DID YOU KNOW CTRIP IS A FOREIGN COMPANY?

CTRIP is one of the most successful and well known 'as China's leading travel service enterprise'.               Well, on the official company's webpage it is reported that "CTRIP is headquartered in Shanghai" which is only the operational headquarter.                                                                                                                      However, under the China's legal framework it is defined as Wholly Foreign Own Enterprises also known as WFOE.                                                                                                                                             In June 1999 the company was founded in the Cayman Islands，therefore CTRIP operates in China but it's not a Chinese company.

The process is not so straight. It starts in the Cayman Islands, than goes to Hong Kong where another legal entity is created in order to receive funds from the one in the Cayman. From Hong Kong the money is transferred to Shanghai. This last passage could be the most difficult because it needs China central government authorization to be put into effect. Once the funds arrive in Shanghai the company can begin to use them to buy properties, goods and whatsoever to run the business

There is no reason to openly publicize this information but I firmly believe most of the people do not know about this. Except the people involved in the creation, launching and fundraising processes, and me obviously, there must be very few people who know the CTRIP case features.

I don’t know if this topic may catch echinacities blog readers but I wanted to share this info posting it.

I would add some other information and graphs about this case study. However it would result a bit too academic.

So I’ll just report some basic-essential data

®     In October 1999 CTRIP - first round fundraising from IDG Technology Venture Investment, Inc. in ordinary share for a total price of 430,000 US$ selling 12.5% of its ownership.                                                                                                                                                         

®     In March 2000 second round of fundraising through a Series A Preferred Share Subscription Agreement, whereby CTRIP authorized and issued 432,000 shares Series A Convertible Preferred Shares at an issue price of US$10.4167 per share.                                                                                                                           

®     In June 2000 CTRIP augmented the number of Series A Preferred Shares from 432,000 shares to 4,320,000 shares at US$1.0417 each.                                                                                                    

®     In November 2000, CTRIP entered its fourth round of fundraising through a Series B Preferred Shares Subscription Agreement, whereby CTRIP authorized and issued 7,193,464 shares Series B Mandatorily Redeemable Convertible Preferred Shares at an issue price of US$1.5667 per share.                                                                                                                                                  

®     In September 2003 CTRIP entered into its fifth and last step of fundraising through Series C Preferred Share Subscription Agreement, whereby CTRIP authorized and issued 2,180,755 shares Series C Convertible Preferred Shares at an issue price of $4.5856 per share.

DID YOU KNOW CTRIP IS A FOREIGN COMPANY?

Sources:

http://pages.english.ctrip.com/about/en/company-profile.html