##### Table of Contents



UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
 WASHINGTON, D.C. 20549
 FORM 20-F
 
  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, 2007
 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)
 Building 3
No. 1387, Zhang Dong Road
Shanghai 201203
Peoples Republic of China
(Address of principal executive offices)
 Rick Yan
Telephone: +(86-21) 6160-1888
Facsimile: +(86-21) 6879-6233
Building 3
No. 1387, Zhang Dong Road
Shanghai 201203
Peoples Republic of China
(Name, telephone, email and/or facsimile number and address of company contact person)
 
 Securities registered or to be registered pursuant to Section 12(b) of the Act:
 (Title of Each Class)
    
    (Name of Each Exchange on Which Registered)American Depositary Shares, 
each representing two common shares, 
par value US$0.0001 per share
    
    The NASDAQ Stock Market LLC
(The NASDAQ Global Select Market)
 Securities registered or to be registered pursuant to Section 12(g) of the Act:
None.
 Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None.
 
  o þ
 o þ
 þ o
  o þ o
  þ o o
 o þ




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##### 



TABLE OF CONTENTS
 PageINTRODUCTION
    
    iiFORWARD-LOOKING STATEMENTS
    
    iiiPART IItem 1.
    
    Identity of Directors, Senior Management and Advisers
    
    1Item 2.
    
    Offer Statistics and Expected Timetable
    
    1Item 3.
    
    Key Information
    
    1Item 4.
    
    Information on the Company
    
    24Item 4A.
    
    Unresolved Staff Comments
    
    39Item 5.
    
    Operating and Financial Review and Prospects
    
    39Item 6.
    
    Directors, Senior Management and Employees
    
    56Item 7.
    
    Major Shareholders and Related Party Transactions
    
    63Item 8.
    
    Financial Information
    
    68Item 9.
    
    The Offer and Listing
    
    69Item 10.
    
    Additional Information
    
    70Item 11.
    
    Quantitative and Qualitative Disclosures About Market Risk
    
    76Item 12.
    
    Description of Securities Other than Equity Securities
    
    76PART IIItem 13.
    
    Defaults, Dividend Arrearages and Delinquencies
    
    77Item 14.
    
    Material Modifications to the Rights of Security Holders and Use of Proceeds
    
    77Item 15.
    
    Controls and Procedures
    
    77Item 16A.
    
    Audit Committee Financial Expert
    
    77Item 16B.
    
    Code of Ethics
    
    78Item 16C.
    
    Principal Accountant Fees and Services
    
    78Item 16D.
    
    Exemptions from the Listing Standards for Audit Committees
    
    78Item 16E.
    
    Purchases of Equity Securities by the Issuer and Affiliated Purchasers
    
    78PART IIIItem 17.
    
    Financial Statements
    
    79Item 18.
    
    Financial Statements
    
    79Item 19.
    
    Exhibits
    
    79EX-4.5 Loan Agreements dated as of September 11, 2007EX-4.8 Technical and Consulting Service Agreement dated as of September 11, 2007EX-4.11 Equity Pledge Agreement dated as of September 11, 2007EX-4.12 Investment Capital Transfer Agreement dated as of September 11, 2007EX-4.13 Share Transfer Agreement dated as of November 20, 2007EX-4.14 Share Transfer Agreement dated as of November 12, 2007EX-4.21 Cooperation Agreement dated as of August 9, 2007EX-8.1 List of subsidiaries of 51job, Inc.EX-12.1 CEO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002EX-12.2 CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002EX-13.1 CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002EX-13.2 CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002EX-15.1 Consent of Maples and CalderEX-15.2 Consent of Jun He Law OfficesEX-15.3 Consent of PricewaterhouseCoopers Zhong Tian CPAs Limited Company
  i




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INTRODUCTION
  
    
    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 Global Select 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.
   
    
    51net are to 51net.com Inc.;
    
    AdCo are to Shanghai Qianjin Advertising 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.;
    
    Wang Ju are to Shanghai Wang Ju Human Resource Consulting 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.
    ii




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FORWARD-LOOKING STATEMENTS
  
    
    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 as well
as stock market volatilities;
    
    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 this annual report on Form 20-F and any amendments thereto.
  iii




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PART I
 
 ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS
  
 ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE
  
 ITEM 3. KEY INFORMATION
 A. Selected Financial Data
  For the year ended December 31,2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2007(in thousands, except per share data)
    
    RMB
    
    RMB
    
    RMB
    
    RMB
    
    RMB
    
    US$(2)Selected Consolidated Statement of
Operations Data:Revenues:Print advertising
    
    
    182,606
    
    
    
    300,652
    
    
    
    356,285
    
    
    
    389,535
    
    
    
    430,621
    
    
    
    59,033Online recruitment services
    
    
    76,960
    
    
    
    111,509
    
    
    
    159,495
    
    
    
    219,794
    
    
    
    282,688
    
    
    
    38,753Executive search
    
    
    15,748
    
    
    
    24,908
    
    
    
    26,307
    
    
    
    19,938
    
    
    
    16,086
    
    
    
    2,205Other human resource related
revenues
    
    
    18,020
    
    
    
    42,875
    
    
    
    53,507
    
    
    
    68,586
    
    
    
    114,871
    
    
    
    15,747Total revenues
    
    
    293,334
    
    
    
    479,944
    
    
    
    595,594
    
    
    
    697,853
    
    
    
    844,266
    
    
    
    115,738Net revenues
    
    
    280,119
    
    
    
    456,120
    
    
    
    562,026
    
    
    
    659,843
    
    
    
    799,284
    
    
    
    109,572Cost of services(1)
    
    
    (151,477
    )
    
    
    (224,607
    )
    
    
    (269,328
    )
    
    
    (294,068
    )
    
    
    (349,022
    )
    
    
    (47,847
    )Gross profit
    
    
    128,642
    
    
    
    231,513
    
    
    
    292,698
    
    
    
    365,775
    
    
    
    450,262
    
    
    
    61,725Operating expenses(1):Sales and marketing
    
    
    (39,043
    )
    
    
    (69,029
    )
    
    
    (115,095
    )
    
    
    (136,770
    )
    
    
    (181,230
    )
    
    
    (24,844
    )General and administrative
    
    
    (55,817
    )
    
    
    (72,096
    )
    
    
    (100,614
    )
    
    
    (114,322
    )
    
    
    (128,347
    )
    
    
    (17,595
    )Total operating expenses
    
    
    (94,860
    )
    
    
    (141,125
    )
    
    
    (215,709
    )
    
    
    (251,092
    )
    
    
    (309,577
    )
    
    
    (42,439
    )Income from operations
    
    
    33,782
    
    
    
    90,388
    
    
    
    76,989
    
    
    
    114,683
    
    
    
    140,685
    
    
    
    19,286Income before income tax provision
    
    
    35,792
    
    
    
    95,201
    
    
    
    91,367
    
    
    
    127,901
    
    
    
    148,979
    
    
    
    20,422Income tax expense
    
    
    (3,192
    )
    
    
    (34,058
    )
    
    
    (29,945
    )
    
    
    (28,560
    )
    
    
    (45,402
    )
    
    
    (6,224
    )Net income
    
    
    32,600
    
    
    
    61,143
    
    
    
    61,422
    
    
    
    99,341
    
    
    
    103,577
    
    
    
    14,198Earnings per share:Basic
    
    
    0.83
    
    
    
    1.32
    
    
    
    1.10
    
    
    
    1.79
    
    
    
    1.84
    
    
    
    0.25Diluted
    
    
    0.75
    
    
    
    1.26
    
    
    
    1.07
    
    
    
    1.76
    
    
    
    1.83
    
    
    
    0.25Earnings per ADS(3):Basic
    
    
    1.65
    
    
    
    2.65
    
    
    
    2.21
    
    
    
    3.58
    
    
    
    3.68
    
    
    
    0.50Diluted
    
    
    1.50
    
    
    
    2.52
    
    
    
    2.15
    
    
    
    3.52
    
    
    
    3.66
    
    
    
    0.50
 1




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As of December 31,2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2007(in thousands)
    
    RMB
    
    RMB
    
    RMB
    
    RMB
    
    RMB
    
    US$(2)Selected Consolidated Balance
Sheet Data:Assets:Cash
    
    
    115,085
    
    
    
    848,293
    
    
    
    830,634
    
    
    
    868,698
    
    
    
    1,007,520
    
    
    
    138,119Total current assets
    
    
    145,573
    
    
    
    893,647
    
    
    
    892,544
    
    
    
    919,576
    
    
    
    1,075,288
    
    
    
    147,409Total non-current assets
    
    
    39,831
    
    
    
    43,735
    
    
    
    70,875
    
    
    
    208,039
    
    
    
    227,878
    
    
    
    31,239Total assets
    
    
    185,404
    
    
    
    937,382
    
    
    
    963,420
    
    
    
    1,127,615
    
    
    
    1,303,166
    
    
    
    178,648Liabilities:Total current liabilities
    
    
    56,096
    
    
    
    85,564
    
    
    
    109,540
    
    
    
    139,075
    
    
    
    176,115
    
    
    
    24,143Total non-current liabilities
    
    
    24
    
    
    
    
    
    
    
    
    
    
    
    122
    
    
    
    516
    
    
    
    72Total liabilities
    
    
    56,120
    
    
    
    85,564
    
    
    
    109,540
    
    
    
    139,197
    
    
    
    176,631
    
    
    
    24,215Total shareholders equity
    
    
    129,284
    
    
    
    851,818
    
    
    
    853,880
    
    
    
    988,418
    
    
    
    1,126,535
    
    
    
    154,433Total liabilities and
shareholders equity
    
    
    185,404
    
    
    
    937,382
    
    
    
    963,420
    
    
    
    1,127,615
    
    
    
    1,303,166
    
    
    
    178,648
 
 (1)
    
    Share-based compensation was included in the consolidated statement of operations data as
follows: For the year ended December 31,2003
    
    2004
    
    2005
    
    2006
    
    2007
    
    2007(in thousands)
    
    RMB
    
    RMB
    
    RMB
    
    RMB
    
    RMB
    
    US$(2)Cost of services
    
    
    (597
    )
    
    
    (1,811
    )
    
    
    (1,480
    )
    
    
    (4,621
    )
    
    
    (4,931
    )
    
    
    (676
    )Operating expenses:Sales and marketing
    
    
    (423
    )
    
    
    (1,758
    )
    
    
    (1,438
    )
    
    
    (3,972
    )
    
    
    (4,241
    )
    
    
    (581
    )General and administrative
    
    
    (17,682
    )
    
    
    (16,921
    )
    
    
    (11,635
    )
    
    
    (19,926
    )
    
    
    (20,479
    )
    
    
    (2,807
    )
 
 (2)
    
    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 31, 2007, which was RMB7.2946 to
US$1.00.(3)
    
    Each ADS represents two common shares. Exchange Rate Information
  2




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Noon buying rate of Renminbi per U.S. dollarPeriod
    
    Period-end
    
    Average(1)
    
    Low
    
    High2003
    
    
    8.2767
    
    
    
    8.2772
    
    
    
    8.2800
    
    
    
    8.27652004
    
    
    8.2765
    
    
    
    8.2768
    
    
    
    8.2771
    
    
    
    8.27652005
    
    
    8.0702
    
    
    
    8.1826
    
    
    
    8.2765
    
    
    
    8.07022006
    
    
    7.8041
    
    
    
    7.9579
    
    
    
    8.0702
    
    
    
    7.80412007
    
    
    7.2946
    
    
    
    7.5806
    
    
    
    7.8127
    
    
    
    7.2946December
    
    
    7.2946
    
    
    
    7.3682
    
    
    
    7.4120
    
    
    
    7.29462008January
    
    
    7.1818
    
    
    
    7.2405
    
    
    
    7.2946
    
    
    
    7.1818February
    
    
    7.1115
    
    
    
    7.1644
    
    
    
    7.1973
    
    
    
    7.1100March
    
    
    7.0120
    
    
    
    7.0722
    
    
    
    7.1110
    
    
    
    7.0105April
    
    
    6.9870
    
    
    
    6.9997
    
    
    
    7.0185
    
    
    
    6.9840May
    
    
    6.9400
    
    
    
    6.9725
    
    
    
    7.0000
    
    
    
    6.9377June (through June 26)
    
    6.8630
    
    6.9034
    
    
    6.9633
    
    
    6.8630
 
 (1)
    
    Annual averages are calculated from month-end rates. Monthly averages are calculated using
the average of the daily rates during the relevant period. B. Capitalization and Indebtedness
  C. Reasons for the Offer and Use of Proceeds
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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.
 51job Weekly www.51job.com 51job Weekly 51job Weekly 51job Weekly
 ChinaHR.com Cjol.com Zhaopin.com ChinaHR.com Zhaopin.com
   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.
  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.
 51job
 4




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Weekly www.51job.com
 51job Weekly
 A slowdown or other adverse developments in the PRC economy may materially and adversely affect
our customers, demand for our services and our business.
  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.
  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.
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The market for other human resource related services, including business process outsourcing,
remains in the development stage in China and we may be unable to expand such existing services
or successfully develop new services in this area.
    We are dependent on local newspaper contractors in each of our geographic markets to publish
and distribute 51job Weekly.
 51job Weekly 51job Weekly
  
    
    our local newspaper contractors will fulfill their obligations under our agreements;
    
    the agreements will be renewed on terms acceptable to us or at all;
    
    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.
 51job Weekly 51job Weekly
 We are dependent on our Internet service providers, and we are vulnerable to failures of the
Internet, fixed line telecommunications networks in China and our technology platform.
  6




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If we are unable to protect or promote our brand names and reputation, our business may be
materially and adversely affected.
 www.51job.com
 If we are unable to prevent others from using our intellectual property, our business may be
materially and adversely affected.
 www.51job.com 51job Weekly
 We rely heavily on our senior management team and key personnel, and the loss of any of their
services could severely disrupt our business.
   7




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Our business may suffer if we do not successfully manage our current and potential future
growth.
  If we are unable to successfully detect and prevent criminal actions or fraud perpetrated on
us, we may be subject to liability and financial loss.
  Our operating history may not serve as an adequate basis to judge our future prospects and
results of operations.
  
    
    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;
    
    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.
  We rely on our print advertising business to provide a majority of our revenues and any adverse
development in this business could materially and adversely affect our overall results of
operations.
 51job Weekly 51job Weekly 51job Weekly
 8




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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 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.
  We may not be able to successfully execute future acquisitions or efficiently manage any
acquired business.
  
    
    our ability to identify and acquire businesses on a cost-effective basis;
    
    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.
  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.
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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.
  We may be subject to liability for placing advertisements with content that is deemed
inappropriate.
  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 may be exposed to infringement or misappropriation claims by third parties, which, if
successful, could cause us to pay significant damage awards.
  10




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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.
  If we are not able to respond successfully to technological or industry developments, 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.
  Our business could be adversely affected if our software contains bugs.
 www.51job.com
 We are controlled by a small number of our existing shareholders, whose interests may differ
from other shareholders, and our board of directors has the power to discourage a change of
control.
  
    
    Rick Yan, our chief executive officer and a director, who beneficially owned
approximately 26.9% of our outstanding common shares;
    
    Recruit, which beneficially owned approximately 21.8%, and which is affiliated with
Hiroyuki Honda, one of our directors; and
    
    entities affiliated with DCM, which beneficially owned approximately 17.2%, and which
is affiliated with David K. Chao, one of our directors.
  11




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If certain preferential tax treatments become unavailable in China, our effective income tax
rate would increase. In addition, our foreign ADS holders may be subject to PRC withholding tax
on the dividends payable by us and upon gains realized on their sales of our ADSs if we are
classified as a PRC resident enterprise.
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Our earnings have been and will continue to be adversely affected by changes in our accounting
policies, including those related to the expensing of stock options.
  If we do not appropriately maintain effective internal controls in accordance with Section 404
of the Sarbanes-Oxley Act of 2002, our business, results of operations and the market price of
our ADSs may be materially and adversely affected.
   We have no business insurance coverage.
  We are vulnerable to natural disasters and other calamities.
  13




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We may become a passive foreign investment company, which could result in adverse U.S. tax
consequences to U.S. investors.
  Our subsidiaries face limitations on paying dividends or making other distributions to us.
  
    
    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;
    
    Shanghai Qianjin Advertising Co., Ltd., or AdCo, and its subsidiaries; and
    
    Shanghai Wang Ju Human Resource Consulting Co., Ltd., or Wang Ju.
  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.
  14




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##### Table of Contents




    
    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.
  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.
  15




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##### Table of Contents



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.
  Our contractual arrangements with RAL and Qian Cheng may not be as effective in providing
operational control as direct ownership of these businesses.
  16




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##### Table of Contents




    
    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.
  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.
    
    
    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 our business.
 
 17




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##### Table of Contents



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.
  
    
    amount of government involvement;
    
    level of development;
    
    growth rate;
    
    control of foreign exchange; and
    
    allocation of resources.
    18




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##### Table of Contents



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 continued growth of the Chinese Internet market depends on the establishment of an adequate
telecommunications infrastructure.
  The PRC legal system has inherent uncertainties that could materially and adversely affect us.
  19




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##### Table of Contents



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.
  Governmental control of currency conversion may affect the value of your investment.
  The fluctuation of the Renminbi may materially and adversely affect your investment.
   20




---



##### Table of Contents



We face risks related to health epidemics and other outbreaks.
  Recent PRC regulations relating to offshore investment activities by PRC residents and employee
stock options granted by overseas-listed companies may increase our administrative burden and
adversely impact our business and prospects. If our shareholders who are PRC residents fail to
make any required registrations or filings under such regulations, we may be unable to
distribute profits and may become subject to liability under PRC laws.
    21




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##### Table of Contents



Risks Related to Our ADSs
 The market price for our ADSs may be volatile.
  
    
    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.
  The future sales, or perceived future sales, by our existing shareholders of a substantial
number of our ADSs in the public market or through private transactions could adversely affect
the price of our ADSs.
  Your right to participate in any future rights offerings may be limited, which may cause
dilution of your holdings.
  22




---



##### Table of Contents



You may not be able to exercise your right to vote.
  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.
  You may be subject to limitations on transfer of your ADSs.
  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.
   23




---



##### Table of Contents




    
    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.
   
 ITEM 4. INFORMATION ON THE COMPANY
 A. History and Development of the Company
  
    
    Shanghai Qianjin Advertising Co., Ltd., or AdCo, and AdCos seven 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 and is wholly owned by
Run An;
    
    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 and is wholly owned by Run An;
    
    Beijing Run An Information Consultancy Co., Ltd., or Run An, which is jointly owned by
David Weimin Jin and Tao Wang, two executive officers of our company;
    
    Shanghai Wang Cai Advertising Co., Ltd., or Wang Cai AdCo, which is an AdCo Subsidiary
jointly owned by AdCo and TechJV and holds licenses to conduct advertising businesses;
    
    Shanghai Wang Ju Human Resource Consulting Co., Ltd., or Wang Ju, which is owned by
51net HR and Run An and holds a license to provide human resource related services; and
    
    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.
  24




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##### Table of Contents



B. Business Overview
  51job Weekly www.51job.com www.51job.com eHire eSearch
 25




---



##### Table of Contents



Our Product and Services
  
    
    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.
   Recruitment Related Services
 Print Advertising  51job Weekly. 51job Weekly 51job Weekly
 51job Weekly
 City
    
    Newspaper contractor(1)Beijing
    
    China Trade NewsChangchun
    
    City Evening NewsChangsha
    
    Human Resource NewsChengdu
    
    Hua Xi Metropolitan NewsChongqing
    
    Human Resource NewsDalian
    
    Dalian Evening NewsFuzhou
    
    Straits Talent NewsGuangzhou
    
    Guangzhou Youth DailyHangzhou
    
    News Information DailyHarbin
    
    Harbin Lifestyle DailyHefei
    
    Hefei Evening NewsJinan
    
    Jinan TimesKunming
    
    Chuncheng Evening NewsNanjing
    
    Modern ExpressNingbo
    
    Modern Golden NewsQingdao
    
    Qingdao Financial TimesShanghai
    
    China Trade NewsShenyang
    
    Friendly TimesShenzhen
    
    Nan Fang Metropolitan NewsTianjin
    
    Metro ExpressWuhan
    
    News Information DailyXian
    
    China Merchant NewsZhengzhou
    
    Youth Herald
 
 (1)
    
    English translations of the Chinese names. 51job Weekly
 51job Weekly 51job Weekly www.51job.com 51job Weekly www.51job.com 51job Weekly 51job Weekly
 51job Weekly 51job
Weekly 51job Weekly 51job Weekly
 26




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##### Table of Contents



51job Weekly 51job Weekly 51job Weekly 51job Weekly 51job Weekly 51job Weekly
 51job Weekly
   51job Weekly
 For the year ended December 31,2005
    
    2006
    
    2007Estimated number of print advertising pages
    
    
    11,884
    
    
    
    12,609
    
    
    
    16,568
  Online Recruitment Services  www.51job.com www.51job.com www.51job.com www.51job.com
 www.51job.com www.51job.com www.51job.com
 27




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##### Table of Contents



www.51job.com www.51job.com 51job Weekly
 eHire eHire www.51job.com
  For the year ended December 31,2005
    
    2006
    
    2007Estimated unique employers using online recruitment services
    
    
    56,599
    
    
    
    74,950
    
    
    
    94,125
 www.51job.com
 
    
    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.
 www.51job.com
 51job Weekly www.51job.com 51job Weekly www.51job.com 51job Weekly
 Executive Search  eSearch eSearch
 28




---



##### Table of Contents



Other Human Resource Related Services
      Future Future Human
Capital
   Technology
  51job Weekly www.51job.com
  29




---



##### Table of Contents



Competition
  Print Advertising
 51job Weekly Beijing Evening News Guangzhou Daily Shanghai Talent Market Shenzhen Special Zone Daily.
 Online Recruitment Services
 Zhaopin.com ChinaHR.com Cjol.com Zhaopin.com
 NetEase.com QQ.com Sina.com Sohu.com Tom.com ChinaHR.com ChinaHR.com Zhaopin.com Zhaopin.com
 Other Services
  Customers
  30




---



##### Table of Contents



Sales and Marketing
  
    
    job seekers;
    
    employers with hiring and/or training needs; and
    
    human resource departments with actual or potential outsourcing needs.
 Direct Marketing
 Event Marketing 51job
Weekly 51job Weekly www.51job.com
 Mass Media Advertising
 Online Marketing
 Cross-Marketing 51job Weekly www.51job.com Future 51job Weekly www.51job.com
 Media Promotions
 Intellectual Property and Proprietary Rights
 www.51job.com
 51job.com  eHire  eSearch  51job.com   51job.com
 www.51job.com
 31




---



##### Table of Contents



www.51job.com
   Regulation
   Limitations on Foreign Ownership of Our Businesses
 Advertising
  
    
    Foreign Investment Industrial Guidance Catalogue (2004); and
    
    Regulations on Administration of Foreign Investment in Advertising Enterprises (2004).
  Human Resource Services Companies
  32




---



##### Table of Contents



Internet Content Providers
   
    
    Administrative Rules for Foreign Investments in Telecommunications Enterprises (2001); and
    
    Foreign Investment Industry Guidance Catalogue (2007).
  General Regulation of Our Businesses
 Advertising
  
    
    Advertising Law (1994);
    
    Administration of Advertising Regulations (1987);
    
    Implementation Rules on Administration of Advertising Regulations (2004); and
    
    Measures for the Administration of Advertising Business Licenses (2005).
  Human Resource
  Internet Content Services and Online Commerce
  
    
    Telecommunications Regulations (2000);
    
    The Administrative Measures for Telecommunications Business Operating Licenses (2001); and
    
    The Internet Information Services Administrative Measures (2000).
   33




---



##### Table of Contents



Regulations Relating to Our Intellectual Property Rights
     Regulations Relating to Internet Privacy
   Regulation of Foreign Currency Exchange and Dividend Distribution
 Foreign Currency Exchange
   34




---



##### Table of Contents



Dividend Distribution
  
    
    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;
    
    Sino-foreign Equity Joint Venture Enterprise Law Implementing Rules (1983), as amended; and
    
    PRC Enterprise Income Tax Law and its Implementation Rules (2007).
  C. Organizational Structure
  35




---



##### Table of Contents



(1)
    
    Does not include Wang Jin Information Technology (Shanghai) Co., Ltd. and Shanghai Wang Ju
Advertising Co., Ltd., both of which are wholly owned subsidiaries of 51net established in the
PRC with no current operations.(2)
    
    Includes the subsidiaries and branches of AdCo that conduct advertising businesses as well as
Shanghai Cheng An Human Resources Co., Ltd., a company providing outsourcing services which is
90% owned by AdCo and 10% owned by Run An. Hefei Wu You Culture Communication Co., Ltd., an
AdCo subsidiary, is 80% owned by AdCo and 20% owned by Qian Cheng.(3)
    
    Excludes Wuhan AdCo and Wang Cai AdCo, which are set out separately in the chart. 36




---



##### Table of Contents




    
    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 and Shanghai Wang Ju Human Resource
Consulting Co., Ltd., or Wang Ju, which hold licenses 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.comwebsite.
   
    
    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, with exception to the effectiveness of the
equity pledge agreements, which are subject to registration with the relevant
administrations of industry and commerce, and the trademark license agreement, which may
not be enforceable against bona fide third parties until registration with the relevant
trademark administration authorities; and
    
    except as otherwise disclosed herein, our current business operations as described in
this annual report are not in violation of existing PRC laws, rules and regulations in all
material aspects.
    37




---



##### Table of Contents



Description of the Material Group Entities
 51net
 51job.com  www.51job.com
 Tech JV
  Qian Cheng
  RAL
 www.51job.com
 AdCo and the AdCo Subsidiaries
  WFOE
  38




---



##### Table of Contents



Wang Ju
  D. Property, Plants and Equipment
    
 ITEM 4A. UNRESOLVED STAFF COMMENTS
  
 ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS
  A. Overview
   39




---



##### Table of Contents



Revenues
   For the year ended December 31,2005
    
    2006
    
    2007Revenues:Print advertising
    
    
    59.8
    %
    
    
    55.8
    %
    
    
    51.0
    %Online recruitment services
    
    
    26.8
    
    
    
    31.5
    
    
    
    33.5Executive search
    
    
    4.4
    
    
    
    2.9
    
    
    
    1.9Other human resource related revenues
    
    
    9.0
    
    
    
    9.8
    
    
    
    13.6Total revenues
    
    
    100.0
    %
    
    
    100.0
    %
    
    
    100.0
    %
  2005
    
    2006
    
    2007compared to
    
    compared to
    
    compared to2004
    
    2005
    
    2006Print advertising
    
    
    18.5
    %
    
    
    9.3
    %
    
    
    10.5
    %Online recruitment services
    
    
    43.0
    
    
    
    37.8
    
    
    
    28.6Executive search
    
    
    5.6
    
    
    
    (24.2
    )
    
    
    (19.3
    )Other human resource related revenues
    
    
    24.8
    
    
    
    28.2
    
    
    
    67.5Total revenues
    
    
    24.1
    %
    
    
    17.2
    %
    
    
    21.0
    %
 Recruitment Related Revenues
 51job
Weekly www.51job.com eSearch
 Print Advertising Revenues. 51job
Weekly 51job Weekly 51job Weekly
  40




---



##### Table of Contents



51job Weekly
 51job Weekly
  Online Recruitment Services Revenues. www.51job.com eHire www.51job.com www.51job.com
   41




---



##### Table of Contents



51job Weekly
 Executive Search Revenues. eSearch
 Other Human Resource Related Revenues
   Net Revenues and Business Taxes
  42




---



##### Table of Contents



Costs
   For the year ended December 31,2005
    
    2006
    
    2007Cost of services
    
    
    (47.9
    %)
    
    
    (44.6
    %)
    
    
    (43.7
    %)Total operating expenses
    
    
    (38.4
    %)
    
    
    (38.0
    %)
    
    
    (38.7
    %)
   Cost of Services
  Operating Expenses
  43




---



##### Table of Contents



For the year ended December 31,2005
    
    2006
    
    2007Operating expenses:Sales and marketing
    
    
    (20.5
    %)
    
    
    (20.7
    %)
    
    
    (22.7
    %)General and administrative
    
    
    (17.9
    )
    
    
    (17.3
    )
    
    
    (16.0
    )Total operating expenses
    
    
    (38.4
    %)
    
    
    (38.0
    %)
    
    
    (38.7
    %)
 51job Weekly
  Income Taxation
      44




---



##### Table of Contents



Critical Accounting Policies
   Income Taxes
  45




---



##### Table of Contents



Share-Based Compensation
     46




---



##### Table of Contents



Basis for Consolidation and Our Relationships with Our Affiliated Variable Interest Entities
      Allowances for Doubtful Accounts
  Long-Lived Assets
  47




---



##### Table of Contents



Results of Operations
  For the year ended December 31,2005
    
    2006
    
    2007(in thousands, except percentages)
    
    RMB
    
    %
    
    RMB
    
    %
    
    RMB
    
    %Revenues:Print advertising
    
    
    356,285
    
    
    
    63.4
    
    
    
    389,535
    
    
    
    59.0
    
    
    
    430,621
    
    
    
    53.9Online recruitment services
    
    
    159,495
    
    
    
    28.4
    
    
    
    219,794
    
    
    
    33.3
    
    
    
    282,688
    
    
    
    35.4Executive search
    
    
    26,307
    
    
    
    4.7
    
    
    
    19,938
    
    
    
    3.0
    
    
    
    16,086
    
    
    
    2.0Other human resource related
revenues
    
    
    53,507
    
    
    
    9.5
    
    
    
    68,586
    
    
    
    10.4
    
    
    
    114,871
    
    
    
    14.3Total revenues
    
    
    595,594
    
    
    
    106.0
    
    
    
    697,853
    
    
    
    105.8
    
    
    
    844,266
    
    
    
    105.6Less: Business and related tax
    
    
    (33,568
    )
    
    
    (6.0
    )
    
    
    (38,010
    )
    
    
    (5.8
    )
    
    
    (44,982
    )
    
    
    (5.6
    )Net revenues
    
    
    562,026
    
    
    
    100.0
    
    
    
    659,843
    
    
    
    100.0
    
    
    
    799,284
    
    
    
    100.0Cost of services(1)
    
    
    (269,328
    )
    
    
    (47.9
    )
    
    
    (294,068
    )
    
    
    (44.6
    )
    
    
    (349,022
    )
    
    
    (43.7
    )Gross profit
    
    
    292,698
    
    
    
    52.1
    
    
    
    365,775
    
    
    
    55.4
    
    
    
    450,262
    
    
    
    56.3Operating expenses(1):Sales and marketing
    
    
    (115,095
    )
    
    
    (20.5
    )
    
    
    (136,770
    )
    
    
    (20.7
    )
    
    
    (181,230
    )
    
    
    (22.7
    )General and administrative
    
    
    (100,614
    )
    
    
    (17.9
    )
    
    
    (114,322
    )
    
    
    (17.3
    )
    
    
    (128,347
    )
    
    
    (16.0
    )Total operating expenses
    
    
    (215,709
    )
    
    
    (38.4
    )
    
    
    (251,092
    )
    
    
    (38.0
    )
    
    
    (309,577
    )
    
    
    (38.7
    )Income from operations
    
    
    76,989
    
    
    
    13.7
    
    
    
    114,683
    
    
    
    17.4
    
    
    
    140,685
    
    
    
    17.6Loss from foreign currency translation
    
    
    (11,320
    )
    
    
    (2.0
    )
    
    
    (9,440
    )
    
    
    (1.4
    )
    
    
    (18,134
    )
    
    
    (2.3
    )Interest and investment income
    
    
    20,385
    
    
    
    3.6
    
    
    
    20,744
    
    
    
    3.1
    
    
    
    24,635
    
    
    
    3.1Other income
    
    
    5,313
    
    
    
    1.0
    
    
    
    1,914
    
    
    
    0.3
    
    
    
    1,793
    
    
    
    0.2Income before income tax provision
    
    
    91,367
    
    
    
    16.3
    
    
    
    127,901
    
    
    
    19.4
    
    
    
    148,979
    
    
    
    18.6Income tax expense
    
    
    (29,945
    )
    
    
    (5.4
    )
    
    
    (28,560
    )
    
    
    (4.3
    )
    
    
    (45,402
    )
    
    
    (5.7
    )Net income
    
    
    61,422
    
    
    
    10.9
    
    
    
    99,341
    
    
    
    15.1
    
    
    
    103,577
    
    
    
    12.9(1) Share-based compensation expense:Included in cost of services
    
    
    (1,480
    )
    
    
    (0.3
    )
    
    
    (4,621
    )
    
    
    (0.7
    )
    
    
    (4,931
    )
    
    
    (0.6
    )Included in operating expenses:Sales and marketing
    
    
    (1,438
    )
    
    
    (0.3
    )
    
    
    (3,972
    )
    
    
    (0.6
    )
    
    
    (4,241
    )
    
    
    (0.5
    )General and administrative
    
    
    (11,635
    )
    
    
    (2.1
    )
    
    
    (19,926
    )
    
    
    (3.0
    )
    
    
    (20,479
    )
    
    
    (2.6
    )
 2007 Compared to 2006
 Total Revenues.
 
    
    Print Advertising.Our print advertising revenues increased 10.5% to RMB430.6 million
(US$59.0 million) in 2007 from RMB389.5 million in 2006. This increase was primarily due
to a higher number of recruitment advertisements placed in our editions of 51job Weeklyas
we increased customer penetration in our existing markets. We estimate that the number of
print advertising pages increased 31.4% to 16,568 in 2007 from 12,609 in 2006. The
increase in revenues from greater advertisement volumes was partially offset by a 15.9%
decrease in our overall average revenue per page due to higher growth rates in lower
priced markets. We did not materially change the prices we charge for print advertising in
each local market in 2007.
    
    Online Recruitment Services.Our online recruitment services revenues increased 28.6%
to RMB282.7 million (US$38.8 million) in 2007 from RMB219.8 million in 2006. This increase
was mainly attributable to growth in the number of unique employers placing recruitment
and related advertisements on www.51job.comas well as greater use of our eHireweb-based
online resumé and recruitment management platform. We estimate that the number of unique
employers increased 25.6% to 94,125 in 2007 from 74,950 in 2006. The prices we charge for
our online recruitment services were generally unchanged in 2007. However, our average
revenue per unique employer in 2007 increased 2.4% over 2006 as a result of
 48




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##### Table of Contents



the greater number of customers purchasing multiple online recruitment services and the
migration of customers to higher priced products, both factors which increase our average
revenue per unique employer, more than offset the increase in new online customers, who
generally purchase basic, lower priced recruitment advertisements and decrease our average
revenue per unique employer.
    
    Executive Search.Our executive search revenues decreased 19.3% to RMB16.1 million
(US$2.2 million) in 2007 from RMB19.9 million in 2006, primarily as a result of fewer
candidate assignments.
    
    Other Human Resource Related Revenues. Our revenues from other human resource related
services increased 67.5% to RMB114.9 million (US$15.7 million) in 2007 from RMB68.6
million in 2006. This increase was primarily attributable to an increase in training
revenues as we conducted a greater number of seminars and added new course content as well
as an increase in business process outsourcing revenues from the growing number of
corporate customers and their employees we served.
 Net Revenues.
 Cost of Services. 51job Weekly
 Gross Profit.
 Operating Expenses.
 
    
    Sales and Marketing Expenses.Our sales and marketing expenses increased 32.5% to
RMB181.2 million (US$24.8 million) in 2007 from RMB136.8 million in 2006. This increase
was due to the expansion of our sales and marketing staff, higher employee salaries and
commissions, and greater spending on advertising and promotional activities. Our
advertising and promotion expenses in 2007 increased 79.6% to RMB34.1 million (US$4.7
million) from RMB19.0 million in 2006 due to a greater number of customer events and
activities as well as increased spending on brand advertising campaigns. Our sales and
marketing expenses in 2007 also included share-based compensation expense of RMB4.2
million (US$0.6 million) compared with RMB4.0 million in 2006.
    
    General and Administrative Expenses.Our general and administrative expenses increased
12.3% to RMB128.3 million (US$17.6 million) in 2007 from RMB114.3 million in 2006. This
increase was primarily due to a loss provision of RMB9.7 million (US$1.3 million) recorded
in the fourth quarter of 2007 relating to the non-compliance to contract terms by a third
party which provided services to us in connection with our human resource outsourcing
operations in Beijing. We have terminated our relationship with the third party contractor
and have been involved in an ongoing investigation of this contractor with the assistance
of local authorities. Due to the contractors non-compliance, we
have assessed that we face probable liability and have estimated a loss of RMB9.7 million (US$1.3 million)
related to this matter. We are exploring all legal options available to recover funds from
the third party contractor. However, the outcome of the investigation and our ability to
recover funds is unclear.In addition to the loss provision, our general and administrative expenses increased in
2007 due to higher employee compensation and depreciation and amortization expenses which
were partially offset by lower office rent and professional services fees. Our general and
administrative expenses in 2007 included share-based compensation expense of RMB20.5
million (US$2.8 million) compared with RMB19.9 million in 2006.
 49




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##### Table of Contents



Loss from Foreign Currency Translation.
 Interest and Investment Income.
 Income Tax Expense.
 Net Income.
 2006 Compared to 2005
 Total Revenues.
 
    
    Print Advertising.Our print advertising revenues increased 9.3% to RMB389.5 million in
2006 from RMB356.3 million in 2005. This growth was primarily due to a greater volume of
print advertisements in our editions of 51job Weekly,which reflected increased
penetration in existing markets and our sales and marketing efforts, as well as higher
overall average revenue per page. We estimate that the number of print advertising pages
increased 6.1% to 12,609 in 2006 from 11,884 in 2005. Our overall average revenue per page
rose approximately 3.0% over 2005 as a result of modest price increases we made for
certain print advertisement products in some cities in late 2005.
    
    Online Recruitment Services.Our online recruitment services revenues increased 37.8%
to RMB219.8 million in 2006 from RMB159.5 million in 2005. This increase was primarily the
result of significant growth in the number of unique employers using our online
recruitment services complemented by a modest increase in our average revenue per unique
employer. We estimate that the number of unique employers increased 32.4% to 74,950 in
2006 from 56,599 in 2005, mainly due to our greater sales and marketing efforts and
increased customer acceptance of the Internet as a channel for recruitment advertising.
Although the prices we charge were generally unchanged in 2006, our average revenue per
unique employer in 2006 increased 4.1% from 2005 as the employers who purchased multiple
online services or higher priced products offset the first-time customers who generally
purchase discounted introductory and promotional online recruitment services packages.
    
    Executive Search.Our executive search revenues decreased 24.2% to RMB19.9 million in
2006 from RMB26.3 million in 2005 due to fewer candidate assignments and case closings.
    
    Other Human Resource Related Revenues. Our revenues from other human resource related
services increased 28.2% to RMB68.6 million in 2006 from RMB53.5 million in 2005. This
increase was primarily driven by growth in sales of training and outsourcing services.
Training revenues grew as a result of an increase in the number of public and in-house
seminars we conducted in 2006. In addition, we believe the increase in revenues from our
human resource outsourcing business reflected growing customer acceptance and demand for
these services as well as our sales and marketing efforts.
 Net Revenues.
 Cost of Services. 51job Weekly
 50




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##### Table of Contents



Gross Profit.
 Operating Expenses.
 
    
    Sales and Marketing Expenses.Our sales and marketing expenses increased 18.8% to
RMB136.8 million in 2006 from RMB115.1 million in 2005. This increase was primarily due to
increases in commissions and bonuses paid to sales personnel, the hiring of additional
sales and marketing staff, increases in employee salaries and benefits, increases in
marketing and promotional expenses, and the addition of a new sales office in Tianjin in
2006. We calculate commissions based on a percentage of total revenues generated by a
salesperson. In addition, we pay bonuses to account executives for achieving and exceeding
certain sales targets and goals. Our total advertising and promotion expenses in 2006
decreased 11.1% to RMB19.0 million from RMB21.4 million in 2005 due to lower advertising
expenses which were partially offset by higher promotion expenses from conducting a
greater number of promotional events and other brand awareness activities. Our sales and
marketing expenses in 2006 also included an increase in share-based compensation expense
to RMB4.0 million from RMB1.4 million in 2005 due to the adoption of SFAS No. 123R.
    
    General and Administrative Expenses.Our general and administrative expenses increased
13.6% to RMB114.3 million in 2006 from RMB100.6 million in 2005. This increase was
primarily due to higher share-based compensation expense, hiring of additional office
staff, higher employee salaries and bonuses, higher professional services fees, and costs
associated with our purchase of office facilities in Shanghai, including greater
depreciation expenses, moving and renovation expenses, and office management fees. Our
general and administrative expenses in 2006 included a 71.3% increase in share-based
compensation expense to RMB19.9 million from RMB11.6 million in 2005 due to the adoption
of SFAS No. 123R.
 Loss from Foreign Currency Translation.
 Interest and Investment Income.
 Income Tax Expense.
 Net Income.
 Inflation
  Unaudited Quarterly Results of Operations
  51




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For the three months ended,March 31,
    
    June 30,
    
    September 30,
    
    December 31,2007
    
    2007
    
    2007
    
    2007(in thousands)
    
    RMB
    
    RMB
    
    RMB
    
    RMBRevenues:Print advertising
    
    
    113,557
    
    
    
    107,569
    
    
    
    114,065
    
    
    
    95,430Online recruitment services
    
    
    61,585
    
    
    
    71,203
    
    
    
    73,018
    
    
    
    76,882Executive search
    
    
    3,852
    
    
    
    4,676
    
    
    
    3,592
    
    
    
    3,966Other human resource related revenues
    
    
    21,491
    
    
    
    26,497
    
    
    
    29,558
    
    
    
    37,325Total revenues
    
    
    200,485
    
    
    
    209,945
    
    
    
    220,233
    
    
    
    213,603Net revenues
    
    
    189,382
    
    
    
    199,170
    
    
    
    208,456
    
    
    
    202,276Cost of services(1)
    
    
    (84,850
    )
    
    
    (84,076
    )
    
    
    (90,657
    )
    
    
    (89,439
    )Gross profit
    
    
    104,532
    
    
    
    115,094
    
    
    
    117,799
    
    
    
    112,837Operating expenses(1):Sales and marketing
    
    
    (33,776
    )
    
    
    (42,232
    )
    
    
    (50,548
    )
    
    
    (54,674
    )General and administrative
    
    
    (28,915
    )
    
    
    (29,804
    )
    
    
    (31,866
    )
    
    
    (37,762
    )Total operating expenses
    
    
    (62,691
    )
    
    
    (72,036
    )
    
    
    (82,414
    )
    
    
    (92,436
    )Income from operations
    
    
    41,841
    
    
    
    43,058
    
    
    
    35,385
    
    
    
    20,401Income before income tax provision
    
    
    44,502
    
    
    
    45,126
    
    
    
    38,756
    
    
    
    20,595Income tax expense
    
    
    (12,347
    )
    
    
    (14,095
    )
    
    
    (12,078
    )
    
    
    (6,882
    )Net income
    
    
    32,155
    
    
    
    31,031
    
    
    
    26,678
    
    
    
    13,713(1) Share-based compensation expense:Included in cost of services
    
    
    (1,184
    )
    
    
    (1,168
    )
    
    
    (1,300
    )
    
    
    (1,279
    )Included in operating expenses:Sales and marketing
    
    
    (1,017
    )
    
    
    (1,005
    )
    
    
    (1,119
    )
    
    
    (1,100
    )General and administrative
    
    
    (5,187
    )
    
    
    (4,648
    )
    
    
    (5,698
    )
    
    
    (4,946
    )
 B. Liquidity and Capital Resources
  Liquidity
   For the year ended December 31,2005
    
    2006
    
    2007
    
    2007(in thousands)
    
    RMB
    
    RMB
    
    RMB
    
    US$Net cash provided by operating activities
    
    
    122,026
    
    
    
    185,229
    
    
    
    193,315
    
    
    
    26,501Net cash used in investing activities
    
    
    (54,391
    )
    
    
    (144,402
    )
    
    
    (41,248
    )
    
    
    (5,655
    )Net cash provided by (used in) financing
activities
    
    
    (74,098
    )
    
    
    6,099
    
    
    
    4,470
    
    
    
    613Net increase (decrease) in cash
    
    
    (17,659
    )
    
    
    38,064
    
    
    
    138,822
    
    
    
    19,031
 Cash Flows from Operating Activities.
 52




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Cash Flows from Investing Activities.
 Cash Flows from Financing Activities.
 Capital Resources
     53




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C. Research and Development
  D. Trend Information
  E. Off-Balance Sheet Arrangements
  F. Contractual Obligations
 51job Weekly
  CapitalOperating Lease Commitments
    
    CommitmentsPublication
    
    Office
    
    
    
    
    
    Officefees
    
    premises
    
    Others
    
    equipment
    
    Total(in thousands)
    
    RMB
    
    RMB
    
    RMB
    
    RMB
    
    RMBLess than one year
    
    
    51,912
    
    
    
    14,775
    
    
    
    11,709
    
    
    
    929
    
    
    
    79,3251-3 years
    
    
    31,398
    
    
    
    20,426
    
    
    
    3,508
    
    
    
    
    
    
    
    55,3323-5 years
    
    
    960
    
    
    
    5,033
    
    
    
    72
    
    
    
    
    
    
    
    6,065More than 5 years
    
    
    600
    
    
    
    24,345
    
    
    
    1,521
    
    
    
    
    
    
    
    26,466Total
    
    
    84,870
    
    
    
    64,579
    
    
    
    16,810
    
    
    
    929
    
    
    
    167,188
    54




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Recent Accounting Pronouncements
       55




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##### Table of Contents



ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES
 A. Directors and Senior Management
  Name
    
    Age
    
    Position / TitleDonald L. Lucas(1) (2)
    
    
    78
    
    
    Chairman of the board and independent directorRick Yan.
    
    
    45
    
    
    Director, chief executive officer, president and secretaryDavid K. Chao(1) (2) (3)
    
    
    41
    
    
    Independent directorDr. Xiaoyue Chen(1) (3)
    
    
    61
    
    
    Independent directorHiroyuki Honda(4)
    
    
    47
    
    
    Non-executive directorKathleen Chien
    
    
    38
    
    
    Chief financial officer and senior vice presidentDavid Weimin Jin
    
    
    38
    
    
    Senior vice presidentTao Wang
    
    
    45
    
    
    Vice presidentJones Haijun Yu
    
    
    35
    
    
    Vice president
 
 (1)
    
    Member of audit committee.(2)
    
    Member of compensation committee.(3)
    
    Member of nominating and corporate governance committee.(4)
    
    Pursuant to the share purchase agreement between Recruit Co., Ltd., or Recruit, and the
selling shareholders, each of the 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. Mr. Hiroyuki Honda, Recruits nominee, was elected to our board
of directors on July 28, 2006.  Biographical Information
 Donald L. Lucas
 Rick Yan
 David K. Chao
 56




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##### Table of Contents



Dr. Xiaoyue Chen
 Hiroyuki Honda
 Kathleen Chien
 David Weimin Jin
 Tao Wang
 Jones Haijun Yu
 B. Compensation
 Compensation of Directors and Executive Officers
  57




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##### Table of Contents



Directors and Officers Liability Insurance
  Employment Agreements
  Stock-Based Compensation Plans
       58




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Common sharesunderlying optionsgranted
    
    Exercise price
    
    Date of grant
    
    Date of expirationUS$Granted in 2005Rick Yan
    
    
    160,800
    
    
    
    8.695
    
    
    April 22, 2005
    
    April 21, 2011David K. Chao
    
    
    40,000
    
    
    
    7.00
    
    
    July 25, 2005
    
    July 24, 2011Kathleen Chien
    
    
    81,600
    
    
    
    8.695
    
    
    April 22, 2005
    
    April 21, 2011David Weimin Jin
    
    
    40,800
    
    
    
    8.695
    
    
    April 22, 2005
    
    April 21, 2011Tao Wang
    
    
    21,600
    
    
    
    8.695
    
    
    April 22, 2005
    
    April 21, 2011Jones Haijun Yu
    
    
    31,200
    
    
    
    8.695
    
    
    April 22, 2005
    
    April 21, 2011Other employees
    
    
    343,200
    
    
    
    8.695
    
    
    April 22, 2005
    
    April 21, 201130,000
    
    
    
    6.25
    
    
    November 6, 2005
    
    November 10, 2011749,200Granted in 2006Donald L. Lucas
    
    
    40,032
    
    
    
    8.365
    
    
    April 3, 2006
    
    April 2, 2012Rick Yan
    
    
    160,800
    
    
    
    8.365
    
    
    April 3, 2006
    
    April 2, 2012David K. Chao
    
    
    40,032
    
    
    
    8.365
    
    
    April 3, 2006
    
    April 2, 2012Hiroyuki Honda
    
    
    14,976
    
    
    
    9.83
    
    
    July 28, 2006
    
    July 27, 2012Kathleen Chien
    
    
    81,600
    
    
    
    8.365
    
    
    April 3, 2006
    
    April 2, 2012David Weimin Jin
    
    
    31,200
    
    
    
    8.365
    
    
    April 3, 2006
    
    April 2, 2012Tao Wang
    
    
    31,200
    
    
    
    8.365
    
    
    April 3, 2006
    
    April 2, 2012Jones Haijun Yu
    
    
    31,200
    
    
    
    8.365
    
    
    April 3, 2006
    
    April 2, 2012Other employees
    
    
    437,952
    
    
    
    8.365
    
    
    April 3, 2006
    
    April 2, 2012868,992Granted in 2007Donald L. Lucas
    
    
    40,032
    
    
    
    8.795
    
    
    April 16, 2007
    
    April 15, 2013160,128
    
    
    
    8.77
    
    
    May 25, 2007
    
    May 24, 2013Rick Yan
    
    
    100,032
    
    
    
    8.795
    
    
    April 16, 2007
    
    April 15, 2013David K. Chao
    
    
    40,032
    
    
    
    8.795
    
    
    April 16, 2007
    
    April 15, 201340,032
    
    
    
    9.355
    
    
    August 8, 2007
    
    August 7, 2013Dr. Xiaoyue Chen
    
    
    60,096
    
    
    
    9.355
    
    
    April 16, 2007
    
    April 15, 2013Hiroyuki Honda
    
    
    14,976
    
    
    
    8.795
    
    
    April 16, 2007
    
    April 15, 201330,048
    
    
    
    8.80
    
    
    September 24, 2007
    
    September 23, 2013Kathleen Chien
    
    
    81,600
    
    
    
    8.795
    
    
    April 16, 2007
    
    April 15, 2013David Weimin Jin
    
    
    81,600
    
    
    
    8.795
    
    
    April 16, 2007
    
    April 15, 2013Tao Wang
    
    
    48,000
    
    
    
    8.795
    
    
    April 16, 2007
    
    April 15, 2013Jones Haijun Yu
    
    
    48,000
    
    
    
    8.795
    
    
    April 16, 2007
    
    April 15, 2013Other employees
    
    
    444,576
    
    
    
    8.795
    
    
    April 16, 2007
    
    April 15, 20131,189,152
 C. Board Practices
  Board Committees
  Audit Committee
  59




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
    
    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
   
    
    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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##### Table of Contents




    
    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
   
    
    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
   
    
    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
  61




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Remuneration and Borrowing
  Qualification
  Terms of Directors and Executive Officers
  Limitation on Liability and Other Indemnification Matters
    62




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##### Table of Contents



D. Employees
  Sales and account management
    
    
    1,615Marketing and merchandising
    
    
    856Technology and online operations
    
    
    497Customer service and production
    
    
    461Search and training consultants
    
    
    160General and administrative
    
    
    352Total
    
    
    3,941
    *
 
 *
    
    Includes 838 temporary, part-time and contract employees.  E. Share Ownership
  
 ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS
 A. Major Shareholders
  
    
    by each of our directors and executive officers; and
    
    each person known to us to own beneficially more than 5% of our common shares.
  63




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Common shares beneficially ownedNumber
    
    
    %Directors and executive officers:Rick Yan
    
    
    15,316,996
    
    
    
    26.9David K. Chao(1)
    
    
    10,229,598
    
    
    
    18.0Kathleen Chien
    
    
    1,763,958
    
    
    
    3.1David Weimin Jin
    
    
    90,200
    
    
    
    *Donald L. Lucas
    
    
    81,732
    
    
    
    *Tao Wang
    
    
    72,300
    
    
    
    *Jones Haijun Yu
    
    
    57,900
    
    
    
    *Hiroyuki Honda(2)
    
    
    18,428
    
    
    
    *Dr. Xiaoyue Chen
    
    
    
    
    
    
    All directors and executive officers as a group
    
    
    27,631,112
    
    
    
    48.2Principal shareholders:Rick Yan
    
    
    15,316,996
    
    
    
    26.9Recruit Co., Ltd.(2)
    
    
    12,325,199
    
    
    
    21.8Entities affiliated with DCM(3)
    
    
    9,754,329
    
    
    
    17.2Noonday Asset Management, L.P.(4)
    
    
    2,861,158
    
    
    
    5.1
 
 (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 and Peter Moran; 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 beneficial ownership
of 433,577 common shares by David K. Chao. The address of David K. Chao and the entities
affiliated with DCM is 2420 Sand Hill Road, Suite 200, Menlo Park, CA 94025.(2)
    
    The address for Hiroyuki Honda and Recruit Co., Ltd. is GranTokyo South Tower, 1-9-2
Marunouchi, Chiyoda-ku, Tokyo 100-6640, Japan.(3)
    
    Name and number of shares owned by each entity affiliated with DCM are described in Note (1)
above.(4)
    
    Based on their Schedule 13G filing with the Securities and Exchange Commission on January 28,
2008. The address for Noonday Asset Management, L.P. is 227 West Trade Street, Suite 2140,
Charlotte, NC 28202.*
    
    Less than 1%.   64




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B. Related Party Transactions
 Contractual Arrangements Among Our Group Entities
  
 Technical and Consulting Service Agreements
 Qian Cheng Technical and Consulting Service Agreement.
 RAL Technical and Consulting Service Agreement
 Run An Technical and Consulting Service Agreement
 Equity Pledge Agreements
 Qian Cheng Equity Pledge Agreement.
 65




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RAL Equity Pledge Agreement.
 Run An Equity Pledge Agreement.
 Other Agreements
 Loan Agreements.
 66




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##### Table of Contents



Tech JV and RAL Cooperation Agreement. www.51job.com
 Domain Name License Agreement. www.51job.com
 Call Option Agreement.
  Stock Option Grants
  Loans and Advances
  Business Alliance with Recruit
   67




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##### Table of Contents



Investment in Coupon Advertising Services Company with Recruit
  C. Interests of Experts and Counsel
  
 ITEM 8. FINANCIAL INFORMATION
 A. Consolidated Statements and Other Financial Information
  Legal Proceedings
  www.51job.com
 Dividend Policy
   68




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##### Table of Contents



B. Significant Changes
  
 ITEM 9. THE OFFER AND LISTING
 A. Offer and Listing Details
   Sales priceHigh
    
    LowUS$
    
    US$Annual highs and lows2004(1)
    
    
    55.55
    
    
    
    18.612005
    
    
    53.50
    
    
    
    9.712006
    
    
    31.90
    
    
    
    12.702007
    
    
    25.44
    
    
    
    14.02Quarterly highs and lowsFirst quarter 2006
    
    
    19.49
    
    
    
    14.40Second quarter 2006
    
    
    31.90
    
    
    
    15.50Third quarter 2006
    
    
    23.79
    
    
    
    13.20Fourth quarter 2006
    
    
    18.46
    
    
    
    12.70First quarter 2007
    
    
    18.39
    
    
    
    14.02Second quarter 2007
    
    
    19.44
    
    
    
    15.52Third quarter 2007
    
    
    20.98
    
    
    
    15.55Fourth quarter 2007
    
    
    25.44
    
    
    
    17.59First quarter 2008
    
    
    19.66
    
    
    
    16.01Monthly highs and lowsDecember 2007
    
    
    20.16
    
    
    
    17.71January 2008
    
    
    19.56
    
    
    
    16.05February 2008
    
    
    19.25
    
    
    
    17.46March 2008
    
    
    19.66
    
    
    
    16.01April 2008
    
    
    18.42
    
    
    
    16.27May 2008
    
    
    20.50
    
    
    
    17.86June 2008 (through June 26, 2008)
    
    
    19.94
    
    
    
    17.79
 
 (1)
    
    Our ADSs commenced trading on September 29, 2004. B. Plan of Distribution
  C. Markets
  D. Selling Shareholders
  E. Dilution
  69




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##### Table of Contents



F. Expenses of the Issue
  
 ITEM 10. ADDITIONAL INFORMATION
 A. Share Capital
  B. Memorandum and Articles of Association
  C. Material Contracts
    D. Exchange Controls
    70




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E. Taxation
 Cayman Islands Taxation
  United States Federal Income Taxation
   
    
    dealers in securities or currencies;
    
    regulated investment companies;
    
    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;
    
    partnerships or other pass-through entities for U.S. federal income tax purposes;
    
    persons who own or are deemed to own more than 10% of our voting shares; or
    
    persons whose functional currency is not the U.S. dollar.
    
    
    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
 
 71




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##### Table of Contents




    
    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.
   ADSs
  Distributions on ADSs or Common Shares
  
    
    a foreign corporation that is eligible for the benefits of a comprehensive income tax
treaty with the United States which the U.S. Treasury determines to be satisfactory for
these purposes and which 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,
   72




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Sale, Exchange or Other Disposition of ADSs or Common Shares
  Passive Foreign Investment Company Rules
    73




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##### Table of Contents



Information Reporting and Backup Withholding
  74




---



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Enforceability of Civil Liabilities
       F. Dividends and Paying Agents
  G. Statements by Experts
  H. Documents on Display
   75




---



##### Table of Contents



www.sec.gov
   I. Subsidiary Information
  
 ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
 Interest Rate Risk
   Foreign Exchange Risk
   
 ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES
  76




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PART II
 
 ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES
  
 ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS
  
 ITEM 15. CONTROLS AND PROCEDURES
 Evaluation of Disclosure Controls and Procedures
  Report of Management on Internal Control over Financial Reporting
   Internal Control-Integrated Framework
  Changes in Internal Controls
  
 ITEM 16A. AUDIT COMMITTEE FINANCIAL EXPERT
  77




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ITEM 16B. CODE OF ETHICS
 ir.51job.com
 
 ITEM 16C. PRINCIPAL ACCOUNTANT FEES AND SERVICES
  2006
    
    2007
    
    2007(in thousands)
    
    RMB
    
    RMB
    
    US$Audit fees
    
    
    4,457
    
    
    
    5,352
    
    
    
    733
 Pre-Approved Policies and Procedures
  
 ITEM 16D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES
  
 ITEM 16E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS
  78




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PART III
 
 ITEM 17. FINANCIAL STATEMENTS
  
 ITEM 18. FINANCIAL STATEMENTS
  
 ITEM 19. EXHIBIT INDEX
 Exhibits
    
    Description1.1
    
    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
    
    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)4.5*
    
    Loan Agreements dated as of September 11, 2007 between Qianjin
Network Information Technology (Shanghai) Co., Ltd. and the
shareholders of Beijing Run An Information Consultancy Co., Ltd.4.6
    
    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)4.7
    
    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)
 79




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##### Table of Contents



Exhibits
    
    Description4.8*
    
    Technical and Consulting Service Agreement dated as of September 11, 2007
between Beijing Run An Information Consultancy Co. Ltd. and Qian Cheng Wu
You Network Information Technology (Beijing) Co., Ltd.4.9
    
    Equity Pledge Agreement dated as of May 3, 2004 between Qian Cheng Wu You
Network Information Technology (Beijing) Co., Ltd. and the shareholders of
Shanghai Run An Lian Information Consultancy 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)4.10
    
    Equity Pledge Agreement dated as of May 3, 2004 between Qian Cheng Wu You
Network Information Technology (Beijing) Co., Ltd. and the shareholders of
Beijing Qian Cheng Si Jin Advertising 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)4.11*
    
    Equity Pledge Agreement dated as of September 11, 2007 between Qian Cheng
Wu You Network Information Technology (Beijing) Co., Ltd. and the
shareholders of Beijing Run An Information Consultancy Co., Ltd.4.12*
    
    Investment Capital Transfer Agreement dated as of September 11, 2007 among
the shareholders of Beijing Run An Information Consultancy Co., Ltd.4.13*
    
    Share Transfer Agreement dated as of November 20, 2007 among the
shareholders of Shanghai Run An Lian Information Consultancy Co. Ltd.4.14*
    
    Share Transfer Agreement dated as of November 12, 2007 between the
shareholders of Beijing Qian Cheng Si Jin Advertising Co., Ltd.4.15
    
    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)4.16
    
    Supplemental Agreement to the Cooperation Agreement effective as of April
1, 2007 between Shanghai Run An Lian Information Consultancy Co., Ltd. and
Qianjin Network Information Technology (Shanghai) Co., Ltd. (Incorporated
by reference to Exhibit 4.10 from our Annual Report on Form 20-F for the
year ended December 31, 2006 filed with the Securities and Exchange
Commission on June 28, 2007)4.17
    
    Domain Name License Agreement dated as of May 3, 2006 between Shanghai Run
An Lian Information Consultancy Co., Ltd. and 51net.com Inc. (Incorporated
by reference to Exhibit 4.10 from our Annual Report on Form 20-F for the
year ended December 31, 2006 filed with the Securities and Exchange
Commission on June 28, 2007)4.18
    
    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)4.19
    
    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)4.20
    
    Business Alliance Agreement dated as of April 5, 2006 between 51job, Inc.
and Recruit Co., Ltd. (Incorporated by reference to Exhibit 4.18 from our
Annual Report on Form 20-F for the year ended December 31, 2005 filed with
the Securities and Exchange Commission on June 29, 2006)4.21*
    
    Cooperation Agreement dated as of August 9, 2007, as amended as of March
27, 2008, 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 200212.2*
    
    CFO Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
 80




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##### Table of Contents



Exhibits
    
    Description13.1*
    
    CEO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 200213.2*
    
    CFO Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 200215.1*
    
    Consent of Maples and Calder15.2*
    
    Consent of Jun He Law Offices15.3*
    
    Consent of PricewaterhouseCoopers Zhong Tian CPAs Limited Company
 
 *
    
    Filed with this annual report on Form 20-F. 81




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##### Table of Contents



SIGNATURES
  51job, Inc.By:
    /s/ Rick YanName:
    Rick YanTitle:
    President and Chief Executive Officer




---



##### 



51JOB, INC.
 INDEX TO CONSOLIDATED FINANCIAL STATEMENTS
 PageReport of Independent Registered Public Accounting Firm
    
    F-2Consolidated Statements of Operations and Comprehensive Income for the years ended
December 31, 2005, 2006 and 2007
    
    F-3Consolidated Balance Sheets as of December 31, 2006 and 2007
    
    F-4Consolidated Statements of Shareholders Equity for the years ended December 31, 2005, 2006
and 2007
    
    F-5Consolidated Statements of Cash Flows for the years ended December 31, 2005, 2006 and 2007
    
    F-6Notes to the Consolidated Financial Statements for the years ended December 31, 2005, 2006
and 2007
    
    F-7Additional Information  Financial Statement Schedule I
    
    F-24
  F-1




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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 To the Board of Directors and Shareholders of 51job, Inc.:
 Internal Control  Integrated Framework
    
 F-2




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##### Table of Contents



51JOBS, INC.
 
 CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 (in thousands, except number of shares and
    
    Note
    
    2005
    
    2006
    
    2007
    
    2007per share data)
    
    
    
    
    
    RMB
    
    RMB
    
    RMB
    
    US$ (Note 2(c))Revenues:Print advertising
    
    
    
    
    
    
    356,285
    
    
    
    389,535
    
    
    
    430,621
    
    
    
    59,033Online recruitment services
    
    
    
    
    
    
    159,495
    
    
    
    219,794
    
    
    
    282,688
    
    
    
    38,753Executive search
    
    
    
    
    
    
    26,307
    
    
    
    19,938
    
    
    
    16,086
    
    
    
    2,205Other human resource related revenues
    
    
    
    
    
    
    53,507
    
    
    
    68,586
    
    
    
    114,871
    
    
    
    15,747Total revenues
    
    
    
    
    
    
    595,594
    
    
    
    697,853
    
    
    
    844,266
    
    
    
    115,738Less: Business and related taxes
    
    
    
    
    
    
    (33,568
    )
    
    
    (38,010
    )
    
    
    (44,982
    )
    
    
    (6,166
    )Net revenues
    
    
    
    
    
    
    562,026
    
    
    
    659,843
    
    
    
    799,284
    
    
    
    109,572Cost of services(1)
    
    
    
    
    
    
    (269,328
    )
    
    
    (294,068
    )
    
    
    (349,022
    )
    
    
    (47,847
    )Gross profit
    
    
    
    
    
    
    292,698
    
    
    
    365,775
    
    
    
    450,262
    
    
    
    61,725Operating expenses(1):Sales and marketing
    
    
    
    
    
    
    (115,095
    )
    
    
    (136,770
    )
    
    
    (181,230
    )
    
    
    (24,844
    )General and administrative
    
    
    
    
    
    
    (100,614
    )
    
    
    (114,322
    )
    
    
    (128,347
    )
    
    
    (17,595
    )Total operating expenses
    
    
    
    
    
    
    (215,709
    )
    
    
    (251,092
    )
    
    
    (309,577
    )
    
    
    (42,439
    )Income from operations
    
    
    
    
    
    
    76,989
    
    
    
    114,683
    
    
    
    140,685
    
    
    
    19,286Loss from foreign currency translation
    
    
    
    
    
    
    (11,320
    )
    
    
    (9,440
    )
    
    
    (18,134
    )
    
    
    (2,486
    )Interest and investment income
    
    
    
    
    
    
    20,385
    
    
    
    20,744
    
    
    
    24,635
    
    
    
    3,377Other income
    
    
    
    
    
    
    5,313
    
    
    
    1,914
    
    
    
    1,793
    
    
    
    245Income before provision for income tax
    
    
    
    
    
    
    91,367
    
    
    
    127,901
    
    
    
    148,979
    
    
    
    20,422Income tax expense
    
    
    8
    
    
    
    (29,945
    )
    
    
    (28,560
    )
    
    
    (45,402
    )
    
    
    (6,224
    )Net income
    
    
    
    
    
    
    61,422
    
    
    
    99,341
    
    
    
    103,577
    
    
    
    14,198Other comprehensive income:Currency translation adjustments
    
    
    
    
    
    
    388
    
    
    
    579
    
    
    
    419
    
    
    
    57Unrealized loss for investment
    
    
    
    
    
    
    (204
    )
    
    
    
    
    
    
    
    
    
    
    Comprehensive income
    
    
    
    
    
    
    61,606
    
    
    
    99,920
    
    
    
    103,996
    
    
    
    14,255Earnings per share:
    
    
    12 Basic
    
    
    
    
    
    
    1.10
    
    
    
    1.79
    
    
    
    1.84
    
    
    
    0.25 Diluted
    
    
    
    
    
    
    1.07
    
    
    
    1.76
    
    
    
    1.83
    
    
    
    0.25Earnings per ADS(2): Basic
    
    
    
    
    
    
    2.21
    
    
    
    3.58
    
    
    
    3.68
    
    
    
    0.50 Diluted
    
    
    
    
    
    
    2.15
    
    
    
    3.52
    
    
    
    3.66
    
    
    
    0.50Weighted average number of shares
outstanding: Basic
    
    
    
    
    
    
    55,607,716
    
    
    
    55,422,447
    
    
    
    56,279,193
    
    
    
    56,279,193 Diluted
    
    
    
    
    
    
    57,254,454
    
    
    
    56,409,260
    
    
    
    56,631,598
    
    
    
    56,631,598(1) Share-based compensation:Included in cost of services
    
    
    
    
    
    
    (1,480
    )
    
    
    (4,621
    )
    
    
    (4,931
    )
    
    
    (676
    )Included in operating expenses Sales and marketing
    
    
    
    
    
    
    (1,438
    )
    
    
    (3,972
    )
    
    
    (4,241
    )
    
    
    (581
    ) General and administrative
    
    
    
    
    
    
    (11,635
    )
    
    
    (19,926
    )
    
    
    (20,479
    )
    
    
    (2,807
    )
 
 (2)
    
    Each ADS represents two common shares.  F-3




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##### Table of Contents



51JOBS, INC.
 
 CONSOLIDATED BALANCE SHEETS
AS OF DECEMBER 31, 2006 AND 2007
 Note
    
    2006
    
    2007
    
    2007(in thousands, except number of shares and per share data)
    
    
    
    
    
    RMB
    
    RMB
    
    US$ (Note 2(c))ASSETSCurrent assets:Cash
    
    
    
    
    
    
    868,698
    
    
    
    1,007,520
    
    
    
    138,119Accounts receivable (net of allowance for doubtful
accounts of RMB2,612 and RMB3,879 as of December 31, 2006
and 2007, respectively)
    
    
    3
    
    
    
    28,431
    
    
    
    29,706
    
    
    
    4,072Prepayments and other current assets
    
    
    4
    
    
    
    18,064
    
    
    
    33,132
    
    
    
    4,542Deferred tax assets, current
    
    
    8
    
    
    
    4,383
    
    
    
    4,930
    
    
    
    676Total current assets
    
    
    
    
    
    
    919,576
    
    
    
    1,075,288
    
    
    
    147,409Long-term investments
    
    
    2
    (f)
    
    
    
    
    
    
    8,788
    
    
    
    1,205Property and equipment
    
    
    5
    
    
    
    194,315
    
    
    
    205,984
    
    
    
    28,238Intangible assets
    
    
    6
    
    
    
    9,363
    
    
    
    6,869
    
    
    
    942Other long-term assets
    
    
    
    
    
    
    3,857
    
    
    
    5,031
    
    
    
    690Deferred tax assets, non-current
    
    
    8
    
    
    
    504
    
    
    
    1,206
    
    
    
    164Total non-current assets
    
    
    
    
    
    
    208,039
    
    
    
    227,878
    
    
    
    31,239Total assets
    
    
    
    
    
    
    1,127,615
    
    
    
    1,303,166
    
    
    
    178,648LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Accounts payable
    
    
    
    
    
    
    9,692
    
    
    
    9,804
    
    
    
    1,344Due to related parties
    
    
    11
    
    
    
    464
    
    
    
    
    
    
    
    Salary and employee related accrual
    
    
    
    
    
    
    26,677
    
    
    
    29,064
    
    
    
    3,984Taxes payable
    
    
    
    
    
    
    23,751
    
    
    
    33,498
    
    
    
    4,592Advance from customers
    
    
    
    
    
    
    57,930
    
    
    
    75,535
    
    
    
    10,355Other payables and accruals
    
    
    7
    
    
    
    20,561
    
    
    
    28,214
    
    
    
    3,868Total current liabilities
    
    
    
    
    
    
    139,075
    
    
    
    176,115
    
    
    
    24,143Deferred tax liabilities, non-current
    
    
    8
    
    
    
    122
    
    
    
    516
    
    
    
    72Total liabilities
    
    
    
    
    
    
    139,197
    
    
    
    176,631
    
    
    
    24,215Commitments and contingencies
    
    
    13
    
    
    
    
    
    
    
    
    
    
    
    Shareholders equity:Common shares (US$0.0001 par value per share; 500,000,000
shares authorized, 56,119,761 and 56,519,471 shares
issued and outstanding as of December 31, 2006 and 2007,
respectively)
    
    
    
    
    
    
    46
    
    
    
    47
    
    
    
    6Additional paid-in capital
    
    
    
    
    
    
    859,899
    
    
    
    894,019
    
    
    
    122,559Statutory reserves
    
    
    
    
    
    
    4,849
    
    
    
    5,991
    
    
    
    821Other comprehensive income
    
    
    
    
    
    
    261
    
    
    
    680
    
    
    
    93Retained earnings
    
    
    
    
    
    
    123,363
    
    
    
    225,798
    
    
    
    30,954Total shareholders equity
    
    
    
    
    
    
    988,418
    
    
    
    1,126,535
    
    
    
    154,433Total liabilities and shareholders equity
    
    
    
    
    
    
    1,127,615
    
    
    
    1,303,166
    
    
    
    178,648
  F-4




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##### Table of Contents



51JOB,
INC.
 CONSOLIDATED STATEMENTS OF SHAREHOLDERS EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 Common shares
    
    
    
    
    
    
    Deferred
    
    
    
    
    
    
    Other
    
    
    
    
    
    
    TotalNumber
    
    
    
    
    
    
    Additional
    
    
    share-based
    
    
    Statutory
    
    
    Comprehensive
    
    
    Retained
    
    
    shareholdersof shares
    
    
    Par value
    
    
    paid-in capital
    
    
    compensation
    
    
    reserves
    
    
    (loss) income
    
    
    earnings
    
    
    equity(in thousands, except number of shares)
    
    
    
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    RMBBalance as of January 1, 2005
    
    
    55,616,679
    
    
    
    46
    
    
    
    869,126
    
    
    
    (40,154
    )
    
    
    16,756
    
    
    
    (502
    )
    
    
    6,546
    
    
    
    851,818Exercise of share options
    
    
    632,276
    
    
    
    1
    
    
    
    1,545
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,546Share-based compensation
    
    
    
    
    
    
    
    
    
    
    (2,459
    )
    
    
    17,013
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    14,554Reversal of statutory reserves
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (13,075
    )
    
    
    
    
    
    
    13,075
    
    
    
    Repurchase of common shares
    
    
    (1,372,876
    )
    
    
    (2
    )
    
    
    (19,789
    )
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (55,853
    )
    
    
    (75,644
    )Adjustment of other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    184
    
    
    
    
    
    
    
    184Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    61,422
    
    
    
    61,422Balance as of December 31, 2005
    
    
    54,876,079
    
    
    
    45
    
    
    
    848,423
    
    
    
    (23,141
    )
    
    
    3,681
    
    
    
    (318
    )
    
    
    25,190
    
    
    
    853,880Exercise of share options
    
    
    1,243,682
    
    
    
    1
    
    
    
    6,098
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    6,099Share-based compensation
    
    
    
    
    
    
    
    
    
    
    5,378
    
    
    
    23,141
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    28,519Appropriation of statutory reserves
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,168
    
    
    
    
    
    
    
    (1,168
    )
    
    
    Adjustment of other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    579
    
    
    
    
    
    
    
    579Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    99,341
    
    
    
    99,341Balance as of December 31, 2006
    
    
    56,119,761
    
    
    
    46
    
    
    
    859,899
    
    
    
    
    
    
    
    4,849
    
    
    
    261
    
    
    
    123,363
    
    
    
    988,418Exercise of share options
    
    
    399,710
    
    
    
    1
    
    
    
    4,469
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4,470Share-based compensation
    
    
    
    
    
    
    
    
    
    
    29,651
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    29,651Appropriation of statutory reserves
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,142
    
    
    
    
    
    
    
    (1,142
    )
    
    
    Adjustment of other comprehensive income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    419
    
    
    
    
    
    
    
    419Net income
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    103,577
    
    
    
    103,577Balance as of December 31, 2007
    
    
    56,519,471
    
    
    
    47
    
    
    
    894,019
    
    
    
    
    
    
    
    5,991
    
    
    
    680
    
    
    
    225,798
    
    
    
    1,126,535Balance as of December 31, 2007 (US$ Note 2(c))
    
    
    56,519,471
    
    
    
    6
    
    
    
    122,559
    
    
    
    
    
    
    
    821
    
    
    
    93
    
    
    
    30,954
    
    
    
    154,433
  F-5




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##### Table of Contents



51JOB,
INC.
 CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 2005
    
    
    2006
    
    
    2007
    
    
    2007(in thousands)
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    US$ (Note 2(c))Cash flows from operating activities:Net income for the year
    
    
    61,422
    
    
    
    99,341
    
    
    
    103,577
    
    
    
    14,198Adjustments for:Share-based compensation
    
    
    14,553
    
    
    
    28,519
    
    
    
    29,651
    
    
    
    4,065Depreciation
    
    
    13,070
    
    
    
    15,891
    
    
    
    18,351
    
    
    
    2,516Amortization of intangible assets
    
    
    3,235
    
    
    
    3,132
    
    
    
    2,654
    
    
    
    364Loss due to disposal of fixed assets
    
    
    259
    
    
    
    251
    
    
    
    244
    
    
    
    33Loss due to impairment of fixed assets
    
    
    
    
    
    
    49
    
    
    
    
    
    
    
    Loss from foreign currency translation
    
    
    11,320
    
    
    
    9,440
    
    
    
    18,134
    
    
    
    2,486Deferred tax provision (benefit)
    
    
    1,353
    
    
    
    1,516
    
    
    
    (855
    )
    
    
    (117
    )(Increase) Decrease in accounts receivable
    
    
    1,030
    
    
    
    (6,208
    )
    
    
    (1,275
    )
    
    
    (175
    )(Increase) Decrease in prepayments and other current
assets
    
    
    (8,589
    )
    
    
    5,202
    
    
    
    (15,068
    )
    
    
    (2,065
    )Increase (Decrease) in accounts payable
    
    
    (2,462
    )
    
    
    777
    
    
    
    1,650
    
    
    
    226Decrease in due to related parties
    
    
    (72
    )
    
    
    (1,041
    )
    
    
    (464
    )
    
    
    (64
    )Increase in salary and employee related accrual
    
    
    7,641
    
    
    
    7,337
    
    
    
    2,387
    
    
    
    328Increase (Decrease) in taxes payable
    
    
    (7,385
    )
    
    
    549
    
    
    
    9,747
    
    
    
    1,336Increase in advance from customers
    
    
    22,842
    
    
    
    17,311
    
    
    
    17,605
    
    
    
    2,414Increase in other payables and accruals
    
    
    3,581
    
    
    
    3,045
    
    
    
    7,653
    
    
    
    1,049(Increase) Decrease in other long-term assets
    
    
    228
    
    
    
    118
    
    
    
    (676
    )
    
    
    (93
    )Net cash provided by operating activities
    
    
    122,026
    
    
    
    185,229
    
    
    
    193,315
    
    
    
    26,501Cash flows from investing activities:Purchase of property and equipment
    
    
    (45,902
    )
    
    
    (153,842
    )
    
    
    (32,300
    )
    
    
    (4,428
    )Purchase of intangible assets
    
    
    (8,489
    )
    
    
    (1,115
    )
    
    
    (160
    )
    
    
    (22
    )Purchase of long-term investments
    
    
    
    
    
    
    
    
    
    
    (8,788
    )
    
    
    (1,205
    )Proceeds from the maturity of short-term investments
    
    
    
    
    
    
    10,555
    
    
    
    
    
    
    
    Net cash used in investing activities
    
    
    (54,391
    )
    
    
    (144,402
    )
    
    
    (41,248
    )
    
    
    (5,655
    )Cash flows from financing activities:Repurchase of common shares
    
    
    (75,644
    )
    
    
    
    
    
    
    
    
    
    
    Proceeds from the exercise of options
    
    
    1,546
    
    
    
    6,099
    
    
    
    4,470
    
    
    
    613Net cash provided by (used in) financing activities
    
    
    (74,098
    )
    
    
    6,099
    
    
    
    4,470
    
    
    
    613Effect of foreign exchange rate changes on cash
    
    
    (11,196
    )
    
    
    (8,862
    )
    
    
    (17,715
    )
    
    
    (2,428
    )Net increase (decrease) in cash
    
    
    (17,659
    )
    
    
    38,064
    
    
    
    138,822
    
    
    
    19,031Cash, beginning of year
    
    
    848,293
    
    
    
    830,634
    
    
    
    868,698
    
    
    
    119,088Cash, end of year
    
    
    830,634
    
    
    
    868,698
    
    
    
    1,007,520
    
    
    
    138,119Supplemental disclosure of cash flow information:Cash paid during the years for:Income taxes
    
    
    41,598
    
    
    
    24,467
    
    
    
    39,414
    
    
    
    5,403Interest expenses
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Supplemental disclosure of non-cash investing activities:Accrual related to purchase of property, equipment and
software
    
    
    
    
    
    
    (1,556
    )
    
    
    (18
    )
    
    
    (2
    )Accrual related to initial public offering costs
    
    
    (2,053
    )
    
    
    
    
    
    
    
    
    
    
    
  F-6




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##### Table of Contents



51JOB, INC.
 
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 1. ORGANIZATION AND NATURE OF OPERATIONS
    2. PRINCIPAL ACCOUNTING POLICIES
 (a) Basis of Presentation
   (b) Basis of Consolidation
     F-7




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
     Technical and Consulting Service Agreements.
 Pledge and Control Agreements.
 (c) Foreign Currencies
   F-8




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 (d) Cash
  (e) Accounts Receivable
  (f) Investments
  (g) Property and Equipment
  Estimated useful livesLand
    
    48 to 50 yearsBuilding
    
    20 yearsLeasehold improvements
    
    Lesser of the lease period or the estimated useful lifeComputer equipment
    
    5 yearsFurniture and fixtures
    
    5 yearsMotor vehicles
    
    5 yearsOther assets
    
    5 years
 (h) Intangible Assets
  (i) Impairment of Long-Lived Assets
  F-9




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 (j) Revenue Recognition
 Print Advertising
  Online Recruitment Services
 www.51job.com
 Executive Search
  Other Human Resource Related Revenues
  Business and Related Taxes
  (k) Cost of Services
  (l) Sales and Marketing
  F-10




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 (m) Loss Provision Related to a Third Party Contractor
  (n) Share-Based Compensation
      F-11




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
  2005(in thousands, except per share data)
    
    RMBNet income as reported
    
    
    61,422Add: Share-based compensation expense under APB No. 25
    
    
    14,553Less: Share-based compensation expense under SFAS No. 123
    
    
    (21,557
    )Pro forma net income
    
    
    54,418Basic earnings per share:As reported
    
    
    1.10Pro forma
    
    
    0.98Basic earnings per ADS:As reported
    
    
    2.21Pro forma
    
    
    1.96Diluted earnings per share:As reported
    
    
    1.07Pro forma
    
    
    0.95Diluted earnings per ADS:As reported
    
    
    2.15Pro forma
    
    
    1.90
  2005
    
    2006
    
    2007Risk-free interest rate
    
    3.87%-4.53%
    
    4.85%-4.93%
    
    4.23%-4.81%Expected life (years)
    
    4
    
    4
    
    4Expected dividend yield
    
    0%
    
    0%
    
    0%Volatility
    
    90%-100%
    
    80%
    
    55-75%Weighted average of fair value per option at grant date
    
    RMB44.42
    
    RMB40.39
    
    RMB36.86
 (o) Operating Leases
  F-12




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 (p) Taxation
   (q) Statutory Reserves
      F-13




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 (r) Dividend
  (s) Earnings Per Share
  (t) Segment Reporting
  (u) Recent Accounting Pronouncements
    F-14




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
    3. ACCOUNTS RECEIVABLE
   2006
    
    2007RMB
    
    RMBBalance at beginning of the period
    
    
    2,860
    
    
    
    2,612Additions
    
    
    
    
    
    
    2,036Reversals
    
    
    (247
    )
    
    
    Write-offs
    
    
    (1
    )
    
    
    (769
    )Balance at end of period
    
    
    2,612
    
    
    
    3,879
 4. PREPAYMENTS AND OTHER CURRENT ASSETS
 2006
    
    2007RMB
    
    RMBRental and other deposits
    
    
    1,771
    
    
    
    2,106Prepayments for rental and others
    
    
    5,574
    
    
    
    4,800Employee advances
    
    
    1,760
    
    
    
    1,349Payments made on behalf of customers
    
    
    371
    
    
    
    16,517Prepaid insurance premium
    
    
    2,225
    
    
    
    1,504Interest income receivable
    
    
    4,864
    
    
    
    4,498Others
    
    
    1,499
    
    
    
    2,358Total
    
    
    18,064
    
    
    
    33,132
 F-15




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 5. PROPERTY AND EQUIPMENT
 2006
    
    2007RMB
    
    RMBLand and building
    
    
    164,874
    
    
    
    164,963Leasehold improvements
    
    
    10,436
    
    
    
    8,129Computer equipment
    
    
    40,376
    
    
    
    67,492Furniture and fixtures
    
    
    11,940
    
    
    
    12,342Motor vehicles
    
    
    3,824
    
    
    
    3,979Other assets
    
    
    4,901
    
    
    
    4,075Less: impairment
    
    
    (49
    )
    
    
    Less: accumulated depreciation
    
    
    (41,987
    )
    
    
    (54,996
    )Net book value
    
    
    194,315
    
    
    
    205,984
 6. INTANGIBLE ASSETS
 2006
    
    2007RMB
    
    RMBComputer equipment software
    
    
    16,818
    
    
    
    16,835Acquired training licenses
    
    
    6,571
    
    
    
    6,571Internally developed software
    
    
    1,569
    
    
    
    1,569Less: accumulated amortization
    
    
    (15,595
    )
    
    
    (18,106
    )Net book value
    
    
    9,363
    
    
    
    6,869
 7. OTHER PAYABLES AND ACCRUALS
 2006
    
    2007RMB
    
    RMBProfessional service fees
    
    
    4,633
    
    
    
    4,935Office expenses
    
    
    1,504
    
    
    
    4,192Deposit from customers
    
    
    4,031
    
    
    
    479Marketing expenses
    
    
    3,539
    
    
    
    Revenue from newspaper sales collected on behalf of newspaper
contractors
    
    
    4,951
    
    
    
    6,040Payables to employees related to proceeds from share option exercises
    
    
    550
    
    
    
    1,469Loss provision related to a third party contractor
    
    
    
    
    
    
    9,655Others
    
    
    1,353
    
    
    
    1,444Total
    
    
    20,561
    
    
    
    28,214
 8. TAXATION
 Cayman Islands
  British Virgin Islands
  F-16




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 Hong Kong
  China
    Composition of Income Tax Expense
  2005
    
    2006
    
    2007RMB
    
    RMB
    
    RMBCurrent income tax expense
    
    
    28,592
    
    
    
    27,044
    
    
    
    46,257Deferred tax expense (benefit)
    
    
    1,353
    
    
    
    1,516
    
    
    
    (855
    )Income tax expense
    
    
    29,945
    
    
    
    28,560
    
    
    
    45,402
 F-17




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 Reconciliation of the Differences Between Statutory Tax Rate and the Effective Tax Rate
  2005
    
    2006
    
    2007EIT statutory rate
    
    
    33
    %
    
    
    33
    %
    
    
    33
    %Effect of tax holiday for certain subsidiaries
    
    
    (6
    %)
    
    
    (21
    %)
    
    
    (7
    %)Difference in EIT rates of certain subsidiaries
    
    
    (3
    %)
    
    
    (4
    %)
    
    
    (8
    %)Non-deductibility of expenses incurred outside the PRC
    
    
    6
    %
    
    
    8
    %
    
    
    9
    %Other permanent differences
    
    
    4
    %
    
    
    4
    %
    
    
    2
    %Provision of valuation allowance
    
    
    
    
    
    
    3
    %
    
    
    1
    %Reversal of valuation allowance
    
    
    (1
    %)
    
    
    (1
    %)
    
    
    Effective EIT rate of the Group
    
    
    33
    %
    
    
    22
    %
    
    
    30
    %
  2006
    
    2007RMB
    
    RMBDeductible temporary differences related to other payables and accruals
    
    
    1,692
    
    
    
    3,956Deductible temporary differences related to advertising expenses
    
    
    1,878
    
    
    
    40Deductible temporary differences related to provision for doubtful debts
and slow moving merchandise
    
    
    1,626
    
    
    
    1,165Total current deferred tax assets
    
    
    5,196
    
    
    
    5,161Less: Valuation allowance
    
    
    (813
    )
    
    
    (231
    )Net current deferred tax assets
    
    
    4,383
    
    
    
    4,930Tax loss carryforwards
    
    
    7,058
    
    
    
    6,690Deductible temporary differences related to fixed assets impairment
    
    
    7
    
    
    
    Deductible temporary differences related to residual value reconciliation
    
    
    198
    
    
    
    518Deductible temporary differences related to amortization
    
    
    257
    
    
    
    272Total non-current deferred tax assets
    
    
    7,520
    
    
    
    7,480Less: Valuation allowance
    
    
    (7,016
    )
    
    
    (6,274
    )Net non-current deferred tax assets
    
    
    504
    
    
    
    1,206Total deferred tax assets
    
    
    4,887
    
    
    
    6,136Taxable temporary differences related to depreciation period
    
    
    (122
    )
    
    
    (516
    )Total non-current deferred tax liabilities
    
    
    (122
    )
    
    
    (516
    )Total deferred tax liabilities
    
    
    (122
    )
    
    
    (516
    )
  F-18




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
  2006
    
    2007RMB
    
    RMBBalance at beginning of the period
    
    
    5,794
    
    
    
    7,829Additions
    
    
    3,589
    
    
    
    2,332Reversals
    
    
    (1,554
    )
    
    
    (300
    )Reversals due to change in EIT rates
    
    
    
    
    
    
    (1,123
    )Write-offs due to closure of AdCo branches
    
    
    
    
    
    
    (2,233
    )Balance at end of period
    
    
    7,829
    
    
    
    6,505
 9. SHARE-BASED COMPENSATION
   WeightedWeighted
    
    
    averageaverage
    
    
    remaining
    
    
    AggregateNumber
    
    
    exercise
    
    
    contractual
    
    
    intrinsic valueof shares
    
    
    price
    
    
    life (years)
    
    
    (thousands)Outstanding at January 1, 2005
    
    
    2,520,444
    
    
    US$
    0.43Granted
    
    
    749,200
    
    
    US$
    8.51Exercised
    
    
    (632,276
    )
    
    US$
    0.30Forfeited
    
    
    (79,394
    )
    
    US$
    0.48Outstanding at December 31, 2005
    
    
    2,557,974
    
    
    US$
    2.82Granted
    
    
    868,992
    
    
    US$
    8.39Exercised
    
    
    (1,243,682
    )
    
    US$
    0.62Forfeited
    
    
    (142,658
    )
    
    US$
    5.78Outstanding at December 31, 2006
    
    
    2,040,626
    
    
    US$
    6.34Granted
    
    
    1,189,152
    
    
    US$
    8.84Exercised
    
    
    (399,710
    )
    
    US$
    1.49Forfeited
    
    
    (176,938
    )
    
    US$
    8.31Outstanding at December 31, 2007
    
    
    2,653,130
    
    
    US$
    8.06
    
    
    
    4.35
    
    
    US$
    2,578Vested and expected to vest at December 31, 2007
    
    
    2,472,341
    
    
    US$
    8.02
    
    
    
    4.33
    
    
    US$
    2,506Exercisable at December 31, 2007
    
    
    901,666
    
    
    US$
    6.85
    
    
    
    3.38
    
    
    US$
    1,953
    F-19




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
  WeightedaverageNumber
    
    
    grant-dateof shares
    
    
    fair valueNon-vested at January 1, 2007
    
    
    1,446,544
    
    
    US$
    5.37Granted
    
    
    1,189,152
    
    
    US$
    5.05Vested
    
    
    (707,294
    )
    
    US$
    5.30Forfeited
    
    
    (176,938
    )
    
    US$
    5.37Non-vested at December 31, 2007
    
    
    1,751,464
    
    
    US$
    5.19Expected to vest at December 31, 2007
    
    
    1,570,675
    
    
    US$
    5.18
  Outstanding
    
    ExercisableWeighted
    
    
    
    
    
    Weightedaverage remaining
    
    
    
    
    
    average remainingNumber
    
    contractual life
    
    Number of
    
    contractual lifeExercise price
    
    of shares
    
    (years)
    
    shares
    
    (years)US$0.15
    
    
    83,830
    
    
    
    1.25
    
    
    
    83,830
    
    
    
    1.25US$0.50
    
    
    89,124
    
    
    
    1.96
    
    
    
    89,124
    
    
    
    1.96US$1.00
    
    
    7,508
    
    
    
    2.16
    
    
    
    6,338
    
    
    
    2.16US$6.25
    
    
    30,000
    
    
    
    3.86
    
    
    
    15,625
    
    
    
    3.86US$7.00
    
    
    40,000
    
    
    
    3.56
    
    
    
    24,167
    
    
    
    3.56US$8.365
    
    
    710,766
    
    
    
    4.26
    
    
    
    300,762
    
    
    
    4.26US$8.695
    
    
    525,550
    
    
    
    3.31
    
    
    
    347,950
    
    
    
    3.31US$8.77
    
    
    160,128
    
    
    
    5.40
    
    
    
    23,352
    
    
    
    5.40US$8.795
    
    
    861,072
    
    
    
    5.29
    
    
    
    
    
    
    
    US$8.80
    
    
    30,048
    
    
    
    5.73
    
    
    
    1,878
    
    
    
    5.73US$9.355
    
    
    100,128
    
    
    
    5.61
    
    
    
    3,336
    
    
    
    5.61US$9.83
    
    
    14,976
    
    
    
    4.58
    
    
    
    5,304
    
    
    
    4.582,653,130
    
    
    
    
    
    
    
    901,666
  10. EMPLOYEE BENEFITS
  F-20




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##### Table of Contents



51JOB, INC.
 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 11. RELATED PARTY TRANSACTIONS
  2006
    
    
    2007RMB
    
    RMBDue to related parties:Advances for share options exercised
    
    
    464
    
    
    
    464
    
    
    
    
  12. EARNINGS PER SHARE
  2005
    
    2006
    
    2007(in thousands, except number of shares and per share data)
    
    RMB
    
    RMB
    
    RMBNumerator:Net income
    
    
    61,422
    
    
    
    99,341
    
    
    
    103,577Denominator:Denominator for basic earnings per share  weighted
average common shares outstanding
    
    
    55,607,716
    
    
    
    55,422,447
    
    
    
    56,279,193Effect of dilutive share options
    
    
    1,646,738
    
    
    
    986,813
    
    
    
    352,405Denominator for diluted earnings per share
    
    
    57,254,454
    
    
    
    56,409,260
    
    
    
    56,631,598Basic earnings per share
    
    
    1.10
    
    
    
    1.79
    
    
    
    1.84Diluted earnings per share
    
    
    1.07
    
    
    
    1.76
    
    
    
    1.83
 F-21




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##### Table of Contents



51JOB, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 13. COMMITMENTS AND CONTINGENCIES
 Operating Lease Commitments
 51job Weekly
 Publication fees
    
    Office premises
    
    Others
    
    TotalRMB
    
    RMB
    
    RMB
    
    RMB2008
    
    
    51,912
    
    
    
    14,775
    
    
    
    11,709
    
    
    
    78,3962009
    
    
    29,295
    
    
    
    11,725
    
    
    
    2,457
    
    
    
    43,4772010
    
    
    2,103
    
    
    
    8,701
    
    
    
    1,051
    
    
    
    11,8552011
    
    
    480
    
    
    
    2,943
    
    
    
    36
    
    
    
    3,4592012
    
    
    480
    
    
    
    2,090
    
    
    
    36
    
    
    
    2,606After 2012
    
    
    600
    
    
    
    24,345
    
    
    
    1,521
    
    
    
    26,46684,870
    
    
    
    64,579
    
    
    
    16,810
    
    
    
    166,259
  Capital Commitments
  Contingencies
     F-22




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##### Table of Contents



51JOB, INC.
 NOTES
TO THE CONSOLIDATED FINANCIAL STATEMENTS  (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 14. FINANCIAL INSTRUMENTS
  15. CERTAIN RISKS AND CONCENTRATION
    16. SUBSEQUENT EVENT
  F-23




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##### Table of Contents



ADDITIONAL INFORMATION  FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
 CONDENSED STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 Note
    
    2005
    
    2006
    
    2007
    
    2007(in thousands)
    
    
    
    
    
    RMB
    
    RMB
    
    RMB
    
    US$ (Note 5)Net revenues
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Cost of services
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Gross profit
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Total operating expenses
    
    
    
    
    
    
    (20,818
    )
    
    
    (32,918
    )
    
    
    (33,222
    )
    
    
    (4,555
    )Loss from operations
    
    
    
    
    
    
    (20,818
    )
    
    
    (32,918
    )
    
    
    (33,222
    )
    
    
    (4,555
    )Equity in profit of subsidiary companies, net
    
    
    1
    
    
    
    79,223
    
    
    
    129,688
    
    
    
    142,143
    
    
    
    19,486Loss from foreign currency translation
    
    
    
    
    
    
    (10,898
    )
    
    
    (9,344
    )
    
    
    (17,835
    )
    
    
    (2,445
    )Interest income
    
    
    
    
    
    
    13,915
    
    
    
    11,970
    
    
    
    12,541
    
    
    
    1,719Other expense
    
    
    
    
    
    
    
    
    
    
    (55
    )
    
    
    (50
    )
    
    
    (7
    )Income before provision for income tax
    
    
    
    
    
    
    61,422
    
    
    
    99,341
    
    
    
    103,577
    
    
    
    14,198Income tax expense
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net income for the year
    
    
    
    
    
    
    61,422
    
    
    
    99,341
    
    
    
    103,577
    
    
    
    14,198
 F-24




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##### Table of Contents



ADDITIONAL INFORMATION  FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
 CONDENSED
BALANCE SHEETS AS OF DECEMBER 31, 2006 AND 2007
 Note
    
    
    2006
    
    
    2007
    
    
    2007(in thousands, except number of shares and per share data)
    
    
    
    
    
    RMB
    
    
    RMB
    
    
    US$ (Note 5)ASSETSCurrent assets:Cash
    
    
    
    
    
    
    257,772
    
    
    
    246,046
    
    
    
    33,730Receivables due from related parties
    
    
    2
    
    
    
    819
    
    
    
    826
    
    
    
    113Prepayments and other current assets
    
    
    
    
    
    
    1,563
    
    
    
    877
    
    
    
    120Total current assets
    
    
    
    
    
    
    260,154
    
    
    
    247,749
    
    
    
    33,963Long term receivables due from related parties
    
    
    2
    
    
    
    340,167
    
    
    
    318,403
    
    
    
    43,648Long-term investments
    
    
    3
    
    
    
    
    
    
    
    8,788
    
    
    
    1,205Investment in subsidiaries
    
    
    1
    
    
    
    392,208
    
    
    
    555,584
    
    
    
    76,164Total assets
    
    
    
    
    
    
    992,529
    
    
    
    1,130,524
    
    
    
    154,980LIABILITIES AND SHAREHOLDERS EQUITYCurrent liabilities:Due to related parties
    
    
    2
    
    
    
    3,124
    
    
    
    2,717
    
    
    
    372Other payables and accruals
    
    
    
    
    
    
    987
    
    
    
    1,272
    
    
    
    175Total current liabilities
    
    
    
    
    
    
    4,111
    
    
    
    3,989
    
    
    
    547Total liabilities
    
    
    
    
    
    
    4,111
    
    
    
    3,989
    
    
    
    547Shareholders equity:Common shares (US$0.0001 par value; 500,000,000 shares
authorized, 56,119,791 and 56,519,471 shares issued and
outstanding as of December 31, 2006 and 2007,
respectively)
    
    
    
    
    
    
    46
    
    
    
    47
    
    
    
    6Additional paid-in capital
    
    
    
    
    
    
    859,899
    
    
    
    894,019
    
    
    
    122,559Other comprehensive gain
    
    
    
    
    
    
    261
    
    
    
    680
    
    
    
    93Retained earnings
    
    
    
    
    
    
    128,212
    
    
    
    231,789
    
    
    
    31,775Total shareholders equity
    
    
    
    
    
    
    988,418
    
    
    
    1,126,535
    
    
    
    154,433Total liabilities and shareholders equity
    
    
    
    
    
    
    992,529
    
    
    
    1,130,524
    
    
    
    154,980
 F-25




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##### Table of Contents



ADDITIONAL INFORMATION  FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
 CONDENSED STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 Note
    
    
    2005
    
    
    2006
    
    
    2007
    
    
    2007(in thousands)
    
    
    
    
    
    RMB
    
    
    RMB
    
    
    RMB
    
    
    US$ (Note 5)Net cash provided by (used in) operating activities
    
    
    
    
    
    
    7,599
    
    
    
    (9,690
    )
    
    
    10,307
    
    
    
    1,413Net cash provided by (used in) investing activities
    
    
    
    
    
    
    (322,941
    )
    
    
    22,283
    
    
    
    (8,788
    )
    
    
    (1,205
    )Net cash provided by (used in) financing activities
    
    
    
    
    
    
    (74,098
    )
    
    
    6,099
    
    
    
    4,470
    
    
    
    613Effect of foreign exchange rate changes on cash
    
    
    
    
    
    
    (11,196
    )
    
    
    (8,861
    )
    
    
    (17,715
    )
    
    
    (2,428
    )Net increase (decrease) in cash
    
    
    
    
    
    
    (400,636
    )
    
    
    9,831
    
    
    
    (11,726
    )
    
    
    (1,607
    )Cash, beginning of year
    
    
    
    
    
    
    648,577
    
    
    
    247,941
    
    
    
    257,772
    
    
    
    35,337Cash, end of year
    
    
    
    
    
    
    247,941
    
    
    
    257,772
    
    
    
    246,046
    
    
    
    33,730
 F-26




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##### Table of Contents



ADDITIONAL INFORMATION  FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
NOTES TO THE CONDENSED FINANCIAL STATEMENTS
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 1. BASIS OF PRESENTATION
     2. RELATED PARTY BALANCES
  2006
    
    
    2007RMB
    
    
    RMBReceivables due from related parties:51net HR
    
    
    803
    
    
    
    78551net Beijing
    
    
    16
    
    
    
    41819
    
    
    
    826Long term receivables due from related parties:51net.com Inc.
    
    
    340,167
    
    
    
    318,403340,986
    
    
    
    319,229Due to related parties:Qianjin Network Information Technology (Shanghai) Co., Ltd.
    
    
    231
    
    
    
    275Shanghai Qianjin Advertising Co., Ltd.
    
    
    2,424
    
    
    
    2,36951net.com Inc.
    
    
    5
    
    
    
    73Advances for share options exercised
    
    
    464
    
    
    
    3,124
    
    
    
    2,717
  3. LONG-TERM INVESTMENTS
  4. COMMITMENTS
  F-27




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##### Table of Contents



ADDITIONAL INFORMATION  FINANCIAL STATEMENT SCHEDULE I
51JOB, INC.
 NOTES
TO THE CONDENSED FINANCIAL STATEMENTS  (Continued)
FOR THE YEARS ENDED DECEMBER 31, 2005, 2006 AND 2007
 5. FOREIGN CURRENCIES
  6. SUBSEQUENT EVENT
  F-28