)
The average of the daily noon buying rates on the last business day of each month during the
year.
B. Capitalization and Indebtedness
Not Applicable.
C. Reasons for the Offer and Use of Proceeds
Not Applicable.
D. Risk Factors
Risks Related to Our Business
Because we face significant competition, including intense competition in several of our
markets, we may lose market share and our results of operations may be materially and adversely
affected.
We face significant competition in our
51job Weekly
and
www.51job.com
businesses as well as in
our executive search and other human resource businesses.
51job Weekly
currently faces intense
competition in many of our largest markets. Competitors of
51job Weekly
primarily consist of local
newspaper publishers and specialized recruitment advertising publications. In addition,
51job
Weekly
faces competition from online job search websites and other online businesses seeking to
expand into print recruitment advertising.
Our online recruitment services face competition from other dedicated job search websites such
as
ChinaHR.com
,
Cjol.com
and
Zhaopin.com
, as well as from local job search websites and to a lesser
extent, from national Internet portals in China, such as
NetEase.com
,
Sina.com
,
Sohu.com
and
Tom.com
. In 2005, it was reported that business collaborations had been formed between dedicated
job search websites and national Internet portals with a partnership between
ChinaHR.com
and
Sina.com
and one between
Zhaopin.com
and
Sohu.com
. In addition, many executive search firms and
other competitors currently engaged in print advertising have started to internally develop or
acquire online capabilities.
Our executive search and other human resource related businesses face significant competition
from a variety of Chinese and foreign firms in all of our markets, including certain firms that
compete with us in the market for online
recruitment advertising.
Many of our competitors or potential competitors have long operating histories, may have
greater financial, management, technological development, sales, marketing and other resources than
we do, and may be able to adopt our business model. As a result of competition, we may experience
reduced margins, loss of market share or less use of our services by job seekers and businesses. We
cannot assure you that existing or future competitors will not develop or offer
4
Table of Contents
services and products which provide significant performance, price, creative or other advantages
over our services. If we are unable to compete effectively with current or future competitors as a
result of these or other factors, our market share and our results of operations may be materially
and adversely affected.
New competitors face low entry barriers to our industries, and successful entry by new
competitors may cause us to lose market share and materially and adversely affect our results
of operations.
In the future, we may face competition from new entrants in the recruitment advertising
industry and other human resource industries in which we operate. We may face greater competition
from Internet portals, newspapers, dedicated recruitment advertising websites and publications, and
other human resource services providers who may enter the market for any or all of our services.
Our businesses are characterized by relatively low start-up and fixed costs, modest capital
requirements, short start-up lead times and an absence of significant proprietary technology that
would prevent or significantly inhibit the entry of competitors. As a result, potential market
entrants, both in China and from abroad, face relatively low barriers to entry to all of our
businesses and in all of our markets. In addition, we believe that there are relatively low
existing penetration rates in our markets, and that competitors could acquire significant numbers
of clients and establish significant market share within a relatively short period. Furthermore,
the newspaper and print media industry in China is highly regulated at present which may have the
effect of limiting competition and keeping prices, including print advertising prices, at higher
levels. Any deregulation of this industry may result in increased competition and a material
decrease in advertising rates, including prices we charge for our print advertising services.
Increased competition could result in loss of market share and revenues, and have a material
adverse effect on our business, financial condition and results of operations.
If we are unable to achieve or maintain economies of scale with respect to our recruitment
advertising businesses, our results of operations from these businesses may be materially and
adversely affected.
We incur fixed costs such as printing, distribution, direct marketing, advertising,
management, staff, office, infrastructure and utilities in each of our geographic markets in
connection with operating our print advertising business. In addition, we incur fixed costs
relating to website maintenance, design and operation in our online businesses. Our ability to
realize our desired margins in our recruitment advertising businesses depends largely on our
success in posting a high volume of print and online recruitment advertisements to generate
sufficient revenues to offset associated fixed costs. Further, we need to reach and maintain a
critical mass of recruitment advertisements in order for
51job Weekly
and
www.51job.com
to build
and maintain acceptance among employers and job seekers as attractive vehicles for posting and
seeking jobs.
In some of our markets,
51job Weekly
has not achieved the necessary economies of scale and
these operations have not achieved profitability despite our having operated in these markets for a
significant period of time. We believe that this is due primarily to significant competition from
rival print advertising publications. We may be unable to achieve and maintain sufficient economies
of scale in any or all of our geographic markets in connection with our recruitment advertising
businesses. Any failure to do so could materially and adversely affect our results of operations
from these businesses.
A slowdown or other adverse developments in the PRC economy may materially and adversely affect
our customers, demand for our services and our business.
Substantially all of our operations are conducted in China and substantially all of our
revenues are generated from providing recruitment advertising and search services for PRC
businesses or divisions of firms operating in China. Although the PRC economy has grown
significantly in recent years, we cannot assure you that such growth will continue. Print
advertising, online recruitment services, executive search and our other human resource related
businesses are all relatively new industries in China, and we do not know with any degree of
certainty how sensitive we are to a slowdown in economic growth or other adverse changes in the PRC
economy. In response to adverse economic developments, employers might hire fewer permanent
employees, engage in hiring freezes, lay off employees, or reduce spending on print advertising,
online recruitment services and executive search services. Employers may decide to rely more
heavily on traditional recruitment methods such as referrals and job fairs, and utilize more
"in-house" resources to conduct training and perform other human resource functions, or otherwise modify their behavior in
ways that may have a significant negative impact on our business. As a result, a slowdown in
overall economic growth, an economic downturn or recession or other adverse economic developments
in China may materially reduce the demand for our services and materially and adversely affect our
business.
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If the use of advertising to conduct recruitment does not achieve broader acceptance in China,
we may be unable to expand our recruitment advertising businesses.
The use of advertising services to recruit employees is relatively new in China. Due to
significant control and regulation by the national and local governments, the private sector
recruiting process in China continues to be largely characterized by the use of personal referrals
and large job fairs. We believe that the use of advertising by employers and job seekers remains
relatively low. As a result, we face considerable challenges in promoting greater use of
advertising, which involves, among other things, significant changes in the way that employers
disseminate information about jobs, the way that prospective employees search and apply for jobs,
and the way in which hiring decisions are made. We cannot assure you that recruitment advertising
will achieve broader acceptance in China. Any significant failure of advertising to gain acceptance
among employers and job seekers may substantially limit our ability to expand our recruitment
advertising businesses.
If the Internet, and online advertising in particular, does not achieve broad acceptance in
China as a medium for recruitment, our online recruitment services business may be adversely
affected.
We generate a significant portion of our revenues from online recruitment services, which are
targeted toward employers and job seekers who use the Internet. As part of our online recruitment
services, we offer general online advertising on our website, which is an important element in our
ability to sell online recruitment advertisements to employers and which generates a material
portion of our revenues. China has only recently begun to develop the Internet as a commercial
medium and has a relatively low Internet penetration rate compared to most developed countries. Our
future results of operations from online recruitment services will depend substantially upon an
increase in Internet penetration and an increase in acceptance and use of the Internet for the
distribution of services and for the facilitation of commerce in China. In addition, unless they
are resolved, telecommunication capacity constraints may impede further development of the Internet
to the extent that users experience delays, transmission errors and other difficulties. Any
negative perceptions as to the effectiveness of online recruitment services, or online advertising
generally, or any significant failure of the Internet to gain acceptance as a medium for
recruitment may adversely affect our online recruitment services business and our ability to
further integrate our online and print recruitment advertising businesses.
The markets for executive search services and business process outsourcing are still in the
development stage in China and we may be unable to expand these businesses.
Many employers in China are not familiar with the executive search model or may not accept the
value of a targeted, professional search. Many employers may be unwilling to pay a commission of up
to 30% of a candidate's annual compensation. Similarly, the market for the third party outsourcing
of business processes is also still developing in China. Companies may not be willing to use third
parties for significant administrative functions and may instead choose to continue to perform such
operations in-house. If these services do not gain wider acceptance in China, we may be unable to
expand these businesses.
We are dependent on local newspaper contractors in each of our geographic markets to publish
and distribute 51job Weekly.
In the PRC, entities engaged in publishing activities are required by the government to have a
publishing license. We do not have any publishing licenses and we are, and will continue to be,
dependent on contractual arrangements with local newspapers in each of our geographic markets in
order to publish and distribute
51job Weekly
. Our arrangements with our local newspaper contractors
require them to print, publish and distribute
51job Weekly
as an insert in their newspaper, and in
some cases to contribute marketing support. The successful execution of our business plan is highly
dependent on establishing and maintaining relationships with newspapers in all of our existing
markets as well as the new markets in which we intend to offer recruitment advertising services.
The term of our agreements with local newspaper contractors is generally two years, and six of
these agreements will expire in 2006. In addition, certain of these agreements are subject to early
termination by either party on various grounds. We cannot assure you that our local newspaper
contractors will conduct their activities in full compliance with applicable laws and regulations
governing the publishing, distribution and sale of newspapers. In addition, we cannot
assure you that:
•
our local newspaper contractors will fulfill their obligations under our agreements;
•
the agreements will be renewed on terms acceptable to us or at all;
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•
our current contractors will not, upon termination of our agreements, seek
to compete directly against us or establish relationships with one or more of our
competitors; or
•
in the event that we wish to do so or it is necessary to do so, we will be
able to locate and enter into an agreement with a suitable alternative local newspaper on
a timely basis or at all.
In addition, we may experience lower levels of readership and circulation if we lose the
marketing support of a local newspaper contractor. Any adverse developments involving our local
newspaper contractors could significantly disrupt or impair the publication, promotion and
distribution of
51job Weekly
, which in turn could damage our
51job Weekly
brand name and materially
and adversely affect our recruitment advertising business and our results of operations.
We are dependent on our Internet service provider, and we are vulnerable to failures of the
Internet, fixed line telecommunications networks in China and our technology platform.
Our online businesses are heavily dependent on the performance and reliability of China's
Internet infrastructure, the continual accessibility of bandwidth and servers to our service
providers' networks, and the continuing performance, reliability and availability of our technology
platform.
We rely on affiliates of China Telecommunications Corporation, or China Telecom, to provide us
with bandwidth and server custody service for our services. We are unlikely to have any access to
alternative networks or services in the event of disruptions, failures or other problems with
China's Internet infrastructure or China Telecom's fixed telecommunications networks, or if China
Telecom or its affiliates otherwise fail to provide such services. In addition, we have no control
over the costs of the services provided by China Telecom or its affiliates. If China Telecom or its
affiliates fail to provide these services, we would be required to seek other providers, and there
is no assurance that we will be able to find alternative providers willing or able to provide high
quality services and there is no assurance that such providers will not charge us higher prices for
their services. If the prices that we are required to pay for Internet services rise significantly,
our results of operations could be adversely affected.
If we are unable to protect or promote our brand names and reputation, our business may be
materially and adversely affected.
If we fail to generate a high volume of recruitment advertisements, maintain our relationships
with local newspaper contractors, successfully promote and develop the perception of
www.51job.com
as a "destination site," undertake effective marketing and promotional activities, and generally
provide high quality services, we may not be successful in protecting or promoting our brand names
and reputation in a cost-effective manner or at all. We may dedicate significantly greater
resources in the future to advertising, marketing and other promotional efforts aimed at building
awareness of our brands. Any significant damage to our reputation, the perceived quality or
awareness of our brand names or services, or any significant failure on our part to promote and
protect our brand names and reputation could make it more difficult for us to successfully attract
job seekers, compete for customers or retain qualified personnel, which may have a material adverse
effect on our business.
If we are unable to prevent others from using our intellectual property, our business may be
materially and adversely affected.
Our intellectual property has been, and will continue to be, subject to various forms of theft
and misappropriation. Competitors copy and distribute content from our
www.51job.com
website, from
51job Weekly
and from the training materials that we use, and utilize misleadingly similar Internet
domain names and URLs in an effort to divert Internet traffic away from our website. We are also
susceptible to others copying our business model and methods. The legal protection of trademarks,
trade names, copyrighted material, domain names, trade secrets, know-how and other forms of
intellectual property in the PRC is significantly more limited than in the United States and many
other countries and may afford us little or no effective protection. Preventing unauthorized use of
our intellectual property is difficult, time consuming and expensive, and may divert significant
management and staff resources from our business operations, and yield limited and uncertain
results. Misappropriation of our content, trademarks and other intellectual property could divert
significant business to our competitors, damage our brand name and reputation, and require us to
initiate litigation that could be expensive and require us to divert management resources from the
operation of our businesses.
We rely heavily on our senior management team and key personnel, and the loss of any of their
services could severely disrupt our business.
Our future success is highly dependent on the ongoing efforts of the members of our senior
management and key personnel, in particular on Rick Yan, our chief executive officer. We rely
heavily on his management skills, his expertise
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in consumer products, marketing and technology, and
his relationships with many of our clients and local contractors. We do not maintain key man life
insurance on any of our senior management or key personnel, other than Mr. Yan and Kathleen Chien,
our chief financial officer. The loss of the services of one or more of our senior executives or
key personnel, Mr. Yan in particular, may have a material adverse effect on our business, financial
condition and results of operations. Competition for senior management and key personnel is
intense, and the pool of suitable candidates is very limited, and we may not be able to retain the
services of our senior executives or key personnel, or attract and retain senior executives or key
personnel in the future.
In addition, if Mr. Yan, any other members of our senior management or any of our other key
personnel joins a competitor or forms a competing company, we may not be able to replace them
easily and we may lose customers, business partners, key professionals and staff members. Each of
our senior executives and key personnel has entered into an employment agreement with us, which
contains confidentiality and non-competition provisions. In the event of a dispute between any of
our senior executives or key personnel and us, we cannot assure you as to the extent, if any, that
these provisions may be enforceable in the PRC due to uncertainties involving the PRC legal system.
Our business may suffer if we do not successfully manage our current and potential future
growth.
We have experienced rapid expansion since we commenced operations in 1998 and we intend to
continue to expand in size and increase the number of services we provide. We have established 11
new offices from the beginning of 2003 to the date of this annual report. Our anticipated future
growth will place significant demands on our management and operations. Our success in managing
this growth will depend to a significant degree on the ability of our executive officers and other
members of senior management to operate effectively both independently and as a group, and on our
ability to improve and develop our financial and management information systems, controls and
procedures. In addition, we will have to successfully adapt our existing systems and introduce new
systems, expand, train and manage our workforce, and improve and expand our sales and marketing
capabilities. Mismanagement of any of our services in our new or existing markets or the
deterioration of the quality of our services could significantly damage our brand name and
reputation, adversely affecting our ability to expand our client base.
As a "one-stop" human resource services provider, we will be required to provide high quality
executive search and other human resource related services. As we are currently in the process of
developing many of these businesses, we may encounter initial difficulties in ensuring the high
quality of our services. In particular, we may be unable to provide our
eSearch
clients with
acceptable candidates, we may provide clients with candidates whom they subsequently perceive as
poor performers, and/or we may provide clients with candidates whom they subsequently fail to
retain. With respect to our business process outsourcing service, we may be unable to establish a
substantial nationwide capability, accurately monitor ongoing changes in PRC laws and regulations,
acquire, develop and use up-to-date business and management technology and software, including
sophisticated computer and technology systems that could require significant capital expenditures,
and maintain the integrity and security of our systems. If we are unable to provide high quality
services, if material mistakes occur, or if we are unable to price these services properly, our
brand name and reputation could be damaged and we could incur legal liability to our clients and
their employees.
The management of our business involves the collection by our employees and agents of cash
payments from our customers, which constitute a significant portion of our total revenues. As a
result, we are exposed to theft, embezzlement and other criminal and fraudulent activity by our
employees, our agents and third parties. If we are unable to successfully detect and prevent such
activity, our results of operations and financial condition may be materially and adversely
affected.
Our limited operating history may not serve as an adequate basis to judge our future prospects
and results of operations.
We began operations in 1998. Our limited operating history may not provide a meaningful basis
on which to evaluate our business. Although our revenues have grown rapidly since inception, we
incurred net losses prior to 2002. We cannot assure you that we will maintain our profitability or
that we will not incur net losses in the future. We expect that our operating expenses will
increase as we expand. Any significant failure to realize anticipated revenue growth could result
in significant operating losses. We will continue to encounter risks and difficulties frequently
experienced by companies at a similar stage of development, including our potential failure to:
•
implement our business model and strategy and adapt and modify them as needed;
•
increase awareness of our brands, protect our reputation and develop customer loyalty;
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•
anticipate with any degree of certainty the behavioral and operational changes of our
customers that have a significant impact on our business from time to time as they respond
to evolving social, economic and political changes in China;
•
manage our expanding operations and service offerings, including the
integration of any future acquisitions;
•
maintain adequate control of our expenses;
•
adequately and efficiently operate, maintain, upgrade and develop our
website and the other systems and equipment we utilize in providing our services;
•
attract, retain and motivate qualified personnel;
•
maintain our current, and develop new, contractual arrangements with local
newspapers and other important operational relationships; and
•
anticipate and adapt to changing conditions in the print, online and other
markets in which we operate as well as the impact of any changes in government regulation,
mergers and acquisitions involving our competitors, technological developments and other
significant competitive and market dynamics.
If we are not successful in addressing any or all of these risks, our business may be
materially and adversely affected.
We rely on our print advertising business to provide a significant majority of our revenues and
any adverse development in this business could materially and adversely affect our overall
results of operations.
We generate a significant majority of our revenues from
51job Weekly
, which generated
approximately 62.3% of our revenues in 2003, 62.7% of our revenues in 2004 and 59.8% of our
revenues in 2005. While we have experienced significant growth in our
51job Weekly
business in
recent years, online advertisement may cause print media such as
51job Weekly
to become less
desirable as a form of advertising. To the extent this occurs and if we are not able to generate
sufficient revenues from our online recruitment services to offset any loss of revenues from our
print advertisement business, our overall results of operations could be materially and adversely
affected.
Our recruitment advertising business is subject to weekly fluctuations which hamper our ability
to predict when revenue will ultimately be recognized, if at all.
Due to the nature of recruitment advertising, we are not able to predict future revenue
streams with any degree of certainty. More specifically, the majority of our revenues is derived
from print advertising and we do not recognize advertising revenue until an advertisement is
actually printed. Orders for print advertisements are generally placed week-to-week and advertisers
may cancel or postpone their print advertisements within days of publication. Delays or
cancellations by advertisers hamper our ability to predict when revenue will ultimately be
recognized, if at all. Such uncertainty makes it difficult for us to accurately forecast revenues
for a particular quarter. Therefore, actual results may differ significantly from our targets or
estimated quarterly results, which could cause the price of our ADSs to fall.
Due to seasonal variations in demand for human resource services, we experience significant
fluctuations in our revenue streams which affect our ability to predict our quarterly results
and which may also cause quarterly results to vary from period to period.
Significant fluctuations in our revenue streams, particularly during the peak hiring periods
around the Chinese New Year holidays and the beginning of May and October, affect our ability to
predict quarterly results. During these peak periods, demand for recruitment advertising and other
human resource related services may or may not rise significantly depending on the needs of
employers as well as their perceptions of the job market. In addition, the dates of the Chinese New
Year holidays vary from year to year. We have also experienced a trend of lower fourth quarter
revenues as compared to revenues from the immediately preceding third quarter in recent years. As a
result of these factors, our revenues may vary from quarter to quarter and quarterly results may
not be comparable to the corresponding quarters of prior years. Such uncertainty makes it difficult
for us to predict revenues for a particular quarter. Therefore, actual results may differ
significantly from our targets or estimated quarterly results, which could cause the price of our
ADSs to fall.
We may not be able to successfully execute future acquisitions or efficiently manage any
acquired business.
We may decide to expand, in part, by acquiring certain complementary businesses in the future.
The success of any material acquisition will depend upon several factors, including:
•
our ability to identify and acquire businesses on a cost-effective basis;
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•
our ability to integrate acquired personnel, operations, products and technologies
into our organization effectively; and
•
our ability to retain and motivate key personnel and to retain the clients
of acquired firms.
Any such acquisition may require a significant commitment of management time, capital
investment and other management resources. There is a possibility that we will not be successful in
identifying and negotiating acquisitions on terms favorable to us. In addition, we cannot be
certain that any acquisition, if completed, will be successfully integrated into our existing
operations. If we are unable to effectively integrate an acquired business, our business, financial
condition and results of operations may be materially and adversely affected. In addition, if we
use our equity securities as consideration for acquisitions, we may dilute the value of your common
shares or ADSs. We have not engaged in any material acquisitions.
If we are unable to attract and retain qualified personnel, our executive search, training and
business process outsourcing businesses may be materially and adversely affected.
The success of our executive search, training and business process outsourcing services
depends heavily on our ability to attract and retain skilled personnel. Successful expansion of our
executive search business depends on a dedicated team of consultants with expertise and
relationships in the geographic markets and industries in which our clients seek candidates.
Likewise, the success of our training business depends on personnel with the necessary skills to
conduct and support our training seminars and our other activities and services in this business.
Our business of outsourcing traditional human resource department functions such as payroll,
benefits and compliance management and related services depends on personnel with expertise in
local and national PRC government employment regulations, payroll management and other human
resource department functions. If we are unable to attract and retain critical skilled personnel,
our executive search, training and business process outsourcing businesses may be materially and
adversely affected.
If we choose to develop or introduce new products and services outside of the human resource
services industry in China, these efforts may not be successful, which could materially and
adversely affect our financial condition and results of operations.
In April 2006, we formed a business alliance with Recruit Co., Ltd., or Recruit, a privately
held human resource services company in Japan, to collaborate on the development of our human
resource products and services in China. Under the terms of our business alliance agreement, we
have also established an internal corporate planning group with Recruit to explore potential
business opportunities outside of the human resource services industry in China. We lack experience
and expertise in operating businesses outside of the human resource services industry. If we choose
to begin any such business, we cannot assure you that our efforts will be successful. We cannot
assure you that we will be able to deliver new products or services outside of the human resource
services industry on a commercially viable basis or in a timely manner, or at all. If any of our
efforts to begin businesses outside of the human resource services industry are not successful, our
financial condition and results of operations may be materially and adversely affected.
We may be subject to liability for placing advertisements with content that is deemed
inappropriate.
PRC laws and regulations prohibit advertising companies from producing, distributing or
publishing any advertisement that contains any content that violates laws and regulations, impairs
the national dignity of the PRC, involves designs of the national flag, national emblem or national
anthem or the music of the national anthem of the PRC, is reactionary, obscene, superstitious or
absurd, is fraudulent, or disparages similar products. If we are deemed to be in violation of such
regulations, we may be subject to penalties including confiscation of the illegal revenues, levying
of fines and suspension or revocation of our business license or advertising license, any of which
may materially and adversely affect our business.
We are subject to potential legal liability from both employers and job seekers with respect to
our executive search businesses and other human resource related services.
We are exposed to potential claims associated with the recruitment process, including claims
by clients seeking to hold us liable for recommending a candidate who subsequently proves to be
unsuitable for the position filled, claims by current or previous employers of our candidates
alleging interference with employment contracts, claims by candidates against us alleging our
failure to maintain the confidentiality of their employment search or alleging discrimination or
other violations of employment law or other laws or regulations by our clients, and claims by
either employers or candidates alleging the failure of our business process outsourcing services to
comply with laws or regulations relating to
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employment, employee's insurance or benefits,
individual income taxes or other matters. Any such claims, regardless of merit, may force us to
participate in time-consuming, costly litigation or investigation, divert significant management
and staff attention, and damage our reputation and brand names. We do not maintain insurance
coverage for liabilities arising from claims by employers, candidates or third parties.
We may be exposed to infringement or misappropriation claims by third parties, which, if
successful, could cause us to pay significant damage awards.
Third parties may bring claims against us alleging infringement of patents, trademarks or
copyrights, or misappropriation of their creative ideas or formats, or other infringement of their
proprietary intellectual property rights. Any such claims, regardless of merit, may involve us in
time-consuming, costly litigation or investigation, divert significant management and staff
resources, require us to enter into expensive royalty or licensing arrangements, prevent us from
using important technologies, business methods, content or other intellectual property, result in
monetary liability, or otherwise disrupt our operations. We expect that the likelihood of such
claims may increase, particularly in our online businesses, as the number of competitors in our
markets grows and as related patents and trademarks are registered or copyrights are obtained by
such competitors.
We rely heavily on our information systems, and if our access to technology supporting our
information systems is impaired or interrupted, or if we fail to further develop our
technology, our operations may be seriously disrupted.
Our success depends in large part upon our ability to store, retrieve, process and manage
substantial amounts of information, including our client and candidate databases. To achieve our
strategic objectives and to remain competitive, we must continue to develop and enhance our
information systems. This may require the acquisition of equipment and software and the
development, either internally or through independent consultants, of new proprietary software. Our
inability to design, develop, implement and utilize, in a cost-effective manner, information
systems that provide the capabilities necessary for us to compete effectively, or any interruption
or loss of our information processing capabilities, for any reason, could materially disrupt our
operations.
If we are not able to respond successfully to technological or industry developments, our
business may be materially and adversely affected.
The market for online products and services is characterized by rapid technological
developments, frequent launches of new products and services, the introduction of new business
models, changes in customer needs and behavior, and evolving industry standards. These developments
may make our existing online recruitment services obsolete or less competitive. In order to respond
to such developments, we may be required to undertake substantial efforts and incur significant
costs. In the event that we do not successfully respond to such developments in a timely and
cost-effective manner, our business may be materially and adversely affected.
Computer viruses and "hacking" may cause delays or interruptions on our systems and may reduce
use of our services and damage our reputation and brand names.
Computer viruses and hacking may cause delays or other service interruptions on our systems.
"Hacking" involves efforts to gain unauthorized access to information or systems or to cause
intentional malfunctions, loss or corruption of data, software, hardware or other computer
equipment. In addition, the inadvertent transmission of computer viruses could expose us to a
material risk of loss or litigation and possible liability. Hacking and computer viruses could
result in significant damage to our hardware and software systems and databases, disruptions to our
business activities, including
to our e-mail and other communications systems, breaches of security and the inadvertent
disclosure of confidential or sensitive information, interruptions in access to our website through
the use of "denial of service" or similar attacks, and other material adverse effects on our
operations. We may incur significant costs to protect our systems and equipment against the threat
of, and to repair any damage caused by, computer viruses and hacking. Moreover, if a computer virus
or hacking affects our systems and is highly publicized, our reputation and brand names could be
materially damaged and usage of our services may decrease.
Our business could be adversely affected if our software contains bugs.
Our online systems, including the
www.51job.com
website, and our other software applications,
products and systems could contain undetected errors or "bugs" that could adversely affect their
performance. Additionally, we regularly update and enhance our website and our other online systems
and introduce new versions of our software
11
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products and applications. The occurrence of errors in
any of these may cause us to lose market share, injure our reputation and brand names, and
materially and adversely affect our business.
We are controlled by a small number of our existing shareholders and our board of directors has
the power to discourage a change of control.
As of April 30, 2006, six shareholders beneficially owned approximately 72.7% of our
outstanding common shares, including common shares underlying options outstanding.
These shareholders are:
•
Rick Yan, our chief executive officer and a director, who beneficially owned
approximately 25.5% of our outstanding common shares, including common share underlying
options outstanding;
•
entities affiliated with DCM – Doll Capital Management, or DCM, which owned
approximately 16.7%, and which is affiliated with David K. Chao, one of our directors;
•
Recruit, which owned approximately 14.5%;
•
Michael Lei Feng, one of our executive officers, who owned approximately 7.6%;
•
Norman Lui, one of our executive officers, who owned approximately 5.3%; and
•
Kathleen Chien, one of our executive officers, who owned approximately 3.1%.
While these shareholders have advised us that they do not consider themselves to be a "group"
as defined under the U.S. Securities Exchange Act of 1934, as amended, or the Exchange Act,
individually these shareholders could have significant influence in determining the outcome of any
corporate transaction or other matter submitted to the shareholders for approval, including
mergers, consolidations and the sale of all or substantially all of our assets, election of
directors and other significant corporate actions. In cases where their interests are aligned and
they vote together, these shareholders will also have the power to prevent or cause a change in
control. Without the consent of some or all of these shareholders, we may be prevented from
entering into transactions that could be beneficial to us. In addition, these persons could violate
their non-competition or employment agreements with us or otherwise violate their fiduciary duties
by diverting business opportunities from us to themselves or others. The interests of our largest
shareholders may differ from the interests of our other shareholders.
In April 2006, entities affiliated with DCM, Rick Yan, Michael Lei Feng and Norman Lui, and
Kathleen Chien entered into a share purchase agreement with Recruit. Under the terms and conditions
of the share purchase agreement, Recruit completed a purchase of 8,452,918 common shares, which
represented approximately 15% of our outstanding common shares as of December 31, 2005, from these
shareholders in April 2006. The share purchase agreement also provides for an option that would
allow Recruit to purchase up to an additional 14,862,313 common shares from these shareholders over
a three-year period beginning April 2006 and result in Recruit owning approximately 40% of our
fully diluted common shares outstanding as of December 31, 2005. In addition, under the share
purchase agreement, each of these selling shareholders has agreed that it will use its commercially
reasonable best efforts in cooperating with Recruit to have a representative of Recruit nominated
to stand for election to our board of directors and that it will vote all of its shares in favor of
the election of such nominee to our board of directors at any annual or extraordinary general
meetings
of our members at which such nominee may stand for election for the duration of the agreement.
In addition, our board of directors has the authority, without further action by our
shareholders, to issue common and preferred shares of up to 20% by par value of all issued shares
and to fix the powers and rights of these shares, including dividend rights, conversion rights,
voting rights, terms of redemption and liquidation preferences, any or all of which may be greater
than the rights associated with our common shares. These provisions could have the effect of
depriving you of an opportunity to sell your ADSs at a premium over prevailing market prices by
discouraging third parties from seeking to obtain control of us in a tender offer or similar
transaction.
When the preferential tax treatment elected by some of the AdCo Subsidiaries and other
subsidiaries expire, we will incur higher tax rates for these entities which could adversely
affect our overall results of operations
Under current rules, newly organized PRC entities conducting advertising businesses are
entitled to elect to receive a tax exemption for their first two years of operation and may carry
forward tax losses accumulated in those years, if any, to future periods. A number of our AdCo
Subsidiaries have elected to receive these two-year tax exemptions. Upon the expiration of these
tax exemptions, these AdCo Subsidiaries will be taxed at the full statutory tax rate, currently
33%. Starting in 2004, tax exemptions granted to several of our AdCo Subsidiaries began to expire
which resulted in our higher effective tax rates in 2004 and 2005 compared to prior years. However,
a number of our AdCo Subsidiaries and other
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subsidiaries continue to receive tax exemptions which
are due to expire in 2006 and 2007, and as our business expands, we may establish new entities from
time to time which, depending on applicable tax laws, may be entitled to certain tax incentives,
including these tax exemptions. As these tax exemptions expire, the effective tax rate of our PRC
subsidiaries and our consolidated effective tax rate will increase, which could adversely and
materially affect our net income.
Our earnings have been and will continue to be adversely affected by the change in our
accounting policies with respect to the expensing of stock options.
Prior to January 1, 2006, we accounted for share-based compensation transactions, such as
stock option grants, using the intrinsic value method (based on the discount to fair market value
on the date of grant) as prescribed by Accounting Principles Board, or APB, Opinion No. 25,
"Accounting for Stock Issued to Employees." On December 16, 2004, the Financial Accounting
Standards Board, or FASB, issued Statement of Financial Accounting Standards No. 123R (revised
2004), "Share-Based Payment," or SFAS No. 123R, which requires that such transactions be accounted
for using a fair value based method and recognized as expenses in our consolidated statement of
operations, effective as of the start of annual periods commencing after June 15, 2005, the
effective date. Under SFAS No. 123R, we can select from three transition methods: (1) the modified
prospective method, where the expenses related to unvested but still outstanding options as
calculated under the original SFAS No. 123, "Accounting for Stock-Based Compensation," or SFAS No.
123, be charged to expense without any change in previously calculated measurement; (2) a variation
of the modified prospective method, where in addition to (1), we restate for prior interim periods
using prior SFAS No. 123 pro forma disclosure amounts; and (3) the modified retrospective method,
where all prior period financial statements are retroactively restated based on pro forma
disclosures as calculated under SFAS No. 123.
Under SFAS No. 123R, we are required to expense the fair value of our stock option grants
effective January 1, 2006 and have selected the modified prospective method as the transitional
method. This change in accounting policy with respect to the treatment of employee stock option
grants increased our share-based compensation expense in our consolidated statement of operations
in the first quarter of 2006 and we expect the implementation of SFAS No. 123R may adversely affect
our earnings in the future.
Failure to achieve and maintain effective internal control over financial reporting in
accordance with Section 404 of the Sarbanes-Oxley Act of 2002 could have a material adverse
effect on our business, results of operations and the market price of our ADSs.
We are subject to reporting obligations under the U.S. securities laws. We will be required by
the U.S. Securities and Exchange Commission as directed by Section 404 of the Sarbanes-Oxley Act of
2002, or Sarbanes-Oxley Act, to include a report by our management on our internal control over
financial reporting in our annual reports on Form 20-F that contains an assessment by our principal
executive officer and principal financial officer of the effectiveness of our
internal control over financial reporting. In addition, our independent auditors must attest
to and report on their assessment of the effectiveness of our internal control over financial
reporting. These requirements will first apply to our annual report on Form 20-F for the fiscal
year ending December 31, 2006.
Our principal executive officer and principal financial officer may not conclude that our
internal controls are effective. Moreover, even if they conclude that our internal controls over
our financial reporting are effective, our independent auditors may disagree. If our independent
auditors are not satisfied with our internal controls over financial reporting or the level at
which our internal controls over financial reporting are documented, designed, operated or
reviewed, or if the independent auditors interpret the requirements, rules or regulations different
from us, then it may decline to attest to our principal executive officer and principal financial
officer's assessment or may issue an adverse opinion. Any of these possible outcomes could result
in an adverse reaction in the financial marketplace due to a loss of investor confidence in the
reliability of our consolidated financial statements, which ultimately could have a material
adverse effect on the market price of our ADSs. We also may need to incur significant costs and use
significant management and other resources in an effort to comply with Section 404 of the
Sarbanes-Oxley Act and other requirements.
Moreover, internal controls over financial reporting may not prevent or detect misstatements
because of their inherent limitations, including the possibility of human error, the circumvention
or overriding of controls, or fraud. Therefore, even effective internal controls over financial
reporting can provide only reasonable assurance with respect to the preparation and fair
presentation of financial statements. In the past, our independent auditors have identified several
areas of our internal controls that require improvement, and we are in the process of implementing
changes to strengthen our internal controls. These measures may not be sufficient to address the
areas that require improvement or ensure that our internal controls are effective. If we fail to
maintain the adequacy of our internal controls over financial reporting,
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including any failure to
implement required new or improved controls, or if we experience difficulties in their
implementation, our business and operating results could be harmed, we could fail to meet our
reporting obligations, and there could be a material adverse effect on the market price of our
ADSs.
We have no business insurance coverage.
Other than insurance for some of our properties, we do not maintain any insurance. Insurance
companies in China offer limited business insurance products and we do not have any business
liability insurance coverage for our operations. Any business disruption, litigation or natural
disaster might result in substantial costs and diversion of resources.
We are vulnerable to natural disasters and other calamities.
All of our servers are currently hosted in Shanghai. We have backup systems, but we cannot
assure you that such backup systems will be adequate if there are problems, or that they will
adequately protect us from the effects of fire, floods, typhoons, earthquakes, power loss,
telecommunications failures, break-ins, war, terrorist acts or similar events. Any of the foregoing
events may give rise to server interruptions, breakdowns, system failures, technology platform
failures and Internet failures, which could cause the loss or corruption of data or malfunctions of
software or hardware. Any such event could adversely affect our ability to provide our services to
users. See "Item 4. — Information on the Company — Business Overview — Technology."
We may become a passive foreign investment company, which could result in adverse U.S. tax
consequences to U.S. investors.
We may be a passive foreign investment company for U.S. federal income tax purposes for any
year. Such classification could result in adverse U.S. tax consequences to U.S. investors. For
example, if we are a passive foreign investment company for any year, our U.S. investors may be
subject to increased tax liabilities under U.S. tax laws and regulations and may be subject to
additional reporting requirements. The determination of whether we are a passive foreign investment
company will be made on an annual basis and will depend on the composition of our income and
assets, including goodwill. The calculation of goodwill will be based, in part, on the market value
of our ADSs from time to time, which may be volatile. In general, we will be classified as a
passive foreign investment company for any taxable year in which either (1) at least 75% of our
gross income is passive income or (2) at least 50% of the value (determined
on the basis of a quarterly average) of our assets is attributable to assets that produce or
are held for the production of passive income. For purposes of these tests, cash, including working
capital, and investments are considered assets that produce or are held for the production of
passive income. If our retained cash or investments and any other passive assets comprised at least
50% of the value of our assets, we could be a passive foreign investment company. Our determination
of whether we are a passive foreign investment company is not binding on the Internal Revenue
Service. We cannot assure you that we will not be a passive foreign investment company for the
current or any future taxable year. If we are a passive foreign investment company in any year that
a U.S. investor holds shares or ADSs, we generally will continue to be treated as a passive foreign
investment company for that investor in all succeeding years. We urge U.S. investors to consult
their own tax advisors concerning the availability and making of a mark-to-market election. See
"Item 10. — Additional Information — Taxation — United States Federal Income Taxation — Passive
foreign investment company rules."
Our subsidiaries face limitations on paying dividends or making other distributions to us.
We are a holding company and do not have any assets or conduct any business operations other
than our holding of the equity interests in, directly and indirectly:
•
Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd., or
WFOE, a wholly foreign owned enterprise in China;
•
Qianjin Network Information Technology (Shanghai) Co., Ltd., or Tech JV; and
•
Shanghai Qianjin Advertising Co., Ltd., or AdCo, and its subsidiaries.
As a result of our holding company structure, we rely entirely on dividends, royalty payments
and license fees paid under trademark license agreements and certain other contractual arrangements
paid to us by our subsidiaries and affiliated entities in the PRC to finance our operations and to
pay dividends to our shareholders. These royalty payments and license fees paid under trademark
license agreements and certain other contractual arrangements do not require governmental or other
third party approval. However, the payment of dividends in China is subject to certain
restrictions. PRC regulations currently permit payment of dividends only out of accumulated profits
as determined in accordance with
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PRC accounting standards and regulations. Our subsidiaries and
affiliated entities in the PRC are also required to set aside a portion of their after-tax profits
according to PRC accounting standards and regulations to fund certain reserve funds that are not
distributable as cash dividends. The PRC government also imposes controls on the convertibility of
Renminbi into foreign currencies and, in certain cases, the remittance of currency out of the PRC.
We may also experience difficulties in completing the administrative procedures necessary to obtain
and remit foreign currency. See "Item 4. — Information on the Company — Business Overview —
Regulation — Regulation of Foreign Currency Exchange and Dividend Distribution." If we or any of
our subsidiaries are unable to receive all of the revenues from our operations through these
contractual or dividend arrangements, we may be unable to effectively finance our operations or pay
dividends on our common shares.
Risks Related to Our Corporate Structure
If the PRC authorities determine that our past ownership structure was inconsistent with the
requirements for operating certain of our businesses, we could be subject to sanctions.
The PRC government regulates foreign ownership in entities providing advertising and human
resource related services. Prior to March 2004, PRC laws and regulations prohibited foreign persons
from owning a controlling interest in advertising entities. This foreign ownership restriction was
subsequently relaxed in December 2005 and foreign persons are now permitted to own 100% of
advertising entities. In addition, until November 2003, there were no PRC laws or regulations
explicitly prohibiting or limiting foreign ownership in entities providing human resource related
services. Since November 2003, foreign ownership in entities providing human resource related
services has been limited to 49%.
Prior to our restructuring, 51net, our BVI subsidiary and a foreign entity, owned 99% of Tech
JV, which in turn owned, and continues to own, 80% of AdCo. AdCo owned, and continues to own, 90%
of the principal AdCo Subsidiaries. During this period, Tech JV, AdCo and the AdCo Subsidiaries
conducted a portion of our advertising and
human resource services businesses. We have been advised by Jun He Law Offices, our PRC
counsel, that the foreign ownership percentage of Tech JV, AdCo and the AdCo Subsidiaries prior to
our restructuring was above the maximum foreign ownership permitted for an entity conducting
advertising operations. In addition, we have been advised by our PRC counsel that, prior to our
restructuring, the foreign ownership percentage of Tech JV was above the maximum foreign ownership
permitted for an entity conducting human resource operations. In May 2004, we restructured our
operations to comply with the foregoing PRC laws and regulations governing foreign ownership in
entities conducting advertising and human resource related services. In connection with our
restructuring, we informed relevant PRC governmental authorities that, historically, our foreign
ownership percentage of Tech JV, AdCo and the AdCo Subsidiaries was not in compliance with
limitations on foreign ownership of entities conducting advertising and human resources operations.
However, we have not received any waiver from the PRC government with respect to our past
non-compliance with foreign ownership laws limitations.
There remains uncertainty regarding whether foreign owned PRC entities, such as AdCo, are
required to obtain special governmental approval in order to establish subsidiaries in the PRC or
otherwise invest in PRC entities. Following the formation of the AdCo Subsidiaries, in connection
with our restructuring we made inquiries with relevant PRC governmental authorities as to whether
AdCo was required to obtain such approval before establishing the AdCo Subsidiaries. We have been
unable to obtain any governmental ruling or advice on this matter. As a result, it is uncertain
whether special governmental approval, which we did not obtain, was necessary for the establishment
by AdCo of the AdCo Subsidiaries.
The PRC government may determine that our ownership structure is or was inconsistent with or
insufficient for the proper operation of our businesses, or that our business licenses or other
approvals are or were not properly issued or not sufficient. For a discussion of the limitations on
foreign ownership governing our businesses, see "Item 4. — Information on the Company — Business
Overview — Regulation — Limitations on Foreign Ownership of Our Businesses." Furthermore, if new
governmental regulations arise in the future, the AdCo Subsidiaries may be subject to new
requirements and approvals.
If we or any of our subsidiaries or affiliated entities were found to be or to have been in
violation of PRC laws or regulations governing foreign ownership of advertising or human resource
services businesses, the relevant regulatory authorities would likely have broad discretion in
dealing with such violation, including but not limited to:
•
levying fines;
•
revoking business licenses;
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•
restricting or prohibiting our use of proceeds from our initial public offering and
any future offerings to finance our business and operations in China;
•
requiring us to restructure the ownership structure or operations of our
subsidiaries or affiliated entities; and/or
•
requiring us to discontinue all or a portion of our business.
Any of these or similar actions could cause significant disruption to our business operations
or render us unable to conduct a substantial portion of our business operations and may materially
and adversely affect our business, financial condition and results of operations.
We rely on our agreements with an affiliated entity to provide human resource related services
and to act as an Internet content provider, and we rely on agreements with an affiliated entity
and its shareholders to receive all of the beneficial interest of this entity.
Current PRC laws and regulations limit foreign investment in entities providing human resource
related services and in entities operating as Internet content providers. We currently provide
technical, consulting and human resource related services in conjunction with our affiliated
entity, RAL, which is wholly owned by Michael Lei Feng and Tao Wang, two of our executive officers.
RAL holds a license to provide human resource related services and we rely on RAL to provide human
resource related services to our clients under a contractual arrangement between RAL and our
majority owned subsidiary Tech JV. Similarly, RAL holds a license to operate as an Internet content
provider. While we provide all of our online recruitment services through Tech JV, we rely on RAL
to provide certain Internet content provider services to support Tech JV's online recruitment
services through a contractual arrangement with RAL. We have entered into agreements with RAL's
shareholders which enable us to effectively control RAL.
Tech JV, AdCo and the AdCo Subsidiaries recognize substantially all of our revenues. The
minority interests in Tech JV, AdCo and the AdCo Subsidiaries, which are direct or indirect
subsidiaries of Tech JV, are held by Qian Cheng, which is wholly owned by Michael Lei Feng and Tao
Wang. Through agreements with Qian Cheng and its shareholders, we have the substantial ability to
control, bear all the economic risks of, and receive all the economic rewards from, Qian Cheng. As
a result, we consolidate all of its interests for U.S. GAAP reporting purposes.
As we rely on these agreements with RAL and Qian Cheng to enable us to provide certain
critical services to our clients as well as to receive all the economic benefits of Qian Cheng, a
significant disruption in these contractual relationships as a result of governmental sanction or
otherwise could result in our being required to restructure our operations which could result in a
significant expenditure of resources. If we are unable to restructure our operations to provide
those services through a different entity, we may experience significant disruptions in our ability
to provide online recruitment services or human resource related services to our customers. In
addition, if we are unable to consolidate the minority interests in Tech JV, AdCo and the AdCo
Subsidiaries, our results of operations would reflect Qian Cheng's minority interest in these
entities which, if not otherwise consolidated, would result in a significant reduction in our
reported net income. For a description of our contractual arrangements with these entities, see
"Item 4. — Information on the Company — Organizational Structure."
If our affiliated entity RAL is found to be operating in jurisdictions outside of Shanghai
without a business license, we could be subject to sanctions and our revenues could be
adversely affected.
RAL's existing human resource services license is limited to Shanghai. In 2005, revenues from
human resource related services provided to customers outside Shanghai accounted for approximately
2% of our total revenues. It is possible that government authorities in jurisdictions outside
Shanghai where certain of RAL's customers are located may assert that RAL is providing human
resource related services in such jurisdictions without a necessary license and is required to
obtain a human resource services license in such jurisdictions. As a result, RAL could be required
to cease providing human resource services to customers in such locations which could result in a
reduction in human resource related revenues. In addition, RAL may be subject to sanctions in the
form of forfeiture of profits, fines, or both.
Our contractual arrangements with RAL and Qian Cheng may not be as effective in providing
operational control as direct ownership of these businesses.
Because the percentage of foreign ownership in human resource and Internet content businesses
in China is limited under PRC laws and regulations, we depend substantially on RAL, in which we
have no direct ownership interest, and its contractual arrangements with us to provide those
services. Similarly, we rely on our contractual arrangements with Qian Cheng, in which we have no
direct ownership interest, to realize all of the economic rewards from Qian Cheng's minority
interests in Tech JV, AdCo and the AdCo Subsidiaries. Our contractual arrangements with RAL, Qian
Cheng and their
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respective shareholders may not be as effective as direct ownership in providing
control over their operations. RAL may fail to perform its contractual obligations required for us
to operate our business, such as keeping in good standing under its business licenses. Qian Cheng
and its shareholders may refuse to make payments or otherwise refuse to perform their contractual
obligations necessary for us to realize the economic rewards relating to Qian Cheng's minority
interests in Tech JV, AdCo and the AdCo Subsidiaries. In addition, the contractual arrangements
which provide us with the substantial ability to control these entities may be unenforceable and
the shareholders of these entities may refuse to renew these contractual arrangements. In any such
event, we will have to rely on the PRC legal system to enforce our rights. In many cases, the laws
and regulations governing the enforcement and performance of contractual arrangements are
significantly more limited than in the United States and many other countries and may afford us
little or no effective protection. If we are unable to enforce our rights, we may be unable to
operate our human resource and Internet content businesses through RAL or receive all of the
economic rewards from Qian Cheng. As a result, we may be required to restructure our operations
which would likely entail a significant expenditure of resources. We cannot assure you that any
such restructuring would be effective or would not result in similar or other difficulties. For a
description of these contractual arrangements, see "Item 4. — Information on the Company —
Organizational Structure."
If we or any of our subsidiaries or affiliated entities were found to be in violation of PRC
laws or regulations, the relevant regulatory authorities would likely have broad discretion in
dealing with such violation, including but not limited to:
•
levying fines;
•
revoking business licenses;
•
restricting or prohibiting our use of proceeds from our initial public
offering and any future offerings to finance our business and operations in China;
•
requiring us to restructure the ownership structure or operations of our
subsidiaries or affiliated entities; and/or
•
requiring us to discontinue all or a portion of our business.
Any of these or similar actions could cause significant disruption to our business operations
or render us unable to conduct a substantial portion of our business operations and may materially
and adversely affect our business, financial condition and results of operations.
The PRC laws and regulations governing our current business operations and contractual
arrangements are uncertain, and if we are found to be in violation, we could be subject to
sanctions. In addition, any changes in such PRC laws and regulations may have a material and
adverse effect on our business.
There are substantial uncertainties regarding the interpretation and application of PRC laws
and regulations, including but not limited to the laws and regulations governing our business, or
the enforcement and performance of our contractual arrangements in the event of the imposition of
statutory liens, death, bankruptcy and criminal proceedings. We and our subsidiaries are considered
foreign persons or foreign funded enterprises under PRC laws, and, as a result, we are required to
comply with PRC laws and regulations, including those governing foreign ownership in the
advertising, human resource services and Internet content industries. These laws and regulations
are relatively new and may be subject to future changes, and their official interpretation and
enforcement may involve substantial uncertainty. The effectiveness of newly enacted laws,
regulations or amendments may be delayed, resulting in detrimental reliance by foreign investors.
New laws and regulations that affect existing and proposed future businesses may also be applied
retroactively. In addition, the PRC authorities retain broad discretion in dealing with violations
of laws and regulations, including levying fines, revoking business licenses and requiring actions
necessary for compliance. In particular, licenses, permits and beneficial treatments issued or
granted to us by relevant governmental bodies may be revoked at a later time under contrary
findings of higher regulatory bodies. We cannot predict what effect the interpretation of existing
or new
PRC laws or regulations may have on our businesses. We cannot assure you that any such
restructuring would be effective or would not result in similar or other difficulties. We may be
subject to sanctions, including fines, and could be required to restructure our operations. As a
result of these substantial uncertainties, we cannot assure you that we will not be found in
violation of any current or future PRC laws or regulations.
If we or any of our subsidiaries or affiliated entities or any of our contractual arrangements
are found to be or to have been in violation of any existing or future PRC laws or regulations, the
relevant regulatory authorities would likely have broad discretion in dealing with such violation,
including but not limited to:
•
levying fines;
•
revoking business licenses;
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•
restricting or prohibiting our use of proceeds from our initial public
offering and any future offerings to finance our business and operations in China;
•
requiring us to restructure the ownership structure or operations of our
subsidiaries or affiliated entities; and/or
•
requiring us to discontinue all or a portion our business.
Any of these or similar actions could cause significant disruption to our business operations
or render us unable to conduct a substantial portion of our business operations and may materially
and adversely affect our business, financial condition and results of operations.
We are unable to quantify the likelihood that any sanctions would be imposed or the magnitude
of the effect of any such sanctions on our business, financial condition or results of operations.
Risks Related to the People's Republic of China
Our business could be affected by changes in China's economic, political or social conditions
or government policies.
The PRC economy differs from the economies of most developed countries in many respects,
including with respect to the:
•
amount of government involvement;
•
level of development;
•
growth rate;
•
control of foreign exchange; and
•
allocation of resources.
While the PRC economy has experienced significant growth in the past 20 years, growth has been
uneven, both geographically and among various sectors of the economy. The PRC government has
implemented various measures to encourage economic growth and guide the allocation of resources.
Some of these measures benefit the overall PRC economy, but may also have a negative effect on us.
For example, our financial condition and results of operations may be adversely affected by
government control over capital investments or changes in tax regulations that are applicable to
us.
The PRC economy has been transitioning from a planned economy to a more market-oriented
economy. Although in recent years the PRC government has implemented measures emphasizing the
utilization of market forces for economic reform, the reduction of state ownership of productive
assets and the establishment of sound corporate governance in business enterprises, a substantial
portion of the productive assets in China is still owned by the PRC government. The continued
control of these assets and other aspects of the national economy by the PRC government could
materially and adversely affect our business. For example, the PRC government could determine to
limit the extent to which government controlled entities may use private sector businesses such as
ours to service their human resource requirements. The PRC government could also determine to
develop and support government owned or controlled human resource enterprises in direct competition
with us. In addition, the PRC government continues to play a significant role in
regulating industry development by imposing industrial policies. It also exercises significant
control over PRC economic growth through the allocation of resources, controlling payment of
foreign currency-denominated obligations, setting monetary policy and providing preferential
treatment to particular industries or companies. Efforts by the PRC government to slow the pace of
growth in the Chinese economy could result in reduced job growth and recruitment activity, which in
turn could reduce demand for our recruitment advertising services. In addition, the PRC government
could determine to more closely regulate the advertising, Internet content delivery or human
resource industries, which could impose additional regulatory costs and burdens on us.
PRC laws and regulations governing operators of Internet websites are unclear and the
regulation of the telecommunications and Internet industries may become more burdensome, and if
we are found to be in violation of PRC laws and regulations, we could be subject to sanctions.
The interpretation and application of existing PRC laws and regulations, the stated positions
of the main governing authority, the PRC Ministry of Information Industry, and the possibility of
new laws or regulations being adopted, have created significant uncertainty regarding the legality
of existing and future foreign investments in, and the businesses and activities of, companies with
Internet operations, including those of our company. In particular, the PRC Ministry of Information
Industry has stated that the activities of Internet
content providers, or entities providing
delivery of Internet
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content, are subject to regulation by various PRC government authorities,
depending on the specific activities conducted by the Internet content provider. We cannot be
certain that the commercial Internet content provider license issued by the local Shanghai
Municipal Telecommunications Bureau and held by RAL will satisfy these requirements. For example,
we may be required to obtain an inter-provincial Internet content provider license in order to
operate online businesses in multiple provinces, autonomous regions and centrally administered
municipalities. In addition, PRC government regulation of the telecommunications and Internet
industries is burdensome and may become even more so. New regulations could increase our costs of
doing business and prevent us from efficiently delivering our services. We have been informed that
the PRC Ministry of Information Industry is in the process of preparing a draft of a national
telecommunications law to provide a uniform regulatory framework for the telecommunications
industry. We do not know the nature or scope of these new laws and regulations and we cannot
predict whether they will have a positive or negative effect on any or all aspects of our business.
Our failure to comply with applicable PRC Internet regulations could subject us to severe
sanctions.
The continued growth of the Chinese Internet market depends on the establishment of an adequate
telecommunications infrastructure.
Although private sector Internet service providers currently exist in China, almost all access
to the Internet is maintained through ChinaNet, which is owned by China Telecom under the
administrative control and regulatory supervision of the PRC Ministry of Information Industry. In
addition, the national networks in China connect to the Internet through a government-controlled
international gateway. This international gateway is the only channel through which a domestic user
can connect to the international Internet network. We rely on this infrastructure and China Telecom
to provide data communications capacity, primarily through local telecommunications lines. We
cannot assure you that this infrastructure will be developed. We have no access to alternative
networks or services, on a timely basis or if at all, in the event of disruptions, failures or
other problems with China's Internet infrastructure or telecommunications networks. The Internet
infrastructure in China may not support the demands associated with continued growth in Internet
usage.
The PRC legal system has inherent uncertainties that could materially and adversely affect us.
The PRC legal system is based upon written statutes. Prior court decisions may be cited for
reference but are not binding on subsequent cases and have limited value as precedents. Since 1979,
the PRC legislative bodies have promulgated laws and regulations dealing with economic matters such
as foreign investment, corporate organization and governance, commerce, taxation and trade.
However, the PRC has not developed a fully integrated legal system and the array of new laws and
regulations may not be sufficient to cover all aspects of economic activities in the PRC. In
particular, because these laws and regulations are relatively new, and because of the limited
volume of published decisions and their non-binding nature, the interpretation and enforcement of
these laws and regulations involve
uncertainties. In addition, published government policies and internal rules may have
retroactive effects and, in some cases, the policies and rules are not published at all. As a
result, we may be unaware of our violation of these policies and rules until some time later. Our
contractual arrangements with our affiliated entities are governed by the laws of the PRC. The
enforcement of these contracts and the interpretation of the laws governing these relationships is
subject to uncertainty. See "— Risks Related to Our Corporate Structure — The PRC laws and
regulations governing our current business operations and contractual arrangements are uncertain,
and if we are found to be in violation, we could be subject to sanctions."
You may experience difficulties in effecting service of legal process, enforcing foreign
judgments or bringing original actions in China based on United States or other foreign laws
against us or our management.
We conduct substantially all of our operations in China and the majority of our assets are
located in China. In addition, the majority of our directors and executive officers reside within
China. As a result, it may not be possible to effect service of process within the United States or
elsewhere outside China upon these directors or executive officers, including with respect to
matters arising under U.S. federal securities laws or applicable state securities laws. Moreover,
our PRC counsel has advised us that the PRC does not have treaties with the United States or many
other countries providing for the reciprocal recognition and enforcement of judgment of courts.
Governmental control of currency conversion may affect the value of your investment.
The PRC government imposes controls on the convertibility of Renminbi into foreign currencies
and, in certain cases, the remittance of currency out of China. We receive substantially all of our
revenues in Renminbi, which is currently not a freely convertible currency. Under our current
structure, our income will be primarily derived from
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dividend payments from our PRC subsidiaries
and other payments such as royalty and licensing fees. Shortages in the availability of foreign
currency may restrict the ability of our PRC subsidiaries and our affiliated entities to remit
sufficient foreign currency to pay dividends, royalty payments or other fees to us, or otherwise
satisfy their foreign currency dominated obligations. Under existing PRC foreign exchange
regulations, payments of current account items, including profit distributions, interest payments
and expenditures from the transaction, can be made in foreign currencies without prior approval
from the PRC State Administration of Foreign Exchange by complying with certain procedural
requirements. However, approval from appropriate governmental authorities is required where
Renminbi is to be converted into foreign currency and remitted out of China to pay capital expenses
such as the repayment of bank loans denominated in foreign currencies. The PRC government may also
at its discretion restrict access in the future to foreign currencies for current account
transactions. If the foreign exchange control system prevents us from obtaining sufficient foreign
currency to satisfy our currency demands, we may not be able to pay dividends in foreign currencies
to our shareholders, including holders of our ADSs.
The fluctuation of the Renminbi may materially and adversely affect your investment.
The value of the Renminbi against the U.S. dollar and other currencies may fluctuate and is
affected by, among other things, changes in the PRC's political and economic conditions. On July
21, 2005, the PRC government changed its policy of pegging the value of the Renminbi to the U.S.
dollar. Under the new policy, the Renminbi is permitted to fluctuate within a narrow and managed
band against a basket of certain foreign currencies. This change in policy resulted in an
approximately 2.5% appreciation in the value of the Renminbi against the U.S. dollar as of December
31, 2005, which resulted in a loss from foreign currency translation of RMB11.3 million (US$1.4
million) for us in 2005. While the international reaction to the Renminbi revaluation has generally
been positive, there remains significant international pressure on the PRC government to adopt an
even more flexible currency policy, which could result in further and more significant revaluations
of the Renminbi. As a portion of our assets are denominated in U.S. dollars, any future upward
revaluations of the Renminbi may result in charges to our income statement and reductions in the
value of these U.S. dollar denominated assets when translated into Renminbi.
In addition, as we rely entirely on dividends, royalty payments and other fees paid to us in
Renminbi by our subsidiaries and affiliated entities in the PRC, any significant downward
revaluation of the Renminbi may materially and adversely affect our cash flows, revenues and
financial condition, and the value of, and any dividends payable on, our
ADSs in foreign currency terms. Conversely, if we decide to convert our Renminbi into U.S.
dollars for the purpose of making payments for dividends on our common shares or for other business
purposes and the U.S. dollar appreciates against the Renminbi, the U.S. dollar equivalent of the
Renminbi we convert would be reduced. For further information on our foreign exchange risks and
certain exchange rates, see "Item 3. — Key Information — Selected Financial Data — Exchange Rate
Information" and "Item 11. — Quantitative and Qualitative Disclosures about Market Risk — Foreign
exchange risk."
We face risks related to health epidemics and other outbreaks.
Our business could be adversely affected by the effects of avian flu, Severe Acute Respiratory
Syndrome, or SARS, or another epidemic or outbreak on the economic and business climate. In 2005,
there have been reports on the occurrences of avian flu in various parts of China, including
confirmed human cases. Restrictions on travel resulting from any prolonged recurrence of avian flu,
SARS or another epidemic or outbreak could adversely affect our ability to market and service new
and existing customers throughout China. Our business operations could be disrupted if one of our
employees is suspected of having avian flu, SARS, or another health epidemic, which would require
that a certain number of our employees be quarantined and/or our offices be disinfected. In
addition, our results of operations could be adversely affected to the extent that avian flu, SARS
or another outbreak harms the Chinese economy in general. We have not adopted any written
preventive measures or contingency plans to combat any future outbreak of avian flu, SARS or any
other epidemic.
Recent regulations relating to offshore investment activities by PRC residents may increase the
administrative burden we face and create regulatory uncertainties that may limit our ability to
acquire PRC companies.
As part of our growth strategy, we may decide to expand, in part, by acquiring certain
complementary businesses in the future, including companies incorporated in the PRC. In 2005, the
PRC State Administration of Foreign Exchange, or SAFE, issued various regulations that will require
approvals from, and registrations with, PRC government authorities in connection with direct or
indirect offshore investment activities by PRC residents and PRC corporate entities. A SAFE
regulation, effective from November 1, 2005, retroactively requires registration of direct or
indirect investments previously made by PRC residents in offshore companies before March 31, 2006.
In the event that a PRC shareholder
20
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with a direct or indirect stake in an offshore parent company
fails to make the required registration, the failure would subject such PRC shareholder
to personal
liability and may also limit such offshore parent company's ability to contribute additional
capital into its PRC subsidiaries or its PRC subsidiaries' ability to distribute dividends to the
offshore parent, or otherwise adversely affect its business.
Current regulations are still uncertain and unclear. It is possible that the relevant
government authorities may promulgate new legislation to interpret, amend or implement these
regulations in various ways. As a result, we cannot assure you that we or the owners of any target
PRC business we may acquire, as the case may be, will be able to complete the necessary approval,
filings and registrations for a proposed acquisition. This may restrict our ability to implement
our acquisition strategy and adversely affect our operations. For more information about SAFE
regulations, see "Item 10. — Additional Information — Exchange Controls."
Risks Related to Our ADSs
The market price for our ADSs may be volatile.
The market prices of the securities of companies with Internet related and online businesses
have been extremely volatile and may be subject to wide fluctuations in response to factors
including the following:
•
actual or anticipated fluctuations in our quarterly operating results;
•
changes or revisions by us to previously released operating and financial targets;
•
announcements of new services by us or our competitors;
•
changes in financial estimates or recommendations by securities analysts;
•
conditions in our industry, which is the market for recruitment advertising
services and other human resource
related services in China;
•
announcements by us or our competitors of significant acquisitions,
strategic partnerships, joint ventures or capital commitments;
•
additions or departures of key personnel;
•
release of transfer restrictions on our outstanding common shares or ADSs or
sales of additional common shares or ADSs; and
•
pending or potential litigation or regulatory investigations.
In addition, the securities market has from time to time experienced significant price and
volume fluctuations that are not related to the operating performance of particular companies.
These market fluctuations may also materially and adversely affect the market price of our ADSs.
The price of our ADSs has experienced significant volatility since our initial public offering and
we expect the price and volume volatility with respect to our ADSs to continue in the future.
The future sales, or perceived future sales, by our existing shareholders of a substantial
number of our ADSs in the public market could adversely affect the price of our ADSs.
If our shareholders sell, or are perceived as intending to sell, substantial amounts of our
common shares or ADSs, including those issued upon the exercise of outstanding options, in the
public market, the market price of our ADSs could fall. Such sales, or perceived potential sales,
also might make it more difficult for us to sell equity or equity related securities in the future
at a time and price that we deem appropriate. Common shares held by our existing shareholders and
our affiliates may also be sold in the public market in the future under, and subject to the
restrictions contained in, Rule 144 under the U.S. Securities Act of 1933, as amended, or the
Securities Act. In addition, see "Item 6. — Directors, Senior Management and Employees —
Compensation — Stock-Based Compensation Plans" for a description of outstanding options to purchase
our common shares.
Your right to participate in any future rights offerings may be limited, which may cause
dilution of your holdings.
We may from time to time distribute rights to our shareholders, including rights to acquire
our securities. Under the deposit agreement, the depositary bank will not offer you those rights
unless the distribution to ADS holders of both the rights and any related securities is either
registered under the Securities Act, or exempt from registration under the Securities Act. We are
under no obligation to file a registration statement with respect to any such rights or securities
or to endeavor to cause such a registration statement to be declared effective. Moreover, we may
not be able to establish an exemption from registration under the Securities Act. Accordingly, you
may be unable to participate in our rights offerings and may experience dilution in your holdings.
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You may not be able to exercise your right to vote.
As a holder of ADSs, you may only exercise the voting rights with respect to the underlying
common shares in accordance with the provisions of the deposit agreement. Under the deposit
agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your
voting instructions, the depositary will vote the underlying common shares in accordance with these
instructions. Otherwise, you will not be able to exercise your right to vote unless you withdraw
the shares. Under our fifth amended and restated memorandum and articles of association, the
minimum notice period required for convening either an annual meeting or a general meeting called
to vote on matters requiring the approval of two thirds of the voting shares is 20 days. The
minimum notice period for other general meetings is 14 days. When a general meeting is convened,
you may not receive sufficient advance notice to withdraw the shares to allow you to vote with
respect to any specific matter. If we ask for your instructions, the depositary will notify you of
the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you
that you will receive the voting materials in time to ensure that you can instruct the depositary
to vote your shares. In addition, the depositary and its agents are not responsible for failing to
carry out voting instructions or for the manner of carrying out voting instructions. This means
that you may not be able to exercise your right to vote and there may be nothing you can do if the
shares underlying your ADSs are not voted as you requested.
You may not receive distributions on common shares or any value for them if it is illegal or
impractical to make them available to you.
The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions
it or the custodian receives on common shares or other deposited securities after deducting its
fees and expenses. You will receive these distributions in proportion to the number of common
shares your ADSs represent. However, the depositary is not responsible if it decides that it is
inequitable or impractical to make a distribution available to any holders of ADSs. For example,
the depositary may determine that it is not feasible to distribute certain property through the
mail. Additionally, the value of certain distributions may be less than the cost of mailing them.
In these cases, the depositary may determine not to distribute such property. We have no obligation
to register under U.S. securities laws any ADSs, common shares, rights or other securities received
through such distributions. We also have no obligation to take any other action to permit the
distribution of ADSs, common shares, rights or anything else to holders of ADSs. This means that
you may not receive the distribution we make on our common shares or any value for them if it is
illegal or impractical for us to make them available to you. These restrictions may have a material
adverse effect on the value of your ADSs.
You may be subject to limitations on transfer of your ADSs.
Your ADSs represented by the ADRs are transferable on the books of the depositary. However,
the depositary may close its transfer books at any time or from time to time when it deems
expedient in connection with the performance of its duties. In addition, the depositary may refuse
to deliver, transfer or register transfers of ADSs generally when our books or the books of the
depositary are closed, or at any time if we or the depositary thinks it advisable to do so because
of any requirement of law or of any government or governmental body, or under any provision of the
deposit agreement, or for any other reason.
You may face difficulties in protecting your interests, and your ability to protect your rights
through the U.S. federal courts may be limited, because we are incorporated under Cayman
Islands law.
We are a company incorporated under the laws of the Cayman Islands, and the majority of our
assets are located outside the United States. In addition, a majority of our directors and
executive officers are nationals or residents of jurisdictions other than the United States and all
or a substantial portion of their assets are located outside the United States. As a result, it may
be difficult for investors to effect service of process within the United States upon our directors
or executive officers, or enforce judgments obtained in the United States courts against our
directors or executive officers.
Our corporate affairs are governed by our memorandum and articles of association, the Cayman
Islands Companies Law (2004 Revision) and the common law of the Cayman Islands. The rights of
shareholders to take action against the directors, actions by minority shareholders and the
fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent
governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived
in part from comparatively limited judicial precedent in the Cayman Islands as well as from English
common law, the decisions of whose courts are of persuasive authority, but are not binding on a
court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of
our directors under Cayman Islands law are not as clearly established as they would be under
statutes or judicial precedent in some jurisdictions in the United States. In particular,
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the Cayman Islands has a less developed body of securities laws as compared to the United
States, and some states, such as Delaware, have more fully developed and judicially interpreted
bodies of corporate law. In addition, Cayman Islands companies may not have standing to initiate a
shareholder derivative action in a federal court of the United States.
The Cayman Islands courts are also unlikely:
•
to recognize or enforce against us judgments of courts of the United States
based on certain civil liability provisions of U.S. securities laws; and
•
to impose liabilities against us, in original actions brought in the Cayman
Islands, based on certain civil liability provisions of U.S. securities laws that are
penal in nature.
There is no statutory recognition in the Cayman Islands of judgments obtained in the United
States, although the courts of the Cayman Islands will in certain circumstances recognize and
enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the
merits.
As a result of all of the above, public shareholders may have more difficulty in protecting
their interests in the face of actions taken by management, members of the board of directors or
controlling shareholders than they would as public shareholders of a U.S. company.
ITEM 4. INFORMATION ON THE COMPANY
A. History and Development of the Company
We commenced our business in 1998. Since our inception, we have conducted substantially all of
our operations in China. In March 2000, our founders incorporated a new holding company, now called
51job, Inc., as an exempted limited liability company in the Cayman Islands under the Cayman
Islands Companies Law (2004 Revision). Subsequently, 51job, Inc. acquired 51net.com Inc., or 51net,
a British Virgin Islands company, and other subsidiaries to become the holding company of our
corporate group. We operate as a foreign investment enterprise in China through our wholly owned
subsidiaries, 51net, which is the registered owner of some of our trademarks and our domain name,
51net Beijing, which is a Cayman Islands company, and 51net HR, which is a dormant entity
incorporated in the Cayman Islands, as well as our affiliated Chinese entities, including:
•
Shanghai Qianjin Advertising Co., Ltd. (whose name we changed from Shanghai
Qianjin Culture Communications Co., Ltd. in November 2005), or AdCo, and AdCo's fifteen
branch offices, seven majority owned subsidiaries and one jointly owned subsidiary with
Tech JV, or, collectively, the AdCo Subsidiaries. AdCo and the AdCo Subsidiaries hold
licenses and permits to conduct advertising businesses;
•
Shanghai Run An Lian Information Consultancy Co., Ltd., or RAL, which holds
human resource related services and Internet content provision licenses;
•
Qianjin Network Information Technology (Shanghai) Co., Ltd., or Tech JV,
which is allowed to conduct online advertising and holds a human resource related services
license;
•
Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd., or
WFOE, which is wholly owned by 51net Beijing and owns certain of our trademarks and
registered copyrights;
•
Beijing Qian Cheng Si Jin Advertising Co., Ltd., or Qian Cheng, which is our
joint venture partner in Tech JV;
•
Beijing Run An Information Consultancy Co., Ltd., or Run An, which holds a
minority interest in Qian Cheng;
•
Shanghai Wang Cai Advertising Co., Ltd. (whose name we changed from Shanghai
Jin Lian Advertising Co., Ltd. in July 2005), or Wang Cai AdCo, which is jointly owned by
AdCo and TechJV and a AdCo Subsidiary that holds licenses to conduct advertising
businesses;
•
Wuhan Mei Hao Qian Cheng Advertising Co., Ltd., or Wuhan AdCo, which holds a
minority interest in Tech JV and our AdCo Subsidiary in the city of Wuhan that conducts
advertising businesses; and
•
Wang Jin Information Technology (Shanghai) Co., Ltd., which is wholly owned
by 51net and has no current operations.
In May 2004, we engaged in a restructuring to comply with current PRC foreign ownership
limitation. Since 2002, substantially all of our business and operations have been conducted
through Tech JV and its branches, AdCo and the AdCo Subsidiaries. For a discussion on our group
structure and the contractual arrangements among our entities, see "Item 4. — Information on the
Company — Organizational Structure."
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We completed the initial public offering of 6,037,500 American depositary shares, each
representing two of our common shares, par value US$0.0001 per share, on October 4, 2004. On
September 29, 2004, the trading of our ADSs on the Nasdaq National Market, or Nasdaq, under the
symbol "JOBS," commenced.
In April 2006, we formed a business alliance with Recruit, a privately held human resource
services company in Japan, to collaborate on the development of our human resource products and
services in China. Under the terms of our business alliance agreement, we have also established an
internal corporate planning group with Recruit to explore potential business opportunities outside
of the human resource services industry in China although to date we have not begun to offer any
such products.
Our principal executive offices are located at 21st Floor, Wen Xin Plaza, 755 Wei Hai Road,
Shanghai 200041, People's Republic of China. Our telephone number at this address is +(86-21)
3201-4888. Our agent for service of process in the United States is National Registered Agents,
Inc., located at 875 Avenue of the Americas, Suite 501, New York, New York 10001.
Our principal capital expenditures for 2003 and 2004 consisted of purchases of computers,
network equipment, software and other intellectual property rights for a total of approximately
RMB9.6 million and RMB13.8 million, respectively. Our principal capital expenditures for 2005 were
approximately RMB54.4 million (US$6.7 million) and included installment payments toward the
purchase of a new office complex and purchases of office equipment and software. In October 2005,
we signed a letter of intent to purchase a new office complex in Zhangjiang High Technology Park in
Shanghai for approximately RMB114 million (US$14.1 million).
Our capital expenditure plans for 2006 have not yet been fixed, but we completed the purchase
of the new office complex in Zhangjiang Technology Park in April 2006 and intend to purchase
computers, technology-related equipment and software. Regarding the new office complex, we expect
to incur additional expenses associated with renovations, relocation and other related items. We
plan to move our national technology and online service center as well as our principal executive
offices to the new premises in late 2006. In addition, in March 2006, we signed a letter of intent
to purchase our current principal executive offices at 21st Floor, Wen Xin Plaza, 755 Wei Hai Road,
which we expect will become our Shanghai sales office, for an aggregate consideration of RMB27
million (US$3.3 million). Capital expenditures in 2006 have been, and are expected to continue to
be, funded through operating cash flows and through our existing capital resources.
B. Business Overview
We believe that we are a leading provider of integrated human resource services in China, with
a strong focus on recruitment related services. Our recruitment related services are delivered in
both print and online formats, and we closely integrate these two services to allow us to reach a
wide and diverse audience. Critical aspects in providing our services include the Internet,
web-based applications and human resource software.
We believe that we are the only significant nationwide provider of integrated print and online
recruitment advertising services in China. We believe that our integrated advertising services
allow us to attract a broad base of advertisers and job seekers and provide us with a platform from
which we can market our other human resource related services. In addition to recruitment
advertising services, we also provide executive search and other complementary human resource
related services for large and small employers.
Our goal is to be a "one-stop" solution to human resource departments by providing recruitment
and other human resource related services to employers.
Although we provide services to both employers and job seekers, we derive substantially all of
our revenues from employers. We receive a majority of our revenues in the form of fees from
employers for placing job advertisements on
51job Weekly
and
www.51job.com
. We also receive fees
from employers for access to our
www.51job.com
resumé database, use of
eHire
and in connection with
eSearch
and other human resource related services.
Our Product and Services
We provide a range of human resource services in the following categories:
•
recruitment related services, including print advertising, online
recruitment and executive search services; and
•
other human resource related services, such as training and business process
outsourcing.
Our recruitment related services consist of our integrated print advertising and online
recruitment services as well as our executive search services. We generate the substantial majority
of our revenues from these businesses. Our print advertising business generated 62.3% of our
revenues in 2003, 62.7% of our revenues in 2004 and 59.8% of our revenues
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in 2005. Our online recruitment services business generated 26.2% of our revenues in 2003,
23.2% of our revenues in 2004 and 26.8% of our revenues in 2005. Our executive search business
generated 5.4% of our revenues in 2003, 5.2% of our revenues in 2004 and 4.4% of our revenues in
2005.
We offer a number of other value-added human resource services in areas such as training and
business process outsourcing. Other human resource related services generated 6.1% of our revenues
in 2003, 8.9% of our revenues in 2004 and 9.0% of our revenues in 2005.
Recruitment related services
Print advertising — 51job Weekly. 51job Weekly
, which we formerly translated into English as
Career Post Weekly
, is a city-specific recruitment advertising publication which is published once
a week and is distributed as an insert in local newspapers and/or on a stand-alone basis. As of
March 31, 2006,
51job Weekly
was published in 24 major cities in China. We established operations
in the cities of Changchun in February 2005, Suzhou in June 2005, Fuzhou in July 2005, Zhengzhou in
September 2005 and Tianjin in January 2006.
The 24 cities where
51job Weekly
is published and our newspaper contractor in each city as of
March 31, 2006 are as follows:
City
Newspaper contractor
(1)
City
Newspaper contractor
(1)
Beijing
China Trade News
Kunming
Chuncheng Evening News
Changchun
City Evening News
Nanjing
Modern Express
Changsha
Sanxiang Metropolitan News
Ningbo
Modern Golden News
Chengdu
Hua Xi Metropolitan News
Qingdao
Qingdao Financial Times
Chongqing
(2)
Human Resource News
Shanghai
China Trade News
Guangzhou
Guangzhou Youth Daily
Shenyang
Friendly Times
Dalian
Dalian Evening News
Shenzhen
Nan Fang Metropolitan News
Fuzhou
Straits Talent News
Suzhou
Modern Express
Hangzhou
News Information Daily
Tianjin
Metro Express
Harbin
Harbin Lifestyle Daily
Wuhan
News Information Daily
Hefei
Hefei Evening News
Xian
China Merchant News
Jinan
Jinan Times
Zhengzhou
Youth Herald
(1)
English translations of the Chinese names.
(2)
In February 2006, we changed our newspaper contractor in Chongqing from
Chongqing Business
Daily
.
51job Weekly
is not published in Hong Kong.
A different version of
51job Weekly
is published in each of our markets, with each version
containing city-specific recruitment advertisements. We closely coordinate
51job Weekly
with our
www.51job.com
online recruitment website and post substantially all of the recruitment
advertisements appearing in
51job Weekly
on
www.51job.com
as well.
51job Weekly
contains
recruitment advertisements for the full range of job categories that are available on our website,
including sections for professional, middle management and technical personnel. Advertisements
placed in
51job Weekly
are primarily in Chinese language.
Employers use
51job Weekly
both as a recruitment tool and as an advertising and publicity
medium to promote their brand name and corporate awareness among job seekers.
51job Weekly
recruitment advertisements come in a variety of formats, from large, multi-color advertisements
using graphics and corporate trademarks, often placed by international and large domestic
companies, to simple text job announcements, typically posted by smaller, local businesses.
51job
Weekly
is divided into a number of separate sections, with certain sections targeted at higher
income and more educated job seekers containing large, colorful advertisements on glossy, high
quality paper. Other sections contain simpler text-only advertisements targeted at middle and lower
income job seekers.
In China, entities engaged in publishing activities are required by the government to have a
publishing license. Since we do not have any publishing licenses, we have established a
relationship with a local newspaper in each market where
51job Weekly
is produced. These newspapers
provide us with printing and publishing services on a contractual basis, generally for a term of
two years. These newspapers also generally provide us with distribution and marketing support in
our local markets, although we sometimes undertake marketing independently.
51job Weekly
is
distributed as an insert in our contractor's newspaper in an effort to increase our circulation and
help us establish our brand name. As an
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insert in these newspapers,
51job Weekly
is sold at newsstands, kiosks, convenience stores,
supermarkets and other venues. We provide vendors with marketing materials such as posters, display
racks and other promotional items. We also circulate
51job Weekly
independently through our direct
marketing campaigns. Our direct marketing includes offering free copies of
51job Weekly
at
self-help kiosks at job fairs, in the lobbies of major office buildings, at post offices, on
university campuses and in other public areas where the public circulation of newspapers is
permitted. We have entered into exclusive marketing arrangements to offer free copies of
51job
Weekly
in subway stations in Beijing, Guangzhou and Shanghai and in light rail stations in
Chongqing.
We may change our newspaper contractor in a city when we are able to obtain more favorable
terms or higher quality service from a different newspaper contractor. From inception, we have
changed our newspaper contractor a total of eight times across the 24 cities in which we had a
contract with local newspapers as of March 31, 2006. See "Item 3. — Key Information — Risk Factors
— Risk Related to Our Business — We are dependent on local newspaper contractors in each of our
geographic markets to publish and distribute
51job Weekly
."
The advertising fees that we charge depend on a variety of factors, including the size,
placement, format, and use of color and graphics in the advertisement, the length of time the
advertisement is to appear, and the market in which the advertisement is placed. As we grow in our
existing markets and expand into new cities, we increase our client base and the number of
advertising pages that we produce. Our print advertising revenues are primarily affected by the
number of print advertising pages and the fees that we charge. Pricing for specific products can
vary significantly from city to city.
Our print advertising business is characterized by seasonal variations, particularly during
the peak hiring periods around the Chinese New Year holidays and the beginning of May and October.
As a result, our print advertising revenues may fluctuate significantly from quarter to quarter
depending on customer demand and needs. See "Item 3. — Key Information — Risk Factors — Risk
Related to Our Business — Due to seasonal variations in demand for human resource services, we
experience significant fluctuations in our revenue streams which affect our ability to predict our
quarterly results and which may also cause quarterly results to vary from period to period."
The following table sets forth the estimated number of print advertising pages we generated
and the cities where
51job Weekly
was published for the periods and as of the dates indicated.
2003
2004
2005
Estimated number of print advertising pages
(1)
4,635
9,001
11,884
Number of cities where
51job Weekly
was published
(2)
16
19
23
(1)
For the years ended December 31, 2003, 2004 and 2005.
(2)
As of December 31, 2003, 2004 and 2005.
Increases in our estimated number of print advertising pages generally reflect our
geographic expansion as well as further penetration of existing markets. However, there is no
direct correlation between the growth in the number of cities in which we operate and in the
overall number of our print advertising pages.
Online recruitment services — www.51job.com
. We established our online recruitment website,
www.51job.com
, in 1999.
www.51job.com
provides online recruitment advertisements in both Chinese
and English on a city-by-city basis and covers many different job categories ranging from
professional and middle management positions to clerical, industrial and hourly jobs. We regularly
maintain and update our
www.51job.com
with job search, training and general career management
content.
We believe that
www.51job.com
is one of the largest dedicated national recruitment websites in
China in terms of the number of recruitment advertisements. We also believe that
www.51job.com
is
among the largest in terms of the number of registered job user accounts and posted job seeker
resumés, with approximately 13 million user accounts established since the launch of our website in
1999 and more than 8 million resumés posted online as of March 31, 2006. We believe that
www.51job.com
is perceived as a "destination site" by job seekers because of its large volume of
advertisements and the job search, training and general career management and advisory content
available on the website.
We believe that
www.51job.com
provides employers with a cost-effective means of reaching their
target audience. As our website contains nationwide recruitment advertisements, employers can
access a large pool of potential candidates from a wide geographic area. Certain employers post
advertisements solely online when they consider the demographics of their target audience to favor
the use of the Internet for recruitment advertising. As a result,
www.51job.com
includes a higher
number of technology related positions than
51job Weekly
as well as recruitment
26
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advertisements targeted at younger job seekers that are more likely to use the Internet. We
generally update the advertisements on our website several times each hour, which allows employers
to receive responses more rapidly than is generally possible using print advertisements. Employers
also use our website as a marketing tool, placing advertising banners, trademarks, logos, website
hyperlinks and other devices to promote their image for a fee that varies depending on the size and
graphics in their presentation. We believe that certain employers view this image promotion as a
significant means of attracting online job seekers to their recruitment advertisements on our
website. As a result, we believe that our ability to offer these devices is an important element in
our ability to attract online recruitment advertising business, which generates a material portion
of our revenues. However, in the event of any adverse change in the actual or perceived
effectiveness of online image promotion, or online advertising in general, our online recruitment
advertising business may be adversely affected. See "Item 3. — Key Information — Risk Factors —
Risks Related to Our Business — If the Internet, and online advertising in particular, does not
achieve broad acceptance in China as a medium for recruitment, our online recruitment services
business may be adversely affected."
Employers can use our
eHire
web-based platform to search our job candidate database and
download resumés for a fee. In addition,
eHire
contains other tools that enable employers to
manage, organize and streamline the recruitment and hiring process. We also offer website design as
an additional value-added service and marketing tool for corporate customers. We can build
customized "private label" recruitment websites with the "look and feel" of a dedicated website. We
design these sites in-house to client specifications and operate and maintain these sites for our
clients. These client sites, together with our
www.51job.com
website, are hosted by China Telecom.
The following table sets forth the estimated number of unique employers who used our online
recruitment services for the periods indicated.
For the year ended December 31,
2003
2004
2005
Estimated unique employers using online recruitment services
25,880
39,317
56,599
www.51job.com
provides job seekers with online tools to search for job opportunities and
allows them to:
•
search and review all current recruitment advertisements;
•
receive e-mails of advertisements matching the job seeker's profile and preferences;
•
submit resumés directly to prospective employers to apply for a desired position;
•
organize and track job related information and applications; and
•
obtain information about upcoming job fairs and career development and other job related information.
We provide job seekers access to
www.51job.com
free of charge.
We closely coordinate
51job Weekly
with our
www.51job.com
online recruitment website, and we
post substantially all of the recruitment advertisements appearing in
51job Weekly
on
www.51job.com
as well. We place a basic description of a
51job Weekly
recruitment advertisement on our website as
a complimentary service to our customers. This practice also allows us to introduce our online
recruitment website to customers who have only purchased print recruitment advertising to increase
potential cross-selling opportunities.
Executive search — eSearch
. To meet employers' recruitment needs, we supplement our
recruitment advertising service with our
eSearch
executive search services. We conduct searches
principally for employers seeking to fill mid-level professional, managerial and junior executive
positions. We generally charge corporate clients a total assignment fee of approximately 30% of the
candidate's annual compensation, including a minimum upfront retainer. We maintain a team of
specialized executive search consultants whom we dedicate exclusively to providing this service,
while working closely with our recruitment and other sales staff to cross-sell our products and
develop client relationships. Substantially all of our executive search assignments are engaged
locally in China.
We believe that as companies expand and need to hire qualified and more experienced
professional and managerial personnel, including those who are not active job seekers, demand for
executive search services market may increase. We believe that we are well positioned in this
market as we may attract employers that have used our
www.51job.com
website or
51job Weekly
but are
first-time executive search users. In addition, our search consultants can access our extensive
online candidate resumé database which other search firms are restricted from using.
Other human resource related services
We conduct training seminars in business management, leadership, sales and marketing, human
resource,
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negotiation skills, financial planning and analysis, public administration, manufacturing,
secretarial and other skills. We provide our seminars to the general public and on a customized,
in-house basis for corporate clients. In addition, we provide outdoor-based training exercises and
programs for corporate clients to promote personal development, team building and communication. We
believe that our training services build our brand awareness as a leading provider of integrated
human resource services.
We perform business process outsourcing services by managing human resource administrative
functions for employers on an outsourced basis. Currently, we provide business process outsourcing
services to a limited number of corporate clients with respect to social insurance and welfare
payment processing, tracking compliance with local governmental employment regulations and payroll
processing. We continue to build our outsourcing capability and expertise.
We seek to develop business process outsourcing services as part of our strategy to become a
"one-stop" solution to our clients. While the market for these services in China is still limited
compared to developed economies like the United States, we expect to further expand and develop
these services as the market for these services in China grows. We believe that there is
significant future potential for these services as more companies in China become accustomed to
using third parties to perform human resource administrative functions.
We also organize and host annual human resource conferences in many of our cities. These
conferences include lectures, seminars, workshops and networking events for human resource
professionals. Although we do not generate significant revenues from hosting these conferences,
this service provides us with exposure to, and interaction with, existing and prospective clients.
We provide our monthly human resource trade magazine called
Human Capital
to clients on a
subscription or complimentary basis. This magazine, which has been produced since August 2002, is
targeted principally at corporate human resource personnel and contains articles, commentary,
interviews and reports on human capital management topics.
We provide general and customized salary survey studies with analysis on compensation and
benefits packages across various cities, industries and positions. Human resource departments
utilize our information to understand the market for compensation levels and to determine
compensation and benefits packages for employees and candidates.
We have developed a proprietary assessment system to assist human resource departments in
evaluating capabilities and dispositions of job candidates and existing employees, in aiding
employee placement and in allocating employee resources. We have also developed a human resource
management software that allows employers to track attendance, payroll, vacation and other employee
related information.
Technology
We design and update our website and develop our proprietary software entirely in-house. Our
website is hosted by China Telecom, China's principal telecommunications and Internet service
provider. We own the copyrights, software, trademarks and other intellectual property with respect
to the design and content of our website, other than the advertisements and trademarks provided by
our advertisers.
We employ a large staff of website designers and technicians to update and enhance our website
as well as to design, build and provide assistance to customers that are creating their own
recruitment website. We update the advertisements on our website from our central offices in
Shanghai. We also have technicians in Beijing, Guangzhou and Shenzhen to service key accounts and
to supplement our central operations in the event of an emergency. New recruitment advertisements
provided to us by employers who have purchased and registered online accounts generally appear on
our website within several hours. Complimentary online postings for advertisements in
51job Weekly
generally appear on
www.51job.com
within one to two days.
From time to time we experience slower Internet service from our Internet service provider as
a result of technical difficulties associated with high traffic volumes, computer viruses, the
proliferation of "spam" e-mail traffic and other difficulties that generally affect Internet
traffic. To date, we have not been subject to significant targeted disruptions or "hacking" and we
believe that difficulties we have experienced relating to the speed of the Internet service and
web-hosting provided by China Telecom are consistent with the difficulties that affect Internet
service in China generally. To date, our website has not gone off-line or been shut down for any
significant period of time. We do not believe that our business has been materially disrupted or
negatively affected by technical difficulties with respect to our website. However, we cannot
assure you that our business will not face material disruptions or damage from spam, viruses,
hacking or other technical difficulties. See "Item 3. — Key Information — Risk Factors — Risks
Related to Our
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Business — Computer viruses and "hacking" may cause delays or interruptions on our systems and
may reduce use of our services and damage our reputation and brand names;" "— We are vulnerable to
natural disasters and other calamities;" and "— We are dependent on our Internet service provider,
and we are vulnerable to failures of the Internet, fixed line telecommunications networks in China
and our technology platform."
Competition
We face significant competition in each of our markets with respect to each of our lines of
business. See "Item 3. — Key Information — Risk Factors — Risks Related to Our Business — Because
we face significant competition, including intense competition in several of our markets, we may
lose market share and our results of operations may be materially and adversely affected."
Print advertising
51job Weekly
is published in 24 cities across China as of March 31, 2006 and our core markets
include Beijing, Guangzhou, Shanghai and Shenzhen. We face intense competition within all of our
markets. Our competitors typically consist of one or more large local newspapers that include a
help-wanted circular as a section. Our competitors in our core markets include
Beijing Youth Daily
,
Guangzhou Daily
,
Shanghai Talent Market
and
Shenzhen Special Zone Daily
.
Online recruitment services
We experience intense competition in our online recruitment services businesses from dedicated
online recruitment websites and, to a lesser extent, from national Internet portals in China. With
the exception of
Zhaopin.com
which has begun print advertising operations in a few cities in China,
we are not aware of any other online competitor that also operates a significant print advertising
business. We view our principal existing online competitors to be
ChinaHR.com
,
Cjol.com
and
Zhaopin.com
, which are primarily dedicated online recruitment websites.
None of the well established nationwide Internet portals, including
NetEase.com
,
Sina.com
,
Sohu.com
and
Tom.com
, are dedicated providers of recruitment advertising or other human resource
products, and each offers a wide variety of other online services. However, any or all of our
online or print competitors may decide to allocate significant additional resources to providing
recruitment advertising or other human resource services. For example, following Monster
Worldwide's acquisition of a 40% stake in
ChinaHR.com
for US$50 million in February 2005,
ChinaHR.com
has been purported in recent media reports to be significantly increasing its sales and
marketing efforts in China. In 2005, it was also reported that a business collaboration had been
formed between
ChinaHR.com
and
Sina.com
and one between
Zhaopin.com
and
Sohu.com
. As a result of
such events, we could encounter significantly increased competition in some or all of our markets.
Other services
We believe that the competition for our other human resource related services, especially for
executive search and training services, is largely fragmented and localized. The main competitors
in our market for executive search services in China include entities such as Bó-Lè Associates,
Ltd., Horton International, Hudson Highland Group, which is a spin-off from Monster Worldwide, and
Sterling, each of which provides executive search services on a nationwide basis.
Customers
Our customers consist of large multinational corporations, large national PRC corporations and
local PRC enterprises of all sizes.
Sales and Marketing
Our sales and marketing strategy is focused on promoting our brand names and further
establishing our reputation as an integrated provider of high quality human resource services.
Through direct marketing, event marketing, mass media advertising, online marketing,
cross-marketing and media promotions, we target three key groups:
•
employers with hiring needs;
•
job seekers; and
•
human resource departments with actual or potential outsourcing needs.
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Direct marketing
. We target employers principally through direct marketing. As of December 31,
2005, we employed over 1,200 sales and account management representatives across our cities that
identify and contact potential customers directly via telephone, personal sales visits, the
Internet and the mail. We train our sales staff to cross-sell all of our services and to design
comprehensive packages of human resource services for potential clients to meet their specific
requirements. We believe that direct marketing has been highly effective in attracting new
customers. In addition, we believe that, by providing significant contact with potential clients,
direct marketing enables us to understand the current and evolving needs of our existing and
prospective customers and helps us develop new services and products.
Event marketing
. We organize customer events such as recruiting workshops and product
information seminars as well as networking social events to provide our sales team an opportunity
to interact with employers and better understand their needs. To attract potential job seekers, we
provide complimentary copies of
51job Weekly
at job fairs, at office buildings, in subway stations
in select cities and in other public and commercial areas. We believe that offering complimentary
copies of
51job Weekly
to job seekers is also a highly effective means to cross-promote our
www.51job.com
website.
Mass media advertising
. We use traditional mass media advertising on a selective basis to
increase our visibility and profile. We advertise using various media, including television, radio,
and outdoor advertising on billboards, bus stops and buses. In addition, we advertise on print
media such as newspapers, magazines and industry publications and telephone directories.
Online marketing
. We use Internet advertising, including banners, keyword and hyperlink
purchases and paid listings, to promote our brand names. We also conduct online promotion campaigns
such as prize drawings and giveaways with the goal of attracting traffic to our website and
enhancing the loyalty of job seekers.
Cross-marketing
. We cross-market our brand names, services and products in
51job Weekly
, on
www.51job.com
and in
Human Capital
. We also establish cross-marketing relationships with a variety
of partners. We believe that we also benefit from recommendations and referrals by our large
existing base of
51job Weekly
and jobs seekers and employers who have used
www.51job.com
.
Media promotions
. We produce studies on job market trends that are regularly featured and
published in magazines, in newspapers and online. We believe this exposure heightens our profile
among both employers and job seekers, and attracts interest and generates sales inquiries for our
services.
Intellectual Property and Proprietary Rights
We regard our copyrights, trademarks, trade secrets and other intellectual property rights as
critical to our business. We rely on trademark and copyright law, trade secret protection,
non-competition and confidentiality and/or licensing agreements with our executive officers,
clients, contractors and others to protect our intellectual property rights. We have registered our
www.51job.com
Internet domain name as well as a number of similar domain names in an effort to
prevent entities from diverting online traffic away from our website.
We have registered trademarks with the Trademark Office of the PRC State Administration for
Industry and Commerce, including
,
,
51job.com
,
,
eHire
,
and
eSearch
. In
addition, our wholly owned British Virgin Islands subsidiary 51net has registered our trademarks
,
51job.com
and
with the Patents Registry, Intellectual Property Department of the Hong
Kong Special Administrative Region. 51net is also the registered
owner of our trademarks
and
51job.com
with the Intellectual Property Bureau of the Taiwan Ministry of Economy.
All of our trademarks and the
www.51job.com
domain name are owned or registered in the PRC by
51net and WFOE. Under a trademark license agreement between 51net, as licensor, and RAL, as
licensee, RAL has the right to use certain trademarks in the PRC, with no right of assignment or
sublicense. Under a domain name license agreement between 51net, as licensor, and RAL, as licensee,
RAL has the right to use the
www.51job.com
domain name in connection with the operation of our
website. See "Item 4. — Information on the Company — Organizational Structure."
Our intellectual property is subject to theft and other unauthorized use, and our ability to
protect our intellectual property from unauthorized use is limited. In addition, we may in the
future be subject to claims that we have infringed the intellectual property rights of others. See
"Item 3. — Key Information — Risk Factors — Risks Related to Our Business — If we are unable to
prevent others from using our intellectual property, our business may be materially and adversely
affected" and "— We may be exposed to infringement or misappropriation claims by third parties,
which, if successful, could cause us to pay significant damage awards."
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Regulation
Advertising agencies, human resource services firms and Internet content providers are subject
to substantial regulation by the PRC government. An "Internet content provider" is a commercial
operator providing the delivery of Internet content. This section sets forth a summary of the most
significant PRC regulations that affect the business and the industries in which we operate.
In addition to laws and regulations that apply generally to advertising agencies, human
resource firms and Internet content providers, special limitations apply to foreign ownership of
businesses engaged in advertising, human resource and Internet content providing services in China.
Limitations on Foreign Ownership of Our Businesses
Advertising companies
The principal regulations governing foreign ownership of advertising companies in China
include:
•
Foreign Investment Industry Guide Catalogue (2004); and
•
Regulations on Administration of Foreign Investment in Advertising Enterprises (2004).
Starting December 10, 2005, foreign investors, individually or in the aggregate, are permitted
to own 100% of the equity interest in an advertising company in the PRC.
Human resource services companies
The principal regulation governing ownership in human resource services companies in China is
the Interim Regulations on the Administration of Sino-foreign Equity Joint Venture as Human
Resource Agencies (2003), jointly promulgated by the PRC Ministry of Personnel, the PRC Ministry of
Commerce and the PRC State Administration for Industry and Commerce. Under this regulation, the
percentage of foreign ownership in the equity interest of a foreign invested human resource
services company cannot be less than 25% or more than 49%. Investors from Hong Kong and Macau can
have up to 70% ownership in a foreign invested human resource services company pursuant to the
special arrangements between China and Hong Kong and Macau, respectively.
Internet content providers
In the PRC, entities that coordinate with Internet service providers (such as
telecommunications companies) to effect the online placement of content provided by either
themselves or third parties are defined as "Internet content providers" and require a special
license. An entity may provide online services to customers, including selling recruitment
advertising and other online services, without being required to have an "Internet content
provider" license. However, the act of coordinating with the Internet service provider to effect
the placement of such content requires an "Internet content provider" license.
The principal regulations governing foreign ownership in Internet content providers in China
include:
•
Administrative Rules for Foreign Investments in Telecommunications Enterprises (2001); and
•
Foreign Investment Industry Guidance Catalogue (2004).
Under these regulations, foreign investors, individually or in the aggregate, are prohibited
from owning more than 50% of a PRC entity that provides value-added telecommunications services,
which include the service of providing Internet content.
Recent changes in regulation
In accordance with its commitments made in connection with the PRC's entry into the World
Trade Organization, or WTO, the PRC government has reduced the limitations on foreign investment in
advertising businesses in China. Beginning in December 2005, advertising agencies may be wholly
owned by foreign entities. Investors from Hong Kong and Macau can have up to 70% ownership in a
foreign invested human resource services company pursuant to the special arrangements between China
and Hong Kong and Macau, respectively. There are no laws or regulations setting forth any schedule
for future relaxation of limitations in the human resource and Internet content businesses.
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General Regulation of Our Businesses
Advertising
The PRC State Administration for Industry and Commerce is responsible for regulating
advertising activities in the PRC. The principal regulations governing advertising (including
online advertising) in China include:
•
Advertising Law (1994);
•
Administration of Advertising Regulations (1987); and
•
Measures for the Administration of Advertising Business Licenses (2005).
An entity providing advertising services must obtain an approval from the PRC State
Administration for Industry and Commerce or one of its local offices.
Human resource
Human resource services firms in China are mainly regulated by the PRC Ministry of Personnel.
The principal regulation applicable to human resource services firms is the Regulations on
Administration of Human Resource Markets (2001, as amended in 2005), jointly promulgated by the PRC
Ministry of Personnel and the PRC State Administration for Industry and Commerce. Under this
regulation, any entity providing human resource services in China must obtain a human resource
services license from the local Administration of Personnel at the provincial level. Each of these
Administrations may adopt rules, with some degrees of variation among provinces, to regulate human
resource services operations conducted within the province.
Internet content services and online commerce
The delivery of content on our website is subject to PRC laws and regulations applicable to
telecommunications and Internet service providers. We are also within the regulatory jurisdiction
of various governmental bodies, including the PRC Ministry of Information Industry and the PRC
State Administration for Industry and Commerce. The principal regulations applicable to
telecommunications and Internet service providers include:
•
Telecommunications Regulations (2000);
•
The Administrative Measures for Telecommunications Business Operating Licenses (2001); and
•
The Internet Information Services Administrative Measures (2000).
Under these regulations, delivery of Internet content is classified as a value-added
telecommunications service, and a commercial operator of such services must obtain an Internet
content provider license from the appropriate telecommunications authorities.
There are no PRC laws that have national applicability to online commerce relating to
advertising and human resource services. However, local authorities may impose requirements on
online business activities conducted within its jurisdiction, such as registration or filing
requirements.
Regulations Relating to Our Intellectual Property Rights
China has adopted comprehensive legislation governing intellectual property rights, including
trademarks, patents and copyrights. China has adhered to the main international conventions on
intellectual property rights and has become a member of the Agreement on Trade Related Aspects of
Intellectual Property Rights upon its accession to the WTO in December 2001.
The PRC amended its Copyright Law in 2001 to widen the scope of works that are eligible for
copyright protection. The amended Copyright Law extends copyright protection to cover Internet
activities and products disseminated over the Internet. Copyrighted software is protected under the
Copyright Law and other regulations. In addition, there is a voluntary registration system
administered by the China Copyright Protection Center.
Registered trademarks are protected under the Trademark Law adopted in 1982 and revised in
2001. Trademarks can be registered with the Trademark Office of the PRC State Administration for
Industry and Commerce for renewable ten-year periods. Trademark license agreements are required to
be filed with the Trademark Office of the PRC State Administration for Industry and Commerce for
the record.
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Domain name disputes are governed by the Measures of China Internet Network Information Center
for Resolving Disputes Regarding Domain Names promulgated by the Chinese Internet Network
Infrastructure Center, or CNNIC, on February 14, 2006 and effective on March 17, 2006, under which
CNNIC can authorize domain name dispute resolution institutions to decide disputes.
Regulations Relating to Internet Privacy
The Constitution of the PRC provides that PRC law protects the freedom and privacy of
communications of citizens and that infringement of such rights is not permitted. While PRC laws do
not prohibit Internet content providers from collecting personal information of their users, in
recent years, the relevant government authorities have enacted legislation on the use of the
Internet that recognizes the protection of personal information from unauthorized disclosure. Under
the Regulation on Internet Information Service, Internet information service providers are
prohibited from producing, copying, publishing or distributing information that is humiliating or
slanderous to others or that trespasses the lawful rights and interests of others. Depending on the
nature of their violation, Internet content providers that violate this provision may face criminal
charges or be sanctioned by security authorities. In addition, they may be ordered to temporarily
suspend their service, or their licenses may be revoked. While PRC laws do not prohibit Internet
content providers from collecting personal information of their users, under the Administration
Regulation on the Internet BBS Service, Internet content providers that provide electronic
messaging services must keep users' personal information confidential and must not disclose such
personal information to any third party without the consent of the users, unless the law requires
such disclosure. The regulations further authorize the relevant telecommunications authorities to
order Internet content providers to rectify an unauthorized disclosure. Internet content providers
could be subject to legal liability if the unauthorized disclosure causes damages or losses to the
users. To comply with these regulations, we provide subscribers to our website with a range of
confidentiality options. They may choose to authorize us to disclose their personal information to
third parties, or to instruct us to keep this information strictly confidential. Our systems are
designed to maintain information received from these subscribers in accordance with their
instructions.
However, the PRC government retains the power and authority to order Internet content
providers to turn over personal information of Internet users if the users post any prohibited
content or engage in illegal activities on the Internet.
Regulation of Foreign Currency Exchange and Dividend Distribution
Foreign currency exchange
The principal regulation governing foreign currency exchange in the PRC is the Foreign
Currency Administration Rules (1996), as amended. Under these rules, Renminbi is freely convertible
for payments of current account items, such as trade and service related foreign exchange
transactions and dividend payments, but not for expenses of capital, such as direct investment,
loan or investment in securities, outside the PRC unless the prior approval of the State
Administration for Foreign Exchange of the PRC is obtained.
Under the Foreign Currency Administration Rules, foreign-invested enterprises in the PRC may
purchase foreign exchange without the approval of the State Administration for Foreign Exchange of
the PRC for trade and service related foreign exchange transactions by providing commercial
documents evidencing these transactions. They may also retain foreign exchange (subject to a cap
approved by the State Administration for Foreign Exchange of the PRC) to satisfy foreign exchange
liabilities or to pay dividends. However, the relevant PRC government authorities, which have
significant administrative discretion in implementing the laws, may restrict or eliminate the
ability of foreign-invested enterprises to purchase and retain foreign currencies in the future. In
addition, foreign exchange transactions involving direct investment, loan and investment in
securities outside the PRC are subject to limitations and require approvals from the State
Administration for Foreign Exchange of the PRC.
Dividend distribution
The principal regulations governing distribution of dividends paid by wholly foreign owned
enterprises and Sino-foreign equity joint ventures include:
•
Wholly Foreign Owned Enterprise Law (1986), as amended;
•
Wholly Foreign Owned Enterprise Law Implementing Rules (1990), as amended;
•
Sino-foreign Equity Joint Venture Enterprise Law (1979), as amended; and
•
Sino-foreign Equity Joint Venture Enterprise Law Implementing Rules (1983), as amended.
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Under these regulations, foreign-invested enterprises in the PRC may pay dividends only out of
their accumulated profits, if any, determined in accordance with PRC accounting standards and
regulations. In addition, foreign-invested enterprises in the PRC are required to set aside certain
amounts out of their accumulated profits each year, if any, to fund certain reserve funds. These
reserves are not distributable as cash dividends.
C. Organizational Structure
Prior to the formation of our company, due to PRC restrictions on the foreign ownership of
advertising businesses, our businesses were principally operated by two PRC entities, Beijing Run
An Information Consultancy Co., Ltd., or Run An, and Beijing Qian Cheng Si Jin Advertising Co.,
Ltd., or Qian Cheng. Run An and Qian Cheng were formed in 1997 and 1999, respectively, and both are
controlled and owned by Michael Lei Feng and Tao Wang, two PRC citizens who serve as our executive
officers. Run An's original market research and insurance agency businesses, unrelated to our
current operations, were discontinued in 1999. Run An began providing executive search services in
2000. Qian Cheng was established by Michael Lei Feng and Run An to provide advertising services.
In January 2000, Qianjin Network Information Technology (Shanghai) Co., Ltd., or Tech JV, was
formed as a joint venture between Qian Cheng and 51net.com Inc., or 51net, a British Virgin Islands
company established by Rick Yan and Norman Lui. Subsequently, Tech JV established a majority owned
subsidiary, Shanghai Qianjin Advertising Co., Ltd. (whose name we changed from Shanghai Qianjin
Culture Communications Co., Ltd. in November 2005), or AdCo, with Qian Cheng as the sole minority
shareholder. AdCo in turn established several majority owned subsidiaries with Qian Cheng as the
sole minority shareholder and a jointly owned entity with Tech JV called Shanghai Wang Cai
Advertising Co., Ltd. (whose name we changed from Shanghai Jin Lian Advertising Co., Ltd. in July
2005), or Wang Cai AdCo, which we refer to collectively as the AdCo Subsidiaries. Prior to our May
2004 restructuring discussed below, 51net owned 99% of the equity interest in Tech JV. After Tech
JV and its branches, AdCo and the AdCo Subsidiaries obtained the necessary business licenses, the
business and operations of Run An and Qian Cheng were transferred to Tech JV and its branches, AdCo
and the AdCo Subsidiaries over a period of time. This transfer was effected through the transfer of
customers, employees and operations to these entities and did not involve a formal sale of assets
or equity. Since 2002, substantially all of our business and operations have been conducted through
Tech JV and its branches, AdCo and the AdCo Subsidiaries.
On March 24, 2000, our company was incorporated as an exempted limited liability company in
the Cayman Islands by our founders, Rick Yan, Michael Lei Feng, Norman Lui and Kathleen Chien. An
exempted company under Cayman Islands law is a company that carries on its business mainly outside
the Cayman Islands and is exempt from certain requirements of the Companies Law of the Cayman
Islands. Subsequently, we acquired 51net and became the holding company of our corporate group. We
also formed a wholly owned subsidiary in the Cayman Islands, 51net Beijing, and a wholly owned
subsidiary in the PRC, Qian Cheng Wu You Network Information Technology (Beijing) Co., Ltd., or
WFOE, to hold some of our intellectual property rights and generally facilitate our operations
through network and software related technical support services. 51net Beijing holds all of the
equity interest in WFOE.
Our relationships with Run An and Qian Cheng, our affiliated entities, have been governed by a
series of agreements. As a result of these agreements, under which we have borne all of the
economic risks and received all of the economic rewards in these affiliated entities, the
historical financial results of these entities have been consolidated in our financial statements
as variable interest entities under FASB Interpretation No. 46, "Consolidation of Variable Interest
Entities, an Interpretation of ARB No. 51," or FIN 46.
Each of the material entities in our group, including our material affiliated entities that we
use to operate our businesses and in which we hold no equity interest, is described below under "—
Description of the Material Group Entities."
Our May 2004 Restructuring and Arrangements with Affiliated Entities
The PRC government regulates foreign ownership in entities that provide advertising and human
resource related services. Prior to March 2004, PRC laws and regulations prohibited foreign persons
from owning a controlling interest in advertising entities. This foreign ownership limitation was
relaxed to permit foreign ownership of up to 70% of a PRC advertising entity, and starting in
December 2005, foreign investors are permitted to own 100% of a PRC advertising entity. In
addition, until November 2003, there were no PRC laws or regulations explicitly prohibiting or
limiting foreign ownership in entities providing human resource related services. Since November
2003, foreign ownership in entities providing human resource related services has been limited to
49%. Tech JV obtained an online advertising license in May 2000 and a license to conduct human
resource related services in September 2002. In addition, AdCo, an 80% owned subsidiary of Tech JV,
obtained an advertising license in June 2001 and various AdCo branches and subsidiaries
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received additional advertising licenses as we expanded into new cities. Tech JV and its
branches, AdCo and the AdCo Subsidiaries obtained these licenses in accordance with what we believe
to be prescribed procedures under then applicable PRC regulations. Over a period of time, beginning
when Tech JV and its branches, AdCo and the AdCo Subsidiaries acquired these licenses, we
transferred the business and operations conducted by our affiliated entities to Tech JV and its
branches, AdCo and the AdCo Subsidiaries. From 2002, Tech JV and its branches, AdCo and the AdCo
Subsidiaries have conducted substantially all of our advertising and human resource related
businesses.
In May 2004, we engaged in a restructuring which, among other things, reduced our effective
interest in Tech JV to 69.7%. In addition, Michael Lei Feng and Tao Wang formed Shanghai Run An
Lian Information Consultancy Co., Ltd., or RAL, an affiliated entity in which we hold no equity
interest. As part of our restructuring, RAL entered into a series of agreements with us that permit
us to consolidate all of its financial results under FIN 46. As a result, we consolidate RAL and
continue to consolidate Qian Cheng and Run An under our new structure.
Our services are currently provided through the following group entities:
•
online recruitment services are provided by Tech JV, which does not act as
an Internet content provider;
•
print advertising services are provided by AdCo and the AdCo Subsidiaries,
which are all direct and indirect majority owned PRC subsidiaries of Tech JV;
•
human resource related services are provided by RAL, which holds a license
to provide human resource related services; and
•
Internet content provider services are provided by RAL through a contractual
arrangement with Tech JV; RAL holds a license to act as an Internet content provider and
operates our
www.51job.com
website.
For a description of the distinction between an entity that provides online services and an
"Internet content provider," see "Item 4. — Information on the Company — Business Overview —
Regulation — Limitations on Foreign Ownership of Our Businesses — Internet content providers."
We no longer provide services together with Run An or Qian Cheng.
Tech JV and its branches, AdCo and the AdCo Subsidiaries recognize substantially all of our
revenues and receive substantially all of the cash payments from our clients. Under the terms of
our contractual arrangements with Qian Cheng, WFOE receives all of the economic rewards and bears
all of the economic risks of Qian Cheng's minority interest in Tech JV, AdCo and the AdCo
Subsidiaries.
We have been advised by Jun He Law Offices, our PRC counsel, that the foreign ownership
percentage of Tech JV, AdCo and the AdCo Subsidiaries prior to our restructuring was above the
maximum foreign ownership permitted for entities conducting advertising and human resource
operations at that time. For a description of the risks associated with our past ownership
structure, please see "Item 3. — Key Information — Risk Factors — Risks Related to Our Corporate
Structure — If the PRC authorities determine that our past ownership structure was inconsistent
with the requirements for operating certain of our businesses, we could be subject to sanctions."
In addition, there remains uncertainty regarding whether foreign owned PRC entities, such as
AdCo, are required to obtain special governmental approval in order to establish subsidiaries in
the PRC or otherwise invest in PRC entities. Following the formation of the AdCo Subsidiaries, in
connection with our restructuring we made inquiries with relevant PRC governmental authorities as
to whether AdCo was required to obtain such approval before establishing the AdCo Subsidiaries. We
have been unable to obtain any governmental ruling or advice on this matter. As a result, it is
uncertain whether special governmental approval, which we did not obtain, was necessary for the
establishment by AdCo of the AdCo Subsidiaries.
We intend to continue to evaluate from time to time the PRC regulatory environment with
respect to the foreign ownership of, and foreign participation in, advertising businesses, human
resource related services and Internet content provider services, and plan to continue to
streamline our ownership structure and operations as and when permitted by PRC laws and
regulations.
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Group Ownership Structure
The chart below sets forth our current ownership structure.
(1)
(1)
Does not include 51net HR, a dormant entity incorporated in the Cayman Islands and wholly
owned by 51job, Inc. and Wang Jin Information Technology (Shanghai) Co., Ltd., a wholly owned
subsidiary of 51net established in the PRC with no current operations.
(2)
Includes the subsidiaries and branches of AdCo that conduct advertising businesses and
Shanghai Cheng An Human Resources Co., Ltd., which provides outsourcing services.
(3)
Excludes Wuhan AdCo and Wang Cai AdCo, which are set out separately in the chart.
Our subsidiary, 51net, directly holds 51% of the outstanding shares of Tech JV, Qian
Cheng directly holds 1% of the outstanding shares of Tech JV, and our AdCo Subsidiary located in
the city of Wuhan, Wuhan Mei Hao Qian Cheng Advertising Co., Ltd., or Wuhan AdCo, directly holds
the remaining 48% of the outstanding shares of Tech JV. As a result of 51net's indirect majority
ownership of Wuhan AdCo and Qian Cheng's direct minority ownership of Wuhan AdCo, 51net is deemed
to effectively hold 69.7% of the equity interest in Tech JV and Qian Cheng is deemed to effectively
hold 30.3% of the equity interest in Tech JV.
Qian Cheng, Run An and RAL are each owned by Michael Lei Feng and Tao Wang, each an executive
officer of our company and a PRC citizen. Qian Cheng is 87% owned by Michael Lei Feng and 13% owned
by Run An. Run An and RAL are each 80% owned by Michael Lei Feng and 20% owned by Tao Wang. As a
result of their ownership interest in Run An, Michael Lei Feng and Tao Wang effectively holds 97%
and 3%, respectively, of the equity interest in Qian Cheng.
36
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Description of the Material Group Entities
51net
51net is an intermediate-level holding company that is the registered owner of some of our
trademarks and our domain name and holds direct and indirect equity interests in several of our PRC
subsidiaries. Our wholly owned subsidiary 51net is an international business company incorporated
in the British Virgin Islands. Specifically, 51net owns the
trademarks
,
,
51job.com
and
under certain categories specified by relevant PRC trademark regulations, and the
domain name
www.51job.com
. All of these trademarks have been registered with the Trademark Office
of the PRC State Administration for Industry and Commerce and are protected under the PRC Trademark
Law adopted in 1982 and revised in 2001. For a description of PRC regulations relating to
intellectual property rights, see "Item 4. — Information on the Company — Business Overview —
Regulation — Regulations Relating to Our Intellectual Property Rights."
Tech JV
We provide online recruitment services through Tech JV. Tech JV was initially established as
an equity joint venture between 51net and Qian Cheng. Immediately before our May 2004
restructuring, 51net held 99% of the equity interest in Tech JV and Qian Cheng held the remaining
1%. As part of our restructuring, 51net transferred 48% of its equity interest in Tech JV to Wuhan
AdCo. Since 51net indirectly holds a majority equity interest in Wuhan AdCo, and Qian Cheng
directly and indirectly holds a minority interest in Wuhan AdCo, 51net holds 69.7% of the effective
equity interest and Qian Cheng holds 30.3% of the effective equity interest in Tech JV. Because
51net is a British Virgin Islands company, Tech JV is deemed a foreign invested enterprise and its
business activities are subject to the PRC regulatory limitations on foreign ownership as discussed
in "Item 4. — Information on the Company — Business Overview — Regulation — Limitations on Foreign
Ownership of Our Businesses." Tech JV has obtained a permit to conduct online advertising from the
PRC State Administration for Industry and Commerce. The scope of its business license also includes
software development, multimedia and network system design and information technology.
Qian Cheng
Qian Cheng is our joint venture partner in Tech JV and holds a 30.3% effective equity interest
in Tech JV. Qian Cheng is an affiliated entity in which we hold no equity interest. Qian Cheng was
established by, and is wholly owned directly and indirectly by, two of our executive officers,
Michael Lei Feng and Tao Wang, both of whom are PRC citizens. Qian Cheng holds a license issued by
the Beijing Municipal Administration for Industry and Commerce to provide advertising services,
including designing, producing and publishing advertisements for Chinese and multinational
companies in China and contracting for advertising projects.
RAL
We provide human resource related and Internet content provider services through RAL. RAL
operates our
www.51job.com
website. RAL is a PRC limited liability company and is an affiliated
entity in which we hold no equity interest. RAL was established by, and since its inception has
been wholly owned by, Michael Lei Feng and Tao Wang. RAL holds a permit issued by the Shanghai
Bureau of Personnel, which allows it to provide certain human resource related services. RAL has
also obtained a permit from the Shanghai Municipal Telecommunications Bureau, which allows it to
provide Internet content provider services applicable to our businesses.
AdCo and the AdCo Subsidiaries
We provide print advertising services through Shanghai Qianjin Advertising Co., Ltd., or AdCo,
and AdCo's fifteen branch offices, seven majority owned subsidiaries and one jointly owned
subsidiary with Tech JV, or the AdCo Subsidiaries, located in different cities and provinces in
China. AdCo is a PRC equity joint venture company. Tech JV and Qian Cheng own 80% and 20%,
respectively, of the equity interest in AdCo. AdCo and the AdCo Subsidiaries have obtained permits
from the local Administrations for Industry and Commerce in the cities where they operate, which
allow them to conduct advertising business, including the designing and production of
advertisements and the contracting of domestic advertising projects.
WFOE
We provide advertising related technical and consulting services to Qian Cheng and software
and web related technical and consulting services to RAL through WFOE, our wholly owned PRC
subsidiary. WFOE is registered in the
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PRC with the relevant regulatory authorities as a wholly foreign owned enterprise. WFOE owns
certain of our trademarks and registered copyrights and its principal business is network and
software related technical support services.
Contractual Arrangements Among Our Group Entities
The relationships and economic arrangements among our group entities are governed by a series
of agreements. As part of our May 2004 restructuring, we amended or terminated certain existing
agreements and entered into certain additional agreements. The material agreements which currently
govern the relationships and economic arrangements among our group entities are illustrated in the
following chart and described in greater detail below.
Contractual arrangements with RAL
RAL technical and consulting service agreement
. The technical and consulting service agreement
between RAL and WFOE provides that WFOE has the exclusive right to provide software and web related
technical and consulting services to RAL. RAL will pay service fees to WFOE based on the extent and
nature of the services provided by WFOE, as set forth in invoices issued by WFOE to RAL from time
to time. The agreement has a term of ten years and may be extended with the consent of the parties.
This agreement is not subject to early termination, other than by WFOE solely upon a default by
RAL. RAL has no early termination rights with respect to this agreement.
RAL equity pledge agreement.
As security for RAL's obligations under the technical and
consulting service agreement, the shareholders of RAL have pledged all of their equity interest in
RAL to WFOE under an equity pledge agreement. Upon the occurrence of certain defaults by RAL as
defined in the RAL equity pledge agreement, including any default by RAL in respect of any
provisions of the RAL technical and consulting service agreement, WFOE, as pledgee, will be
entitled to certain rights, including the right to sell the pledged equity interest. The
shareholders of RAL have agreed that they will not dispose of the pledged equity interest or take
any actions that will prejudice WFOE's interest under the RAL equity pledge agreement. The pledge
cannot be released until the discharge of all of RAL's obligations under the RAL technical and
consulting service agreement. The parties have further agreed that WFOE has the right to approve
the appointment of directors and to recommend candidates to the board for positions of the general
manager and senior executives of RAL. The board may only choose from the candidates so recommended
by WFOE. In addition, during the ten-year term of the agreement, WFOE has the option to purchase
the equity interest in RAL to the maximum extent permitted under PRC laws. Upon the expiration of
the term, if and to the extent the option has not been exercised, WFOE is obligated to purchase the
equity interest in RAL to the extent permitted under PRC laws. In the case of an option held by a
foreign entity, PRC law requires that the exercise price of the option be determined at the time of
exercise by reference to the appraised value of the underlying equity interest. The exercise price
determined by the parties may not be significantly lower than this appraised value and must also be
approved by relevant PRC regulatory
38
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authorities. To comply with these regulations, the parties to
the RAL equity pledge agreement have agreed that the exercise price of the equity interest in RAL
shall be the lowest price permitted by PRC law.
Tech JV and RAL cooperation agreement.
Tech JV and RAL have entered into a cooperation
agreement under which RAL agrees to provide human resource related services to Tech JV's customers
and post human resource related information on its website
www.51job.com
, and Tech JV agrees to pay
RAL an amount equal to the direct operating costs incurred by RAL, plus a 5% margin, subject to a
total payment cap of RMB1,000,000 per quarter. In addition, Tech JV agrees to provide technical
support to RAL in connection with its provision of human resource related services and the
development, construction and maintenance of RAL's website. The cooperation agreement has a term of
ten years and may be extended with the consent of the parties.
Domain name license agreement.
51net has entered into a domain name license agreement with RAL
under which 51net has granted to RAL the right to use the
www.51job.com
domain name in the PRC in
connection with RAL's operation of its website. RAL is not permitted to assign its right under this
agreement to any third party. The license fee to be paid under the domain name license agreement
will be agreed to by both parties. The domain name license agreement has a term of two years and is
renewable upon the written consent of 51net.
Contractual arrangements with Qian Cheng
Qian Cheng technical and consulting service agreement.
WFOE and Qian Cheng have entered into a
technical and consulting services agreement under which WFOE has the exclusive right to provide
advertising related technical and consulting services to Qian Cheng. Qian Cheng will pay service
fees to WFOE based on the extent and nature of the services provided by WFOE, as set forth in
invoices issued by WFOE to Qian Cheng from time to time. The Qian Cheng
technical and consulting service agreement has a term of ten years and may be extended with
the consent of the parties. This agreement is not subject to early termination, other than by WFOE
solely upon a default by Qian Cheng. Qian Cheng has no early termination rights with respect to
this agreement.
Qian Cheng equity pledge agreement.
As security for Qian Cheng's obligations under the
technical and consulting service agreement, the shareholders of Qian Cheng have pledged all of
their equity interest in Qian Cheng to WFOE under an equity pledge agreement. Upon the occurrence
of certain defaults by Qian Cheng as defined in the Qian Cheng equity pledge agreement, including
any default by Qian Cheng in respect of any provisions of the Qian Cheng technical and consulting
service agreement, WFOE, as pledgee, will be entitled to certain rights, including the right to
sell the pledged equity interest. The shareholders of Qian Cheng have agreed that they will not
dispose of the pledged equity interest or take any actions that will prejudice WFOE's interest
under the Qian Cheng equity pledge agreement. The pledge cannot be released until the discharge of
all of Qian Cheng's obligations under the Qian Cheng technical and consulting service agreement.
The parties have further agreed that WFOE has the right to approve the appointment of directors and
to recommend candidates to the board for positions of the general manager and senior executives of
Qian Cheng. The board may only choose from the candidates so recommended by WFOE. In addition,
during the ten-year term of the agreement, WFOE has the option to purchase the equity interest in
Qian Cheng to the maximum extent permitted under PRC laws. Upon the expiration of the term, if and
to the extent the option has not been exercised, WFOE is obligated to purchase the equity interest
in Qian Cheng to the extent permitted under PRC laws. In all cases, the purchase price shall be the
lowest price permitted under PRC laws.
Call option agreement.
51net has entered into a call option agreement with Qian Cheng dated as
of August 1, 2002, and supplemented and amended as of May 3, 2004, under which 51net or its
designee is granted an irrevocable option to purchase all of Qian Cheng's equity interest in Tech
JV and AdCo for RMB1.2 million or, if such purchase price is not permissible under the applicable
PRC laws, the lowest price permitted under then applicable PRC laws. In addition, Qian Cheng
granted 51net an irrevocable option to purchase any and all of its equity interests in the AdCo
Subsidiaries, including, without limitation, Wuhan AdCo, at the lowest price permitted under PRC
laws. The call option agreement has a term of ten years, which may be extended upon written consent
of the parties.
Each of the above agreements, except the call option agreement, is dated as of May 3, 2004.
In the opinion of Jun He Law Offices, our PRC legal counsel:
•
our current ownership structure is in compliance with existing PRC laws and
regulations;
•
the agreements among our subsidiaries, affiliated entities and their
respective shareholders are valid and binding, and are enforceable under, and will not
result in any violation of, existing PRC laws or regulations; and
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•
our current business operations as described in this annual report are not
in violation of existing PRC laws, rules and regulations.
There are, however, substantial uncertainties regarding the interpretation and application of
PRC laws and regulations, including but not limited to the laws and regulations governing our
business or the enforcement and performance of our contractual arrangements in the event of the
imposition of statutory liens, death, bankruptcy and criminal proceedings. Accordingly, we cannot
assure you that PRC regulatory authorities will not take a view contrary to the opinion of our PRC
legal counsel. See "Item 3. — Key Information — Risk Factors — Risks Related to Our Corporate
Structure — If the PRC authorities determine that our past ownership structure was inconsistent
with the requirements for operating certain of our businesses, we could be subject to sanctions"
and " — Risks Related to the People's Republic of China — The PRC legal system has inherent
uncertainties that could materially and adversely affect us."
D. Property, Plants and Equipment
Our executive offices as well as our principal customer service, sales, marketing and
development facilities are currently located at Wen Xin Plaza, 755 Wei Hai Road, Shanghai 200041,
People's Republic of China. We also lease space for our network of sales offices in Beijing,
Changchun, Changsha, Chengdu, Chongqing, Dalian, Dongguan, Fuzhou, Guangzhou, Hangzhou, Harbin,
Hefei, Jinan, Kunming, Nanjing, Ningbo, Qingdao, Shanghai, Shenyang, Shenzhen, Suzhou, Tianjin,
Wuhan, Xian, Zhengzhou and Hong Kong. As of the date of this annual report, we have leases for
office space totaling approximately 23,360 square meters. We believe that we will be able to obtain
adequate facilities, principally through the leasing of appropriate properties, to accommodate our
expansion plans in the near future.
In March 2006, we signed a letter of intent to purchase our current principal executive
offices at 21st Floor, Wen Xin Plaza, 755 Wei Hai Road, which we expect will become our Shanghai
sales office, for an aggregate consideration of RMB27 million (US$3.3 million). We have not made
any cash payments toward this purchase as of May 31, 2006. We expect to fund this purchase through
operating cash flows and through our existing capital resources.
In April 2006, we completed the purchase a new office complex of approximately 12,600 square
meters in Zhangjiang High Technology Park in Shanghai's New Pudong Area. The purchase price for the
new premises is approximately RMB114 million (US$14.1 million), of which we have paid RMB108
million (US$13.4 million) as of May 31, 2006. We also expect to incur additional expenses
associated with renovations, relocation and other related items. Expenditures related to the new
office complex are expected to be funded by through operating cash flows and through our existing
capital resources. We plan to move our national technology and online service center as well as our
principal executive offices to the new office complex and expect to begin occupying the new
premises in late 2006.
ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
The following discussion of our financial condition and results of operations is based upon
and should be read in conjunction with our consolidated financial statements and their related
notes included elsewhere in this annual report on Form 20-F.
A. Overview
We believe that we are a leading provider of integrated human resource services in China.
Increases in revenues from our recruitment related businesses have been the primary driver of our
financial results. We receive a majority of our revenues in the form of fees from employers for
placing job advertisements on
51job Weekly
and
www.51job.com
. We also receive fees from employers
for access to our
www.51job.com
resumé database, use of
eHire
and in connection with
eSearch
and
other human resource related services. The increases in our revenues reflect greater penetration in
our existing markets as well as expansion into new markets across China. In addition, our net
income has increased each year since we became profitable in 2002 on a full-year basis. The
increases in net income in 2003 and 2004 reflect both our revenue growth as well as the reduction
as a percentage of net revenues of our cost of services and operating expenses driven by improved
economies of scale and operational efficiencies. Net income was relatively unchanged from 2004 to
2005 as our revenue growth was offset by an increase in operating expenses.
Revenues
Our total revenues in 2005 were RMB595.6 million (US$73.8 million), a 24.1% increase from
RMB479.9 million in 2004. The substantial majority of our revenues come from employers who purchase
our
51job Weekly
and
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www.51job.com
recruitment services. The revenue growth we have achieved in our
recruitment advertising services have been principally characterized by expansion of these
businesses in existing cities as well as our entry into new cities. We believe that our revenue
growth will continue to be driven by further development and liberalization of the Chinese economy
and other macroeconomic factors such as the growing number of companies, increasing competition
amongst companies for skilled and experienced workers, and significant growth in job openings in
China. We believe these factors should lead to increased use and growing acceptance of recruitment
advertising and other human resource services by employers in China. In addition, we believe that
an increasingly skilled, educated and urbanized workforce in China will drive the demand for and
usage of our services.
The following table sets forth the revenues from our principal lines of business as a
percentage of our total revenues for the periods indicated.
For the year ended December 31,
2003
2004
2005
Revenues:
Print advertising
62.3
%
62.7
%
59.8
%
Online recruitment services
26.2
23.2
26.8
Executive search
5.4
5.2
4.4
Other human resource related services
6.1
8.9
9.0
Total revenues
100.0
%
100.0
%
100.0
%
The following table sets forth our revenue growth rates by business line for the periods
indicated.
2003
2004
2005
compared to
compared to
compared to
2002
2003
2004
Print advertising
56.1
%
64.6
%
18.5
%
Online recruitment services
165.9
44.9
43.0
Executive search
61.9
58.2
5.6
Other human resource related services
82.1
137.9
24.8
Total revenues
77.2
%
63.6
%
24.1
%
Recruitment related revenues
Our recruitment related revenues are comprised of fees from employers for our
51job Weekly
print advertising business, our
www.51job.com
online recruitment services and our
eSearch
executive
search services. Because a large portion of our costs associated with providing our recruitment
related services are fixed, we believe these services present a significant potential for economies
of scale and improvement in our profitability as we increase our volume of advertisements and
services and the prices that we charge. We expect that we will continue to earn the substantial
majority of our revenues and profits from our recruitment related services in the future.
Print advertising revenues.
Our print advertising revenues are generated from fees that we
charge employers for placing recruitment and related advertisements in editions of
51job Weekly
across our markets in China. We do not receive revenues from the sale of
51job Weekly
at
distribution locations such as newsstands, kiosks and post offices. Employers sign print
advertising contracts with us for single or multiple advertisements in one or more markets. These
contracts as well as the time between the signing of a contract and the publishing of an
advertisement in
51job Weekly
are generally short-term in nature.
Our advertising fees vary and depend on a number of factors including the size, placement,
format and use of color and graphics in the advertisement, the length of time the advertisement is
to appear and the market in which the advertisement is placed. As we have increased penetration in
our existing markets and expanded into new cities, our client base and the number of print
advertising pages have grown. Our print advertising revenues are primarily affected by the number
of print advertising pages and the fees that we charge.
We expect that future growth of our print advertising business will be primarily driven by a
combination of increases in the volume of our print advertising pages and in average revenue per
page. Our print advertising prices vary considerably between individual markets due to differences
in local competitive environments, purchasing power and other conditions. Historically, the print
advertising businesses in our individual markets have not been subject to significant or prolonged
price competition. While the prices we charge for print advertising in each city have been
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generally stable or have moderately increased, we have from time to time initiated or discontinued
special promotions or sales campaigns in certain cities which may impact the overall average
revenues per page. In addition, our overall average revenues per page are affected to some extent
by differences in relative growth rates in individual markets, with growth in higher priced markets
tending to increase our overall average revenues per page and growth in lower priced markets
tending to reduce the overall average.
We calculate the number of our print advertising pages by physically counting the number of
paid advertising pages in each of our editions of
51job Weekly
. In calculating the number of paid
advertising pages, we make adjustments to take into account differing page sizes and pages with
mixed advertising and non-advertising content. This is a manual process that is subject to error,
including errors in judgment as to the appropriate adjustments to be made. We cannot assure you
that our methodology, page counting, calculations and analyses are accurate, or that they yield
results that are comparable between periods or give a correct approximation of the actual revenues
we generate per page.
As our customers usually place orders for print advertisements on a week-to-week basis, our
print advertising business is subject to weekly fluctuations. We do not recognize advertising
revenue until an advertisement is actually printed in
51job Weekly
. As a result, delays or
cancellations by advertisers hamper our ability to predict revenue for future periods and makes it
difficult for us to accurately forecast revenues with any degree of certainty. See "Item 3. — Key
Information — Risk Factors — Risks Related to Our Business — Our recruitment advertising business
is subject to weekly fluctuations which hamper our ability to predict when revenue will ultimately
be recognized, if at all."
We generally require that all advertising fees be paid in advance of posting an advertisement,
although we may offer credit terms to select clients on a case-by-case basis.
Online recruitment services revenues.
Our online recruitment services revenues are generated
from fees we charge employers for placing recruitment and related advertisements on our
www.51job.com
website and for accessing our
eHire
web-based online resumé and recruitment
management platform. We also generate online revenues for website design and hosting services that
we provide to businesses that wish to create their own dedicated recruitment website. We do not
charge job seekers for using
www.51job.com
.
We believe that the increase of our online recruitment services revenues have been
characterized by increased acceptance of online advertising as a recruitment medium in China and
our effectiveness in penetrating the growing online recruitment services market. In addition, we
believe that, by offering online advertising in connection with our print advertising service, we
are able to attract print advertising customers to our online recruitment services, as well as new
customers seeking the broader coverage offered by our integration of these two channels.
The growth of our online recruitment services revenues has been primarily driven by a higher
number of unique employers using these services rather than an increase in average revenue per
unique employer. Average revenue per unique employer has been principally affected by offsetting
factors. New customers tend to use basic, lower priced online recruitment services and significant
increases in these customers generally result in higher aggregate online recruitment services
revenues but lower average revenue per unique employer. We may also choose to offer introductory or
promotional packages at reduced prices from time to time which will also lead to a reduction in
average revenue per unique employer. Offsetting these factors that lower our average revenue per
unique employer is our ability to retain customers and migrate them over time to higher-priced
products. In addition, as more customers become increasingly
familiar and comfortable with our online platform, our ability to sell them a package of
multiple online recruitment services increases our average revenue per unique employer. Our ability
to retain customers and migrate them to higher priced products or multiple purchases may be
adversely affected by, among other things, difficulties we may encounter in developing or launching
higher priced services as well as offerings of similar services by competitors.
We define a unique employer as a customer that purchases our online recruitment services
during a specified period. We make adjustments for multiple purchases by the same customer within a
city to avoid double counting. Each employer is assigned a unique identification number in our
management information system. Affiliates and branches of a given employer may, under certain
circumstances, be counted as separate unique employers. Our calculation of the number of unique
employers is subject to misidentification and other forms of error, including errors in judgment as
to appropriate adjustments to be made to the data. We cannot assure you that our methodology,
employer identification, calculations and analyses are accurate, or that they yield results that
are comparable between periods or give a correct approximation of actual numbers of customers.
As with
51job Weekly
, we generally require that all advertising fees be paid in advance of
posting an advertisement on our website, although we may offer credit terms to select clients on a
case-by-case basis.
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Executive search revenues.
Our
eSearch
executive search revenues are generated from fees and
commissions paid by employers. We generally charge a total assignment fee of approximately 30% of
the candidate's annual compensation, including a minimum upfront retainer. We offer executive
search services to employers as a part of our "one-stop" solution strategy and although we believe
that we have been able to develop this business through sales and marketing efforts, we do not
expect that this business will contribute significantly to our revenues in the foreseeable future.
In addition, our ability to expand this business will depend on further acceptance of executive
search by employers in China as an effective recruitment tool. As a result, as our recruitment
advertising businesses expand, we expect that our executive search service revenues may continue to
decline as a percentage of our overall revenues.
Other human resource related revenues
Revenues from our other human resource related services are principally generated from fees
paid for attending our training seminars and industry conferences, for contracting our business
processing outsourcing services and for using our assessment services, our salary survey studies
and
eHR
software product. We expect to continue to develop additional human resource related
services and products for our corporate clients. While revenues from other human resource related
services currently represent less than 10% of our total revenues, we believe that these products
and services complement our "one-stop" human resource solution strategy and raise our brand
awareness as an industry innovator and thought leader.
Growth of our other human resource related services will be dependent on our ability to
successfully develop, introduce and increase adoption of these types of products and services in
China's rapidly evolving human resource services market. We believe the increase in other human
resource related revenues has been primarily driven by growing customer acceptance of these
products and services as well as our sales and marketing efforts. In addition, we believe that our
expansion of training and business process outsourcing services to new customers and additional
cities have contributed to the growth of this segment. As we believe these newer services and the
overall human resource industry in China are in the early stages of development, we believe there
may be significant market potential in the future but we are unable to quantify the size at this
time.
Net revenues and business taxes
Our net revenues reflect a PRC business tax of 5% and other related surcharges which are
levied on our revenues, after certain deductible expenses, generated from services we provide in
China. A portion of the business taxes that we had previously paid was refunded in 2003, 2004 and
2005 as a result of local government financial incentives. These refunds are recognized as other
income in our statement of operations. We cannot assure you that we will continue to receive such
financial incentives in the future.
Costs
We operate and manage our various businesses as a single segment. In addition, we share
operating costs and management resources amongst these businesses. As a result, we do not account
for our results of operations on a geographical or other basis, and we are unable to allocate costs
among our various businesses.
The following table sets forth our cost of services and total operating expenses as a
percentage of our net revenues for the periods indicated.
For the year ended December 31,
2003
2004
2005
Cost of services
(54.1
%)
(49.2
%)
(47.9
%)
Total operating expenses
(33.9
%)
(30.9
%)
(38.4
%)
Our cost of services has declined as a percentage of our net revenues from 2003 to 2005. We
believe this has been a result of increased economies of scale in our recruitment related services,
particularly our print advertising and online recruitment services businesses, and of improved
operating efficiencies. As we have expanded our operations and enlarged our infrastructure and
service platforms, we believe that we have been able to attract new corporate clients and
to increase sales opportunities with existing customers across our various markets. This has
allowed us to achieve greater economies of scale as our revenues have increased faster than our
customer service costs. In addition, expansion of our online recruitment services business requires
limited additional fixed costs and the significant revenue growth of this business has contributed
to our overall improved operating efficiency. We believe that our online recruitment services
business will achieve higher profit margins than our other recruitment related businesses in the
longer term.
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We believe that our operating expenses declined as a percentage of our net revenues in 2003
and 2004 as a result of improved operating efficiencies primarily due to increased productivity of
our infrastructure and staff. In 2005, we believe that operating expenses increased as a percentage
of our net revenues due to expansion of our sales force, higher marketing expenses and greater
general administrative expenses following our becoming a public company in September 2004. As we
aim to decrease our cost of services and total operating expenses as a percentage of our net
revenues, we continue to identify areas in our businesses that will allow us to benefit from
economies of scale and operating efficiencies. However, significant uncertainties may impact out
ability to lower these costs and expenses and we cannot assure you that we will be able to decrease
these costs as a percentage of our net revenues.
Cost of services
Our cost of services primarily includes printing related expenses, employee compensation and
depreciation. The majority of our costs of services are printing related costs, which principally
consist of printing, publishing and distribution expenses that we pay to our newspaper contractors.
Our printing related costs are characterized by both fixed and variable components. These costs
also have tended not to increase or decrease proportionately to increases or decreases in our print
advertising revenues and as a result, we have been able to grow our print advertising businesses
while incurring lower printing related costs relative to our print advertising revenues. We aim to
lower our printing related costs and continuously seek opportunities to secure more favorable terms
with newspaper contractors. In addition, as we have grown our online recruitment services, we have
been able to leverage our existing infrastructure, allowing us to incur limited additional costs
relative to the higher revenues we have generated. The majority of our employee, depreciation and
other costs of services are largely shared across our various business lines.
Operating expenses
Our operating expenses include sales and marketing expenses, general and administrative
expenses, and share-based compensation.
The following table sets forth our operating expenses as a percentage of our net revenues for
the periods indicated.
For the year ended December 31,
2003
2004
2005
Operating expenses:
Sales and marketing
(13.8
%)
(14.7
%)
(20.2
%)
General and administrative
(13.6
)
(12.1
)
(15.8
)
Share-based compensation — share options
(4.8
)
(4.1
)
(2.4
)
Share-based compensation — founder shares
(1.7
)
—
—
Total operating expenses
(33.9
%)
(30.9
%)
(38.4
%)
Our sales and marketing expenses primarily include employee compensation for our sales and
marketing staff, advertising and promotion expenses, and expenses for our management and staff
related to our new market expansion as well as existing operations. The sales and marketing
strategies we employ in each city to promote our brand and services depends on a number of factors
such as local competitive conditions and the cost, popularity and effectiveness of various media
formats. In addition, we receive marketing support for
51job Weekly
from many of our newspaper
contractors. However, since we record all costs associated with our relationships with our
newspaper contractors under cost of services, our sales and marketing expenses do not reflect costs
incurred in connection with this marketing support.
Our general and administrative expenses primarily include rent and property management fees,
employee compensation, administrative office expenses, professional services fees and depreciation.
General and administrative expenses increased from 2003 to 2005 due to our expansion into new
markets, the introduction of new services and the overall expansion of our businesses. In addition,
following the completion of our initial public offering in October 2004, we have incurred
additional general and administrative expenses due to the various additional legal, accounting and
other requirements applicable to operating as a public company listed in the United States.
Although we have purchased
directors' and officers' liability insurance, we also expect to incur significant legal
expenses in defending class action lawsuits filed against us. See "Item 8. — Financial Information
— Consolidated Statements and Other Financial Information — Legal Proceedings." However, we aim to
lower our general and administrative expenses as a percentage of net revenues but due to
significant uncertainties, we cannot assure you we will be able to do so.
44
Table of Contents
Income Taxation
We file separate income tax returns because we and our affiliated entities are incorporated in
different jurisdictions.
Under the current laws of the Cayman Islands, we are not subject to income or capital gain
taxes. In addition, upon payments of dividends by us to our shareholders, no Cayman Islands
withholding tax will be imposed.
Under the current laws of the British Virgin Islands, we are exempt from income tax on foreign
derived income. In addition, there are no withholding taxes in the British Virgin Islands.
In accordance with "Income Tax Law of China for Enterprises with Foreign Investment and
Foreign Enterprises," foreign-invested enterprises that are incorporated in China are generally
subject to enterprise income tax, or EIT, at a rate of 33%. As opposed to our business taxes which
is based on our total revenues and which is discussed above in "— Revenues — Net revenues and
business taxes," EIT is a separate tax based on our taxable income. Under current rules, newly
organized PRC entities conducting advertising businesses are entitled to elect a tax exemption for
their first two years of operation and may carry forward tax losses incurred, if any, during this
two-year period to future periods. A number of our AdCo Subsidiaries have elected to receive the
two-year tax exemption treatment. The majority of these exemptions expired in 2004 and 2005, and
others will expire in 2006 and 2007. Upon the expiration of their tax exemptions with the exception
of AdCo's subsidiary in Shenzhen and Wang Cai AdCo's subsidiaries in Shanghai and Shenzhen, each of
which have obtained a preferential tax rate of 15%, the other AdCo Subsidiaries will be taxed at
the statutory tax rate, currently 33%. These expirations of the tax exemptions caused our effective
tax rate to increase significantly in 2004. In addition, so long as we continue to recognize
share-based compensation expense in future periods, our effective tax rate may exceed the statutory
tax rate as a result of such expense, since share-based compensation is not deductible for PRC tax
purposes. The amount of income tax payable by our PRC subsidiaries in the future will depend on
various factors, including, among other things, the results of operations and taxable income of,
and the statutory tax rate applicable to, each of the subsidiaries, and our effective tax rate
depends in part on the extent of each of our subsidiaries' relative contribution to our
consolidated taxable income. As our business expands, we may establish new entities from time to
time which, depending on applicable law, may be entitled to certain tax incentives, including tax
exemptions. We intend to continue to explore opportunities to take advantage of available tax
incentives. In addition, some of our PRC subsidiaries and affiliated entities have accumulated tax
loss carryforwards that have not previously been recognized as deferred tax assets because there
was significant uncertainty as to whether we would be able to realize the benefit from those loss
carryforwards. To the extent permitted by PRC tax rules, we may undertake further reorganizations
or transactions among our subsidiaries and affiliated entities or with third parties to utilize
some or all of these tax loss carryforwards before they expire, or qualify for additional tax
benefits.
Our foreign-invested Chinese subsidiary, Tech JV, has been granted a preferential 30% EIT rate
with no expiration date.
Critical Accounting Policies
We prepare financial statements in conformity with U.S. GAAP, which requires us to make
estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of
contingent assets and liabilities on the date of the financial statements, and the reported amounts
of revenues and expenses during the financial reporting period. We continually evaluate these
estimates and assumptions based on the most recently available information, our own historical
experience and various other assumptions that we believe are reasonable under the circumstances,
the results of which form the basis for making judgments about the carrying values of assets and
liabilities that are not readily apparent from other sources. Since the use of estimates is an
integral component of the financial reporting process, actual results could differ from those
estimates. Some of our accounting policies require higher degrees of judgment than others in their
application. We consider the policies discussed below to be critical to an understanding of our
financial statements as their application assists management in making their business decisions.
We operate and manage our various businesses as a single segment. In addition, since our
revenues are primarily generated from customers in the PRC, we do not account for our results of
operations on a geographical or other basis. Since many of our management and staff provide
services with respect to many or all of our businesses, and since our infrastructure and operations
are designed to facilitate all of our businesses as an integrated unit, we are unable to allocate
costs among our various businesses or present our financial results in terms of multiple
business segments.
45
Table of Contents
Income taxes
We account for income taxes under the provisions of Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes," or SFAS No. 109. Under SFAS No. 109, income taxes
are accounted for under the asset and liability method. Deferred taxes are determined based upon
differences between the financial reporting and tax bases of assets and liabilities at currently
enacted statutory tax rates for the years in which the differences are expected to reverse. The
effect on deferred taxes of a change in tax rates is recognized in income in the period of change.
We provide a valuation allowance on our deferred tax assets to the extent we consider it to be
more likely than not that we will be unable to realize all or part of such assets. Our future
realization of our deferred tax assets is dependent on many factors, including our ability to
generate taxable income within the period during which temporary differences reverse or before our
tax loss carryforwards expire, the outlook for the Chinese economy and overall outlook for our
industry. We consider these factors at each balance sheet date and determine whether valuation
allowances are necessary.
We had deferred tax assets of RMB4.6 million as of December 31, 2003, RMB7.8 million as of
December 31, 2004 and RMB6.3 million (US$0.8 million) as of December 31, 2005.
As of December 31, 2003, 2004 and 2005, we recognized aggregate valuation allowances of RMB7.8
million, RMB7.1 million and RMB5.8 million (US$0.7 million), respectively. As a result of our
current expectations as to our ability to generate taxable income, we currently do not expect to
provide significant further valuation allowances with respect to our net deferred tax assets. In
the event that unexpected developments prevent us from realizing some or all of our deferred tax
assets, we will be required to take a charge against our net income for the period in which such
events occur.
Share-based compensation
Prior to January 1, 2006, we accounted for share-based compensation arrangements under
Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," or APB No.
25, and complied with the disclosure provisions of SFAS No. 123, "Accounting for Stock-Based
Compensation," or SFAS No. 123. In general, compensation cost under APB No. 25 was recognized based
on the difference, if any, between the estimated fair value or market value of our common shares
and the amount an employee was required to pay to acquire the shares, as determined on the date the
option was granted. Compensation cost, if any, was recorded in shareholders' equity as additional
paid-in capital with an offsetting entry recorded to deferred share-based compensation. Deferred
share-based compensation was amortized and charged to expense based on the vesting terms of the
underlying options.
When estimating the fair value of our common shares on the grant date, we reviewed both
internal and external sources of information. As a private company before the completion of our
initial public offering in October 2004, the sources we used to determine the fair value of the
underlying shares at the date of measurement were subjective in nature and were based on, among
other factors:
•
our financial condition as of the date of grant;
•
our financial and operating prospects at that time;
•
comparable market indicators; and
•
an independent third party analysis of the historical value of our underlying common shares.
We recognized an aggregate of RMB35.2 million in deferred share-based compensation in 2000 in
connection with our issuance of restricted common shares to each of our founders in that year. As
these shares were placed in escrow and were subject to repurchase by us between 2000 and 2003 in
the event of termination of employment by our founders, we considered this arrangement to
constitute share-based compensation to be accounted for in accordance with APB No. 25, and
accordingly, we amortized all of this deferred share-based compensation as an expense over this
period. This resulted in share-based compensation expense related to these issuances of RMB8.8
million in 2001, RMB8.8 million in 2002 and RMB4.6 million in 2003. All such shares have
subsequently been released from escrow and we will not recognize additional share-based
compensation expense with respect to these issuances.
In addition, we recognized share-based compensation in connection with the grant of options to
employees and
directors, the sale of common shares to one of our directors at a price below fair market
value, and the extension of the exercise period of options held by certain terminated employees.
This resulted in additional share-based compensation expense of RMB14.1 million in 2003, RMB20.5
million in 2004 and RMB14.6 million (US$1.8 million) in 2005.
46
Table of Contents
In December 2004, the FASB issued Statement of Financial Accounting Standards No. 123R
(revised 2004), "Share-Based Payment," or SFAS No. 123R, that requires companies to expense the
value of employee stock options and similar awards. Under SFAS No. 123R, share-based compensation
will be (1) measured at fair value on the awards' grant date, based on the estimated number of
awards that are expected to vest and (2) required as awards vest. Under SFAS No. 123R, we could
select from three transition methods: (1) the modified prospective method, where the expenses
related to unvested but still outstanding options as calculated under the original SFAS No. 123 be
charged to expense without any change in previously calculated measurement; (2) a variation of the
modified prospective method, where in addition to (1), we restate for prior interim periods using
prior SFAS No. 123 pro forma disclosure amounts; and (3) the modified retrospective method, where
all prior period financial statements are retroactively restated based on pro forma disclosures as
calculated under SFAS No. 123.
We have adopted SFAS No. 123R effective from January 1, 2006 and selected the modified
prospective method as the transitional method. Consequently, our share-based compensation expense
relating to the unvested portion of the outstanding grants is recognized based on the fair value of
the options as determined under SFAS No. 123 as disclosed in note 2(m) to our consolidated
financial statements included elsewhere in this annual report. New options to be issued after the
effective date are recognized based on the provisions of SFAS No. 123R. The adoption of SFAS No.
123R increased our share-based compensation expense in our consolidated statement of operations in
the first quarter of 2006 and we expect the implementation of SFAS No. 123R may adversely affect
our earnings in the future.
Basis for consolidation and our relationships with our affiliated variable interest entities
We consolidate 100% of the interests of all of our subsidiaries and affiliated entities.
Historically, certain of our operations were conducted by two affiliated entities, Run An and
Qian Cheng, in which we have not held any equity interest. These entities were, and continue to be,
wholly owned, directly and indirectly, by two of our executive officers. We entered into
contractual arrangements with these two entities under which we bore all of their economic risk and
received all of their economic rewards. In our consolidated financial statements, we have
consolidated all of the interests of Run An and Qian Cheng under FASB Interpretation No. 46,
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," or FIN 46.
FIN 46 requires a "variable interest entity" to be consolidated by the primary beneficiary of
such entity. An entity is considered to be a variable interest entity if certain conditions are
present, including where the equity investors in the entity do not have the characteristics of a
controlling financial interest or do not have sufficient equity at risk for the entity to finance
its activities without additional subordinated financial support from other parties. Under various
agreements with Run An and Qian Cheng, we were considered the primary beneficiary of Run An and
Qian Cheng, and all of their interests have been consolidated in our financial statements. In
addition, as a result of our consolidation of Qian Cheng, its minority interests in Tech JV and its
subsidiaries have been consolidated in our financial statements. All significant transactions and
balances between us, our subsidiaries, Run An and Qian Cheng have been eliminated upon
consolidation.
In connection with our restructuring in May 2004, we terminated or modified the agreements
referred to above and entered into new agreements with these entities and RAL, a new entity formed
by two of our executive officers. We bear all of the economic risks and receive all of the economic
rewards of these entities under these agreements. Consequently, we have consolidated the interests
of RAL and continue to consolidate the interests of Run An and Qian Cheng under FIN 46. In the
opinion of Jun He Law Offices, our PRC legal counsel, these contractual arrangements and our
current business operations are not in violation of existing PRC laws, rules and regulations. There
are, however, substantial uncertainties regarding the interpretation and application of PRC laws
and regulations, including but not limited to the laws and regulations governing our business or
the enforcement and performance of our contractual arrangements in the event of the imposition of
statutory liens, death, bankruptcy and criminal proceedings. Accordingly, we cannot assure you that
PRC regulatory authorities will not take a view contrary to the opinion of our PRC legal counsel.
See "Item 3. — Key Information — Risk Factors — Risks Related to Our Corporate Structure — If the
PRC authorities determine that our past ownership structure was inconsistent with the requirements
for operating certain of our businesses, we could be subject to sanctions" and "— Risks Related to
the People's Republic of China — The PRC legal system has inherent uncertainties that could
materially and adversely affect us."
We do not believe that our restructuring has had an impact on our financial statements or how
our results are reported in the future. For additional information with respect to our
relationships with RAL, Run An and Qian Cheng, see "Item 4. — Information on the Company —
Organizational Structure."
47
Table of Contents
Allowances for doubtful accounts
We provide general and specific provisions for bad debts when facts and circumstances indicate
that the receivable is unlikely to be collected. If the financial condition of our customers were
to deteriorate, resulting in an impairment of their ability to make payments, additional allowances
may be required.
Long-lived assets
Our accounting for long-lived assets, including property and equipment, is described in note
2(g) to our consolidated financial statements included elsewhere in this annual report. The
recorded value of long-lived assets is affected by a number of management estimates, including
estimated useful lives, residual values and impairment charges. We assess impairment for long-lived
assets whenever the net book value for these assets is more than the estimated future cash flows
attributable to them. During each of the years ended December 31, 2003, 2004 and 2005, we did not
record any impairment charges. If different judgments or estimates had been utilized, material
differences could have resulted in the amount and timing of the impairment charge and the related
depreciation and amortization charges.
Results of Operations
The following table sets forth a summary of our audited consolidated statements of operations
for the periods indicated both in Renminbi and as a percentage of net revenues:
For the year ended December 31,
2003
2004
2005
RMB
%
RMB
%
RMB
%
Revenues:
Print advertising
182,606,297
65.2
300,651,791
65.9
356,284,649
63.4
Online recruitment services
76,960,121
27.5
111,508,533
24.4
159,494,922
28.4
Executive search
15,748,331
5.6
24,907,914
5.5
26,306,740
4.7
Other human resource
related revenues
18,019,611
6.4
42,875,597
9.4
53,507,789
9.5
Total revenues
293,334,360
104.7
479,943,835
105.2
595,594,100
106.0
Less: Business and related tax
(13,215,419
)
(4.7
)
(23,823,953
)
(5.2
)
(33,567,880
)
(6.0
)
Net revenues
280,118,941
100.0
456,119,882
100.0
562,026,220
100.0
Cost of services
(151,477,142
)
(54.1
)
(224,606,635
)
(49.2
)
(269,328,384
)
(47.9
)
Gross profit
128,641,799
45.9
231,513,247
50.8
292,697,836
52.1
Operating expenses:
Sales and marketing
(38,619,523
)
(13.8
)
(67,271,096
)
(14.7
)
(113,656,714
)
(20.2
)
General and administrative
(38,135,612
)
(13.6
)
(55,175,493
)
(12.1
)
(88,978,985
)
(15.8
)
Share-based compensation —
share option
(13,482,546
)
(4.8
)
(18,678,238
)
(4.1
)
(13,073,480
)
(2.4
)
Share-based compensation —
founder shares
(4,622,466
)
(1.7
)
—
—
—
—
Total operating expenses
(94,860,147
)
(33.9
)
(141,124,827
)
(30.9
)
(215,709,179
)
(38.4
)
Income from operations
33,781,652
12.1
90,388,420
19.8
76,988,657
13.7
Loss from foreign currency
translation
(3,456
)
(0.0
)
(2,158
)
(0.0
)
(11,320,194
)
(2.0
)
Interest and investment income
930,288
0.3
2,846,422
0.6
20,385,151
3.6
Other income
1,083,790
0.4
1,968,532
0.4
5,313,723
1.0
Income before income tax
provision
35,792,274
12.8
95,201,216
20.9
91,367,337
16.3
Income tax expense
(3,192,011
)
(1.1
)
(34,058,184
)
(7.5
)
(29,945,033
)
(5.4
)
Net income
32,600,263
11.7
61,143,032
13.4
61,422,304
10.9
Other Financial Information:
Aggregate share-based
compensation
expense
(1)
(18,701,563
)
(6.7
)
(20,489,734
)
(4.5
)
(14,553,321
)
(2.6
)
(1)
Aggregate share-based compensation expense includes share-based compensation expense
attributable to cost of services and operating expenses.
48
Table of Contents
2005 compared to 2004
Total revenues.
Our total revenues increased 24.1% to RMB595.6 million (US$73.8 million) in
2005 from RMB479.9 million in 2004. This increase was primarily driven by growth in our print
advertising revenues and our online recruitment services revenues. We derived our total revenues
from:
•
Print advertising.
Our print advertising revenues increased 18.5% to
RMB356.3 million (US$44.1 million) in 2005 from RMB300.7 million in 2004. This increase
was primarily due to a higher number of recruitment advertisements placed in our editions
of
51job Weekly
as we entered into four new markets in 2005 and increased our penetration
of our existing markets. We estimate that the number of print advertising pages increased
32.0% to 11,884 in 2005 from 9,001 in 2004. The increase in revenues from higher
advertisement volumes was partially offset by a decline in our overall average revenue per
page. Our overall average revenue per page declined principally as a result of an increase
in revenue contribution from certain markets in which local prices were lower than our
average. Although the prices that we charged for our print advertising in each city
remained generally stable or moderately increased, we may adjust our sales policy on
promotions and discounts in our cities from time to time.
•
Online recruitment services.
Our online recruitment services revenues
increased 43.0% to RMB159.5 million (US$19.8 million) in 2005 from RMB111.5 million in
2004. This increase was mainly attributable to substantial growth in the number of unique
employers using our online recruitment services. We estimate that the number of unique
employers increased 44.0% to 56,599 in 2005 from 39,317 in 2004. This growth primarily
consisted of an increase in employers placing recruitment advertisements on
www.51job.com
and, to a lesser extent, reflected an increase in the use of our
eHire
web-based online
resumé and recruitment management platform. Our average revenue per unique employer in
2005 was relatively unchanged from the level in 2004. We believe that the increase in new
online customers, who generally purchase basic, lower priced recruitment advertisements
which drive a decline in our average revenue per unique employer was primarily offset by
the greater number of customers purchasing multiple online recruitment services and the
migration of customers to higher priced products, both factors which would increase our
average revenue per unique employer.
•
Executive search.
Our executive search revenues increased 5.6% to RMB26.3
million (US$3.3 million) in 2005 from RMB24.9 million in 2004, primarily as a result of
greater sales efforts.
•
Other human resource related revenues
. Our revenues from other human
resource related services increased 24.8% to RMB53.5 million (US$6.6 million) in 2005 from
RMB42.9 million in 2004. This increase was primarily attributable to an increase in
training revenues as we conducted a greater number of seminars and courses. In addition,
we believe the increase reflected growing customer acceptance of new services,
particularly our business process outsourcing services. In November 2004, we discontinued
the sale of stationery and offices supplies to our business customers which contributed
revenues of RMB2.2 million (US$0.3 million) in 2005 and RMB12.7 million in 2004.
Net revenues.
Our net revenues increased 23.2% to RMB562.0 million (US$69.6 million) in 2005
from RMB456.1 million in 2004. Our net revenues reflected our total revenues less the amounts paid
as business taxes of RMB33.6 million (US$4.2 million) in 2005 and RMB23.8 million in 2004.
Cost of services.
Our cost of services increased 19.9% to RMB269.3 million (US$33.4 million)
in 2005 from RMB224.6 million in 2004. The majority of this increase was a result of higher
printing related expenses associated with the expansion of
51job Weekly
into four new cities in
2005 as well as greater page volumes in existing markets. In addition, our employee compensation
expense increased principally as a result of new staff additions to support our
growing operations. Our cost of services in 2005 also included share-based compensation
expense of approximately RMB1.5 million (US$0.2 million), a decrease from RMB1.8 million in 2004.
Our cost of services declined as a percentage of revenues as we benefited from increasing economies
of scale and operating efficiencies in our businesses.
Gross profit.
As a result of the above factors, our gross profit increased 26.4% to RMB292.7
million (US$36.3 million) in 2005 from RMB231.5 million in 2004. Our gross profit margin, which is
equal to our gross profit divided by our net revenues, was 52.1% in 2005 compared to 50.8% in 2004.
Operating expenses.
Our total operating expenses increased 52.9% to RMB215.7 million (US$26.7
million) in 2005 from RMB141.1 million in 2004. The increase in our operating expenses was
primarily due to an increase in sales and marketing expenses as well as general and administrative
expenses, which was partially offset by a decrease in share-based compensation expense. Our
operating expenses consisted of:
49
Table of Contents
•
Sales and marketing expenses.
Our sales and marketing expenses increased 69.0% to
RMB113.7 million (US$14.1 million) in 2005 from RMB67.3 million in 2004. This increase was
due to the expansion of our sales and marketing staff, increases in commissions paid to
sales personnel, increases in advertising and promotional expenses, and the addition of
four new sales offices in Changchun, Suzhou, Fuzhou and Zhengzhou in 2005. We calculate the
commissions paid to sales personnel based on a percentage of total revenues generated by
the employee. In addition, we pay bonuses to account executives for achieving and exceeding
certain sales targets. Our advertising and promotion expenses in 2005 increased 72.7% to
RMB21.4 million (US$2.6 million) from RMB12.4 million in 2004 due to a greater number of
promotional events and other activities principally in connection with our expansion into
new markets, and also in connection with a national television advertising campaign we
conducted in early 2005.
•
General and administrative expenses.
Our general and administrative expenses
increased 61.3% to RMB89.0 million (US$11.0 million) in 2005 from RMB55.2 million in 2004.
This increase was primarily due to greater costs incurred in connection with operating as
a public company, higher professional services expenses, and costs associated with the
opening of four new offices opened in 2005, including rent, the hiring of new personnel
and the purchase of office equipment. Contributing also to the increase was compensation
to additional office staff and depreciation and amortization.
•
Share-based compensation.
Our share-based compensation expense included in
operating expenses decreased 30.0% to RMB13.1 million (US$1.6 million) in 2005 from
RMB18.7 million in 2004. We did not recognize any additional deferred share-based
compensation in 2005. Upon adoption of SFAS No. 123R effective January 1, 2006, we expect
to incur higher share-based compensation expense.
Loss from foreign currency translation.
We recognized a loss of RMB11.3 million (US$1.4
million) from foreign currency translation in 2005 as a result of a change in PRC foreign exchange
policy and a revaluation of the Renminbi in July 2005. For more information about China's foreign
exchange policy, see "Item 10. — Additional Information — Exchange Controls."
Interest and investment income.
Our interest and investment income increased 616% to RMB20.4
million (US$2.5 million) in 2005 from RMB2.8 million in 2004 due to higher average balances in our
interest bearing bank deposits and higher interest rates.
Income tax expense.
We recorded an income tax expense of RMB29.9 million (US$3.7 million) in
2005 compared to RMB34.1 million in 2004.
Net income.
As a result of the above factors, our net income increased 0.5% to RMB61.4 million
(US$7.6 million) in 2005 from RMB61.1 million in 2004.
2004 compared to 2003
Total revenues.
Our total revenues increased 63.6% to RMB479.9 million in 2004 from RMB293.3
million in 2003. This increase was primarily due to the growth in our print advertising revenues
and our online recruitment services revenues. We derived our total revenues from:
•
Print advertising.
Our print advertising revenues increased 64.6% to
RMB300.7 million in 2004 from RMB182.6 million in 2003. This increase was primarily due to
significant growth in recruitment advertisements placed in our editions of
51job Weekly
,
which reflected the revenue contribution of the three new markets we entered in 2004, and
our increased penetration of our existing markets through greater direct sales and
marketing efforts. As a result, our estimated number of print advertising pages increased
94.2% to 9,001 in 2004 from 4,635 in 2003. The increase in revenues was largely driven by
the increase in the number of print advertising pages, which was partially offset by a
decline in our overall average revenue per page. Our overall average revenue per page
declined primarily due to an increase in revenue contribution from some of our markets
that generally have lower local prices for recruitment advertisement compared to those
which we realize on average in our other markets and additional revenue contribution from
three new, lower priced markets.
•
Online recruitment services.
Our online recruitment services revenues
increased 44.9% to RMB111.5 million in 2004 from RMB77.0 million in 2003. This increase
was primarily attributable to significant growth in the number of unique employers using
our online recruitment services, partially offset by a decrease in our average revenue per
unique employer. We estimate that the number of unique employers using our online
recruitment services increased 51.9% to 39,317 in 2004 from 25,880 in 2003, primarily as a
result of increased
50
Table of Contents
sales and marketing efforts promoting our
www.51job.com
website and
online recruitment services. We estimate that our average revenue per unique employer
decreased primarily as a result of price reductions in 2004 for certain online products,
generally in the form of discounted introductory and promotional online recruitment
services packages, as well as a significant increase in the number of first-time online
customers, who generally purchase basic, lower priced recruitment advertisements.
•
Executive search.
Our executive search revenues increased 58.2% to RMB24.9
million in 2004 from RMB15.7 million in 2003, primarily as a result of greater sales and
marketing efforts and also, we believe an increased acceptance by employers of executive
search as a recruitment tool.
•
Other human resource related revenues
. Our revenues from other human
resource related services increased 138% to RMB42.9 million in 2004 from RMB18.0 million
in 2003. This increase was primarily driven by growth in training revenues due to an
increase in the number of seminars and human resource conferences we conducted in 2004. In
addition, revenues in 2004 reflected the contribution of new services we introduced in
mid-2003, including our
eHR
human resource management software and business process
outsourcing services, which gained increasing customer acceptance in 2004. In November
2004, we discontinued the sale of stationery and offices supplies to our business
customers which contributed revenues of RMB12.7 million in 2004 and RMB2.2 million in
2003.
Net revenues.
Our net revenues increased 62.8% to RMB456.1 million in 2004 from RMB280.1
million in 2003. Our net revenues reflected our total revenues less the amounts paid as business
taxes of RMB23.8 million in 2004 and RMB13.2 million in 2003.
Cost of services.
Our cost of services increased 48.3% to RMB224.6 million in 2004 from
RMB151.5 million in 2003. The majority of this increase was represented by printing related
expenses associated with the expansion of
51job Weekly
. In addition, our employee compensation
expense increased primarily due to the hiring of additional staff to support our growing
operations. Our cost of services in 2004 also included an increase in share-based compensation
expense to approximately RMB1.8 million from RMB0.6 million in 2003.
Gross profit.
As a result of the above factors, our gross profit increased 80.0% to RMB231.5
million in 2004 from RMB128.6 million in 2003. Our gross profit margin was 50.8% in 2004 compared
to 45.9% in 2003.
Operating expenses.
Our total operating expenses increased 48.8% to RMB141.1 million in 2004
from RMB94.9 million in 2003. The increase in our operating expenses was primarily due to an
increase in sales and marketing expenses as well as general and administrative expenses. Our
operating expenses consisted of:
•
Sales and marketing expenses.
Our sales and marketing expenses increased
74.2% to RMB67.3 million in 2004 from RMB38.6 million in 2003. This increase was due to
the hiring of additional sales and marketing personnel, commissions to sales personnel,
increased spending on advertising and promotional campaigns, and the addition of three new
offices in Changsha, Hefei and Ningbo in 2004. Our advertising and promotion expenses in
2004 increased 75.2% to RMB12.4 million from RMB7.1 million in 2003 as we increased our
use of direct marketing, event marketing and other forms of promotion principally in
connection with our expansion into new markets.
•
General and administrative expenses.
Our general and administrative expenses
increased 44.7% to RMB55.2 million in 2004 from RMB38.1 million in 2003. This increase was
primarily due to costs incurred in connection with the operation of the three new offices
opened in 2004. In addition, the increase reflected compensation to additional office
staff, professional services expenses, and depreciation and amortization.
•
Share-based compensation.
Our share-based compensation expense included in
operating expenses increased 3.2% to RMB18.7 million in 2004 from RMB18.1 million in 2003.
This increase was due to our recognition of
RMB6.6 million of additional deferred share-based compensation in 2004, principally as a
result of the sale of common shares to one of our directors at a price below fair market
value, which was partially offset by the full amortization of the deferred share-based
compensation that we recognized in connection with our issuance of common shares to our
founders in 2000. For further discussion with respect to our share-based compensation, see
"— Critical Accounting Policies — Share-based compensation."
Interest and investment income.
Our interest and investment income increased 206% to RMB2.8
million in 2004 from RMB0.9 million in 2003 due to higher cash balances of outstanding bank
deposits.
Income tax expense.
We recorded an income tax expense of RMB34.1 million in 2004 compared to
RMB3.2 million in 2003. Both our income tax expense and effective tax rate increased significantly
in 2004. These increases were
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primarily the result of an overall increase in taxable income we
recognized in the period and the expiration of tax exemptions with respect to certain subsidiaries
of AdCo. In addition, share-based compensation expense is not deductible for purposes of
calculating PRC enterprise income tax, causing our effective income tax rate in 2004 to exceed our
statutory enterprise income tax rate of 33%.
Net income.
As a result of the above factors, our net income increased 87.6% to RMB61.1
million in 2004 from RMB32.6 million in 2003.
Unaudited Quarterly Results of Operations
We have presented our unaudited quarterly results of operations for the four fiscal quarters
of 2005. You should read the following table in conjunction with the consolidated financial
statements and related notes contained elsewhere in this annual report. We have prepared the
unaudited information on the same basis as our audited consolidated financial statements. This
information reflects all adjustments, consisting only of normal recurring adjustments, which are in
the opinion of our management necessary for fair presentation of our results of operations for the
quarters presented. Because the recruitment advertising and human resource industries in China are
new and rapidly evolving, and because our business is also relatively new, operating results for
any quarter are not necessarily indicative of results for any future quarters or for a full year.
The following table presents our unaudited quarterly results of operations for 2005:
For the three months ended,
March 31,
June 30,
September 30,
December 31,
2005
2005
2005
2005
RMB
RMB
RMB
RMB
Revenues:
Print advertising
93,690,402
90,502,452
93,099,031
78,992,763
Online recruitment services
31,805,222
38,864,411
44,443,053
44,382,236
Executive search
6,938,222
7,054,774
6,326,391
5,987,354
Other human resource related revenues
10,256,021
10,998,124
16,883,951
15,369,692
Total revenues
142,689,867
147,419,761
160,752,426
144,732,045
Net revenues
134,437,804
139,164,212
151,589,980
136,834,223
Cost of services
(69,005,139
)
(69,249,300
)
(68,736,494
)
(62,337,450
)
Gross profit
65,432,665
69,914,912
82,853,486
74,496,773
Operating expenses:
Sales and marketing
(31,703,792
)
(26,978,660
)
(27,570,088
)
(27,404,175
)
General and administrative
(22,358,405
)
(21,207,581
)
(22,198,570
)
(23,214,429
)
Share-based compensation — share option
(3,290,803
)
(3,349,954
)
(3,237,445
)
(3,195,278
)
Total operating expenses
(57,353,000
)
(51,536,195
)
(53,006,103
)
(53,813,882
)
Income from operations
8,079,665
18,378,717
29,847,383
20,682,891
Income before income tax provision
13,375,127
23,173,658
24,940,902
29,877,650
Income tax expense
(4,199,835
)
(7,281,976
)
(7,910,392
)
(10,552,830
)
Net income
9,175,292
15,891,682
17,030,510
19,324,820
Other Financial Information:
Aggregate share-based compensation expense
(1)
(3,671,596
)
(3,759,343
)
(3,597,976
)
(3,524,406
)
(1)
Aggregate share-based compensation expense includes share-based compensation expense
attributable to cost of services and operating expenses.
B. Liquidity and Capital Resources
We believe that our current cash and cash equivalents and cash flow from operations will be
sufficient to meet our anticipated cash needs, including our cash needs for working capital and
capital expenditures, for the foreseeable future. We may, however, require additional cash
resources due to changing business conditions or other future developments, including any
investments or acquisitions we may decide to pursue.
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Liquidity
Our liquidity has been principally affected by our significant increases in net cash from
operating activities and from our initial public offering in 2004, our repurchases of ADSs in the
open market, and our purchases of property, equipment and software.
The following table sets forth a summary of our cash flows for the periods indicated.
For the year ended December 31,
2003
2004
2005
2005
RMB
RMB
RMB
US$
Net cash provided by operating activities
65,966,668
105,812,412
122,025,929
15,120,558
Net cash used in investing activities
(20,343,047
)
(13,804,765
)
(54,391,335
)
(6,739,775
)
Net cash provided by (used in) financing activities
746,227
640,964,309
(74,097,969
)
(9,181,677
)
Net increase (decrease) in cash
46,446,812
733,208,100
(17,659,122
)
(2,188,189
)
Cash flows from operating activities.
Our increase in net cash provided by operating
activities from 2003 to 2004 was primarily the result of an increase in net income. The substantial
majority of this increase was due to growth in our print advertising revenues and our online
recruitment services revenues. Our increase in net cash provided by operating activities in 2004
also reflected an adjustment for share-based compensation of RMB20.5 million for share-based
compensation expense and RMB24.6 million in taxes payable. Our net cash provided by operating
activities in 2005 increased to RMB122.0 million (US$15.1 million) from RMB105.8 million in 2004.
The increase was primarily attributable to an increase in advance from customers and salary and
employee related accrual, which were partially offset by a decrease in taxes payable.
Cash flows from investing activities.
Our net cash used in investing activities from 2003 to
2005 reflected purchases of property, equipment, software and other intellectual property rights in
these years in connection with the general growth of our businesses and the opening of new offices.
We established three new offices in 2003, three new offices in 2004 and four new offices in 2005.
In 2003, our net cash used in investing activities reflected our investment of RMB10.7 million of
our excess cash in an interest bearing bank deposit. Our net cash used in investing activities in
2004 included RMB635.5 million of cash proceeds from our initial public offering in interest
bearing bank deposits. In 2005, we made installment payments totaling RMB22.8 million (US$2.8
million) toward our purchase of an office complex in Zhangjiang High Technology Park.
Cash flows from financing activities.
Our net cash from financing activities has been
primarily affected by our initial public offering in 2004. Our net cash provided by financing
activities in 2003 consisted of proceeds from the exercise of stock options by certain directors
and executive officers. In 2004, our net cash provided by financing activities consisted of net
proceeds of RMB635.5 million from the sale of 6,037,500 ADSs in our initial public offering and
RMB5.5 million proceeds from the exercise of warrants to purchase Series A preference shares by one
of our principal shareholders and from the exercise of options by certain directors and officers.
In 2005, our net cash used in financing activities consisted of our repurchase of 686,438 ADSs in
the open market for an aggregate consideration of RMB75.6 million (US$9.4 million), which was
partially offset by the exercise of options by employees and certain directors and officers.
Capital resources
We have financed our operations primarily through cash flows from operations as well as equity
investments by certain of our founders and current shareholders. To date, we have not financed our
operations through significant borrowings, and as of December 31, 2005, we had no material debt
obligations outstanding to unrelated parties.
Our external financing has consisted primarily of the proceeds from our initial public
offering and the sale of our Series A preference shares and warrants to purchase Series A
preference shares. In October 2004, we raised net proceeds of RMB635.5 million from the sale of
6,037,500 ADSs in our initial public offering. From June 2000 to January 2002, we sold an aggregate
of 13,678,466 Series A preference shares for aggregate net proceeds of approximately US$14.0
million (RMB116.4 million), including a warrant to purchase 10,000 Series A preference shares which
was exercised in
May 2001. We also issued warrants to purchase 380,000 Series A preference shares which were
exercised in March 2004. All of the warrants have been exercised and all Series A preference shares
were converted into an aggregate of 14,058,466 of our common shares upon the completion of our
initial public offering in 2004. Our operations from inception through 2000 were financed primarily
by equity and debt financing from our chief executive officer and director, Rick Yan, as well as
equity financing by our other three founders.
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Our operations are conducted primarily through Tech JV and its subsidiaries. As a result, our
ability to finance our operations and any debt that we, or our subsidiaries, may incur is
dependent, in part, upon the flow of dividends from, and the payment of royalties and other fees
by, our subsidiaries. The payment of dividends in China is subject to restrictions. PRC regulations
currently permit payment of dividends only out of accumulated profits as determined in accordance
with PRC accounting standards and regulations. Our subsidiaries and affiliated entities in the PRC
are also required to set aside a portion of their after-tax profits according to PRC accounting
standards and regulations to fund certain reserve funds that are not distributable as cash
dividends. Through certain contractual arrangements, we are able to require Qian Cheng to pay us
any cash it receives as dividends or other distributions with respect to its minority shareholding
in Tech JV and its subsidiaries. Our ability to obtain cash or other assets under these contracts
depends on their effectiveness and enforceability. For a description of these agreements and our
PRC counsel's opinion as to their enforceability, see "Item 4. — Information on the Company —
Organizational Structure." If we or any of our subsidiaries are unable to receive all of the
revenues from our operations through these contractual arrangements or dividends, we may be unable
to effectively finance our operations.
In March 2006, we signed a letter of intent to purchase our current principal executive
offices at 21st floor, Wen Xin Plaza, 755 Wei Hai Road, which we expect to become our Shanghai
sales office, for an aggregate consideration of RMB27 million (US$3.3 million). In addition, in
April 2006, we completed the purchase of a new office complex in Zhangjiang High Technology Park in
Shanghai's New Pudong Area for approximately RMB114 million (US$14.1 million). For a discussion of
our capital expenditures, see "Item 4. — Information on the Company — History and Development of
the Company."
We believe that our current cash and cash equivalents and cash flow from operations will be
sufficient to meet our anticipated cash needs, including our cash needs for working capital and
capital expenditures, for the foreseeable future. We may, however, require additional cash
resources due to changing business conditions or other future developments, including any
investments or acquisitions we may decide to pursue.
C. Research and Development
We employ a large staff of website designers and software developers to design and update our
website and create our proprietary software. We did not incur material expenditures with respect to
our research and development activities in any of the three years ended December 31, 2003, 2004 or
2005. For more information on our technology operations, see "Item 4 — Information on the Company —
Business Overview — Technology."
D. Trend Information
Other than as disclosed elsewhere in this annual report, we are not aware of any trends,
uncertainties, demands, commitments or events for the period from January 1, 2003 to December 31,
2005 that are reasonably likely to have a material effect on our net revenues, income,
profitability, liquidity or capital resources, or that caused the disclosed financial information
to be not necessarily indicative of future operating results or financial conditions.
E. Off-Balance Sheet Arrangements
Other than our operating leases commitments, we do not have any outstanding derivative
financial instruments, off-balance sheet guarantees, interest rate swap transactions or foreign
currency forward contracts. We do not engage in trading activities involving non-exchange traded
contracts.
F. Contractual Obligations
We have entered into non-cancelable agreements with initial or remaining terms in excess of
one year for the publication of
51job Weekly
, the lease of office premises, and the lease of office
equipment. Our contractual cash obligations consist largely of obligations under property lease
agreements for office premises. Payments made under operating leases, net of any incentive
discounts that we receive from the leasing company, are charged to our income statement on a
straight-line basis over the lease periods.
We have also a capital commitment for the purchase of office space and leasehold improvement
associated with a letter of intent we executed for the purchase of an office complex in Zhangjiang
High Technology Park.
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The following table sets forth our future minimum payments with respect to non-cancelable
agreements as of December 31, 2005:
Operating Lease Commitment
Capital Commitment
Publication
Office
Office
Leasehold
fees
premises
Other
complex
improvement
Total
RMB
RMB
RMB
RMB
RMB
RMB
Less than one year
53,958,833
23,452,882
140,005
90,982,370
68,182
168,602,272
1-3 years
43,784,942
10,500,551
151,264
—
—
54,436,757
3-5 years
1,865,850
6,370,410
—
—
—
8,236,260
More than 5 years
—
—
—
—
—
—
Total
99,609,625
40,323,843
291,269
90,982,370
68,182
231,275,289
Our publication fees and office lease agreements are generally for a term of two years. We
expect to renew substantially all of these agreements as they expire, although we cannot predict
the terms and conditions of such renewals.
Rental expenses incurred under operating leases were RMB10.5 million in 2003, RMB13.9 million
in 2004 and RMB28.7 million (US$3.6 million) in 2005.
WFOE, our wholly owned PRC subsidiary, entered into equity pledge agreements with the
shareholders of Qian Cheng and RAL, respectively. Under each of these equity pledge agreements,
WFOE has an option, exercisable during a term of ten years, to purchase the equity interests in
each of Qian Cheng and RAL, respectively, when and if, and at the lowest price, permitted by PRC
law. At the end of the term, if and to the extent these options have not been exercised, WFOE is
obligated to purchase the maximum amount of the equity interest in Qian Cheng and RAL,
respectively, as permitted by applicable PRC law. For a detailed description of these equity pledge
agreements, see "Item 4. — Information on the Company — Organizational Structure — Contractual
Arrangements Among Our Group Entities."
We do not have material contractual obligations in currencies other than Renminbi.
Recent Accounting Pronouncements
In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment," or SFAS
No. 123R, which replaced SFAS No. 123 and superseded APB No. 25. SFAS No. 123R requires the
measurement of all employee share-based payments to employees, including grants of employee stock
options, using a fair-value-based method and the recording of such expense in the consolidated
statements of operations. The pro forma disclosures previously permitted under SFAS No. 123 no
longer will be an alternative to financial statement recognition. In March 2005, the SEC issued
Staff Accounting Bulletin No. 107 regarding the SEC's interpretation of SFAS No. 123R and the
valuation of share-based payments for public companies.
We adopted SFAS No. 123R and related FASB Staff Positions starting January 1, 2006 and have
recognized stock-based compensation expense using the modified prospective method, which requires
that compensation expense be recorded for all unvested stock options upon adoption of SFAS No.
123R. We have applied the Black-Scholes valuation model in determining the fair value of
share-based payments to employees, and are recognizing compensation expense on a straight-line
basis over the requisite service period. The adoption of SFAS No. 123R increased our share-based
compensation expense in our consolidated statement of operations in the first quarter of 2006 and
we expect the implementation of SFAS No. 123R may adversely affect our earnings in the future.
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections," or SFAS
No. 154, which replaces APB Opinion No. 20, "Accounting Changes," and SFAS No. 3, "Reporting
Accounting Changes in Interim Financial Statements." SFAS No. 154 provides guidance on the
accounting for and reporting of accounting changes and error corrections. It establishes
retrospective application as the required method for reporting a change in accounting principle and
the reporting of a correction of an error. SFAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005. We do not expect that
the adoption of SFAS No. 154 will have a material effect on our financial statements.
In June 2005, the FASB ratified the Emerging Issues Task Forces' Issue No. 05-06, "Determining
the Amortization Period for Leasehold Improvements," or EITF No. 05-06. EITF No. 05-06 provides
that the amortization period used for leasehold improvements acquired in a business combination or
purchased after the inception of a lease be the shorter of (a) the useful life of the assets or (b)
a term that includes required lease periods and renewals that are reasonably assured
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upon the acquisition or the purchase. The provisions of EITF No. 05-06 should be applied to
leasehold improvements (within the scope of this issue) that are purchased or acquired in reporting
periods beginning after June 29, 2005. We do not expect that the adoption of EITF No. 05-06 will
have a material effect on our financial statements.
ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
A. Directors and Senior Management
Effective May 30, 2006, Charles E. Phillips, Jr., an independent director and member of our
compensation committee and nominating and corporate governance committee, resigned from our board
of directors for personal reasons.
The names of our current directors and executive officers, their ages as of the date of this
annual report and the principal positions with 51job, Inc. held by them are as follows:
Name
Age
Position / Title
Donald L. Lucas
(1) (2)
76
Chairman of the board and independent director
Rick Yan
43
Director, chief executive officer, president and secretary
David K. Chao
(1) (2)
39
Independent director
Shan Li
(1) (3)
42
Independent director
Kathleen Chien
36
Chief financial officer and senior vice president
Michael Lei Feng
37
Senior vice president
Norman Lui
35
Vice president
Tao Wang
43
Vice president
David Weimin Jin
36
Vice president
Jones Haijun Yu
33
Vice president
(1)
Member of audit committee.
(2)
Member of compensation committee.
(3)
Member of nominating and corporate governance committee.
There are no family relationships among any of the directors or executive officers of our
company.
The business address of each of our directors and executive officers listed below is 21st
Floor, Wen Xin Plaza, 755 Wei Hai Road, Shanghai 200041, People's Republic of China.
Biographical Information
Donald L. Lucas
is the chairman of the board of directors of our company. Mr. Lucas became an
independent director of our company in February 2004. Mr. Lucas received his Bachelor of Arts
degree from Stanford University and his Master of Business Administration degree from the Stanford
Graduate School of Business. In 1960, Mr. Lucas began a seven-year participation, including acting
as both a general partner and a limited partner with Draper, Gaither & Anderson, the first venture
capital firm organized on the West Coast in the United States. Since 1967, Mr. Lucas has been
actively engaged in venture capital activities as a private individual. Mr. Lucas currently serves
as a board member of Cadence Design Systems, Inc., DexCom, Inc., Oracle Corporation and Vimicro
International Corporation. He also serves as a director for several privately held companies. Mr.
Lucas is the former chairman of the board of the Stanford Institute for Economic Policy and
Research and a Trustee of the University of Santa Clara.
Rick Yan
is a director, chief executive officer and president of our company. Mr. Yan has been
a director and chief executive officer of our company since 2000. Mr. Yan is responsible for our
overall strategy and management. Mr. Yan received his Bachelor of Engineering degree and Master of
Philosophy degree from the University of Hong Kong and his Master of Business Administration degree
with distinction from INSEAD in France. Mr. Yan was an investor and advisor of our company from its
inception and prior to his appointment as chief executive officer. Prior to joining our company,
Mr. Yan was a Director and the Head of China Practice at Bain & Company, an international strategy
consulting company. Mr. Yan joined the firm in London in 1989, returned to Asia and set up Bain &
Company's Hong Kong and Beijing offices in 1991 and 1993, respectively. In his 11-year tenure with
Bain & Company, Mr. Yan was widely acknowledged as an expert in the consumer products and
technology sectors. Prior to his affiliation with Bain & Company, Mr. Yan worked at Hewlett-Packard
in Hong Kong for four years and was awarded Marketing Executive of the Year.
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Table of Contents
David K. Chao
is a director of our company. Mr. Chao has been a director of our company since
2000. Mr. Chao received his Bachelor of Arts degree in Economics and East Asian Studies
(Anthropology) with high honors from Brown University and his Master of Business Administration
degree from Stanford University. Mr. Chao is a Co-founder and Managing General Partner of DCM —
Doll Capital Management, a venture capital firm based in the Silicon Valley. Prior to joining DCM,
Mr. Chao was a founding executive of one of the largest mobile virtual network operators in Japan.
He also worked as a management consultant at McKinsey & Company in San Francisco. Prior to that,
Mr. Chao worked in marketing and product management at Apple Computer and was one of the account
executives for Recruit. Mr. Chao serves on the boards of directors of numerous DCM portfolio
companies. He is a Management Board member of the Stanford Graduate School of Business Board of
Trustees and a member of The Thacher School Board of Trustees. He also serves on the board of
directors of Legend Capital and the board of advisors for Red Herring.
Shan Li
is a director of our company. Mr. Li became an independent director of our company in
February 2004. Mr. Li holds a Bachelor of Science degree in Management Information Systems from
Qinghua University, a Master's degree in Economics from the University of California at Davis and a
Ph.D. in Economics from the Massachusetts Institute of Technology. Mr. Li is a founding partner of
San Shan Limited, a private equity firm. Mr. Li is a veteran of the banking industry, having held
various executive positions with Bank of China International Holdings, Goldman Sachs, Lehman
Brothers, Credit Suisse First Boston and China Development Bank.
Kathleen Chien
is chief financial officer and a senior vice president of our company. Ms.
Chien joined our company in 1999. Ms. Chien received her Bachelor of Science degree in Economics
from the Massachusetts Institute of Technology and her Master of Business Administration degree
from the Haas School of Business at the University of California, Berkeley. Prior to joining our
company, Ms. Chien worked in the financial services and management consulting industries, including
three years with Bain & Company in Hong Kong and two years with Capital Securities Corp., a leading
investment bank in Taiwan. During her tenure at Bain & Company, Ms. Chien was a consultant to a
number of companies on strategic and marketing issues, including entry into the Chinese market and
achieving cost and operational efficiencies. While at Capital Securities Corp., Ms. Chien completed
a number of equity and equity-linked transactions, including the first ever Swiss-franc convertible
bond issuance out of Taiwan, enabling client companies to raise significant capital from the
European and U.S. investment community.
Michael Lei Feng
is a senior vice president of our company. Mr. Feng has been with our company
since its inception. Mr. Feng received his Bachelor of Arts and Bachelor of Science degrees in Law
from China Foreign Affairs College. Prior to joining our company, Mr. Feng worked at Bain & Company
in Beijing for three years and at the Ministry of Foreign Affairs in China for one year. During his
tenure at Bain & Company, Mr. Feng was a consultant to companies in a number of industries and
advised them on their China strategies.
Norman Lui
is a vice president of our company. Mr. Lui has been with our company since its
inception. Mr. Lui received his Bachelor of Science degree in Electrical Engineering with
distinction from Cornell University. Prior to joining our company, Mr. Lui was with Bain & Company
for five years, working in the Hong Kong, Beijing and San Francisco offices. During his five-year
tenure at Bain & Company, Mr. Lui was a consultant to companies in the consumer products and
telecommunications industries with respect to their sales, marketing and operating strategies.
Tao Wang
is a vice president of our company. Mr. Wang joined our company in 2000. Mr. Wang
received a Bachelor of Science degree in Math from Shandong University and a Master of Engineering
degree from the Second Academy under the PRC Ministry of Aerospace Industry. Mr. Wang also holds a
Master of Business Administration degree from the Business School at University of Warwick in the
United Kingdom. Prior to joining our company, Mr. Wang spent four years as a Senior Consultant at
Bain & Company. Also, Mr. Wang served as a Representative and the General Manager of a joint
venture company in Wuhan for TI Group Asia Pacific. Earlier in his career, Mr. Wang held
engineering and project management positions at the Ministry of Aerospace Industry in China.
David Weimin Jin
is a vice president of our company. Mr. Jin joined our company in 2000. He
received a Bachelor of Science degree in Engineering from Xidian University. Prior to joining our
company, Mr. Jin held sales management positions in large multinational companies, including three
years at Shell and one year with Colgate Palmolive.
Jones Haijun Yu
is a vice president of our company. Mr. Yu joined our company in 1998. He
received a Bachelor of Science degree in Biochemistry from Wuhan University and in Business
Management from Beijing Jiaotong University. Prior to joining our company, Mr. Yu worked as a
technician with Guangzhou Zengcheng Biochemical Engineering Company for one year.
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B. Compensation
Compensation of Directors and Executive Officers
In April 2004, we approved an annual director's fee of US$15,000 for each director. In
addition, our directors receive a fee of US$2,000 for each board meeting attended in person and
US$1,000 for each committee meeting attended in person, or US$1,000 for each board meeting attended
by conference call and US$500 for each committee meeting attended by conference call. Our directors
are also reimbursed for reasonable travel expenses incurred in attending board meetings in person.
There are no arrangements between us and our directors providing for special benefits upon our
directors' termination of service. For the year ended December 31, 2005, the aggregate cash
compensation to our directors as a group was approximately US$119,000 (RMB960,000). In 2005, we
granted options to acquire 40,000 common shares at fair market value to one of our independent
directors.
For the year ended December 31, 2005, the aggregate cash compensation to our executive
officers as a group was approximately RMB3.9 million (US$0.5 million). We granted options to
acquire an aggregate of 408,000 common shares to our executive officers in 2005.
Directors' and Officers' Liability Insurance
We maintain directors' and officers' liability insurance for our directors and officers.
Employment Agreements
We have entered into employment agreements with each of our executive officers. The terms of
these agreements are substantially similar to each other. Under these agreements, each of our
executive officers is employed at will, and their employment may be terminated, with or without
cause, by either party. These agreements do not provide for any special termination benefits, nor
do we have other arrangements with these executive officers for special termination benefits. Each
executive officer has agreed to hold in strict confidence and not to use, except for the benefit of
our company, any proprietary information, technical data, trade secrets and know-how of our company
or the confidential or proprietary information of any third party, including our affiliated
entities and our subsidiaries, received by our company. Each of these executive officers has also
agreed not to engage in any other employment, occupation, consulting or other business activity
directly related to the business in which we are involved, or engage in any other activities that
conflict with his or her obligations to us during the term of his or her employment. For the
12-month period after any of these executive officers' termination of employment with us for any
reason, such officer is prohibited from recruiting any of our employees or soliciting or inducing
our employees to leave their employment with us.
Stock-Based Compensation Plans
In 2000, our board of directors and shareholders adopted our 2000 stock option plan. Under
this plan, our directors, officers and other employees and consultants are eligible to acquire
common shares under options. At the time of adoption, 4,010,666 common shares were reserved for
issuance under the plan. In February 2004, our board of directors and shareholders approved an
increase in the number of authorized shares reserved under the plan of 1,519,912 common shares,
increasing the total number of authorized shares reserved under the plan to 5,530,578 common
shares. The plan has a term of ten years but may be terminated earlier by our board of directors.
Stock options granted under the 2000 stock option plan may be incentive stock options, or
ISOs, which are intended to qualify for favorable U.S. federal income tax treatment under the
provisions of Section 422 of the U.S. Internal Revenue Code of 1986, as amended, or non-qualified
stock options, or NSOs, which do not so qualify.
The compensation committee of our board of directors administers the plan. Subject to the
provisions of the plan and, in the case of a committee, the specific duties delegated by the board
of directors to such committee, and subject to the approval of any relevant authorities, the board
of directors or the committee so appointed has the authority in its discretion to determine, among
other things, the fair market value of the common shares, select optionees, determine the number of
common shares to be covered by each award granted under the plan, and the terms and conditions of
any options or stock purchase rights granted under the plan.
Stock options granted under the plan become exercisable at a rate of not less than 20% per
year over five years from the date of the option grant. In the event of the termination of service
of an optionee, the unvested portion of a stock option is forfeited and the vested portion
terminates within the period of time as specified in the option agreement and, in the absence of a
specified time in the option agreement, within twelve months following the optionee's termination
in the case of the optionee's disability or death, and three months following the optionee's
termination in all other cases.
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In the event of a merger of our company, each outstanding stock option may be assumed or an
equivalent option or right may be substituted by the successor corporation. In the event the
successor corporation refuses to assume or substitute for the stock option, the outstanding stock
options will automatically vest and become exercisable for a period of 15 days, after which the
stock options will terminate.
The following table summarizes the options granted to our directors, executive officers and
other employees under our 2000 stock option plan during the periods indicated.
Common shares
underlying options
Exercise
granted
price
Date of grant
Date of expiration
US$
Granted in 2003
Kathleen Chien
200,000
0.15
April 1, 2003
March 31, 2009
460,882
0.50
December 15, 2003
December 14, 2009
David Weimin Jin
65,000
0.15
April 1, 2003
March 31, 2009
Other employees
250,900
0.15
April 1, 2003
March 31, 2009
5,000
0.15
September 1, 2003
August 31, 2009
364,450
0.50
December 15, 2003
December 14, 2009
1,346,232
Granted in 2004
Donald L. Lucas
92,176
1.00
February 17, 2004
February 16, 2010
138,264
*
1.00
February 28, 2004
Not applicable
Shan Li
92,176
1.00
February 28, 2004
February 27, 2010
Charles E. Phillips, Jr.
92,176
3.25
May 20, 2004
May 19, 2010
Other employees
53,400
1.00
February 28, 2004
February 27, 2010
468,192
Granted in 2005
Rick Yan
160,800
8.695
April 22, 2005
April 21, 2011
David K. Chao
40,000
7.00
July 25, 2005
July 24, 2011
Kathleen Chien
81,600
8.695
April 22, 2005
April 21, 2011
Michael Lei Feng
50,400
8.695
April 22, 2005
April 21, 2011
Norman Lui
21,600
8.695
April 22, 2005
April 21, 2011
Tao Wang
21,600
8.695
April 22, 2005
April 21, 2011
David Weimin Jin
40,800
8.695
April 22, 2005
April 21, 2011
Jones Haijun Yu
31,200
8.695
April 22, 2005
April 21, 2011
Other employees
271,200
8.695
April 22, 2005
April 21, 2011
30,000
6.25
November 6, 2005
November 10, 2011
749,200
*
These relate to sales of common shares, from those authorized under the stock option plan,
below fair market value.
C. Board Practices
The directors will hold office until the next annual general meeting of shareholders and until
such director's successor is elected and duly qualified, or until such director's earlier death,
resignation or removal. We have no specific policy with respect to director attendance at our board
meetings, committee meetings or annual general meetings of shareholders.
Board Committees
To enhance our corporate governance, we have established three committees under the board of
directors: the audit committee, the nominating and corporate governance committee and the
compensation committee. We have adopted a charter for each of these committees. The committees have
the following functions and members.
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Audit committee
Our audit committee reports to the board of directors regarding the appointment of our
independent public accountants, the scope and results of our annual audits, compliance with our
accounting and financial policies and management's procedures and policies relating to the adequacy
of our internal accounting controls. Our audit committee charter requires its members to satisfy
applicable Nasdaq corporate governance rules on independence. Since May 2004, the members of our
audit committee have been Donald L. Lucas, who acts as the chairman of our audit committee, David
K. Chao and Shan Li. Our board of directors has determined that all of our audit committee members
are "independent directors" within the meaning of Nasdaq Marketplace Rule 4200(a)(15) and meet the
criteria for independence set forth in Section 10A(m)(3)(B)(i) of the Exchange Act.
Our audit committee will be responsible for, among other things:
•
the appointment, evaluation, compensation, oversight and termination of the
work of our independent auditor (including resolution of disagreements between management
and the independent auditor regarding financial reporting);
•
ensuring that it receives from our independent auditor a formal written
statement attesting to the auditor's independence and describing all relationships between
the auditor and us;
•
pre-approving any audit and non-audit services, including tax services, to
be provided by our independent auditor in accordance with Nasdaq rules;
•
reviewing our annual audited financial statements and quarterly financial
statements with management and our independent auditor;
•
reviewing with our independent auditor all critical accounting policies and
practices to be used by us in preparing our financial statements, all alternative
treatments of financial information within U.S. GAAP, and other material communications
between our independent auditor and management;
•
reviewing our policies with respect to risk assessment and risk management;
•
reviewing, with management and counsel, any legal matters that may have a
material impact on us and any material reports or inquiries from regulatory or
governmental agencies; and
•
establishing procedures for the receipt, retention and treatment of
complaints regarding accounting, internal accounting controls, auditing matters or
potential violations of law, and the confidential, anonymous submission by our employees
of concerns regarding questionable accounting or auditing matters or potential violations
of law.
Nominating and corporate governance committee
Our nominating and corporate governance committee assists the board of directors in
identifying individuals qualified to become members of our board of directors and in determining
the composition of the board and its committees. Our board of directors has determined that the
member of our nominating and corporate governance committee is an "independent director" within the
meaning of Nasdaq Marketplace Rule 4200(a)(15) and meets the criteria for independence set forth in
Section 10A(m)(3)(B)(i) of the Exchange Act. The current member of our nominating and corporate
governance committee is Shan Li, who acts as the chairman of the committee.
Our nominating and corporate governance committee will be responsible for, among other things:
•
identifying and recommending to the board nominees for election or
re-election to the board, or for appointment to fill any vacancy;
•
reviewing annually with the board the current composition of the board in
light of the characteristics of independence, age, skills, experience and availability of
service to us;
•
reviewing the continued board membership of a director upon a significant
change in such director's principal occupation;
•
identifying and recommending to the board the names of directors to serve as
members of the audit committee and the compensation committee, as well as the nominating
and corporate governance committee itself;
•
advising the board periodically with respect to significant developments in
the law and practice of corporate governance as well as our compliance with applicable
laws and regulations, and making recommendations to the board on all matters of corporate
governance and on any corrective action to be taken;
•
establishing criteria and processes for, and leading the board and each
committee of the board in, its annual performance self-evaluation;
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•
reviewing and approving policies and procedures with respect to proposed
transactions between us and our related parties, and approving in advance all such
related-party transactions; and
•
monitoring compliance with our code of business conduct and ethics,
including reviewing the adequacy and effectiveness of our procedures to ensure proper
compliance.
Compensation committee
Our compensation committee assists the board in reviewing and approving the compensation
structure of our directors and executive officers, including all forms of compensation to be
provided to our directors and executive officers. In addition, the compensation committee reviews
stock compensation arrangements for all of our other employees. Members of the compensation
committee are not prohibited from direct involvement in determining their own compensation. Our
chief executive officer may not be present at any committee meeting during which his or her
compensation is deliberated. The current members of our compensation committee are David K. Chao,
who acts as the chairman of the committee, and Donald L. Lucas. Our board of directors has
determined that all members of our compensation committee are "independent directors" within the
meaning of Nasdaq Marketplace Rule 4200(a)(15) and meet the criteria for independence set forth in
Section 10A(m)(3)(B)(i) of the Exchange Act.
Our compensation committee will be responsible for, among other things:
•
approving and overseeing the total compensation package for our executives;
•
reviewing and making recommendations to the board with respect to the compensation of our directors;
•
reviewing and approving corporate goals and objectives relevant to the
compensation of our chief executive officer, evaluating the performance of our chief
executive officer in light of those goals and objectives, and setting the compensation
level of our chief executive officer based on this evaluation;
•
reviewing the results of, and procedures for, the evaluation of the
performance of other executive officers;
•
reviewing periodically and making recommendations to the board regarding any
long-term incentive compensation or equity plans, programs or similar arrangements, and
administering these plans;
•
reviewing and making recommendations to the board regarding all new
employment, consulting, retirement and severance agreements and arrangements proposed for
our executives; and
•
selecting peer groups of companies to be used for purposes of determining
competitive compensation packages.
Duties of Directors
Under Cayman Islands law, our directors have a duty to act honestly, in good faith and with a
view to our best interests. Our directors also have a duty to exercise the skills they actually
possess and the care and diligence that a reasonably prudent person would exercise in comparable
circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with
our memorandum and articles of association. A shareholder has the right to seek damages if a duty
owed by our directors is breached.
The functions and powers of our board of directors include, among others:
•
convening shareholders' annual general meetings and reporting its work to shareholders at such meetings;
•
declaring dividends and distributions;
•
appointing officers and determining the term of office of the officers;
•
exercising the borrowing powers of our company and mortgaging the property of our company; and
•
approving the transfer of shares in our company, including the registering
of such shares in our share register.
Interested Transactions
A director may vote in respect of any contract or transaction in which he is interested,
provided that the nature of the interest of any director in such contract or transaction shall be
disclosed by him at or prior to its consideration and any vote on that matter. A general notice or
disclosure to the directors or otherwise contained in the minutes of a meeting or a written
resolution of the directors or any committee of directors that a director is a shareholder of any
specified firm or company and is to be regarded as interested in any transaction with such firm or
company will be sufficient disclosure, and, after such general notice, it will not be necessary to
give special notice relating to any particular transaction.
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Remuneration and Borrowing
The directors may determine remuneration to be paid to the directors. The compensation
committee will assist the directors in reviewing and approving the compensation structure for the
directors. We do not provide for any termination benefits for the directors, nor do we have other
arrangements with the directors for special termination benefits. The directors may exercise all
the powers of our company to borrow money and to mortgage or charge its undertaking, property and
uncalled capital or any part thereof and to issue debentures, debenture stock and other securities
whether outright or as security for any debt, liability or obligation of our company or of any
third party.
Qualification
There is no shareholding qualification for directors. Further, shareholding qualification for
directors may not be fixed by our company in a general meeting.
Terms of Directors and Executive Officers
At each annual general meeting of the shareholders of our company, all of our directors at
such time are required to retire from office and are eligible for re-election. All of these
directors will retain office until the close of such general meeting. Our next annual general
meeting is currently scheduled for July 28, 2006.
Limitation on Liability and Other Indemnification Matters
Cayman Islands law allows us to indemnify our directors, officers, auditors and trustee acting
in relation to any of our affairs against actions, costs, charges, losses, damages and expenses
incurred by reason of any act done or omitted in the execution of their duties as our directors,
officers, auditors and trustee, except to the extent that it may be held by the Cayman Islands
courts to be contrary to public policy such as to provide indemnification against civil fraud or
the consequences of committing a crime.
Under our fifth amended and restated memorandum and articles of association adopted on April
26, 2004, we may indemnify our directors, officers, employees and agents against expenses
(including attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such persons in connection with actions, suits or proceedings to which they
are party or are threatened to be made a party by reason of their acting as our directors,
officers, employees or agents. To be entitled to indemnification, these persons must have acted in
good faith and in the best interest or not opposed to the interest of our company and must not have
acted in a manner willfully or grossly negligent, and, with respect to any criminal action, they
must have had no reasonable cause to believe their conduct was unlawful. Our fifth amended and
restated memorandum and articles of association also provides for indemnification of such person in
the case of a suit initiated by our company or in the right of our company. Such indemnification
covers expenses (including attorneys' fees) actually and reasonably incurred in connection with the
defense or settlement of such suit. There are good faith and other similar conduct requirements for
such indemnification rights as those imposed on other types of suits described above. However, if
such persons are successful in the merits of the actions, suits or proceedings described above,
including suits initiated by or in the right of our company, then they may be indemnified for
actual and reasonable expenses without having to meet the conduct requirements.
We have entered into indemnification agreements with each of our directors under which we
agree to indemnify each of them to the fullest extent permitted by applicable law and our articles
of association, from and against all costs, charges, expenses, liabilities and losses (including
attorney's fees) incurred in connection with any litigation, suit or proceeding to which such
director is or is threatened to be made a party, witness or other participant. Within 20 days after
our receipt of a written demand of such director, we will advance funds for the payment of
indemnification of these expenses.
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D. Employees
We had 1,481 employees, 2,333 employees and 2,986 employees as of December 31, 2003, 2004 and
2005, respectively. The following table sets forth the number of our employees categorized by
function as of December 31, 2005.
Sales and account management
1,258
Marketing and merchandising
620
Technology and online operations
322
Customer service and production
365
Search and training consultants
163
General and administrative
258
Total
2,986
*
*
Includes 675 temporary, part-time and contract employees.
We believe that we maintain a good working relationship with our employees and we have
not experienced any significant labor disputes or any difficulty in recruiting staff for our
operations. Our employees are not represented by any collective bargaining agreements or labor
unions.
E. Share Ownership
There are no different voting rights among our shareholders. We are not aware of any
arrangement that may, at a subsequent date, result in a change of control of our company. For
information regarding the share ownership of our directors and officers, see "Item 7. — Major
Shareholders and Related Party Transactions — Major Shareholders."
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ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
A. Major Shareholders
The following table sets forth information with respect to the beneficial ownership of our
common shares as of April 30, 2006:
•
by each of our directors and executive officers; and
•
each person known to us to own beneficially more than 5% of our common shares.
Beneficial ownership is determined in accordance with the rules of the Securities and Exchange
Commission and includes voting or investment power a person has with respect to the common shares.
A person is also deemed to be a beneficial owner of any securities of which that person has a right
to acquire beneficial ownership within 60 days. Percentage of beneficial ownership is based on
58,244,681 common shares outstanding, including common shares underlying options outstanding as of
April 30, 2006.
Common shares
beneficially owned
Number
%
Directors and executive officers:
Rick Yan
14,842,818
25.5
David K. Chao
(1)
10,155,396
17.4
Michael Lei Feng
4,410,660
7.6
Norman Lui
3,064,403
5.3
Kathleen Chien
(2)
1,819,750
3.1
Tao Wang
573,900
1.0
Donald L. Lucas
201,157
*
Shan Li
71,693
*
David Weimin Jin
59,565
*
Jones Haijun Yu
44,100
*
All directors and executive officers as a group
35,243,442
60.5
Principal shareholders:
Rick Yan
14,842,818
25.5
Entities affiliated with DCM — Doll Capital Management
(3)
9,754,329
16.7
Recruit Co.,
Ltd.
(4)
8,462,916
14.5
FMR Corp.
(5)
5,864,000
10.1
Michael Lei Feng
4,410,660
7.6
Norman Lui
3,064,403
5.3
(1)
Includes 3,201,171 common shares owned by DCM III, L.P., 84,817 common shares owned by DCM
III-A, L.P., 156,406 common shares owned by DCM Affiliates Fund III, L.P., 5,169,293 common
shares owned by Doll Technology Investment Fund II, L.P., 287,020 common shares owned by DCM
Network Fund, L.P., 530,892 common shares owned by DCM Internet Fund, L.P., and 324,730 Common
shares owned by Doll Technology Affiliates Fund II, L.P. The respective general partners of
these entities are DCM Investment Management III, L.L.C. and Doll Technology Investment
Management II, L.L.C. and share voting and investment power with respect to shares held by
each of the limited partnerships. The managing members of DCM Investment Management III,
L.L.C. are David K. Chao, Dixon R. Doll, Peter Moran and Robert Theis; the managing members of
Doll Technology Investment Management II, L.L.C. are David K. Chao and Dixon R. Doll. Each
managing member disclaims beneficial ownership of shares held by the limited partnerships,
except to the extent of their respective pecuniary interests therein. Also includes 401,067
common shares owned by David K. Chao.
(2)
Includes 237,867 common shares acquired through early exercise of options. The exercise price
paid by Ms. Chien to us was recognized as a liability and the shares acquired upon exercise
were not considered issued for accounting purposes until vested.
(3)
Name and number of shares owned by each entity affiliated with DCM are described in Note (1)
above.
(4)
In April 2006, entities affiliated with DCM, Rick Yan, Michael Lei Feng, and Norman Lui, and
Kathleen Chien entered into a share purchase agreement with Recruit.
(5)
Based on their Schedule 13F-HR filing with the Securities and Exchange Commission for the
period ended March 31, 2006.
*
Less than 1%.
As of April 30, 2006, 12,043,456 of our common shares including common shares underlying
options outstanding, representing 20.7% of our outstanding shares, were held by a total of 17
holders of record with addresses in the United
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States. As of the same date, 8,960,362 of our ADSs, representing 17,920,724 common shares, or
30.8% of our outstanding shares, were held by a total of two registered holders of record with
addresses in the United States. Since certain of these common shares and ADSs were held by brokers
or other nominees, the number of record holders in the U.S. may not be representative of the number
of beneficial holders or their country of residence.
In April 2006, entities affiliated with DCM, Rick Yan, Michael Lei Feng and Norman Lui, and
Kathleen Chien entered into a share purchase agreement with Recruit. Under the terms and conditions
of the share purchase agreement, Recruit completed a purchase of 8,452,918 common shares, which
represented approximately 15% of our outstanding common shares as of December 31, 2005, from these
shareholders in April 2006. The share purchase agreement also provides for an option that would
allow Recruit to purchase up to an additional 14,862,313 common shares from these shareholders over
a three-year period beginning in April 2006 and result in Recruit owing approximately 40% of our
fully diluted common shares outstanding as of December 31, 2005. In addition, under the share
purchase agreement, each of these selling shareholders has agreed that it will use its commercially
reasonable best efforts in cooperating with Recruit to have a representative of Recruit nominated
to stand for election to our board of directors and that it will vote all of its shares in favor of
the election of such nominee to our board of directors at any annual or extraordinary general
meetings of our members at which such nominee may stand for election for the duration of the
agreement. Recruit has agreed not to sell or otherwise transfer an interest in any of the shares it
has purchased under the agreement for one year following the date of such purchase.
B. Related Party Transactions
Stock Option Grants
We have granted options to purchase common shares in our company to certain of our employees,
directors and officers under our 2000 stock option plan. As of December 31, 2005, there were
outstanding options to purchase an aggregate of 2,557,974 common shares in our company. For a
description of our 2000 stock option plan and these option grants, see "Item 6. — Directors, Senior
Management and Employees — Compensation — Stock-Based Compensation Plans."
Loans and Advances
In 2000, Rick Yan, a director and chief executive officer of our company, made a loan to us in
the principal amount of RMB3,476,214 for working capital purposes. In 2003, we recorded an
additional loan from Mr. Yan in the principal amount of RMB887,550 for working capital purposes.
These loans were unsecured, non-interest bearing and had no definite maturity. These loans were
paid in full in 2004.
In 2003, we recorded RMB333,882 as loans made to us to account for the exercise price of
certain options exercised by Kathleen Chien, our chief financial officer, and David K. Chao, one of
our directors. Because the shares underlying the exercised options were not vested at the time of
the exercise, the exercise price paid by Ms. Chien and Mr. Chao to us was recognized as a
liability, and the exercised shares were not considered issued for accounting purposes. This
liability item will be re-characterized as share capital upon vesting of the shares. The amount
attributable to Ms. Chien in connection with this item was RMB248,301. The amount attributable to
Mr. Chao in connection with this item was RMB85,582.
In 2004, we recorded RMB1,907,276 as loans made to us to account for the exercise price of
certain options by Kathleen Chien. Because the shares underlying the exercised options were not
vested at the time of exercise, the exercise price paid by Ms. Chien to us was recognized as a
liability, and the shares were not considered issued for accounting purposes. This liability item
will be re-characterized as share capital upon vesting of the shares.
In 2005, Michael Lei Feng, an executive of our company, made an advance to us in the principal
amount of RMB500,000 in connection with increasing the registered capital of one of our variable
interest entities. This advance was repaid in full as of March 31, 2006.
Business Alliance with Recruit
In April 2006, we formed a business alliance with Recruit, a privately held human resource
services company in Japan, to collaborate on the development of our human resource products and
services in China. Under the terms of our business alliance agreement, we have also established an
internal corporate planning group with Recruit to explore potential business opportunities outside
of the human resource services industry in China although to date we have not begun to offer any
such products.
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In a separate transaction in April 2006, entities affiliated with DCM, Rick Yan, Michael Lei
Feng and Norman Lui, and Kathleen Chien entered into a share purchase agreement with Recruit. Under
the terms and conditions of the share purchase agreement, Recruit completed a purchase of 8,452,918
common shares from these shareholders in April 2006. The share purchase agreement also provides for
an option that would allow Recruit to purchase up to an additional 14,862,313 common shares from
these selling shareholders. As of April 30, 2006, Recruit owned 8,462,916 common shares of our
company.
Transactions Among Our Subsidiaries and Affiliated Entities
For a description of transactions among our subsidiaries and affiliated entities, see "Item 4.
— Information on the Company — Organizational Structure — Contractual Arrangements Among Our Group
Entities."
C. Interests of Experts and Counsel
Not Applicable.
ITEM 8. FINANCIAL INFORMATION
A. Consolidated Statements and Other Financial Information
See "Item 18. — Financial Statements" for our audited consolidated financial statements filed
as part of this annual report.
Legal Proceedings
Beginning in January 2005, several complaints were filed against us, and certain of our senior
executive officers and directors, in the United States District Court for the Southern District of
New York, following our announcement of anticipated financial results for the fourth quarter of
2004. The complaints seek unspecified damages on alleged violations of federal securities laws
during the period from November 4, 2004 to January 14, 2005. The complaints allege violations of
the federal securities laws through the issuance of false or misleading statements during the class
period covered, including improperly recognizing third quarter advertising revenue and issuing
misleading guidance on our fourth quarter results. In connection with these actions, we have
engaged U.S. counsel to represent the defendants. On July 26, 2005, the Court consolidated the
cases and appointed a lead plaintiff. On October 13, 2005, we and all defendants moved to dismiss
the complaint. The motion to dismiss remains pending before the Court. We will continue to take all
appropriate action in response to these lawsuits. We cannot predict the outcome of the case at this
time and no provision has been made with respect to these lawsuits.
From time to time, we undertake legal action against entities that misappropriate the content
of our
www.51job.com
website, including recruitment advertisements and the design of our website,
our brands and trademarks, materials from our training courses and other proprietary intellectual
property. Our intellectual property is subject to theft and other unauthorized use, and our ability
to protect our intellectual property is limited. In addition, we may in the future be subject to
claims that we have infringed the intellectual property rights of others. See "Item 3. — Key
Information — Risk Factors — Risks Related to Our Business — We may be exposed to infringement or
misappropriation claims by third parties, which, if successful, could cause us to pay significant
damage awards."
Dividend Policy
Since the incorporation of our company in 2000, we have never declared or paid any cash
dividends on our common shares, but it is possible that we may declare dividends in the future. We
have historically retained earnings to finance operations and the expansion of our business. The
timing, amount and form of future dividends, if any, will depend, among other things, on our future
results of operations and cash flow, our future prospects, our capital requirements and surplus,
the amount of distributions, if any, received by us from our subsidiaries and our affiliated
entities, and other factors deemed relevant by our board of directors. Any future dividends on our
common shares would be declared by and subject to the discretion of our board of directors.
Holders of ADSs will be entitled to receive dividends, if any, subject to the terms of the
deposit agreement, to the same extent as holders of common shares, less the fees and expenses
payable under the deposit agreement, and after deduction of any applicable taxes.
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B. Significant Changes
We have not experienced any significant changes since the date of our audited consolidated
financial statements included in this annual report.
ITEM 9. THE OFFER AND LISTING
A. Offer and Listing Details
Our ADSs, each representing two of our common shares, have been trading on the Nasdaq National
Market since September 29, 2004. Our ADSs are traded under the symbol "JOBS."
The following table provides the high and low trading prices for our ADSs on the Nasdaq
National Market for (1) the years ended December 31, 2004 and 2005, (2) each of the six most recent
fiscal quarters and (3) each of the most recent six months.
Sales price
High
Low
US$
US$
Annual highs and lows
2004
(1)
55.55
18.61
2005
53.50
9.71
Quarterly highs and lows
Fourth quarter 2004
55.55
20.35
First quarter 2005
53.50
14.90
Second quarter 2005
21.22
12.21
Third quarter 2005
15.91
12.25
Fourth quarter 2005
15.60
9.71
First quarter 2006
19.49
14.40
Monthly highs and lows
December 2005
15.60
13.16
January 2006
18.90
14.60
February 2006
19.49
15.90
March 2006
16.50
14.40
April 2006
25.60
15.50
May 2006
31.90
23.54
June 2006 (through June 26, 2006)
28.50
18.75
(1)
Our ADSs commenced trading on September 29, 2004.
B. Plan of Distribution
Not Applicable.
C. Markets
Our ADSs, each representing two of our common shares, have been trading on the Nasdaq National
Market since September 29, 2004 under the symbol "JOBS."
D. Selling Shareholders
Not Applicable.
E. Dilution
Not Applicable.
F. Expenses of the Issue
Not Applicable.
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ITEM 10. ADDITIONAL INFORMATION
A. Share Capital
Not Applicable.
B. Memorandum and Articles of Association
We incorporate by reference into this annual report the description of our amended and
restated memorandum and articles of association contained in our F-1 registration statement (File
No. 333-117194) filed with the Commission on September 29, 2004. Our shareholders adopted our
amended and restated memorandum and articles of association at an extraordinary shareholder meeting
on April 26, 2004.
C. Material Contracts
Except for the agreement discussed below, we have not entered into any material contracts
other than in the ordinary course of business and other than those described in "Item 4. —
Information on the Company" or elsewhere in this annual report on Form 20-F.
In April 2006, we formed a business alliance with Recruit, a privately held human resource
services company in Japan, to collaborate on the development of our human resource products and
services in China. Under the terms of our business alliance agreement, we have also established an
internal corporate planning group with Recruit to explore potential business opportunities outside
of the human resource services industry in China although to date we have not begun to offer any
such products.
D. Exchange Controls
China's government imposes control over the convertibility of Renminbi into foreign
currencies. Under the current unified floating exchange rate system, the People's Bank of China
publishes a daily exchange rate for Renminbi, or the PBOC Exchange Rate, based on the previous
day's dealings in the inter-bank foreign exchange market. Financial institutions authorized to deal
in foreign currency may enter into foreign exchange transactions at exchange rates within an
authorized range above or below the PBOC Exchange Rate according to market conditions.
Under the Foreign Exchange Control Regulations issued by the State Council on January 29, 1996
and effective as of April 1, 1996 (and amended on January 14, 1997) and the Administration of
Settlement, Sale and Payment of Foreign Exchange Regulations which came into effect on July 1, 1996
regarding foreign exchange control, or the Regulations, conversion of Renminbi into foreign
exchange by foreign investment enterprises for current account items, including the distribution of
dividends to foreign investors of foreign investment enterprises and payments for licensing fees or
services, is permissible. Foreign investment enterprises are permitted to remit foreign exchange
from their foreign exchange bank account in China on the basis of, inter alia, the terms of the
relevant joint venture contracts and the board resolutions declaring the distribution of the
dividend and payment of profits. Conversion of Renminbi into foreign currencies and remittance of
foreign currencies for capital account items, including direct investment, loans, security
investment, is still subject to the approval of the State Administration of Foreign Exchange, or
SAFE, in each such transaction. On January 14, 1997, the State Council amended the Foreign Exchange
Control Regulations to provide, among other things, that the State shall not impose restrictions on
recurring international payments and transfers.
Under the Regulations, foreign investment enterprises are required to open and maintain
separate foreign exchange accounts for capital account items (but not for other items). In
addition, foreign investment enterprises may only buy, sell and/or remit foreign currencies at
those banks authorized to conduct foreign exchange business upon the production of valid commercial
documents and, in the case of capital account item transactions, document approval from SAFE.
Currently, foreign investment enterprises are required to apply to SAFE for "foreign exchange
registration certificates for foreign investment enterprises." With such foreign exchange
registration certificates (which are granted to foreign investment enterprises upon fulfilling
specified conditions and which are subject to review and renewal by SAFE on an annual basis) or
with the foreign exchange sales notices from the SAFE (which are obtained on a
transaction-by-transaction basis), foreign-invested enterprises may enter into foreign exchange
transactions at banks authorized to conduct foreign exchange business to obtain foreign exchange
for their needs.
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E. Taxation
Cayman Islands Taxation
The Cayman Islands currently levy no taxes on individuals or corporations based upon profits,
income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate
duty. There are no other taxes likely to be material to our company levied by the Government of the
Cayman Islands except for stamp duties that may be applicable on instruments executed in, or after
execution brought within the jurisdiction of, the Cayman Islands. The Cayman Islands are not party
to any double taxation treaties. There are no exchange control regulations or currency restrictions
in the Cayman Islands.
United States Federal Income Taxation
The following summarizes the material U.S. federal income tax consequences to a U.S. Holder,
as defined below, of the ownership and disposition of our ADSs or common shares as of the date of
this annual report.
Except where noted, this summary deals only with ADSs and common shares that are held as
capital assets by U.S. Holders. This summary does not describe all of the U.S. federal income tax
consequences applicable to U.S. Holders that are subject to special treatment under the U.S.
federal income tax laws, including:
•
dealers in securities or currencies;
•
financial institutions;
•
real estate investment trusts;
•
insurance companies;
•
tax-exempt organizations;
•
persons holding ADSs or common shares as part of a hedging, integrated or
conversion transaction, constructive sale or straddle;
•
traders in securities that have elected the mark to market method of accounting;
•
persons liable for the alternative minimum tax;
•
a partnership or other pass-through entity for United Stated federal income tax purposes;
•
persons who own more than 10% of our voting shares; or
•
persons whose "functional currency" is not the U.S. dollar.
This summary is based in part on representations by the depositary and assumes that each
obligation under the deposit agreement and any related agreement will be performed in accordance
with its terms. Furthermore, the discussion below is based upon the provisions of the Internal
Revenue Code of 1986, as amended, and U.S. Treasury regulations, rulings and judicial decisions
thereunder at the date hereof, and such authorities may be replaced, revoked or modified, possibly
on a retroactive basis, so as to result in U.S. federal income tax consequences different from
those discussed below.
A U.S. Holder that holds or is considering the disposition of ADSs or common shares should
consult its own tax advisor concerning the U.S. federal income tax consequences as well as any
consequences arising under the laws of any other taxing jurisdiction in light of the particular
circumstances of the U.S. Holder.
A U.S. Holder is a beneficial owner of ADSs or common shares that is a U.S. person. A U.S.
person is a person who is, for U.S. federal income tax purposes:
•
an individual citizen or resident of the United States;
•
a corporation or other entity taxable as a corporation created or organized
in or under the laws of the United States, any state thereof, or the District of Columbia;
•
an estate the income of which is subject to U.S. federal income taxation,
regardless of its source; or
•
a trust if it is subject to the primary supervision of a court within the
United States and one or more U.S. persons have the authority to control all substantial
decisions of the trust or if the trust has a valid election in effect under applicable
U.S. Treasury regulations to be treated as a U.S. person.
If a partnership holds ADSs or common shares, the tax treatment of a partner will generally
depend on the status of the partner and the activities of the partnership. A partner of a
partnership holding ADSs or common shares should consult its own tax advisors.
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ADSs
In general, for U.S. federal income tax purposes, a U.S. Holder of ADSs will be treated as the
owner of the underlying common shares that are represented by such ADSs. Deposits and withdrawals
of common shares in exchange for ADSs will not be subject to U.S. federal income taxation.
Distributions on ADSs or common shares
Subject to the discussion under "Passive foreign investment company rules" below, the gross
amount of the distributions on the ADSs or common shares will be taxable to a U.S. Holder as
dividends to the extent of our current or accumulated earnings and profits, as determined under
U.S. federal income tax principles. Such income will be includable in a U.S. Holder's gross income
as ordinary income on the day actually or constructively received by a U.S. Holder, in the case of
common shares, or by the depositary, in the case of ADSs. Subject to certain limitations, dividends
paid to non-corporate U.S. Holders, including individuals, will be eligible for a reduced rate of
taxation if we are deemed to be a "qualified foreign corporation" for U.S. federal income tax
purposes. A qualified foreign corporation includes:
•
a foreign corporation that is eligible for the benefits of a comprehensive
income tax treaty with the United States that includes an exchange of information program;
and
•
a foreign corporation if its stock with respect to which a dividend is paid
or its ADSs backed by such stock are readily tradable on an established securities market
within the United States,
but does not include an otherwise qualified corporation that is a passive foreign investment
company. We believe that we will be a qualified foreign corporation for so long as (1) we are not a
passive foreign investment company and (2) the ADSs are listed on the Nasdaq National Market or a
national securities exchange in the United States, and thus are considered to be readily tradable
on an established securities market. However, our status as a qualified foreign corporation may
change.
Dividends paid on the ADSs or common shares will be treated as income from sources outside the
United States generally will constitute "passive income" for U.S. foreign tax credit limitation
purposes.
To the extent that the amount of any distribution exceeds our current or accumulated earnings
and profits, the distribution will first be treated as a tax-free return of capital, causing a
reduction in the adjusted basis of the ADSs or common shares (thereby increasing the amount of
gain, or decreasing the amount of loss, a U.S. Holder would recognize on a subsequent disposition
of the ADSs or common shares), and the balance in excess of adjusted basis will be taxed as capital
gain. We do not expect to provide U.S. Holders of common shares or ADSs with information regarding
the amount of our current or accumulated earnings and profits, as determined under U.S. federal
income tax principles.
Distributions of ADSs or common shares that are received as part of a pro rata distribution to
all of our common shareholders (including ADS holders) will not be subject to U.S. federal income
tax. The basis of the new ADSs or common shares so received will be determined by allocating a U.S.
Holder's basis in the old ADSs or common shares between the old ADSs or common shares and the new
ADSs or common shares received, based on their relative fair market values on the date of
distribution.
Sale, exchange or other disposition of ADSs or common shares
Subject to the discussion under "Passive foreign investment company rules" below, upon the
sale, exchange or other disposition of ADSs or common shares, a U.S. Holder generally will
recognize capital gain or loss equal to the difference between the amount realized upon the sale,
exchange or other disposition and the adjusted tax basis of the U.S. Holder in the ADSs or common
shares. A U.S. Holder's tax basis in an ADS or a common share will be, in general, the price it
paid for that ADS or common share. The capital gain or loss generally will be long-term capital
gain or loss if, at the time of sale, exchange or other disposition, the U.S. Holder has held the
ADS or common share for more than one year. Net long-term capital gains of non-corporate U.S.
Holders, including individuals, are eligible for reduced rates of taxation. The deductibility of
capital losses is subject to limitations. Any gain or loss that a U.S. Holder recognizes generally
will be treated as gain or loss from sources within the United States for U.S. foreign tax credit
limitation purposes.
Passive foreign investment company rules
We believe that we were not a passive foreign investment company for 2005 and based on the
projected composition of our income and valuation of our assets, we do not expect to be a passive
foreign investment company for 2006. In addition, we do not expect to become one in the future,
although this may change. The determination of whether we are a passive foreign investment company
will be made on an annual basis and will depend on the composition of our income and assets,
including goodwill. The calculation of goodwill will be based, in part, on the market value of our
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ADSs from time to time, which may be volatile. For a discussion of the risks related to the
possible tax effects should we be considered a passive foreign investment company, see "Item 3. —
Key Information — Risk Factors — Risks Related to Our Business — We may become a passive foreign
investment company, which could result in adverse U.S. tax consequences to U.S. investors."
In general, we will be deemed to be a passive foreign investment company for any taxable year
in which either (1) at least 75% of our gross income is passive income or (2) at least 50% of the
value (determined on the basis of a quarterly average) of our assets is attributable to assets that
produce or are held for the production of passive income. For this purpose, passive income
generally includes dividends, interest, royalties, rents (other than rents and royalties derived in
the active conduct of a trade or business and not derived from a related person), annuities and
gains from assets that produce passive income. If we own at least 25% by value of the equity shares
of another corporation, we will be treated for purposes of the passive foreign investment company
tests as owning a proportionate share of the assets of the other corporation, and as receiving
directly a proportionate share of the other corporation's income.
If we are a passive foreign investment company for any taxable year during which a U.S. Holder
has an equity interest in our company, unless the U.S. Holder makes a mark-to-market election or a
qualified electing fund election, as discussed below, such U.S. Holder will be subject to the
following special tax rules.
Gain realized upon the sale or disposition of ADSs or common shares and distributions made to
a U.S. Holder by us during a taxable year with respect to the ADSs or common shares that are
"excess distributions" (defined generally as the excess of the amount received with respect to the
ADSs or common shares in the taxable year over 125% of the average amount received in the shorter
of either the three previous years or a U.S. Holder's holding period before the taxable year) must
be allocated ratably to each day of the U.S. Holder's holding period. The amount allocated to the
current taxable year or any year before we became a passive foreign investment company will be
included as ordinary income in a U.S. Holder's gross income for that year. The amount allocated to
other prior taxable years will be taxed as ordinary income at the highest rate in effect for the
class of U.S. Holder, corporate or non-corporate, in that prior year and the tax is subject to an
interest charge at the rate applicable to deficiencies in income taxes.
In certain circumstances, instead of being subject to the excess distribution rules discussed
above, a U.S. Holder may make an election to include gain on the ADSs or common shares of a passive
foreign investment company as ordinary income under a mark-to-market method, provided that the ADSs
or equity shares are regularly traded on a qualified exchange. Under current law, the
mark-to-market election is only available for ADSs or common shares that are regularly traded
within the meaning of U.S. Treasury regulations on certain designated U.S. exchanges and foreign
exchanges that meet trading, listing, financial disclosure and other requirements to be treated as
a qualified exchange under applicable U.S. Treasury regulations. The Nasdaq National Market is a
qualified exchange.
If a U.S. Holder makes an effective mark-to-market election, the U.S. Holder will include each
year as ordinary income, rather than capital gain, the excess, if any, of the fair market value of
the U.S. Holder's ADSs or common shares at the end of the taxable year over such U.S. Holder's
adjusted basis in the ADSs or common shares, and will be permitted an ordinary loss in respect of
the excess, if any, of the adjusted basis of these ADSs or common shares over their fair market
value at the end of the taxable year, but only to the extent of the net amount previously included
in income as a result of the mark-to-market election. A U.S. Holder's basis in the ADSs or common
shares will be adjusted to reflect any such income or loss amounts. Any gain or loss on the sale of
the ADSs or common shares will be ordinary income or loss, except that this loss will be ordinary
loss only to the extent of the previously included net mark-to-market gain.
Instead of being subject to the excess distribution rules discussed above, a U.S. holder of
shares in a passive foreign investment company alternatively may elect to have the company treated
as a qualified electing fund, provided that the company provides certain information to make such
an election effective. This option will not be available to U.S. Holders because we do not intend
to provide such information to U.S. Holders.
If a U.S. Holder owns ADSs or common shares during any year that we are a passive foreign
investment company, the U.S. Holder must file Internal Revenue Service Form 8621.
A U.S. Holder should consult its own tax advisors concerning the availability and the making
of a mark-to-market election and the U.S. federal income tax consequences of holding the ADSs or
common shares if we are deemed to be a passive foreign investment company in any taxable year.
Information reporting and backup withholding
In general, unless a U.S. Holder belongs to a category of certain exempt recipients (such as
corporations), information reporting requirements will apply to distributions on ADSs or common
shares made within the United States
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and to the proceeds of sales of ADSs or common shares that are effected through the U.S.
office of a broker or the non-U.S. office of a broker that has certain connections with the United
States. Backup withholding may apply to these payments if a U.S. Holder fails to provide a correct
taxpayer identification number or certification of exempt status, fails to report in full dividend
and interest income or, in certain circumstances, fails to comply with applicable certification
requirements.
Any amounts withheld under the backup withholding rules will be allowed as a refund or a
credit against a U.S. Holder's U.S. federal income tax, provided the U.S. Holder furnishes the
required information to the Internal Revenue Service in a timely manner.
Enforceability of Civil Liabilities
We are an exempted limited liability company incorporated under the laws of the Cayman
Islands. We are incorporated in the Cayman Islands because of certain benefits associated with
being a Cayman Islands corporation, such as political and economic stability, an effective judicial
system, a favorable tax system, the absence of exchange control or currency restrictions and the
availability of professional and support services. However, the Cayman Islands has a less developed
body of securities laws as compared to the United States and provides protections for investors to
a significantly lesser extent. In addition, Cayman Islands companies may not have standing to sue
before the federal courts of the United States.
A substantial majority of our assets are located outside the United States. In addition, a
majority of our directors and officers are nationals and/or residents of countries other than the
United States, and all or a substantial portion of our or such persons' assets are located outside
the United States. As a result, it may be difficult for investors to effect service of process
within the United States upon us or such persons or to enforce against them or against us,
judgments obtained in United States courts, including judgments predicated upon the civil liability
provisions of the securities laws of the United States or any state thereof.
We have appointed National Registered Agents, Inc. at 875 Avenue of the Americas, Suite 501,
New York, New York 10001, as our agent to receive service of process with respect to any action
brought against us in the United States District Court for the Southern District of New York under
the federal securities laws of the United States or of any State of the United States or any action
brought against us in the Supreme Court of the State of New York in the County of New York under
the securities laws of the State of New York.
Maples and Calder, our counsel as to Cayman Islands law and Jun He Law Offices, our counsel as
to PRC law, have advised us that there is uncertainty as to whether the courts of the Cayman
Islands and the PRC, respectively, would (1) recognize or enforce judgments of United States courts
obtained against us or our directors or officers predicated upon the civil liability provisions of
the securities laws of the United States or any state thereof, or (2) entertain original actions
brought in each respective jurisdiction, against us or our directors or officers predicated upon
the securities laws of the United States or any state thereof.
Maples and Calder has further advised us that a final and conclusive judgment in federal or
state courts of the United States under which a sum of money is payable, other than a sum payable
in respect of taxes, fines, penalties or similar charges, may be subject to enforcement proceedings
as a debt in the Courts of the Cayman Islands under the common law doctrine of obligation.
Jun He Law Offices has advised us further that the recognition and enforcement of foreign
judgments are provided for under the PRC Civil Procedure Law. PRC courts may recognize and enforce
foreign judgments in accordance with the requirements of the PRC Civil Procedure Law based either
on treaties between the PRC and the country where the judgment is made or in reciprocity between
jurisdictions.
F. Dividends and Paying Agents
Not Applicable.
G. Statements by Experts
Not Applicable.
H. Documents on Display
We have previously filed with the Commission our registration statement on Form F-1 and
prospectus under the Securities Act of 1933, as amended, with respect to our ADSs.
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We are subject to the periodic reporting and other informational requirements of the
Securities Exchange Act of 1934, as amended, or the Exchange Act. Under the Exchange Act, we are
required to file reports and other information with the Securities and Exchange Commission.
Specifically, we are required to file annually a Form 20-F no later than six months after the close
of each fiscal year, which is December 31. Copies of reports and other information, when so filed,
may be inspected without charge and may be obtained at prescribed rates at the public reference
facilities maintained by the Securities and Exchange Commission at Room 1024, Judiciary Plaza, 450
Fifth Street, N.W., Washington, D.C. 20549. You can request copies of these documents upon payment
of a duplicating fee, by writing to the SEC. Please call the SEC at 1-800-SEC-0330 for further
information on the operation of the public reference rooms. The SEC also maintains a website at
www.sec.gov
that contains reports, proxy and information statements, and other information
regarding registrants that make electronic filings with the SEC using its EDGAR system. As a
foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the
furnishing and content of quarterly reports and proxy statements, and officers, directors and
principal shareholders are exempt from the reporting and short-swing profit recovery provisions
contained in Section 16 of the Exchange Act.
Our financial statements have been prepared in accordance with U.S. GAAP.
We will furnish our shareholders with annual reports, which will include a review of
operations and annual audited consolidated financial statements prepared in conformity with U.S.
GAAP.
I. Subsidiary Information
Not Applicable.
ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Interest rate risk
Our exposure to interest rate risk for changes in interest rates relates primarily to the
interest income generated by excess cash deposited in banks. As of December 31, 2005, we had cash
and cash equivalents of RMB830.6 million (US$102.9 million). Cash and cash equivalents consist of
cash on hand and in banks.
The carrying amounts of cash and cash equivalents, accounts receivable and other receivables
represent our principal exposure to credit risk in relation to our financial assets. As of December
31, 2005, approximately 30% of our cash and cash equivalents were held in uninsured accounts at
major financial institutions located in the United States and the remainder in uninsured accounts
located in China and Hong Kong that we believe are of acceptable credit quality. We have not used
any derivative financial instruments to hedge interest rate risk. We have not been exposed nor do
we anticipate being exposed to material risks due to changes in interest rates, although our future
interest income may fluctuate in line with changes in interest rates. The risk associated with
fluctuating interest rates is principally confined to our cash deposits in banks, and, therefore,
our exposure to interest rate risk is minimal.
Foreign exchange risk
Substantially all of our revenue generating operations are transacted in the Renminbi, which
is not fully convertible into foreign currencies, and a significant portion of our liabilities are
denominated in Renminbi. As a result, the conversion of our revenues is subject to PRC regulatory
restrictions on currency conversion and we are exposed to risks posed by fluctuations in the
foreign exchange market. The value of the Renminbi against the U.S. dollar and other currencies may
fluctuate and is affected by, among other things, changes in the PRC's political and economic
conditions. On July 21, 2005, the PRC government changed its policy of pegging the value of the
Renminbi to the U.S. dollar. Under the new policy, the Renminbi is permitted to fluctuate within a
narrow and managed band against a basket of certain foreign currencies. This change in policy
initially resulted in an approximately 2.5% appreciation in the value of the Renminbi against the
U.S. dollar as of December 31, 2005, which resulted in a loss from foreign currency translation of
RMB11.3 million (US$1.4 million) for us in 2005. As a portion of our assets are denominated in U.S.
dollars, future upward revaluations of the Renminbi could result in charges to our income statement
and reductions in the value of these assets. In addition, as we rely entirely on dividends, royalty
payments and other fees paid to us in Renminbi by our subsidiaries and affiliated entities in the
PRC, future downward revaluations of the Renminbi may materially and adversely affect our cash
flows, revenues and financial condition, and the value of, and any dividends payable on, our ADSs
in foreign currency terms.
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We have not used any forward contracts or currency borrowings to hedge our exposure to foreign
currency risk. See "Item 3. — Key Information — Risk Factors — Risks Related to the People's
Republic of China — The fluctuation of the Renminbi may materially and adversely affect your
investment."
ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
Not Applicable.
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PART II
ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
None.
ITEM
14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND
USE OF PROCEEDS
Use of Proceeds
The following information regarding the use of proceeds relates to the registration statement
on Form F-1 (File No. 333-117194) for our initial public offering and sale of 6,037,500 American
depositary shares, or ADSs, each representing two of our common shares, for an aggregate offering
price of US$84,525,000. Our registration statement was declared effective by the Commission on
September 28, 2004.
We received net proceeds of approximately US$76.8 million from our initial public offering
(after deducting underwriting discounts and other expenses related to the offering). We have
utilized a portion of the net proceeds from our initial public offering to fund capital
expenditures and our repurchases of ADSs in the open market. The remaining net proceeds are
currently held in interest bearing bank deposits. None of the net proceeds from the initial public
offering were paid, directly or indirectly, to any of our directors or officers of our company or
their associates, persons owning 10% or more of our equity securities or our affiliates.
Morgan Stanley & Co. International Limited, UBS Securities LLC, Piper Jaffray & Co. and CLSA
Limited were the underwriters for our initial public offering.
ITEM 15. CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
As of the end of the period covered by this annual report, our principal executive officer and
principal financial officer have evaluated the effectiveness of our disclosure controls and
procedures, as that term is defined in Rules 13a-15(e) and 15d-15(e) of the Securities Exchange Act
of 1934, as amended, or the Exchange Act. Based on this evaluation, they have concluded that, as of
the end of the period covered by this annual report, our disclosure controls and procedures were
effective in ensuring that the material information required to be disclosed by us in the report
that we file and furnish under the Exchange Act is recorded, processed, summarized and reported
within the time periods specified by the Securities and Exchange Commission's rules and
regulations.
However, in the course of its audit of our 2005 financial statements, our independent auditors
have identified several areas of our internal controls relating to financial reporting matters that
require improvement, including risk management, personnel and process supervision, formal
documentation of internal controls and processes, and improvement of controls and access to
computer systems and servers. We are committed to taking appropriate steps to make these
improvements as soon as practicable. In addition, we are in the process of implementing
modifications to our internal controls to comply with the requirements of Section 404 of the
Sarbanes-Oxley Act of 2002. Our board of directors and the audit committee have been advised of
these matters and are monitoring our progress to make the required improvements.
Changes in Internal Controls
There were no significant changes in our internal controls over financial reporting or in
other factors during the period that has materially affected, or is likely to materially affect,
these controls other than the steps we have taken to remedy the material weakness in internal
control over financial reporting previously reported in our annual report on Form 20-F for the
fiscal year ended December 31, 2004. As described in that report, in January 2005 we discovered a
clerical error related to certain accounting processes in which manual adjustments duplicated
automated entries, which we concluded was the result of a material weakness in internal control.
Following this discovery, we increased the level of supervision over accounting processes,
reinforced existing controls and improved interdepartmental communications and documentation.
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ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
Our board of directors has concluded that Mr. Donald L. Lucas, an independent director, meets
the criteria for an "audit committee financial expert" as established by the U.S. Securities and
Exchange Commission. See "Item 6. — Directors, Senior Management and Employees — Board
Practices."
ITEM 16B. CODE OF ETHICS
Our board of directors has adopted a code of ethics that applies to our directors, officers
and employees, including our principal executive officer, principal financial officer, principal
accounting officer or controller and any other persons who perform similar functions for us. We
have included a copy of our code of business conduct and ethics as an exhibit to this annual
report, and posted the code on our website at
ir.51job.com
.
ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
Audit Fees
PricewaterhouseCoopers Zhong Tian CPAs Ltd. Co., or PwC, were our independent auditors for the
years ended December 31, 2004 and 2005. Audit fees relate to aggregate fees billed for professional
services rendered by PwC for the audit of our annual financial statements and the review of our
quarterly financial results. We paid PwC audit fees of RMB3,790,040 in 2004 and RMB3,080,932
(US$381,766) in 2005.
Audit Related Fees
Audit-related fees are aggregate fees billed for assurance and related services rendered by
PwC that were reasonably related to the performance of the audit or review of our financial
statements and are not reported under the caption "Audit Fees" above. In 2004, we paid RMB2,470,262
in audit-related fees to PwC for review work in connection with registration documents. We did not
pay any audit related fees to PwC in 2005.
Tax Fees
In 2004, we paid RMB9,960 (US$1,203) to PwC for tax advice services. We did not pay any tax
fees to PwC in 2005.
All Other Fees
We did not purchase any other services from PwC in 2004 or 2005.
Pre-Approved Policies and Procedures
Our audit committee pre-approves audit engagement terms and fees prior to the commencement of
any audit work, other than that which may be necessary for the independent auditors to prepare the
proposed audit approach, scope and fee estimates. The independent auditors annually submit to us a
written proposal that details all audit and audit related services. Audit fees are fixed and
contained in the proposal, and the audit committee reviews the nature and dollar value of services
to be provided under such proposal. Any revisions to such proposal after the engagement has begun
are reviewed and pre-approved by the audit committee.
ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
We are in compliance with applicable listing standards for the audit committee of our board of
directors.
76
Table of Contents
ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
The following table sets forth certain information related to purchases made by us of our ADSs
in 2005:
Approximate dollar value of
Total number of
Average price paid
ADSs that may yet be
Period
ADSs purchased
per share
purchased
under the program
US$
RMB
(1)
US$
RMB
(1)
January 2005
—
—
—
—
—
February 2005
—
—
—
—
—
March 2005
—
—
—
—
—
April 2005
—
—
—
—
—
May 2005
—
—
—
—
—
June 2005
—
—
—
—
—
July 2005
—
—
—
—
—
August 2005
201,905
14.00
112.98
22,173,000
178,941,000
September 2005
30,000
14.21
114.68
21,746,000
175,495,000
October 2005
—
—
—
21,746,000
175,495,000
November 2005
280,500
13.24
106.85
18,032,000
145,522,000
December 2005
174,033
13.62
109.92
15,661,000
126,387,000
(1)
Translations from U.S. dollars to Renminbi were made at the noon buying rate in The City of
New York for cable transfers of Renminbi as certified for customs purposes by the Federal
Reserve Bank of New York. The translations of U.S. dollar amounts into Renminbi amounts have
been made at the noon buying rate in effect on December 30, 2005, which was US$1.00 to
RMB8.0702.
All ADSs purchased in 2005 were under a stock repurchase program which was approved by
our shareholders in May 2005. Under the program, we are authorized to purchase up to US$25 million
worth of outstanding ADSs. The program expired on May 26, 2006.
77
Table of Contents
PART III
ITEM 17. FINANCIAL STATEMENTS
We have elected to provide financial statements pursuant to Item 18.
ITEM 18. FINANCIAL STATEMENTS
The consolidated financial statements for 51job, Inc. and its subsidiaries are included at the
end of this annual report.
ITEM 19. EXHIBIT INDEX
Exhibits
Description
1.
1
Amended and Restated Memorandum and Articles of Association.
(Incorporated by reference to Exhibit 3.1 from our
Registration Statement on Form F-1 (File No. 333-117194)
filed with the Securities and Exchange Commission on July 7,
2004)
2.
1
Specimen of Share Certificate. (Incorporated by reference to
Exhibit 4.1 from our Registration Statement on Form F-1 (File
No. 333-117194) filed with the Securities and Exchange
Commission on July 7, 2004)
2.
2
Specimen of American Depositary Receipt. (Incorporated by
reference to Exhibit 4.2 from our Registration Statement on
Form F-1 (File No. 333-117194) filed with the Securities and
Exchange Commission on August 2, 2004)
2.
3
Form of Deposit Agreement among 51job, Inc., JPMorgan Chase
Bank, as Depositary, and Holders and Beneficial Holders from
time to time of American Depositary Shares evidenced by
American Depositary Receipts issued thereunder, including the
form of American Depositary Receipt. (Incorporated by
reference to the Registration Statement on Form F-6 (File No.
333-117254) filed with the Securities and Exchange Commission
with respect to American Depositary Shares representing
common shares on July 9, 2004)
4.
1
2000 Stock Option Plan. (Incorporated by reference to Exhibit
10.1 from our Registration Statement on Form F-1 (File No.
333-117194) filed with the Securities and Exchange Commission
on July 7, 2004)
4.
2
Form of Employment, Confidential Information and Invention
Assignment Agreement. (Incorporated by reference to Exhibit
10.2 from our Registration Statement on Form F-1 (File No.
333-117194) filed with the Securities and Exchange Commission
on July 7, 2004)
4.
3
Form of Indemnification Agreement. (Incorporated by reference
to Exhibit 10.3 from our Registration Statement on Form F-1
(File No. 333-117194) filed with the Securities and Exchange
Commission on July 7, 2004)
4.
4*
Lease Agreements between Shanghai Qianjin Culture
Communication Co., Ltd. (name changed to Shanghai Qianjin
Advertising Co., Ltd. in November 2005) and (1) Shanghai
Wailao Property Management Service Co., Ltd. (dated as of
November 21, 2003); and (2) Shanghai Xiesheng Industry Co.,
Ltd. (dated as of June 3, 2003)
4.
5*
Lease Agreement dated as of March 11, 2005, as amended as of
July 2005, between Shanghai Qianjin Culture Communication
Co., Ltd. (name changed to Shanghai Qianjin Advertising Co.,
Ltd. in November 2005) and Zhang Ling
4.
6*
Lease Agreements dated as of February 21, 2005 between
Qianjin Network Information Technology (Shanghai) Co., Ltd.
and Shanghai Golden Union Real Estate Management Co., Ltd.
4.
7*
Summary of the Shanghai Commercial Building Advance Sale
Contracts dated as of December 31, 2005 between Shanghai
Zhangjiang Ji Cheng Dian Lu Industrial Area Development Co.,
Ltd. and entities of 51job, Inc.
4.
8
Form of Investor Rights Agreement. (Incorporated by reference
to Exhibit 10.5 from our Registration Statement on Form F-1
(File No. 333-117194) filed with the Securities and Exchange
Commission on July 7, 2004)
78
Table of Contents
Exhibits
Description
4.
9
Technical and Consulting Service Agreement dated as of May 3, 2004, as
amended as of July 2, 2004, between Shanghai Run An Lian Information
Consultancy Co., Ltd. and Qian Cheng Wu You Network Information Technology
(Beijing) Co., Ltd. (Incorporated by reference to Exhibit 10.7 from our
Registration Statement on Form F-1 (File No. 333-117194) filed with the
Securities and Exchange Commission on July 7, 2004)
4.
10
Technical and Consulting Service Agreement dated as of May 3, 2004, as
amended as of July 2, 2004, between Beijing Qian Cheng Si Jin Advertising
Co., Ltd. and Qian Cheng Wu You Network Information Technology (Beijing)
Co., Ltd. (Incorporated by reference to Exhibit 10.8 from our Registration
Statement on Form F-1 (File No. 333-117194) filed with the Securities and
Exchange Commission on July 7, 2004)
4.
11
Equity Pledge Agreement dated as of May 3, 2004 among Michael Lei Feng,
Tao Wang and Qian Cheng Wu You Network Information Technology (Beijing)
Co., Ltd. (Incorporated by reference to Exhibit 10.9 from our Registration
Statement on Form F-1 (File No. 333-117194) filed with the Securities and
Exchange Commission on July 7, 2004)
4.
12
Equity Pledge Agreement dated as of May 3, 2004 among Michael Lei Feng,
Beijing Run An Information Consultancy Co., Ltd. and Qian Cheng Wu You
Network Information Technology (Beijing) Co., Ltd. (Incorporated by
reference to Exhibit 10.10 from our Registration Statement on Form F-1
(File No. 333-117194) filed with the Securities and Exchange Commission on
July 7, 2004)
4.
13
Cooperation Agreement dated as of May 3, 2004 between Shanghai Run An Lian
Information Consultancy Co., Ltd. and Qianjin Network Information
Technology (Shanghai) Co., Ltd. (Incorporated by reference to Exhibit
10.11 from our Registration Statement on Form F-1 (File No. 333-117194)
filed with the Securities and Exchange Commission on July 7, 2004)
4.
14*
Amendment Notice to the Cooperation Agreement dated as of April 1, 2006
between Shanghai Run An Lian Information Consultancy Co., Ltd. and Qianjin
Network Information Technology (Shanghai) Co., Ltd.
4.
15
Domain Name License Agreement dated as of May 3, 2004 between Shanghai Run
An Lian Information Consultancy Co., Ltd. and 51net.com Inc. (Incorporated
by reference to Exhibit 10.12 from our Registration Statement on Form F-1
(File No. 333-117194) filed with the Securities and Exchange Commission on
July 7, 2004)
4.
16
Call Option Agreement dated as of August 1, 2002, as supplemented and
amended as of May 3, 2004, between Beijing Qian Cheng Si Jin Advertising
Co., Ltd. and 51net.com Inc. (Incorporated by reference to Exhibit 10.13
from our Registration Statement on Form F-1 (File No. 333-117194) filed
with the Securities and Exchange Commission on July 7, 2004)
4.
17
Share Transfer Agreement dated as of April 5, 2004 among Wuhan Mei Hao
Qian Cheng Advertising Co., Ltd., 51net.com Inc. and Beijing Qian Cheng Si
Jin Advertising Co., Ltd. (Incorporated by reference to Exhibit 10.14 from
our Registration Statement on Form F-1 (File No. 333-117194) filed with
the Securities and Exchange Commission on July 7, 2004)
4.
18*
Business Alliance Agreement dated as of April 5, 2006 between 51job, Inc.
and Recruit Co., Ltd.
8.
1*
List of subsidiaries of 51job, Inc.
11.
1
Code of Business Conduct and Ethics. (Incorporated by reference to Exhibit
10.6 from our Registration Statement on Form F-1 (File No. 333-117194)
filed with the Securities and Exchange Commission on July 7, 2004)
12.
1*
CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
12.
2*
CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
13.
1*
CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
13.
2*
CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
*
Filed with this annual report on Form 20-F.
79
Table of Contents
SIGNATURES
The registrant hereby certifies that it meets all of the requirements for filing its annual
report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual
report on its behalf.
51job, Inc.
By:
/s/ Rick Yan
Name:
Rick Yan
Title:
President and Chief Executive Officer
Date: June 29, 2006
Table of Contents
51JOB, INC.
INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
Page
Report of Independent Registered Public Accounting Firm
F-2
Consolidated Statements of Operations and Comprehensive Income for the years ended
December 31, 2003, 2004 and 2005
F-3
Consolidated Balance Sheets as of December 31, 2004 and 2005
F-4
Consolidated Statements of Shareholders' Equity for the years ended December 31, 2003, 2004
and 2005
F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2003, 2004 and 2005
F-6
Notes to the Consolidated Financial Statements for the years ended December 31, 2003, 2004
and 2005
F-7
Additional Information — Financial Statement Schedule I
F-25
F-1
Table of Contents
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
TO THE BOARD OF DIRECTORS AND SHAREHOLDERS OF
51JOB, INC.:
In our opinion, the accompanying consolidated balance sheets and the related consolidated
statements of operations and comprehensive income, of changes in shareholders' equity and of cash
flows expressed in Renminbi present fairly, in all material respects, the financial position of
51job, Inc. (the "Company") and its subsidiaries as of December 31, 2004 and 2005, and the results
of their operations and their cash flows for each of the three years ended December 31, 2005 in
conformity with accounting principles generally accepted in the United States of America. In
addition, in our opinion, the related Financial Statement Schedule I presents fairly, in all
material respects, the information set forth therein when read in conjunction with the related
consolidated financial statements. These consolidated financial statements and Financial Statement
Schedule I are the responsibility of the Company's management. Our responsibility is to express an
opinion on these consolidated financial statements and Financial Statement Schedule I based on our
audits. We conducted our audits of these statements in accordance with the standards of the Public
Company Accounting Oversight Board (United States). Those standards require that we plan and
perform the audits to obtain reasonable assurance about whether the financial statements are free
of material misstatement. An audit includes examining, on a test basis, evidence supporting the
amounts and disclosures in the financial statements, assessing the accounting principles used and
significant estimates made by management and evaluating the overall financial statement
presentation. We believe that our audits provide a reasonable basis for our opinion.
/s/ PricewaterhouseCoopers Zhong Tian CPAs Ltd. Co.
Shanghai, People's Republic of China
June 26, 2006
F-2
Table of Contents
51JOB, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
Note
2003
2004
2005
2005
RMB
RMB
RMB
US$ (Note 2(c))
Revenues:
Print advertising
182,606,297
300,651,791
356,284,649
44,148,181
Online recruitment services
76,960,121
111,508,533
159,494,922
19,763,441
Executive search
15,748,331
24,907,914
26,306,740
3,259,738
Other human resource related revenues
18,019,611
42,875,597
53,507,789
6,630,293
Total revenues
293,334,360
479,943,835
595,594,100
73,801,653
Less: Business and related taxes
(13,215,419
)
(23,823,953
)
(33,567,880
)
(4,159,485
)
Net revenues
280,118,941
456,119,882
562,026,220
69,642,168
Cost of services
(151,477,142
)
(224,606,635
)
(269,328,384
)
(33,373,198
)
Gross profit
128,641,799
231,513,247
292,697,836
36,268,970
Operating expenses:
Sales and marketing
(38,619,523
)
(67,271,096
)
(113,656,714
)
(14,083,507
)
General and administrative
(38,135,612
)
(55,175,493
)
(88,978,985
)
(11,025,623
)
Share-based compensation — share option (1)
(13,482,546
)
(18,678,238
)
(13,073,480
)
(1,619,970
)
Share-based compensation — founder shares (2)
(4,622,466
)
—
—
—
Total operating expenses
(94,860,147
)
(141,124,827
)
(215,709,179
)
(26,729,100
)
Income from operations
33,781,652
90,388,420
76,988,657
9,539,870
Loss from foreign currency translation
(3,456
)
(2,158
)
(11,320,194
)
(1,402,715
)
Interest and investment income
930,288
2,846,422
20,385,151
2,525,978
Other income
1,083,790
1,968,532
5,313,723
658,437
Income before provision for income tax
35,792,274
95,201,216
91,367,337
11,321,570
Income tax expense
8
(3,192,011
)
(34,058,184
)
(29,945,033
)
(3,710,569
)
Net income for the year
32,600,263
61,143,032
61,422,304
7,611,001
Amount allocated to participating preference
shareholders
14
(10,615,466
)
(13,986,417
)
—
—
Income attributable for common shareholders
21,984,797
47,156,615
61,422,304
7,611,001
Other comprehensive income:
Currency translation adjustments
76,964
236,144
387,496
48,016
Unrealized loss for investment
(279,532
)
(299,451
)
(204,011
)
(25,280
)
Comprehensive income
32,397,695
61,079,725
61,605,789
7,633,737
Earnings per share:
14
— Basic
0.83
1.32
1.10
0.14
— Diluted
0.75
1.26
1.07
0.13
Earnings per ADS (3)
— Basic
1.65
2.65
2.21
0.27
— Diluted
1.50
2.52
2.15
0.27
Weighted average number of shares outstanding:
— Basic
26,594,228
35,593,374
55,607,716
55,607,716
— Diluted
29,323,325
37,483,019
57,254,454
57,254,454
(1) Share-based compensation — share options:
Included in cost of services
596,551
1,811,496
1,479,841
183,371
Included in operating expenses
— Sales and marketing
423,221
1,757,722
1,438,083
178,197
— General and administrative
13,059,325
16,920,516
11,635,397
1,441,773
(2)
All share-based compensation — founder shares is a component of general and administrative
expense.
(3)
Each ADS represents two common shares.
The accompanying notes are an integral part of these financial statements.
F-3
Table of Contents
51JOB, INC.
CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2004 AND 2005
Note
2004
2005
2005
RMB
RMB
US$ (Note 2(c))
ASSETS
Current assets:
Cash
848,292,672
830,633,550
102,926,018
Short-term investments
2
(f)
—
10,554,529
1,307,840
Accounts receivable (net of allowance
for doubtful accounts of RMB3,689,222
and RMB2,860,275 as of December 31,
2004 and 2005, respectively)
3
23,252,468
22,222,865
2,753,694
Prepayments and other current assets
4
14,675,948
23,265,437
2,882,882
Deferred tax assets, current
8
7,426,098
5,867,820
727,097
Total current assets
893,647,186
892,544,201
110,597,531
Investments
2
(f)
10,495,490
—
—
Property and equipment
5
22,534,875
32,357,875
4,009,551
Intangible assets
6
6,126,749
11,380,835
1,410,230
Other long-term assets
4,201,919
26,724,335
3,311,484
Deferred tax assets, non-current
8
376,122
412,314
51,091
Total non-current assets
43,735,155
70,875,359
8,782,356
Total assets
937,382,341
963,419,560
119,379,887
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable
9,820,033
7,358,046
911,755
Due to related parties
13
1,577,873
1,505,515
186,552
Salary and employee related accrual
11,698,665
19,339,789
2,396,445
Taxes payable
30,586,768
23,201,967
2,875,017
Advance from customers
17,777,757
40,619,516
5,033,273
Other payables and accruals
7
13,933,686
17,515,264
2,170,363
Deferred tax liabilities, current
8
169,237
—
—
Total current liabilities
85,564,019
109,540,097
13,573,405
Total liabilities
85,564,019
109,540,097
13,573,405
Commitments and contingencies
15
—
—
—
Shareholders' equity:
Common shares (US$0.0001 par value;
500,000,000 shares authorized,
55,616,679 and 54,876,079 shares
issued and outstanding as of December
31, 2004 and 2005, respectively)
9
46,044
45,451
5,632
Additional paid-in capital
869,125,807
848,423,068
105,130,365
Deferred share-based compensation
11
(40,154,027
)
(23,141,471
)
(2,867,521
)
Statutory reserves
16,756,461
3,680,707
456,086
Other comprehensive loss
(501,659
)
(318,174
)
(39,426
)
Retained earnings
6,545,696
25,189,882
3,121,346
Total shareholders' equity
851,818,322
853,879,463
105,806,482
Total liabilities and shareholders' equity
937,382,341
963,419,560
119,379,887
The accompanying notes are an integral part of these financial statements.
F-4
Table of Contents
51JOB, INC.
CONSOLIDATED STATEMENTS OF SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
Additional
Additional
Deferred
Deferred
Series A Preference
paid-in
paid-in
share-based
share-based
Retained
Common shares
Shares
capital
capital
compensation
compensation
Other
earnings /
Total
Number
Number
common
preference
founder
common
Statutory
comprehensive
(Accumulated
shareholders'
of shares
Par value
of shares
Par value
shares
shares
shares
shares
reserves
income
deficit)
equity
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB
Balance as of January 1, 2003
28,304,781
23,427
13,678,466
11,332
36,504,160
116,364,516
(4,622,466
)
—
871,270
(235,783
)
(71,312,408
)
77,604,048
Share-based compensation —
founder shares
—
—
—
—
—
—
4,622,466
—
—
—
—
4,622,466
Share-based compensation —
share option
—
—
—
—
60,417,377
—
—
(46,338,280
)
—
—
—
14,079,097
Exercise of share options
467,334
389
—
—
580,860
—
—
—
—
—
—
581,249
Appropriation of statutory
reserves
—
—
—
—
—
—
—
—
8,599,128
—
(8,599,128
)
—
Adjustment of other
comprehensive loss
—
—
—
—
—
—
—
—
—
(202,568
)
—
(202,568
)
Net income
—
—
—
—
—
—
—
—
—
—
32,600,263
32,600,263
Balance as of December 31, 2003
28,772,115
23,816
13,678,466
11,332
97,502,397
116,364,516
—
(46,338,280
)
9,470,398
(438,351
)
(47,311,273
)
129,284,555
Exercise of share options
711,098
588
—
—
2,190,264
—
—
—
—
—
—
2,190,852
Exercise of warrants
—
—
380,000
314
—
3,276,142
—
—
—
—
—
3,276,456
Conversion of Series A
Preference Shares to common
shares
14,058,466
11,646
(14,058,466
)
(11,646
)
119,640,658
(119,640,658
)
—
—
—
—
—
—
Issuance of common shares
12,075,000
9,994
—
—
635,487,007
—
—
—
—
—
—
635,497,001
Share-based compensation —
share option
—
—
—
—
14,305,481
—
—
6,184,253
—
—
—
20,489,734
Appropriation of statutory
reserves
—
—
—
—
—
—
—
—
7,286,063
—
(7,286,063
)
—
Adjustment of other
comprehensive loss
—
—
—
—
—
—
—
—
—
(63,308
)
—
(63,308
)
Net income
—
—
—
—
—
—
—
—
—
—
61,143,032
61,143,032
Balance as of December 31, 2004
55,616,679
46,044
—
—
869,125,807
—
—
(40,154,027
)
16,756,461
(501,659
)
6,545,696
851,818,322
Exercise of share options
632,276
510
—
—
1,545,518
—
—
—
—
—
—
1,546,028
Share-based compensation —
share option
—
—
—
—
(2,459,235
)
—
—
17,012,556
—
—
—
14,553,321
Reversal of statutory reserves
—
—
—
—
—
—
—
—
(13,075,754
)
—
13,075,754
—
Repurchase of common shares
(1,372,876
)
(1,103
)
—
—
(19,789,022
)
—
—
—
—
—
(55,853,872
)
(75,643,997
)
Adjustment of other
comprehensive income
—
—
—
—
—
—
—
—
—
183,485
—
183,485
Net income
—
—
—
—
—
—
—
—
—
—
61,422,304
61,422,304
Balance as of December 31, 2005
54,876,079
45,451
—
—
848,423,068
—
—
(23,141,471
)
3,680,707
(318,174
)
25,189,882
853,879,463
Balance as of December 31,
2005 (US$ Note 2(c))
54,876,079
5,632
—
—
105,130,365
—
—
(2,867,521
)
456,086
(39,426
)
3,121,345
105,806,481
The accompanying notes are an integral part of these financial statements.
F-5
Table of Contents
51JOB, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
Note
2003
2004
2005
2005
RMB
RMB
RMB
US$ (Note 2(c))
Cash flows from operating activities:
Net income for the year
32,600,263
61,143,032
61,422,304
7,611,001
Adjustments for:
Share-based compensation
18,701,563
20,489,734
14,553,321
1,803,341
Depreciation
4,677,763
7,235,708
13,070,492
1,619,600
Amortization of intangible assets
3,230,360
3,383,828
3,234,693
400,819
Loss due to disposal of fixed assets
—
85,717
259,064
32,101
Loss from foreign currency translation
—
—
11,320,193
1,402,715
(Increase) Decrease in accounts receivable
(12,441,388
)
(5,833,220
)
1,029,603
127,581
Increase in prepayments and other current assets
(4,882,969
)
(6,018,815
)
(8,589,489
)
(1,064,346
)
(Increase) Decrease in deferred tax assets
(2,344,088
)
(3,238,432
)
1,522,086
188,606
Increase (Decrease) in accounts payable
3,599,055
(1,320,004
)
(2,461,987
)
(305,071
)
Increase (Decrease) in due to related parties
2,275,186
(4,926,900
)
(72,358
)
(8,966
)
Increase in salary and employee related accrual
869,958
2,234,180
7,641,124
946,832
Increase (Decrease) in deferred tax liabilities
2,305,435
(2,168,278
)
(169,237
)
(20,971
)
Increase (Decrease) in taxes payable
3,725,353
24,550,704
(7,384,801
)
(915,070
)
Increase in advance from customers
10,652,869
329,926
22,841,759
2,830,383
Increase in other payables and accruals
3,720,404
10,428,733
3,581,578
443,803
(Increase) Decrease in other long-term assets
(723,096
)
(563,501
)
227,584
28,200
Net cash provided by operating activities
65,966,668
105,812,412
122,025,929
15,120,558
Cash flows from investing activities:
Purchase of property and equipment
(8,839,759
)
(12,006,783
)
(45,902,556
)
(5,687,908
)
Purchase of intangible assets
(770,947
)
(1,797,982
)
(8,488,779
)
(1,051,867
)
Purchase of investments
(10,732,341
)
—
—
—
Net cash used in investing activities
(20,343,047
)
(13,804,765
)
(54,391,335
)
(6,739,775
)
Cash flows from financing activities:
Proceeds from issuance of Series A Preference
Shares, net of issuance cost
—
3,276,456
—
—
Proceeds from initial public offering, net of
issuance cost paid
635,497,001
—
—
Repurchase of common shares
—
—
(75,643,997
)
(9,373,249
)
Proceeds from the exercise of options
746,227
2,190,852
1,546,028
191,572
Net cash provided by (used in) financing activities
746,227
640,964,309
(74,097,969
)
(9,181,677
)
Effect of foreign exchange rate changes on cash
76,964
236,144
(11,195,747
)
(1,387,295
)
Net increase (decrease) in cash
46,446,812
733,208,100
(17,659,122
)
(2,188,189
)
Cash, beginning of year
68,637,760
115,084,572
848,292,672
105,114,207
Cash, end of year
115,084,572
848,292,672
830,633,550
102,926,018
Supplemental disclosure of cash flow information:
Cash paid during the years for:
Income taxes
1,900,000
14,703,548
41,598,483
5,154,579
Interest expenses
—
—
—
—
Supplemental disclosure of non-cash investing
activities:
Accrual related to purchase of property, equipment
and software
2,748,970
(4,577,286
)
—
—
Conversion of Series A Preference Shares to common
shares
—
119,652,304
—
—
Accrual related to IPO costs
—
2,053,164
(2,053,164
)
(254,413
)
The accompanying notes are an integral part of these financial statements.
F-6
Table of Contents
51JOB, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
1. ORGANIZATION AND NATURE OF OPERATIONS
The accompanying consolidated financial statements include the financial statements of 51job,
Inc. (the "Company"), its subsidiaries, which principally consist of 51net Beijing, 51net.com Inc.
("51net"), Qianjin Network Information Technology (Shanghai) Co., Ltd. ("Tech JV"), Shanghai
Qianjin Advertising Co., Ltd. ("AdCo"), Shanghai Wang Cai Advertising Co., Ltd. ("Wang Cai AdCo")
and Qian Cheng Wu You Network Information Technology (Beijing) Co. Ltd. ("WFOE"), and certain
variable interest entity subsidiaries ("VIE subsidiaries"), which consist of Beijing Run An
Information Consultancy Co., Ltd. ("Run An"), Beijing Qian Cheng Si Jin Advertising Co., Ltd.,
("Qian Cheng") and Shanghai Run An Lian Information Consultancy Co., Ltd. ("RAL"). The Company, its
subsidiaries, and VIE subsidiaries are hereinafter collectively referred to as the "Group."
The Company changed its name from 51net.com Cayman Islands Inc. to 51job, Inc. effective from
April 26, 2004. AdCo changed its name from Shanghai Qianjin Culture Communications Co., Ltd. to
Shanghai Qianjin Advertising Co., Ltd. in November 2005. Wang Cai AdCo changed its name from
Shanghai Jin Lian Advertising Co., Ltd. in July 2005.
The Group is an integrated human resource services provider in the People's Republic of China
(the "PRC") and is principally engaged in recruitment related advertising services, including the
production of a city-specific publication of advertisement listings as newspaper inserts and
Internet recruitment services. The Group also provides executive search services and other human
resource related services.
Under relevant PRC laws and regulations, companies conducting businesses as stated in the
preceding paragraph require various licenses, including the advertisement license, HR services
license and the license for Internet content provision ("ICP") from relevant government
authorities.
The Company was incorporated in the Cayman Islands on March 24, 2000 and accordingly is
considered as a foreign person under PRC law. As of December 31, 2003, the Company owned a 99% and
a 79.2% equity interest in Tech JV and AdCo, respectively. The remaining equity interest in these
entities was owned by Qian Cheng and Run An, the Company's VIE subsidiaries. As PRC regulations
limited foreign ownership of companies that provide human resource related services, Internet
content provision and advertising services, the Group was dependent on certain licenses held by its
VIE subsidiaries and conducted a small portion of its human resource related operations through Run
An and Qian Cheng. The Company did not have any equity ownership interest in either of these
entities. After Tech JV obtained the necessary business licenses, the business and operations of
Run An and Qian Cheng were transferred to Tech JV and its branches, AdCo and AdCo's subsidiaries
over a period of time. Since 2002, substantially all of the Company's operations have been
conducted through Tech JV and its branches, AdCo and AdCo's subsidiaries. Additionally, Run An and
Qian Cheng held certain equity interest in the Company's subsidiaries. Under a series of technical
and consulting services agreements and undertaking by those equity owners, the Company bore all of
the risk and rewards of Run An and Qian Cheng, and RAL, a VIE subsidiary which was formed in April
2004 (Note 2(b)). Accordingly, for all periods presented, the Company, or its subsidiaries, as the
case may be, was considered the primary beneficiary of the VIE subsidiaries and their results are
consolidated in the Company's financial statements. No other party shares in any of the economic
risk or rewards of the Company's subsidiaries and VIE subsidiaries; therefore, no minority interest
is reflected on the Company's financial statements.
In March 2004, the PRC government amended its limitation on foreign ownership of advertising
companies and permitted foreign equity ownership up to 70% of a PRC advertising entity.
Accordingly, the Company undertook a restructuring in May 2004 (the "Restructuring") and 51net, a
foreign entity, has transferred 48% of its equity interest in Tech JV to a subsidiary of AdCo,
which is also an indirect subsidiary of 51net. As a result, 51net effectively holds 69.7% of the
equity interest in Tech JV and Qian Cheng effectively holds the remaining 30.3% equity interest.
After the Restructuring, Tech JV can legally hold the necessary licenses to provide advertising
services in the PRC. Additionally, as part of the Restructuring, certain of the agreements with and
undertakings by the VIE subsidiaries were amended to enhance the Company's ability to control the
VIE subsidiaries (Note 2(b)). Starting December 2005, the PRC government permits 100% foreign
ownership of a PRC advertising entity.
In October 2004, the Company completed an initial public offering of American Depositary
Shares (ADSs). ADSs of the Company are traded on the Nasdaq National Market under the symbol "JOBS"
in the United States.
F-7
Table of Contents
51JOB, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
2. PRINCIPAL ACCOUNTING POLICIES
(a) Basis of presentation
The accompanying consolidated financial statements have been prepared in accordance with
generally accepted accounting principles in the United States of America ("U.S. GAAP").
The preparation of financial statements in conformity with U.S. GAAP requires management to
make estimates and assumptions that affect the reported amounts of assets and liabilities and
disclosures of contingent assets and liabilities at the balance sheet dates and the reported
amounts of revenues and expenses during the reported years. Actual results may materially differ
from those estimates.
(b) Basis of consolidation
The consolidated financial statements include the financial statements of the Company, its
subsidiaries, and VIE subsidiaries. All significant transactions and balances between the Company,
its subsidiaries and VIE subsidiaries have been eliminated upon consolidation.
A subsidiary is an entity in which the Company, directly or indirectly, controls more than one
half of the voting power; has the power to appoint or remove the majority of the members of the
board of directors; to cast majority of votes at the meeting of the board of directors or to govern
the financial and operating policies of the investee under a statute or agreement among the
shareholders or equity holders.
The Group has adopted Financial Accounting Standards Board ("FASB") Interpretation No. 46,
"Consolidation of Variable Interest Entities, an Interpretation of ARB No. 51," ("FIN 46") for all
periods presented. FIN 46 requires VIEs to be consolidated by the primary beneficiary of the
entity. An entity is considered to be a VIE if certain conditions are present, such as if the
equity investors in the entity do not have the characteristics of a controlling financial interest
or do not have sufficient equity at risk for the entity to finance its activities without
additional subordinated financial support from other parties.
As of December 31, 2004 and 2005 and for all years presented, the Group is the primary
beneficiary of three VIEs, Run An, Qian Cheng and RAL, which were established in January 1997,
February 1999 and April 2004, respectively. Run An and Qian Cheng were in existence prior to the
establishment of the Company and are considered predecessors of the Group. The Group does not have
any ownership interest in the VIE subsidiaries but has control of such entities through certain
agreements and undertakings as described below. As a result of the Group's consolidation of Run An,
Qian Cheng and RAL for all periods presented, 100% of the interest of Tech JV and AdCo are included
in the consolidated financial statements.
Run An holds ICP and HR service licenses and also engages in provision of training services.
Two senior executives of the Company hold 80% and 20% of the equity interest in Run An,
respectively. As of December 31, 2005, the registered capital of Run An was RMB1,000,000, which was
fully paid by the principal founder of the Company, and its accumulated loss was RMB4,046,181.
Qian Cheng holds an advertisement license necessary for recruitment advertising services. A
senior executive officer of the Company and Run An hold 87% and 13% of the equity interest in Qian
Cheng, respectively. As of December 31, 2005, the registered capital of Qian Cheng was
RMB1,500,000, which was fully paid by the principal founder and a senior executive of the Company,
and its accumulated loss was RMB11,007,358.
RAL holds a permit issued by the Shanghai human resources bureau which allows it to conduct
human resource related business including the collection and launch of, and consulting services
related to human resource supply and demand information (online human resource intermediary
service). RAL also obtained a permit from the Shanghai municipal telecommunications administration
bureau that allows it to provide Internet information services that do not relate to news,
publishing, education, healthcare, medicine and medical appliances. RAL conducts the Group's other
HR related services and operates as an Internet content provider. Two senior executives of the
Company hold 80% and 20% of the equity interest in RAL, respectively. As of December 31, 2005, the
registered capital of RAL was RMB1,000,000, which was fully paid by the senior executives of the
Company, and its accumulated loss was RMB492,714.
F-8
Table of Contents
51JOB, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
As part of the Restructuring (Note 1), the Group entered into and amended various agreements
as related to its VIE subsidiaries. While the substance of the previous agreements with the VIE
subsidiaries remain unchanged, the agreements and arrangements were amended in connection with the
Restructuring to (i) enhance the Company's ability to control the VIE subsidiaries and (ii) ensure
the agreements are legally enforceable in the PRC court of law. Accordingly, the Restructuring did
not change the Company's accounting of its VIE subsidiaries. The key provisions of the agreements
with the Company or its subsidiaries and the VIE subsidiaries or its shareholders are as follows:
Technical and Consulting Service Agreements.
WFOE has entered into technical and consulting
service agreements with Run An, Qian Cheng and RAL, respectively, under which WFOE has the
exclusive right, subject to certain exceptions, to provide technical services to Run An, Qian Cheng
and RAL for service fees. The technical and consulting service agreements have a term of ten years
and can only be terminated by WFOE during the term. Such term is renewable upon the expiration of
the agreement.
Pledge and Control Agreements.
As security for Run An, Qian Cheng and RAL's obligations under
the technical and consulting service agreements, the shareholders of Run An, Qian Cheng and RAL
have pledged all of their equity interest in Run An, Qian Cheng and RAL to WFOE. According to the
pledge agreement, WFOE has the right to sell the pledged equity. Additionally, the shareholders of
Run An, Qian Cheng and RAL have agreed that they will not dispose of the pledged equity or take any
actions that will prejudice WFOE's interest under the equity pledge agreements. They have further
agreed that they will obtain WFOE's consent regarding material decisions concerning the operation
of Run An, Qian Cheng and RAL, including the distribution of profits, the incurrence of debt and
the appointment of directors. Additionally, WFOE has the right to recommend candidates to the board
for the positions of general manager and senior executives of Run An, Qian Cheng and RAL. Under
such pledges, WFOE is obliged to purchase any and all of the equity interest in Run An, Qian Cheng
and RAL from their shareholders, if permitted by the PRC laws. The pledges cannot be released until
the discharge of all of Run An, Qian Cheng and RAL's obligations under the respective technical and
consulting service agreement.
(c) Foreign currencies
The Group's functional currency is the Renminbi ("RMB"). Transactions denominated in
currencies other than RMB are translated into RMB at the exchange rates quoted by the People's Bank
of China prevailing at the dates of the transactions. Gains and losses resulting from foreign
currency transactions are included in the consolidated statements of operations and comprehensive
income. Monetary assets and liabilities denominated in foreign currencies are translated into RMB
using the applicable exchange rates quoted by the People's Bank of China at the balance sheet
dates. All such exchange gains and losses are included in the statements of operations and
comprehensive income. The exchange differences for translation of group companies' balances where
RMB is not their functional currency are included in cumulative translation adjustments, which is a
separate component of shareholders' equity on the consolidated financial statements.
The unaudited United States dollar ("US$") amounts disclosed in the accompanying financial
statements are presented solely for the convenience of the readers. Translations of amounts from
RMB into United States dollars for the convenience of the reader were calculated at the noon buying
rate of US$1.00 = RMB8.0702 on December 30, 2005 in The City of New York for cable transfers of RMB
as certified for customs purposes by the Federal Reserve Bank of New York. No representation is
made that the RMB amounts could have been, or could be, converted into US$ at that rate on December
30, 2005, or at any other certain rate.
(d) Cash
Cash represents cash on hand and demand deposits placed with banks or other financial
institutions. Included in the cash balance as of December 31, 2004 and 2005 are amounts denominated
in United States dollars totaling US$79,267,318 and US$31,040,000, respectively (equivalent to
approximately RMB656,055,958 and RMB250,499,008, respectively). The Group receives substantially
all of its revenues in RMB, which currently is neither a freely convertible currency nor can it be
freely remitted out of China. However, there are no restrictions in the use of the cash and cash
equivalents in the PRC as the cash and cash equivalents are not restricted funds and are not
classified as restricted cash.
F-9
Table of Contents
51JOB, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
(e) Accounts receivable
Accounts receivable is presented net of allowance for doubtful accounts. The Company provides
specific provisions for bad debts when facts and circumstances indicate that the receivable is
unlikely to be collected. If the financial condition of its customers were to deteriorate,
resulting in an impairment of their ability to make payments, additional allowances may be
required.
(f) Investments
As of December 31, 2004 and 2005, investments consist of a fixed-maturity instrument issued by
Hong Kong and Shanghai Banking Corporation Limited. The fixed-maturity instrument is negotiable,
bears interest at 1.35% per annum and will mature on June 19, 2006. The financial instrument is
redeemable by the Group at its discretion. Investments are recorded at fair value as
available-for-sale securities in accordance with Statement of Financial Accounting Standards
("SFAS") No. 115, "Investment Securities."
(g) Property and equipment
Property and equipment are stated at cost less accumulated depreciation. Depreciation is
calculated on a straight-line basis to allocate the cost of the assets to their estimated residual
value over the following estimated useful lives:
Estimated useful lives
Leasehold improvements
Lesser of the lease period or
the estimated useful life
Computer equipment
5 years
Furniture and fixtures
5 years
Motor vehicles
5 years
(h) Intangible assets
Intangible assets include purchased computer software, licenses and internally developed
software and are amortized on a straight-line basis over their estimated useful lives, which range
from three to ten years.
The Group recognizes costs to develop software products to be marketed or sold in accordance
with SFAS No. 86, "Accounting for Costs of Computer Software to be Sold, Leased or Otherwise
Marketed." Costs incurred for the development of software products prior to the establishment of
technological feasibility are expensed when incurred and are included in product development
expense. Once the software product has reached technological feasibility, all subsequent product
development costs are capitalized until that product is available for marketing. Technological
feasibility is evaluated on a product-by-product basis.
The Group recognizes website and internally used software development costs in accordance with
Statement of Position ("SOP") No. 98  —  1, "Accounting for the Costs of Computer Software
Developed or Obtained for Internal Use," and Emerging Issues Task Force ("EITF") No. 00-02,
"Accounting for Website Development Cost," where applicable. As such, the Group expenses all costs
that are incurred in connection with the planning and implementation phases of development and
costs that are associated with repair or maintenance of the existing websites and software. Costs
incurred in the development phase are capitalized and amortized over the estimated product life.
(i) Impairment of long-lived assets
The Group has adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived
Assets," ("SFAS No. 144") which addresses the financial accounting and reporting for the
recognition and measurement of impairment losses for long-lived assets. In accordance with SFAS No.
144, long-lived assets are reviewed for impairment whenever events or changes in circumstances
indicate that carrying amount of an asset may not be recoverable. The Group may recognize
impairment of long-lived assets in the event the net book value of such assets exceeds the future
undiscounted cash flows attributable to these assets. No impairment of long-lived assets was
recognized for all years presented.
F-10
Table of Contents
51JOB, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
(j) Revenue recognition
Print advertising
The Group provides recruitment advertising services through a weekly newspaper which is
distributed in various cities of the PRC. Arrangements for recruitment advertisement on the weekly
newspaper are generally short-term in nature. Fees for these types of print recruitment advertising
services are recognized as revenue when collectibility is reasonably assured and upon the
publication of the advertisements. Cash received in advance of services are recognized as advances
from customers.
Online recruitment services
The Group provides online recruitment advertising and other technical services through its
www.51job.com
website. The average display period of online recruitment services normally ranges
from one week to one year. Fees for its online recruitment advertisement and other technical
services are recognized as revenue ratably over the display period of the contract or when services
are provided and when collectibility is reasonably assured in accordance with Staff Accounting
Bulletin ("SAB") No. 104. Cash received in advance of services are recognized as advances from
customers.
Executive search
The Group provides executive search services. Revenue is recognized when recruitment services
are substantially rendered and collectibility is reasonably assured, less an allowance for
individuals placed but not expected to meet the probation period. The allowance for search
placement is based on historical activities of search placement that do not complete the
contingency period. This contingency period varies on a contract by contract basis but is typically
90 days. The Group has not had significant search placements that do not complete the contingency
period. Cash received in advance of services are recognized as advances from customers.
Other human resource related revenues
The Group also provides other value-added human resource products. Additionally, the Group
sold stationery and office supplies to its business customers. Revenue is recognized when services
are rendered or products are sold. In November 2004, the Group discontinued its stationery and
office supplies business. Revenue from selling of related products was RMB2,206,536, RMB12,679,995
and RMB2,188,714 during the years ended December 31, 2003, 2004 and 2005, respectively.
Business and related taxes
The Company's subsidiaries and its VIE subsidiaries are subject to business taxes and related
surcharges on the revenues earned for services provided in the PRC. The applicable rate of business
taxes is 5% after certain deductible expenses. In the accompanying statements of operations and
comprehensive income, business taxes and related surcharges for revenues earned are deducted from
gross revenues to arrive at net revenues.
(k) Cost of services
Cost of services consist primarily of printing and publishing expenses, payroll compensation
and related employee costs, and other expenses incurred by the Group which are directly
attributable to the rendering of the Group's recruitment advertising and other human resource
services.
(l) Sales and marketing
Sales and marketing costs comprised primarily of the Group's sales and marketing personnel
payroll compensation and related employee costs and advertising and promotion expenses. Advertising
and promotion expenses generally represent the cost of promotions to create or stimulate a positive
image of the Group or a desire for the Group's services. Advertising and promotion expenses totaled
approximately RMB7,062,232, RMB12,372,664 and RMB21,367,227 during the years ended December 31,
2003, 2004 and 2005, respectively, are charged to the statements of operations and comprehensive
income when incurred.
F-11
Table of Contents
51JOB, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
(m) Share-based compensation
The Group accounts for share-based compensation arrangements with employees in accordance with
Accounting Principles Board ("APB") Opinion No. 25, "Accounting for Stock Issued to Employees,"
("APB No. 25") and complies with the disclosure provisions of SFAS No. 123, "Accounting for
Stock-Based Compensation" ("SFAS No. 123"), and SFAS No. 148, "Accounting for Stock-Based
Compensation — Transition and Disclosure." In general, compensation cost under APB No. 25
is recognized based on the difference, if any, between the estimated fair value of the Company's
common shares and the amount an employee is required to pay to acquire the common shares, as
determined on the measurement date. Compensation cost, if any, is recorded in shareholders' equity
as additional paid-in capital with an offsetting entry recorded to deferred share-based
compensation. Deferred share-based compensation is amortized and charged to expense based on the
vesting terms of the underlying options or share-based compensation arrangement.
If the compensation cost for the Group's share-based compensation plans for employees had been
determined based on the estimated fair value on the measurement dates for the share option awards
and Founder Share escrow arrangements (Note 11) as prescribed by SFAS No. 123, the Company's net
income attributable to common shareholders and earnings per share would have resulted in the pro
forma amounts for the years ended December 31, 2003, 2004 and 2005 as disclosed below:
2003
2004
2005
RMB
RMB
RMB
Net income as reported
32,600,263
61,143,032
61,422,304
Add: Share-based compensation expense under APB No. 25
18,701,563
20,489,734
14,553,321
Less: Share-based compensation expense under SFAS No. 123
(19,184,475
)
(20,980,215
)
(21,557,770
)
Pro forma net income
32,117,351
60,652,551
54,417,855
Basic earnings per share:
As reported
0.83
1.32
1.10
Pro forma
0.81
1.31
0.98
Basic earnings per ADS:
As reported
1.65
2.65
2.21
Pro forma
1.63
2.63
1.96
Diluted earnings per share:
As reported
0.75
1.26
1.07
Pro forma
0.74
1.25
0.95
Diluted earnings per ADS:
As reported
1.50
2.52
2.15
Pro forma
1.48
2.50
1.90
The effects of applying SFAS No. 123 methodologies in this pro forma disclosure are not
indicative of future earnings or earnings per share. Additional share option awards in future years
are expected.
F-12
Table of Contents
51JOB, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
The Company calculated the fair value of share options to employees on the date of grant based
on the minimum value method as allowed under SFAS No. 123 for non-public entities prior to the
Company's initial public offering. Upon completion of the Company's initial public offering in
October 2004, the Company adopted the Black-Scholes pricing method to calculate fair value of
options. For the years ended December 31, 2003, 2004 and 2005, the fair value of options granted
was estimated with the following assumptions:
2003
2004
2005
Risk-free interest rate
2.65%
2.65%
3.87%-4.53%
Expected life (years)
6
6
4
Expected dividend yield
0%
0%
0%
Volatility
0%
0%
90%-100%
Weighted average of fair value of options at grant date
RMB37.59
RMB42.46
RMB44.42
(n) Operating leases
Leases where substantially all the rewards and risks of ownership of assets remain with the
leasing company are accounted for as operating leases. Payments made under operating leases, net of
any incentives received by the Group from the leasing company, are charged to the statements of
operations and comprehensive income on a straight-line basis over the lease periods.
(o) Taxation
Deferred income taxes are provided using the balance sheet liability method. Under this
method, deferred income taxes are recognized for the differences between the financial statement
carrying amounts and the tax bases of existing assets and liabilities by applying enacted statutory
rates applicable to future years in which the differences are expected to reverse. The tax base of
an asset or liability is the amount attributed to that asset or liability for tax purposes. The
effect on deferred taxes of a change in tax rates is recognized in income in the period that
includes the enactment date. A valuation allowance is provided to reduce the amount of deferred tax
assets if it is considered more likely than not that some portion of, or all of, the deferred tax
assets will not be realized.
(p) Statutory reserves
All subsidiaries and VIE subsidiaries incorporated in the PRC, except for Tech JV which is
majority owned by 51net, a BVI company, are required on an annual basis to make an appropriation of
retained earnings as statutory common reserve fund equal to 10% of after-tax profit, calculated in
accordance with PRC accounting standards and regulations. Appropriations are classified in the
consolidated balance sheet as statutory common reserve fund, and are recorded beginning in the
first period in which after-tax profits exceed all prior year accumulated losses. Once the total
statutory common reserve fund reaches 50% of the registered capital of the respective companies,
further appropriations are discretionary. The statutory common reserve fund can be used to increase
the registered capital and eliminate future losses of the respective companies. The Group's
statutory common reserve fund is not distributable to shareholders except in the event of a
liquidation. During the years ended December 31, 2003, 2004 and 2005, the Group made total
appropriations to their statutory common reserve fund of RMB5,732,752, RMB4,857,375 and RMB770,608,
respectively. During the year ended December 31, 2005, the Group also made a discretionary reversal
of RMB9,487,777 from the common statutory reserve fund to retained earnings.
In addition, the above subsidiaries are required on an annual basis to set aside at least 5%
of after-tax profit, calculated in accordance with PRC accounting standards and regulations, to the
statutory common welfare fund, which can be used for staff welfare of the Group. The Group's
subsidiaries made total appropriations of RMB2,866,376, RMB2,428,688 and RMB385,304 during the
years ended December 31, 2003, 2004 and 2005, respectively. During the year ended December 31,
2005, the Group also made a discretionary reversal of RMB4,743,889 from the statutory common
welfare fund to retained earnings.
Tech JV is required on an annual basis to make appropriations of retained earnings, calculated
in accordance with PRC accounting standards and regulations, to non-distributable statutory
reserves, comprising of enterprise statutory reserve, employees' bonus and welfare fund and
enterprise expansion fund. The percentages of the appropriation are
F-13
Table of Contents
51JOB, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
determined by the Board of
Directors of Tech JV. During the years ended December 31, 2003, 2004 and 2005, Tech JV did not make
any appropriations to these statutory reserves.
Appropriations to the statutory common reserve fund and the statutory common welfare fund are
accounted for as a transfer from retained earnings or accumulated deficit to the statutory
reserves.
There are no legal requirements in the PRC to fund these reserves by transfer of cash to any
restricted accounts, and the Group does not do so. These reserves are not distributable as cash
dividends.
(q) Dividend
Dividends are recognized when declared. PRC regulations currently permit payment of dividends
only out of accumulated profits as determined in accordance with PRC accounting standards and
regulations. Additionally, the Company's PRC subsidiaries and VIE subsidiaries can only distribute
dividends after they have met the PRC requirements for appropriation to statutory reserves (Note
2(p)). Aggregate net assets of the Company's PRC subsidiaries not distributable in the form of
dividends to the parent as a result of the aforesaid PRC regulations were RMB409 million as of
December 31, 2005. However, the PRC subsidiaries may transfer such net assets to the Company by
other means, including through royalty and trademark license agreements or certain other
contractual agreements, at the discretion of the Company without third party consent.
(r) Earnings per share
In accordance with SFAS No. 128, "Computation of Earnings Per Share," and EITF Issue 03-06,
"Participating Securities and the Two-Class Method under FASB Statement No. 128," basic earnings
per share is computed by dividing net income attributable to common shareholders by the weighted
average number of unrestricted common shares outstanding during the period using the two-class
method. Under the two class method, net income is allocated between common shares and other
participating securities based on their participating rights. The Company's Series A Preference
Shares (Note 10) are participating securities. Diluted earnings per share is calculated by dividing
net income attributable to common shareholders as adjusted for the effect of dilutive common
equivalent shares, if any, by the weighted average number of common and dilutive common equivalent
shares outstanding during the period. Common equivalent shares consist of the common shares
issuable upon the conversion of the convertible preference shares (using the if-converted method),
common shares issuable upon the exercise of outstanding share options (using the treasury stock
method) and certain common shares held in escrow (Note 11) (using the treasury stock method).
(s) Segment reporting
The Group operates and manages its business as a single segment. As the Group primarily
generates its revenues from customers in the PRC, no geographical segments are presented.
(t) Recent accounting pronouncements
In December 2004, the FASB issued SFAS No. 123 (revised 2004), "Share-Based Payment" ("SFAS
No. 123R"), which replaced SFAS No. 123 and superseded APB No. 25. SFAS No. 123R requires the
measurement of all employee share-based payments to employees, including grants of employee stock
options, using a fair-value-based method and the recording of such expense in the consolidated
statements of operations. The pro forma disclosures previously permitted under SFAS No. 123 no
longer will be an alternative to financial statement recognition. In March 2005, the SEC issued
Staff Accounting Bulletin No. 107 regarding the SEC's interpretation of SFAS No. 123R and the
valuation of share-based payments for public companies.
The Company adopted SFAS No. 123R and related FASB Staff Positions starting January 1, 2006
and have recognized stock-based compensation expense using the modified prospective method, which
requires that compensation expense be recorded for all unvested stock options upon adoption of SFAS
No. 123R. The Company has applied the Black-Scholes valuation model in determining the fair value
of share-based payments to employees, and is recognizing compensation expense on a straight-line
basis over the requisite service period. The adoption of SFAS No. 123R increased the Company's
share-based compensation expense in its consolidated statement of operations in the first quarter
of 2006. The Company expects the implementation of SFAS No. 123R may adversely affect its earnings
in the future.
F-14
Table of Contents
51JOB, INC.
NOTES
TO THE CONDENSED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
In May 2005, the FASB issued SFAS No. 154, "Accounting Changes and Error Corrections," ("SFAS
No. 154") which replaces APB Opinion No. 20, "Accounting Changes," and SFAS No. 3, "Reporting
Accounting Changes in Interim Financial Statements." SFAS No. 154 provides guidance on the
accounting for and reporting of accounting changes and error corrections. It establishes
retrospective application as the required method for reporting a change in accounting principle and
the reporting of a correction of an error. SFAS No. 154 is effective for accounting changes and
corrections of errors made in fiscal years beginning after December 15, 2005. The Company does not
expect that the adoption of SFAS No. 154 will have a material effect on its financial statements.
In June 2005, the FASB ratified EITF Issue No. 05-06, "Determining the Amortization Period for
Leasehold Improvements." ("EITF No. 05-06") EITF No. 05-06 provides that the amortization period
used for leasehold improvements acquired in a business combination or purchased after the inception
of a lease be the shorter of (a) the useful life of the assets or (b) a term that includes required
lease periods and renewals that are reasonably assured upon the acquisition or the purchase. The
provisions of EITF No. 05-06 should be applied to leasehold improvements (within the scope of this
issue) that are purchased or acquired in reporting periods beginning after June 29, 2005. The
Company does not expect that the adoption of EITF No. 05-06 will have a material effect on its
financial statements.
3. ACCOUNTS RECEIVABLE
The Group's accounts receivable balances, net of allowance for doubtful accounts, were
RMB23,252,468 and RMB22,222,865 as of December 31, 2004 and 2005, respectively.
The movement of allowance for doubtful accounts is analyzed as follows:
2004
2005
RMB
RMB
Balance at beginning of the period
1,318,528
3,689,222
Additions
2,370,694
5,799,717
Write-offs
—
(6,628,664
)
Balance at end of period
3,689,222
2,860,275
4. PREPAYMENTS AND OTHER CURRENT ASSETS
2004
2005
RMB
RMB
Rental and other deposits
1,331,839
4,333,790
Prepayments for rental and other expenses
6,229,135
6,315,403
Employee advances
868,497
1,507,761
Payments made on behalf of customers
189,449
—
Prepaid insurance premium
1,171,646
1,704,902
Merchandise — stationery
2,507,726
—
Subsidy income receivable
—
4,660,000
Interest income receivable
—
2,829,274
Others
2,377,656
1,914,307
Total
14,675,948
23,265,437
F-15
Table of Contents
51JOB, INC.
NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
5. PROPERTY AND EQUIPMENT
2004
2005
RMB
RMB
Leasehold improvements
7,091,521
13,085,141
Computer equipment
26,758,707
36,185,945
Furniture and fixtures
3,942,323
9,896,664
Motor vehicles
3,646,016
3,886,016
Less: accumulated depreciation
(18,903,692
)
(30,695,891
)
Net book value
22,534,875
32,357,875
6. INTANGIBLE ASSETS
2004
2005
RMB
RMB
Computer equipment software
10,798,362
15,952,849
Acquired training licenses
3,049,274
6,571,253
Internally developed software
1,568,808
1,568,808
Less: accumulated amortization
(9,289,695
)
(12,712,075
)
Net book value
6,126,749
11,380,835
7. OTHER PAYABLES AND ACCRUALS
2004
2005
RMB
RMB
Professional service fees
6,469,433
4,796,706
Office expenses
2,585,186
1,327,095
Deposit from customers
3,713,147
3,053,967
Travelling expenses
103,190
24,420
Payables to employees related to proceeds from share option exercises
—
6,872,776
Others
1,062,730
1,440,300
Total
13,933,686
17,515,264
8. TAXATION
Cayman Islands
Under the current laws of Cayman Islands, the Company and its subsidiaries that are
incorporated in Cayman Islands are not subject to tax on income or capital gain. In addition, upon
payments of dividends by those companies to their shareholders, no Cayman Islands withholding tax
will be imposed.
British Virgin Islands
Under the current laws of British Virgin Islands, the Company's subsidiary that is
incorporated in British Virgin Islands is not subject to tax on income or capital gain. In
addition, upon payments of dividends by that company to its shareholders, no British Virgin Islands
withholding tax will be imposed.
Hong Kong
The Company's subsidiary that is incorporated in Hong Kong is subject to Hong Kong profits tax
at a rate of 17.5% on its assessable profit.
F-16
Table of Contents
51JOB, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
China
The Company's subsidiaries that are incorporated in the PRC are subject to Enterprise Income
Tax ("EIT") on the taxable income as reported in their respective statutory financial statements
adjusted in accordance with the Enterprise Income Tax Law and the Income Tax Law of the People's
Republic of China Concerning Foreign Investment Enterprises and Foreign Enterprises (collectively,
the "PRC Income Tax Laws"), respectively. Under the PRC Income Tax Laws, these companies are
subject to EIT at a statutory rate of 33% except for the following entities: Tech JV, which is
subject to EIT at a rate of 30%; AdCo Shenzhen Branch, which is subject to EIT at a rate of 15%;
and Wang Cai AdCo's branches in Shanghai and Shenzhen, which are subject to EIT at a rate of 15%.
In addition, some of AdCo's branches and subsidiaries are granted by the local tax authorities a
right to elect a two-year EIT exemption on their taxable income, commencing from their
establishment. Total tax benefit recognized as a result of the tax exemption was RMB16,127,096,
RMB2,318,116 and RMB6,073,010 for the years ended December 31, 2003, 2004 and 2005, respectively.
Composition of income tax expense
The current and deferred portion of income tax expense included in the consolidated statement
of operations for the years ended December 31, 2003, 2004 and 2005 are as follows:
2003
2004
2005
RMB
RMB
RMB
Current income tax expenses
3,230,664
39,464,894
28,592,183
Deferred tax
(38,653
)
(5,406,710
)
1,352,850
Income tax expense
3,192,011
34,058,184
29,945,033
Reconciliation of the differences between statutory tax rate and the effective tax rate
Reconciliation between the statutory EIT rate in the PRC and the Group's effective tax rate
for the years ended December 31, 2003, 2004 and 2005 are as follows:
2003
2004
2005
EIT statutory rate
33
%
33
%
33
%
Effect of tax holiday for certain subsidiaries
(45
%)
(3
%)
(6
%)
Difference in EIT rates of certain subsidiaries
(1
%)
(1
%)
(3
%)
Non-deductibility of expenses incurred outside the PRC
18
%
8
%
6
%
Other permanent differences
(1
%)
—
4
%
Provision of valuation allowance
5
%
—
—
Reversal of valuation allowance
—
(1
%)
(1
%)
Effective EIT rate of the Group
9
%
36
%
33
%
F-17
Table of Contents
51JOB, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
Significant components of deferred tax assets and liabilities as of December 31, 2004 and 2005
are as follows:
2004
2005
RMB
RMB
Deductible temporary differences related to revenue
5,955,432
—
Deductible temporary differences related to accrued expenses
656,674
1,711,457
Deductible temporary differences related to advertising expenses
—
1,984,085
Deductible temporary differences related to provision for
doubtful debts and slow moving merchandise
1,490,856
2,996,098
Total current deferred tax assets
8,102,962
6,691,640
Less: Valuation allowance
(676,864
)
(823,820
)
Net current deferred tax assets
7,426,098
5,867,820
Tax loss carryforwards
6,387,134
4,970,167
Deductible temporary differences related to amortization
376,122
412,314
Total non-current deferred tax assets
6,763,256
5,382,481
Less: Valuation allowance
(6,387,134
)
(4,970,167
)
Net non-current deferred tax assets
376,122
412,314
Total deferred tax assets
7,802,220
6,280,134
Taxable temporary differences related to accrued expenses
(169,237
)
—
Total current deferred tax liabilities
(169,237
)
—
Total deferred tax liabilities
(169,237
)
—
As of December 31, 2004 and 2005, valuation allowances were provided on the deferred tax
assets to the extent that management believed it was more likely than not that such deferred tax
assets would not have been realized in the foreseeable future. Valuation allowances were provided
because it was more likely than not that the Group will not be able to utilize certain tax loss
carry forwards generated by certain subsidiaries or VIE subsidiaries. As those entities continue to
generate tax losses and tax planning strategies are not available to utilize those tax losses in
other group companies, management believes it is more likely than not that such losses will not be
utilized before they expire. However, certain valuation allowance was reversed in 2004 and 2005
when the Group generated sufficient taxable income to utilize the deferred tax assets. If events
occur in the future that prevent the Group from realizing some or all of its deferred tax assets,
an adjustment to the valuation allowances will be recognized when such events occur. In the PRC,
tax loss carry forwards generally expire after five years.
The following represents a roll-forward of the valuation allowance for each of the years:
2004
2005
RMB
RMB
Balance at beginning of the period
7,802,306
7,063,998
Additions
1,723,945
1,782,902
Reversals
(2,462,253
)
(3,052,913
)
Balance at end of period
7,063,998
5,793,987
9. INITIAL PUBLIC OFFERING
In October 2004, the Company completed an initial public offering of 6,037,500 American
Depositary Shares ("ADSs"), including an over-allotment option to the underwriters to purchase an
additional 787,500 ADS, at US$14.00 per ADS. Each ADS represents two common shares which have par
value of US$0.0001 per share. Net proceeds of approximately RMB635.5 million were credited to the
Company's common shares and additional paid-in capital.
F-18
Table of Contents
51JOB, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
10. SERIES A PREFERENCE SHARES
In June 2000 and October 2001, the Company entered into certain Series A Preference Shares
Purchase Agreements, in which (i) the Company authorized 15,000,000 of the Company's Series A
Preference Shares ("Series A Preference Shares"), and (ii) the Company agreed to sell and the
investors agreed to purchase 13,668,466 Series A Preference Shares, subject to closing and
subscription, at an issuance price of US$1.0417 per share.
In 2001, the Company issued to Recruit Company Limited ("Recruit") a warrant to purchase
10,000 Series A Preference Shares at exercise price of US$1.0417 in connection with obtaining
access to an online recruiting application developed by Recruit. The warrant was exercised
immediately and Recruit became a registered holder of 10,000 Series A Preference Shares as of May
2001.
In August 2002, in connection with share repurchase from an executive officer the principal
Series A Preference shareholder received a warrant to purchase an additional 380,000 Series A
Preference Shares at an exercise price of US$1.0417 per share for no consideration. The fair value
of the warrants, RMB1,233,659, as determined based on the Black-Scholes option pricing model, was
deducted from 2002 net income as a deemed dividend to arrive at net income attributable to common
shareholders for earnings per share calculation. The warrant was exercised in March 2004.
The holders of the Series A Preference Shares were entitled to receive, out of any funds
legally available therefore, when and as declared by the board of directors, dividends at a rate of
eight percent (8%) per annum. No dividends would be paid on the common shares of the Company until
all declared dividends on the preference shares were paid, and no dividend would be paid on any
common shares unless a dividend was paid with respect to each outstanding Series A Preference Share
equal to or greater than the amount of such dividend that would be payable on all common shares
into which such Series A Preference Share could then be converted. Such dividend rights were not
cumulative and no right to such dividend accrued unless declared by the board of directors.
Each holder of Series A Preference Shares was entitled to convert such preference shares at
any time, without the payment of any additional consideration, into common shares at an initial
conversion price of US$1.0417 (each Series A Preference Share was convertible into one common
share). The conversion price would be adjusted, in the event the Company was to issue any common
shares, or shares that were convertible into common shares, except for certain cases, including
issuances of employees share options, less than the conversion price in effect on the date
immediately prior to such issue.
Each Series A Preference Share would be automatically converted into common shares at the then
effective conversion price upon the closing of a qualified initial public offering.
On October 4, 2004, 14,058,466 issued Series A Preference Shares were converted on a 1:1 basis
to the Company's common shares of US$0.0001 each upon the completion of the Company's initial
public offering
(Note 9).
F-19
Table of Contents
51JOB, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
11. SHARE-BASED COMPENSATION
In April 2000, the Company issued a total of 28,399,021 common shares to the four founders of
the Group, at the price of US$0.0001 per share ("Founder Shares"). At the time of the issuance,
these common shares were placed into escrow with the chief executive officer and president of the
Company as escrow agent, and were subject to repurchase by the Company, at the Company's
discretion, upon the termination of employment of the applicable founders at a repurchase price of
US$0.0001 or the estimated fair value of the common shares on the date of repurchase, as determined
by the Company. During each of the subsequent years, certain percentage of the total number of
common shares so purchased by each founder was released from the repurchase option and the escrow
as follows:
Shares issued
Vesting
17,316,000
25% released from escrow on October 1, 2000 and one forty
eighth released from escrow at the end of each calendar
month after October 2000.
6,307,021
26.9% released from escrow on April 28, 2000 and one forty
eighth released from escrow at the end of each calendar
month after April 2000.
3,696,000
31.25% released from escrow on April 28, 2000 and one forty
eighth released from escrow at the end of each calendar
month after April 2000.
1,080,000
25% released from escrow on October 1, 2000 and one forty
eighth released from escrow at the end of each calendar
month after October 2000.
28,399,021
Balance at end of period
As of December 31, 2003, all common shares so purchased by the founders had been released from
the repurchase option and the escrow.
The placement of the Founder Shares in escrow is recognized as a separate share-based
compensatory arrangement between the Company and the founders. Upon the issuance of the Founder
Shares, the Company recognized total deferred compensation of RMB35,235,724 based on the estimated
fair value of the common shares on the date of issuance. Such deferred compensation is recognized
over the period in which the shares are subject to repurchase by the Company. Total compensation
expense of RMB4,622,466, nil and nil was recognized for the years ended December 31, 2003, 2004 and
2005, respectively.
On September 1, 2000, the Company adopted a share option plan ("2000 Option Plan") which
provides for the issuance of up to 4,010,666 common shares. The total number of common shares
reserved under the plan was increased to 5,530,578 in February 2004. Under the share option plan,
the directors may, at their discretion, issue share options to purchase the Company's common shares
to any senior executives, directors, employees or consultants of the Group. These share options can
be exercised within six years from the date of grant.
The following table summarizes the Company's share options under the 2000 Option Plan:
2003
2004
2005
Outstanding at beginning of years
2,317,102
2,919,728
2,520,444
Granted
1,346,232
468,192
749,200
Exercised
(467,334
)
(711,097
)
(632,276
)
Forfeited
(276,272
)
(156,379
)
(79,394
)
Outstanding at end of years
2,919,728
2,520,444
2,557,974
Vested and exercisable at end of years
1,384,964
1,426,086
1,212,153
F-20
Table of Contents
51JOB, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
The following is additional information relating to employee options outstanding as of
December 31, 2005:
Outstanding
Exercisable
Weighted
Weighted
average
average
Weighted-
remaining
Weighted-
remaining
Number
average
contractual
Number
average
contractual life
Exercise prices
of shares
exercise price
life (years)
of shares
exercise price
(years)
US$0.15
1,112,556
US$
0.15
1.37
994,130
US$
0.15
1.15
US$0.50
424,756
US$
0.50
3.96
78,725
US$
0.50
3.96
US$1.00
179,286
US$
1.00
4.15
90,650
US$
1.00
4.15
US$3.25
92,176
US$
3.25
4.38
48,648
US$
3.25
4.38
US$6.00
30,000
US$
6.00
5.86
—
US$
6.00
5.86
US$7.00
40,000
US$
7.00
5.56
—
US$
7.00
5.56
US$8.695
679,200
US$
8.695
5.31
—
US$
8.695
5.31
2,557,974
1,212,153
In connection with share options granted under the 2000 Option Plan during the years ended
December 31, 2003, 2004 and 2005, the Company recognized deferred share-based compensation totaling
RMB60,417,377, RMB14,305,481 and nil, respectively, which is being amortized over the vesting
period.
In 2003, the Company extended the exercise period for certain employees who were terminated
during the year. The modification to increase the life of the option results in a new measurement
date and an incremental share based compensation expense of RMB9,899,198 recognized for the year
ended December 31, 2003.
In February 2004, the Company sold 138,264 common shares to a director at a price of US$1.00
per share, which is below the then estimated fair market value of the common shares. This
transaction resulted in the recognition of share-based compensation expense of RMB5,699,236 for the
year ended December 31, 2004.
Compensation expense for share options granted under the 2000 Option Plan recognized during
the years ended December 31, 2003, 2004 and 2005, totaling RMB14,079,097, RMB20,489,734 and
RMB14,553,321, respectively.
12. EMPLOYEE BENEFITS
The full-time employees of the Company's subsidiaries and VIE subsidiaries that are
incorporated in the PRC are entitled to staff welfare benefits including medical care, welfare
subsidies, unemployment insurance and pension benefits. These companies are required to accrue for
these benefits based on certain percentages of the employees' salaries in accordance with the
relevant regulations, and make contributions to the state-sponsored pension and medical plans out
of the amounts accrued for medical and pension benefits. The total amounts charged to the
statements of operations and comprehensive income for such employee benefits amounted to
RMB11,733,119, RMB17,377,621 and RMB27,669,108 for the years ended December 31, 2003, 2004 and
2005, respectively. The PRC government is responsible for the medical benefits and ultimate pension
liability to these employees.
13. RELATED PARTY TRANSACTIONS
Balances with related parties for the periods indicated are as follows:
2004
2005
RMB
RMB
Due to related parties:
Principal shareholders
—
500,000
Advances for share options exercised
1,577,873
1,005,515
1,577,873
1,505,515
F-21
Table of Contents
51JOB, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
The amounts and due to principal shareholders as of December 31, 2005 mainly arose from an
advance from a principal shareholder in connection with increasing the registered capital of a VIE
subsidiary. This amount is unsecured, non-interest bearing and has no definite terms.
The amount of advance for share options exercise arose from the exercise of options by the
Company's directors and executive officers. During the periods presented, certain directors and
executive officers of the Company made payments to exercise certain unvested options. In connection
with the early exercises, the Company has a call option to repurchase the shares that are not yet
vested if the employee's service terminates prior to the option's vesting at the original exercise
price. The early exercise of the options was not considered a substantial exercise for accounting
purposes on the date of exercise, and the cash paid for the exercise price is recognized as a
liability and such common shares are not considered issued. When the options are vested and the
call option expires, the shares are considered issued and cash paid for the exercise is transferred
to shareholders' equity.
14. EARNINGS PER SHARE
Basic earnings per share and diluted earnings per share have been calculated for the years
ended December 31, 2003, 2004 and 2005 as follows:
2003
2004
2005
RMB
RMB
RMB
Numerator:
Net income
32,600,263
61,143,032
61,422,304
Amount allocated to participating preference shareholders
(10,615,466
)
(13,986,417
)
—
Numerator for basic earnings per share
21,984,797
47,156,615
61,422,304
Effect of dilutive securities
—
—
—
Numerator for diluted earnings per share
21,984,797
47,156,615
61,422,304
Denominator:
Denominator for basic earnings per share —
weighted-average common shares outstanding
26,594,228
35,593,374
55,607,716
Effect of Series A Preference Shares
—
*
—
*
—
Effect of unvested Founder Shares
1,734,040
—
—
Effect of dilutive share options
731,890
1,889,645
1,646,738
Effect of dilutive warrants
263,167
—
—
Denominator for diluted earnings per share
29,323,325
37,483,019
57,254,454
Basic earnings per share
0.83
1.32
1.10
Diluted earnings per share
0.75
1.26
1.07
*
These potentially dilutive securities were not included in the calculation of dilutive
earnings (loss) per share because of their anti-dilutive effect.
Net income, after deducting deemed dividends to holders of preference shares, has been
allocated to the common share and preference share based on their respective rights to share in
dividends.
In April 2000, the Company issued 28,399,021 Founder Shares (Note 11) which are subject to
repurchase by the Company at its discretion, upon the termination of employment of the applicable
founders. Accordingly, for calculating basic earnings per share, the shares held in escrow are not
included in the denominator for basic earnings per share.
Potentially dilutive securities included Series A Preference Shares, unvested Founder Shares,
warrants and share options granted to employees.
F-22
Table of Contents
51JOB, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
15. COMMITMENTS AND CONTINGENCIES
Operating lease commitments
The Group has entered into non-cancelable agreements with initial or remaining terms in excess
of one year for the publication of
51job Weekly
, the rental of office premises and for the lease of
computer and other equipment. Future minimum payments with respect to these agreements as of
December 31, 2005 are as follows:
Publication
Office
fees
premises
Others
Total
RMB
RMB
RMB
RMB
2006
53,958,833
23,452,882
140,005
77,551,720
2007
39,886,771
5,843,097
80,116
45,809,984
2008
3,898,171
4,657,454
71,148
8,626,773
2009
1,865,850
6,370,410
—
8,236,260
99,609,625
40,323,843
291,269
140,224,737
Rental expenses for the years ended December 31, 2003, 2004 and 2005 are RMB10,456,277,
RMB13,905,812 and RMB28,702,735, respectively.
Capital commitments
As of December 31, 2005, capital commitments for purchase of an office complex and leasehold
improvements amounted to RMB91,050,552.
Contingencies
There are uncertainties regarding the legal basis of the Company's ability to operate the
Internet content service. Although the PRC has implemented a wide range of market-oriented economic
reforms, the telecommunication, information and media industries as well as certain sectors of the
HR service industries remain highly regulated. Not only are restrictions currently in place, but
also regulations are unclear regarding in what specific segments of these industries companies with
foreign investors, including the Company, may operate. Therefore, the Company might be required to
limit the scope of its operations in the PRC, and this could have an adverse effect on the
Company's financial position, results of operations and cash flows.
Tech JV obtained an advertising license in May 2000, when Tech JV was a 98% foreign owned
entity, and a license to conduct human resource services in September 2002, when Tech JV was a 99%
foreign owned entity. During the period from the date Tech JV acquired these licenses to the date
of the Restructuring (Note 1), Tech JV and its licensed PRC subsidiaries conducted all of the
advertising and human resource related services. Following the acquisition of these licenses and
commencing these operations, the PRC government enacted laws limiting foreign ownership in entities
conducting advertising and human resource related services.
The PRC government has not published an official ruling with respect to the status of foreign
ownership arrangements that were established prior to the enactment of these limitations and which
may be above these limitations. Prior to the Restructuring, the ownership percentage of Tech JV was
above the maximum foreign ownership permitted for an entity conducting advertising and human
resource operations. In addition, there is uncertainty regarding the regulation of PRC subsidiaries
in which subsidiaries of foreign owned PRC entities invest, such as the subsidiaries of AdCo which
are engaged in advertising or trade businesses. The PRC government may determine that the Group's
ownership structure was inconsistent with or insufficient for the proper operation of the Group's
businesses, or that the Group's business licenses or other approvals were not properly issued or
not sufficient.
In the opinion of management, the likelihood of loss in respect of the Group's current or past
ownership structure is remote.
F-23
Table of Contents
51JOB, INC.
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
Beginning in January 2005, several complaints were filed in the United States District Court
for the Southern District of New York against the Company and certain of its senior executive
officers and directors. The complaints seek unspecified damages on alleged violations of federal
securities laws during the period from November 4, 2004 to January 14, 2005. In connection with
these actions, the Company has engaged U.S. counsel to represent the defendants. On July 26, 2005,
the Court consolidated the cases and appointed a lead plaintiff. On October 13, 2005, the Company
and all defendants moved to dismiss the complaint. The motion to dismiss remains pending before the
Court. The Company cannot predict the outcome of the case at this time and no provision has been
made with respect to these lawsuits.
16. FINANCIAL INSTRUMENTS
Financial instruments of the Group primarily comprise investments, accounts receivable,
accounts payable, due to related parties, other payables and advance from customers. As of December
31, 2004 and 2005, their carrying values approximate their estimated fair values.
17. CERTAIN RISKS AND CONCENTRATION
Financial instruments that potentially subject the Group to significant concentrations of
credit risk consist primarily of cash and accounts receivable. As of December 31, 2004 and 2005,
substantially all of the Group's cash was held in major financial institutions located in the
United States, the PRC and Hong Kong which management believes are of high credit quality. Accounts
receivable are typically unsecured and denominated in RMB, and are derived from revenues earned
from operations arising in the PRC.
The Group's sales and purchase and expense transactions are generally denominated in RMB and a
significant portion of the Group's liabilities are denominated in RMB. RMB is not freely
convertible into foreign currencies. In the PRC, foreign exchange transactions are required by law
to be transacted only by authorized financial institutions at exchange rates set by the Bank of
China. Remittances in currencies other than RMB by the Group in the PRC must be processed through
the Bank of China or other PRC foreign exchange regulatory bodies and requires certain supporting
documentation in order to effect the remittance.
No individual customer accounted for more than 10% of net revenues during the years ended
December 31, 2003, 2004 and 2005. No individual customer accounted for more than 10% of accounts
receivable as of December 31, 2004 and 2005.
18. SUBSEQUENT EVENTS
In March 2006, the Company signed a letter of intent to purchase its current principal
executive offices at 21st Floor, Wen Xin Plaza, 755 Wei Hai Road for approximately RMB27 million.
The Company plans to utilize this location as its Shanghai sales office following the Company's
move of its principal executive offices to a new office complex in Zhangjiang High Technology Park.
In April 2006, the Company completed its purchase of a new office complex in Zhangjiang High
Technology Park in Shanghai's New Pudong Area. This office complex is intended to become the
Company's new principal executive offices. The Company signed a letter of intent to purchase this
complex in October 2005 for RMB114 million.
F-24
Table of Contents
ADDITIONAL INFORMATION — FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
Note
2003
2004
2005
2005
RMB
RMB
RMB
US$ (Note 4)
Net revenues
—
—
—
—
Cost of services
—
—
—
—
Gross profit
—
—
—
—
Total operating expenses
(19,085,436
)
(24,270,500
)
(20,818,339
)
(2,579,656
)
Loss from operations
(19,085,436
)
(24,270,500
)
(20,818,339
)
(2,579,656
)
Equity in profit of subsidiary companies, net
1
51,682,719
83,415,592
79,223,274
9,816,767
Other income
2,980
1,997,940
3,017,369
373,890
Income before provision for income tax
32,600,263
61,143,032
61,422,304
7,611,001
Income tax expense
—
—
—
—
Net income for the year
32,600,263
61,143,032
61,422,304
7,611,001
F-25
Table of Contents
ADDITIONAL INFORMATION — FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
CONDENSED BALANCE SHEETS AS OF DECEMBER 31, 2004 AND 2005
Note
2004
2005
2005
RMB
RMB
US$ (Note 4)
ASSETS
Current assets:
Cash
648,576,639
247,940,580
30,722,978
Receivables due from related parties
2
837,728
838,808
103,939
Prepayments and other current assets
1,598,045
1,931,937
239,391
Total current assets
651,012,412
250,711,325
31,066,308
Long term receivables due from related parties
2
39,508,874
362,450,068
44,912,154
Investment in subsidiaries
1
165,799,867
251,535,177
31,168,394
Total assets
856,321,153
864,696,570
107,146,856
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Due to related parties
2
1,577,873
2,014,535
249,626
Other payables and accruals
2,924,958
8,802,572
1,090,748
Total current liabilities
4,502,831
10,817,107
1,340,374
Total liabilities
4,502,831
10,817,107
1,340,374
Shareholders' equity:
Common shares (US$0.0001 par value;
500,000,000 shares authorized, 55,616,679
and 54,876,079 shares issued and
outstanding as of December 31, 2004 and
2005, respectively)
46,044
45,451
5,632
Additional paid-in capital
869,125,807
848,423,068
105,130,365
Deferred share-based compensation
(40,154,027
)
(23,141,471
)
(2,867,521
)
Other comprehensive loss
(501,659
)
(318,174
)
(39,426
)
Retained earnings
23,302,157
28,870,589
3,577,432
Total shareholders' equity
851,818,322
853,879,463
105,806,482
Total liabilities and shareholders' equity
856,321,153
864,696,570
107,146,856
F-26
Table of Contents
ADDITIONAL INFORMATION — FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
Note
2003
2004
2005
2005
RMB
RMB
RMB
US$ (Note 4)
Net cash provided by (used in) operating activities
(375,103
)
(891,852
)
7,598,852
941,594
Net cash provided by (used in) investing activities
—
7,420,016
(322,941,195
)
(40,016,504
)
Net cash provided by (used in) financing activities
746,227
640,964,309
(74,097,969
)
(9,181,677
)
Effect of foreign exchange rate changes on cash
76,964
236,144
(11,195,747
)
(1,387,296
)
Net increase (decrease) in cash
448,088
647,728,617
(400,636,059
)
(49,643,883
)
Cash, beginning of year
399,934
848,022
648,576,639
80,366,861
Cash, end of year
848,022
648,576,639
247,940,580
30,722,978
F-27
Table of Contents
ADDITIONAL
INFORMATION — FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
1. BASIS OF PRESENTATION
The condensed financial statements of 51job, Inc. (the "Company") have been prepared in
accordance with accounting principles generally accepted in the United States of America except for
accounting of the Company's subsidiaries and certain footnote disclosures as described below.
The Company is generally a holding company of certain subsidiaries and variable interest
entities (collectively "Subsidiaries"). The Company records it investment in its Subsidiaries under
the equity method of accounting as prescribed in Accounting Principles Board ("APB") Opinion No.
18, "The Equity Method of Accounting for Investments in Common Stock." Such investment is presented
on the balance sheet as "Investment in subsidiaries" and 100% of the Subsidiaries' profit or loss
as "Equity in profit of subsidiary companies, net" on the statement of operations.
The Subsidiaries did not pay any dividend to the Company for the periods presented.
Certain information and footnote disclosures normally included in financial statements
prepared in accordance with accounting principles generally accepted in the United States of
America have been condensed or omitted. The footnote disclosures contain supplemental information
relating to the operations of the Company and, as such, these statements should be read in
conjunction with the notes to the consolidated financial statements of the Company.
2. RELATED PARTY BALANCES
Balances with related parties for the periods indicated are as follows:
2004
2005
RMB
RMB
Receivables due from related parties:
51net HR
828,929
822,577
51net Beijing
1,021
16,231
Qianjin Network Information Technology (Shanghai) Co., Ltd.
7,778
—
837,728
838,808
Long term receivables due from related parties:
51net.com Inc.
39,508,874
362,450,068
40,346,602
363,288,876
Due to related parties:
Qianjin Network Information Technology (Shanghai) Co., Ltd.
—
73,519
Shanghai Qianjin Advertising Co., Ltd.
—
935,501
Advances for share options exercised
1,577,873
1,005,515
1,577,873
2,014,535
The amounts due from 51net.com Inc. relate to cash payments made by the Company to 51net.com
Inc. for investment in the Company's PRC entities. The amounts are unsecured, non-interest bearing
and have no definite terms.
3. COMMITMENTS
The Company does not have any significant commitments or long term obligations as of any of
the periods presented.
F-28
Table of Contents
ADDITIONAL
INFORMATION — FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
—
(Continued)
FOR THE YEARS ENDED DECEMBER 31, 2003, 2004 AND 2005
(Amounts expressed in RMB unless otherwise stated)
4. FOREIGN CURRENCIES
The unaudited United States dollar ("US$") amounts disclosed in the financial statement are
presented solely for the convenience of the readers. Translations of amounts from RMB into United
States dollars for the convenience of the reader were calculated at the noon buying rate of US$1.00
= RMB8.0702 on December 30, 2005 in The City of New York for cable transfers of RMB as certified
for customs purposes by the Federal Reserve Bank of New York. No representation is made that the
RMB amounts could have been, or could be, converted into US$ at that rate on December 30, 2005, or
at any other certain rate.
F-29