20-F

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 20-F

(Mark One)

¨ REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR 12(g) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2016.

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

OR

¨ 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 ___________

For the transition period from ___________ to ___________

Commission file number: 001-36363

Tarena International, 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)

Suite 10017, Building E, Zhongkun Plaza, A18 Bei San Huan West Road, Haidian District
Beijing 100098, People’s Republic of China
(Address of principal executive offices)

1/F, Block A, Training Building, 65 Kejiyuan Road, Baiyang Jie Dao, Economic Development District,
Hangzhou 310000, People’s Republic of China
(Address of principal executive offices)

Yuduo Yang, Chief Financial Officer
E-mail: yangyd@tedu.cn
Suite 10017, Building E, Zhongkun Plaza, A18 Bei San Huan West Road, Haidian District
Beijing 100098, People’s Republic of China
Telephone: +86 10-6213 8109
(Name, Telephone, E-mail 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	The NASDAQ Stock Market LLC
representing one Class A ordinary share,	(The NASDAQ Global Select Market)
par value US$0.001 per share
Class A ordinary shares,	The NASDAQ Stock Market LLC
par value US$0.001 per share	(The NASDAQ Global Select Market)*

* Not for trading, but only in connection with the listing on The NASDAQ Global Select Market of American depositary shares, each representing one Class A ordinary share.

Securities registered or to be registered pursuant to Section 12(g) of the Act:

None
(Title of Class)

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:

None
(Title of Class)

Indicate the number of outstanding shares of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report. As of December 31, 2016, there were 56,055,497 ordinary shares outstanding, par value $0.001 per share, being the sum of 47,160,248 Class A ordinary shares and 8,895,249 Class B ordinary shares.

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.
¨ Yes      x No

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934. ¨ Yes      x No

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. x Yes      ¨ No

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).
x Yes      ¨ No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company. See definition of “accelerated filer,” “large accelerated filer” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer  ¨	Accelerated filer þ
Non-accelerated filer  ¨	Emerging growth company  þ

If an emerging growth company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards† provided pursuant to Section 13(a) of the Exchange Act.       þ

† The term “new or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its Accounting Standards Codification after April 5, 2012.

Indicate by check mark which basis of accounting the registrant has been to prepare the financial statements included in this filing:

U.S. GAAP x International Financial Reporting Standards as issued by
the International Accounting Standards Board ¨ Other ¨

If “other” has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has elected to follow. ¨ Item 17       ¨ Item 18

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ¨ Yes      x No

(APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY PROCEEDINGS DURING THE PAST FIVE YEARS)

Indicate by check mark whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Securities Exchange Act of 1934 subsequent to the distribution of securities under a plan confirmed by a court.

¨ Yes      ¨ No

TABLE OF CONTENTS

INTRODUCTION			4
FORWARD-LOOKING INFORMATION			4
PART I.			5
	ITEM 1.	IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS	5
	ITEM 2.	OFFER STATISTICS AND EXPECTED TIMETABLE	5
	ITEM 3.	KEY INFORMATION	5
	ITEM 4.	INFORMATION ON THE COMPANY	45
	ITEM 4.A.	UNRESOLVED STAFF COMMENTS	74
	ITEM 5.	OPERATING AND FINANCIAL REVIEW AND PROSPECTS	75
	ITEM 6.	DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES	93
	ITEM 7.	MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS	104
	ITEM 8.	FINANCIAL INFORMATION	106
	ITEM 9.	THE OFFER AND LISTING	107
	ITEM 10.	ADDITIONAL INFORMATION	108
	ITEM 11.	QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK	118
	ITEM 12.	DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES	119
PART II.			120
	ITEM 13.	DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES	120
	ITEM 14.	MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS	120
	ITEM 15.	CONTROLS AND PROCEDURES	122
	ITEM 16.A.	AUDIT COMMITTEE FINANCIAL EXPERT	123
	ITEM 16.B.	CODE OF ETHICS	123
	ITEM 16.C.	PRINCIPAL ACCOUNTANT FEES AND SERVICES	123
	ITEM 16.D.	EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES	123
	ITEM 16.E.	PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS	124
	ITEM 16.F.	CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT	124
	ITEM 16.G.	CORPORATE GOVERNANCE	124
	ITEM 16.H.	MINE SAFETY DISCLOSURE	124
PART III.			125
	ITEM 17.	FINANCIAL STATEMENTS	125
	ITEM 18.	FINANCIAL STATEMENTS	125
	ITEM 19.	EXHIBITS	125

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INTRODUCTION

In this annual report, except where the context otherwise requires and for purposes of this annual report only:

· “we,” “us,” “our company,” “our” and “Tarena” refer to Tarena International, Inc., a Cayman Islands company, and its subsidiaries, and, in the context of describing our operations, risk factors and financial results, also include our variable interest entity;

· “China” or “PRC” refers to the People’s Republic of China, excluding, for the purpose of this annual report only, Taiwan, Hong Kong and Macau;

· “shares” or “ordinary shares” refers to our ordinary shares, par value US$0.001 per share, which include both Class A ordinary shares and Class B ordinary shares;

· “ADSs” refers to our American depositary shares, each of which represents one Class A ordinary share; the ADSs are evidenced by American depositary receipts, or “ADRs”;

· “IT” refers to information technology;

· “variable interest entity,” or “VIE,” refers to Beijing Tarena Jinqiao Technology Co., Ltd., which is a domestic PRC company in which we do not have any equity interests but whose financial results have been consolidated into our consolidated financial statements in accordance with U.S. GAAP because we have effective financial control over, and Tarena International, Inc. is the primary beneficiary of such company. As the context may require, “variable interest entities” or “VIEs” may also include Shanghai Tarena Software Technology Co., Ltd., which used to a variable interest entity consolidated by our Group but was wound up in December 2016; and

· all references to “RMB” or “Renminbi” refer to the legal currency of China; all references to “US$,” “dollars” and “U.S. dollars” refer to the legal currency of the United States.

FORWARD-LOOKING INFORMATION

This annual report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to, statements about:

· our goals and growth strategies;

· our expectations regarding demand for and market acceptance of our courses;

· our ability to retain and increase our student enrollments;

· our ability to maintain and increase the utilization rate of our learning centers;

· our ability to offer new courses in existing and new subject areas;

· our ability to replicate the success and growth of our adult education services to the kid education market;

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· our ability to maintain and increase the tuition fees of our courses;

· our ability to deepen and expand our corporate employer relationships;

· our ability to maintain our relationships with universities and colleges;

· our future business development, results of operations and financial condition;

· the expected growth of, and trends in, the markets for our services in China;

· relevant government policies and regulations relating to our corporate structure, business and industry; and

· assumptions underlying or related to any of the foregoing.

You should read thoroughly this annual report and the documents that we refer to in this annual report with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this annual report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

PART I.

ITEM 1. IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISERS

Not Applicable.

ITEM 2. OFFER STATISTICS AND EXPECTED TIMETABLE

Not Applicable.

ITEM 3. KEY INFORMATION

A. Selected Financial Data

Selected Consolidated Financial Data

The following selected consolidated statements of comprehensive income data (other than ADS data) for the years ended December 31, 2014, 2015 and 2016 and the selected consolidated balance sheet data as of December 31, 2015 and 2016 have been derived from our audited consolidated financial statements included elsewhere in this annual report. The following selected consolidated statements of comprehensive income data (other than ADS data) for the years ended December 31, 2012 and 2013 and the selected consolidated balance sheet data as of December 31, 2012, 2013 and 2014 have been derived from our audited consolidated financial statements which are not included in this annual report. Our historical results for any period are not necessarily indicative of results to be expected for any future period. The selected consolidated financial data should be read in conjunction with, and are qualified in their entirety by reference to, our audited consolidated financial statements and related notes and “Item 5. Operating and Financial Review and Prospects” below. Our audited consolidated financial statements are prepared and presented in accordance with generally accepted accounting principles in the United States, or U.S. GAAP.

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	For the Year Ended December 31,
	2012			2013			2014			2015			2016
	RMB			RMB			RMB			RMB			RMB
	(in thousands, except for share, per share and per ADS data)
Selected Consolidated Statements of Comprehensive Income Data:
Net revenues		358,667			575,170			836,941			1,178,008			1,579,604
Cost of revenues(1)		(112,120	)		(180,097	)		(240,084	)		(333,559	)		(449,104	)
Gross profit		246,547			395,073			596,857			844,449			1,130,500
Selling and marketing expenses(1)		(106,522	)		(187,430	)		(261,489	)		(384,954	)		(527,553	)
General and administrative expenses(1)		(62,800	)		(100,518	)		(183,998	)		(251,298	)		(307,519	)
Research and development expenses(1)		(11,309	)		(23,588	)		(33,454	)		(50,515	)		(65,594	)
Operating income		65,916			83,537			117,916			157,682			229,834
Interest income		7,355			9,549			26,802			42,732			23,974
Loss on foreign currency forward contract		—			—			—			—			(12,898	)
Foreign currency exchange gains (losses)		—			—			7,539			(29,499	)		3,760
Income before income taxes		74,306			101,105			166,645			182,727			260,630
Net income		60,298			87,033			151,850			178,760			241,854
Net income (loss) attributable to ordinary shareholders		(106,558	)		(183,590	)		148,320			178,760			241,854
Cash dividend declared per share(2)		—			—			—			—			0.98
Weighted average number of class A and class B ordinary shares outstanding(3):
Basic		10,851,287			10,930,412			41,223,389			53,767,810			55,540,670
Diluted		10,851,287			10,930,412			47,770,132			58,750,856			59,005,261
Earnings per Class A ordinary share, and per Class B ordinary share(4)
Basic		(9.82	)		(16.80	)		3.11			3.32			4.35
Diluted		(9.82	)		(16.80	)		2.69			3.04			4.10
Earnings per ADS(5)
Basic		(9.82	)		(16.80	)		3.11			3.32			4.35
Diluted		(9.82	)		(16.80	)		2.69			3.04			4.10

Notes:

(1)	Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows:
(2)	On March 7, 2016, the Board of Directors approved to declare a cash dividend of US$0.15 per ordinary share to shareholders as of the close of trading on April 6, 2016.

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	For the Year Ended December 31,
	2012		2013		2014		2015		2016
	RMB		RMB		RMB		RMB		RMB
	(in thousands)
Cost of revenues		—		106		349		664		4,124
Sales and marketing expenses		8		280		1,036		1,959		5,496
General and administrative expenses		788		4,054		22,302		28,274		51,154
Research and development expenses		21		297		1,289		2,022		7,050

(3) The weighted average number of ordinary shares represents the sum of the weighted average number of Class A and Class B ordinary shares. See Note 15 to our audited consolidated financial statements included in this annual report for additional information regarding the computation of the per share amounts and the weighted average numbers of Class A and Class B ordinary shares.

(4) As holders of Class A and Class B ordinary shares have the same dividend right and the same participation right in our undistributed earnings, the basic and diluted earnings per Class A ordinary share and Class B ordinary share are the same for all the periods presented.

(5) Each ADS represents one Class A ordinary share.

	For the Year Ended December 31,
	2012			2013			2014		2015		2016
	RMB			RMB			RMB		RMB		RMB
	(in thousands)
Selected Consolidated Balance Sheet Data:
Cash and cash equivalents		101,808			159,368			261,035		513,938		810,672
Time deposits, including non-current portion		5,000			74,148			759,662		564,105		475,391
Restricted time deposits		—			—			—		150,000		—
Accounts receivable, net of allowance for doubtful accounts, including non-current portion		106,748			93,997			150,971		154,770		98,550
Property and equipment, net		51,363			78,074			81,835		127,864		437,337
Long-term investments		—			—			—		24,000		41,760
Total assets		294,603			449,177			1,333,661		1,653,891		2,085,012
Deferred revenue		60,693			94,426			117,954		164,524		266,061
Total liabilities		92,636			155,949			214,575		315,277		486,792
Total mezzanine equity		430,791			700,963			—		—		—
Total shareholders’ equity (deficit)		(228,824	)		(407,735	)		1,119,086		1,338,614		1,598,220
Class A and Class B ordinary shares		99			107			355		374		388
Number of outstanding Class A and Class B ordinary shares		10,851,287			12,226,558			52,445,782		54,563,321		56,055,497

Change in Reporting Currency and Exchange Rate Information

Our business is primarily conducted in China and all of our revenues are denominated in RMB. We used to use U.S. dollar as our reporting currenty. Starting from the third quarter of 2016, we changed our reporting currency from U.S. dollar to Renminbi. The aligning of the reporting currency with the underlying operations will better depict our results of operations for each period. Assets and liabilities of entities with functional currencies other than RMB are translated into RMB using the exchange rate on the balance sheet date. Revenues and expenses of entities with functional currencies other than RMB are translated into RMB at average rates prevailing during the reporting period. Prior periods’ financial information has been recasted as if we always used RMB as our reporting currency.

We make no representation that any RMB or U.S. dollar amounts could have been, or could be, converted into U.S. dollars or RMB, as the case may be, at any particular rate, or at all. The PRC government imposes control over its foreign currency reserves in part through direct regulation of the conversion of RMB into foreign exchange and through restrictions on foreign trade. On April 25, 2017, the noon buying rate was RMB6.8833 to US$1.00.

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The following table sets forth information concerning exchange rates between the RMB and the U.S. dollar for the periods indicated.

	Noon Buying Rate
Period	Period-End		Average(1)		Low		High
	(RMB per U.S. Dollar)
2012		6.2855		6.3123		6.2670		6.3495
2013		6.0969		6.1957		6.0969		6.2898
2014		6.1190		6.1426		6.0930		6.1710
2015		6.4936		6.2266		6.1079		6.4936
2016		6.9370		6.6375		6.4565		6.9508
2017
January		6.8588		6.8863		6.8331		6.9526
February		6.8750		6.8678		6.8456		6.8898
March		6.8993		6.8932		6.8701		6.9125
April (through April 25, 2017)		6.8833		6.8836		6.8651		6.9042

Source: Daily Statistics of People’s Bank of China

Note:

(1) Annual averages are calculated using the average of month-end rates of the relevant year. Monthly averages are calculated using the average of the daily rates during the relevant period.

B. Capitalization and Indebtedness

Not Applicable.

C. Reasons for the Offer and Use of Proceeds

Not Applicable.

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D. Risk Factors

Risks Relating to Our Business

If we are not able to continue to attract students to enroll in our courses, our business and prospects will be materially and adversely affected.

The success of our business depends primarily on the number of students enrolled in our courses. Therefore, our ability to continue to attract students to enroll in our courses is critical to the continued success and growth of our business. This in turn will depend on several factors, including our ability to develop new courses and enhance existing courses to respond to changes in market trends and student demands, expand our learning center network and geographic footprint, manage our growth while maintaining consistent and high education quality, broaden our relationships with corporate employers and market our courses effectively to a broader base of prospective students, including young kids. Furthermore, our ability to attract students also depends on our ability to provide educational content that is perceived as more effective than the standard curricula of universities in China in terms of practical job-oriented training and as complementary to standard curricula of primary and secondary schools in China. If we are unable to continue to attract students to enroll in our courses, our net revenues may decline, which may have a material adverse effect on our business, financial condition and results of operations

We may not be able to continue to recruit, train and retain qualified instructors and teaching assistants, who are critical to the success of our business and effective delivery of our education services to students.

Our instructors and teaching assistants are critical to maintaining the quality of our educational services and our reputation. We seek to hire highly qualified instructors with rich industry experience and strong teaching skills. We recruit dedicated teaching assistants primarily from outstanding graduates of our courses. There is a limited pool of instructors and teaching assistants with these attributes and we must provide competitive compensation packages to attract and retain them. We must also provide ongoing training to our instructors and teaching assistants to ensure that they stay abreast of changes in curriculum, student demands, industry standards and other trends necessary to teach and tutor effectively. We have not experienced major difficulties in recruiting, training or retaining qualified instructors and teaching assistants in the past. However, we may not always be able to recruit, train and retain enough qualified instructors and teaching assistants in the future to keep pace with our growth and maintain consistent education quality. A shortage of qualified teaching staff, a decrease in the quality of our teaching staff’s classroom performance, whether actual or perceived, or a significant increase in compensation to retain qualified instructors and teaching assistants would have a material adverse effect on our business, financial condition and results of operations.

If we are not able to continually tailor our curriculum to market demand and enhance our courses to adequately and promptly respond to developments in the professional job market, our courses may become less attractive to students.

New trends in the global economy and rapid developments in the professional services industries may change the type of skills required for professionals in the marketplace. This requires us to continually develop, update and enhance our course materials to adapt to the needs of the professional job market in China. We may be unable to update our courses in a timely and cost-effective manner, or at all, to keep pace with changes in market requirements. Any inability to track and respond to these changes in a cost-effective and timely manner or to tailor our courses to the professional services markets in China would render our courses less attractive to students, which may materially and adversely affect our reputation and ability to continue to attract students and cause us to lose market share.

If we fail to develop and introduce new courses in anticipation of market demand in a timely and cost-effective manner, our competitive position and ability to generate revenues may be materially and adversely affected.

Since inception, our primary focus has been on providing IT professional education services. We have since expanded our course offerings to include non-IT training courses, including digital art, online sales and marketing and accounting. We have also launched IT and non-IT training courses customized for young kids since December 2015, which primarily include computer programming, robot programming and digital arts (including 3D printing). We intend to continue developing new courses in anticipation of market demand. The introduction of new courses is subject to risks and uncertainties. Unexpected technical, operational, logistical, regulatory or other problems could delay or prevent the introduction of one or more new courses. Moreover, we cannot assure you that any of these new courses will match the quality or popularity of those developed by our competitors, achieve widespread market acceptance or generate the desired level of income for our students.

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Offering new courses requires us to make investments in content development, recruit and train additional qualified instructors and teaching assistants, increase marketing efforts and re-allocate resources away from other uses. We may have limited experience with the content of new courses and may need to modify our systems and strategies to incorporate new courses into our existing course offerings. In offering courses in new subject areas, we may face new risks and challenges that we are not familiar with. Furthermore, we may experience difficulties in recruiting or otherwise identifying qualified instructors to develop the content for these new courses. If we are unable to offer new courses in a timely and cost-effective manner, our results of operations and financial condition could be adversely affected.

We rely on Java, digital art and web front courses for a majority of our total net revenues, and a decrease in the popularity and usage of Java technology, Adobe design or web front technology would have a material adverse effect on our business and results of operations.

A majority of our total net revenues are generated from the Java, digital art and web front courses. In 2014, 2015 and 2016, our Java course contributed 36.0%, 28.5% and 35.1% of our total student enrollments, our digital art course contributed 31.5%, 30.8% and 27.6% of our total student enrollments, and our web front course contributed nil, 5.5% and 12.2% of our total student enrollments, respectively. The historical rapid growth of our business has been driven by the popularity and usage of Java technology, Adobe design and web front development, and we expect net revenues from these courses to continue to represent a substantial portion of our total net revenues in the near future. We believe our reliance on Java, digital art and web front courses is mainly attributable to the wide adoption and popularity of Java technology, Adobe design and web front development. However, whether Java as a programming language, Adobe design technology as a digital art tool or web front development can maintain their popularity is beyond our control. Any factor that materially and adversely affects student enrollment in our Java, digital art, or web front courses, such as a decrease in the popularity and usage of Java technology, Adobe design or web front development, would have a material adverse effect on business and our results of operations.

Our business depends on the market recognition of our brand, and if we are unable to maintain or enhance our brand recognition, our business, financial condition and results of operations may be materially and adversely affected.

We believe that the market recognition of our “Tarena” (达内) brand has significantly contributed to the success of our business and believe that maintaining and enhancing the reputation of this brand is critical to sustaining our competitive advantage. Our ability to maintain and enhance our brand recognition and reputation depends primarily on the perceived effectiveness and quality of our courses as well as the success of our marketing and promotion efforts. As we continue to grow and expand into new course areas, we may not be able to maintain the quality and consistency of our educational services as we did in the past. We have devoted significant resources to promoting our courses and brand in recent years, including Internet-based marketing and advertising, traditional media advertising and sponsoring industry trade seminars and software design competitions. However, our marketing and promotion efforts may not be successful or may inadvertently negatively impact our brand recognition and reputation. For example, if any governmental authority or competitor publicly alleges that any of our advertisements are misleading, our brand reputation may be adversely impacted. If we are unable to maintain and further enhance our brand recognition and reputation and increase awareness of our courses, or if we incur excessive marketing and promotion expenses, our results of operations may be materially and adversely affected. If we are unable to sustain our brand image, we may not be able to maintain premium tuition fees over our competitors, which may further exacerbate the extent of any adverse effect on our results of operations. Furthermore, any negative publicity relating to our company or our courses and services, regardless of its veracity, could harm our brand image and in turn materially and adversely affect our business and operating results.

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We may not be able to maintain our high job placement rate for students, which could harm our ability to attract student enrollments.

We gather data on post-course job placement rates by conducting surveys of our graduates. Based on the survey responses, we calculate the six-month post-course job placement rates for a month by dividing (i) the number of job-seeking students enrolled in such month who (A) successfully graduated from our programs with graduation certificates awarded and (B) indicated that they had received employment offers within six months of graduation, by (ii) the total number of job-seeking students enrolled in such month who later successfully graduated from our programs with graduation certificates awarded. We calculate the average six-month post-course job placement rate for a year by averaging the six-month post-course job placement rates of each month of such year. Our average six-month post-course job placement rate for each of 2014 and 2015 was over 90%. When calculating such job placement rates for 2014 and 2015, a majority of the employment reported by relevant students were full-time employment, and a majority of the employment reported by relevant students were in the fields of their studies with us. All of the students enrolled in 2014 and 2015 who later successfully graduated from our programs with graduation certificates awarded and who were job-seeking, have filled out our surveys. Among the students enrolled in 2014 and 2015, 89% and 86% of such students, respectively, graduated from our programs with graduation certificates awarded. Among the students enrolled in 2014 and 2015 who later successfully graduated from our programs with graduation certificates awarded, 81% and 77% of such students, respectively, were deemed to be job-seeking students.

Our student job placement rate depends on a wide range of external and internal factors. External factors include the macroeconomic conditions, the performance of the professional services sector in China and the recruiting demand of corporate employers. Internal factors include our education quality, the efforts of our career services personnel, our ability to provide adequate staffing to achieve desired results and our relationships with corporate employers. A number of such external and internal factors are outside of our control. Our historical job placement rates have been high. However, we cannot assure you that we will be able to maintain our current level of job placement rate for our students in the future. Any decrease in our job placement rate could harm our ability to recruit students, which may materially and adversely affect our business, financial condition and results of operations.

Our newly launched kid education programs may not be successfully due to our limited experience in providing education services to minors.

In December 2015, we launched our new kid education programs Tongcheng and Tongmei featuring IT training courses and non-IT training courses for kid students. In March 2016, we rolled out another kid education program Tongchuang to offer kids robotics programming courses. Our new kid education programs target students aged between six and eighteen. As we have been primarily engaging in adult vocational training programs since our inception, we have very limited experience in providing education programs to minors, who have distinct learning preference and mentality as comparing to adult students and require tailored courses and dedicated class management. Although the courses offered through our kid education programs are designed based on minors’ learning patterns and interests, we cannot guarantee you that our kid education programs will be able to continue to attract students or be proved to achieve satisfactory education results. If students lose interests in our kid education programs or find the courses offered in our kid education programs ineffective, our business, results of operations and financial conditions may be adversely affected.

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In addition, unlike programs designed for adult students, our courses in our kid education programs are taught by teaching assistants face-to-face in offline classrooms. As a result, a large number of minors and their parents attend classes on our premises and/or use our facilities, and they may suffer accidents or injuries or other harm on our premises, including those caused by or otherwise arise from the actions of our employees or contractors. In the event of accidents or injuries or other harm caused or perceived to be caused by us, our facilities and/or services may be perceived to be unsafe, which may discourage prospective students from enrolled in our programs. We could also face claims alleging that we should be liable for the accidents or injuries, or we were negligent, provided inadequate supervision to our employees and therefore should be held jointly liable for harm caused by them. If any of these were to happen, our reputation, business, results of operations and financial conditions may be adversely affected.

Our business, financial condition and results of operations may be adversely affected by a downturn in the global or Chinese economy.

Because our student enrollment may depend on our students’ and potential students’ levels of disposable income, perceived job prospects and willingness to spend, as well as the level of hiring demand of professional services positions our business and prospects may be affected by economic conditions in China or globally. The global macroeconomic environment is facing challenges, including the escalation of the European sovereign debt crisis since 2011, the end of quantitative easing by the U.S. Federal Reserve, the economic slowdown in the Eurozone in 2014 and and the expected exit of The United Kingdom from the European Union. It is unclear whether the Chinese economy will resume its high growth rate. The Chinese economy has slowed down in recent years. According to the National Bureau of Statistics of China, in 2016, China’s gross domestic product grew at a rate of 6.7%. There have been concerns over unrest in the Middle East and Africa, which have resulted in volatility in oil and other markets, and over the prolonged crisis in Ukraine which contributed to the collapse in the value of the Russian ruble, and the resulting Russian financial crisis. There have also been concerns about the territorial disputes involving China in Asia and the economic effects. Economic conditions in China, including the performance of the IT and other professional services industries, are sensitive to global economic conditions, as well as changes in domestic economic and political policies and the expected or perceived overall economic growth rate in China. A decline in the economic prospects of IT and other professionals could alter current or prospective students’ spending priorities and the recruiting demand from professional service industries. We cannot assure you that professional education spending in general or with respect to our course offerings in particular will increase, or not decrease, from current levels. Therefore, a slowdown in China’s economy or the global economy may lead to a reduction in demand for professional education services, which could materially and adversely affect our financial condition and results of operations.

If we fail to successfully execute our growth strategies, our business and prospects may be materially and adversely affected.

Our growth strategies include growing our student enrollments for existing courses, expanding our course offerings, further enhancing the quality of our education services and expanding our corporate employer network. We may not succeed in executing our growth strategies due to a number of factors, including, without limitation, the following:

· we may fail to market our courses in new markets or promote new courses in existing markets effectively;

· we may not be able to replicate our successful business model in other geographic markets or in new course subject areas;

· we may fail to identify new cities with sufficient growth potential to expand our network;

· we may not be able to replicate the success and growth of our adult education services to the kid education market;

· we may not be able to recruit and retain learning center managers, teaching assistants and other key personnel;

· our analysis for selecting suitable new locations may not be accurate and the demand for our services at such new locations may not materialize or increase as rapidly as we expect;

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· we may fail to obtain the requisite licenses and permits necessary to open learning centers at our desired locations from local authorities;

· we may not be able to continue to update our existing courses or offer new courses to adapt to changing market demand and technological advances; and

· we may fail to achieve the benefits we expect from our expansion.

If we fail to execute our growth strategies successfully, we may not be able to maintain our growth rate and our business and prospects may be materially and adversely affected as a result.

We may not be able to manage our business expansion effectively, which could harm our financial condition and results of operations.

We have expanded rapidly and we plan to continue to expand our operations in different geographic areas as we address the growth in our customer base and market opportunities. We increased the number of our learning centers from 118 as of December 31, 2014 to 145 as of December 31, 2016. This expansion has resulted, and will continue to result, in substantial demands on our management, personnel and operational, technological and other resources. To manage the expected growth of our operations, we will be required to expand our existing operational, administrative and technological systems and our financial systems, procedures and controls and to expand training and management of our growing employee base. In addition, the geographic dispersion of our operations requires significant management resources. We cannot assure you that our current and planned personnel, systems, procedures and controls will be adequate to support our future operations, or that we will be able to effectively and efficiently manage the growth of our operations or recruit and retain qualified personnel to support our expansion. Any failure to effectively and efficiently manage our expansion may materially and adversely affect our ability to capitalize on new business opportunities, which in turn may have a material adverse effect on our financial condition and results of operations.

The growth of our business is in part dependent on our continuing access to a broad network of corporate employers.

We derive both direct benefits, such as increased enrollment driven by employer-specific customized courses, and indirect benefits, such as higher student job placement rate and strengthening of the Tarena brand, from our access to a large number of corporate employers. We believe our access to a large number of corporate employers in a wide range of industries is one of our core competitive strengths. If our access to these corporate employers were to become constrained or limited, or the benefits we derive from these access were to be diminished, whether by our own actions or actions of our competitors, our growth prospects and our business would be harmed.

Our success depends on the continuing efforts of our senior management team and other key personnel and our business may be adversely affected if we lose their services.

Our future success depends heavily upon the continuing services of our senior management team. If any member of our senior management team leaves us and we fail to effectively manage a transition to new personnel, or if we fail to attract and retain experienced and passionate instructors, regional managers and other key personnel on acceptable terms, our business, financial conditions and results of operations could be adversely affected. We will need to continue to hire additional personnel, especially qualified instructors and regional managers, as our business grows. A shortage in the supply of personnel with requisite skills or our failure to attract and retain high quality executives or key personnel could impede our ability to increase revenues from our existing courses, to launch new course offerings and to expand our operations and would have an adverse effect on our business and financial results.

Mr. Shaoyun Han, our founder, chairman and chief executive officer, has played an important role in the growth and development of our business since its inception. To date, we have relied heavily on Mr. Han’s expertise in, and familiarity with, our business operations, his leadership, and his reputation in the professional education services industry. If Mr. Han is unable or unwilling to continue in his present positions, we may not be able to easily replace him and may incur additional expenses to identify and train his successor. We do not maintain key man insurance on Mr. Han.

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The operations of certain of our learning centers are, or may be deemed by relevant PRC government authorities to be, beyond their authorized business scope or without proper license or registration. If the relevant PRC government authorities take actions against such learning centers, our business and operations could be materially and adversely affected.

The principal regulations governing private education in China consist of the Education Law of the PRC, the Law for Promoting Private Education and the Implementation Rules for the Law for Promoting Private Education. Under these PRC laws and regulations and related administrative requirements, to provide professional education services, a company may, in the capacity of a school sponsor, establish a private school which obtains a school permit from the human resources and social security authorities under the Law for Promoting Private Education, and such school can then establish and operate learning centers within the approved districts to provide professional education services, provided that learning centers located outside the registered address of the private schools shall be registered with original approving authorities. Alternatively, a company may obtain approval from the competent industry and commerce administration authorities to include the relevant professional education services in the authorized scope of business as specified in its business licenses. A company with “professional education services” or an equivalent statement included in its approved scope of business can operate learning centers by itself or through its registered branches. On November 7, 2016, the Standing Committee of the PRC National People's Congress, or NPC, released the amendment of the Law for Promoting Private Education, which will be effective on September 1, 2017, pursuant to which private schools are classified as either non-profit private schools or for-profit private schools. On December 30, 2016, the Implementation Rules for Private School Classification Registration was issued by the Ministry of Education, or the MOE, and other relevant authorities, which requires all private schools, including non-profit private schools and for-profit private schools, to obtain a “school permit”. Existing private schools that choose to register as for-profit private schools should apply for new school permits and complete the re-registration process. The Regulatory Implementation Rules for Profitable Private School issued on December 30, 2016 further indicates that for-profit private training institutions shall be regulated with reference to such rules. The implementation of abovementioned regulations will also rely on detailed rules of local government authorities.

However, many local government authorities have different views on the relevant rules and regulations and have adopted different practices in granting school permits to private schools or issuing business licenses to companies that provide professional education services. Although some cities, such as Beijing, Shanghai and Hangzhou, allow companies to include “professional education services” in their business scope, the industry and commerce administration authorities in certain other areas have adopted regional policies of not allowing “professional education services” or similar statement to be included in the business scope of any company. In addition, when we applied for school permits or registrations of learning centers, the local human resources and social security authorities in some cities in China have either informed us that no school permits will be issued to new private schools in their jurisdictions or that they do not permit new learning centers established by private schools to be registered. These regional policies and practices have created significant obstacles for us to comply with all applicable rules and regulations for all of our local operations.

We use both ways discussed above to establish learning centers. As of December 31, 2016, we had a total of 145 learning centers, of which 49 were managed by schools and 96 were managed by our subsidiaries. Among the learning centers operated by our subsidiaries, 49 have neither professional education services nor education information related consultation as an authorized scope of business in the licenses of our subsidiaries or their registered branches operating these learning centers as of December 31, 2016, and these learning centers in the aggregate accounted for 27.1% of our student enrollments in 2016. We were not able to include professional education services in these companies’ authorized business scope mainly because the industry and commerce administration authorities in these areas have a general local policy prohibiting the inclusion of “professional education services” in the business scope of any company. In addition, nine learning centers operated by our subsidiaries only have “education information related consultation” rather than “professional education services” in their respective authorized scopes of business, and these learning centers in the aggregate accounted for 4.0% of our student enrollments in 2016. The difference between “educational services” and “education information related consultation” is not very clear under applicable PRC laws and regulations, and it is possible that the relevant PRC government authorities may determine that operating learning centers in the way as currently conducted by our relevant subsidiaries is beyond the scope of “education information related consultation.” For these learning centers, we have been communicating, and will continue to communicate, with the competent industry and commerce administration authorities to expand the authorized business scope of the relevant subsidiaries to include “professional education services” or similar statement. For regions where it becomes apparent that we will not be able to expand the authorized business scope of the relevant subsidiaries, we will also explore the possibility of obtaining approval from the competent authorities to set up private schools to take over the operations of the relevant subsidiaries. If the relevant PRC government authorities discover or determine that our subsidiaries operate beyond their authorized business scope, they may order the relevant subsidiaries to complete the registration for change of business scope within a given period, failing which each company is subject to a one-time fine of RMB10,000 to RMB100,000, or may be ordered to cease its operation. We have been fined once for RMB50,000 for conducting business outside the authorized business scope since 2011.

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For our learning centers operated by schools, we are also required to obtain and maintain various licenses and permits and make filings for each learning center with the competent human resources and social security authorities and civil affairs authorities. As of December 31, 2016, one of our learning centers are operated by schools outside their approved districts without obtaining relevant licenses and permits, and eight of our learning centers are operated by schools outside their registered address without being registered with the original approving authorities, which may subject us to fines of RMB10,000 to RMB50,000, confiscation of the gains derived from the noncompliant operations or the suspension of the noncompliant learning centers. These eight learning centers in the aggregate accounted for 4.4% of our total student enrollments in 2016. We were unable to obtain the requisite permits or make the required filings in some districts because the local authorities discontinued granting permits or accepting filings for administrative reasons for a period of time. Although we have not been subject to any material fines or other penalties in relation to any non-compliance of licensing requirements in the past with respect to our learning centers operated by schools, if we fail to cure any non-compliance in a timely manner, we may be subject to fines, confiscation of the gains derived from our noncompliant operations or the suspension of our noncompliant learning centers, which may materially and adversely affect our business and results of operation.

We may lose market share and our profitability may be materially and adversely affected, if we fail to compete effectively with our present and future competitors or to adjust effectively to changing market conditions and trends.

The professional education services market in China is fragmented, rapidly evolving and highly competitive. We face competition in our offered courses and in many of the geographic markets in which we operate. As the IT professional education market in China matures, there is increased demand for highly specialized IT labor, and we may face competition from IT professional education providers that offer specialized training programs targeting certain niche job markets in the IT industry. In the future, we may also face competition from new entrants into the Chinese IT professional education market. As we expand beyond IT education into other fields of professional education, we also face competition for student enrollment from existing online and offline providers of professional education services, as well as smaller regional professional education services providers in China. Furthermore, we also face competition from providers of IT and non-IT education programs to kids.

Some of our competitors may be able to devote more resources than we can to the development, promotion and provision of their education services and respond more quickly than we can to changes in student needs, market trends or new technologies. In addition, some of our competitors may be able to respond faster to changes in student preferences in some of our geographic markets and engage in price-cutting strategies. We cannot assure you that we will be able to compete successfully against current or future competitors. If we are unable to maintain our competitive position or otherwise respond to competitive pressure effectively, we may be forced to reduce our tuition fees and lose our market share, which will adversely impact our profitability.

Our business and financial results may be materially and adversely affected if we are unable to maintain our cooperative relationships with financing service providers for student loans.

In 2014, 2015 and 2016, a substantial portion of our students relied on loans provided or arranged by a number of financing service providers to pay our tuition fees. In 2014, the financing service providers involved in tuition financing include Bank of China Consumer Finance Co., Ltd., or BOC CFC, CreditEase Business Consulting (Beijing) Co., Ltd., or CreditEase, and Bank of Beijing Consumer Finance Company, or BOB CFC. In 2015 and 2016, in addition to the above mentioned tuition financing services provided by those financing service providers, our students also took out loans facilitated through Baidu Small Loan Co., Ltd., or Baidu Small Loan, RenRenDai and ShiTuDai, consumer financing services provided by an independent third parties, to pay our tuitions. In 2014, 2015 and 2016, approximately 55.0%, 50.4% and 55.1% of our students took out loans provided or arranged by financing service providers to pay for our tuition fees.

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We have entered into cooperative agreements with Baidu Small Loan Co., Ltd, BOC CFC and BOB CFC pursuant to which they provide loans to our students for the payment of our tuition fees. We have also entered into agreements with CreditEase and RenRenDai, whereby they assisted our students in obtaining loans to pay for our tuition fees. Our cooperative agreement with BOC CFC has expired in March 2017 and we are in the process of renewing our cooperative agreement with BOC CFC. However, we may not be able to renew our cooperative agreement with BOC CFC on commercially reasonable terms or at all. Moreover, Baidu Small Loan Co., Ltd., RenRenDai, BOC CFC, CreditEase, and ShiTuDai have full discretion in deciding whether or not to extend or arrange for loans to a particular student. Furthermore, macroeconomic conditions in China may force the financing service providers to decrease or eliminate the amount of credit available for our students, making it difficult for our prospective students to afford our education. In addition, if the default rates on the loans provided or arranged by these and other financing service providers were to increase, they may raise the interest rates on the student loans, making such financing options less attractive to our students. Although peer-to-peer lending is generally protected as private loans between individuals under PRC law and has flourished in recent years in China, there are uncertainties as to the licensing requirements and the nature of business provided by those intermediaries, such as CreditEase, RenRenDai and ShiTuDai, in facilitating the peer-to-peer lending. If one or more new PRC laws and/or regulations are passed in the future prohibiting peer-to-peer lending facilitated by, or imposing significant licensing requirements on, intermediaries such as CreditEase, RenRenDai and ShiTuDai, we cannot assure you that CreditEase, RenRenDai or ShiTuDai will be able to obtain relevant licenses and continue facilitating peer-to-peer lending in the future. If CreditEase, RenRenDai or ShiTuDai ceases to facilitate peer-to-peer lending to our students in the future, if our cooperative relationships with the financing service providers are damaged or lost, or if the financing service providers significantly increase their interest rates, our business and financial results would be adversely affected.

If we fail to protect our intellectual property rights, we may lose our competitive advantage and our brand and operations may suffer.

We consider our copyrights, trademarks, trade names and domain names invaluable to our ability to continue to develop and enhance our brand recognition. Unauthorized use of our copyrights, trademarks, trade names and domain names may damage our reputation and brand. Our major brand names and logos are registered trademarks in China. Our proprietary curricula and course materials, together with our Tarena Teaching System, or TTS, are protected by copyrights. However, preventing copyright, trademark and trade name infringement or misuse could be difficult, costly and time-consuming, particularly in China. The measures we take to protect our copyrights, trademarks and other intellectual property rights are currently based upon a combination of trademark and copyright laws in China and may not be adequate to prevent unauthorized uses. Furthermore, application of laws governing intellectual property rights in China is uncertain and evolving, and could involve substantial uncertainties to us. There had been several incidents in the past where third parties used our “Tarena” (达内) brand without our authorization, and we had to resort to litigation to protect our intellectual property rights. These proceedings were all resolved in our favor and our brand and business were not materially harmed. However, if we are unable to adequately protect our trademarks, copyrights and other intellectual property rights in the future, we may lose our competitive advantage, our brand name may be harmed and our business may suffer materially. Furthermore, our management’s attention may be diverted by violations of our intellectual property rights, and we may be required to enter into costly litigation to protect our proprietary rights against any infringement or violation.

We may be subject to intellectual property rights claims or other claims which could result in substantial costs and diversion of our financial and management resources away from our business.

We cannot assure you that our course materials, other educational contents or other intellectual properties developed or used by us do not or will not infringe upon patents, valid copyrights or other intellectual property rights held by third parties. We may be subject to legal proceedings and claims from time to time relating to the intellectual property of others. In addition, some of our employees were previously employed at other companies, including our current and potential competitors. To the extent these employees are involved in content development at our company similar to content development in which they have been involved at their former employers, we may become subject to claims that such employees or we may have used or disclosed trade secrets or other proprietary information of the former employers of our employees. In addition, our competitors may file lawsuits against us. Although we are not aware of any pending or threatened claims, if any such claim arises in the future, litigation or other dispute resolution proceedings may be necessary to retain our ability to offer our current and future course materials or other content, which could result in substantial costs and diversion of our financial and management resources. Furthermore, if we are found to have violated the intellectual property rights of others, we may be enjoined from using such intellectual property rights, incur additional costs to license or develop alternative intellectual property rights and be forced to pay fines and damages, any of which may materially and adversely affect our business.

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We recruit a significant portion of our students directly from our network of cooperative universities and colleges. If we lose these relationships, or the benefits we derive from these relationships diminish, our growth and our business may be harmed.

We have established various kinds of cooperative relationships with over 690 universities and colleges in China. We enroll a significant percentage of our students directly from these universities and colleges through jointly offered majors, on-campus learning sites and university recruiting promotional events. We recruited approximately 14.8% of our students in 2016 from these universities and colleges. If our relationships with any of these universities and colleges were to be damaged or lost, or the benefits we derive from these relationships were to be diminished, whether by our own actions, actions of one or more governmental entities or actions of our competitors, our growth and our business may be harmed.

Failure to control rental costs, obtain leases at desired locations at reasonable prices or protect our leasehold interests could materially and adversely affect our business.

A majority of our offices and learning centers are located on leased premises. At the end of each lease term we must negotiate an extension of the lease. If we are not able to negotiate an extension on terms acceptable to us, we will be forced to move to a different location, or the rent may increase significantly. This could disrupt our operations and adversely affect our profitability. All of our leases are subject to renewal at market prices, which could result in a substantial rent increase each renewal period. We compete with many other businesses for sites in certain highly desirable locations. As a result, we may not be able to obtain new leases at desirable locations or renew our existing leases on acceptable terms or at all, which could adversely affect our business. As of December 31, 2016, we had received from our lessors copies of title certificates or proof of authorization to lease the properties to us for all leased properties. However, we cannot assure you that we will be able to obtain copies of title certificates or proof of authorization to lease any properties that we may lease in the future or the title to these properties we currently lease or any properties that we may lease in the future will not be otherwise challenged. Furthermore, several of our leased properties are owned by universities or built on allocated land in China. Such properties may not be legally leased to us under PRC law. Our leasehold interest in these properties may be challenged by relevant PRC governmental authorities to be invalid, and we may be forced to move out of such premises.

In addition, we have not registered most of our lease agreements with relevant PRC governmental authorities as required by PRC law, and although failure to do so does not in itself invalidate the leases, we may not be able to defend these leases against bona fide third parties. As of the date of this annual report, we are not aware of any actions, claims or investigations being contemplated by governmental authorities against us or our lessors with respect to the defects in our leased real properties or any challenges by third parties to our use of these properties. However, if any of our leases are terminated as a result of challenges by third parties or governmental authorities for lack of title certificates or proof of authorization to lease, we may not be able to protect our leasehold interest and may be forced to relocate the affected learning centers and incur additional expenses relating to such relocation. If we fail to find suitable replacement sites in a timely manner or on terms acceptable to us, our business and results of operations could be materially and adversely affected.

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Our accounts receivable have been relatively high. Inability to collect our accounts receivable on a timely basis, if at all, could materially and adversely affect our financial condition, liquidity and results of operations.

Understanding the difficulty for recent college graduates to afford the tuition fees of our courses, we offered qualified students the post-graduation tuition payment option beginning in 2006, which led to our relatively high accounts receivable. As of December 31, 2014, 2015 and 2016, our outstanding accounts receivable, net of allowance for doubtful accounts, were RMB151 million, RMB155 million and RMB99 million, respectively. Although we conduct financial evaluations of our students applying to use our post-graduation tuition payment option, we do not require collateral or other security from our students. Adverse changes in the macroeconomic environmental and the earnings capacity of our students may negatively impact our ability to collect our accounts receivable. Furthermore, as time passes, it might be more difficult for us to collect historical accounts receivables. Our bad debt allowance increased significantly between 2014 and 2015. In 2015, we observed an increase in the overall account aging for students enrolled between 2010 and 2014 who used the post-graduation payment option, as well as an increase in the cumulative default amount of accounts receivable from such students. As a result, we determined that the delinquency risk for the corresponding accounts receivable has increased as well. In 2016, our bad debt allowance decreased considerably from RMB63.1 million in 2015 to RMB33.6 million in 2016. However, there is no guarantee that our bad debt allowance and delinquency risk will keep decreasing in the following years. Our inability to collect our accounts receivable on a timely basis, if at all, could cause our bad debt allowance to increase or remain relatively high in the future, and materially and adversely affect our financial condition, liquidity and results of operations.

Capacity constraints of our learning centers could cause us to lose students to our competitors.

Our learning centers are limited in size and number of classrooms. We may not be able to admit all students who would like to enroll in our courses due to the capacity constraints of our learning centers. If we fail to expand our physical capacity as quickly as the demand for our classroom-based services grows, we could lose potential students to our competitors, which could adversely affect our results of operations and business prospects.

We may not be able to recoup the capital expenditures or investments we make to expand and upgrade our teaching, administrative, research and other capabilities.

We purchased two office buildings in Beijing for an aggregate price of RMB231.9million in 2016. The office buildings are mainly for teaching purpose, and to a lesser extent for administrative function. We also purchased a building in Qingdao and another one in Haikou for an aggregate price of RMB49.6 million in 2016. The purpose of these two buildings is for teaching purposes as learning centers to accommodate the growing demand in local market and enjoy local favorable policies. We may continue to invest in our teaching, administrative, research and other capabilities as our business further develops. Although we will evaluate the feasibility of each property purchase for the good of business operation, we are likely to incur costs associated with these investments earlier than some of the anticipated benefits and the return on these investments may be lower, or may develop more slowly, than we expect. We may not be able to recover our capital expenditures or investments, in part or in full, or the recovery of these capital expenditures or investments may take longer than expected. As a result, the carrying value of the related assets may be subject to an impairment charge, which could adversely affect our profitability.

Our strategy of investments and acquiring complementary businesses and assets may fail.

As part of our business strategy, we have pursued, and intend to continue to pursue, selective strategic investments and acquisitions of businesses and assets that complement our existing business. Investments and acquisitions involve uncertainties and risks, including:

· potential ongoing financial obligations and unforeseen or hidden liabilities, including liability for infringement of third-party copyrights or other intellectual property;

· failure to achieve the intended objectives, benefits or revenue-enhancing opportunities;

· costs and difficulties of integrating acquired businesses and managing a larger business;

· potentially significant goodwill impairment charges;

· high acquisition and financing costs;

· possible loss of key employees of a target business;

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· potential claims or litigation regarding our board’s exercise of its duty of care and other duties required under applicable law in connection with any of our significant acquisitions or investments approved by the board;

· diversion of resources and management attention; and

· in the case of acquisitions of businesses or assets outside of China, the need to integrate operations across different business cultures and languages and to address the particular economic, currency, political, and regulatory risks associated with specific countries.

Any failure to address these risks successfully may have a material and adverse effect on our financial condition and results of operations. Investments and acquisitions may require a significant amount of capital investment, which would decrease the amount of cash available for working capital or capital expenditures. In addition, if we use our equity securities to pay for investments and acquisitions, we may dilute the value of our ADSs and the underlying ordinary shares. If we borrow funds to finance investments and acquisitions, such debt instruments may contain restrictive covenants that could, among other things, restrict us from distributing dividends. Moreover, acquisitions may also generate significant amortization expenses related to intangible assets. We may also incur impairment charges to earnings for investments and acquired businesses and assets which are determined to be impaired, and recognize the proportional share of the net losses of the investees to the extent of the amount of the investments for the equity method investments.

Geographic concentration of our learning centers may unfavorably impact our operations.

We derive a substantial portion of our net revenues from our entities in Hangzhou and Beijing. Revenue derived from the entities in Hangzhou accounted for 25.5%, 33.0% and 31.9% of our net revenues in 2014, 2015 and 2016, respectively. Revenue derived from the entities in Beijing accounted for 15.5%, 12.3% and 12.4% of our net revenues in 2014, 2015 and 2016, respectively. As a result of this geographic concentration, our results of operations are significantly affected by economic conditions in Hangzhou and Beijing. Furthermore, any natural disaster or health epidemics affecting the Hangzhou and Beijing regions could significantly impact our operations. Although we have been and will be exploring opportunities of setting up additional learning centers in second tier or third tier cities, we expect that we will continue to derive a substantial portion of our net revenues from Hangzhou and Beijing in the near future. Deterioration in economic conditions and the professional services industries in these markets could decrease the demand for our courses, which in turn could negatively impact our operations and business prospects.

Our historical financial and operating results, growth rates and profitability may not be indicative of future performance.

Although we commenced operations in 2002, our significant business growth and expansion began in 2009. Our business and our prospects must be evaluated in light of the risks and uncertainties encountered by companies at a comparable stage of development. In addition, the professional education services market in China is still at an early stage of development, which makes it difficult to evaluate our business and future prospects. Furthermore, our results of operations may vary from period to period in response to a variety of other factors, including general economic conditions and regulations, government actions pertaining to the professional education services sector in China, changes in spending on professional education services, our ability to control cost of revenues and operating expenses, and non-recurring charges incurred in connection with acquisitions or other extraordinary transactions or under unexpected circumstances. Due to the above factors, some of which are beyond our control, our historical financial and operating results, growth rates and profitability may not be indicative of our future performance and you should not rely on our past results or our historic growth rates as indicators of our future performance.

Our ability to broadcast our lectures live and to offer online learning modules on TTS depends upon the performance and reliability of our systems and the Internet infrastructure and telecommunications networks in China.

We deliver live broadcasts of our lectures via a dedicated network provided by China Telecom and China Unicom to terminals located in selected learning centers with high student enrollment and via public Internet infrastructure to other learning centers. Any unscheduled service interruption of the Internet infrastructure and telecommunications networks in China could cause us to be unable to deliver these live broadcasts, forcing us to resort to using pre-recorded lectures in the event of such service interruptions. Our inability to broadcast live lectures during service interruptions may damage the quality of our education and student experience, which may hurt our reputation and negatively impact our financial condition and results of operations. Furthermore, our gross profit and net income could be adversely affected if the prices that we pay for telecommunications and Internet services rise significantly.

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Our ability to offer online learning modules also depends on the performance and reliability of the Internet infrastructure in China. Disruptions to the Internet infrastructure of China may deny our students access to the learning functionalities on our TTS or TMOOC.cn, which may hinder students from effectively learning our education contents. Furthermore, increases in the traffic on TTS or TMOOC.cn could also strain the capacity of our existing computer systems, which could lead to slower response times or system failures. This would cause a disruption or suspension in our course offerings, which would hurt our brand and reputation and negatively affect our revenue growth. We may need to incur additional costs to improve our systems in order to accommodate increased demand if we anticipate that our systems cannot handle higher traffic volume in the future.

Our new CRM system may not function properly, which may materially and adversely affect our operations

We switched to a new customer relationship management, or CRM system, in August 2015. The new CRM system is developed in-house and is intended to improve functionality and information flow. As with any major new software system, there are inherent risks in the design, construction, implementation and operation of our new CRM system. These risks include the potential failures to properly design the system, to efficiently construct and implement the system and to effectively operate the system. While we believe that our new CRM system will provide the anticipated IT and customer service enhancements we expect, no assurances can be given in this regard. The failure to properly and efficiently operate the new CRM system could disrupt our operations and adversely affect our financial results.

Accidents or injuries suffered by our students or other people on our premises may adversely affect our reputation, subject us to liability and cause us to incur substantial costs.

We do not carry liability insurance for most of our students at our learning centers. In the event of accidents, injuries or other harm to students or other people on our premises, including those caused by or otherwise arising from the actions of our employees on our premises, our facilities may be perceived to be unsafe, which may discourage prospective students from attending our classes. We could also face claims alleging that we were negligent or provided inadequate supervision to our employees and therefore should be held jointly liable for harm caused by them or are otherwise liable for injuries suffered by our students or other people on our premises. A liability claim, even of unsuccessful, against us or any of our employees could adversely affect our reputation, enrollment and revenues, causing us to incur substantial expenses and divert the time and attention of our management.

If we fail to maintain an effective system of internal controls, we may be unable to accurately report our results of operations or prevent fraud or fail to meet our reporting obligations, and investor confidence and the market price of our ADSs may be materially and adversely affected.

We are subject to reporting obligations under the U.S. securities laws. Among other things, the Securities and Exchange Commission, or the SEC, as required by Section 404 of the Sarbanes-Oxley Act of 2002, or Section 404, adopted rules requiring every public company, including us, to include a management report on the company’s internal control over financial reporting in its annual report, which contains management’s assessment of the effectiveness of the company’s internal control over financial reporting. In addition, once we cease to be an “emerging growth company,” as such term is defined in the Jumpstart Our Business Startups Act of 2012 (as amended by the Fixing America’s Surface Transportation Act of 2015), or the JOBS Act, our independent registered public accounting firm may be required to report on the effectiveness of our internal control over financial reporting.

Our management has concluded that our internal control over financial reporting was effective as of December 31, 2016. See “Item 15. Controls and Procedures.” In the future, however, if we fail to maintain effective internal control over financial reporting, our management may not be able to conclude that we have effective internal control over financial reporting at a reasonable assurance level. A failure to achieve and maintain effective internal controls over financial reporting could result in inaccuracies in our financial statements and could also impair our ability to comply with applicable financial reporting requirements and related regulatory filings on a timely basis. As a result, our business, financial condition, results of operations and prospects, as well as the trading price of our ADSs, may be materially and adversely affected. Moreover, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions. We may also be required to restate our financial statements from prior periods.

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Furthermore, even if our management concludes that our internal control over financial reporting is effective, our independent registered public accounting firm, after conducting its own independent testing, may issue a report that is qualified if it is not satisfied with our internal controls or the level at which our controls are documented, designed, operated or reviewed, or if it interprets the relevant requirements differently from us. In addition, as a public company, our reporting obligations may place a significant strain on our management, operational and financial resources and systems for the foreseeable future. We may be unable to timely complete our evaluation testing and any required remediation. If we fail to maintain an effective internal control environment, we could suffer material misstatements in our financial statements and fail to meet our reporting obligations, which would likely cause investors to lose confidence in our reported financial information. This could in turn limit our access to capital markets, harm our results of operations and lead to a decline in the trading price of our ADSs. Additionally, ineffective internal control over financial reporting could expose us to increased risk of fraud or misuse of corporate assets and subject us to potential delisting from the stock exchange on which we list, regulatory investigations and civil or criminal sanctions.

We have limited insurance coverage for our operations in China.

Insurance companies in China currently do not offer as extensive an array of insurance products as insurance companies do in more developed economies. We have determined that the risks of disruption or liability from our business, the loss or damage to our fixed assets, including our equipment and office furniture, the cost of insuring for these risks, and the difficulties associated with acquiring such insurance on commercially reasonable terms render it commercially impractical for us to have such insurance. As a result, we do not have any business interruption, litigation or property insurance coverage for our operations in China. Any uninsured occurrence of personal injury, loss or damage to fixed assets, or litigation or business disruption may result in the incurrence of substantial costs and the diversion of resources, which could have an adverse effect on our operating results.

Our business is subject to seasonal fluctuations, which may cause our operating results to fluctuate from quarter to quarter. This may result in volatility in and adversely affect the price of our ADSs.

We have experienced, and expect to continue to experience, seasonal fluctuations in our net revenues and results of operations, primarily due to seasonal changes in student enrollment. Historically, our courses tend to have the largest student enrollment, cash collection and net revenues in the third and fourth quarters. We generally generate less tuition fees in the first quarter of each year due to the Chinese New Year holiday. Our expenses, however, vary significantly and do not necessarily correspond to changes in our student enrollment and net revenues. We make investments in marketing and promotion, instructor recruitment and training and course development throughout the year. We expect quarterly fluctuations in our net revenues and results of operations to continue. These fluctuations could result in volatility and adversely affect the price of our ADSs. As our net revenues grow, these seasonal fluctuations may become more pronounced.

Higher labor costs and inflation in China may adversely affect our business and our profitability.

Labor costs in China have risen in recent years. We employed 6,257 employees in China as of December 31, 2016. The increases in labor cost may erode our profitability and materially harm our business, financial condition and results of operations. In addition, PRC government have promulgated some new laws and regulations to enhance labor protection in recent years, such as the Labor Contract Law and the Social Insurance Law, which are also expected to cause our labor costs to increase. As the interpretation and implementation of these new laws and regulations are still evolving, our employment practice may not be at all times be deemed in compliance with the new laws and regulations. If we are subject to severe penalties or incur significant liabilities in connection with labor disputes or investigation, our business and profitability may be adversely affected.

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Although we have not in the past been materially affected by inflation since our inception, we can provide no assurance that we will not be affected in the future by higher rates of inflation in China.

We have granted share-based awards and may grant more share-based awards in the future, which may materially reduce our net income.

We adopted a share plan in 2008, or the 2008 Plan, that permits granting of options to purchase our ordinary shares, restricted shares (or share appreciation rights or other similar awards) and rights to purchase restricted shares. Under the 2008 Plan, the maximum aggregate number of ordinary shares that may be issued pursuant to all awards under our share plan is 8,184,990 shares. In February 2014, we adopted a 2014 share incentive plan, or the 2014 Plan. Pursuant to the 2014 Plan, we may issue options, restricted shares and restricted share units to our qualified employees, directors and consultants on a regular basis. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, or the Award Pool, is 1,833,696, provided that the shares reserved in the Award Pool shall be increased on the first day of each calendar year, commencing with January 1, 2015, if the unissued shares reserved in the Award Pool on such day account for less than 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year, as a result of which increase the shares unissued and reserved in the Award Pool immediately after each such increase shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year. As a result of grants and potential future grants under the 2008 Plan and the 2014 Plan, we have incurred and will continue to incur share-based compensation expenses. As of December 31, 2016, the unrecognized compensation cost related to unvested options and non-vested shares amounted to RMB71.3 million and RMB0.2 million, respectively, which will be recognized over a weighted average period of approximately 2.18 years and 0.25 year. Expenses associated with share-based compensation awards granted under our share plan may materially reduce our future net income. However, if we limit the size of grants under our share plan to minimize share-based compensation expenses, we may not be able to attract or retain key personnel.

Any natural catastrophes, severe weather conditions, health epidemics and other extraordinary events could severely disrupt our business operations.

The occurrence of natural catastrophes such as earthquakes, floods, typhoons, tsunamis or any acts of terrorism may result in significant property damages as well as loss of revenues due to interruptions in our business operations. Health epidemics such as outbreaks of Zika, Ebola, avian influenza, severe acute respiratory syndrome (SARS) or the influenza A (H1N1), and severe weather conditions such as snow storm and hazardous air pollution, as well as the government measures adopted in response to these events, could require the temporary closure of our learning centers.

Furthermore, our ability to broadcast live lectures and provide our education services through TTS or TMOOC.cn depends on the continuing operation of our technology system, which is vulnerable to damage or interruption from natural catastrophes and other extraordinary events. Our disaster recovery planning cannot account for every conceivable possibility. Any damage to or failure of our technology system could result in interruptions in our services, and our brand could be damaged if students believe our systems are unreliable. Such disruptions could severely interfere with our business operations and adversely affect our results of operations.

Risks Relating to Our Corporate Structure

If the PRC government finds that the agreements that establish the structure for holding our ICP license do not comply with applicable PRC laws and regulations, we could be subject to severe penalties.

Prior to 2012, we conducted a substantial portion of our operations through our consolidated VIEs and their subsidiaries and schools. On January 30, 2012, the PRC Catalogue for the Guidance of Foreign Investment Industries (amended) became effective, which listed professional education service as an industry for which foreign investments are “encouraged” by the government. On April 10, 2015, the new PRC Catalogue for the Guidance of Foreign Investment Industries (amended) became effective, which listed non-accredited professional education service as an industry for which foreign investments are “encouraged” by the government. In light of such change of law, starting from the second half of 2012, we began to transfer the operations, including related assets and liabilities, of our consolidated VIEs to Tarena Tech and its subsidiaries and schools. All of our learning center operations of VIEs had been transferred to Tarena Tech and its subsidiaries and schools. In December 2016, we would up Shanghai Tarena, one of our VIEs. Pursuant to the Provisions on Administration of Foreign Invested Telecommunications Enterprises promulgated by the State Council on December 11, 2001 and amended on September 10, 2008, the ultimate foreign equity ownership in a value-added telecommunications services provider may not exceed 50%. Moreover, for a foreign investor to acquire any equity interest in a value-added telecommunication business in China, it must satisfy a number of stringent performance and operational experience requirements, including demonstrating good track records and experience in operating value-added telecommunication business overseas. Foreign investors that meet these requirements must obtain approvals from the MIIT and the Ministry of Commerce, or the MOFCOM, or their authorized local counterparts, which retain considerable discretion in granting approvals. Pursuant to publicly available information, the PRC government has issued telecommunications business operating licenses to only a limited number of foreign invested companies, all of which are Sino-foreign joint ventures engaging in the value-added telecommunication business. Although the Guidance Catalog of Industries for Foreign Investment amended in 2015 and Circular 196 promulgated by MIIT in June 2015 allows a foreign investor to own up to 100% of the total equity interest in an E-Commerce business, we have not engaged in any E-Commerce business. Due to the foreign ownership restriction on Internet content and other value-added telecommunication services, we operate our TMOOC.cn website through our VIE, Beijing Tarena. Beijing Tarena has added our TMOOC.cn website under the ICP license held by Beijing Tarena. Beijing Tarena is 70% owned by Mr. Shaoyun Han, our founder, chairman and chief executive officer, and 30% owned by Mr. Jianguang Li, our director. Mr. Han and Mr. Li are both PRC citizens. We entered into a series of contractual arrangements with Beijing Tarena and its shareholders, which enable us to:

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· exercise effective financial control over Beijing Tarena;

· receive substantially all of the economic benefits and bear the obligation to absorb substantially all of the losses of Beijing Tarena; and

· have an exclusive option to purchase all or part of the equity interests in Beijing Tarena when and to the extent permitted by PRC law.

Because of these contractual arrangements, we are the primary beneficiary of Beijing Tarena and consolidate its financial results in our consolidated financial statements in accordance with U.S. GAAP. For a detailed discussion of these contractual arrangements, see “Item 4. Information on the Company—C. Organizational Structure.”

Han Kun Law Offices, our PRC legal counsel, is of the opinion that (i) the ownership structure of Beijing Tarena and Tarena Tech will not result in any violation of PRC laws or regulations currently in effect; and (ii) the contractual arrangements among Tarena Tech, Beijing Tarena and its shareholders governed by PRC law are valid, binding and enforceable, and will not result in any violation of PRC laws or regulations currently in effect. There are, however, substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations concerning foreign investment in the PRC, and their application to and effect on the legality, binding effect and enforceability of the contractual arrangements. In particular, we cannot rule out the possibility that PRC regulatory authorities, courts or arbitral tribunals may in the future adopt a different or contrary interpretation or take a view that is inconsistent with the opinion of our PRC legal counsel. It is uncertain whether any new PRC laws or regulations relating to VIE will be adopted or if adopted, what they would provide. In or around September 2011, various media sources reported that the China Securities Regulatory Commission, or the CSRC, had prepared a report proposing regulating the use of VIE structures, such as ours, in industries subject to foreign investment restrictions in China and overseas listings by China-based companies. However, it is unclear whether the CSRC officially issued or submitted such a report to a higher level government authority or what such report provides, or whether any new PRC laws or regulations relating to the VIE structures will be adopted or if adopted, what they would provide. In January 2015, the MOFCOM published a discussion draft of the proposed Foreign Investment Law for public review and comments. Among other things, the draft Foreign Investment Law expands the definition of foreign investment and introduces the principle of “actual control” in determining whether a company is considered a foreign-invested enterprise, or an FIE. Under the draft Foreign Investment Law, variable interest entities would also be deemed as FIEs, if they are ultimately “controlled” by foreign investors, and be subject to restrictions on foreign investments. However, the draft law has not taken a position on what actions will be taken with respect to existing companies with the “variable interest entity” structure, whether or not these companies are controlled by Chinese parties. It is uncertain when the draft would be signed into law and whether the final version would have any substantial changes from the draft. See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Value–Added Telecommunications Services—The Discussion Draft PRC Foreign Investment Law” and “—Risks Relating to Doing Business in China—Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.”

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If we or Beijing Tarena is found to be in violation of any existing or future PRC laws or regulations, or such arrangement is determined as illegal and invalid by the PRC court, arbitral tribunal or regulatory authorities, or fail to obtain, maintain or renew any of the required permits or approvals, the relevant PRC regulatory authorities would have broad discretion to take action in dealing with such violations or failures, including:

· revoking the business and operating licenses of our PRC subsidiaries and Beijing Tarena;

· discontinuing or restricting the conduct of any transactions between our PRC subsidiaries and Beijing Tarena;

· imposing fines, confiscating the income from Beijing Tarena, or imposing other requirements with which we or Beijing Tarena may not be able to comply; or

· requiring us to restructure our ownership structure or operations, including terminating the contractual arrangements with Beijing Tarena and deregistering the equity pledges of Beijing Tarena.

We launched our TMOOC.cn online learning platform in March 2015 to cover a broader customer base. TMOOC.cn features sample lecture videos and class materials covering our course subjects. We offer our part-time class students the opportunity to complete a portion of lessons online using TMOOC.cn. TMOOC.cn is also important for our marketing efforts. Therefore, the imposition of any of these penalties could result in a material and adverse effect on our ability to provide online education services and conduct our marketing and promotional activities through TMOOC.cn. Beijing Tarena has added our TMOOC.cn website under its ICP license. However, we cannot guarantee that Beijing Tarena will be successful in applying for the ICP license annual inspection. If we fail to go through the ICP annual inspection, our continued operation of TMOOC.cn may subject us to penalties, including confiscation of illegal income and fines, and we may be ordered to shut down our TMOOC.cn website.

If the relevant PRC authorities determine that we can no longer own and operate certain of our learning centers through our PRC subsidiaries, we may need to restructure the ownership and operation of these learning centers (including possibly transferring these learning centers to our consolidated VIE), our business may be disrupted and we may be exposed to increased risks associated with the contractual arrangements relating to our consolidated VIE.

Prior to 2012, we operated a substantial portion of our learning centers through our consolidated VIE and their subsidiaries and schools. After the PRC Catalogue for the Guidance of Foreign Investment Industries (amended) became effective on January 30, 2012 and as amended on April 10, 2015, non-accredited foreign investment in professional education services is now “encouraged” in China and there is no limitation with respect to maximum percentage of foreign ownership in a company conducting business in this area.

In light of such change of law, starting from the second half of 2012, we began to transfer the operations, including related assets and liabilities, of our consolidated VIEs to our wholly-owned subsidiary, Tarena Tech, and its subsidiaries. All of our learning center operations of VIEs had been transferred to Tarena Tech and its subsidiaries and schools. As of December 31, 2016, we operated 49 of our learning centers through private schools owned by subsidiaries of Tarena Tech. These 49 learning centers in the aggregate accounted for 31.6% of our total student enrollments in 2016.

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However, there are still uncertainties under current PRC laws as to whether a wholly foreign owned enterprise (such as Tarena Tech) is allowed to indirectly invest in and own private schools through its PRC subsidiaries. On the one hand, the PRC Catalogue for the Guidance of Foreign Investment Industries (Amended) encourages and permit 100% foreign ownership of non-accredited professional training business in China and the Law for Promoting Private Education does not expressly prohibit a subsidiary of a foreign-invested enterprise from investing in private schools. On the other hand, according to the Law for Promoting Private Education, Chinese-foreign cooperation in operating schools is specifically governed by the Regulations on Operating Chinese-foreign Schools and its implementing rules, which requires specific approvals from those governmental authorities in charge of either human resources and social security or education and requires any foreign party to such Chinese-foreign cooperation in operating schools to be an educational institution with relevant experience in providing educational services outside of China. In addition, the Regulations on Operating Chinese-foreign Schools prohibits foreign institutions or individuals from independently establishing schools which provide educational services mainly for Chinese citizens in China. In practice, different local authorities have different views and administrative policies on whether foreign institutions or individuals are permitted to use their direct or indirect wholly-owned subsidiary incorporated in China to establish a school under the Law for Promoting Private Education without violating the Regulations on Operating Chinese-foreign Schools. 24 private schools sponsored by our wholly-owned subsidiaries in China have obtained private school operating permits, and based on the results of oral inquiries with the relevant governmental authorities of human resources and social security or education, we believe that the relevant government authorities have not challenged and are unlikely to challenge the ownership structure of our schools. However, if the relevant PRC government authorities determine in the future that we can no longer own and operate our schools and their related learning centers through our PRC subsidiaries, which are considered ineligible to act as sponsors of private schools, we may need to transfer these schools and the related learning centers to our consolidated VIE, which may severely disrupt our business and expose us to increased risks associated with the contractual arrangements relating to our consolidated VIE. See “—Risks Relating to Our Corporate Structure.” If we fail to restructure the ownership and operation of these schools or otherwise accommodate requests from the relevant PRC human resources and social security or education regulatory authorities in a timely manner or to their satisfaction, we may be subject to fines, the suspension or ceasing of our operations or other penalties, which may materially and adversely affect our business and results of operations.

Any failure by Beijing Tarena or its shareholders to perform their obligations under our contractual arrangements with them would have an adverse effect on our business.

If Beijing Tarena or its shareholders fail to perform their obligations under their contractual arrangements with us, we may have to incur substantial costs and expend additional resources to enforce such arrangements. We may also have to rely on legal remedies under PRC law, including seeking specific performance or injunctive relief, and claiming damages, which we cannot assure you will be effective. For example, if the shareholders of Beijing Tarena were to refuse to transfer their equity interest in Beijing Tarena to us or our designee if we exercise the exclusive option agreements pursuant to these contractual arrangements, or if they were otherwise to act in bad faith toward us, then we may have to take legal actions to compel them to perform their contractual obligations.

All the agreements under our contractual arrangements are governed by PRC law and provide for the resolution of disputes through arbitration in China. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as in some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit our ability to enforce these contractual arrangements. Under PRC law, if the losing parties fail to carry out the arbitration awards within a prescribed time limit, the prevailing parties may only enforce the arbitration awards in PRC courts through arbitration award recognition proceedings, which would require additional expenses and delay. In the event we are unable to enforce these contractual arrangements, we may not be able to exert effective financial control over Beijing Tarena, and our ability to conduct our business may be negatively affected.

If we had direct ownership of Beijing Tarena, we would be able to exercise our rights as a shareholder to effect changes in the board of directors of Beijing Tarena, which in turn could effect changes, subject to any applicable fiduciary obligations, at the management level. However, under the current contractual arrangements, we rely on the performance by Beijing Tarena and its shareholders of their obligations under the contracts to exercise control over Beijing Tarena. Therefore, our contractual arrangements with Beijing Tarena may not be as effective in ensuring our control over the relevant portion of our business operations as direct ownership would be.

The shareholders of Beijing Tarena may have potential conflicts of interest with us, which may materially and adversely affect our business and financial condition.

We have designated individuals who are PRC nationals to be the shareholders of Beijing Tarena. The equity interests of Beijing Tarena are held by Mr. Shaoyun Han and Mr. Jianguang Li. The interests of these individuals as the shareholders of Beijing Tarena may differ from the interests of our company as a whole. These shareholders may breach, or cause Beijing Tarena to breach, or refuse to renew, the existing contractual arrangements we have with them and Beijing Tarena, which would have a material and adverse effect on our ability to effectively control Beijing Tarena. We cannot assure you that when conflicts of interest arise, any or all of these shareholders will act in the best interests of our company or such conflicts will be resolved in our favor.

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Currently, we do not have any arrangements to address potential conflicts of interest between these shareholders and our company, except that we could exercise our purchase option under the purchase option agreement with these shareholders to request him to transfer all of his equity ownership in Beijing Tarena to a PRC entity or individual designated by us. We rely on Mr. Shaoyun Han and Mr. Jianguang Li, who are both our directors and who owe a fiduciary duty to our company, to comply with the terms and conditions of the contractual arrangements. Such fiduciary duty requires directors to act in good faith and in the best interests of the company and not to use their positions for personal gains. If we cannot resolve any conflict of interest or dispute between us and the shareholders of Beijing Tarena, we would have to rely on legal proceedings, which could result in disruption of our business and subject us to substantial uncertainty as to the outcome of any such legal proceedings.

Our contractual arrangements with our consolidated VIE may be subject to scrutiny by the PRC tax authorities, and a finding that we owe additional taxes could substantially reduce our consolidated net income and the value of your investment.

Under PRC laws and regulations, arrangements and transactions among related parties may be subject to audit or challenge by the PRC tax authorities. We could face material and adverse tax consequences if the PRC tax authorities determine that the contractual arrangements among Tarena Tech and our consolidated VIE did not represent an arm’s-length price and adjust our consolidated VIE’ income in the form of a transfer pricing adjustment. A transfer pricing adjustment could, among other things, result in a reduction, for PRC tax purposes, of expense deductions recorded by our consolidated VIE, which could in turn increase their tax liabilities without reducing our tax liabilities. In addition, the PRC tax authorities may impose late payment fees and other penalties to our consolidated VIE for under-paid taxes. Our consolidated net income may be materially and adversely affected if our tax liabilities increase or if we are found to be subject to late payment fees or other penalties.

If Beijing Tarena becomes the subject of a bankruptcy or liquidation proceeding, we may lose the ability to use and enjoy its assets, which could materially and adversely affect our business.

Due to foreign ownership restrictions in the online value-added telecommunications business, we hold our ICP license through contractual arrangements with Beijing Tarena as well as its shareholders. As part of these arrangements, Beijing Tarena holds assets that are important to the operation of our business, including the domain name and ICP license for our TMOOC.cn website.

We do not have priority pledges and liens against Beijing Tarena’s assets. As a contractual and property right matter, this lack of priority pledges and liens has remote risks. If Beijing Tarena undergoes an involuntary liquidation proceeding, third-party creditors may claim rights to some or all of its assets and we may not have priority against such third-party creditors on Beijing Tarena’s assets. If Beijing Tarena liquidates, we may take part in the liquidation procedures as a general creditor under the PRC Enterprise Bankruptcy Law and recover any outstanding liabilities owed by Beijing Tarena to Tarena Tech under the applicable service agreements. To ameliorate the risks of an involuntary liquidation proceeding initiated by a third-party creditor, we closely monitor the operations and finances of Beijing Tarena through carefully designed budgetary and internal controls to ensure that Beijing Tarena is well capitalized and is highly unlikely to trigger any third party monetary claims in excess of its assets and cash resources. Furthermore, Tarena Tech has the ability, if necessary, to provide financial support to Beijing Tarena to prevent such an involuntary liquidation.

If the shareholders of Beijing Tarena were to attempt to voluntarily dissolve or liquidate Beijing Tarena without obtaining our prior consent, we could effectively prevent such unauthorized voluntary liquidation by exercising our right to request Beijing Tarena’s shareholders to transfer all of their equity ownership interest to a PRC entity or individual designated by us in accordance with the exclusive option agreements with the shareholders of Beijing Tarena. In the event that the shareholders of Beijing Tarena initiates a voluntary liquidation proceeding without our authorization or attempts to distribute the retained earnings or assets of Beijing Tarena without our prior consent, we may need to resort to legal proceedings to enforce the terms of the contractual agreements. Any such legal proceeding may be costly and may divert our management’s time and attention away from the operation of our business, and the outcome of such legal proceeding would be uncertain. The uncertainties in legal proceedings to enforce the terms of the contractual agreements are mainly caused by PRC laws that prohibit domestic companies holding ICP licenses from assisting foreign investors in conducting value-added telecommunications business in China. Under the MIIT Circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications business illegally in China.

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If the custodians or authorized users of our controlling non-tangible assets, including chops and seals, fail to fulfill their responsibilities, or misappropriate or misuse these assets, our business and operations could be materially and adversely affected.

In China, legal documents for corporate transactions, including agreements and contracts such as the leases and sales contracts that our business relies on, are typically executed using the chop or seal of the signing entity or with the signature of a legal representative whose designation is registered and filed with the relevant local branch of the State Administration for Industry and Commerce, or the SAIC. We generally execute legal documents by affixing chops or seals, rather than having the designated legal representatives sign the documents.

We have three major types of chops—corporate chops, contract chops and finance chops. We use corporate chops generally for documents to be submitted to government agencies, such as applications for changing business scope, directors or company name, and for legal letters. We use contract chops for executing leases and commercial contracts. We use finance chops generally for making and collecting payments, including but not limited to issuing invoices. Use of corporate chops and contract chops must be approved by our legal department and administrative department, and use of finance chops must be approved by our finance department. The chops of our subsidiaries and our consolidated VIE are generally held by the relevant entities so that documents can be executed locally. Although we usually utilize chops to execute contracts, the registered legal representatives of our PRC subsidiaries and our consolidated VIE have the apparent authority to enter into contracts on behalf of such entities without chops, unless such contracts set forth otherwise. All designated legal representatives of our PRC subsidiaries and our consolidated VIE have signed employment agreements with us under which they agree to abide by duties they owe to us.

In order to maintain the physical security of our chops, we generally store them in secured locations accessible only to the department heads of the legal, administrative or finance departments. Our designated legal representatives generally do not have access to the chops. Although we monitor our employees, including the designated legal representatives of our PRC subsidiaries and our consolidated VIE, the procedures may not be sufficient to prevent all instances of abuse or negligence. There is a risk that our employees or designated legal representatives could abuse their authority, for example, by binding the relevant subsidiary or consolidated VIE with contracts against our interests, as we would be obligated to honor these contracts if the other contracting party acts in good faith in reliance on the apparent authority of our chops or signatures of our legal representatives. If any designated legal representative obtains control of the chop in an effort to obtain control over the relevant entity, we would need to have a shareholder or board resolution to designate a new legal representative and to take legal action to seek the return of the chop, apply for a new chop with the relevant authorities, or otherwise seek legal remedies for the legal representative’s misconduct. If any of the designated legal representatives obtains and misuses or misappropriates our chops and seals or other controlling intangible assets for whatever reason, we could experience disruption to our normal business operations. We may have to take corporate or legal action, which could involve significant time and resources to resolve while distracting management from our operations.

Risks Relating to Doing Business in China

Uncertainties in the interpretation and enforcement of PRC laws and regulations could limit the legal protections available to you and us.

The PRC legal system is based on written statutes. Unlike common law systems, it is a system in which legal cases have limited value as precedents. In the late 1970s, the PRC government began to promulgate a comprehensive system of laws and regulations governing economic matters. The overall effect of legislation over the past three decades has significantly increased the protections afforded to various forms of foreign or private-sector investment in China. Our PRC subsidiaries are subject to various PRC laws and regulations generally applicable to companies in China. However, since these laws and regulations are relatively new and the PRC legal system continues to rapidly evolve, the interpretations of many laws, regulations and rules are not always uniform and enforcement of these laws, regulations and rules involve uncertainties.

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From time to time, we may have to resort to administrative and court proceedings to enforce our legal rights. However, since PRC administrative and court authorities have significant discretion in interpreting and implementing statutory terms, it may be more difficult to evaluate the outcome of administrative and court proceedings and the level of legal protection we enjoy than in more developed legal systems. Furthermore, the PRC legal system is based in part on government policies and internal rules (some of which are not published in a timely manner or at all) some of which may have retroactive effect. As a result, we may not be aware of our violation of these policies and rules until some time after the violation. Such uncertainties, including uncertainty over the scope and effect of our contractual, property (including intellectual property) and procedural rights, and any failure to respond to changes in the regulatory environment in China could materially and adversely affect our business and impede our ability to continue our operations.

Changes in China’s economic, political or social conditions or government policies could have a material adverse effect on our business and operations.

All of our business operations are conducted in China. Accordingly, our business, financial condition, results of operations and prospects may be influenced to a significant degree by political, economic and social conditions in China generally and by continued economic growth in China as a whole.

China’s economy differs from the economies of most developed countries in many respects, including the level of government involvement, level of development, growth rate, control of foreign exchange and allocation of resources. Although the PRC government has implemented measures since the late 1970s emphasizing the utilization of market forces for economic reform, the reduction of state ownership of productive assets, and the establishment of improved corporate governance in business enterprises, a substantial portion of productive assets in China is still owned by the PRC government. In addition, the PRC government continues to play a significant role in regulating industry development by imposing industrial policies. The PRC government also exercises significant control over the PRC economic growth through allocating resources, controlling payment of foreign currency-denominated obligations, setting monetary policy, and providing preferential treatment to particular industries or companies.

While China’s economy has experienced significant growth over the past decades, growth has been uneven, both geographically and among various sectors of the economy, and the rate of growth has been slowing. Some of the government measures may benefit the overall Chinese economy, but may have a negative effect on us. For example, our financial condition and results of operations may be adversely affected by government control over capital investments or changes in tax regulations. Any stimulus measures designed to boost the Chinese economy may contribute to higher inflation, which could adversely affect our results of operations and financial condition.

We may be subject to significant limitations on our ability to operate private schools, or otherwise be materially and adversely affected by changes in PRC laws governing private education providers.

Under the Law for Promoting Private Education and the Implementation Rules for The Law for Promoting Private Education, a private school may elect to be a school that does not require reasonable returns or a school that requires reasonable returns. At the end of each fiscal year, every private school is required to allocate a certain amount to its development fund for the construction or maintenance of the school or procurement or upgrade of educational equipment. In the case of a private school that requires reasonable returns, this amount shall be no less than 25% of annual net income of the school, while in the case of a private school that does not require reasonable returns, this amount shall be equivalent to no less than 25% of the annual increase in the net assets of the school, if any. A private school that requires reasonable returns must publicly disclose such election and additional information required under the regulations. A private school shall consider factors such as the school’s tuition, ratio of the funds used for education-related activities to the course fees collected, admission standards and educational quality when determining the percentage of the school’s net income that would be distributed to the investors as reasonable returns. However, none of the current PRC laws and regulations provides a formula or guidelines for determining “reasonable returns.” In addition, the amendment of the Law for Promoting Private Education released on November 7, 2016, which will become effective on September 1, 2017, allows for-profit private schools to obtain returns, which will be further regulated by the PRC corporate law and other relevant laws and regulations.

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As of December 31, 2016, we had five schools registered as schools requiring reasonable returns, while 20 schools are registered as schools not requiring reasonable returns. Unlike typical schools which grant diplomas to students upon graduation, we provide professional education and do not grant any diploma to our students. However, the current PRC laws and regulations governing private education may be amended or replaced by new laws and regulations that (i) impose significant limitations on the ability of our schools to operate their business, charge course fees or make payments to related parties for services, (ii) specify the formula for calculating “reasonable returns,” or (iii) change the tax treatment policies applicable to private schools. We cannot predict the timing and effects of any such amendments or new laws and regulations. Changes in PRC laws and regulations governing private education could materially and adversely affect our business prospects and results of operations. For example, if the PRC government imposes additional restrictions on private schools’ ability to operate their business or restricts private schools from making payments to related parties for services, our ability to receive service fees from our schools may be limited.

Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.

Under the PRC Enterprise Income Tax Law, or the EIT Law, that became effective on January 1, 2008, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a PRC “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income. Under the Implementation Rules to the EIT Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, a circular, known as Circular 82, issued in April 2009, as amended in January 2014, by the State Administration of Taxation, or the SAT, specifies that certain offshore incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, and minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights. Circular 82 also clarified that dividends and other income paid by such “resident enterprises” will be considered to be PRC source income, subject to PRC withholding tax, currently at a rate of 10%, when recognized by shareholders that are non-PRC resident enterprises. Further to Circular 82, the SAT issued a bulletin, known as Bulletin 45, which took effect on September 1, 2011, to provide more guidance on the implementation of Circular 82 and clarify the reporting and filing obligations of such “Chinese-controlled offshore-incorporated resident enterprises.” Bulletin 45 provides procedures and administrative details for the determination of PRC resident enterprise status and administration on post-determination matters. Although both Circular 82 and Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals like us, the determining criteria set forth in Circular 82 and Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the tax resident enterprise status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups or by PRC or foreign individuals.

We do not believe that Tarena International, Inc. meets all of the conditions above and thus we do not believe that Tarena International, Inc. is a PRC resident enterprise, despite the fact that all of the members of our management team as well as the management team of our offshore holding company are located in China. However, if the PRC tax authorities determine that Tarena International, Inc. is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. First, we will be subject to the uniform 25% enterprise income tax on our world-wide income, which could materially reduce our net income. In addition, we will also be subject to PRC enterprise income tax reporting obligations. Second, although dividends paid by one PRC tax resident to another PRC tax resident should qualify as “tax-exempt income” under the EIT Law, we cannot assure you that such dividends will not be subject to a 10% withholding tax, as the PRC foreign exchange control authorities, which enforce the withholding tax on dividends, and the PRC tax authorities have not yet issued guidance with respect to the processing of outbound remittances to entities that are not controlled by any PRC enterprise or enterprise group and treated as resident enterprises for PRC enterprise income tax purposes.

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Finally, dividends we pay to our non-PRC enterprise shareholders and gains derived by our non-PRC shareholders from the sale of our shares may be become subject to a 10% PRC withholding tax. In addition, future guidance may extend the withholding tax to dividends we pay to our non-PRC individual shareholders and gains derived by such shareholders from transferring our shares. In addition to the uncertainty in how the new “resident enterprise” classification could apply, it is also possible that the rules may change in the future, possibly with retroactive effect. If PRC income tax were imposed on gains realized through the transfer of our ADSs or ordinary shares or on dividends paid to our non-resident investors, the value of the investment in our ADSs or ordinary shares may be materially and adversely affected. Furthermore, our ADS holders whose jurisdictions of residence have tax treaties or arrangements with China may not qualify for benefits under such tax treaties or arrangements.

We face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfers of our operating company’s equity interests. Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.

In connection with the EIT Law, the Ministry of Finance and the SAT jointly issued a Circular 59 in April 2009, and the SAT issued a Circular 698 in December 2009. Both Circular 59 and Circular 698 became effective retroactively on January 1, 2008.

According to Circular 698, where a non-resident enterprise transfers the equity interests of a PRC “resident enterprise” indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and the overseas holding company is located in a tax jurisdiction that: (i) has an effective tax rate less than 12.5% or (ii) does not impose tax on foreign income of its residents, the non-resident enterprise, being the transferor, must report to the relevant tax authority of the PRC “resident enterprise” this Indirect Transfer. Using a “substance over form” principle, the PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC withholding tax at a rate of up to 10%. Circular 698 also provides that, where a non-PRC resident enterprise transfers its equity interests in a PRC “resident enterprise” to its related parties at a price lower than the fair market value, the relevant tax authority has the power to make a reasonable adjustment to the taxable income of the transaction. In addition, the PRC “resident enterprise” is supposed to provide necessary assistance to support the enforcement of Circular 698.

On February 3, 2015, the SAT issued a Public Notice [2015] No.7, or Public Notice 7, to supersede the existing tax rules in relation to the Indirect Transfer, while the other provisions of Circular 698 remain in force. Public Notice 7 introduced a new tax regime that is significantly different from that under Circular 698. Public Notice extend its tax jurisdiction to capture not only Indirect Transfer as set forth under Circular 698 but also transactions involving transfer of immovable property in China and assets held under the establishment and place, in China of a foreign company through the offshore transfer of a foreign intermediate holding company. Public Notice 7 also addresses the term transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. However, it also brings challenges to both the foreign transferor and transferee of the Indirect Transfer as they have to make self-assessment on whether the transaction should be subject to PRC tax and to file or withhold the PRC tax accordingly. Since Public Notice 7 was recently promulgated and it is unclear how this set of measures, and any future implementation rules thereof, will be interpreted, amended and implemented by the relevant governmental authorities. Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of being taxed under Circular 698 and Public Notice 7 and may be required to expend valuable resources to comply with Circular 698 and Public Notice 7 or to establish that we should not be taxed under Circular 698 and Public Notice 7, which may have a material adverse effect on our financial condition and results of operations or the non-resident investors’ investments in us.

By promulgating and implementing these circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise. The PRC tax authorities have the discretion under Circular 59, Circular 698 and Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment. Although we currently have no confirmed plans to pursue any acquisitions in China or elsewhere in the world, we may pursue acquisitions in the future that may involve complex corporate structures. If we are considered a non-resident enterprise under the EIT Law and if the PRC tax authorities make adjustments under Circular 59 or Circular 698 and Public Notice 7, our income tax costs associated with such potential acquisitions will be increased, which may have an adverse effect on our financial condition and results of operations.

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In addition, the State Administration of Taxation promulgated Administrative Measures on the General Anti-Avoidance Rule (Trial), or GAAR Measures, on December 12, 2014, which shows the authority’s intention to fight against tax avoidance scheme that is adopted to obtain unwarranted tax benefit without reasonable commercial purpose. A press release, made by the State Administration of Taxation to clarify certain issues relating to the application of the GAAR Measures, stated that the GAAR Measures may be applicable if any general tax-avoidance scheme exists in the offshore indirect transfer of equity interests. Since GAAR Measures was recently promulgated and it is unclear how this set of measures, and any future implementation rules thereof, will be interpreted, amended and implemented by the relevant governmental authorities, we cannot predict how these regulations will affect our business operation, future acquisitions or strategy.

We face risks and uncertainties with respect to the licensing requirement for Internet audio-video programs and human resources intermediary service.

In December 2007, the State Administration of Press Publication Radio Film and Television, or SAPPRFT, and the Ministry of Industry and Information Technology, or MIIT, issued the Administrative Measures Regarding Internet Audio-Video Program Services, or the Internet Audio-Video Program Measures, which became effective on January 31, 2008. Among other things, the Internet Audio-Video Program Measures stipulate that no entities or individuals may provide Internet audio-video program services without a “License for Disseminating Audio-Video Programs through Information Network” issued by SAPPRFT or its local bureaus or completing the relevant registration with SAPPRFT or its local bureaus, and only entities wholly owned or controlled by the PRC government may engage in the production, editing, integration or consolidation, and transmission to the public through the Internet, of audio-video programs, or the provision of audio-video program uploading and transmission services. In February 2008, SAPPRFT and MIIT jointly held a press conference in response to inquiries related to the Internet Audio-Video Program Measures, during which SAPPRFT and MIIT officials indicated that providers of audio-video program services established prior to the promulgation date of the Internet Audio-Video Program Measures that do not have any regulatory non-compliance records can re-register with the relevant government authorities to continue their current business operations. After the conference, the two authorities published a press release that confirmed the above guidelines. There are still significant uncertainties relating to the interpretation and implementation of the Internet Audio-Video Program Measures, in particular, the scope of “Internet Audio-Video Programs.”

Furthermore, on April 1, 2010, SAPPRFT promulgated the Test Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which clarified the scope of Internet audio-video programs services. According to the Categories, there are four categories of Internet audio-visual program services which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making and editing of certain specialized audio-video programs concerning, among other things, educational content, and broadcasting such content to the general public online.

We transmit our audio-video educational programs through our TTS system and TMOOC.cn to enrolled course participants. In addition, we provide audio-video program uploading and transmission services. As a result, we might be subject to the Internet Audio-Video Program Measures. If the governmental authorities determine that our provision of lecture videos on TTS and/or TMOOC.cn falls within the Internet Audio-Video Program Measures, we may not be able to obtain the License for Disseminating Audio-Video Programs through Information Network. If this occurs, we may become subject to significant penalties, fines, legal sanctions or an order to suspend our use of audio-video content, all of which could have a material adverse effect on our business, financial condition, results of operations and prospects.

Pursuant to the Provisions on the Administration of Human Resources Markets issued by SAIC in 2001 and as amended in 2005 and 2015, respectively, a human resources service intermediary refers to any entity which provides intermediary services for employers and any potential employees, and no entity may provide such services without a “License for Human Resources Intermediary Resources.” Any internet information service provider which provides intermediary services for employers and any potential employees via internet shall obtain such license. In January 2015, we launched a self-developed job search website called Job Show (www.jobshow.cn), which serves as a dedicated open platform for our students and other job-seeking candidates to connect with corporate employers more effectively. Although we have not entered into any agreement with corporate employers or any job-seeking candidates, we source and list job opportunities from both IT and non-IT employers in China through the website, which may be deemed as a human resources service intermediary. Currently, we have recorded human resources intermediary services in our business license but we have not obtained the “License for Human Resources Intermediary Resources,” and if the relevant PRC government authorities determine that we shall obtain such license for the operation of Job Show and we fail to obtain such license, they may order us to shut down the website and subject us to a fine of RMB10,000 and if there is any illegal income, we may be subject a fine of no more than three times of the illegal income, which shall not exceed RMB30,000.

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PRC regulations establish complex approval procedures for some acquisitions of PRC companies by foreign investors, which could make it more difficult for us to pursue growth through acquisitions in China. The transfers of our learning centers from our consolidated VIE to our wholly-owned subsidiaries in China may be subject to such approval procedures, in which case we may need to restructure the ownership and operation of the affected learning centers, and as a result we may be exposed to increased risks associated with the contractual arrangements relating to our consolidated VIE.

Six PRC regulatory agencies promulgated regulations effective in September 2006 that are commonly referred to as the M&A Rules. The M&A Rules establish procedures and requirements that could make some acquisitions of PRC companies by foreign investors more time-consuming and complex, including requirements in some instances that the MOFCOM be notified in advance of any change-of-control transaction in which a foreign investor takes control of a PRC domestic enterprise. In addition, national security review rules issued by the PRC governmental authorities in 2011 require acquisitions by foreign investors of domestic companies engaged in military-related or certain other industries that are crucial to national security to be subject to prior security review. Moreover, the Anti-Monopoly Law requires that the MOFCOM shall be notified in advance of any concentration of undertaking if certain thresholds are triggered. We may expand our business in part by acquiring complementary businesses. Complying with the requirements of the M&A Rules, security review rules and other PRC regulations to complete such transactions could be time-consuming, and any required approval processes, including obtaining approval from the MOFCOM, may delay or inhibit our ability to complete such transactions, which could affect our ability to expand our business or maintain our market share.

In addition, in accordance with the M&A Rules, approval of the MOFCOM is required for acquisitions of PRC domestic enterprises by foreign companies that are established or controlled by PRC domestic companies, enterprises or individuals related to the target PRC domestic enterprises, or “Related Party Acquisitions”, and the parties are not allowed to evade such requirements through investment by foreign investment enterprises in China or other ways. Although M&A Rules have become effective since September 2006, we are not aware of any precedent of approval by the MOFCOM of any Related Party Acquisition conducted by PRC domestic individuals. Starting from the second half of 2012, we began to transfer our operations, including related assets and liabilities, of our consolidated VIEs to our wholly-owned subsidiary, Tarena Tech, and its subsidiaries, either through transferring the companies that operate learning centers or that sponsor the schools, or through changing the schools’ sponsors. All of our learning center operations of VIEs had been transferred to Tarena Tech and its subsidiaries and schools. As Mr. Shaoyun Han is a shareholder of both Tarena and our consolidated VIEs, even though the transfers of the companies, which operated 23 of our learning centers themselves or through schools they established as of December 31, 2016, from our consolidated VIEs to our wholly-owned subsidiaries in China are not “acquisitions by foreign investors of PRC domestic enterprises” under the M&A Rules, and Tarena Tech, our wholly foreign invested enterprise in PRC, was converted into a wholly foreign invested enterprise before the effective date of M&A Rules, the requirement for an approval from the MOFCOM may still be required for such transfers because of the above anti-evasion clause. Furthermore, it is unclear whether our transfers of the schools which operated 14 learning centers as of December 31, 2016, which are not enterprises, from subsidiaries of our consolidated VIEs to our wholly-owned subsidiaries, could be regarded as Related Party Transactions under the M&A Rules. If the MOFCOM determines that our previous transfers of learning centers from our consolidated VIEs to our wholly-owned subsidiaries are Related Party Transactions under the M&A Rules and we fail to obtain the MOFCOM’s approvals on such transfers, the effectiveness of such transfers may be challenged and we may be need to transfer these companies and schools, including the related learning centers, back to our consolidated VIE. Under such circumstances, our business may be disrupted and we may be exposed to increased risks associated with the contractual arrangements relating to our consolidated VIE. See “—Risks Relating to Our Corporate Structure.”

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PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, limit our ability to inject capital into our PRC subsidiaries, or otherwise expose us to liability and penalties under PRC law.

The PRC State Administration of Foreign Exchange, or the SAFE, has promulgated regulations, including the Notice on Relevant Issues Relating to Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles, or SAFE Circular No. 37, effective on July 4, 2014, and its appendixes, that require PRC residents, including PRC institutions and individuals, to register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interests in domestic enterprises or offshore assets or interests, referred to in SAFE Circular No. 37 as a “special purpose vehicle.” SAFE Circular No. 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event. In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making profit distributions to the offshore parent and from carrying out subsequent cross-border foreign exchange activities, and the special purpose vehicle may be restricted in their ability to contribute additional capital into its PRC subsidiary. Further, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion, including (i) the requirement by SAFE to return the foreign exchange remitted overseas within a period specified by SAFE, with a fine of up to 30% of the total amount of foreign exchange remitted overseas and deemed to have been evasive and (ii) in circumstances involving serious violations, a fine of no less than 30% of and up to the total amount of remitted foreign exchange deemed evasive. Furthermore, the persons-in-charge and other persons at our PRC subsidiaries who are held directly liable for the violations may be subject to criminal sanctions. On February 28, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. In accordance with SAFE Notice 13, entities and individuals are required to apply for foreign exchange registration of foreign direct investment and overseas direct investment, including those required under the SAFE Circular No. 37, with qualified banks, instead of SAFE. The qualified banks, under the supervision of SAFE, directly examine the applications and conduct the registration.

These regulations apply to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions or share transfers that we make in the future if our shares are issued to PRC residents. We have requested PRC residents who we know currently hold direct or indirect interests in our company to make the necessary applications, filings and amendments as required under SAFE Circular No. 37 and other related rules.

To our knowledge, all of our shareholders who are PRC citizens and hold interest in us, have registered with the local SAFE branch and/or qualified banks as required under SAFE Circular No. 37 and SAFE Notice 13. However, in practice, different local SAFE branches and/or qualified banks may have different views and procedures on the application and implementation of SAFE regulations. Therefore, we cannot assure you that they can successfully amend their foreign exchange registrations with the local SAFE branch and/or qualified banks in full compliance with applicable laws. In addition, we may not be informed of the identities of all the PRC residents holding direct or indirect interest in our company, and we cannot provide any assurances that these PRC residents will comply with our request to make or obtain any applicable registrations or comply with other requirements required by SAFE Circular No. 37, SAFE Notice 13 or other related rules. A failure by any of our current or future shareholders or beneficial owners who are PRC residents to comply with the SAFE regulations may subject us to fines or other legal sanctions, restrict our cross-border investment activities, limit our PRC subsidiaries’ ability to make distributions or pay dividends or affect our ownership structure, which could adversely affect our business and prospects.

Furthermore, it is unclear how these regulations, and any future regulation concerning offshore or cross-border transactions, will be interpreted, amended and implemented by the relevant government authorities. We cannot predict how these regulations will affect our business operations or future strategy. For example, we may be subject to a more stringent review and approval process with respect to our foreign exchange activities, such as remittance of dividends and foreign-currency-denominated borrowings, which may adversely affect our financial condition and results of operations. In addition, if we decide to acquire a PRC domestic company, either we or the owners of such company, as the case may be, may not be able to obtain the necessary approvals or complete the necessary filings and registrations required by the foreign exchange regulations. This may restrict our ability to implement our acquisition strategy and could adversely affect our business and prospects.

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Failure to comply with PRC regulations regarding the registration requirements for employee share ownership plans or share option plans may subject the PRC plan participants or us to fines and other legal or administrative sanctions.

In February 2012, SAFE promulgated the Notices on Issues Concerning the Foreign Exchange Administration for Domestic Individuals Participating in Stock Incentive Plans of Overseas Publicly-Listed Companies, or the Stock Option Rules. Under the Stock Option Rules and other relevant rules and regulations, PRC residents who participate in stock incentive plan in an overseas publicly-listed company are required to register with SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of the overseas publicly-listed company or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants. The participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition, the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted institution or other material changes. See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Stock Incentive Plans.” We and our PRC employees who have been granted share options and restricted share units are subject to these regulations and we have completed the registrations of our stock incentive plans, namely the 2008 Plan and the 2014 Plan, with the local SAFE as required by PRC law. Failure of our PRC share option holders or restricted shareholders to complete their SAFE registrations may subject these PRC residents to fines and legal sanctions and may also limit our ability to contribute additional capital into our PRC subsidiaries, limited our PRC subsidiaries’ ability to distribute dividends to us, or otherwise materially and adversely affect our business.

PRC regulation of direct investment and loans by offshore holding companies to PRC entities and governmental control of currency conversion may delay or limit us from using the proceeds of offshore offerings to make additional capital contributions or loans to our PRC subsidiaries.

Any capital contributions or loans that we, as an offshore entity, make to our PRC subsidiaries are subject to PRC regulations. Under PRC laws and regulations, we are permitted to utilize the proceeds from offshore offerings to fund our existing PRC subsidiaries only through loans or capital contributions or to establish new PRC subsidiaries, subject to applicable government registration and approval requirements. None of our loans to a PRC subsidiary can exceed the difference between its total amount of investment and its registered capital approved under relevant PRC laws, and the loans must be registered with the local branch of SAFE. Our capital contributions to our PRC subsidiaries or establishment of new PRC subsidiaries must be approved by the MOFCOM or its local counterpart. We cannot assure you that we will be able to complete the necessary registration or obtain the necessary approval on a timely basis, or at all. If we fail to complete the necessary registration or obtain the necessary approval, our ability to make loans or equity contributions to our PRC subsidiaries may be negatively affected, which could adversely affect our PRC subsidiaries’ liquidity and their ability to fund their working capital and expansion projects and meet their obligations and commitments.

On March 30, 2015, the SAFE promulgated Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide. Circular 19 came into force replacing both previous SAFE Circular 142 and SAFE Circular 36 on June 1, 2015. Circular 19 allows all foreign-invested enterprises established in the PRC to use their foreign exchange capitals to make equity investment and removes certain other restrictions provided under Circular 142 for these enterprises. However, Circular 19 continues to prohibit foreign-invested enterprises from, among other things, using the Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope, and providing entrusted loans or repaying loans between non-financial enterprises. The business scopes of Tarena Tech include research and development of computer software, hardware, internet technology and products and telecommunications technology, transfer of proprietary technologies, information technology consulting, technical services, computer technology training, sales of self-developed products and franchise business operations. The business scopes of Tarena Software Technology (Hangzhou) Co., Ltd., or Tarena Hangzhou, include technology development, technology consulting, technical services, computer software and hardware, network technology, telecommunication technology, services, non-certification computer technology training for adults (excluding business subject to pre-approvals), wholesale and retail of computer software and hardware and telecommunication equipment (excluding equipment subject to national controls and other special controls). Tarena Tech and Tarena Hangzhou may only use Renminbi converted from foreign exchange capital contribution for activities within their respective approved business scope. Therefore, we may not use such Renminbi funds converted to make equity investments in the PRC through our PRC subsidiaries. In addition, the use of such Renminbi capital may not be altered without SAFE approval, and such Renminbi capital may not in any case be used to repay Renminbi loans if the proceeds of such loans have not been used. Violations of SAFE Circular 19 could result in severe monetary or other penalties.

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SAFE also promulgated a SAFE Circular 45 in November 2011, which, among other things, restricts a foreign-invested enterprise from using RMB converted from its registered capital to provide entrusted loans or repay loans between non-financial enterprises. Those circulars may significantly limit our ability to use Renminbi converted from the net proceeds of offshore offerings to fund establishment of new PRC subsidiaries by Tarena Tech and Tarena Hangzhou to invest in or acquire any other PRC companies, or to establish new PRC consolidated affiliated entities.

Our PRC subsidiaries are subject to restrictions on paying dividends or making other payments to us, which may restrict our ability to satisfy our liquidity requirements.

We are a holding company incorporated in the Cayman Islands. We may need dividends and other distributions on equity from our PRC subsidiaries to satisfy our liquidity requirements. Current PRC regulations permit our PRC subsidiaries to pay dividends to us only out of their accumulated profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, our PRC subsidiaries are required to set aside at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until the total amount set aside reaches 50% of their respective registered capital. Our PRC subsidiaries may also allocate a portion of its after-tax profits based on PRC accounting standards to employee welfare and bonus funds at their discretion. These reserves are not distributable as cash dividends. Furthermore, if our PRC subsidiaries incur debt on their own behalf in the future, the instruments governing the debt may restrict their ability to pay dividends or make other payments to us. Any limitation on the ability of our subsidiaries to distribute dividends to us or may restrict our ability to satisfy our liquidity requirements.

In addition, the EIT Law, and its implementation rules provide that withholding tax rate of up to 10% will be applicable to dividends payable by Chinese companies to non-PRC-resident enterprises unless otherwise exempted or reduced according to treaties or arrangements between the PRC central government and governments of other countries or regions where the non-PRC-resident enterprises are incorporated.

We may not be able to obtain certain treaty benefits on dividends paid to us by our PRC subsidiary through our Hong Kong Subsidiary.

Under the EIT Law, dividends generated from retained earnings after January 1, 2008 from a PRC company and distributed to a foreign parent company are subject to a withholding tax rate of 10% unless the foreign parent’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential withholding arrangement. Pursuant to the Arrangement between Mainland China and the Hong Kong Special Administrative Region for the Avoidance of Double Taxation and Prevention of Fiscal Evasion with respect to Taxes on Income, or the Hong Kong Tax Treaty, which became effective on December 8, 2006, a company incorporated in Hong Kong, such as Tarena HK, will be subject to withholding income tax at a rate of 5% on dividends it receives from its PRC subsidiary if it holds a 25% or more interest in that particular PRC subsidiary, or 10% if it holds less than a 25% interest in that subsidiary. Pursuant to the Notice of the SAT on the Issues concerning the Application of the Dividend Clauses of Tax Agreements, or Circular 81, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kong enterprise must directly hold at least 25% share ownership in the PRC enterprise during the 12 consecutive months preceding its receipt of the dividends. However, a transaction or arrangement entered into for the primary purpose of enjoying a preferential tax treatment should not be a reason for the application of the preferential tax treatment under the Hong Kong Tax Treaty. If a taxpayer inappropriately is entitled to such preferential tax treatment, the competent tax authority has the power to make appropriate adjustments. The SAT promulgated a tax notice on October 27, 2009, or Circular 601, which provides that tax treaty benefits will be denied to “conduit” or shell companies without business substance, and a beneficial ownership analysis will be used based on a “substance-over-the-form” principle to determine whether or not to grant tax treaty benefits. On June 29, 2012, the SAT further issued the Announcement of the SAT regarding Recognition of “Beneficial Owner” under Tax Treaties, or Announcement 30, which provides that a comprehensive analysis should be made when determining the beneficial owner status based on various factors supported by various types of documents including the articles of association, financial statements, records of cash movements, board meeting minutes, board resolutions, staffing and materials, relevant expenditures, functions and risk assumption as well as relevant contracts and other information. In August 2015, the SAT promulgated the Administrative Measures for Non-Resident Taxpayers to Enjoy Treatments under Tax Treaties, or Circular 60, which became effective on November 1, 2015. Circular 60 provides that non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax rate. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. However, if a competent tax authority finds out that it is necessary to apply the general anti-tax avoidance rules, it may start general investigation procedures for anti-tax avoidance and adopt corresponding measures for subsequent administration. As a result, although our PRC subsidiary, Tarena Hangzhou, is currently wholly owned by our Hong Kong subsidiary Tarena HK, we cannot assure you that we would be entitled to the tax treaty benefits and enjoy the favorable 5% rate applicable under the Hong Kong Tax Treaty on dividends. If Tarena HK cannot be recognized as the beneficial owner of the dividends to be paid by Tarena Hangzhou to us, such dividends will be subject to a normal withholding tax of 10% as provided by the EIT Law. Besides, according to Circular 81 and Circular 60, if the relevant tax authorities consider the transactions or arrangements we have are for the primary purpose of enjoying a preferential tax treatment, the relevant tax authorities may adjust the preferential withholding tax in the future.

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Discontinuation or revocation of any of the preferential tax treatments and government subsidies or imposition of any additional taxes and surcharges could adversely affect our financial condition and results of operations.

Our PRC subsidiaries are incorporated in the PRC and governed by applicable PRC tax laws and regulations. The EIT Law and its Implementing Rules, both became effective on January 1, 2008, have adopted a uniform statutory enterprise income tax rate of 25% to all enterprises in China including foreign-invested enterprises. The EIT Law and its Implementation Rules also permit qualified “high and new technology enterprises,” or HNTEs, to enjoy a preferential enterprise income tax rate of 15% upon filing with relevant tax authorities. The qualification as a HNTE generally has a valid term of three years and the renewal of such qualification is subject to review by the relevant authorities in China. Tarena Tech obtained its HNTE certificate in 2009 and renewed its HNTE certificate in 2012 and again in 2015, and is eligible to enjoy a preferential tax rate of 15% until the end of 2017. If Tarena Tech fails to maintain its HNTE qualification or renew its qualification when its current term expires, its applicable enterprise income tax rate may increase to 25%, which could have an adverse effect on our financial condition and results of operations. In addition, Tarena Hangzhou, one of our PRC subsidiaries, was established in 2013 and is qualified as a “newly established software enterprise”, which entitles it to two years of full tax exemption followed by three years of 50% tax exemption, commencing from the year in which its taxable income is greater than zero, which was 2014. Tarena Hangzhou has also received financial subsidies from PRC local government authority in 2013, 2015 and 2016. In 2016, Tarena Hangzhou acquired Hanru Education & TechnologyCo., Ltd., or Hanru Hangzhou, which was qualified as an eligible software enterprise and entitled to a full tax exemption of two years followed by a 50% tax exemption of three years, commencing from 2016.

Preferential tax treatments and financial subsidies are subject to review and may be adjusted or revoked at any time in the future. The discontinuation of any preferential tax treatments or financial subsidies or imposition of any additional taxes could adversely affect our financial condition and results of operations.

Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment.

The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies. The PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar in 2005, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. However, the People’s Bank of China regularly intervenes in the foreign exchange market to limit fluctuations in Renminbi exchange rates and achieve policy goals. During the period between July 2008 and June 2010, the exchange rate between the RMB and the U.S. dollar had been stable and traded within a narrow range. However, the Renminbi fluctuated significantly during that period against other freely traded currencies, in tandem with the U.S. dollar. Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. In August 2015, the People’s Bank of China changed the way it calculates the mid-point price of Renminbi against the U.S. dollar, requiring the market-makers who submit for reference rates to consider the previous day’s closing spot rate, foreign-exchange demand and supply as well as changes in major currency rates. The value of the Renminbi depreciated approximately 5.8% against the U.S. dollar in 2015 and further by approximately 6.3% in 2016. On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the RMB has depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalisation, the PRC government may in the future announce further changes to the exchange rate system and we cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future.

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Significant revaluation of the RMB may have a material and adverse effect on your investment. For example, to the extent that we need to convert U.S. dollars into RMB for capital expenditures and working capital and other business purposes, appreciation of the RMB against the U.S. dollar would have an adverse effect on the RMB amount we would receive from the conversion. Conversely, if we decide to convert our RMB into U.S. dollars for the purpose of making payments for dividends on our ordinary shares or ADSs or for other business purposes, appreciation of the U.S. dollar against the RMB would have a negative effect on the U.S. dollar amount available to us. In addition, appreciation or depreciation in the value of the RMB relative to U.S. dollars would affect the U.S. dollar equivalent of our earnings, regardless of any underlying change in our business or results of operations.

In January 2016, we entered into a foreign currency forward contract with China Merchants Bank Co., Ltd. The notional amounts of the foreign currency forward contracts were RMB564.1 million and the settlement date was on May 19, 2016. We incurred a loss of RMB12.9 million as a result of such forward foreign currency contract in 2016, due to the fluctuation in the exchange rate between U.S. dollars and RMB. We may decide to enter into additional foreign currency contract in the future, the availability and effectiveness of these hedges may be limited and we may not be able to adequately hedge our exposure or at all. In addition, our currency exchange losses may be magnified by PRC exchange control regulations that restrict our ability to convert Renminbi into foreign currency. As a result, fluctuations in exchange rates may have a material adverse effect on your investment.

The audit report included in this annual report is prepared by an auditor who is not inspected by the Public Company Accounting Oversight Board and, as such, you are deprived of the benefits of such inspection.

Auditors of companies that are registered with the U.S. Securities and Exchange Commission, or the SEC, and traded publicly in the United States, including our independent registered public accounting firm, must be registered with the U.S. Public Company Accounting Oversight Board (United States), or PCAOB, and are required by the laws of the United States to undergo regular inspections by the PCAOB to assess their compliance with the laws of the United States and professional standards. Because our auditor is located in the Peoples’ Republic of China, a jurisdiction where the PCAOB is currently unable to conduct inspections without the approval of the PRC authorities, our auditor is not currently inspected by the PCAOB. In May 2013, PCAOB announced that it had entered into a Memorandum of Understanding on Enforcement Cooperation with the CSRC and the PRC Ministry of Finance, which establishes a cooperative framework between the parties for the production and exchange of audit documents relevant to investigations undertaken by PCAOB, the CSRC or the PRC Ministry of Finance in the United States and the PRC, respectively. PCAOB continues to be in discussions with the CSRC and the PRC Ministry of Finance to permit joint inspections in the PRC of audit firms that are registered with PCAOB and audit Chinese companies that trade on U.S. exchanges.

This lack of PCAOB inspections in China prevents the PCAOB from regularly evaluating audits and quality control procedures of any auditors operating in China, including our auditor. As a result, investors may be deprived of the benefits of PCAOB inspections. The inability of the PCAOB to conduct inspections of auditors in China makes it more difficult to evaluate the effectiveness of our auditor’s audit procedures or quality control procedures as compared to auditors outside of China that are subject to PCAOB inspections. Investors may lose confidence in our reported financial information and procedures and the quality of our financial statements.

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Proceedings instituted by the SEC against certain China-based accounting firms, including our independent registered public accounting firm, could result in financial statements being determined to not be in compliance with the requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act.

On January 22, 2014, Judge Cameron Elliot, an SEC administrative law judge, issued an initial decision suspending the Chinese member firms of the “Big Four” accounting firms, including our independent registered public accounting firm, from, among other things, practicing before the SEC for six months. In February 2014, the initial decision was appealed. While under appeal and in February 2015, the Chinese member firms of the “Big Four” accounting firms reached a settlement with the SEC. As part of the settlement, each of the Chinese member firms of the “Big Four” accounting firms agreed to settlement terms that include a censure; undertakings to make a payment to the SEC; procedures and undertakings as to future requests for documents by the SEC; and possible additional proceedings and remedies should those undertakings not be adhered to.

If the settlement terms are not adhered to, Chinese member firms of the “Big Four” accounting firms may be suspended from practicing before the SEC. If our independent registered public accounting firm were suspended, from practicing before the SEC and we were unable to timely find another registered public accounting firm to audit and issue an opinion on our financial statements, our financial statements could be determined not to be in compliance with the requirements of the Exchange Act. Such a determination could ultimately lead to our delisting from the NASDAQ Global Select Market or deregistration from the SEC, or both, which would substantially reduce or effectively terminate the trading of our ADSs in the United States.

Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.

The MOFCOM published a discussion draft of the proposed Foreign Investment Law in January 2015 aiming to, upon its enactment, replace the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations. The draft Foreign Investment Law embodies an expected PRC regulatory trend to rationalize its foreign investment regulatory regime in line with prevailing international practice and the legislative efforts to unify the corporate legal requirements for both foreign and domestic investments. While the Ministry of Commerce solicited comments on this draft earlier this year, substantial uncertainties exist with respect to its enactment timetable, interpretation and implementation. The draft Foreign Investment Law, if enacted as proposed, may materially impact the viability of our current corporate structure, corporate governance and business operations in many aspects.

Among other things, the draft Foreign Investment Law expands the definition of foreign investment and introduces the principle of “actual control” in determining whether a company is considered a foreign-invested enterprise, or an FIE. The draft Foreign Investment Law specifically provides that entities established in China but “controlled” by foreign investors will be treated as FIEs. Once an entity is determined to be an FIE, it will be subject to the foreign investment restrictions or prohibitions set forth in a “negative list” to be separately issued by the State Council later. The “negative list” will consist of a list of industry categories where foreign investments are strictly prohibited and a list of industry categories where foreign investments are subject to certain restrictions. Foreign investments in business sectors outside of the “negative list” will only be subject to filing procedures, whereas foreign investments in the restricted industries must apply for prior approval from the foreign investment administration authority. In case the underlying business of an FIE falls within the foreign investment restricted industries, upon market entry clearance by the MOFCOM, the FIE may file an application for being treated as a PRC domestic investment if the FIE is “controlled” by PRC entities and/or citizens. In this connection, “control” is broadly defined in the draft law to cover the following summarized categories: (i) holding 50% or more of the voting rights of the subject entity; (ii) holding less than 50% of the voting rights of the subject entity but having the power to secure at least 50% of the seats on the board or other equivalent decision making bodies, or having the voting power to exert material influence on the board, the shareholders’ meeting or other equivalent decision making bodies; or (iii) having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity’s operations, financial matters or other key aspects of business operations.

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The “variable interest entity” structure, or VIE structure, has been adopted by many PRC-based companies, including us, to obtain necessary licenses and permits in the industries that are currently subject to foreign investment restrictions in China. See “—Risks Relating to Our Corporate Structure—If the PRC government finds that the agreements that establish the structure for holding our ICP license do not comply with applicable PRC laws and regulations, we could be subject to severe penalties” and “Item 4. Information on the Company—C. Organizational Structure.” Under the draft Foreign Investment Law, variable interest entities that are controlled via contractual arrangement would also be deemed as FIEs, if they are ultimately “controlled” by foreign investors. Therefore, for any companies with a VIE structure in an industry category that is on the “negative list,” the VIE structure may be deemed legitimate only if the ultimate controlling person(s) is/are of PRC nationality (including PRC citizens, PRC governmental authorities and their affiliates, and the PRC companies controlled by the foregoing). Conversely, if the actual controlling person(s) is/are of foreign nationalities, then the variable interest entities will be treated as FIEs and any operation in the industry category on the “negative list” without market entry clearance may be considered as illegal.

Through our dual-class share structure, Mr. Shaoyun Han, our founder, chairman and chief executive officer, a PRC citizen, possessed and controlled 67.1% of the voting power of our company as of March 31, 2017. The draft Foreign Investment Law has not taken a position on what actions will be taken with respect to the existing companies with a VIE structure, whether or not these companies are controlled by Chinese parties. Moreover, it is uncertain whether the Internet content and other value-added telecommunication service industry, in which our VIE operates, will be subject to the foreign investment restrictions or prohibitions set forth in the “negative list” to be issued. If the enacted version of the Foreign Investment Law and the final “negative list” mandate further actions, such as MOFCOM market entry clearance or certain restructuring of our corporate structure and operations, to be completed by companies with existing VIE structure like us, we face substantial uncertainties as to whether these actions can be timely completed, or at all, and our business and financial condition may be materially and adversely affected.

The draft Foreign Investment Law, if enacted as proposed, may also materially impact our corporate governance practice and increase our compliance costs. For instance, the draft Foreign Investment Law imposes stringent ad hoc and periodic information reporting requirements on foreign investors and the applicable FIEs. Aside from investment implementation report and investment amendment report that are required at each investment and alteration of investment specifics, an annual report is mandatory, and large foreign investors meeting certain criteria are required to report on a quarterly basis. Any company found to be non-compliant with these information reporting obligations may potentially be subject to fines and/or administrative or criminal liabilities, and the persons directly responsible may be subject to criminal liabilities.

Risks Relating to Our ADSs

The trading prices of our ADSs have fluctuated and may be volatile, which could result in substantial losses to investors.

The trading prices of our ADSs have fluctuated since we first listed our ADSs.The trading price of our ADSs has ranged from US$8.35 to US$17.75 per ADS in 2016. The last reported trading price on April 24, 2017 was US$18.60 per ADS. The trading prices of our ADSs may continue to fluctuate and be volatile due to factors beyond our control. This may happen because of broad market and industry factors, like the performance and fluctuation of the market prices of other companies with business operations located mainly in China that have listed their securities in the United States. In recent years, the widespread negative publicity of alleged fraudulent accounting practices and poor corporate governance of certain U.S. public companies with operations in China were believed to have negatively affected investors’ perception and sentiment towards companies with connection with China, which significantly and negatively affected the trading prices of some companies’ securities listed in the U.S. Any similar negative publicity or sentiment may affect the performances of our ADSs. A number of PRC companies have recently listed or are in the process of listing their securities on U.S. stock markets. The securities of some of these companies have experienced significant volatility, including price declines in connection with their initial public offerings. The trading performances of these PRC companies’ securities after their offerings may affect the attitudes of investors toward PRC companies listed in the United States in general and consequently may impact the trading performance of our ADSs, regardless of our actual operating performance.

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In addition to market and industry factors, the price and trading volume for our ADSs may be highly volatile for factors specific to our own operations, including the following:

· the financial projections that we may choose to provide to the public, any changes in those projections or our failure for any reason to meet those projections;

· variations in our net revenues, net income and cash flow;

· announcements of new investments, acquisitions, strategic partnerships, or joint ventures;

· announcements of new services and expansions by us or our competitors;

· changes in financial estimates by securities analysts;

· additions or departures of key personnel;

· release of lock-up or other transfer restrictions on our outstanding equity securities or sales of additional equity securities;

· potential litigation, regulatory investigations or other legal proceedings involving us; and

· detrimental negative publicity about us or our industry.

Any of these factors may result in large and sudden changes in the volume and price at which our ADSs will trade.

If securities or industry analysts do not publish research or reports about our business, or if they adversely change their recommendations regarding our ADSs, the market price for our ADSs and trading volume could decline.

The trading market for our ADSs is influenced by research or reports that industry or securities analysts publish about our business. If one or more analysts who cover us downgrade our ADSs or publish unfavorable research about us, the market price for our ADSs would likely decline. If one or more of these analysts cease to cover us or fail to regularly publish reports on us, we could lose visibility in the financial markets, which in turn could cause the market price or trading volume for our ADSs to decline.

Our dual class share structure with different voting rights will limit your ability to influence corporate matters and could discourage others from pursuing any change of control transactions that holders of our Class A ordinary shares and ADSs may view as beneficial.

Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to ten votes per share, with Class A and Class B ordinary shares voting together as one class on all matters subject to a shareholders’ vote. As of March 31, 2017, our Class B ordinary shares represent 12.6% of our total outstanding ordinary shares on an as-converted basis and entitle their holders to 59.0% of our total voting power.

As a result of the dual class share structure and the concentration of ownership, holders of our Class B ordinary shares have substantial influence over our business, including decisions regarding mergers, consolidations and the sale of all or substantially all of our assets, election of directors and other significant corporate actions. They may take actions that are not in the best interest of us or our other shareholders. This concentration of ownership may discourage, delay or prevent a change in control of our company, which could deprive our shareholders of an opportunity to receive a premium for their shares as part of a sale of our company and may reduce the price of our ADSs. This concentrated control will limit your ability to influence corporate matters and could discourage others from pursuing any potential merger, takeover or other change of control transactions that holders of Class A ordinary shares and ADSs may view as beneficial. For more information regarding our principal shareholders and their affiliated entities, see “Item 7. Major Shareholders and Related Party Transactions.”

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The sale or availability for sale of substantial amounts of our ADSs could adversely affect their market price.

Sales of substantial amounts of our ADSs in the public market, or the perception that these sales could occur, could adversely affect the market price of our ADSs and could materially impair our ability to raise capital through equity offerings in the future. We cannot predict what effect, if any, market sales of securities held by our significant shareholders or any other shareholder or the availability of these securities for future sale will have on the market price of our ADSs. In addition, certain holders of our existing shareholders are entitled to certain registration rights, including demand registration rights, piggyback registration rights, and Form F-3 or Form S-3 registration rights. Registration of these shares under the Securities Act would result in these shares becoming freely tradable without restriction under the Securities Act immediately upon the effectiveness of the registration. Sales of these registered shares in the public market, or the perception that such sales could occur, could cause the price of our ADSs to decline.

We may be classified as a passive foreign investment company for United States federal income tax purposes, which could result in adverse United States federal income tax consequences to United States investors in the ADSs or ordinary shares.

We will be classified as a “passive foreign investment company,” or “PFIC” if, in the case of any particular taxable year, either (a) 75% or more of our gross income for such year consists of certain types of “passive” income or (b) 50% or more of the average quarterly value of our assets (as determined on the basis of fair market value) during such year produce or are held for the production of passive income. Passive income generally includes dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of passive assets (including property producing passive income) and net foreign currency gains. For this purpose, cash is categorized as a passive asset and the company’s unbooked intangibles associated with active business activity are taken into account as a non-passive asset. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.

Based on our current income and assets and the value of our ADSs and outstanding ordinary shares, we do not believe that we were a PFIC for our taxable year ended December 31, 2016 and we do not expect to be classified as a PFIC for our taxable year ending December 31, 2017 or in the foreseeable future.

While we do not expect to become a PFIC, because the value of our assets for purposes of the asset test will generally be determined by reference to the market price of our ADSs or ordinary shares, fluctuations in the market price of our ADSs or ordinary shares may cause us to become a PFIC for the current or subsequent taxable years. The determination of whether we will be or become a PFIC will also depend, in part, on the composition of our income and assets, which will be affected by how, and how quickly, we use our liquid assets. Under circumstances where we determine not to deploy significant amounts of cash for active purposes, our risk of being classified as a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year.

If we are classified as a PFIC in any taxable year, a U.S. Holder (as defined in “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations”) may incur significantly increased United States income tax on gain recognized on the sale or other disposition of the ADSs or ordinary shares and on the receipt of distributions on the ADSs or ordinary shares to the extent such gain or distribution is treated as an “excess distribution” under the United States federal income tax rules and such holders may be subject to burdensome reporting requirements. Further, if we are classified as a PFIC for any year during which a U.S. Holder holds our ADSs or ordinary shares, we generally will continue to be treated as a PFIC for all succeeding years during which such U.S. Holder holds our ADSs or ordinary shares. For more information, see “Item 10. Additional Information—E. Taxation—United States Federal Income Tax Considerations—Passive Foreign Investment Company Considerations.”

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You may face difficulties in protecting your interests, and your ability to protect your rights through U.S. courts may be limited, because we are incorporated under Cayman Islands law.

We are an exempted company incorporated under the laws of the Cayman Islands. Our corporate affairs are governed by our memorandum and articles of association, the Companies Law of the Cayman Islands (2016 Revision) and the common law of the Cayman Islands. The rights of shareholders to take action against the directors, actions by minority shareholders and the fiduciary responsibilities of our directors to us under Cayman Islands law are to a large extent governed by the common law of the Cayman Islands. The common law of the Cayman Islands is derived in part from comparatively limited judicial precedent in the Cayman Islands as well as from the common law of England, the decisions of whose courts are of persuasive authority, but are not binding, on a court in the Cayman Islands. The rights of our shareholders and the fiduciary responsibilities of our directors under Cayman Islands law are not as clearly established as they would be under statutes or judicial precedent in some jurisdictions in the United States. In particular, the Cayman Islands has a less developed body of securities laws than the United States. Some U.S. states, such as Delaware, have more fully developed and judicially interpreted bodies of corporate law than the Cayman Islands. In addition, Cayman Islands companies may not have standing to initiate a shareholder derivative action in a federal court of the United States.

The Cayman Islands courts are also unlikely:

· to recognize or enforce against us judgments of courts of the United States based on certain civil liability provisions of U.S. securities laws; and

· to impose liabilities against us, in original actions brought in the Cayman Islands, based on certain civil liability provisions of U.S. securities laws that are penal in nature.

There is no statutory recognition in the Cayman Islands of judgments obtained in the United States, although the courts of the Cayman Islands will in certain circumstances recognize and enforce a non-penal judgment of a foreign court of competent jurisdiction without retrial on the merits.

As a result of all of the above, public shareholders may have more difficulty in protecting their interests in the face of actions taken by management, members of the board of directors or controlling shareholders than they would as public shareholders of a company incorporated in the United States.

Judgments obtained against us by our shareholders may not be enforceable.

We are a Cayman Islands company and almost all of our assets are located outside of the United States. All of our current operations are conducted in China. In addition, most of our current directors and executive officers are nationals and residents of countries other than the United States. As a result, it may be difficult or impossible for you to bring an action against us or against these individuals in the United States in the event that you believe that your rights have been infringed under the United States federal securities laws or otherwise. Even if you are successful in bringing an action of this kind, the laws of the Cayman Islands and of China may render you unable to enforce a judgment against our assets or the assets of our directors and officers.

The voting rights of holders of ADSs are limited by the terms of the deposit agreement, and you may not be able to exercise your right to vote your Class A ordinary shares.

As a holder of our ADSs, you will only be able to exercise the voting rights with respect to the underlying Class A ordinary shares in accordance with the provisions of the deposit agreement. Under the deposit agreement, you must vote by giving voting instructions to the depositary. Upon receipt of your voting instructions, the depositary will vote the underlying Class A ordinary shares in accordance with these instructions. You will not be able to directly exercise your right to vote with respect to the underlying shares unless you withdraw the shares. Under our amended and restated memorandum and articles of association, as amended, the minimum notice period required for convening a general meeting is ten clear days. When a general meeting is convened, you may not receive sufficient advance notice to withdraw the shares underlying your ADSs to allow you to vote with respect to any specific matter. If we ask for your instructions, the depositary will notify you of the upcoming vote and will arrange to deliver our voting materials to you. We cannot assure you that you will receive the voting materials in time to ensure that you can instruct the depositary to vote your shares. In addition, the depositary and its agents are not responsible for failing to carry out voting instructions or for their manner of carrying out your voting instructions. This means that you may not be able to exercise your right to vote and you may have no legal remedy if the shares underlying your ADSs are not voted as you requested.

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We are an emerging growth company within the meaning of the Securities Act and may take advantage of certain reduced reporting requirements.

We are an “emerging growth company” as defined in the JOBS Act, and we intend to take advantage of certain exemptions from various requirements that are applicable to other public companies that are not emerging growth companies including, most significantly, not being required to comply with the auditor attestation requirements of Section 404 for so long as we are an emerging growth company, which may be for as long as five years following our initial public offering in April 2014. As a result of our current status as an emerging growth company, our investors may not have access to certain information that they may deem important.

The JOBS Act also provides that an emerging growth company does not need to comply with any new or revised financial accounting standards until such date that a private company is otherwise required to comply with such new or revised accounting standards. However, we had elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. The decision to opt out of the extended transition period under the JOBS Act was irrevocable.

We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.

Because we qualify as a foreign private issuer under the Exchange Act, we are exempt from certain provisions of the securities rules and regulations in the United States that are applicable to U.S. domestic issuers, including:

· the rules under the Exchange Act requiring the filing with the SEC of quarterly reports on Form 10-Q or current reports on Form 8-K;

· the sections of the Exchange Act regulating the solicitation of proxies, consents, or authorizations in respect of a security registered under the Exchange Act;

· the sections of the Exchange Act requiring insiders to file public reports of their share ownership and trading activities and liability for insiders who profit from trades made in a short period of time; and

· the selective disclosure rules by issuers of material nonpublic information under Regulation FD.

We are required to file an annual report on Form 20-F within four months of the end of each fiscal year. In addition, we publish our results on a quarterly basis as press releases, distributed pursuant to the rules and regulations of the NASDAQ Global Select Market. Press releases relating to financial results and material events are also be furnished to the SEC on Form 6-K. However, the information we are required to file with or furnish to the SEC are less extensive and less timely as compared to that required to be filed with the SEC by United States domestic issuers. As a Cayman Islands company listed on the NASDAQ Global Select Market, we are subject to the NASDAQ Global Select Market corporate governance listing standards. However, NASDAQ Global Select Market rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NASDAQ Global Select Market corporate governance listing standards.

We relied on the exemption available to foreign private issuers for the requirement that it hold an annual general meeting of shareholders no later than December 31, 2016 in 2016. In this respect, we elected to follow home country practice and did not hold an annual general meeting of shareholders no later than December 31, 2016 in 2016. We may also continue to rely on this and other exemptions available to foreign private issuers in the future, and to the extent that we choose to do so in the future, our shareholders may be afforded less protection than they otherwise would under the NASDAQ Global Select Market corporate governance listing standards applicable to U.S. domestic issuers. As a result, you may not be afforded the same protections or information, which would be made available to you, were you investing in a United States domestic issuer.

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You may not receive dividends or other distributions on our Class A ordinary shares and you may not receive any value for them, if it is illegal or impractical to make them available to you.

The depositary of our ADSs has agreed to pay to you the cash dividends or other distributions it or the custodian receives on Class A ordinary shares or other deposited securities underlying our ADSs, after deducting its fees and expenses. You will receive these distributions in proportion to the number of Class A ordinary shares your ADSs represent. However, the depositary is not responsible if it decides that it is unlawful or impractical to make a distribution available to any holders of ADSs. For example, it would be unlawful to make a distribution to a holder of ADSs if it consists of securities that require registration under the Securities Act but that are not properly registered or distributed under an applicable exemption from registration. The depositary may also determine that it is not feasible to distribute certain property through the mail. Additionally, the value of certain distributions may be less than the cost of mailing them. In these cases, the depositary may determine not to distribute such property. We have no obligation to register under U.S. securities laws any ADSs, ordinary shares, rights or other securities received through such distributions. We also have no obligation to take any other action to permit the distribution of ADSs, ordinary shares, rights or anything else to holders of ADSs. This means that you may not receive distributions we make on our ordinary shares or any value for them if it is illegal or impractical for us to make them available to you. These restrictions may cause a material decline in the value of our ADSs.

You may not be able to participate in rights offerings and may experience dilution of your holdings.

We may, from time to time, distribute rights to our shareholders, including rights to acquire securities. Under the deposit agreement, the depositary will not distribute rights to holders of ADSs unless the distribution and sale of rights and the securities to which these rights relate are either exempt from registration under the Securities Act with respect to all holders of ADSs, or are registered under the provisions of the Securities Act. The depositary may, but is not required to, attempt to sell these undistributed rights to third parties, and may allow the rights to lapse. We may be unable to establish an exemption from registration under the Securities Act, and we are under no obligation to file a registration statement with respect to these rights or underlying securities or to endeavor to have a registration statement declared effective. Accordingly, holders of ADSs may be unable to participate in our rights offerings and may experience dilution of their holdings as a result.

You may be subject to limitations on transfer of your ADSs.

Your ADSs are transferable on the books of the depositary. However, the depositary may close its books at any time or from time to time when it deems expedient in connection with the performance of its duties. The depositary may close its books from time to time for a number of reasons, including in connection with corporate events such as a rights offering, during which time the depositary needs to maintain an exact number of ADS holders on its books for a specified period. The depositary may also close its books in emergencies, and on weekends and public holidays. The depositary may refuse to deliver, transfer or register transfers of our ADSs generally when our share register or the books of the depositary are closed, or at any time if we or the depositary thinks it is advisable to do so because of any requirement of law or of any government or governmental body, or under any provision of the deposit agreement, or for any other reason.

We incur increased costs as a result of being a public company, and we cannot predict or estimate the amount of additional future costs we may incur or the timing of such costs

As a public company, we incur significant legal, accounting and other expenses that we did not incur as a private company, including additional costs associated with our public company reporting obligations. The Sarbanes-Oxley Act of 2002, as well as rules subsequently implemented by the SEC and NASDAQ Global Select Market, impose various requirements on the corporate governance practices of public companies. As a company with less than US$1.07 billion in revenues for our last fiscal year, we qualify as an “emerging growth company” pursuant to the JOBS Act. An emerging growth company may take advantage of specified reduced reporting and other requirements that are otherwise applicable generally to public companies. These provisions include exemption from the auditor attestation requirement under Section 404 in the assessment of the emerging growth company’s internal control over financial reporting and permission to delay adopting new or revised accounting standards until such time as those standards apply to private companies. However, we had elected to “opt out” of this provision and, as a result, we will comply with new or revised accounting standards as required when they are adopted for public companies. The decision to opt out of the extended transition period under the JOBS Act was irrevocable.

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We expect these rules and regulations to increase our legal and financial compliance costs and to make some corporate activities more time-consuming and costly. After we are no longer an “emerging growth company,” we expect to incur significant expenses and devote substantial management effort toward ensuring compliance with the requirements of Section 404 and the other rules and regulations of the SEC. We are currently evaluating and monitoring developments with respect to these rules and regulations, and we cannot predict or estimate with reasonable certainty the amount of additional costs we may incur or the timing of such costs.

In the past, shareholders of a public company often brought securities class action suits against the company following periods of instability in the market price of that company’s securities. In the fourth quarter of 2015, several law firm in the U.S. announced that they were investigating potential securities claims on behalf of our shareholders against us. We cannot predict whether such investigations will result in lawsuits, including class action suits, being filed against us. If we were involved in a class action suit, it could divert a significant amount of our management’s attention and other resources from our business and operations, which could harm our results of operations and require us to incur significant expenses to defend the suit. Any such class action suit, whether or not successful, could harm our reputation and restrict our ability to raise capital in the future. In addition, if a claim is successfully made against us, we may be required to pay significant damages, which could have a material adverse effect on our financial condition and results of operations.

ITEM 4. INFORMATION ON THE COMPANY

A. History and Development of the Company

We began our operations in Beijing in September 2002 through Beijing Tarena Technology Co., Ltd. In November 2012, we changed the name of Beijing Tarena Technology Co., Ltd. to Tarena Technologies Inc., or Tarena Tech. Tarena International, Inc., an exempted company with limited liability, was incorporated in the Cayman Islands in October 2003 and became our ultimate holding company. We established Tarena Hong Kong Limited, or Tarena HK, as our wholly-owned subsidiary in October 2012. Tarena HK wholly owns Tarena Software Technology (Hangzhou) Co., Ltd., or Tarena Hangzhou, an entity that we established in January 2013.

On April 3, 2014, our ADSs began trading on the NASDAQ Global Select Market under the ticker symbol “TEDU.” We and certain selling shareholders sold a total of 15,300,000 ADSs, representing 15,300,000 Class A ordinary shares, at an initial offering price of $9.00 per ADS. Concurrently with our initial public offering, we also issued 1,500,000 Class A ordinary shares at a price of US$9.00 per share to New Oriental Education & Technology Group Inc. Ltd. through a private placement.

Prior to 2012, we conducted a substantial portion of our operations through our consolidated VIEs and their respective subsidiaries and schools. On January 30, 2012, the PRC Catalogue for the Guidance of Foreign Investment Industries (amended) became effective, which listed professional education service as an industry for which foreign investments are “encouraged” by the government and On April 10, 2015, the new PRC Catalogue for the Guidance of Foreign Investment Industries (amended) became effective, which listed non accredited professional education service as an industry for which foreign investments are “encouraged” by the government. In light of such change of law, starting from the second half of 2012, we began to transfer the operations, including related assets and liabilities, of our consolidated VIEs to Tarena Tech and its subsidiaries and schools. All of our learning center operations of VIEs had been transferred to Tarena Tech and its subsidiaries and schools. In December 2016, we wound up Shanghai Tarena, one of our VIEs. We expect to continue to control and consolidate Beijing Tarena, which holds an Internet Content Provider license, or ICP license. Beijing Tarena has added our TMOOC.cn website under the ICP license held by Beijing Tarena. In 2015, we invested RMB24.0 million in five PRC companies which are engaged in the provision of educational products and services. In 2016, we invested RMB12.8 million in three companies which are mainly engaged in provision of educational products and services. For a description of the risks relating to our corporate structure and the contractual arrangements we have entered into with our VIE, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.”

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The table below sets forth the respective revenues and assets of Tarena and our wholly-owned subsidiaries and our consolidated VIEs as of the dates and for the periods indicated:

	Net Revenues(1)									Total Assets(1)
	For the year ended December 31, 2014			For the year ended December 31, 2015			For the year ended December 31, 2016			As of December 31, 2016
Tarena and its wholly-owned subsidiaries		99.7	%		100.0	%		100.0	%		97.2	%
Consolidated VIEs(2)		0.3	%		0.0	%(3)		0.0	%(3)		2.8	%
Total		100	%		100	%		100	%		100	%

Notes:

(1) The percentages exclude the inter-company transactions and balances between Tarena and wholly-owned subsidiaries and the consolidated VIEs.

(2) Shanghai Terena, one of our consolidated VIEs, were wound up in December 2016.

(3) The net revenues from consolidated VIEs is immaterial and accounted for 0.0% due to rounding.

We have dual headquarters in China. Our principal executive offices in Beijing are located at Suite 10017, Building E, Zhongkun Plaza, A18 Bei San Huan West Road, Haidian District, Beijing, People’s Republic of China. Our telephone number at this address is +86 10 6213 5687. Our principal executive offices in Hangzhou are located at 1/F, Block A, Training Building, 65 Kejiyuan Road, Baiyang Jie Dao, Economic Development District, Hangzhou 310000, People’s Republic of China. Our telephone number at this address is +86 571 5602 0827. Our registered office in the Cayman Islands is located at the offices of Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111, Cayman Islands. Our agent for service of process in the United States is Law Debenture Corporate Services Inc. located at 801 2^nd Avenue, Suite 403, New York, NY 10017.

B. Business Overview

We provide professional education services in China. Our core strength is in IT professional education services. Since our inception in 2002, we have trained over 380,000 students, cooperated with more than 690 universities and colleges and placed students with approximately 90,000 corporate employers in a variety of industries. We currently offer courses in twelve IT subjects, three non-IT subjects and three kid education programs.

For our adult students, our education platform combines live distance instruction, classroom-based tutoring and online learning modules. We deliver professional education lectures through a group of experienced and passionate instructors based in Beijing to a nationwide network of 145 directly managed learning centers in 46 cities in China as of December 31, 2016. For each class, instructors deliver lectures from one classroom in Beijing to students in the same classroom as well as to students at our learning centers across China via simultaneous webcast. To facilitate a disciplined and focused learning environment, we staff each classroom at our learning centers with one or two on-site teaching assistants to tutor and supervise students. We complement the live instruction and tutoring with our proprietary learning management system TTS. TTS has five core functions, featuring course content, self-assessment exams, student and teaching staff interaction tools, student management tools and an online student community. Through this education platform, we provide job-oriented education with measurable outcomes, as demonstrated by our high job placement rates and students’ academic performance. In addition to our TTS platform, we launched TMOOC.cn in March 2015, which offers not only regular teaching video contents, but also continuing education courses and job placement training courses, in order to cover a broader customer base. We offer our part-time class students the opportunity to complete a portion of lessons online using TMOOC.cn. TMOOC.cn is also important for our marketing efforts.

In December 2015, we launched new training programs Tongcheng and Tongmei featuring IT training courses and non-IT training courses. In March 2016, we also rolled out Tongchuang to offer kids robotics programming courses. These new programs target and contain curriculum that are customized for primary to high school students aged between six and eighteen. Unlike programs designed for adult students, our courses for primary to high school students are taught by teaching assistants face-to-face in offline classrooms. In order to build a more vivid and concentrated learning environment, students will watch a series of interesting courseware videos step by step, under the lead of on-site teaching assistants. These programs are mainly delivered through the facilities of existing learning centers to improve the utilization of the facilities. In 2016, we also set up six flagship centers for kid education programs, which have further improved our brand recognition and teaching facilties and brought better learning experience for our students.

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We have a strong commitment to career services. We had 445 career counselors as of December 31, 2016, who advise students through mandatory job skill seminars, one-on-one interview workshops and systematic career assessment and planning. We had 243 employer cooperation representatives as of December 31, 2016, who liaise closely with employers, alumni, human resources websites and other employment recruiters to maximize job opportunities for our students. In January 2015, we launched a self-developed job search website called Job Show (www.jobshow.cn), which serves as a dedicated open platform for our students and other job-seeking candidates to connect with corporate employers more effectively. Through Job Show, we source and list job opportunities from both IT and non-IT employers in China. We have a track record of producing qualified, job-ready candidates for many corporate employers in China, including global Fortune 500 companies and leading technology companies.

We are a holding company with no material operations of our own. We conduct our operations primarily through our wholly-owned subsidiaries in China. We also control and consolidate a VIE, Beijing Tarena. Beijing Tarena has added our TMOOC.cn website under the ICP license held by Beijing Tarena as of December 31, 2016. Our wholly-owned subsidiaries in China are currently not eligible as wholly-owned foreign-invested enterprises to hold ICP licenses.

Our Education Platform

For our adult students, our education platform combines three key components: live distance instruction, classroom-based tutoring and online learning modules.

Live distance instruction

From our headquarters in Beijing, our instructors deliver live courses primarily via live webcast to our learning centers across China. Students attending class watch live audio-video broadcasts of lectures delivered using streaming media and other Internet-based technologies. Our full-time students typically watch live lectures for approximately five hours a day and work on practice exercises assigned by instructors for approximately two hours every day during the classroom sessions, which generally last from 9:00 a.m. to 6:00 p.m. five days a week.

Our live broadcast method of lecture delivery ensures consistency in teaching quality across all our centers. All of our instructors to deliver the lecture through webcasting system are located in Beijing, where we centralize our training support. Our headquarter-level quality control department monitors the performance of each lecturer on a daily basis. We typically have multiple instructors for each course, with each instructor focusing on separate topic areas. We believe this allows our instructors to focus, and offer more in-depth teaching, on their specific areas of expertise within a subject.

Classroom-based tutoring

Our students are generally required to physically attend classes at our learning centers. We believe physical attendance is important as it creates a disciplined and focused learning environment for students to effectively master the course content. Requiring students to physically attend classes also facilitates the delivery of personalized and systematic tutoring and job placement services to our students.

Our classrooms are equipped with computers for each student, as well as projectors and other equipment necessary for the live broadcast of our lectures. Our classroom technology infrastructure allows students to interact with instructors online to receive help on course materials and to use online modules in TTS to take notes and conduct practice exercises.

Our learning centers function both as classrooms for delivering lectures and self-study rooms after class hours. As of December 31, 2016, we directly managed a total of 145 learning centers in 46 major cities across China. Our learning centers vary in terms of size, typically having between 5 and 20 classrooms, with each classroom typically able to host between 20 and 100 students. In addition to the learning centers that we operate directly, we also have one franchised learning center in Xi’an, and the franchise fee from such learning center was immaterial in 2016.

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The following table provides an overview of our national network of learning centers that we manage directly and the courses offered in each city as of December 31, 2016 and student enrollments in each city in 2016:

Cities	Number of Learning Centers	Java	C++	Digital art	Software testing	PHP	Embedded	Android	NET	iOS	Linux and network engineering	Online sales and marketing	Accounting	Web front- end development	Big data	VR/AR
Beijing	15	●	●	●	●	●	●	●	●	●	●	●	●	●	●	●
Hangzhou	9	●	—	●	—	—	●	●	—	●	—	●	●	●	—	—
Shenzhen	9	●	●	●	●	●	●	●	—	●	●	●	●	●	—	—
Shanghai	8	●	●	●	●	●	●	●	—	●	●	●	●	●	—	—
Guangzhou	8	●	●	●	●	●	●	●	—	●	●	●	●	●	—	—
Chengdu	7	●	●	●	●	●	—	●	—	●	—	●	●	●	—	—
Nanjing	6	●	●	●	●	—	●	●	—	●	—	●	●	●	—	—
Wuhan	6	●	●	●	●	●	●	●	—	●	—	—	●	●	—	—
Hefei	6	●	●	●	—	—	—	—	—	●	—	—	●	●	—	—
Zhengzhou	5	●	—	●	—	●	●	●	—	●	—	—	●	—	—	—
Chongqing	4	●	—	●	—	●	●	●	—	—	—	●	●	●	—	—
Changsha	4	●	—	●	—	—	—	—	—	—	—	●	—	—	—	—
Jinan	4	●	●	●	—	●	—	●	—	●	—	●	●	—	—	—
Qingdao	4	●	●	●	—	●	—	—	—	—	—	●	●	—	—	—
Taiyuan	4	●	—	●	—	●	—	●	—	—	—	●	●	—	—	—
Shenyang	3	●	—	●	—	—	—	—	—	—	—	●	—	—	—	—
Changchun	3	●	—	●	—	—	—	●	—	—	—	●	—	—	—	—
Shijiazhuang	3	●	—	●	—	—	—	—	—	●	—	—	—	—	—	—
Xi’an	2	—	—	●	●	●	—	●	—	●	—	●	—	—	—	—
Wuxi	2	●	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Suzhou	2	●	●	—	—	—	—	—	—	—	—	—	—	—	—	—
Harbin	2	●	—	●	—	—	—	—	—	—	—	●	—	●	—	—
Xiamen	2	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Nanchang	2	●	●	●	—	—	—	—	—	●	—	—	—	—	—	—
Dalian	2	●	—	●	—	—	—	—	—	—	—	●	●	—	—	—
Kunming	2	●	—	●	—	—	—	—	—	—	—	●	—	—	—	—
Tianjin	2	●	—	●	—	—	—	—	—	●	—	●	—	—	—	—
Nanning	1	●	—	●	—	—	—	—	—	—	—	●	—	—	—	—
Ningbo	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Fuzhou	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Zhuhai	1	●	—	●	—	—	—	●	—	—	—	—	—	—	—	—
Daqing	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Yantai	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Dongguan	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Guiyang	1	●	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Haikou	1	●	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Lanzhou	1	●	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Weifang	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Luoyang	1	●	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Linyi	1	●	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Yuncheng	1	●	—	●	—	—	—	—	—	—	—	●	—	—	—	—
Wenzhou	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Hohhot	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Qinhuangdao	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Nanyang	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—
Zibo	1	●	—	●	—	—	—	—	—	—	—	—	—	—	—	—

Notes:

● currently offered

— not currently offered

In 2016, we have entered 46 cities in China and recruited 107,493 students, approximately 62.0% of whom are from top 10 cities, namely Beijing, Shenzhen, Shanghai, Hangzhou, Chengdu, Nanjing, Guangzhou, Wuhan, Zhengzhou and Qingdao. Other cities accounted for 38.0% of total student enrollments.

Online learning modules

Our live distance instruction and classroom-based tutoring are supplemented by our proprietary online learning modules featured on our TTS platform. TTS has the following five core functions:

· Course content. TTS contains lecture slides, key lecture video recordings, case studies, practice exercises and supplemental reading materials. In addition to recordings of past lectures, TTS also features exclusive online videos on key course materials. Students may view lecture videos using the computers at our learning centers. To foster effective learning of our course lecture materials, especially theoretical knowledge points, TTS features software development case studies and practice exercises. TTS contains supplemental reading materials on areas in which we have historically received frequent questions from students. TTS also allows students to download coding materials and study notes that they have prepared for reference in their future jobs.

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· Self-assessment exams. TTS features daily and weekly interactive mock examinations to measure learning outcomes. Students use the mock exams to assess their learning results and gauge their grasp of course content. After students complete a self-assessment exam, TTS automatically provides students with detailed explanations on each of the exam questions.

· Student and teaching staff interaction. TTS allows students to interact with instructors and teaching assistants. In class, students may raise questions for instructors and teaching assistants using the messaging tools on TTS. After class, students can post questions to the teaching assistants through the online question and answer board in TTS. Teaching assistants are able to provide timely and accurate responses typically within 30 minutes after a question is submitted. To ensure the accuracy of responses and to identify questions of common interest, our instructors also actively review questions posted on TTS and regularly provide answers. Students are given the opportunity to provide feedback for each answer or tutorial service provided by teaching assistants using the evaluation functions on TTS.

· Student management tools. TTS allows instructors to receive daily ratings and feedback from students. Instructors may then adjust their lecture pace and coverage of course materials each day. TTS enables teaching assistants to evaluate each student’s academic performance. The teaching assistant interface of TTS contains each student’s monthly performance test scores, as well as each student’s ranking within the class and nationally. Teaching assistants are required to follow-up with underperforming students regarding their academic status and to adopt concrete action plans with such students to improve their future performance. TTS also allows teaching assistants to monitor each student’s attendance and to log their daily tutoring activities.

· Online student community. TTS serves as an online student community that fosters academic collaboration among students. We encourage students to post course-related articles and comments sharing their study experiences on the bulletin board forum.

In addition to our TTS platform, we launched TMOOC.cn in March 2015 to cover a broader customer base. TMOOC.cn offers two types of online learning products: continuing education courses and job placement training courses. Continuing education courses, composed of a library of video clips that focus on on-the-job practical skills, target working professionals and others with continuing education needs. Job placement training courses are full length programs that target job seekers. These recruitment-oriented courses are carefully chosen from existing courses at our learning centers and redesigned to be more suitable for online learning environment. Users who finish all modules in a job placement training course and pass the relevant Tarena certification examination will receive the same job placement services that we offer to students at learning centers. We also offer our part-time class students the opportunity to complete a portion of lessons online using TMOOC.cn. The number of registered TMOOC.cn users has reached more than 195,000 as of December 31, 2016, and our proprietary content library offers more than 22,000 hours of video content.

Our Course Offerings

Our courses provide students with practical education to prepare them for jobs in industries with significant growth potential and strong hiring demand. We currently offer courses in twelve IT subjects, three non-IT subjects and three kid education programs.

For adult students, we generally offer the following two types of classes in order to accommodate the different scheduling and training needs of our students:

· Full-time class. The term for a full-time class is typically four months and includes approximately 1,000 learning hours. Full-time classes meet from Monday to Friday. In 2016, we also implemented “teaching at appropriate level” strategy and launched advanced courses with terms of one to five months. In 2016, approximately 80.6% of our enrolled students attended our full-time classes.

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· Part-time class. Part-time classes typically have terms of three to five months. We allow students to attend part-time classes either exclusively during weekends or on a combination of weekday nights and weekends, as these students typically have full-time jobs. We offer our part-time class students the opportunity to complete a portion of lessons online by watching videos available on TTS through TMOOC.cn. In 2016, approximately 19.4% of our enrolled students attended our part-time classes.

We have adopted stringent quality control procedures to ensure that we produce high quality graduates. We use entrance exams to assess the level of our students. Prospective full-time students with low entrance exam scores are recommended to enroll in preparatory training camps. We have a total of four monthly closed-book performance tests to evaluate the learning status of our students. For underperforming students who have failed the first monthly performance test, we offer them the opportunity to re-take the first month classes at no extra cost. We believe physical class attendance is important, and students with low attendance rates are generally not given graduation certificates and job opportunities referrals at the end of our program.

Our full-time classes also include short term, project-based training programs designed for college students to gain practical IT experience, which are not material for our business as a whole.

IT education courses

We offer education courses covering the following twelve IT subjects:

Subject	Year of Launch	Focus of Course Content
Java	2002	Programming for Windows and Linux-based desktop software and web-based software
.NET	2007	Development of software based on the .NET framework that runs primarily on Windows
C++	2009	Programming for Windows and Linux-based desktop software
Software testing	2009	Practical software testing and quality assurance training
Embedded	2009	Development of software to control machines and devices
PHP	2010	Web-based software development for e-commerce industries
Android	2011	Programming for Android-based applications
iOS	2012	Programming for iOS-based applications
Linux and network engineering	2013	Linux operating system and network management technology
Big Data	2015	Hadoop, HBase, Hive, Zookeeper
Web front-end development	2015	HTML5, CSS3, JavaScript, jQuery, AJAX, Bootstrap, AngularJS, Web APP
VR/AR	2016	Programming for developing a full range of VR/AR projects

Graduates of our IT education courses receive Tarena Certified Software Developer certificates, or TCSD certificates. Holders of TCSD certificates are qualified to obtain the intermediate-advanced software engineer certificate issued by the Ministry of Industry and Information Technology of China, or the MIIT, for their respective field of study, subject to such graduates passing our internal examination. Graduates of our Java courses are granted ORACLE Certified Java Programmer certificates by ORACLE Corporation after passing the relevant exams. Our Linux and network engineering course graduates may also sign up for Red Hat certification exams at our learning centers. Graduates of our embedded course are awarded the Embedded Engineer Certificate issued by ARM upon passing the relevant exams. Pursuant to our strategic partnership agreement with Alibaba Cloud Computing Co., Ltd., or Aliyun, Aliyun will provide two opportunities to take the ACF (Ali Cloud Foundation) certification exams to each Tarena student.

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Non-IT education courses

We began offering courses in non-IT subjects in 2013. We launched our digital art course in February 2013, our online sales and marketing course in November 2013 and our accounting course in October 2014. The following table describes the three non-IT courses that we currently offer:

Subject	Year of Launch	Focus of Course Content
Digital art	2013	Latest Adobe user interface design technology for graphic, webpage and mobile sites design
Online sales and marketing	2013	Search engine marketing, search engine optimization, and other Internet based marketing, including microblog marketing
Accounting	2014	Accounting certificate, and chief accountant practice

Since its launch in February 2013, our digital art course has registered strong growth in student enrollments and has become one of the largest courses in terms of net revenue contribution in 2016. Our accounting course helps us target a broader student base. Graduates of our online sales and marketing courses are awarded the Certificate issued by Baidu without additional examination.

Kid Education Programs

In December 2015, we launched new training programs Tongcheng, Tongmei and Tongchuang featuring IT training courses and non-IT training courses. Compared with the curriculum for adult students, the IT and non-IT courses offered under the Tongcheng, Tongmei and Tongchuang programs feature materials that are customized for young kids. Both new programs target and contain curriculum that are customized for primary to high school students aged between 6 and 18. Unlike programs designed for adult students, our courses for primary to high school students are taught by teaching assistants face-to-face in offline classrooms. In order to build a more vivid and concentrated learning environment, students will watch a series of interesting courseware videos step by step, under the lead of on-site teaching assistants.

Tongcheng, Tongmei and Tongchuang programs each has three to four levels, with each level consisting of 120 learning hours per year. Students begin from level 1 and attend a 3-hour class per week. Depending on the age group, it generally takes approximately one year to complete each level. As of December 31, 2016, our Tongcheng, Tongmei or Tongchuang programs are offered in 15 cities in China.

Our Teaching Staff

Our instructors

As of December 31, 2016, we employed 204 full-time instructors based in Beijing. Most of our instructors for IT education courses have industry backgrounds in global and domestic technology companies. Instructors for non-IT education courses are typically experts or veterans in their respective specialized fields. Our instructors also provide us with unique access to a large pool of experts on industry trends that is especially valuable in our decision-making and development process for new courses. We believe we attract highly qualified instructors by virtue of our respected brand, our well-established teaching infrastructure and sales team and our competitive compensation.

We believe that developing and maintaining highly capable and motivated instructors is critical to our success. We seek qualified instructor candidates who have extensive industry experience or come from other professional education service providers. These candidates are subject to multiple rounds of interviews conducted by our director of teaching, vice-president for teaching and the chief executive officer. All instructors are required to undergo training in teaching skills and techniques. We require our instructors to regularly update their course materials to remain current with evolving employer needs, industry developments and other key trends necessary to teach effectively. We typically have a backup instructor assigned to each course to meet any emergency needs.

To align incentives, instructors receive bonuses based on students’ ratings and the number of class sessions taught, in addition to their base compensation.

Our teaching assistants

We believe that our dedicated teaching assistants are essential to the success of our education model. Our teaching assistants interact with and tutor our students on a daily basis, and are instrumental in facilitating a disciplined and focused learning environment. Each classroom is staffed with one or two teaching assistants, who attend lectures together with students. Teaching assistants are available during class hours to answer student questions in person, and after class hours to address inquiries online via TTS or on-site until 8:30 p.m. Teaching assistants are also responsible for offering focused tutoring services to underperforming students and continuously monitoring their academic results. We have adopted a comprehensive set of key performance indicators, or KPIs, to evaluate the performance of our teaching assistants. Such KPIs include student satisfaction, exam scores of students on monthly performance tests, the improvement of underperforming students and employment results after graduation, among other indicators.

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We primarily seek teaching assistant candidates from our graduates who have demonstrated strong command of materials in the relevant subject areas. We provide necessary training to newly hired teaching assistants to tutor effectively. Our teaching assistants are frequently evaluated by students on the quality of their assistance. We had a total of 1,344 teaching assistants as of December 31, 2016.

Course Content Development

In addition to teaching, our instructors also develop the course content in their respective subject areas. We regularly update our existing courses, typically every six months, to stay abreast of the latest technology developments and industry trends. Our instructors are also responsible for producing practice exercises and exam questions for monthly performance tests to evaluate the effectiveness of our student self-assessment tests in TTS.

We regularly engage in new course development in order to capture demands created by evolving job market and industry trends. We have a set of procedures for new course development. Prior to developing a new course, we gather market intelligence by collecting job market demand information to ensure that we are developing relevant and up-to-date courses. We conduct a series of surveys, each with clear parameters, to determine various aspects of the proposed new course. Once we gather enough market intelligence, we recruit, or identify from within Tarena, instructors with the appropriate industry and academic background to form a course-specific development task team. All of our new courses are then pilot tested in selected learning center in Beijing for student satisfaction, training practicality and employment outcomes. In 2016, we launched one new course in VR/AR and one kid program in kid robot programming.

Our software research and development department is tasked with improving the technical performance and user experience of TTS. Since introducing TTS student version 1.0 in 2006, we have produced eight upgrades to TTS. The current version that our students use is TTS student version 9.0.

Our Students

The majority of our students are college students and graduates. In 2016, approximately 81.3% of our enrolled students were either studying towards, or already held, a post-secondary degree. We have experienced significant growth in student enrollment in recent years. Our student enrollment reached 107,493 in 2016.

Student recruitment

We rely primarily on Internet-based marketing to attract students and increase enrollments. We advertise on the Internet using search engine keywords on leading search engines. We also use banners and other advertising placements on targeted sites, such as education portals, career sites and industry-specific websites. We actively monitor the effectiveness of our advertising and adjust marketing spending accordingly. Our learning centers also host seminars, information sessions and preparatory training camps for prospective students.

When a prospective student responds to our advertisements, an enrollment advisor generates a prospective student profile and advises the candidate, either online or in a face-to-face meeting, on various aspects of our courses and educational experience. As of December 31, 2016, we had a total of 1,746 enrollment advisors nationally.

To promote brand awareness, we place advertisements in industry trade publications and present at industry trade seminars and conventions. We also began to host our annual Tarena-Discovery Cup Chinese University Students Software Design Competition in April 2012. In 2015, we changed our logo from “Tarena Technology” (达内科技) to “Tarena Education” (达内教育) to better showcase our professional image in education.

We also encourage our students at school to introduce their friends or classmates who are interested in taking professional education courses. Student referral has become one of the key channels we access to new students.

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In addition to our marketing efforts and student referrals, we recruit a significant portion of our students directly from universities and colleges. As of December 31, 2016, we have cooperated with over 690 universities and colleges in China under one of the three following modes of cooperation:

· Joint-majors. We offer joint-majors with 103 universities and colleges in China. These universities offer students the option to include our selected courses in their standard undergraduate curriculum. Students in selected majors at these universities take our courses full-time for one semester and receive academic credits from these universities and colleges after successfully completing our courses.

· On-campus learning sites. We have established over 144 on-campus learning sites with over a number of universities and colleges in China to offer our courses, without live broadcast, to students attending these universities and colleges. Students enrolled in our on-campus learning sites typically attend part of our course in the on-campus learning sites and part of the course at our learning centers. We pay universities and colleges for the cost of classroom facilities used in the learning sites but do not share revenue with these universities and colleges.

· Enrollment cooperation. We have enrollment cooperation with over 690 universities and colleges in China. These universities and colleges allow us to organize marketing and promotional events on campus in order to attract students.

We had a total of 283 university cooperation representatives as of December 31, 2016. Our university cooperation representatives are responsible for establishing new and maintaining current cooperative relationships between us and universities in China. In 2016, we enrolled approximately 14.8% of our students from universities and colleges with which we cooperated.

Student job placement services

We have an effective job placement program for our adult students. Each learning center retains full-time career counselors who meet with students on the first day of class to discuss their career goals and to build an employment profile for each student. Our career counselors host a series of mandatory career development seminars for students throughout the term. During the final weeks of each course, our career counselors meet with students one-on-one to offer training on interview and résumé preparation. In addition to the scheduled career service activities, our career counselors are generally available to meet with students one-on-one during office hours. Our career counselors also monitor the employment results of our students and actively offer personalized assistance to students facing difficulties in securing job offers. We had a total of 445 career counselors as of December 31, 2016.

Each learning center offering courses for adult students also retains full-time employer cooperation representatives who routinely collaborate with employers, alumni, human resources websites and other employment recruiters to maximize opportunities for job placements. We had a total of 243 employer cooperation representatives as of December 31, 2016. We invite corporate employers to host recruiting events and interviews at our learning centers and offer students with interview opportunities across the country.

In January 2015, we launched a self-developed job search website called Job Show (www.jobshow.cn), which serves as a dedicated open platform for our students and other job-seeking candidates to connect with corporate employers more effectively. Through Job Show, we source and list job opportunities from both IT and non-IT employers in China.

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We gather data on post-course job placement rates by conducting surveys of our graduates. Based on the survey responses, we calculate the six-month post-course job placement rates for a month by dividing (i) the number of job-seeking students enrolled in such month who (A) successfully graduated from our programs with graduation certificates awarded and (B) indicated that they had received employment offers within six months of graduation, by (ii) the total number of job-seeking students enrolled in such month who later successfully graduated from our programs with graduation certificates awarded. We calculate the average six-month post-course job placement rate for a year by averaging the six-month post-course job placement rates of each month of such year. Our average six-month post-course job placement rate for each of 2014 and 2015 was over 90%. When calculating such job placement rates for 2014 and 2015, a majority of the employment reported by relevant students were full-time employment, and a majority of the employment reported by relevant students were in the fields of their studies with us. All of the students enrolled in 2014 and 2015 who later successfully graduated from our programs with graduation certificates awarded and who were job-seeking, have filled out our surveys. Among the students enrolled in 2014 and 2015, 89% and 86% of such students, respectively, graduated from our programs with graduation certificates awarded. Among the students enrolled in 2014 and 2015 who later successfully graduated from our programs with graduation certificates awarded, 81% and 77% of such students, respectively, were deemed to be job-seeking students.

Our Network of Employers

We have a track record of producing job-ready and highly qualified candidates for many corporate employers. Since our inception, our network of potential employers for our students covered approximately 90,000 corporate employers, including Global Fortune 500 companies, and leading technology, IT services and Internet companies in China.

We offer the following recruiting services to corporate employers:

· General recruiting services. We offer corporate employers candidate referral services and other recruitment-related services. Once an employer communicates its hiring needs to us, we direct the relevant learning centers to produce a list of student candidates that meet the hiring criteria of such employer, and refer such candidates to the employer for interviews and assessments. We also offer space at our learning centers for employers to host recruiting events targeting our students and to conduct interviews.

· Customized courses. We offer customized courses targeting specific employers with large demands for trained professionals. Prospective students for our customized courses generally undergo interviews conducted by the employers before the start of classes. In addition to our standard curriculum, students enrolled in customized courses must participate in additional training provided by employers at our learning centers. Such additional training is tailored according to the particular skill requirements of the employers. Successful graduates of our customized courses who have passed the relevant qualifying exams are granted job offers by the employers.

While we currently do not generate any material revenue from any of our recruiting services for corporate employers, we believe such services enhance our brand recognition and are instrumental in our ability to help students achieve high job placement rates.

Tuition Fees

For our full-time classes for adult students, our standard tuition fees generally range from RMB16,800 to RMB20,800 per course. We raised the standard tuition fees on selected courses offered in certain large cities by RMB1,000 to RMB 2,000 per course in March 2016. We also increased our tuition fees for part-time classes on selected courses offered in certain large cities by RMB1,000 to RMB2,000 per course in 2016. For our kid education programs, our standard tuition fees are between RMB15,000 and RMB19,200. Each kid education program is composed of four levels, with each level consisting of 120 learning hours in one year.

We primarily offer two payment options for our adult students, including one-time full payment upon enrollment and multiple payments within two months of enrollment. We also offer an option whereby qualified adult students can pay our tuition fees within a period of time after graduation.

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To assist our students in paying our tuition fees, we offered the following five credit sources to provide financing services for our students to make one-time, up-front tuition payments in 2016:

· Baidu Small Loan Co., Ltd. We launched the Baidu student loan program in November 2015.

· Bank of China Consumer Finance Co., Ltd. We launched the BOC CFC student loan program in April 2014.

· RenRenDai. We began to cooperate with RenRenDai, a third-party peer-to-peer lending service provider, in arranging loans for our students to pay for their tuition fees in January 2015.

· CreditEase. CreditEase, a credit management and microfinancing company in China, assists our students in obtaining loans to pay for their tuition. CreditEase began to offer this service to our students in July 2013.

· ShiTuDai. We have cooperated with ShiTuDai, a peer-to-peer lending service provided by an independent third party, in arranging loans for our students to pay for their tuition fees since the second quarter of 2015.

Approximately 55.1% of our students enrolled in 2016 obtained financing from one of the five abovementioned sources. Such financing arrangements are bilateral in nature, and are carried out between our students and the respective financing institution directly.

Technology

Building a reliable, scalable and secure technology infrastructure is crucial to our ability to support our live lecture broadcasts, online TTS, TMOOC.cn and the various services that we provide to our students. We manage our lecture delivery system, TTS and TMOOC.cn using a combination of commercially available software and hardware systems. Since 2006, we have established a powerful online platform that enables thousands of students to simultaneously log onto our TTS and participate in activities online.

All of our servers and routers, including backup servers, are currently hosted at our learning centers or by third-party service providers in multiple cities in China. We regularly back up our databases. Our network administration department regularly monitors the performance of our websites and infrastructure to enable us to respond quickly to potential problems. We deliver live broadcast of audio and video of the lectures given in Beijing via the dedicated network of China Telecom and China Unicom to terminals located in selected learning centers with high student enrollment, and via public Internet infrastructure to our other learning centers.

We developed our CRM software in-house to manage our student and corporate employer information, as well as to integrate our key administrative functions. We will rely on our internal IT resources to upgrade the CRM system as needed.

Seasonality

Seasonal fluctuations have affected, and are likely to continue to affect, our business. Historically, we typically generate the highest net revenues in the third and fourth quarters because of the increased student enrollments during summer vacation. We generally generate less tuition fees in the first quarter of each year due to the Chinese New Year holiday. Our quarterly cost of revenue, selling and marketing expenses, general and administrative expenses and research and development expenses have generally been increasing in absolute amounts since 2012 as we expanded our network of learning centers, increased the number of our personnel, enhanced our marketing efforts and offered more courses.

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Intellectual Property

Our trademarks, copyrights, domain names, trade secrets and other intellectual property rights distinguish our courses and services from those of our competitors and contribute to our ability to compete in our target markets. We rely on a combination of copyright and trademark law, trade secret protection and confidentiality agreements with senior executive officers and most other employees, to protect our intellectual property rights. In addition, we require certain of our senior executive officers and other employees to enter into agreements with us under which they acknowledge that all inventions, utility models, designs, know-how, copyrights and other forms of intellectual property made by them within the scope of their employment with us, pursuant to job assignments or using our materials and technology, or during the two years after their employment that relates to their employment with us, are our property and they should assign the same to us if we so require. We also regularly monitor any infringement or misappropriation of our intellectual property rights.

As of December 31, 2016, we had registered 192 domain names relating to our business, including our www.tedu.cn, TMOOC.cn, jobshow.cn, www.IT61.cn and www.art61.cn websites, with the Internet Corporation for Assigned Names and Numbers and China Internet Network Information Center. Tarena Tech holds 21 registered software copyrights, 35 trademarks and 190 registered domain names including www.tedu.cn. Beijing Tarena holds the domain name TMOOC.cn.

Competition

The professional education services market in China is fragmented, rapidly evolving and highly competitive. We face competition in our offered courses and in many of the geographic markets in which we operate. For our IT training courses, we face competition from IT professional education providers that offer specialized training programs targeting certain niche job markets in the IT industry. In the future, we may also face competition from new entrants into the Chinese IT professional education market. For our non-IT training courses, we face competition for student enrollment from existing online and offline providers of professional education services, as well as smaller regional professional education services providers in China. As we enter the kid professional education services market, we also face competition from other national and regional providers of kid education services.

We believe that the principal competitive factors in our markets include the following:

· scope and quality of course offerings and services;

· student placement and employer satisfaction with our graduates;

· brand recognition;

· ability to effectively market course offerings and services to a broad base of prospective students;

· cost effectiveness of the education; and

· ability to align course offerings and services to specific needs of students and employers.

We believe that we are well-positioned to effectively compete in markets in which we operate on the basis of our innovative education platform, scalable and efficient business model, unparalleled access to corporate employers, training quality, strong content development capabilities and experienced management team. However, some of our current or future competitors may have longer operating histories, greater brand recognition, or greater financial, technical or marketing resources than we do. For a discussion of risks relating to competition, see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business—We may lose market share and our profitability may be materially and adversely affected, if we fail to compete effectively with our present and future competitors or to adjust effectively to changing market conditions and trends.”

Insurance

We do not maintain any property insurance policies covering students, equipment and facilities for injuries, death or losses due to fire, earthquake, flood or any other disaster. Consistent with customary industry practice in China, we do not maintain business interruption insurance, nor do we maintain key-man life insurance. We maintain accident injury insurance and accident injury medical insurance for our employees based in our headquarters in Beijing, and we maintain liability insurance for our students enrolled through university and college cooperation channel. Uninsured injury or death to our students or staff, or damage to any of our equipment or buildings could have a material adverse effect on our results of operations. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business—We have limited insurance coverage for our operations in China.”

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Government Regulations

Regulations on Private Education

The principal regulations governing private education in China consist of the Education Law of the PRC, the Law for Promoting Private Education and the Implementation Rules for the Law for Promoting Private Education, or the PE Implementation Rules and the Regulations on Chinese-Foreign Cooperation in Operating Schools.

Education Law of the PRC

On March 18, 1995, the NPC promulgated the Education Law of the PRC, or the Education Law. On December 27, 2015, the Standing Committee of the NPC released the Amendment of the Education Law of the PRC. Pursuant to the Education Law, enterprises, social organizations and individuals are generally encouraged to operate schools and other types of educational organizations in accordance with PRC laws and regulations.

Our new kid education programs launched in December 2015 are currently operated through our learning centers in fifteen cities in China. The kid education programs contain IT training courses and non-IT training courses, both of which fall within the category of professional education training. Under PRC regulations, the kid education programs offered through professional education training entities shall not be subject to supplemental governmental pre-approval. The governmental authorities that have approved the establishment of the professional education training entities shall be the same authorities that continue to regulate new programs launched by such training entities. In the case of our learning centers operating our kid education programs, their establishments are approved by the relevant governmental authorities in charge of labor and social welfare, and as such, the kid education programs will be under the governance of the same governmental authorities. Furthermore, current PRC laws and regulations do not specifically distinguish between adult professional education training and minor professional education training. Thus, from a regulatory prospective, the kid education programs do not have material difference as compared with adult professional education training programs and shall follow the same PRC regulations that apply to our adult professional education training programs. According to the Regulation on Prohibiting Primary to High Schools and Their Teachers from Paid Teaching after School issued by the MOE on June 29, 2015 and the implementation documents issued by local education authorities, only teachers of primary to high schools are not allowed to teach paid lessons after school nor act in a separate capacity as private tutors or teachers. None of teachers in our kids education programs are teachers of primary to high schools, and most of such teachers are our full-time employees.

The Law for Promoting Private Education and its Implementation Rules

On December 28, 2002, the Standing Committee of the NPC promulgated the Law for Promoting Private Education, or the Private Education Law, which became effective on September 1, 2003 and was amended on November 7, 2016. The latest amendment will become effective on September 1, 2017. On March 5, 2004, the PRC State Council promulgated the Implementation Rules for the Law for Promoting Private Education, which became effective on April 1, 2004, or the PE Implementation Rules. Under the Private Education Law and the Private Education Law Implementation Rules, “private schools” are defined as schools established by social organizations or individuals using non-government funds. Private schools providing certifications, pre-school education, education for self-study aid and other academic education shall be subject to approval by the education authorities, while private schools engaging in professional qualification training and professional education training shall be subject to approvals from the authorities in charge of labor and social welfare. Private schools are classified as either non-profit private schools or for-profit private schools. A duly approved private school engaging in professional qualification training and professional education training shall (i) be granted a Permit for Operating a Private School by the authorities in charge of human resources and social security, (ii) be registered with the Ministry of Civil Affairs or its local counterparts as a privately run non-enterprise institution and (iii) pass the annual inspection with the Ministry of Civil Affairs or its local counterparts. As of December 31, 2016, we operated 24 schools, all of which are engaged in professional education training. Each has (i) obtained a Permit for Operating a Private School issued by the authorities in charge of human resources and social security or education, (ii) been registered with the relevant local counterpart of the Ministry of Civil Affairs and (iii) passed the annual inspection, as applicable, with the Ministry of Civil Affairs or its local counterparts.

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The types and amounts of fees charged by a private school providing certifications shall be approved by the governmental pricing authority and be publicly disclosed. A private school that does not provide certifications shall file its pricing information with the governmental pricing authority and publicly disclose such information. A private school shall file its advertisement and school enrollment brochure with the relevant governmental authorities of human resources and social security or education. None of our schools provides a diploma or certification to students, and 12 of our schools have filed their pricing information with the governmental pricing authority and publicly disclose such information. 9 of our schools have filed their advertisement and school enrollment brochure with the relevant governmental authorities of human resources and social security or education. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business—The operations of certain of our learning centers are, or may be deemed by relevant PRC government authorities to be, beyond their authorized business scope or without proper license or registration. If the relevant PRC government authorities take actions against such learning centers, our business and operations could be materially and adversely affected.”

Private schools are divided into two categories: for-profit private schools, which may obtain returns, and non-profit private schools, which may not obtain returns. The obtaining of returns of for-profit private school should be regulated by the PRC corporate law and other relevant laws and regulations.

The election to establish a for-profit private school shall be provided in the articles of association of the school. The percentage of the school’s annual net balance that can be distributed as a reasonable return shall be determined by the school’s board of directors, taking into consideration the following factors: (i) school fee types and collection criteria, (ii) the ratio of the school’s expenses used for educational activities and improving the educational conditions to the total fees collected, and (iii) the admission standards and educational quality. The relevant information relating to the above factors shall be publicly disclosed before the school’s board determines the percentage of the school’s annual net balance that can be distributed as reasonable returns. Such information and the decision to distribute reasonable returns shall also be filed with the approval authorities within 15 days from the decision made by the board. However, none of the current PRC laws and regulations provides a formula or guidelines for determining “reasonable returns”. In addition, the amendment of the Law for Promoting Private Education released on November 7, 2016, which will become effective on September 1, 2017, allow the for-profit private school to obtain returns, which will be further regulated by the PRC corporate law and other relevant laws and regulations

At the end of each fiscal year, every private school is required to allocate a certain amount to its development fund for the construction or maintenance of the school or procurement or upgrade of educational equipment. In the case of a private school that requires reasonable returns, this amount shall be no less than 25% of the annual net income of the school, while in the case of a private school that does not require reasonable returns, this amount shall be equal to no less than 25% of the annual increase in the net assets of the school, if any. Private schools that do not require reasonable returns shall be entitled to the same preferential tax treatment as public schools, while the preferential tax treatment policies applicable to private schools requiring reasonable returns shall be formulated by the finance authority, taxation authority and other authorities under the State Council. To date, however, no regulations have been promulgated by the relevant authorities in this regard.

The distribution of residual properties upon termination and liquidation of a for-profit private school should be regulated by PRC corporate law and relevant regulations.

Except for aforementioned differences, the “sponsorship interest” that a sponsor holds in a private school is, for all other practical purposes, substantially equivalent under PRC law and practice to the “equity interest” a shareholder holds in a company. A sponsor of a private school has the obligation to make capital contributions to the school in a timely manner. The contributed capital can be in the form of tangible or non-tangible assets such as materials in kind, land use rights or intellectual property rights. The capital contributed by the sponsor becomes assets of the school and the school has independent legal person status. In addition, the sponsor of a private school has the right to exercise ultimate control over the school by becoming the member of and controlling the composition of the school’s decision making body. Specifically, the sponsor has control over the private school’s constitutional documents and has the right to elect and replace the private school’s decision making bodies, such as the school’s board of directors, and therefore controls the private school’s business and affairs.

As of December 31, 2016, we had five schools registered as schools requiring reasonable returns, while all other schools are registered as schools not requiring reasonable returns.

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Regulations on Chinese-Foreign Cooperation in Operating Schools

Chinese-foreign cooperation in operating schools or training programs is specifically governed by the Regulations on Operating Chinese-foreign Schools, promulgated by the State Council in 2003 in accordance with the Education Law, the Occupational Education Law and the Private Education Law. The Implementing Rules for the Regulations on Operating Chinese-foreign Schools, or the Implementing Rules, were issued by the MOE in 2004. The Regulations on Chinese-Foreign Cooperation in Operating Schools and its Implementing Rules encourage substantive cooperation between overseas educational organizations with relevant qualifications and experience in providing high-quality education and Chinese educational organizations to jointly operate various types of schools in the PRC. Cooperation in the areas of higher education and occupational education is especially encouraged. Chinese-foreign cooperative schools are not permitted, however, to engage in compulsory education or military, police, political and other kinds of education that are of a special nature in China. The Regulations on Operating Chinese-foreign Schools prohibits foreign institutions or individuals from independently establishing schools in China, which provide educational services mainly for Chinese citizens.

The Ministry of Human Resources and Social Security (formerly known as Ministry of Labor and Social Security) also promulgated the Regulations on Operation Chinese-foreign Cooperation School in Professional Education Training to implement the Regulations on Operating Chinese-foreign Schools on July 26, 2006, which took effect on October 1, 2006. The Regulations on Operation Chinese-foreign Cooperation School in Professional Education Training prohibits foreign institutions or individuals from independently establishing professional education training institutions in China, which provide educational services mainly for Chinese citizens.

We have not operated or applied for any Chinese-foreign schools. Prior to 2012, we operated a substantial portion of our learning centers through subsidiaries of our consolidated VIEs and schools to which our consolidated VIEs or their respective subsidiaries are sponsors. Starting from the second half of 2012, we began to transfer our operations to our wholly-owned subsidiary, Tarena Tech, and its subsidiaries. All of our learning center operations of VIEs had been transferred to Tarena Tech and its subsidiaries and schools. As of December 31, 2016, we operated 49 of our learning centers through private schools owned by subsidiaries of Tarena Tech. However, there are still uncertainties under the current PRC laws as to whether a wholly foreign owned enterprise (such as Tarena Tech) is allowed to indirectly invest in and own private schools through its PRC subsidiaries. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business—If the relevant PRC authorities determine that we can no longer own and operate certain of our learning centers through our PRC subsidiaries, we may need to restructure the ownership and operation of these learning centers (including possibly transferring these learning centers to our consolidated VIE), our business may be disrupted and we may be exposed to increased risks associated with the contractual arrangements relating to our consolidated VIE.”

Regulations on Professional Education

On May 15, 1996, the Standing Committee of the NPC promulgated the Professional Education Law of the PRC, or the Professional Education Law which became effective on September 1, 1996. Pursuant to the Professional Education Law, professional training includes training pre-employment, training for military personnel transferring to civil positions, training for apprentices, on-the-job training, job-transfer training and other professional training. Professional training may be classified as junior, middle or senior level according to the actual situations. It shall be conducted by either professional training institutions or professional schools, which may develop various professional training to satisfy the needs of the society. The PRC government encourages institutional organizations, social organizations, other social groups and citizens to establish professional schools and professional training institutions, and the financial allocation for professional schools and professional training institutions from the governments at various levels shall be gradually increased. The PRC government also encourages financial institutions to support and develop professional education by means of credit facilities.

On August 3, 2007, the Standing Committee of the NPC promulgated the Employment Promotion Law of the PRC, or the Employment Promotion Law which became effective on January 1, 2008. Pursuant to the Employment Promotion Law, the PRC government at and above the county level shall encourage and support professional schools, professional training institutions and corporations to carry out pre-employment training, employment training, re-employment training and entrepreneurship training, and encourage workers to attend various types of training programs. Corporations in China are requested to set aside financial resources for the training and continued education of their employees.

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Foreign Investments in Professional Education Services

The Catalogue for the Guidance of Foreign Investment Industries, or the Catalogue, as promulgated and amended from time to time by the MOFCOM and the National Development and Reform Commission, is the principal guide to foreign investors’ investment activities in the PRC. The most updated version of the Catalogue, which was promulgated in March 2015 and became effective in April 2015, divides the industries into three categories: encouraged, restricted and prohibited. Industries not listed in the Catalogue are generally open to foreign investment unless specifically restricted by other PRC laws and regulations. A wholly foreign-owned enterprise is generally permitted for encouraged industries and industries not listed in the Catalogue, while there are some limitations to the ownership and/or corporate structure of the foreign-invested companies that operate in restricted industries. Industries in the prohibited category are not open to foreign investors. According to the latest Catalogue, foreign investment is encouraged in non-accredited professional education services and there is no limitation with respect to maximum percentage of foreign ownership in a company conducting business in professional education services.

Regulations on For-profit Private Training Institutions

The Private Education Law provides that the regulations applicable to private training institutions registered with the SAIC and its local counterparts shall be formulated by the State Council separately. On July 29, 2010, the PRC central government promulgated the Outline of China’s National Plan for Medium- and Long-Term Education Reform and Development (2010-2020), which announced the policy that the government will implement a reform to divide private schools into two categories: (i) for-profit private schools and (ii) not-for-profit private schools. On October 24, 2010, the General Office of the State Council issued the Notices on the National Education System Innovation Pilot. Under this notice, the PRC government plans to implement a for-profit and non-profit classified management system for the private schools in Shanghai, Zhejiang, Shenzhen and Jilin Huaqiao Foreign Language School. However, the above outline and the pilot program is still new and no further national law or regulation has been promulgated to implement them and, except in Shanghai, no other local government of the pilot areas has promulgated relevant regulations on differentiated management of the private schools and for-profit training institutions.

On June 20, 2013, Shanghai promulgated the Interim Measures for Administration of Operational Private Training Institutions, or Measure No. 5, which requires for-profit private training institutions to register with local counterparts of the SAIC. The local counterparts of the SAIC shall consult with the local human resources and social securities authorities before completion of registration of for-profit private training institutions. Measure No. 5 came into effect on July 20, 2013 and will remain effective for two years.

On December 30, 2016, the Implementation Rules for Private School Classification Registration was issued by the MOE and other relevant authorities, which requires all private schools, including non-profit private schools and for-profit private schools, to obtain “school permits”. Existing private schools which choose to register as for-profit private schools should apply for new school permits and complete the re-registration process. The Regulatory Implementation Rules for Profitable Private School issued on December 30, 2016 further indicates that for-profit private training institutions shall be regulated with reference to such rules. The implementation of above regulations will also rely on the detailed rules of local government authorities.

As of December 31, 2016, 18 of our PRC subsidiaries, consolidated VIE and subsidiaries of consolidated VIE had computer technology training or training in its approved business scope.

Regulations on Online and Distance Education

Pursuant to the Administrative Regulations on Educational Websites and Online and Distance Education Schools issued by the MOE on July 5, 2000, educational websites and online education schools may provide educational services in relation to higher education, elementary education, pre-school education, teaching education, occupational education, adult education, other education and public educational information services. “Educational websites” refer to organizations providing education or education-related information services to website visitors by means of a database or online education platform connected via the Internet or an educational television station through an Internet Service Provider, or ISP. “Online education schools” refer to education websites providing academic education services or training services with the issuance of various certificates.

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Setting up education websites and online education schools is subject to approval from relevant education authorities, depending on the specific types of education. Any education website and online education school shall, upon the receipt of approval, indicate on its website such approval information as well as the approval date and file number.

On June 29, 2004, the State Council promulgated the Decision on Setting Down Administrative Licenses for the Administrative Examination and Approval Items Really Necessary to be Retained, pursuant to which the administrative license for “online education schools” was retained, while the administrative license for “educational websites” was not retained. Accordingly, Beijing Tarena, our consolidated VIE engaging in online education-related services, is not required to obtain approval to operate “educational websites” from the MOE. On January 28, 2014, the State Council promulgated the Decision on Abolishing and Delegating Certain Administrative Examination and Approval Items, pursuant to which the administrative approval for “online education schools” of higher education was abolished. Beijing Tarena is not required to obtain a license to operate “online education schools,” as it does not directly offer government accredited degrees or certifications through its online education or training services.

Regulations on Online Publications

On February 4, 2016, the State Administration of Press, Publication, Radio, Film and Television of the PRC (formerly the General Administration of Press and Publication), or the SAPPRFT and the Ministry of Industry and Information Technology, or the MIIT jointly promulgated the Internet Publishing Service Administrative Measures, or the Internet Publishing Measures, which took effect on March 10, 2016 and replaced the Tentative Internet Publishing Administrative Measures jointly promulgated by the General Administration of Press and Publication and MIIT on June 27, 2002. The Internet Publishing Measures require entities that engage in Internet publishing to obtain an Internet Publishing License for engaging in Internet publishing from the SAPPRFT. Pursuant to the Internet Publishing Measures, the definition of “Internet publishing” is broad and refers to the act of online spreading of articles, whereby the Internet information service providers select, edit and process works created by themselves or others and subsequently post such works on the Internet or transmit such works to the users’ end through Internet for the public to browse. These works include contents from books, newspapers, periodicals, audio-video products, electronic publications that have already been formally published or works that have been made public in other media.

Beijing Tarena has offered videos of lectures on its website TMOOC.cn and has not obtained an Internet Publishing License from the SAPPRFT. However, governmental authorities could determine that Beijing Tarena’s online content services fall within the scope of “internet publishing,” and therefore require Beijing Tarena to apply for an Internet Publishing License. Beijing Tarena may not be able to obtain such a license, and it may become subject to penalties, fines, legal sanctions or be ordered to suspend the video content on the website.

Regulation on Broadcasting Audio-Video Programs through the Internet or Other Information Network

The SAPPRFT promulgated the Rules for Administration of Broadcasting of Audio-Video Programs through the Internet and Other Information Networks, or the Broadcasting Rules, in 2004, which became effective on October 11, 2004. The Broadcasting Rules apply to the activities of broadcasting, integration, transmission, downloading of audio-video programs with computers, televisions or mobile phones as the main terminals and through various types of information networks. Pursuant to the Broadcasting Rules, a Permit for Broadcasting Audio-video Programs via Information Network is required to engage in these Internet broadcasting activities. On April 13, 2005, the State Council announced a policy on private investments in businesses in China that relate to cultural matters, which prohibits private investments in businesses relating to the dissemination of audio-video programs through information networks.

On December 20, 2007, the SAPPRFT and MIIT issued the Internet Audio-Video Program Measures, which became effective on January 31, 2008. Among other things, the Internet Audio-Video Program Measures stipulate that no entities or individuals may provide Internet audio-video program services without a Permit for Broadcasting Audio-video Programs via Information Network issued by the SAPPRFT or its local counterparts and only entities wholly owned or controlled by the PRC government may engage in the production, editing, integration or consolidation, and transfer to the public through the Internet, of audio-video programs, and the provision of audio-video program uploading and transmission services. On September 15, 2009, SAPPRFT promulgated the Notice on Several Issues regarding the Permit for Broadcasting Audio-video Programs via Information Network. The Notice restates the necessity of applying for such license and sets forth the legal liabilities for those providing Internet audio-video program services without the license.

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On April 1, 2010, SAPPRFT promulgated the Test Implementation of the Tentative Categories of Internet Audio-Visual Program Services, or the Categories, which clarified the scope of Internet audio-video programs services. According to the Categories, there are four categories of Internet audio-visual program services which are further divided into seventeen sub-categories. The third sub-category to the second category covers the making and editing of certain specialized audio-video programs concerning, among other things, educational content, and broadcasting such content to the general public online.

On April 25, 2016, the SAPPRFT issued the Provisions on the Administration of Private Network and Targeted Communication Audiovisual Program Services, or Targeted Communication Rules, which replaced the Broadcasting Rules issued in 2004. The Target Communication Rules mainly focus on networks and services such as IPTV and private network mobile TV.

In the course of offering our lecture videos, we transmit our audio-video educational programs live through the Internet to enrolled course participants. If the governmental authorities determine that our provision of lecture videos falls within the Internet Audio-Video Program Measures, we may not be able to obtain the License for Disseminating Audio-Video Programs through Information Network. If this occurs, we may become subject to significant penalties, fines, legal sanctions or an order to suspend our use of audio-video content.

Regulations on Value-Added Telecommunications Services

Licenses for Value-Added Telecommunication Services

On September 25, 2000, the Telecommunications Regulations of the People’s Republic of China, or the Telecom Regulations, were issued by the PRC State Council as the primary governing law on telecommunication services. The Telecom Regulations set out the general framework for the provision of telecommunication services by PRC companies. Under the Telecom Regulations, it is a requirement that telecommunications service providers procure operating licenses prior to their commencement of operations. The Telecom Regulations draw a distinction between “basic telecommunications services” and “value-added telecommunications services.” A “Catalog of Telecommunications Business” was issued as an attachment to the Telecom Regulations to categorize telecommunications services as basic or value-added. In February 2003, the Catalog was updated and the information services such as content service, entertainment and online games services are classified as value-added telecommunications services.

On March 1, 2009, the MIIT issued the Administrative Measures for Telecommunications Business Operating Permit, or the Telecom Permit Measures, which took effect on April 10, 2009. The Telecom Permit Measures confirm that there are two types of telecom operating licenses for operators in China, namely, licenses for basic telecommunications services and licenses for value-added telecommunications services. The operation scope of the license will detail the permitted activities of the enterprise to which it was granted. An approved telecommunication services operator shall conduct its business in accordance with the specifications recorded on its value-added telecommunications services operating license, or VATS License. In addition, a VATS License’s holder is required to obtain approval from the original permit-issuing authority prior to any change to its shareholders.

On September 25, 2000, the State Council promulgated the Administrative Measures on Internet Information Services, or the Internet Measures, which was amended in January 2011. Under the Internet Measures, commercial Internet information services operators shall obtain an ICP license from the relevant government authorities before engaging in any commercial Internet information services operations within the PRC. The ICP license has a term of five years and shall be renewed within 90 days before expiration. Our consolidated VIE,

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Foreign Investment in Value-Added Telecommunication Services

Pursuant to the Provisions on Administration of Foreign Invested Telecommunications Enterprises promulgated by the State Council on December 11, 2001 and amended on September 10, 2008, the ultimate foreign equity ownership in a value-added telecommunications services provider (except E-Commerce) may not exceed 50%. The Guidance Catalog of Industries for Foreign Investment amended in 2015 allows a foreign investor to own up to 100% of the total equity interest in an E-Commerce business. Moreover, for a foreign investor to acquire any equity interest in a value-added telecommunication business in China, it must satisfy a number of stringent performance and operational experience requirements, including demonstrating good track records and experience in operating value-added telecommunication business overseas. Foreign investors that meet these requirements must obtain approvals from the MIIT and the MOFCOM or their authorized local counterparts, which retain considerable discretion in granting approvals. Pursuant to publicly available information, the PRC government has issued telecommunications business operating licenses to only a limited number of foreign invested companies, all of which are Sino-foreign joint ventures engaging in the value-added telecommunication business.

The MIIT Circular issued by the MIIT in July 2006 reiterated the regulations on foreign investment in telecommunications businesses, which require foreign investors to set up foreign-invested enterprises and obtain an ICP license to conduct any value-added telecommunications business in China. Under the MIIT Circular, a domestic company that holds an ICP license is prohibited from leasing, transferring or selling the license to foreign investors in any form, and from providing any assistance, including providing resources, sites or facilities, to foreign investors that conduct value-added telecommunications business illegally in China. Furthermore, the relevant trademarks and domain names that are used in the value-added telecommunications business must be owned by the local ICP license holder or its shareholder. The MIIT Circular further requires each ICP license holder to have the necessary facilities for its approved business operations and to maintain such facilities in the regions covered by its license. Currently, Beijing Tarena, our consolidated VIE, owns the domain names www.it211.com.cn and TMOOC.cn and holds the ICP license necessary to operate our www.it211.com.cn website in China, while the trademarks relating to our operations are held by Tarena Tech, our WFOE. If the relevant PRC government authorities determine in the future that the current ownership of our trademarks do not comply with the relevant regulations and the trademarks relating to our operations must be held by our VIE, we may need to transfer the trademarks to our VIE, which may severely disrupt our business. The Internet Electronic Messaging Service Administrative Measures promulgated by the MIIT in November 2000 require ICP operators to obtain specific approvals before providing BBS services. BBS services include electronic bulletin boards, electronic forums, message boards and chat rooms. On July 4, 2010, the approval requirement for operating BBS services was terminated by a decision issued by the PRC State Council. However, in practice, the competent authorities in Beijing still require the relevant operating companies to obtain such approval for the operation of BBS services which we have not obtained.

In light of the aforesaid restrictions, we rely on Beijing Tarena, our consolidated VIE in China, to hold and maintain the licenses necessary to provide online education and other value-added telecommunications services in China. We operate our TMOOC.cn website and value-added telecommunications services through Beijing Tarena. Beijing Tarena, our consolidated VIE in China, holds an ICP license that is valid until March 1, 2017 for the operation of www.it211.com.cn. and TMOOC.cn. Beijing Tarena is in the process of annual inspection for ICP license.

The Discussion Draft PRC Foreign Investment Law

In January 2015, the MOFCOM published a discussion draft of the proposed Foreign Investment Law for public review and comments. The draft Foreign Investment Law purports to change the existing “case-by-case” approval regime to a “filing or approval” procedure for foreign investments in China. The MOFCOM, together with other relevant authorities, will determine a catalogue for special administrative measures, or the “negative list,” which will consist of a list of industry categories where foreign investments are strictly prohibited and a list of industry categories where foreign investments are subject to certain restrictions. Foreign investments in business sectors outside of the “negative list” will only be subject to filing procedures, in contrast to the existing prior approval requirements, whereas foreign investments in the restricted industries must apply for approval from the foreign investment administration authority.

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The draft Foreign Investment Law for the first time defines “foreign investor,” “foreign investment,” “Chinese investor” and “actual control.” A foreign investor is not only determined based on the place of its incorporation, but also on the conditions of the “actual control.” The draft Foreign Investment Law specifically provides that entities established in China but “controlled” by foreign investors, such as via contracts or trust, will be treated as FIEs, whereas foreign investment in China in the foreign investment restricted industries by a foreign investor may nonetheless apply for being, when approving market entry clearance by the foreign investment administration authority, treated as a PRC domestic investment if the foreign investor is determined by the foreign investment administration authority as being “controlled” by PRC entities and/or citizens. In this connection, “actual control” is broadly defined in the draft Foreign Investment Law to cover the following summarized categories: (i) holding 50% of more of the voting rights of the subject entity; (ii) holding less than 50% of the voting rights of the subject entity but having the power to secure at least 50% of the seats on the board or other equivalent decision making bodies, or having the voting power to material influence on the board, the shareholders’ meeting or other equivalent decision making bodies; or (iii) having the power to exert decisive influence, via contractual or trust arrangements, over the subject entity’s operations, financial matters or other key aspects of business operations. According to the draft Foreign Investment Law, variable interest entities would also be deemed as FIEs, if they are ultimately “controlled” by foreign investors, and be subject to restrictions on foreign investments. However, the draft Foreign Investment Law has not taken a position on what actions will be taken with respect to the existing companies with the “variable interest entity” structure, whether or not these companies are controlled by Chinese parties.

The draft Foreign Investment Law emphasizes on the security review requirements, whereby all foreign investments concerning national security must be reviewed and approved in accordance with the security review procedure. In addition, the draft Foreign Investment Law imposes stringent ad hoc and periodic information reporting requirements on foreign investors and the applicable FIEs. In addition to investment implementation report and investment amendment report that are required at each investment and alteration of investment specifics, an annual report is mandatory, and large foreign investors meeting certain criteria are required to report on a quarterly basis. Any company found to be non-compliant with these information reporting obligations may potentially be subject to fines and/or administrative or criminal liabilities, and the persons directly responsible may be subject to criminal liabilities.

The draft Foreign Investment Law is now open for public review and comments. It is still uncertain when the draft would be signed into law and whether the final version would have any substantial changes from this draft. When the Foreign Investment Law becomes effective, the trio of existing laws regulating foreign investment in China, namely, the Sino-foreign Equity Joint Venture Enterprise Law, the Sino-foreign Cooperative Joint Venture Enterprise Law and the Wholly Foreign-invested Enterprise Law, together with their implementation rules and ancillary regulations, will be abolished. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Substantial uncertainties exist with respect to the enactment timetable, interpretation and implementation of draft PRC Foreign Investment Law and how it may impact the viability of our current corporate structure, corporate governance and business operations.”

Regulations on Intellectual Property Rights

Copyright and Software Products

The NPC adopted the Copyright Law in 1990 and amended it in 2001 and 2010, respectively. The amended Copyright Law extends copyright protection to Internet activities, products disseminated over the Internet and software products. In addition, there is a voluntary registration system administered by the China Copyright Protection Center. The amended Copyright Law also requires registration of a copyright pledge.

To address the problem of copyright infringement related to the content posted or transmitted over the Internet, the National Copyright Administration and the MIIT jointly promulgated the Measures for Administrative Protection of Copyright Related to Internet on April 29, 2005. This measure became effective on May 30, 2005.

The Administrative Measures on Software Products, issued by the MIIT in October 2000 and subsequently amended, provide a registration and filing system with respect to software products made in or imported into China. These software products may be registered with the relevant local authorities in charge of software industry administration. Registered software products may enjoy preferential treatment status granted by relevant software industry regulations. Software products can be registered for five years, and the registration is renewable upon expiration.

In order to further implement the Computer Software Protection Regulations promulgated by the State Council on December 20, 2001 and amended on January 30, 2013, the State Copyright Bureau issued the Computer Software Copyright Registration Procedures on February 20, 2002, which apply to software copyright registration, license contract registration and transfer contract registration. In compliance with, and in order to take advantage of the above rules, as of December 31, 2016, we had registered 55 software copyrights in China.

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Trademarks

Trademarks are protected by the PRC Trademark Law which was adopted in 1982 and subsequently amended in 1993, 2001 and 2013 as well as the Implementation Regulation of the PRC Trademark Law adopted by the State Council in 2002. The Trademark Office under the SAIC handles trademark registrations and grants a term of ten years to registered trademarks which may be renewed for consecutive ten-year periods upon request by the trademark owner. Trademark license agreements must be filed with the Trademark Office for record. The PRC Trademark Law has adopted a “first-to-file” principle with respect to trademark registration. Where a trademark for which a registration has been made is identical or similar to another trademark which has already been registered or been subject to a preliminary examination and approval for use on the same kind of or similar commodities or services, the application for registration of such trademark may be rejected. Any person applying for the registration of a trademark may not prejudice the existing right first obtained by others, nor may any person register in advance a trademark that has already been used by another party and has already gained a “sufficient degree of reputation” through such party’s use. We have registered 35 trademarks in China as of December 31, 2016.

Regulations on Foreign Currency Exchange

The principal regulations governing foreign currency exchange in China are the Foreign Exchange Administration Regulations, or the Foreign Exchange Regulations, as amended on August 5, 2008. Under the Foreign Exchange Regulations, Renminbi is freely convertible for current account items, including the distribution of dividends, interest payments, trade and service-related foreign exchange transactions, but not for capital account items, such as direct investments, loans, repatriation of investments and investments in securities outside of China, unless the prior approval of the SAFE is obtained and prior registration with the SAFE is made. Though there are restrictions on the convertibility of Renminbi for capital account transactions, which principally include investments and loans, we generally follow the regulations and apply to obtain the approval of the SAFE and other relevant PRC governmental authorities.

On March 30, 2015, the SAFE promulgated Circular 19, which expands a pilot reform of the administration of the settlement of the foreign exchange capitals of foreign-invested enterprises nationwide. Circular 19 came into force replacing both previous SAFE Circular 142 and SAFE Circular 36 on June 1, 2015. Circular 19 allows all foreign-invested enterprises established in the PRC to use their foreign exchange capitals to make equity investment and removes certain other restrictions provided under Circular 142 for these enterprises. However, Circular 19 continues to prohibit foreign-invested enterprises from, among other things, using the Renminbi fund converted from its foreign exchange capitals for expenditure beyond its business scope, and providing entrusted loans or repaying loans between non-financial enterprises.

On June 9, 2016, the SAFE promulgated Circular 16, which expands the application scope from only the capital of foreign-invested enterprises to the capital, foreign debt fund and fund from oversea public offering. Furthermore, Circular 16 allows foreign-invested enterprises to use their foreign exchange capitals under capital account to the extent permitted by the relevant laws and regulations.

These circulars may delay or limit us from using the proceeds of offshore offerings to make additional capital contributions or loans to our PRC subsidiaries and violations of these circulars could result in severe monetary or other penalties. See also “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—PRC regulation of direct investment and loans by offshore holding companies to PRC entities and governmental control of currency conversion may delay or limit us from using the proceeds of offshore offering to make additional capital contributions or loans to our PRC subsidiaries.”

Regulations on Dividend Distribution

Under our current corporate structure, our Cayman Islands holding company primarily relies on dividend payments from Tarena Tech, which is a wholly foreign owned enterprise incorporated in the PRC, to fund any cash and financing requirements we may have. The principal regulations governing distribution of dividends of foreign invested enterprises include the Foreign Invested Enterprise Law, as amended on October 31, 2000, and the Implementation Rules of the Foreign Invested Enterprise Law, as amended on April 12, 2001.

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Under these laws and regulations, wholly foreign owned enterprises in China may pay dividends only out of their accumulated after-tax profits, if any, determined in accordance with PRC accounting standards and regulations. In addition, wholly foreign owned enterprises in China are required to allocate at least 10% of their respective accumulated profits each year, if any, to fund certain reserve funds until these reserves have reached 50% of the registered capital of the enterprises. Wholly foreign owned companies may, at their discretion, allocate a portion of their after-tax profits based on PRC accounting standards to staff welfare and bonus funds. These reserves are not distributable as cash dividends.

Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents

Pursuant to SAFE’s Notice on Relevant Issues Relating to Domestic Residents’ Investment and Financing and Round-Trip Investment through Special Purpose Vehicles, or SAFE Circular No. 37, issued and effective on July 4, 2014, and its appendixes, PRC residents, including PRC institutions and individuals, must register with local branches of SAFE in connection with their direct establishment or indirect control of an offshore entity, for the purpose of overseas investment and financing, with such PRC residents’ legally owned assets or equity interest in domestic enterprises or offshore assets or interests, referred to in SAFE Circular No. 37 as a “special purpose vehicle.” SAFE Circular No. 37 further requires amendment to the registration in the event of any significant changes with respect to the special purpose vehicle, such as increase or decrease of capital contributed by PRC individuals, share transfer or exchange, merger, division or other material event.

On February 28, 2015, SAFE promulgated a Notice on Further Simplifying and Improving Foreign Exchange Administration Policy on Direct Investment, or SAFE Notice 13, which became effective on June 1, 2015. In accordance with SAFE Notice 13, entities and individuals are required to apply for foreign exchange registration of foreign direct investment and overseas direct investment, including those required under the SAFE Circular No. 37, with qualified banks, instead of SAFE. The qualified banks, under the supervision of SAFE, directly examine the applications and conduct the registration.

In the event that a PRC shareholder holding interests in a special purpose vehicle fails to fulfill the required SAFE registration, the PRC subsidiaries of that special purpose vehicle may be prohibited from making distributions of profit to the offshore parent and from carrying out subsequent cross-border foreign exchange activities and the special purpose vehicle may be restricted in their ability to contribute additional capital into its PRC subsidiary. Further, failure to comply with the various SAFE registration requirements described above could result in liability under PRC law for foreign exchange evasion. These regulations apply to our direct and indirect shareholders who are PRC residents and may apply to any offshore acquisitions and share transfer that we make in the future if our shares are issued to PRC residents. We have requested PRC residents currently holding direct or indirect interests in our company to our knowledge to make the necessary applications, filings and amendments as required under SAFE Circular No. 37 and other related rules. To our knowledge, all of our shareholders who are PRC citizens and hold interest in us, have registered with the local SAFE branch and/or qualified banks as required under SAFE Circular No. 37 and SAFE Notice 13. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—PRC regulations relating to offshore investment activities by PRC residents may limit our PRC subsidiaries’ ability to increase their registered capital or distribute profits to us, limit our ability to inject capital into our PRC subsidiaries, or otherwise expose us to liability and penalties under PRC law.”

Regulations on Stock Incentive Plans

In February 2012, SAFE promulgated the Stock Option Rules. Under the Stock Option Rules and other relevant rules and regulations, PRC residents who participate in stock incentive plan in an overseas publicly-listed company are required to register with SAFE or its local branches and complete certain other procedures. Participants of a stock incentive plan who are PRC residents must retain a qualified PRC agent, which could be a PRC subsidiary of the overseas publicly listed company or another qualified institution selected by the PRC subsidiary, to conduct the SAFE registration and other procedures with respect to the stock incentive plan on behalf of its participants. The participants must also retain an overseas entrusted institution to handle matters in connection with their exercise of stock options, the purchase and sale of corresponding stocks or interests and fund transfers. In addition, the PRC agent is required to amend the SAFE registration with respect to the stock incentive plan if there is any material change to the stock incentive plan, the PRC agent or the overseas entrusted institution or other material changes. The PRC agents must, on behalf of the PRC residents who have the right to exercise the employee share options, apply to SAFE or its local branches for an annual quota for the payment of foreign currencies in connection with the PRC residents’ exercise of the employee share options. The foreign exchange proceeds received by the PRC residents from the sale of shares under the stock incentive plans granted and dividends distributed by the overseas listed companies must be remitted into the bank accounts in the PRC opened by the PRC agents before distribution to such PRC residents.

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We adopted two share incentive plans, namely the 2008 Plan and the 2014 Plan. Pursuant to the 2008 Plan, we may issue options, restricted shares (or share appreciation rights or other similar awards) and rights to purchase restricted shares to our qualified employees and directors and consultants on a regular basis. Pursuant to the 2014 Plan, we may issue options, restricted shares and restricted share units to our qualified employees, directors and consultants on a regular basis. We have advised our employees and directors participating in the employee stock option plan to handle foreign exchange matters in accordance with the Stock Option Rules, and we have completed the registrations of our stock incentive plans with the local SAFE as required by PRC law.

In addition, the State Administration for Taxation has issued circulars concerning employee share options, under which our employees working in the PRC who exercise share options will be subject to PRC individual income tax. Our PRC subsidiaries have obligations to file documents related to employee share options with relevant tax authorities and to withhold individual income taxes of those employees who exercise their share options. If our employees fail to pay or if we fail to withhold their income taxes as required by relevant laws and regulations, we may face sanctions imposed by the PRC tax authorities or other PRC government authorities.

Regulation on Tax

PRC Enterprise Income Tax Law

On March 16, 2007, the NPC enacted the EIT Law. Both the EIT Law and its Implementing Rules, which was enacted on December 6, 2007 by the State Council, became effective on January 1, 2008. Under the EIT Law, enterprises are classified as PRC resident enterprises and non-PRC-resident enterprises. PRC resident enterprises typically pay an enterprise income tax at the rate of 25%. An enterprise established outside of the PRC with its “de facto management bodies” located within the PRC is considered a PRC “resident enterprise,” meaning that it shall be treated in a manner similar to a PRC resident enterprise for enterprise income tax purposes. The Implementing Rules to the EIT Law defines “de facto management body” as a managing body that in practice exercises “substantial and overall management and control over the production and operations, personnel, accounting, and properties” of an enterprise.

The SAT issued Circular 82 on April 22, 2009, as amended in January 2014. Circular 82 provides certain specific criteria for determining whether the “de facto management body” of a PRC-controlled and offshore-incorporated enterprise is located in China, which include all of the following conditions: (a) the location where senior management members responsible for an enterprise’s daily operations discharge their duties; (b) the location where financial and human resource decisions are made or approved by organizations or persons; (c) the location where the major assets and corporate documents are kept; and (d) the location where more than half (inclusive) of all directors with voting rights or senior management have their habitual residence. In addition, the SAT issued a bulletin on July 27, 2011, effective September 1, 2011, or Bulletin 45, providing more guidance on the implementation of Circular 82. Bulletin 45 clarifies matters including PRC resident enterprise status determination, post-determination administration and competent tax authorities etc. Although both Circular 82 and Bulletin 45 only apply to offshore enterprises controlled by PRC enterprises or PRC enterprise groups, not those controlled by PRC individuals or foreign individuals like us, the determining criteria set forth in Circular 82 and Bulletin 45 may reflect the SAT’s general position on how the “de facto management body” test should be applied in determining the PRC tax resident enterprise status of offshore enterprises, regardless of whether they are controlled by PRC enterprises, PRC enterprise groups or by PRC or foreign individuals.

We do not believe that Tarena International, Inc. meets all of the conditions above, and thus we do not believe that Tarena International, Inc. is a PRC resident enterprise despite the fact that all members of our management team as well as the management team of our offshore holding company are located in China. However, if the PRC tax authorities determine that Tarena International, Inc. is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.”

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Pursuant to the Hong Kong Tax Treaty, and other applicable PRC regulations, if a Hong Kong resident enterprise is determined by the competent PRC tax authority to have satisfied the relevant conditions and requirements under such Hong Kong Tax Treaty and other applicable regulations, the 10% withholding tax on the dividends the Hong Kong resident enterprise receives from a PRC resident enterprise may be reduced to 5% upon receiving approval from in-charge tax authority. However, based on Circular 81, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kong enterprise must directly hold at least 25% share ownership in the PRC enterprise during the 12 consecutive months preceding its receipt of the dividends. However, a transaction or arrangement entered into for the primary purpose of enjoying a preferential tax treatment should not be a reason for the application of the preferential tax treatment under the Hong Kong Tax Treaty. If a taxpayer inappropriately is entitled to such preferential tax treatment, the competent tax authority has the power to make appropriate adjustments. The SAT promulgated Circular 601, which provides that tax treaty benefits will be denied to “conduit” or shell companies without business substance, and a beneficial ownership analysis will be used based on a “substance-over-the-form” principle to determine whether or not to grant tax treaty benefits. Based on Announcement 30, which provides that a comprehensive analysis should be made when determining the beneficial owner status based on various factors supported by various types of documents including the articles of association, financial statements, records of cash movements, board meeting minutes, board resolutions, staffing and materials, relevant expenditures, functions and risk assumption as well as relevant contracts and other information. Based on Circular 60, non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax rate. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. However, if a competent tax authority finds out that it is necessary to apply the general anti-tax avoidance rules, it may start general investigation procedures for anti-tax avoidance and adopt corresponding measures for subsequent administration. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We may not be able to obtain certain treaty benefits on dividends paid to us by our PRC subsidiary through our Hong Kong Subsidiary.”

In January 2009, the SAT promulgated the Provisional Measures for the Administration of Withholding of Enterprise Income Tax for Non-resident Enterprises, or the Non-resident Enterprises Measures, pursuant to which, the entities which have the direct obligation to make certain payments to a non-resident enterprise shall be the relevant tax withholders for such non-resident enterprise. Further, the Non-resident Enterprises Measures provides that in case of an equity transfer between two non-resident enterprises which occurs outside China, the non-resident enterprise which receives the equity transfer payment shall, by itself or engage an agent to, file tax declaration with the PRC tax authority located at the place of the PRC company whose equity has been transferred, and the PRC company whose equity has been transferred shall assist the tax authorities to collect taxes from the relevant non-resident enterprise. On April 30, 2009, the MOF and the SAT jointly issued the Notice on Issues Concerning Process of Enterprise Income Tax in Enterprise Restructuring Business, or Circular 59. On December 10, 2009, the SAT issued the Notice on Strengthening the Administration of the Enterprise Income Tax concerning Proceeds from Equity Transfers by Non-resident Enterprises, or Circular 698. Both Circular 59 and Circular 698 became effective retroactively as of January 1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise. Under Circular 698, where a non-resident enterprise transfers the equity interests of a PRC “resident enterprise” indirectly by disposition of the equity interests of an overseas holding company, or an Indirect Transfer, and such overseas holding company is located in certain low tax jurisdictions, the non-resident enterprise, being the transferor, shall report to the competent tax authority of the PRC “resident enterprise” this Indirect Transfer. The PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC tax at a rate of up to 10%. On February 3, 2015, the SAT issued a Public Notice [2015] No.7, or Public Notice 7, to supersede the existing tax rules in relation to the Indirect Transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force. Public Notice 7 introduces a new tax regime that is significantly different from that under Circular 698. Public Notice extend its tax jurisdiction to capture not only Indirect Transfer as set forth under Circular 698 but also transactions involving transfer of immovable property in China and assets held under the establishment and place, in China of a foreign company through the offshore transfer of a foreign intermediate holding company. Public Notice 7 also addresses the term transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings on. However, it also brings challenges to both the foreign transferor and transferee of the Indirect Transfer as they have to make self-assessment on whether the transaction should be subject to PRC tax and to file or withhold the PRC tax accordingly. There is little guidance and practical experience as to the application of Circular 698 and Public Notice 7. Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of being taxed under Circular 698 and Public Notice 7 and may be required to expend valuable resources to comply with Circular 698 and Public Notice 7 or to establish that we should not be taxed under Circular 698 and Public Notice 7. The PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment.

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The State Administration of Taxation promulgated Administrative Measures on the General Anti-Avoidance Rule (Trial), or GAAR Measures, on December 12, 2014, which shows the authority’s intention to fight against tax avoidance scheme that is adopted to obtain unwarranted tax benefit without reasonable commercial purpose. A press release, made by the State Administration of Taxation to clarify certain issues relating to the application of the GAAR Measures, stated that the GAAR Measures may be applicable if any general tax-avoidance scheme exists in the offshore indirect transfer of equity interests. Since GAAR Measures was recently promulgated and it is unclear how this set of measures, and any future implementation rules thereof, will be interpreted, amended and implemented by the relevant governmental authorities, we cannot predict how these regulations will affect our business operation, future acquisitions or strategy.

In addition, the EIT Law and its Implementation Rules permit certain “high and new technology enterprises strongly supported by the state” that hold independent ownership of core intellectual property and simultaneously meet a list of other criteria, financial or non-financial, as stipulated in the Implementation Rules and other regulations, to enjoy a reduced 15% enterprise income tax rate. The SAT, the Ministry of Science and Technology and the Ministry of Finance jointly issued the Administrative Measures on the Recognition Criteria and Procedures for Advance and New Technology Enterprise delineating the specific criteria and procedures for the “high and new technology enterprises” certification in April 2008. Enterprises recognized as “high and new technology enterprises,” or HNTEs, will enjoy a reduced 15% enterprise income tax rate after they go through tax reduction application formalities with relevant tax authorities. Tarena Tech, renewed its HNTE certificate in 2012 and again in 2015, and is eligible to enjoy a preferential tax rate of 15% until the end of 2017. Tarena Hangzhou was established in 2013 and is qualified as a “newly established software enterprise”, which entitles it to two years of full tax exemption followed by three years of 50% tax exemption, commencing from the year in which its taxable income is greater than zero, which was 2014. On January 25, 2016, we acquired 100% of the equity interests in Hangzhou Han Ru Education Technology Co., Ltd, which is qualified as a “newly established software enterprise”, which entitles it to two years of full tax exemption followed by three years of 50% tax exemption, commencing from the year in which its taxable income is greater than zero, which was 2016.

PRC Value-added Tax (“VAT”) in lieu of Business Tax (the “VAT Pilot Program”)

An enterprise or individual providing taxable service within the territory of China has been historically required to pay BT at the rate of 3% or 5% on the revenues generated from provision of such services in accordance with applicable PRC tax regulations. However, if the services provided are technical transfer or technical development, or technical consulting and technical service related to technology transfer or technical development, BT may be exempted subject to approval by the relevant tax authorities.

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In November 2011, the Ministry of Finance and the SAT promulgated the Notice on the Pilot Program in Shanghai Replacing BT with VAT in Transportation and Some Modern Service Sectors. Pursuant to this circular and other relevant notices, VAT shall be imposed in lieu of BT in transportation and some modern service sectors firstly in Shanghai starting from January 1, 2012. On August 1, 2013, the VAT Pilot Program was implemented throughout China in transportation and some modern services sectors. On April 29, 2014, the Ministry of Finance and the SAT issued the Circular on the Inclusion of Telecommunications Industry in the Pilot Collection of Value-added Tax in Lieu of Business Tax. On March 23, 2016, the Ministry of Finance and the SAT issued the Circular on Comprehensively Promoting the Pilot Program of the Collection of Value added Tax in Lieu of Business Tax. Effective from May 1, 2016, the PRC tax authorities will collect VAT in lieu of Business Tax on a trial basis within the territory of China, and in industries such as construction industries, real estate industries, financial industries, and living service industries. The applicable VAT rates are 6% and 3% for the entities that are general taxpayer and small-scale taxpayer, respectively.

Local Surcharges

The city construction tax and education surcharge are local surcharges imposed as a certain percentage of PRC turnover taxes (i.e., business tax, value-added tax and consumption tax). The city construction tax is charged at rates of 1%, 5% or 7% (the applicable city construction tax rate depends on the location of the taxpayer) of the turnover tax paid while the education surcharge rate is currently at 3% of the turnover tax paid. Though in the past, foreign-invested enterprises, foreign enterprises and foreign individuals were exempted from such surcharges, these entities were required to make such payments from December 1, 2010 according to a notice issued by PRC State Council in October 2010.

In addition to the city construction tax and the education surcharge, the China Ministry of Finance issued Circular Caizong (2010) No. 98, or Circular 98, that requires all entities and individuals (including foreign-invested enterprises, foreign enterprises and foreign individuals) to pay a local education surcharge, or LES, at 2% on turnover tax paid. Local governments are required to report their implementation measures on LES to the Ministry of Finance. LES became applicable to all entities and individuals in Beijing on January 1, 2012.

Employment Laws and Social Insurance

We are subject to laws and regulations governing our relationship with our employees, including wage and hour requirements, working and safety conditions, and social insurance, housing funds and other welfare. The compliance with these laws and regulations may require substantial resources.

China’s National Labor Law, which became effective on January 1, 1995, and China’s National Labor Contract Law, which became effective on January 1, 2008 and was amended on December 28, 2012, permit workers in both state-owned and private enterprises in China to bargain collectively. The National Labor Law and the National Labor Contract Law provide for collective contracts to be developed through collaboration between the labor union (or worker representatives in the absence of a union) and management that specify such matters as working conditions, wage scales, and hours of work. The laws also permit workers and employers in all types of enterprises to sign individual contracts, which are to be drawn up in accordance with the collective contract. The National Labor Contract Law has enhanced rights for the nation’s workers, including permitting open-ended labor contracts and severance payments. The legislation requires employers to provide written contracts to their workers, restricts the use of temporary labor and makes it harder for employers to lay off employees. It also requires that employees with fixed-term contracts be entitled to an indefinite-term contract after a fixed-term contract is renewed twice or the employee has worked for the employer for a consecutive ten-year period.

On October 28, 2010, the NPC promulgated the PRC Social Insurance Law, which became effective on July 1, 2011. In accordance with the PRC Social Insurance Law and other relevant laws and regulations, China establishes a social insurance system including basic pension insurance, basic medical insurance, work-related injury insurance, unemployment insurance and maternity insurance. An employer shall pay the social insurance for its employees in accordance with the rates provided under relevant regulations and shall withhold the social insurance that should be assumed by the employees. The authorities in charge of social insurance may request an employer’s compliance and impose sanctions if such employer fails to pay and withhold social insurance in a timely manner. Under the Regulations on the Administration of Housing Fund effective in 1999, as amended in 2002, PRC companies must register with applicable housing fund management centers and establish a special housing fund account in an entrusted bank. Both PRC companies and their employees are required to contribute to the housing funds.

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C. Organizational Structure

The following diagram illustrates our corporate structure, including our subsidiaries and consolidated VIE and its subsidiaries, as of the date of this annual report:

Notes:

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(1) Mr. Shaoyun Han, our founder, chairman and chief executive officer, owns 70% of the equity interest in Beijing Tarena. Mr. Jianguang Li, our director, owns 30% of the equity interest in Beijing Tarena.

(2) Mr. Shaoyun Han is the principal of Weifang Tarena Professional Education School.

(3) Tarena (Wuhan) Technology Co., Ltd., which is a wholly-owned subsidiary of Tarena Tech, wholly owns Wuhan Tarena Software Co., Ltd., which holds 100% of the sponsorship interest in Wuhan Tarena Professional Education School.

(4) Mr. Shaoyun Han is the principal of Shenyang Tarena Professional Education School, Jinan Tarena Professional Education School, Wuhan Tarena Professional Education School, Chongqing Jiulongpo Tarena Professional Education School, Kunming Tarena Professional Education School, Nanjing Tarena Professional Education School, Shenzhen Bao’an Tarena Professional Education School, Harbin Tarena Professional Education School, Zhengzhou Tarena Professional Education School, Dalian High-Tech Zone Tarena Professional Education School, Shenyang Tarena Times Professional Education School, Zhuhai Tarena Professional Education School, Chengdu High-Tech Zone Tarena Professional Education School, Chengdu Tarena Professional Education School, Wuhan Technology Tarena Professional Education School, Shenzhen Longhua Xinqu Tarena Professional Skills Education School, Chongqing Nanan Tarena Professional Education School; Changchun Tarena Professional Education School and Ningbo Tarena Professional Education School; De Xun Wang is the principal of Guangzhou Tarena Software Professional Education School; Qian Li is the principal of Qingdao Tarena Professional Education School; Yue Qin Shen is the principal of Nanjing Weishang Tarena Professional Education School; Jing Liu is the principal of Dalian Shahekou Tarena Accounting Professional Education School.

Because of foreign ownership restriction on Internet content and other value-added telecommunication services in China, we operate our TMOOC.cn website through our consolidated VIE, Beijing Tarena. Beijing Tarena has added our TMOOC.cn website under the ICP license held by Beijing Tarena. Beijing Tarena is 70% owned by Mr. Shaoyun Han, our founder, chairman and chief executive officer, and 30% owned by Mr. Jianguang Li, our director. Mr. Han and Mr. Li are both PRC citizens. We entered into a series of contractual arrangements with Beijing Tarena and its shareholders, which enable us to:

· exercise effective financial control over Beijing Tarena;

· receive substantially all of the economic benefits and bear the obligation to absorb substantially all of the losses of Beijing Tarena; and

· have an exclusive option to purchase all or part of the equity interests in Beijing Tarena when and to the extent permitted by PRC law.

Because of these contractual arrangements, we are the primary beneficiary of Beijing Tarena and consolidate its financial results in our consolidated financial statements in accordance with U.S. GAAP.

The following is a summary of the currently effective contracts by and among Tarena International, our subsidiary Tarena Tech, our VIE, Beijing Tarena, and the shareholders of Beijing Tarena.

Exclusive Business Cooperation Agreement

Under the exclusive business cooperation agreement between Beijing Tarena and Tarena Tech, as amended and restated, Tarena Tech has the exclusive right to provide, among other things, technical support, business support and related consulting services to Beijing Tarena and Beijing Tarena agrees to accept all the consultation and services provided by Tarena Tech. Without Tarena Tech’s prior written consent, Beijing Tarena is prohibited from engaging any third party to provide any of the services under this agreement. In addition, Tarena Tech exclusively owns all intellectual property rights arising out of or created during the performance of this agreement. Beijing Tarena agrees to pay a monthly service fee to Tarena Tech at an amount determined solely by Tarena Tech after taking into account factors including the complexity and difficulty of the services provided, the time consumed, the seniority of the Tarena Tech employees providing services to Beijing Tarena, the value of services provided, the market price of comparable services and the operating conditions of Beijing Tarena. Furthermore, to the extent permitted under the PRC law, Tarena Tech agrees to provide financial support to Beijing Tarena if Beijing Tarena has any operating loss or suffered any critical operation adversity. The term of the agreement will remain effective unless Tarena Tech terminates the agreement in writing or a competent governmental authority rejects the renewal applications by either Beijing Tarena or Tarena Tech to renew its respective business license upon expiration. Without the consent of Tarena Tech, Beijing Tarena is not permitted to terminate this agreement in any event unless required by applicable laws.

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Power of Attorney

Pursuant to the power of attorney, as amended and restated, the shareholders of Beijing Tarena each irrevocably appointed Tarena Tech as the attorney-in-fact to act on their behalf on all matters pertaining to Beijing Tarena and to exercise all of their rights as a shareholder of Beijing Tarena, including but not limited to attend shareholders’ meetings, vote on their behalf on all matters of Beijing Tarena requiring shareholders’ approval under PRC laws and regulations and the articles of association of Beijing Tarena, and designate and appoint directors and senior management members. Tarena Tech may assign its rights under this power of attorney to any other person or entity at its sole discretion without prior notice to the shareholders of Beijing Tarena. Each power of attorney will remain in force until the shareholder ceases to hold any equity interest in Beijing Tarena.

Equity Interest Pledge Agreements

Under the equity interest pledge agreements between Tarena Tech, Beijing Tarena and the shareholders of Beijing Tarena, as amended and restated, the shareholders pledged all of their equity interests in Beijing Tarena to Tarena Tech to guarantee Beijing Tarena’s and Beijing Tarena’s shareholders’ performance of their obligations under the contractual arrangements including, but not limited to the service fees due to Tarena Tech. If Beijing Tarena or any of Beijing Tarena’s shareholders breaches its contractual obligations under the contractual arrangements, Tarena Tech, as the pledgee, will be entitled to certain rights and entitlements, including receiving proceeds from the auction or sale of whole or part of the pledged equity interests of Beijing Tarena in accordance with legal procedures. Tarena Tech has the right to receive dividends generated by the pledged equity interests during the term of the pledge. If any event of default as provided in the contractual arrangements occurs, Tarena Tech, as the pledgee, will be entitled to dispose of the pledged equity interests in accordance with PRC laws and regulations. The equity interest pledge agreements became effective on the date when the agreements were duly executed. The pledge was registered with Changping Bureau of Beijing Administration for Industry and Commerce in December 2013 and April 2017, respectively. The pledge will remain binding until Beijing Tarena and its shareholders discharge all their obligations under the contractual arrangements. The registration of the equity pledge enables Tarena Tech to enforce the equity pledge against third parties who acquire the equity interests of Beijing Tarena in good faith.

Exclusive Option Agreements

Under the exclusive option agreements between Tarena International, Inc., Tarena Tech, each of the shareholders of Beijing Tarena and Beijing Tarena, as amended and restated, each of the shareholders irrevocably granted Tarena International, Inc. or its designated representative(s) an exclusive option to purchase, to the extent permitted under PRC law, all or part of his equity interests in Beijing Tarena. In addition, Tarena International, Inc. has the option to acquire the equity interests of Beijing Tarena for a specified price equal to the loan provided by Tarena Tech to the individual shareholders. If the lowest price permitted under PRC law is higher than the above price, the lowest price permitted under PRC law shall apply. Tarena International, Inc. or its designated representative(s) has sole discretion as to when to exercise such options, either in part or in full. Without Tarena International, Inc.’s prior written consent, Beijing Tarena’s shareholders shall not sell, transfer, mortgage, or otherwise dispose any equity interests in Beijing Tarena. These agreements will remain effective until all equity interests in Beijing Tarena held by its shareholders are transferred or assigned to Tarena International, Inc. or Tarena International, Inc.’s designated representatives.

Loan Agreements

Pursuant to the loan agreements between Tarena Tech and each individual shareholder of Beijing Tarena, as amended and restated, Tarena Tech provided loans with an aggregate amount of RMB5 million to the individual shareholders of Beijing Tarena for the sole purpose of providing capital for Beijing Tarena. The loans can only be repaid in a manner determined by Tarena Tech at its sole discretion, which repayment may take the form of transferring the individual shareholders’ equity interest in Beijing Tarena to Tarena or its designated person pursuant to the exclusive option agreements. The loan shall be interest-free, unless the transfer price exceeds the principal of the loan when each individual shareholder of Beijing Tarena transfers his equity interests in Beijing Tarena to Tarena or its designated person(s). Such excess over the principal of the loan shall be deemed the interest of the loan to the extent permitted under PRC law. The term of each loan agreement is ten years from the date of the agreement expiring in 2026 and can be extended with the written consent of both parties before expiration.

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In the opinion of our PRC counsel, Han Kun Law Offices, these contractual arrangements are valid, binding and enforceable under current PRC laws. However, these contractual arrangements may not be as effective in providing control as direct ownership. There are substantial uncertainties regarding the interpretation and application of current or future PRC laws and regulations. For a description of the risks relating to our contractual arrangements, please see “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure.”

D. Property, Plants and Equipment

We have dual headquarters in China, located in Beijing and Hangzhou. Our principal executive offices in Beijing comprise of approximately 1,338 square meters and accommodate certain of our management and general and administrative activities, as well as our research and development activities. We also have approximately 25,222 square meters in leased classroom space in Beijing. Our principal executive offices and classrooms in Hangzhou comprise of approximately 8,836 square meters of leased space. Our principal executive offices in Hangzhou accommodate certain of our management and general and administrative activities.

In addition to our principal executive offices in Beijing and Hangzhou, we maintain a number of offices, classrooms and student dormitories with an aggregate of approximately 176,749 square meters in 46 cities in the PRC. For our leased facilities, we leased them from unrelated third parties. Our lease terms range from one to ten years. We purchased two office buildings in Beijing in 2016, mainly for teaching purpose, and to a lesser extent for administrative function. We paid an aggregate of RMB232 million for these two office buildings. We also purchased a building in Qingdao and another one in Haikou for an aggregate price of RMB50 million in 2016. The purpose of these two buildings is mainly teaching and partly for administration.

We believe that the facilities that we currently own or lease are adequate to meet our needs for the foreseeable future, and we believe that we will be able to obtain adequate facilities, principally through leasing of additional properties, to accommodate our future expansion plans.

ITEM 4.A. UNRESOLVED STAFF COMMENTS

Not Applicable.

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ITEM 5. OPERATING AND FINANCIAL REVIEW AND PROSPECTS

The following discussion of our financial condition and results of operations is based upon and should be read in conjunction with our consolidated financial statements and their related notes included in this annual report on Form 20-F. This report contains forward-looking statements. See “Forward-Looking Information.” In evaluating our business, you should carefully consider the information provided under the caption “Item 3. Key Information—D. Risk Factors” in this annual report on Form 20-F. We caution you that our businesses and financial performance are subject to substantial risks and uncertainties.

A. Operating Results

Overview

Net Revenues

We derive substantially all of our net revenues from tuition fees that we charge students. In 2014, 2015 and 2016, we generated net revenues of RMB836.9 million, RMB1,178.0 million and RMB1,579.6 million, respectively. We record tuition fees that we collect in advance as deferred revenues. Our net revenues are presented net of business tax and surcharges.

Number of Course and Student Enrollments

Our ability to generate and increase revenues is primarily driven by our ability to increase the number of course enrollments and student enrollments. Our total course enrollments increased from 58,264 in 2014 to 78,729 in 2015 and further to 102,298 in 2016. Our total student enrollments increased from 59,960 in 2014 to 84,041 in 2015 and further to 107,493 in 2016.

Our total student enrollments are affected by the continuing popularity of our existing courses and programs and the number and popularity of new courses and new programs we offer. In 2016, our Java course was the largest course in terms of revenues and number of student enrollments. Since inception, we have developed and launched fifteen new courses, as well as three new education programs targeting kids.

Our total student enrollments are also affected by our ability to maintain our cooperative relationships with financing service providers for student loans. A significant portion of our students enrolled in 2016 relied on loans provided or arranged by Baidu Small Loan, RenRenDai, BOC CFC, CreditEase, and ShiTuDai to pay for our tuition fees. In 2016, approximately 55.1% of our students took out loans provided or arranged by Baidu Small Loan, RenRenDai, BOC CFC, CreditEase, and ShiTuDai to pay for our tuition fees.

Tuition fees

Our net revenues are affected by the tuition fees for each of our courses. For our full-time classes for adult students, our standard tuition fees generally range from RMB16,800 to RMB20,800 per course. We raised the standard tuition fees on selected courses offered in certain large cities by RMB1,000 to RMB 2,000 per course in February 2016. We also increased our tuition fees for part-time classes on selected courses offered in certain large cities by RMB1,000 to RMB2,000 per course in 2016. For our kid education programs, our standard tuition fees are between RMB15,000 and RMB19,200. Each kid education program is composed of four levels, with each level consisting of 120 learning hours in one year.

The actual tuition fees of our courses for adult students may vary according to the recruiting channel through which a student is enrolled. We recruit students either through our direct marketing efforts or from our network of cooperative universities and colleges. We generally offer a discount of approximately RMB4,000 per person per full-time course for students enrolled through our network of cooperative universities and colleges. In 2016, we recruited approximately 14.8% of our students from these universities and colleges.

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Our tuition fees of our courses for adult students are also affected by the payment option selected by our students. We primarily offer two payment options for our students, including one-time full payment upon enrollment and multiple payments within two months of enrollment. We also allow qualified students to pay our tuition fees within a period of time after graduation. We generally charge RMB1,000 higher in tuition fees to students electing to pay in multiple payments within two months of enrollment and charge RMB3,980 higher in tuition fees to students qualified and electing to pay in installments post graduation, as compared to students who elect to pay in full upfront. Our tuition fees for Tongcheng. Tongmei and Tongchuang education programs are required to be fully paid up-front.

In 2015 and 2016, 77.7% and 83.6% of our enrolled students paid one-time in full upon enrollment, 8.8% and 7.5% of our enrolled students paid multiple times within two months of enrollment and 13.5% and 8.9% of our enrolled students utilized the option to pay within a period of time after graduation, respectively. For our post-graduation payment option, qualified students are given a grace period of up to six months after graduation to look for employment, during which time no repayment needs to be made. After such grace period, students are given a ten-month repayment period. In order to qualify for such payment option, students must pass our credit screening by furnishing to us a number of supporting documents, for instance a credit report from the People’s Bank of China.

Cost of Revenues

Our cost of revenues primarily consists of payroll and employee benefits for our instructors (as apportioned based on the amount of time that they devote to teaching), teaching assistants, career counselors and employer cooperation representatives, as well as rental payments for our learning centers, and to a lesser extent, depreciation relating to property and equipment used at our learning centers. The following table sets forth a breakdown of our cost of revenues in absolute amounts and as percentages of net revenues for the periods indicated:

	For the Year Ended December 31,
	2014				2015				2016
	RMB		% of net revenues		RMB		% of net revenues		RMB		% of net  revenues
	(in thousands, except percentages)
Personnel cost and welfare		88,521		10.6		123,341		10.5		173,240		11.0
Rental cost		69,191		8.3		97,927		8.3		125,856		8.0
Others		82,372		9.8		112,291		9.5		150,008		9.4
Total cost of revenues		240,084		28.7		333,559		28.3		449,104		28.4

Our cost of revenues is primarily affected by the number of our learning centers. We had a total of 118, 134 and 145 learning centers as of December 31, 2014, 2015 and 2016, respectively. Our cost of revenues as a percentage of net revenues was 28.7%, 28.3% and 28.4% in 2014, 2015 and 2016, respectively. We expect our cost of revenues to continue to increase as we plan to open more learning centers.

Operating Expenses

Our operating expenses consist primarily of selling and marketing expenses, general and administrative expenses and, to a lesser extent, research and development expenses. The following table sets forth our operating expenses in absolute amounts and as percentages of net revenues for the periods indicated:

	For the Year Ended December 31,
	2014				2015				2016
	RMB		% of net revenues		RMB		% of net revenues		RMB		% of net revenues
	(in thousands, except percentages)
Selling and marketing expenses		261,489		31.2		384,954		32.7		527,553		33.4
General and administrative expenses		183,998		22.0		251,298		21.3		307,519		19.5
Research and development expenses		33,454		4.0		50,515		4.3		65,594		4.1
Total operating expenses		478,941		57.2		686,767		58.3		900,666		57.0

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Our selling and marketing expenses primarily consist of compensation expenses relating to our personnel involved in selling and marketing, including our enrollment advisors and our university cooperation representatives based at our learning centers, advertising expenses relating to our marketing activities, and, to a lesser extent, rental expenses relating to our selling and marketing functions. We expect our selling and marketing expenses to increase as we further expand our business.

Our general and administrative expenses primarily consist of compensation expenses relating to our management and administrative personnel, including share-based compensation, and bad debt allowance associated with our post-graduation tuition installment payment option for qualified students. To a lesser extent, our general and administrative expenses include office expenses relating to administrative functions.

We expect our general and administrative expenses to increase in the future on an absolute basis as our business grows and we incur costs related to complying with our reporting obligations as a public company under U.S. securities laws.

Our research and development expenses primarily consist of a portion of the personnel costs of our instructors as determined based on the amount of time that they devote to research and development-related activities, as well as the personnel costs of our software engineers.

Seasonality

Seasonal fluctuations have affected, and are likely to continue to affect, our business. Historically, we typically generate the highest net revenues in the third and fourth quarters because of the increased student enrollments during summer vacation. We generally generate less tuition fees in the first quarter of each year due to the Chinese New Year holiday. Our quarterly cost of revenue, selling and marketing expenses, general and administrative expenses and research and development expenses have generally been increasing in absolute amounts since 2012 as we expanded our network of learning centers, increased the number of our personnel and enhanced our marketing efforts.

Taxation

Cayman Islands

We are incorporated in the Cayman Islands. Under the current law of the Cayman Islands, we are not subject to income or capital gains tax. In addition, dividend payments are not subject to withholding tax in the Cayman Islands.

Hong Kong

Our wholly-owned subsidiary in Hong Kong, Tarena Hong Kong Limited, is subject to Hong Kong profits tax on its activities conducted in Hong Kong. No provision for Hong Kong profits tax has been made in the consolidated financial statements as Tarena Hong Kong Limited has no assessable income since its inception on October 22, 2012 to December 31, 2016.

China

Pursuant to the EIT Law and its Implementation Rules, which became effective on January 1, 2008, foreign-invested enterprises and domestic companies are subject to enterprise income tax at a uniform rate of 25%. In addition, “high and new technology enterprises,” or HNTEs, will enjoy a preferential enterprise income tax rate of 15% under the EIT Law. Tarena Tech qualified as a HNTE under the EIT Law and is eligible for a preferential enterprise income tax rate of 15% for the period from 2009 to the end of 2017. Tarena Hangzhou was established in 2013 and qualified as a “newly established software enterprise”, which entitles it to two years of full exemption followed by three years of 50% exemption, commencing from the year in which its taxable income is greater than zero, which was 2014. On Jan 25, 2016, we acquired 100% of the equity interests in Hangzhou Han Ru Education Technology Co., Ltd, which is qualified as a “newly established software enterprise”, which entitles it to two years of full tax exemption followed by three years of 50% tax exemption, commencing from 2016. Certain of our subsidiaries qualified as “Small Profit Enterprises” in 2014, 2015 and 2016, and therefore are subject to the preferential income tax rate of 20%. Subject to the approvals from the tax authorities in certain locations in the PRC, our subsidiaries and consolidated VIE that are based in these locations are required to use the deemed profit method to determine their income tax. Under the deemed profit method, these subsidiaries are subject to income tax at 25% on its deemed profit which is calculated based on revenues less deemed expenses equal to 85% to 90% of revenues.

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Critical Accounting Policies

We prepare our consolidated financial statements in accordance with U.S. GAAP, which requires us to make judgments, estimates and assumptions that affect (i) the reported amounts of our assets and liabilities; (ii) the disclosure of our contingent assets and liabilities at the end of each reporting period; and (iii) the reported amounts of revenues and expenses during each reporting period. We continually evaluate these judgments, estimates and assumptions based on our own historical experience, knowledge and assessment of current business and other conditions and our expectations regarding the future based on available information, which together form our basis for making judgments about matters that are not readily apparent from other sources. Since the use of estimates is an integral component of the financial reporting process, our actual results could differ from those estimates. Some of our accounting policies require a higher degree of judgment than others in their application.

When reading our consolidated financial statements, you should consider our selection of critical accounting policies, the judgment and other uncertainties affecting the application of such policies and the sensitivity of reported results to changes in conditions and assumptions. We believe the following accounting policies involve the most significant judgments and estimates used in the preparation of our financial statements.

Revenue recognition

We derive substantially all of our net revenues from tuition fees, a portion of which we allow qualified students to pay on installment for a period of time exceeding one year. When tuition services are sold on repayment terms that exceed one year beyond the point in time that revenue is recognized, the receivable, and therefore the revenue is recorded at the present value of the total payments. The difference between the present value of the receivable and the nominal or principal value of the tuition fees is recognized as interest income over the contractual collection period using the effective interest rate method. The interest rate used to determine the present value of the total amount receivable is the rate at which students can obtain financing of a similar nature from other sources at the date of the transaction.

We enter into arrangements with certain students that purchase multiple services, including classroom training and extended on-line case studies, or multiple-element arrangements. We treat training contracts with multiple deliverable elements as separate units of accounting for revenue recognition purposes and recognizes revenue during the contract period when each deliverable service is provided. We allocate the contract price among all the deliverables at the inception of the arrangement on the basis of their relative selling prices according to the selling price hierarchy established by Accounting Standard Update No. 2009-13, Revenue Recognition - Multiple-Deliverable Revenue Arrangements. We first use vendor-specific objective evidence (VSOE) of selling price, if it exists, otherwise the third-party evidence of selling price is used. If neither VSOE of selling price nor third-party evidence of selling price exists, we use our best estimate of selling price for the deliverables.

Allowance for doubtful accounts

We maintain an allowance for doubtful accounts for estimated losses resulting from the inability of our students to make payments according to their respective payment plans stipulated on the arrangement. We determine the allowance by analyzing students’ accounts that have known or potential collection issues and applying historical loss rates to the aging of the remaining balances of accounts receivable. In the event that we believe an account receivable will become uncollectible, we record an additional provision to increase the allowance for doubtful accounts.

Long-lived assets

Our long-lived assets include property and equipment. We depreciate our property and equipment using the straight-line method over the estimated useful lives of the assets. We make estimates of the useful lives of property and equipment, including the salvage values, in order to determine the amount of depreciation expense to be recorded during each reporting period. We amortize leasehold improvements of our learning center facilities and offices over the shorter of the lease term or the estimated useful life of the assets. We estimate the useful lives of our other property and equipment at the time the assets are acquired based on historical experience with similar assets, as well as anticipated technological or other changes. If technological changes were to occur more rapidly than anticipated or in a different form than anticipated, the useful lives assigned to these assets may be shortened, which would result in the recognition of increased depreciation expense in future periods. There has been no change to the estimated useful lives or salvage values of our property and equipment in 2014, 2015 and 2016.

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We evaluate property and equipment for impairment whenever events or changes in circumstances indicate that the carrying amount of such assets may not be recoverable. We assess recoverability by comparing the carrying amount of a long-lived asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying amount of an asset or asset group exceeds its estimated undiscounted future cash flows, we recognize an impairment charge based on the amount by which the carrying amount exceeds the estimated fair value of the asset or asset group. We estimate the fair value of the asset or asset group based on the best information available, including prices for similar assets, and in the absence of an observable market price, the results of using a present value technique to estimate the fair value of the asset or asset group.

No impairment on our long-lived assets was recognized in 2014, 2015 and 2016.

Share-based Compensation

We measure the cost of employee services received in exchange for an award of equity instruments based on the grant date fair value of the award and recognize the cost over the period the employee is required to provide service in exchange for the award, which is generally the vesting period. We have elected to recognize the compensation cost for an award with only service conditions that have a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, net of estimated forfeitures, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. Forfeiture rates are estimated based on historical and future expectations of employee turnover rates.

On September 22, 2008, we adopted the 2008 Plan, pursuant to which we can issue share options and other share-based awards to our key employees, directors and consultants to purchase up to 6,002,020 of our ordinary shares (being retroactively adjusted to reflect the effect of the share split). On November 28, 2012, we increased the number of our ordinary shares authorized for issuance under the 2008 Plan to 8,184,990. Share options issued before September 22, 2008 are also administered under the 2008 Plan.

In February 2014, we adopted the 2014 Plan, pursuant to which we were authorized to issue options, restricted shares and restricted share units to our qualified employees, directors and consultants. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, or the Award Pool, is 1,833,696, provided that the shares reserved in the Award Pool shall be increased on the first day of each calendar year, commencing with January 1, 2015, if the unissued shares reserved in the Award Pool on such day account for less than 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year, as a result of which increase the shares unissued and reserved in the Award Pool immediately after each such increase shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year.

Share options granted prior to initial public offering

From January 1, 2004 to February 20, 2014, our board of directors has granted the following options to our executive officers and employees:

	Number of Options		Exercise Price (US$)		Fair Value of Ordinary Shares (US$)
Grant date
Prior to January 1, 2012		7,117,020		0.058-1.00		0.04-0.83
January 1, 2013		2,029,386		1.83		3.75
September 16, 2013		488,424		1.83		5.69
February 20, 2014		1,805,784		1.83-4.36		8.60

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Prior to our initial public offering in April 2014, we did not have quoted market prices for our ordinary shares. Accordingly we have considered the guidance prescribed by the AICPA Audit and Accounting Practice Aid, Valuation of Privately-Held-Company Equity Securities Issued as Compensation, or the Practice Aid, which sets forth the preferred types of valuation that should be used. We have followed the “Level B” recommendation, and established the fair value of our ordinary shares at the dates of grant using a retrospective valuation for valuation dates prior to September 2013 with the assistance of an independent valuation firm. We obtained a retrospective valuation instead of contemporaneous valuation for valuation dates prior to September 2013, because at that time, our financial and managerial resources were limited. The valuation as of September 16, 2013 and February 20, 2014 was prepared on contemporaneous basis. We are ultimately responsible for all the fair value measurements in relation to the options and ordinary shares.

In determining the fair value of our ordinary shares for the purpose of determining the fair value of the share options, we followed a two-step process. In the first step, the equity value of our company was determined by taking into consideration the income approach, or the discounted cash flow on DCF, method. We considered the market approach and searched for public companies located in China with business nature and in a development stage similar to ours. However, no companies were similar to us in all aspects. We therefore did not apply any weight for the market approach to arrive at the equity value of our company and only used the market approach to corroborate the valuation results based on the income approach.

In estimating the total equity value of our ordinary shares, we considered the DCF method, which incorporates the projected cash flow of our management’s best estimation as of each measurement date. The projected cash flow estimation includes, among others, analysis of projected net revenue growth, gross margins and terminal value. The assumptions used in deriving the fair value of ordinary shares are consistent with our business plan.

The key assumptions used in developing the cash flow forecasts include: (i) compounded annualized growth rates of net revenue range from 19% to 52% for the forecasted period; (ii) gross margin forecast to improve with increasing economies of scale; and (iii) a terminal growth rate after the projection period.

The DCF method of the income approach involves applying appropriate weighted average cost of capital, or WACC, to discount the future cash flows forecast to present value. WACC comprises a required rate of return on equity plus the current tax effected rate of return on debt, weighted by the relative percentages of equity and debt in the capital structure of comparable public companies whose business operations are similar to that of ours. The required rates of return on equity were based on an estimation of the market required rate of return for investing in business similar to ours, which were derived by using the capital asset pricing model, or CAPM. Under CAPM, the discount rate was determined with consideration of the risk-free rate, industry-average correlated relative volatility coefficient beta, equity risk premium, size of our company, the scale of our business and our ability in achieving forecasted projections.

The risks associated with achieving the forecasts were assessed in selecting the appropriate WACC, which had been determined to range from 16.5% to 30%. The determined WACC decreased from 30% as of 2004 to 16.5% as of February 20, 2014 due to decrease in uncertainties associated with our financial forecast as we achieved millstones, progressed to later stage of development and developed solid track records.

In estimating the fair value of our ordinary shares by the DCF method, our management does not think there would be disproportionate returns of cash flows to different shareholders. Therefore, neither control premium nor a lack of control discount was considered in our valuations.

We also applied a discount for lack of marketability, or DLOM, ranging from 5% to 35%, to reflect the fact that there is no ready market for shares in a closely-held company like us. When determining the DLOM, the Black-Scholes option pricing model was used. Under this option-pricing method, the cost of the put option, which can hedge the price change before the privately held shares can be sold, was considered as a basis to determine the DLOM. This option pricing method was used because it takes into account certain company-specific factors, including the timing of the expected initial public offering and the volatility of the share price of the guideline companies engaged in the same industry.

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The above assumptions used in determining the fair values were consistent with our business plan and major milestones we achieved. We also applied general assumptions, including the following:

· there will be no major changes in the existing political, legal, fiscal and economic conditions in countries in which we will carry on our business;

· there will be no major changes in the current tax laws in countries in which we operate and, that the rates of tax payable remain unchanged and that all applicable laws and regulations will be complied with;

· exchange rates and interest rates will not differ materially from those presently prevailing;

· the availability of financing will not be a constraint on the future growth of our operation;

· we will retain and have competent management, key personnel, and technical staff to support our ongoing operations; and

· industry trends and market conditions for related industries will not deviate significantly from economic forecasts.

In the second step, since our capital structure comprised convertible redeemable preferred shares and ordinary shares at each grant date, we allocated our equity value among each class of equity securities using the option-pricing method. The option-pricing method treats ordinary shares and preferred shares as call options on our company’s equity value and liquidation preference, redemption preference and conversion threshold of the preferred shares as exercise price of the call options.

The increase in the fair value of our ordinary shares from US$3.75 per share as of January 1, 2013 to US$5.69 per share as of September 16, 2013 was primarily attributable to the following factors:

· We offered more courses at our learning centers in 2013. As a result of these offerings, we experienced rapid revenue and student growth in the nine-month period ended September 30, 2013. Our net revenues in the nine-month period ended September 30, 2013 were RMB400.7 million, an increase of 61.9% from RMB 247.6 million in the nine-month period ended September 30, 2012. The number of learning centers increased from 57 as of December 31, 2012 to 86 as of September 30, 2013, and the number of student enrollments increased from 31,340 in 2012 to 33,289 in the nine months ended September 30, 2013, respectively. In view of the above, we adjusted our estimated earning upwards when we prepared financial forecast for valuation as of September 16, 2013, and lowered the discount rate used in valuation from 19.5% as of January 1, 2013 to 17.5% as of September 16, 2013.

· As we progressed towards an initial public offering, or IPO, leading time to an expected liquidity event decreased, resulting in a decrease of DLOM from 20% as of January 1, 2013 to 15% as of September 16, 2013. We also increased our estimated probability of IPO from 50% to 60%. As preferred shares would be automatically converted into ordinary shares upon IPO, the increase in estimated probability of IPO results in allocation of a higher portion of our business enterprise value to ordinary shares.

The increase in the fair value of our ordinary shares from US$5.69 per share as of September 16, 2013 to US$8.60 per share as of February 20, 2014 was primarily attributable to the following factors:

· We adjusted our projections upward when preparing our financial forecast to determine the fair value of our ordinary shares as of February 20, 2014 based on the following operational improvements:

 
(i) we expanded our new digital arts course offering nationally in the last quarter of 2013; 

(ii) we launched a new online sales and marketing course in November 2013; and 

(iii) in February 2014, we implemented a new pricing strategy resulting in an overall increase in tuition fees.

· We made the first confidential submission of the draft registration statement on Form F-1 in respect of the proposed IPO in November 2013, increasing the probability of a successful IPO. This resulted in a decrease of the DLOM from 15% as of September 16, 2013 to 5% as of February 20, 2014. Furthermore, we increased the estimated probability of a successful IPO from 60% as of September 16, 2013 to 90% as of February 20, 2014. Because our preferred shares will be automatically converted into ordinary shares upon the IPO, the increase in the estimated probability of the IPO resulted in the allocation of a higher portion of our business enterprise value to our ordinary shares.

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· The determined weighted average cost of capital decreased from 17.5% as of September 16, 2013 to 16.5% as of February 20, 2014 to reflect the decrease in uncertainties associated with our financial forecast, since we achieved our milestones, progressed to later stage of development and maintained a solid track record.

In determining the fair value of share options granted to executive officers and certain employees, we have used the binomial option pricing model. Under this option pricing model, certain assumptions, including the risk-free interest rate, the expected dividends on the underlying ordinary shares and the expected volatility of the price of the underlying shares for the contract term of the options, are required in order to determine the fair value of the options. Changes in these assumptions could significantly affect the fair value of share options and hence the amount of compensation expense we recognize in our consolidated financial statements.

For the options granted, we used the following assumptions on the date of grant in determining the estimated fair value per option:

	Options Granted In
	2011			2012		2013			2014
Expected volatility		45-46	%		—		52	%		52	%
Expected dividends yield		0	%		—		0	%		0	%
Exercise multiple		2.2			—		2.2			2.2
Risk-free interest rate per annum		3.89%-3.93	%		—		2.27%-3.38	%		3.81	%
Estimated fair value of underlying ordinary shares (per share)	US$	0.63-0.83			—	US$	3.75-5.69		US$	8.60

For the purpose of determining the estimated fair value of our share options, we believe the expected volatility and the estimated fair value of our ordinary shares are the most critical assumptions since we are a privately-held company when we granted these share options.

Since we did not have a trading history at the time the share options were granted and we did not have sufficient share price history to calculate our own historical volatility, expected volatility of our future ordinary share price was estimated based on the price volatility of the shares of comparable public traded companies engaged in the similar industry.

Share options granted after initial public offering

From January 1, 2015 to December 31, 2016, our board of directors has granted the following options to our executive officers and employees:

	Number of Options		Exercise Price (US$)	Fair Value of Ordinary Shares (US$)
Grant date
March 1, 2015 to December 6, 2015		615,624	0.89-4.36	9.28-12.85
January 1, 2016 to December 31, 2016		1,115,807	0.058-4.36	9.99-16.54

On June 16, 2015, Mr. Shaoyun Han exercised 2,439,014 share options to purchase 2,439,014 Class A ordinary shares. Mr. Shaoyun Han remitted RMB17.0 million to us on August 4, 2015.

In determining the fair value of share options granted to executive officers and certain employees, we have used the binomial option pricing model. Under this option pricing model, certain assumptions, including the risk-free interest rate, the expected dividends on the underlying ordinary shares and the expected volatility of the price of the underlying shares for the contract term of the options, are required in order to determine the fair value of the options. Changes in these assumptions could significantly affect the fair value of share options and hence the amount of compensation expense we recognize in our consolidated financial statements.

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For the options granted, we used the following assumptions on the date of grant in determining the estimated fair value per option:

	Options Granted In 2015			Options Granted In 2016
Expected volatility		62.3%-70.9	%		63.5%-68.8	%
Expected dividends yield		0	%		0	%
Exercise multiple		2.0			2.0
Risk-free interest rate per annum		2.68%-2.99	%		2.15%-3.18	%
The fair value of underlying ordinary shares (per share)		US$9.28-US$12.85			US$9.99-US$16.54

The fair values of underlying ordinary shares are closing prices of our stock traded in the open market as of each grant date. For the purpose of determining the estimated fair value of our share options, we believe the expected volatility is the most critical assumption.

Since we had a short share price history, expected volatility of our future ordinary share price was estimated with reference to the price volatility of the shares of comparable public traded companies engaged in the similar industry.

Income taxes

The realization of the future tax benefits of deferred income tax assets is dependent on future taxable income against which such tax benefits can be applied or utilized and any tax planning strategies. In assessing the realizability of deferred income tax assets, we consider whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. All available evidence must be considered in determining the realizability of the deferred income tax assets. Such evidence includes, but is not limited to, the financial performance of subsidiaries and consolidated VIE, the market environment in which these entities operate, the utilization of past tax credits, and the length of relevant carryforward periods. Sufficient negative evidence, such as a cumulative net loss during a three-year period that includes the current year and the prior two years, may require that a valuation allowance be established with respect to existing and future deferred income tax assets. In view of cumulative losses sustained by our PRC subsidiaries and consolidated VIEs, valuation allowances of RMB14.4 million, RMB20.1 million and RMB26.5 million were provided as of December 31, 2014, 2015 and 2016, respectively. If, in the future, taxable incomes are available for each tax-paying component, the valuation allowances against our deferred income tax assets may be adjusted.

In order to assess uncertain tax positions, we adopt a more likely than not threshold and a two-step approach for the tax position measurement and financial statement recognition. For the two-step approach, the first step is to evaluate the tax position for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be sustained, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is greater than 50% likely to be realized upon settlement. The unrecognized tax benefits were RMB36.9 million, RMB53.4 million and RMB69.8 million as of December 31, 2014, 2015 and 2016, respectively. No interest and penalty expenses were recorded for the years ended December 31, 2014, 2015 and 2016.

Recently Issued Accounting Policies

See note 2 to our audited consolidated financial statements included in this annual report for recently issued accounting standards that we believe may have implications on our consolidated financial statements for future periods.

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Results of Operations

The following table sets forth a summary of our consolidated results of operations for the periods indicated, both in absolute amounts and as percentages of our net revenues. This information should be read together with our consolidated financial statements and related notes included elsewhere in this annual report. The operating results in any period are not necessarily indicative of the results that may be expected for any future period.

	For the Year Ended December 31,
	2014						2015						2016
	RMB			% of Net Revenues			RMB			% of Net Revenues			RMB			% of Net Revenues
	(in thousands, except percentages)
Net revenues		836,941			100.0			1,178,008			100.0			1,579,604			100.0
Cost of revenues(1)		(240,084	)		(28.7	)		(333,559	)		(28.3	)		(449,104	)		(28.4	)
Gross profit		596,857			71.3			844,449			71.7			1,130,500			71.6
Operating expenses(1):
Selling and marketing		(261,489	)		(31.2	)		(384,954	)		(32.7	)		(527,553	)		(33.4	)
General and administrative		(183,998	)		(22.0	)		(251,298	)		(21.3	)		(307,519	)		(19.5	)
Research and development		(33,454	)		(4.0	)		(50,515	)		(4.3	)		(65,594	)		(4.2	)
Operating income		117,916			14.1			157,682			13.4			229,834			14.6
Interest income		26,802			3.2			42,732			3.6			23,974			1.5
Other income		14,568			1.7			11,812			1.0			15,960			1.0
Loss on foreign currency forward		—			—			—			—			(12,898	)		(0.8	)
Foreign currency exchange gains (losses)		7,359			0.9			(29,499	)		(2.5	)		3,760			0.2
Income before income taxes		166,645			19.9			182,727			15.5			260,630			16.5
Income tax expense		(14,795	)		(1.8	)		(3,967	)		(0.3	)		(18,776	)		(1.2	)
Net income		151,850			18.1			178,760			15.2			241,854			15.3

Notes:

(1) Share-based compensation expenses were allocated in cost of revenues and operating expenses as follows:

	For the Year Ended December 31
	2014		2015		2016
	RMB		RMB		RMB
	(in thousands)
Cost of revenues		349		664		4,124
Selling and marketing expenses		1,036		1,959		5,496
General and administrative expenses		22,302		28,274		51,154
Research and development expenses		1,289		2,022		7,050

The Year Ended December 31, 2016 Compared to the Year Ended December 31, 2015

Net revenues

Our net revenues increased by 34.1% from RMB1,178.0 million in 2015 to RMB1,579.6 million in 2016. This increase was primarily due to increased student enrollments and, to a lesser extent, an increase in the standard tuition fees. The number of total student enrollments grew by 27.9% from 84,041 in 2015 to 107,493 in 2016. The number of our total student enrollments is affected by the continuing popularity of our existing courses and programs and the number and popularity of new courses and new programs we offer. In the past year, we experienced significant increase in student enrollments for the courses, such as Java, Digital art, and Web front. The number of our learning centers increased from 134 as of December 31, 2015 to 145 as of December 31, 2016 to cater to the increased demand for our courses. The increase in our average revenue per student was primarily a result of an increase in the standard tuition fees and the decrease in the percentage of our students recruited through our network of cooperative universities and colleges. In 2016, we raised the standard tuition fees on selected courses offered in certain large cities by RMB1,000 to RMB 2,000 per course. We generally offer a discount of approximately RMB4,000 per person per full-time course for students enrolled through our network of cooperative universities and colleges. In 2016, the percentage of our students recruited from our network of cooperative universities and colleges was approximately 14.7%, as compared with 16.2% in 2015.

Cost of Revenues

Our cost of revenues increased by 34.6% from RMB333.6 million in 2015 to RMB449.1 million in 2016. This increase was mainly due to an increase in personnel cost and welfare expenses resulting from growing number of teaching and advisory staff at our learning centers, rental cost resulting from higher seat capacity, as well as depreciation expenses for our learning centers. Our instructors, teaching assistants, career counselors and employer cooperation representatives at our learning centers increased from 1,729 as of December 31, 2015 to 2,236 as of December 31, 2016. The number of our learning centers increased from 134 as of December 31, 2015 to 145 as of December 31, 2016.

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Gross Profit and Gross Margin

As a result of the foregoing, our gross profit increased by 33.9% from RMB844.4 million in 2015 to RMB1,130.5 million in 2016. Our gross profit margin slightly decreased from 71.7% in 2015 to 71.6% in 2016, which was mainly due to higher personnel cost and welfare expenses and higher share-based compensation expenses.

Operating Expenses

Our operating expenses increased by 31.1% from RMB686.8 million in 2015 to RMB900.7 million in 2016 as a result of increases in our selling and marketing, general and administrative and research and development expenses.

Selling and Marketing Expenses

Our selling and marketing expenses increased by 37.0% from RMB385.0 million in 2015 to RMB527.6 million in 2016. This increase was partially due to increased personnel cost and welfare expenses related to growth in our selling and marketing headcount from 2,300 as of December 31, 2015 to 2,717 as of December 31, 2016. The amount of personnel cost and welfare expenses for our selling and marketing staff increased from RMB182.3 million in 2015 to RMB245.1 million in 2016. The increase in selling and marketing expenses was also due to expanded marketing efforts, which increased advertising expenses from RMB151.5 million in 2015 to RMB201.3 million in 2016, primarily as a result of increased spending on search engine advertising as we expanded our network of learning centers.

General and Administrative Expenses

Our general and administrative expenses increased by 22.4% from RMB251.3 million in 2015 to RMB307.5 million in 2016 primarily due to higher personnel costs and welfare expenses for our increased headcount of general and administrative personnel, from 1,015 as of December 31, 2015 to 1,304 as of December 31, 2016 to support our growing operations, and an increase in share-based compensation expenses, which increased from RMB28.3 million in 2015 to RMB51.2 million in 2016.

Since July 2015, we focused more on tracking and updating the personal information of our alumni who used the post-graduation payment option, and we began to (i) task our career counselors with accounts receivable collection from their former students in such class and (ii) add accounts receivable collection rate as a KPI for our regional managers, learning center managers and career counselors.

In 2016, as we devote more resources towards accounts receivable management, we observed a decrease in the cumulative default amount of accounts receivable for students enrolled between 2014 and 2015 who used the post-graduation payment option. We believe that our stricter tracking and management of accounts receivable have been effective in generally reducing the overall delinquency risk.

Research and Development Expenses

Our research and development expenses increased by 29.9% from RMB50.5 million in 2015 to RMB65.6 million in 2016 primarily due to increased personnel costs and welfare expenses of our instructors allocated to their content development activities for our new courses, as well as increased number of research and development staff as we expanded our course offerings and operations.

Interest Income

Our interest income decreased from RMB42.7 million in 2015 to RMB24.0 million in 2016. Our interest income in both periods consisted of interest earned on our cash and time deposits in commercial banks and interest income recognized in relation to our installment payment plan for students. The decrease in interest income was primarily due to lower bank deposits and interest rate, as well as lower tuition interest income in relation to our installment payment plan for students.

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Income Tax Expense

Our income tax expense was RMB18.8 million in 2016, compared to RMB4.0 million in 2015. The increase was mainly due to an increase in the effective income tax rate and higher taxable income.

The effective income tax rate of 2.2% in 2015 was lower than the statutory income tax rate of 25% primarily because of (i) the preferential income tax rate of 15% enjoyed by Tarena Tech, (ii) the tax holiday enjoyed by Tarena Hangzhou and (iii) the effect of research and development expenses bonus deduction allowed under PRC tax regulations, partially offset by recognition of valuation allowances for deferred income tax assets of certain subsidiaries, which were at cumulative loss position.

The effective income tax rate of 7.2% in 2016 was lower than the statutory income tax rate of 25% primarily because of (i) the preferential income tax rate of 15% enjoyed by Tarena Tech, (ii) the preferential income tax rate of 12.5% enjoyed by Tarena Hangzhou, (iii) the tax holiday enjoyed by Tarena Hanru, and (iv) the effect of research and development expenses bonus deduction allowed under PRC tax regulations, partially offset by recognition of valuation allowances for deferred income tax assets of certain subsidiaries, which were at cumulative loss position.

Net Income

As a result of the foregoing, our net income increased by 35.3% from RMB178.8 million in 2015 to RMB241.9 million in 2016.

The Year Ended December 31, 2015 Compared to the Year Ended December 31, 2014

Net revenues

Our net revenues increased by 40.8% from RMB836.9 million in 2014 to RMB1,178.0 million in 2015. This increase was primarily due to increased student enrollments and higher average revenue per student. The number of total student enrollments grew by 40.2% from 59,960 in 2014 to 84,041 in 2015. The number of our student enrollments is primarily driven by the number and popularity of our course offerings and programs. We experienced significant increase in student enrollment for our new courses in the past few years, such as digital art, iOS and accounting. The number of our learning centers increased from 118 as of December 31, 2014 to 134 as of December 31, 2015 to cater to the increased demand for our courses. The increase in our average revenue per student was primarily a result of our tuition fees increase in 2015 and the decrease in the percentage of our students recruited through our network of cooperative universities and colleges. In 2015, we raised the standard tuition fees on most of our courses by RMB1,000 per course. We generally offer a discount of approximately RMB4,000 per person per full-time course for students enrolled through our network of cooperative universities and colleges. In 2015, the percentage of our students recruited from our network of cooperative universities and colleges was approximately 16%, as compared with 18% in 2014.

Cost of Revenues

Our cost of revenues increased by 38.9% from RMB240.1 million in 2014 to RMB333.6 million in 2015. This increase was mainly due to higher personnel cost and welfare expenses resulting from increased number of teaching and advisory staff at our learning centers, higher rental cost resulting from increased number of learning centers and expansion of existing learning centers, as well as higher depreciation expenses for our learning centers. Our instructors, teaching assistants, career counselors and employer cooperation representatives at our learning centers increased from 1,378 as of December 31, 2014 to 1,729 as of December 31, 2015. The number of our learning centers increased from 118 as of December 31, 2014 to 134 as of December 31, 2015.

Gross Profit and Gross Margin

As a result of the foregoing, our gross profit increased by 41.5% from RMB596.9 million in 2014 to RMB844.4 million in 2015. Our gross profit margin increased from 71.3% in 2014 to 71.7% in 2015. The improvement in gross margin was mainly due to increased operational scale and efficiency for our learning centers. Our overall center utilization rate in 2015 increased to 73% from 71% in 2014.

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Operating Expenses

Our operating expenses increased by 43.4% from RMB478.9 million in 2014 to RMB686.8 million in 2015 as a result of increases in our selling and marketing, general and administrative and research and development expenses.

Selling and Marketing Expenses

Our selling and marketing expenses increased by 47.2% from RMB261.5 million in 2014 to RMB385.0 million in 2015. This increase was partially due to increased personnel cost and welfare expenses related to growth in our selling and marketing headcount from 1,773 as of December 31, 2014 to 2,300 as of December 31, 2015. The amount of personnel cost and welfare expenses for our selling and marketing staff increased from RMB117.4 million in 2014 to RMB182.3 million in 2015. The increase in selling and marketing expenses was also due to expanded marketing efforts, which increased advertising expenses from RMB102.8 million in 2014 to RMB151.5 million in 2015, primarily as a result of increased spending on search engine advertising as we expanded our network of learning centers.

General and Administrative Expenses

Our general and administrative expenses increased by 36.6% from RMB184.0 million in 2014 to RMB251.3 million in 2015 primarily due to higher personnel costs and welfare expenses for our increased headcount of general and administrative personnel, from 742 as of December 31, 2014 to 1,015 as of December 31, 2015 to support our growing operations, higher bad debt allowance associated with our post-graduation tuition installment payment option for qualified students enrolled from 2010 to 2014 and higher share-based compensation expenses, which increased from RMB22.3 million in 2014 to RMB28.3 million in 2015.

The amount of bad debt allowance in 2014 mainly reflects our assessment of the delinquency risk for students enrolled between 2010 and 2013 who used the post-graduation payment option. In 2015, we observed an increase in the overall account aging for students enrolled between 2010 and 2014 who used the post-graduation payment option, as well as an increase in the cumulative default amount of accounts receivable from such students. As a result, we determined that the delinquency risk for the corresponding accounts receivable has increased as well. As we devote more resources towards accounts receivable management, we do not believe that the overall delinquency risk for our accounts receivable will continue to increase.

Since July 2015, we focused more on tracking and updating the personal information of our alumni who used the post-graduation payment option, and we began to (i) task our career counselors with accounts receivable collection from their former students in such class and (ii) add accounts receivable collection rate as a KPI for our regional managers, learning center managers and career counselors. We believe that our stricter tracking and management of accounts receivable have been effective in generally preventing the overall delinquency risk from increasing.

Research and Development Expenses

Our research and development expenses increased by 51.0% from RMB33.5 million in 2014 to RMB50.5 million in 2015 primarily due to increased personnel costs and welfare expenses of our instructors allocated to their content development activities for our new courses, as well as increased number of research and development staff as we expanded our course offerings and operations.

Interest Income

Our interest income increased from RMB26.8 million in 2014 to RMB42.7 million in 2015. Our interest income in both periods consisted of interest earned on our cash and time deposits deposited in commercial banks and interest income recognized in relation to our installment payment plan for students. The increase in interest income was primarily due to higher tuition interest income in relation to our installment payment plan for students and higher bank deposits generated ultimately from operating activities.

Income Tax Expense

Our income tax expense decreased by 73.2% from RMB14.8 million in 2014 to RMB4.0 million in 2015. The decrease was mainly due to a decrease in the effective income tax rate to 2.2% in 2015 from 8.9% in 2014, partially offset by higher taxable income. The decrease in the effective income tax rate was primarily due to a tax holiday enjoyed by Tarena Hangzhou as a “newly established software enterprise”, as well as more profit before tax being generated by this tax-exempt subsidiary.

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The effective income tax rate of 8.9% in 2014 was lower than the statutory income tax rate of 25% primarily because of (i) the preferential income tax rate of 15% enjoyed by Tarena Tech, (ii) the tax holiday enjoyed by Tarena Hangzhou and (iii) the effect of research and development expenses bonus deduction allowed under PRC tax regulations, partially offset by recognition of valuation allowances for deferred income tax assets of certain subsidiaries, which were at cumulative loss position.

The effective income tax rate of 2.2% in 2015 was lower than the statutory income tax rate of 25% primarily because of (i) the preferential income tax rate of 15% enjoyed by Tarena Tech, (ii) the tax holiday enjoyed by Tarena Hangzhou and (iii) the effect of research and development expenses bonus deduction allowed under PRC tax regulations, partially offset by recognition of valuation allowances for deferred income tax assets of certain subsidiaries, which were at cumulative loss position.

Net Income

As a result of the foregoing, our net income increased by 17.7% from RMB151.8 million in 2014 to RMB178.8 million in 2015.

Inflation

Since our inception, inflation in China has not materially impacted our results of operations. According to the National Bureau of Statistics of China, the year-over-year percent changes in the consumer price index for December 2014, 2015 and 2016 were increases of 1.5%, 1.6% and 2.1%, respectively.

Impact of Foreign Currency Fluctuation

See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Fluctuations in exchange rates could have a material adverse effect on our results of operations and the value of your investment.” and “Item 11. Quantitative and Qualitative Disclosures About Market Risk—Foreign Exchange Risk.”

Impact of Governmental Policies

See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China” and “Item 4. Information on the Company—B. Business Overview—Government Regulations.”

B. Liquidity and Capital Resources

Cash Flows and Working Capital

Our principal sources of liquidity have been cash generated from operating activities and proceeds from the issuance and sale of our shares. As of December 31, 2016, we had RMB1,286.1 million in cash and time deposits and we had no bank borrowings. Our cash consists of cash on hand and cash in bank, which are unrestricted as to withdrawal. Cash of our consolidated VIEs, in the amount of RMB0.6 million as of December 31, 2016, can be used only to settle obligations of our consolidated VIEs. Cash equivalents consist of interest-bearing certificates of deposit with initial term of no more than three months when purchased. Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term of greater than three months when purchased, while the time deposits that mature over one year as of the balance sheet date are included in non-current assets.

We believe that our current cash, cash equivalents, time deposits and anticipated cash flow from operations will be sufficient to meet our anticipated cash needs, including our cash needs for working capital and capital expenditures, for at least the next 12 months.

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See Cash, cash equivalents, time deposits and restricted time deposits under Note 2(d) to our audited consolidated financial statements included in this annual report for information regarding the currencies in which cash, cash equivalents and time deposits were held as of December 31, 2016.

The following table sets forth a summary of our cash flows for the periods indicated:

	For the Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
	(in thousands)
Net cash provided by operating activities		175,343			347,698			524,030
Net cash used in investing activities		(734,539	)		(72,309	)		(156,449	)
Net cash provided by (used in) financing activities		655,026			(26,899	)		(78,044	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		5,837			4,413			7,197
Net increase in cash and cash equivalents		101,667			252,903			296,734
Cash and cash equivalents at the beginning of the year		159,368			261,035			513,938
Cash and cash equivalents at end of the year		261,035			513,938			810,672

Operating Activities

Net cash provided by operating activities increased to RMB524.0 million in 2016 from RMB347.7 million in 2015, primarily due to an increase of approximately RMB546.3 million in cash collected from our students in 2016, which were partially offset by an increase of approximately RMB368.2 million in cash operating expenditures, an increase of approximately RMB0.9 million in income tax payment and a decrease of proceeds from tax refund of approximately RMB0.9 million in 2016.

Net cash provided by operating activities increased to RMB347.7 million in 2015 from RMB175.3 million in 2014, primarily due to an increase of approximately RMB400.2 million in cash collected from our students in 2015, a decrease of approximately RMB1.3 million in income tax payment and proceeds from tax refund of approximately RMB1.3 million in 2015, which were partially offset by an increase of approximately RMB230.4 million in cash operating expenditures.

Net cash provided by operating activities decreased to RMB175.3 million in 2014 from RMB183.9 million in 2013, primarily due to an increase of approximately RMB158.2 million in cash operating expenditures in 2014, which were partially offset by an increase of approximately RMB141.7 million in cash collected from our students and a decrease of approximately RMB7.9 million in income tax payment in 2014.

Investing Activities

Our cash used in investing activities is primarily related to investments in time deposits, short-term financial products and other entities with a great development prospect, and purchase of buildings, property and equipment and leasehold improvements.

Net cash used in investing activities was RMB156.4 million in 2016, consisting of purchase of short-term investment of approximately RMB1,937.0 million, purchase of time deposits of approximately RMB421.2 million, purchase of four office buildings, mainly for teaching purpose, and to a lesser extent, for administrative functions, with a total consideration of RMB282.0 million, purchase of property and equipment, including computers and servers, of approximately RMB100.0 million in connection with the expansion of our network of learning centers, and payment for long-term investment and acquisition of Hanru Hangzhou of approximately RMB17.0 million, and net payment for loans to employees of approximately RMB15.4 million; and partially offset by the maturity of short-term investment of approximately RMB1,937.0 million, and maturity of time deposits of approximately RMB678.7 million.

Net cash used in investing activities was RMB72.3 million in 2015, consisting of purchase of short-term investment of approximately RMB945.0 million, purchase of time deposits of approximately RMB639.0 million, purchase of property and equipment, including computers and servers, of approximately RMB100.0 million in connection with the expansion of our network of learning centers, and payment for long-term investment and acquisition of Hanru Hangzhou of approximately RMB25.0 million; and partially offset by the maturity of short-term investment of approximately RMB945.0 million, and maturity of time deposits of approximately RMB690.3 million.

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Net cash used in investing activities was RMB734.5 million in 2014, consisting of purchases of property and equipment, including computers and servers, of approximately RMB48.4 million in connection with the expansion of our network of learning centers; purchase of time deposits of approximately RMB708.1 million; purchase of short-term investment in the amount of approximately RMB622.8 million; and partially offset by the maturity of short-term investment of approximately RMB622.8 million, and maturity of time deposits of approximately RMB22.3million.

Financing Activities

Net cash used in financing activities in 2016 was RMB78.0 million, which was primarily attributable to the payment for repurchase of treasury stock under a share repurchase plan in the amount of RMB44.4 million, payment for dividend in the amount of RMB54.0 million, and partially offset by proceeds from Issuance of Class A ordinary shares in connection with exercise of share options of RMB20.4 million.

Net cash used in financing activities in 2015 was RMB26.9 million, which was primarily attributable to the payment for repurchase of treasury stock under a share repurchase plan in the amount of RMB49.4 million, and partially offset by proceeds from Issuance of Class A ordinary shares in connection with exercise of share options of RMB22.5 million.

Net cash provided by financing activities in 2014 was RMB655.0 million, which was primarily attributable to the gross proceeds from our initial public offering of approximately RMB592.2 million, payment of costs related to our initial public offering in the amount of RMB21.7 million and net proceeds from our concurrent private placement of RMB83.1 million in April.

Capital Expenditures

Our capital expenditures are primarily related to purchase of office building, property and equipment, leasehold improvements and investments in computers, network equipment and software. Our capital expenditures were RMB48.4 million, RMB100.0 million and RMB382.0 million in 2014, 2015 and 2016, respectively. We have made and may continue to make acquisitions of businesses and properties that complement our operations. We purchased two buildings in Beijing, two buildings respectively in Qingdao and in Haikou for an aggregate price of RMB282 million in 2016. The office buildings are mainly for teaching purpose, and to a lesser extent for administrative functions. We expect our capital expenditures will continue to be significant for the near future as we continue to expand our network of learning centers. We expect to fund our future capital expenditures with our current cash, cash equivalents, time deposits and anticipated cash flow from operations.

Holding Company Structure

We are a holding company with no material operations of our own. We conduct our operations primarily through our wholly-owned subsidiaries in China. As a result, our ability to pay dividends depends upon dividends paid by our wholly-owned subsidiaries. If our wholly-owned subsidiaries or any newly formed subsidiaries incur any debt in the future, the instruments governing their debt may restrict their ability to pay dividends to us. In addition, our wholly-owned subsidiaries are permitted to pay dividends to us only out of their retained earnings, if any, as determined in accordance with PRC accounting standards and regulations. Under PRC law, each of our subsidiaries is required to set aside at least 10% of its after-tax profits each year, if any, to fund a statutory surplus reserve until such reserve reaches 50% of its registered capital. Although the statutory surplus reserves can be used to increase the registered capital and eliminate future losses in excess of retained earnings of the respective companies, the reserve funds are not distributable as cash dividends except in the event of liquidation. As a result of these PRC laws and regulations, as of December 31, 2016, we had RMB102.1 million in statutory surplus reserves that are not distributable as cash dividends. Our PRC subsidiaries have not historically paid any dividends to our offshore entities from their accumulated profits. However, we do not expect that the statutory surplus reserve requirement will materially limit our ability to pay dividends to our shareholders or our plan to expand our business because we are only required to set aside an additional RMB159.6 million to satisfy the maximum requirement of statutory surplus reserves for all of our PRC subsidiaries as of December 31, 2016. In addition, our private schools requiring reasonable returns are required to appropriate no less than 25% of their net income to a statutory development fund, whereas in the case of private schools requiring no reasonable return, this amount shall be no less than 25% of the annual increase of their net assets. As of December 31, 2016, we had RMB13.1 million in statutory development fund that are not distributable as cash dividends.

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C. Research and Development, Patents and Licenses, etc.

Research and Development

Building a reliable, scalable and secure technology infrastructure is crucial to our ability to support our live lecture broadcasts, online TTS, TMOOC.cn and the various services that we provide to our students. We manage our lecture delivery system, TTS and TMOOC.cn using a combination of commercially available software, hardware systems and proprietary technology. Since 2006, we have established a powerful online platform that enables thousands of students to simultaneously log onto our TTS and participate in activities online.

We developed our CRM software in-house to manage our student and corporate employer information, as well as to integrate our key administrative functions. We rely on our internal IT resources to upgrade the CRM system as needed.

Our research and development expenses primarily consist of a portion of the personnel costs of our instructors as determined based on the amount of time that they devote to research and development-related activities, as well as the personnel costs of our software engineers. Our research and development expenses were RMB33.5 million, RMB50.5 million and RMB65.6 million in 2014, 2015 and 2016, respectively.

Intellectual Property

Our trademarks, copyrights, domain names, trade secrets and other intellectual property rights distinguish our courses and services from those of our competitors and contribute to our ability to compete in our target markets. We rely on a combination of copyright and trademark law, trade secret protection and confidentiality agreements with senior executive officers and most other employees, to protect our intellectual property rights. In addition, we require certain of our senior executive officers and other employees to enter into agreements with us under which they acknowledge that all inventions, utility models, designs, know-how, copyrights and other forms of intellectual property made by them within the scope of their employment with us, pursuant to job assignments or using our materials and technology, or during the one year after their employment that relates to their employment with us, are our property and they should assign the same to us if we so require. We also regularly monitor any infringement or misappropriation of our intellectual property rights.

As of December 31, 2016, we had registered 192 domain names relating to our business, including our www.tedu.cn, TMOOC.cn, jobshow.cn, www.IT61.cn and www.art61.cn websites, with the Internet Corporation for Assigned Names and Numbers and China Internet Network Information Center. Tarena Tech holds 21 registered software copyrights, 35 trademarks and 190 registered domain names including www.tedu.cn. Beijing Tarena holds the domain name TMOOC.cn.

D. Trend Information

Other than as disclosed elsewhere in this annual report, we are not aware of any trends, uncertainties, demands, commitments or events for the period from January 1, 2016 to December 31, 2016 that are reasonably likely to have a material effect on our net revenues, income, profitability, liquidity or capital resources, or that would cause the disclosed financial information to be not necessarily indicative of future operating results or financial conditions.

E. Off-Balance Sheet Arrangements

Starting from 2011, Chuanbang, a credit-sourcing company in China owned by Mr. Shaoyun Han, our chief executive officer, began to offer person-to-person lending services to our students to help them pay for our tuition fees. Under the person-to-person lending service, we serve as the guarantor of the loans taken out by students. Starting from April 2013, we had stopped providing guarantees for any new student loans arranged by Chuanbang. See “Item 7. Major Shareholders and Related Party Transactions—B. Related Party Transactions—Transactions with Shareholders and Affiliates—Transactions with Chuanbang.” As of December 31, 2014, 2015 and 2016, our maximum exposure to guarantees of student loans obtained through Chuanbang was RMB1.3 million, nil and nil, respectively.

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Other than the above, we have not entered into any financial guarantees or other commitments to guarantee the payment obligations of any third parties. We have not entered into any derivative contracts that are indexed to our shares and classified as shareholders’ equity, or that are not reflected in our consolidated financial statements. Furthermore, we do not have any retained or contingent interest in assets transferred to an unconsolidated entity that serves as credit, liquidity or market risk support to such entity. We do not have any variable interest in any unconsolidated entity that provides financing, liquidity, market risk or credit support to us or engages in leasing, hedging or research and development services with us.

F. Tabular Disclosure of Contractual Obligations

The following table sets forth our contractual obligations as of December 31, 2016:

	Payment due by December 31,
	Total		2017		2018		2019		2020		2021		2022 and thereafter
	(in thousands)
Operating lease commitments(1)		421,897		116,805		100,736		70,660		47,230		32,542		53,924

Note:

(1) Represents our non-cancelable leases for our offices and learning centers.

G. Safe Harbor

This annual report on Form 20-F contains forward-looking statements that involve risks and uncertainties. All statements other than statements of historical facts are forward-looking statements. These statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, performance or achievements to be materially different from those expressed or implied by the forward-looking statements.

You can identify these forward-looking statements by words or phrases such as “may,” “will,” “expect,” “anticipate,” “aim,” “estimate,” “intend,” “plan,” “believe,” “likely to” or other similar expressions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our financial condition, results of operations, business strategy and financial needs. These forward-looking statements include, but are not limited to, statements about:

· our goals and growth strategies;

· our expectations regarding demand for and market acceptance of our courses;

· our ability to retain and increase our student enrollments;

· our ability to maintain and increase the utilization rate of our learning centers;

· our ability to offer new courses in existing and new subject areas;

· our ability to replicate the success and growth of our adult education services to the kid education market;

· our ability to maintain and increase the tuition fees of our courses;

· our ability to deepen and expand our corporate employer relationships;

· our ability to maintain our relationships with universities and colleges;

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· our future business development, results of operations and financial condition;

· the expected growth of, and trends in, the markets for our services in China;

· relevant government policies and regulations relating to our corporate structure, business and industry; and

· assumptions underlying or related to any of the foregoing.

You should read thoroughly this annual report and the documents that we refer to in this annual report with the understanding that our actual future results may be materially different from and worse than what we expect. Other sections of this annual report include additional factors which could adversely impact our business and financial performance. Moreover, we operate in an evolving environment. New risk factors and uncertainties emerge from time to time and it is not possible for our management to predict all risk factors and uncertainties, nor can we assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. We qualify all of our forward-looking statements by these cautionary statements.

You should not rely upon forward-looking statements as predictions of future events. We undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

ITEM 6. DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

A. Directors and Executive Officers

The following table sets forth information regarding our executive officers and directors as of the date of this annual report.

Directors and Executive Officers	Age	Position/Title
Shaoyun Han	46	Founder, chairman and chief executive officer
Jianguang Li	52	Director
Yongji Sun	52	Independent director
Xiaosong Zhang	53	Independent director
Ya-Qin Zhang	51	Independent director
Yuduo Yang	42	Chief financial officer
Ying Sun	40	Vice president
Yinan Qi	38	Vice president

Shaoyun Han is our founder and has served as chairman of our board of directors and chief executive officer since our inception. Before founding Tarena in September 2002, Mr. Han was deputy chief engineer and director of the software division of AsiaInfo-Linkage between 1995 and 2002, responsible for software research and development and corporate management. Mr. Han received a bachelor’s degree in computer application from Jilin University in China.

Jianguang Li has served as our director since January 2004. Mr. Li has been a partner of IDG Capital Partners since March 2006, responsible for providing venture capital and private equity investment-related advice. Between 1999 and 2006, Mr. Li served as a vice-president of IDG Technology Venture Investment Inc. Prior to joining IDG in 1999, Mr. Li worked in Crosby Assets Management Limited as an investment manager. Mr. Li has been a non-executive director of China Binary Sale Technology Limited, a company listed on the Hong Kong Stock Exchange, since April, 2015. Mr. Li received a bachelor’s degree in management from Peking University and a master’s of science degree from the University of Guelph.

Yongji Sun has served as our independent director since April 2014. Mr. Sun currently serves as the chairman of Dilato Infotech Inc. Between 2011 and 2014, Mr. Sun served as the chief executive officer of Shangxue Education Technology Inc. Between 2005 and 2011, Mr. Sun served as executive vice president of special projects and strategic relationships at HiSoft Technology International Ltd., or HiSoft . Prior to joining HiSoft in November 2005, Mr. Sun founded Beijing Tianhai Hongye International Software Co., Ltd. (Ensemble) in 2002 and served as its chief executive officer from 2003 to 2005. He founded and served as chief executive officer of Newland Network Co. from 2000 to 2002. He founded Lotus China in 1993 and served as the head of the research and development center until 1998. Mr. Sun received a bachelor’s degree from North Eastern Machinery Institute in 1985, a master’s degree in Computer Science from Nanjing Aerospace & Aeronautic University in 1988, and received a master of business administration from Babson College in 2000.

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Xiaosong Zhang has served as our independent director since April 2014. Mr. Zhang currently serves as the chief financial officer of Momo Inc., a NASDAQ-listed company. Mr. Zhang served as an independent director and chairman of the audit committee of Sungy Mobile Limited, a NASDAQ-listed mobile internet company, between November 2013 and July 2014. Mr. Zhang served as the chief financial officer of iSoftStone Holdings Limited, a NYSE-listed company, between July 2010 and April 2014, and was an independent director of iSoftStone between February 2010 and July 2010. Prior to joining iSoftStone, Mr. Zhang served as chief financial officer of BJB Career Education Company Limited from 2009 to June 2010, as chief financial officer of Emarket Holding Group, Ltd. from 2008 to 2009, as chief financial officer of Chinacars, Inc. from 2007 to 2008 and as chief financial officer of Vimicro International Corporation, a NASDAQ-listed company, from 2004 to 2007. From 2000 to 2004, Mr. Zhang was a manager and then a senior manager at the Beijing office of PricewaterhouseCoopers. From 1995 to 1999, Mr. Zhang was an auditor and then a senior auditor at the Los Angeles office of KPMG LLP. Mr. Zhang received his master degree in accountancy from University of Illinois, his master degree in professional meteorology from Saint Louis University, and his bachelor degree in meteorology from Peking University. Mr. Zhang is a Certified Public Accountant in the State of California.

Ya-Qin Zhang has served as our independent director since April 2014. Mr. Zhang has served as president of Baidu, Inc., a NASDAQ-listed company, since September 2014. Mr. Zhang has served as a director of ChinaCache International Holdings Ltd., a NASDAQ-listed company, since September 2010. Mr. Zhang served as an independent director and member of the audit committee of Autohome Inc., a NYSE-listed company, between December 2013 and January 2015. Mr. Zhang served as the chairman of Microsoft Asia-Pacific R&D Group between 2005 and September 2014 and was in charge of the research and development of Microsoft Corporation in the Asia-Pacific region. Mr. Zhang is one of the founding members of the Microsoft Research Asia lab, where he served as managing director and chief scientist, and he also founded the Advanced Technology Center in 2003. Before joining Microsoft in 1999, Mr. Zhang was a director for the Multimedia Technology Laboratory at Sarnoff Corp. and worked as a senior technical staff member for GTE Laboratories Inc. and Contel Corp. Mr. Zhang received his bachelor’s and master’s degrees in electrical engineering from the University of Science and Technology of China and a Ph.D. in electrical engineering from George Washington University.

Yuduo Yang has served as our co-chief financial officer since November 2015 and as our chief financial officer since April 2016. Prior to joining us, Mr. Yang was a vice president at Beijing Fengshun Lubao Car Auction Company Limited from March 2015 to November 2015. From December 2013 to October 2014, Mr. Yang was a finance director at Bybon Group Company Limited. From June 2010 to December 2013, Mr. Yang was a finance director at South Beauty Group, a well-known restaurant chain operator in China. Prior to that, Mr. Yang was a finance manager at Google and Lucent Technologies from December 2007 to May 2010, and from April 2005 to November 2007, respectively, and an auditing manager at KPMG Beijing Office from July 1997 to April 2005. Mr. Yang received a bachelor's degree in economics from Renmin University of China, as well as an MBA degree from Fordham University.

Ying Sun is our vice president. Ms. Sun has served as our vice president since December 2009, responsible for our nation-wide operations. Ms. Sun joined us in June 2005 as the general manager of our Beijing learning centers. Between 2007 and 2009, she was the general manager of our northern region. From 1999 to 2005, Ms. Sun worked in Gloria Hotels and Resorts, serving in various sales and human resources-related roles. Ms. Sun received a bachelor’s degree in tourism economics management from Dongbei University of Finance and Economics in China.

Yinan Qi is our vice president. Mr. Qi has served as our vice president since September 2013, responsible for student recruitment through retail channels. Mr. Qi served as our general manager of northern region between 2010 and 2014, responsible for our operations in Northern China. Mr. Qi joined us in March 2007, previously serving in roles including the deputy general manager of northern region, deputy general manager of our Beijing learning centers and director of our Hangzhou learning center. Prior to joining us, Mr. Qi served as the general manager of the Beihang campus of GAMFE between 2005 and 2006 and as director of technology at Zhonghe Wangxun (Beijing) Information Technology Co., Ltd. between 2002 and 2005. Mr. Qi received a bachelor’s degree in optoelectronic technology from China Jiliang University and a master’s degree in multimedia technologies from the University of Science and Technology Beijing.

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B. Compensation of Directors and Executive Officers

For the fiscal year ended December 31, 2016, we paid an aggregate of approximately RMB2.6 million in cash to our executive officers, and we paid an aggregate of RMB0.7 million in cash to our non-executive directors. For share incentive grants to our directors and executive officers, see “—Share Incentive Plan.”

Our PRC subsidiaries and consolidated affiliated entities are required by law to make contributions equal to certain percentages of each employee’s salary for his or her pension insurance, medical insurance, housing fund, unemployment and other statutory benefits. In July 2016, we purchased a health insurance policy for Mr. Shaoyun Han with a total premium of RMB31,097 and a sum insured of RMB8.0 million.Other than the above-mentioned statutory contributions mandated by applicable PRC law and the health insurance policy, we have not set aside or accrued any amount to provide pension, retirement or other similar benefits to our executive officers and directors.

Employment Agreements and Indemnification Agreements

We have entered into employment agreements with each of our executive officers. Under these agreements, each of our executive officers is employed for a specified time period. We may terminate employment for cause, at any time, without advance notice or remuneration, for certain acts of the executive officer, such as conviction or plea of guilty to a felony or any crime involving moral turpitude, negligent or dishonest acts to our detriment, or misconduct or a failure to perform agreed duties. We may also terminate an executive officer’s employment without cause upon three-month advance written notice. In such case of termination by us, we will provide severance payments to the executive officer as expressly required by applicable law of the jurisdiction where the executive officer is based. The executive officer may resign at any time with a three-month advance written notice.

Each executive officer has agreed to hold, both during and after the termination or expiry of his or her employment agreement, in strict confidence and not to use, except as required in the performance of his or her duties in connection with the employment or pursuant to applicable law, any confidential information or trade secrets of our clients or prospective clients, or the confidential or proprietary information of any third party received by us and for which we have confidential obligations. The executive officers have also agreed to disclose in confidence to us all inventions, designs and trade secrets which they conceive, develop or reduce to practice during the executive officer’s employment with us and to assign all right, title and interest in them to us, and assist us in obtaining and enforcing patents, copyrights and other legal rights for these inventions, designs and trade secrets.

In addition, each executive officer has agreed to be bound by non-competition and non-solicitation restrictions during the term of his or her employment and typically for two years following the last date of employment. Specifically, each executive officer has agreed not to (i) approach our suppliers, clients, customers or contacts or other persons or entities introduced to the executive officer in his or her capacity as a representative of us for the purpose of doing business with such persons or entities that will harm our business relationships with these persons or entities; (ii) assume employment with or provide services to any of our competitors, or engage, whether as a principal, partner, licensor or otherwise, any of our competitors, without our express consent; or (iii) seek directly or indirectly, to solicit the services of any of our employees who is employed by us on or after the date of the executive officer’s termination, or in the year preceding such termination, without our express consent.

We have also entered into indemnification agreements with each of our directors and executive officers. Under these agreements, we agree to indemnify our directors and executive officers against certain liabilities and expenses incurred by such persons in connection with claims made by reason of their being a director or officer of our company.

Share Incentive Plan

The 2008 Plan

We have adopted the 2008 Plan in September 2008. The purpose of the 2008 Plan is to attract and retain the best available personnel for positions of substantial responsibility, to provide additional incentives to selected directors, officers, employees and consultants and to promote the success of Tarena’s business by offering these individuals an opportunity to acquire a proprietary interest in Tarena.

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Under the 2008 Plan, the maximum aggregate number of shares which may be issued is 8,184,990. As of March 31, 2017, options to purchase 984,241 Class A ordinary shares are issued and outstanding, and there are 276,412 Class A ordinary shares available for future issuance upon the exercise of future grants under the 2008 Plan.

Options to purchase a total of 3,815,000 Class A ordinary shares were granted prior to our adoption of the 2008 Plan. Such options were ratified by our board and included in the 2008 Plan.

The following paragraphs summarize the terms of the 2008 Plan.

Types of Awards. The 2008 Plan permits the awards of options, restricted shares (or share appreciation rights or other similar awards) and rights to purchase restricted shares.

Plan Administration. Our board of directors or a committee appointed by our board will administer the 2008 Plan. The committee or the full board of directors, as applicable, will determine the participants to receive awards, the type and number of awards to be granted to each participant, and the terms and conditions of each award grant, among other things.

Award Agreement. Awards granted under the 2008 Plan are evidenced by an award agreement that sets forth terms, conditions and limitations for each award, which may include the term of the award and the provisions applicable in the event of the grantee’s employment or service terminates.

Eligibility. We may grant awards to our employees, directors and consultants of our company, as well as trusts or companies established in connection with any of our employee benefit plan for the benefit of our employees, directors or consultants.

Acceleration. The plan administrator may accelerate the vesting or exercisability of an option or lapsing of a repurchase or redemption right to which restricted shares may be subject.

Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is specified in the relevant award agreement.

Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. However, the maximum exercisable term is the tenth anniversary after the date of a grant.

Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or applicable laws of descent and distribution or pursuant to a qualified domestic relations order and by trusts or companies established in connection with any of our employee benefit plan for the benefit of an employee, director or consultant, except as otherwise provided by the plan administrator.

Termination of Employment or Service. In the event that a grantee ceases employment with us or ceases to provide services to us, any vested options will generally terminate after a period of time following the termination of employment if the grantee does not exercise the options during this period.

Restrictions on Issue of Shares. Options granted under the 2008 Plan can only be exercised and ordinary shares can only be issued upon the occurrence of (i) the consummation of a qualified initial public offering, (ii) the consummation of a liquidation event or (iii) the expiry of the five year period commencing from the grant date.

Termination of the 2008 Plan. Unless terminated earlier, the 2008 Plan will terminate automatically in 2018. Our board of directors has the authority to amend or terminate the plan subject to shareholder approval if required by applicable law.

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The 2014 Plan

We adopted the 2014 Plan in February 2014. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, or the Award Pool, is 1,833,696, provided that the shares reserved in the Award Pool shall be increased on the first day of each calendar year, commencing with January 1, 2015, if the unissued shares reserved in the Award Pool on such day account for less than 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year, as a result of which increase the shares unissued and reserved in the Award Pool immediately after each such increase shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year. The number of Class A ordinary shares available for future issuance upon the exercise of future grants under the 2014 Plan was 1,207,867 as of January 1, 2017. As of March 31, 2017, options to purchase 2,340,140 Class A ordinary shares are issued and outstanding under the 2014 Plan and 121,593 restricted share units were granted and outstanding under the 2014 Plan. The following paragraphs summarize the terms of the 2014 Plan.

Types of Awards. The 2014 Plan permits the awards of options, restricted shares and restricted share units.

Plan Administration. Our board or a committee of one or more members of our board duly authorized for the purpose of the 2014 Plan can act as the plan administrator.

Award Agreement. Options, restricted shares or restricted share units granted under the 2014 Plan are evidenced by an award agreement that sets forth the terms, conditions and limitations for each grant.

Eligibility. We may grant awards to our employees, consultants or directors. However, we may grant options that are intended to qualify as incentive share options only to our employees and employees of our parent companies and subsidiaries.

Acceleration of Awards upon Change in Control. If a change in control, liquidation or dissolution of our company occurs, the plan administrator may, in its sole discretion, provide for (i) all awards outstanding to terminate at a specific time in the future and give each participant the right to exercise the vested portion of such awards during a specific period of time, or (ii) the purchase of any award for an amount of cash equal to the amount that could have been attained upon the exercise of such award, or (iii) the replacement of such award with other rights or property selected by the plan administrator in its sole discretion, or (iv) payment of award in cash based on the value of ordinary shares on the date of the change-in-control transaction plus reasonable interest.

Exercise of Options. The plan administrator determines the exercise price for each award, which is stated in the award agreement. The vested portion of option will expire if not exercised prior to the time as the plan administrator determines at the time of its grant. However, the maximum exercisable term is the tenth anniversary after the date of a grant.

Exercise Price of Options. The exercise price in respect of any option shall be determined by the plan administrator and set forth in the award agreement which may be a fixed or variable price related to the fair market value of the shares. The exercise price per share subject to an option may be amended or adjusted in the absolute discretion of the plan administrator, the determination of which shall be final, binding and conclusive.

Vesting Schedule. In general, the plan administrator determines the vesting schedule, which is set forth in the award agreement.

Transfer Restrictions. Awards may not be transferred in any manner by the recipient other than by will or the laws of descent and distribution, except as otherwise provided by the plan administrator.

Termination. Unless terminated earlier, the 2014 Plan will terminate automatically in 2024.

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The following table summarizes, as of March 31, 2017, the outstanding options granted to our directors and executive officers under our share plan.

Name	Ordinary Shares Underlying Options Awarded		Exercise Price (US$/Share)		Date of Grant		Date of Expiration
Shaoyun Han		*		4.360		February 20, 2014		February 19, 2024
		555,524		1.830		February 20, 2014		February 19, 2024
		*		4.360		March 1, 2015		February 28, 2025
		*		1.830		December 31, 2016		December 29, 2026
Jianguang Li		*		0.058		January 1, 2004		September 21, 2023
Yongji Sun		—
Xiaosong Zhang		—
Ya-Qin Zhang		—
Yuduo Yang		*		1.000		May 17, 2016		May 15, 2026
		*		1.000		January 1, 2017		December 31, 2026
Ying Sun		*		1.830		January 1, 2013		September 21, 2023
		*		4.360		February 20, 2014		February 19, 2024
		*		4.360		March 1, 2015		February 28, 2025
		*		1.000		January 1, 2016		December 31, 2026
		*		1.830		December 31, 2016		December 29, 2026
		*		1.000		January 1, 2017		December 31, 2026
Yinan Qi		*		1.830		January 1, 2013		September 21, 2023
		*		4.360		February 20, 2014		February 19, 2024
		*		4.360		March 1, 2015		February 28, 2025
		*		4.360		July 1, 2015		June 30, 2025
		*		1.000		January 1, 2016		December 31, 2025
		*		1.000		January 1, 2017		December 31, 2026
Total		1,322,347

* The aggregate number of ordinary shares underlying the outstanding options held by this individual is less than 1% of our total outstanding shares as of March 31, 2017.

The following table summarizes, as of March 31, 2017, the outstanding restricted share units we granted to our directors and executive officers under the 2014 Plan.

Name	Number of Class A Ordinary Shares Underlying Restricted Share Units		Date of Grant
Shaoyun Han		—
Jianguang Li		—
Yongji Sun		*	April 3, 2016
Xiaosong Zhang		*	April 3, 2016
Ya-Qin Zhang		*	April 3, 2016
Yuduo Yang		*	February 28, 2017
Ying Sun		—
Yinan Qi		*	February 28, 2017
Total		*

* Less than 1% of our total outstanding shares as of March 31, 2017.

As of March 31, 2017, other individuals as a group hold outstanding options to purchase a total of 2,002,034 Class A ordinary shares of our company, with exercise prices ranging from US$0.058 to US$4.36 per share.

C. Board Practices

Board of Directors

Our board of directors currently consists of five directors. A director is not required to hold any shares in our company. Subject to the rules of the NASDAQ Global Select Market and disqualification by the chairman of the relevant board meeting, a director may vote with respect to any contract, proposed contract, or arrangement in which he or she is materially interested. The board may exercise all the powers of the company to borrow money, mortgage its business, property and uncalled capital, and issue debentures or other securities whenever money is borrowed or as security for any obligation of the company or of any third party. There is no age limit requirement for directors. The service agreements between us and the directors do not provide benefits upon termination of their services.

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Committees of the Board of Directors

We have an audit committee, a compensation committee and a nominating and corporate governance committee under the board of directors. We have adopted a charter for each of the three committees. Each committee’s members and functions are described below.

Audit Committee. Our audit committee consists of Messrs. Xiaosong Zhang, Yongji Sun and Ya-Qin Zhang and is chaired by Mr. Xiaosong Zhang. Each member of our audit committee satisfies the “independence” requirements of Rule5605(c)(2) of the NASDAQ Stock Market Rules and meets the independence standards under Rule 10A-3 under the Securities Exchange Act of 1934, as amended, or the Exchange Act. We have determined that Mr. Xiaosong Zhang qualifies as an “audit committee financial expert.” The audit committee oversees our accounting and financial reporting processes and the audits of the financial statements of our company. The audit committee is responsible for, among other things:

· selecting the independent registered public accounting firm and pre-approving all auditing and non-auditing services permitted to be performed by the independent registered public accounting firm;

· reviewing with the independent registered public accounting firm any audit problems or difficulties and management’s response;

· reviewing and approving all proposed related party transactions, as defined in Item 404 of Regulation S-K under the Securities Act;

· discussing the annual audited financial statements with management and the independent registered public accounting firm;

· reviewing major issues as to the adequacy of our internal controls and any special audit steps adopted in light of material control deficiencies;

· reviewing and reassessing annually the adequacy of our audit committee charter;

· meeting separately and periodically with management and the independent registered public accounting firm;

· monitoring compliance with our code of business conduct and ethics, including reviewing the adequacy and effectiveness of our procedures to ensure proper compliance; and

· reporting regularly to the board.

Compensation Committee. Our compensation committee consists of Messrs. Ya-Qin Zhang, Yongji Sun and Xiaosong Zhang, and is chaired by Ya-Qin Zhang. Each member of our compensation committee satisfies the “independence” requirements of Rule5605(c)(2) of the NASDAQ Stock Market Rules. The compensation committee assists the board in reviewing and approving the compensation structure, including all forms of compensation, relating to our directors and executive officers. Our chief executive officer may not be present at any committee meeting during which their compensation is deliberated upon. The compensation committee is responsible for, among other things:

· reviewing and approving, or recommending to the board for its approval, the compensation for our chief executive officer and other executive officers;

· reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors;

· reviewing and recommending to the board for determination with respect to the compensation of our non-employee directors

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· selecting compensation consultant, legal counsel or other adviser only after taking into consideration all factors relevant to that person’s independence from management.

Nominating and Corporate Governance Committee. Our nominating and corporate governance committee consists of Messrs. Yongji Sun, Xiaosong Zhang and Ya-Qin Zhang, and is chaired by Mr. Yongji Sun. Each member of our nominating and corporate governance committee satisfies the “independence” requirements of Rule5605(c)(2) of the NASDAQ Stock Market Rules. The nominating and corporate governance committee assists the board in selecting individuals qualified to become our directors and in determining the composition of the board and its committees. The nominating and corporate governance committee is responsible for, among other things:

· recommending nominees to the board for election or re-election to the board, or for appointment to fill any vacancy on the board;

· reviewing annually with the board the current composition of the board with regards to characteristics such as independence, age, skills, experience and availability of service to us;

· selecting and recommending to the board the names of directors to serve as members of the audit committee and the compensation committee, as well as of the nominating and corporate governance committee itself;

· developing and reviewing the corporate governance principles adopted by the board and advising the board with respect to significant developments in the law and practice of corporate governance and our compliance with such laws and practices; and

· evaluating the performance and effectiveness of the board as a whole.

Duties of Directors

Under Cayman Islands law, our directors have a duty of loyalty to act honestly in good faith with a view to our best interests. Our directors also have a duty to exercise the skill they actually possess and such care and diligence that a reasonably prudent person would exercise in comparable circumstances. In fulfilling their duty of care to us, our directors must ensure compliance with our memorandum and articles of association. A shareholder may have the right to seek damages in our name if a duty owed by our directors is breached.

Terms of Directors and Officers

Our officers are elected by and serve at the discretion of the board. Our directors are not subject to a term of office and hold office until such time as they resign or are removed from office by ordinary resolution of our shareholders. A director will be removed from office automatically if, among other things, the director (i) becomes bankrupt or makes any arrangement or composition with his creditors; or (ii) dies or is found by our company to be of unsound mind.

D. Employees

We have dual headquartered in Beijing and Hangzhou, where our instructors, software engineers and certain general and administrative staff are based. We have divided our national network of learning centers into three regions, namely northern region, southern region, and central and western region, and we have regional offices that are responsible for managing the daily operations of learning centers located within each territory.

We had a total of 3,904, 5,066 and 6,257 employees as of December 31, 2014, 2015 and 2016, respectively. As of December 31, 2016, we had 570 employees in Beijing, 387 employees in Hangzhou and 5,300 employees in other areas within China. The following table sets forth the number of our employees, categorized by function, as of December 31, 2016:

Functions	Number of Employees
Teaching and content development		1,548
Selling and marketing		2,717
Career development		445
Employer cooperation		243
General and administration		1,304
Total		6,257

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As required by regulations in China, we participate in various employee social security plans that are organized by municipal and provincial governments, including pension, unemployment insurance, childbirth insurance, work-related injury insurance, medical insurance and housing insurance. We are required under PRC law to make contributions from time to time to employee benefit plans at specified percentages of the salaries, bonuses and certain allowances of our employees, up to a maximum amount specified by the local government.

Our employees are not covered by any collective bargaining agreement. We believe that we maintain a good working relationship with our employees, and we have not experienced any significant labor disputes.

E. Share Ownership

Except as specifically noted, the following table sets forth information with respect to the beneficial ownership of our ordinary shares as of March 31, 2017 by:

· each of our directors and executive officers; and

· each person known to us to own beneficially more than 5% of our ordinary shares.

The calculations in the table below are based on 57,313,810 ordinary shares outstanding as of March 31, 2017, comprising of 50,107,751 Class A ordinary shares and 7,206,059 Class B ordinary shares.

Beneficial ownership is determined in accordance with the rules and regulations of the SEC. In computing the number of shares beneficially owned by a person and the percentage ownership of that person, we have included shares that the person has the right to acquire within 60 days, including through the exercise of any option, warrant or other right or the conversion of any other security. These shares, however, are not included in the computation of the percentage ownership of any other person.

	Ordinary Shares Beneficially Owned
	Class A ordinary shares		Class B ordinary shares		Total ordinary shares on an as- converted basis		% of total ordinary shares on an as- converted basis		% of aggregate voting power †
Directors and Executive Officers:**
Shaoyun Han(1)		10,247,463		7,206,059		17,453,522		30.2		67.1
Jianguang Li(2)		*		—		*		*		*
Yongji Sun(3)		*		—		*		*		*
Xiaosong Zhang(4)		*		—		*		*		*
Ya-Qin Zhang(5)		*		—		*		*		*
Yuduo Yang		*		—		*		*		*
Ying Sun		*		—		*		*		*
Yinan Qi		*		—		*		*		*
All directors and executive officers as a group		10,916,392		7,206,059		18,122,451		31.2		67.5
Principal  Shareholders:
KKR funds(6)		17,073,726		7,206,059		24,279,785		42.0		72.7
AERO Holdings Limited(7)		5,865,318		—		5,865,318		10.2		4.8
Trafalgar Trading Fund Inc. (8)		3,368,837		—		3,368,837		5.9		2.8
Learningon Limited(9)		500,000		6,060,000		6,560,000		11.4		50.0
Connion Capital Limited(10)		5,308,449		—		5,308,449		9.2		4.3
Techedu Limited(11)		2,439,014		1,146,059		3,585,073		6.3		11.4

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Notes:

* Less than 1%.

** Except for Mr. Jianguang Li, Mr. Yongji Sun, Mr. Xiaosong Zhang and Mr. Ya-Qin Zhang, the business address of our directors and executive officers is Suite 10017, Building E, Zhongkun Plaza, A18 Bei San Huan West Road, Haidian District, Beijing, 100098, PRC.

† For each person and group included in this column, percentage of voting power is calculated by dividing the voting power beneficially owned by such person or group by the voting power of all of our Class A and Class B ordinary shares as a single class. Each holder of Class A ordinary shares is entitled to one vote per share and each holder of our Class B ordinary shares is entitled to ten votes per share on all matters submitted to them for a vote. Our Class A ordinary shares and Class B ordinary shares vote together as a single class on all matters submitted to a vote of our shareholders, except as may otherwise be required by law. Our Class B ordinary shares are convertible at any time by the holder thereof into Class A ordinary shares on a one-for-one basis.

(1) Represents (i) 6,060,000 Class B Ordinary Shares held by Learningon Limited, (ii) 1,146,059 Class B Ordinary Shares held by Techedu Limited, (iii) 2,439,014 Class A Ordinary Shares held by Techedu Limited, (iv) 2,000,000 Class A Ordinary Shares held by Moocon Education Limited, (v) 1,272,698 Class A Ordinary Shares held by Connion Capital Limited, (vi) 3,594,439 restricted American depositary shares (“ADSs”) representing 3,594,439 Class A Ordinary Shares held by Connion Capital Limited, (vii) 500,000 restricted ADSs representing 500,000 Class A Ordinary Shares held by Learningon Limited, and (viii) 441,312 Class A Ordinary Shares that Connion Capital Limited may purchase upon exercise of options within 60 days of March 31, 2017. Each of Connion, Learningon and Techedu is principally an investment holding vehicle. Each of Connion and Learningon is a company organized and existing under the laws of the British Virgin Islands, and is ultimately wholly owned by HANQQ Trust. TMF (Cayman) Ltd. is the trustee of HANQQ Trust, with Mr. Han as settlor and Mr. Han and his family as beneficiaries. Techedu Limited is a company organized and existing under the laws of the British Virgin Islands and is wholly owned by Mr. Shaoyun Han. Mr. Han is the sole director of each of Connion, Learningon and Techedu, which do not have any executive officer. The registered office address of each of Connion, Learningon and Techedu is the offices of Trident Trust Company, (B.V.I.) Ltd., Trident Chambers, Wickhams Cay, P.O. Box 146, Road Town, Tortola, British Virgin Islands.

(2) The business address of Mr. Li is 6/F., COFCO Plaza, No.8 Jianguomennei Ave, Jiannei St, Dongcheng District, Beijing, 100020, PRC.

(3) The business address of Mr. Sun is 4th Floor, Jingban Xinxigang, No.3, East Yumin Road, Xicheng District, Beijing, PRC.

(4) The business address of Mr. Zhang is 20th Floor, Block B, Tower 2, Wangjing SOHO, No.1 Futongdong Street, Chaoyang District, Beijing, PRC.

(5) The business address of Mr. Zhang is Baidu Campus, No. 10 Shangdi 10th Street, Haidian District, Beijing 100085 PRC.

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(6) Consists of (i) 6,826,263 Class A ordinary shares held by Talent Fortune Investment Limited, a Cayman Islands company, as of July 14, 2015 (as reported in a Schedule 13D amendment filed by KKR & Co. L.P. on July 23, 2015) and (ii) 10,247,463 Class A ordinary shares and 7,206,059 Class B ordinary shares beneficially owned by Mr. Shaoyun Han as of March 31, 2017 as a result of a convertible bond purchase agreement entered into among, inter alia, Talent Fortune Investment Limited and Mr. Shaoyun Han on July 14, 2015. Talent Fortune Holdings Limited is the sole shareholder of Talent Fortune Investment Limited. KKR China Growth Fund L.P. is the controlling member of Talent Fortune Holdings Limited. KKR Associates China Growth L.P. is the sole general partner of KKR China Growth Fund L.P. KKR China Growth Limited is the sole general partner of KKR Associates China Growth L.P. KKR Fund Holdings L.P is the sole shareholder of KKR Associates China Growth L.P. KKR Fund Holdings GP Limited is a general partner of KKR Fund Holdings L.P. KKR Group Holdings L.P. is the sole shareholder of KKR Fund Holdings GP Limited and a general partner of KKR Fund Holdings L.P. KKR Group Limited is the general partner of KKR Group Holdings L.P. KKR & Co. L.P. is the sole shareholder of KKR Group Limited. KKR Management LLC is the general partner of KKR & Co. L.P. The designated members of KKR Management LLC are Messrs. Henry R. Kravis and George R. Roberts. The business address of Talent Fortune Investment Limited is c/o KKR Asia Limited, Level 56, Cheung Kong Center, 2 Queen’s Road Central, Hong Kong. The percentage of beneficial ownership and voting power was calculated based on the total number of our ordinary shares outstanding as of March 31, 2017. As disclosed in a Schedule 13D amendment filed by KKR & Co. L.P. and its affiliated entities (collectively, “KKR Parties”) on July 23, 2015 (the “KKR 13D”), KKR Parties took the view that they may be deemed to share the beneficial ownership of our ordinary shares owned by Mr. Shaoyun Han by virtue of a convertible bond purchase agreement (the “CBPA”) entered into on July 14, 2015 among (i) Moocon Education Limited (“Moocon”), a limited liability company incorporated in the British Virgin Islands wholly owned by Mr. Shaoyun Han, (ii) Mr. Han, (iii) Talent Wise Investment Limited (“Talent”), an exempted company with limited liability incorporated in Cayman Islands indirectly controlled by KKR & Co. L.P. and its affiliated entities and (iv) Talent Fortune Investment Limited (“Talent Fortune”, together with Talent, the “Talent Parties”), an exempted company with limited liability incorporated in Cayman Islands indirectly controlled by KKR & Co. L.P. and its affiliated entities. Under the CBPA, neither Mr. Han nor any entity directly or indirectly controlled by him, excluding us (together with Mr. Han, the “Founder Entities”) may agree to have us take any of the following actions without the approval of Talent Wise, provided that the Talent Parties and their affiliates hold not less than 4,195,662 Class A ordinary shares of ours and Moocon has not redeemed the Bond (as defined in the CBPA) in full: (i) issue any securities of any type or class, carry out any equity financing or undertake any obligation in relation to any of the above, with certain exceptions; (ii) merge, amalgamate or reorganization, or acquisition exceeding US$10 million, or take any action which would result in a change of control or a transfer of an asset valued at US$10 million or more; (iii) carry out business other than education; or (iv) delist or change its listing place, or take any other actions which may affect the liquidity of the KKR Parties’ investment. In the event of Talent Wise elects to convert all of the Bond into the shares of the Moocon under the CBPA, following the occurrence of an Event of Default (as define in the CBPA), and therefore acquires the control of Moocon, Talent Wise may be deemed to beneficially own all of the shares of the Company held by Moocon. As of March 31, 2017, Moocon held 2,000,000 Class A ordinary shares of ours, representing approximately 1.6% of the total outstanding voting power of our company. The calculation of the voting power is based on 57,313,810 outstanding ordinary shares as a single class, being the sum of 50,107,751 Class A ordinary shares and 7,206,059 Class B ordinary shares outstanding as of March 31, 2017, assuming conversion of all Class B ordinary shares into Class A ordinary shares. Since Mr. Han would still control more than 50% of the total outstanding voting power of our company following the occurrence of an Event of Default, the operation of the CBPA would not result in a change of control.

(7) The number of ordinary shares beneficially owned is as of April 26, 2016, as reported in a Schedule 13G filed by AERO Holdings Limited on April 27, 2016, and consists of (i) 6,355,741 ADSs, representing 6,355,741 Class A ordinary shares, held by Orchid Asia VI, L.P. and (ii) 318,241 ADSs, representing 318,241 Class A ordinary shares, held by Orchid Asia V Co-Investment Limited. The general partner of Orchid Asia VI, L.P. is OAVI Holdings, L.P., whose general partner is Orchid Asia VI GP, Limited. Orchid Asia VI GP, Limited is wholly owned by Orchid Asia V Group Management, Ltd., which is wholly owned by Orchid Asia V Group, Limited. AERO Holdings Limited is the controlling shareholder of Orchid Asia V Group, Limited and Orchid Asia V Co-Investment Limited. Ms. Lam Lai Ming is the sole shareholder of AERO Holdings Limited. The business address of AERO Holdings Limited is Suites 6211-12, 62^nd Floor, The Center, 99 Queen’s Road, Central, Hong Kong. The percentage of beneficial ownership and voting power was calculated based on the total number of our ordinary shares outstanding as of March 31, 2017.

(8) Represents 3,368,837 Class A ordinary shares held by Trafalgar Trading Fund Inc., a Cayman Islands limited liability company, which is registered with the Cayman Islands Monetary Authority as a mutual fund. Trafalgar Trading Fund Inc. became our principle shareholder after it acquired 1,679,647 and 1,689,190 Class A ordinary shares in December 2016 and February 2017, respectively. The registered office address of Trafalgar Trading Fund Inc. is c/o Mourant Ozannes Corporate Services (Cayman) Limited 94 Solaris Avenue, P.O. Box 1348, Grand Cayman, KY1-1108, Cayman Islands. Trafalgar Trading Fund Inc. is managed by Trafalgar Capital Management (HK) Limited, with its business address at 18/F The Workstation, 43 Lyndhurst Terrace, Central, Hong Kong.

(9) Represents (i) 6,060,000 Class B ordinary shares and (ii) 500,000 restricted ADSs representing 500,000 Class A ordinary shares. The registered office address of Learingon Limited is the offices of Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146, Road Town, Tortola, the British Virgin Islands. Learingon Limited is ultimately owned by Mr. Shaoyun Han through a trust.

(10) The registered office address of Connion Capital Limited is the offices of Trident Trust Company (B.V.I.) Limited, Trident Chambers, P.O. Box 146, Road Town, Tortola, the British Virgin Islands. Connion Capital Limited is ultimately owned by Mr. Shaoyun Han through a trust.

(11) Represents (i) 2,439,014 Class A ordinary shares and (ii) 1,146,059 Class B ordinary shares.

Our ordinary shares are divided into Class A ordinary shares and Class B ordinary shares. Holders of Class A ordinary shares are entitled to one vote per share, while holders of Class B ordinary shares are entitled to ten votes per share. We issued Class A ordinary shares represented by our ADSs in our initial public offering in April 2014. Holders of our Class B ordinary shares may choose to convert their Class B ordinary shares into the same number of Class A ordinary shares at any time. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstance.

To our knowledge, we are not owned or controlled, directly or indirectly, by another corporation, by any foreign government or by any other natural or legal persons, severally or jointly. We are not aware of any arrangement that may, at a subsequent date, result in a change of control of our company.

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To our knowledge, as of March 31, 2017, 34,509,232 of our Class A ordinary shares are held by one record holder in the United States, which is the depositary of our ADS program, representing 68.9% of our total issued and outstanding Class A ordinary shares as of such date. The number of beneficial owners of our ADSs in the United States is likely to be much larger than the number of record holders of our ordinary shares in the United States. As of March 31, 2017, none of our Class B ordinary shares are held by any record holder in the United States.

For options and restricted share unit granted to our officers, directors and employees, see “—B. Compensation of Directors and Executive Officers—Share Incentive Plan.”

ITEM 7. MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

A. Major Shareholders

See “Item 6. Directors, Senior Management and Employees—E. Share Ownership.”

B. Related Party Transactions

Contractual Arrangements with our VIE

See “Item 4. Information on the Company—C. Organizational Structure.”

Transactions with Shareholders and Affiliates

Transactions with Chuanbang. Starting from the second half of 2011, Chuanbang, a company owned by our chief executive officer, Mr. Shaoyun Han, began to offer person-to-person lending to enable qualified students to borrow unsecured loans from unrelated individuals to pay for our tuition fees. Under the person-to-person lending service offered by Chuanbang to students enrolled prior to January 1, 2014, a student enters into a loan agreement with Mr. Han, as the designated representative of Chuanbang, to borrow an amount equal to our tuition fees. Mr. Han then assigns the existing loan agreement to an unrelated individual lender identified by Chuanbang, or the person-to-person lender, with us serving as the guarantor of the loan to the student. Upon the receipt of cash from the person-to-person lenders, Mr. Han remits the cash to us directly on behalf of the student for the payment of such student’s tuition fees. Chuanbang services the student loans by collecting repayments on behalf of the person-to-person lenders from students, made to an account opened in the name of Mr. Han. The “interest spread” between (i) the interest rate under the loan agreement between the student and Mr. Han and (ii) the “anticipated annual yield” under the assignment agreement between Mr. Han and the person-to-person lender represents compensation for Chuanbang’s estimated costs incurred in originating and servicing the student loans, plus the amount payable to us for guaranteeing the student loans. Chuanbang ceased offering loan services to our students enrolled since January 1, 2014.

As of December 31, 2016, our maximum exposure to guarantees of student loans was nil. All the third-party lenders were repaid.

Pursuant to our agreement with Chuanbang, Chuanbang provided cash collection service on our accounts receivable to better manage our cash collection since August 2013. The fee is calculated based on 2%~12% of the amount collected. The staff of Chuanbang includes our former employees who joined Chuanbang in July 2013. Chuanbang also provides similar cash collection service to other financial institutions. The cash collection service fees were RMB0.7 million, RMB2.1 million and RMB6.4 million for 2014, 2015 and 2016, respectively.

In September 2015, Precise, which is owned by an executive of Kohlberg Kravis Roberts & Co. L.P, or KKR, a shareholder of the Company, provided cash advances in the amount of RMB1.4 million to us in order to fund its share repurchase plan. We have fully repaid the advances in October 2015.

Registration Rights

Registration Rights Granted in 2011

In connection with our issuance of Series C preferred shares, we and all our then shareholders entered into an amended and restated shareholders agreement on September 6, 2011. Pursuant to our amended and restated shareholders agreement dated September 6, 2011, we have granted certain registration rights to certain of our shareholders. Set forth below is a description of the registration rights granted under the agreement.

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Demand Registration Rights. At any time after the completion of our initial public offering in April 2014, upon a written request from the holders of at least 10% of the registrable securities held by our preferred shareholders, we must file a registration statement covering the offer and sale of the registrable securities held by the requesting shareholders and other holders of registrable securities who choose to participate in the offering. Registrable securities include, among others, our ordinary shares issued or to be issued upon conversion of the preferred shares.

However, we are not obligated to proceed with a demand registration if we have, within the six-month period preceding the date of such request, already effected a registration under the Securities Act pursuant to the exercise of the holders’ registration rights, unless the registrable securities of the holders were excluded from such registration. We have the right to defer filing of a registration statement for up to 90 days if our board of directors determines in good faith that the filing of a registration statement would be materially detrimental to us and our shareholders, but we cannot exercise the deferral right more than once in any 12-month period.

Form F-3 Registration Rights. When we are eligible for registration on Form F-3, upon a written request from the holders of a majority of the registrable securities held by our preferred shareholders, we must file a registration statement on Form F-3 covering the offer and sale of the registrable securities.

We are not obligated to effect a Form F-3 registration, among other things, if we already effected a registration under the Securities Act pursuant to the exercise of the holders’ demand or piggyback registration rights, unless the registrable securities of the holders were excluded from such registration. We have the right to defer filing of a registration statement for up to 60 days if our board of directors determines in good faith that the filing of a registration statement would be materially detrimental to us and our shareholders, but we cannot exercise the deferral right more than once in any 12-month period.

Piggyback Registration Rights. If we propose to file a registration statement for a public offering of our ordinary shares on a form that would be suitable for registrable securities, we must offer holders of registrable securities an opportunity to include in that registration all or any part of their registrable securities. The underwriters of any underwritten offering have the right to limit the number of shares with registration rights to be included in the registration statement, subject to certain limitations.

Expenses of Registration. We will pay all expenses relating to any demand, Form F-3, or piggyback registration, with certain limited exceptions.

Termination of Obligations. We shall have no obligation to effect any demand, Form F-3, or piggyback registration on the earlier of (a) the date that is five years after the completion of our initial public offering, or (b) as to any holder of registrable securities, the time when all registrable securities held by such holder may be sold in any 90-day period without registration pursuant to Rule 144 under the Securities Act.

Registration Rights Granted in 2015

We entered into a registration rights agreement with Talent Fortune Investment Limited, or KKR, an affiliate of KKR & Co. L.P., on July 17, 2015, pursuant to which we granted certain registration rights to KKR. Set forth below is a description of the registration rights granted under the agreement.

Securities Act Registration on Request. Upon a written request from KKR, we must use reasonable best efforts to effect a registration under the Securities Act covering the registrable securities requested by KKR to register.

However, we are not obligated to effect more than a total of three registration requests and at least a period of 180 days shall have elapsed since the previous registration request and the previous registration in which KKR had an opportunity to participate pursuant to its piggyback registration rights. ..

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Piggyback Registration Rights. If we propose to register our securities under the Securities Act, subject to limited exceptions, we must offer KKR an opportunity to include in that registration all or any part of its registrable securities. The managing underwriter of any underwritten offering have the right to limit the number of shares with registration rights to be included in the registration statement, subject to certain limitations.

Postponements. We have the right to defer filing of a registration statement for up to 90 days if our board of directors determines in good faith that the filing of a registration statement would be materially adversely affect us and our shareholders, but we cannot exercise the deferral right more than once in any 12-month period.

Expenses of Registration. We will pay all expenses relating to any requested or piggyback registration, with certain limited exceptions.

Termination of Obligations. Our obligations under this registration rights agreement shall terminate when all registrable shares of KKR could be sold without restriction under Rule 144(e) under the Securities Act within a 90-day period.

Employment Agreements and Indemnification Agreements

See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Employment Agreements and Indemnification Agreements.”

Share Option Grants

See “Item 6. Directors, Senior Management and Employees—B. Compensation of Directors and Executive Officers—Share Incentive Plan.”

C. Interests of Experts and Counsel

Not applicable.

ITEM 8. FINANCIAL INFORMATION

A. Consolidated Statements and Other Financial Information

We have appended consolidated financial statements filed as part of this annual report.

Legal Proceedings

We are currently not a party to, and are not aware of any threat of, any legal, arbitration or administrative proceedings that, in the opinion of our management, are likely to have a material and adverse effect on our business, financial condition or results of operations. From time to time, we have become, and may in the future become, a party to various legal or administrative proceedings or claims arising in the ordinary course of our business. Regardless of the outcome, legal or administrative proceedings or claims may have an adverse impact on us because of defense and settlement costs, diversion of management attention and other factors.

Dividend Policy

On February 28, 2017, we declared a cash dividend of RMB1.10 (US$0.16) per ordinary share. Holders of our ADS, each representing one Class A ordinary share, are accordingly entitled to the cash dividend of RMB1.10 (US$0.16) per ADS, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. The cash dividend was paid on or about May 30, 2017 to shareholders of record as of the close of trading on March 27, 2017. The aggregate amount of cash dividends paid was approximately RMB64.9 million (US$9.5 million), which was funded by surplus cash on our balance sheet. We are a holding company incorporated in the Cayman Islands. PRC regulations may restrict the ability of our PRC subsidiaries to pay dividends to us. See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Dividend Distribution.”

Our board of directors has discretion as to whether to distribute dividends, subject to applicable laws. Subject to our ongoing financial performance, cash position, budget and business plan and market conditions, we may, on an annual basis, consider paying a special dividend. If we pay any dividends, we will pay our ADS holders to the same extent as holders of our ordinary shares, subject to the terms of the deposit agreement, including the fees and expenses payable thereunder. Cash dividends on our ordinary shares, if any, will be paid in U.S. dollars.

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B. Significant Changes

Except as disclosed elsewhere in this annual report, we have not experienced any significant changes since the date of our audited consolidated financial statements included in this annual report.

ITEM 9. THE OFFER AND LISTING

A. Offering and Listing Details.

Our ADSs, each representing one Class A ordinary share, have been listed on the NASDAQ Global Select Market since April 3, 2014 under the symbol “TEDU.” Update until April 24, 2017 (starting from April 3, 2014), the trading price of our ADSs on the NASDAQ Global Select Market ranged from US$6.54 to US$20.00 per ADS.

The following table provides the high and low trading prices for our ADSs on the NASDAQ Global Select Market for the periods indicated below.

	Trading Price
	High		Low
Annual Highs and Lows
2014 (since April 3, 2014)		15.85		6.54
2015		14.83		6.65
2016		17.75		8.35
Quarterly Highs and Lows
First Quarter 2015		12.50		9.26
Second Quarter 2015		14.83		9.28
Third Quarter 2015		13.31		6.65
Fourth Quarter 2015		11.45		8.89
First Quarter 2016		11.38		8.28
Second Quarter 2016		11.61		9.68
Third Quarter 2016		15.19		9.87
Fourth Quarter 2016		17.75		13.92
First Quarter 2017		19.57		14.1
Monthly Highs and Lows
October 2016		16.23		14.11
November 2016		17.75		13.92
December 2016		17.26		14.54
January 2017		15.49		14.79
February 2017		15.44		14.10
March 2017		19.57		15.36
April 2017 (through April 24, 2017)		20.00		18.39

B. Plan of Distribution

Not applicable.

C. Markets

Our ADSs, each representing one Class A ordinary share, have been listed on the NASDAQ Global Select Market under the symbol “TEDU” since April 3, 2014.

D. Selling Shareholders

Not applicable.

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E. Dilution

Not applicable.

F. Expenses of the Issue

Not applicable.

ITEM 10. ADDITIONAL INFORMATION

A. Share Capital

Not applicable.

B. Memorandum and Articles of Association

The following are summaries of material provisions of our currently effective fifth amended and restated memorandum and articles of association, as well as the Companies Law (2016 Revision) insofar as they relate to the material terms of our ordinary shares.

Registered Office and Objects

Our registered office in the Cayman Islands is located at the offices of Conyers Trust Company (Cayman) Limited, Cricket Square, Hutchins Drive, PO Box 2681, Grand Cayman KY1-1111, Cayman Islands. As set forth in article 3 of our fifth amended and restated memorandum of association, the objects for which our company is established are unrestricted.

Board of Directors

See “Item 6. Directors, Senior Management and Employees—C. Board Practices.”

Ordinary Shares

General. Holders of Class A ordinary shares and Class B ordinary shares have the same rights except for voting and conversion rights. All of our outstanding ordinary shares are fully paid and non-assessable. Certificates representing the ordinary shares are issued in registered form. Our shareholders who are non-residents of the Cayman Islands may freely hold and transfer their ordinary shares.

Dividends. The holders of our ordinary shares are entitled to such dividends as may be declared by our board of directors, provided that dividends may be declared and paid out of funds legally available therefor, namely out of either profit, our share premium account or any other fund or account which can be authorized for this purpose in accordance with the Companies Law. Holders of Class A ordinary shares and Class B ordinary shares will be entitled to the same amount of dividends, if declared.

Voting Rights. Holders of our ordinary shares are entitled to ten calendar days notice of meetings of our shareholders. In respect of all matters subject to a shareholders’ vote, each Class A ordinary share is entitled to one vote, and each Class B ordinary share is entitled to ten votes, voting together as one class. Voting at any meeting of shareholders is by show of hands unless a poll is demanded. A poll may be demanded by the chairman of such meeting or any shareholder present in person or by proxy.

A quorum required for a meeting of shareholders consists of two shareholders who hold at least 50% of all voting power of our share capital in issue at the meeting present in person or by proxy or, if a corporation or other non-natural person, by its duly authorized representative. Shareholders’ meetings may be held annually. Each general meeting, other than an annual general meeting, shall be an extraordinary general meeting. Extraordinary general meetings may be called by a majority of our board of directors or our chairman or upon a requisition of shareholders holding at the date of deposit of the requisition not less than 1/3 of the aggregate voting power of our company. Advance notice of at least ten calendar days is required for the convening of our annual general meeting and other general meetings.

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An ordinary resolution to be passed at a meeting by the shareholders requires the affirmative vote of a simple majority of the votes attaching to the ordinary shares cast at a meeting, while a special resolution requires the affirmative vote of no less than 2/3 of the votes cast attaching to the outstanding ordinary shares at a meeting. A special resolution will be required for important matters such as a change of name or making changes to our fifth amended and restated memorandum and articles of association.

Conversion. Each Class B ordinary share is convertible into one Class A ordinary share at any time by the holder thereof. Class A ordinary shares are not convertible into Class B ordinary shares under any circumstances. Upon any transfer of Class B ordinary shares by a holder to any person or entity which is not an affiliate of such holder, such Class B ordinary shares shall be automatically and immediately converted into the equivalent number of Class A ordinary shares.

Transfer of Ordinary Shares. Subject to the restrictions set out below and the provisions above in respect of Class B ordinary shares, any of our shareholders may transfer all or any of his or her ordinary shares by an instrument of transfer in the usual or common form or any other form approved by our board of directors.

Our board of directors may, in its absolute discretion, decline to register any transfer of any ordinary share which is not fully paid up or on which we have a lien. Our board of directors may also decline to register any transfer of any ordinary share unless:

· the instrument of transfer is lodged with us, accompanied by the certificate for the ordinary shares to which it relates and such other evidence as our board of directors may reasonably require to show the right of the transferor to make the transfer;

· the instrument of transfer is in respect of only one class of ordinary shares;

· the instrument of transfer is properly stamped, if required;

· in the case of a transfer to joint holders, the number of joint holders to whom the ordinary share is to be transferred does not exceed four; and

· a fee of such maximum sum as the NASDAQ Global Market may determine to be payable or such lesser sum as our directors may from time to time require is paid to us in respect thereof.

If our directors refuse to register a transfer they shall, within three months after the date on which the instrument of transfer was lodged, send to each of the transferor and the transferee notice of such refusal.

The registration of transfers may, after compliance with any notice required of the NASDAQ Global Market, be suspended and the register closed at such times and for such periods as our board of directors may from time to time determine, provided, however, that the registration of transfers shall not be suspended nor the register closed for more than thirty days in any year as our board may determine.

Liquidation. On a return of capital on winding up or otherwise (other than on conversion, redemption or purchase of ordinary shares), assets available for distribution among the holders of ordinary shares shall be distributed among the holders of the ordinary shares on a pro rata basis. If our assets available for distribution are insufficient to repay all of the paid-up capital, the assets will be distributed so that the losses are borne by our shareholders proportionately. Any distribution of assets or capital to a holder of a Class A ordinary share and a holder of a Class B ordinary share will be the same in any liquidation event.

Calls on Ordinary Shares and Forfeiture of Ordinary Shares. Our board of directors may from time to time make calls upon shareholders for any amounts unpaid on their ordinary shares in a notice served to such shareholders at least fourteen calendar days prior to the specified time of payment. The ordinary shares that have been called upon and remain unpaid are subject to forfeiture.

Repurchase and Redemption of Ordinary Shares. The Companies Law and our fifth amended and restated articles of association permit us to purchase our own shares. In accordance with our fifth amended and restated articles of association and provided the necessary shareholders or board approval have been obtained, we may issue shares on terms that are subject to redemption, at our option or at the option of the holders of these shares, on such terms and in such manner, including out of capital, as may be determined by our board of directors.

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Variations of Rights of Shares. All or any of the special rights attached to any class of shares may, subject to the provisions of the Companies Law, be varied with the written consent of the holders of three-fourths of the issued shares of that class or with the sanction of a special resolution passed at a general meeting of the holders of the shares of that class. The rights conferred upon the holders of the shares of any class issued shall not, unless otherwise expressly provided by the terms of issue of the shares of that class, be deemed to be varied by the creation or issue of further shares ranking pari passu with such existing class of shares.

Inspection of Books and Records. Holders of our ordinary shares have no general right under Cayman Islands law to inspect or obtain copies of our list of shareholders or our corporate records. However, we will provide our shareholders with annual audited financial statements. See “Item 10. Additional Information—H. Documents on Display.”

Issuance of Additional Shares. Our fifth amended and restated memorandum of association authorizes our board of directors to issue additional ordinary shares from time to time as our board of directors shall determine, to the extent of available authorized but unissued shares.

Our fifth amended and restated memorandum of association also authorizes our board of directors to establish from time to time one or more series of preferred shares and to determine, with respect to any series of preferred shares, the terms and rights of that series, including:

· the designation of the series;

· the number of shares of the series;

· the dividend rights, dividend rates, voting rights; and

· the rights and terms of redemption and liquidation preferences.

Our board of directors may issue preferred shares without action by our shareholders to the extent authorized but unissued. Issuance of these shares may dilute the voting power of holders of ordinary shares.

Anti-Takeover Provisions. Some provisions of our fifth amended and restated memorandum and articles of association may discourage, delay or prevent a change of control of our company or management that shareholders may consider favorable, including provisions that authorize our board of directors to issue preferred shares in one or more series and to designate the price, rights, preferences, privileges and restrictions of such preferred shares without any further vote or action by our shareholders.

Exempted Company. We are an exempted company with limited liability under the Companies Law. “Limited liability” means that the liability of each shareholder is limited to the amount unpaid by the shareholder on the shares of the company. The Companies Law distinguishes between ordinary resident companies and exempted companies. Any company that is registered in the Cayman Islands but conducts business mainly outside of the Cayman Islands may apply to be registered as an exempted company. The requirements for an exempted company are essentially the same as for an ordinary company except that an exempted company:

· does not have to file an annual return of its shareholders with the Registrar of Companies;

· is not required to open its register of members for inspection;

· does not have to hold an annual general meeting;

· may issue negotiable or bearer shares or shares with no par value;

· may obtain an undertaking against the imposition of any future taxation (such undertakings are usually given for 20 years in the first instance);

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· may register by way of continuation in another jurisdiction and be deregistered in the Cayman Islands;

· may register as a limited duration company; and

· may register as a segregated portfolio company.

Our fifth amended and restated memorandum and articles of association do not provide provisions that are different from those that are applicable to an exempted company as set forth above, except that they do not permit us to issue bearer shares or shares with no par value.

C. Material Contracts

Commodity Housing Presale Contracts

Tarena Technologies Inc., our subsidiary, entered into a commodity housing presale contract, or Housing Presale Contract I, with Beijing Jingkai-gongda Investment Management Co., or Beijing Jingkai on May 5, 2016. Pursuant to the Housing Presale Contract I, Beijing Jingkai agreed to sell, and Tarena Technologies Inc. agreed to purchase, a building numbered as B5 located in D1F1 of Beijing Economic-Technological Development Area, at a total price of RMB114.6 million, in accordance with the terms and conditions set out in the Housing Presale Contract I.

Tarena Software Technology (Hangzhou) Co., Ltd., our subsidiary, entered into a commodity housing presale contract, or Housing Presale Contract II, with Beijing Jingkai on November 5, 2016. Pursuant to the Housing Presale Contract II, Beijing Jingkai agreed to sell, and Tarena Software Technology (Hangzhou) Co., Ltd. agreed to purchase, a building numbered as B7 located in D1F1 of Beijing Economic-Technological Development Area, at a total price of RMB118.3 million, in accordance with the terms and conditions set out in the Housing Presale Contract II.

We have not entered into any material contracts other than in the ordinary course of business and other than those described above and in “Item 4. Information on the Company” or elsewhere in this annual report on Form 20-F.

D. Exchange Controls

See “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Foreign Exchange Registration of Overseas Investment by PRC Residents,” “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Foreign Currency Exchange” and “Item 4. Information on the Company—B. Business Overview—Government Regulations—Regulations on Dividend Distribution.”

E. Taxation

The following summary of certain Cayman Islands, PRC and United States federal income tax consequences of an investment in our ADSs or ordinary shares is based upon laws and relevant interpretations thereof in effect as of the date of this annual report, all of which are subject to change or differing interpretation, possibly with retroactive effect. This summary does not deal with all possible tax consequences relating to an investment in our ADSs or ordinary shares, such as the tax consequences under other federal, state, local and other tax laws not addressed herein. To the extent that the discussion relates to matters of Cayman Islands tax law, it represents the opinion of Conyers Dill & Pearman, our Cayman Islands counsel. To the extent that the discussion relates to matters of PRC tax law, it represents the opinion of Han Kun Law Offices, our PRC counsel.

Cayman Islands Taxation

The Cayman Islands currently levies no taxes on individuals or corporations based upon profits, income, gains or appreciation and there is no taxation in the nature of inheritance tax or estate duty. There are no other taxes levied by the Government of the Cayman Islands that are likely to be material to holders of ADSs or ordinary shares. The Cayman Islands is a party to double taxation treaty with the United Kingdom but otherwise is not party to any double tax treaties. There are no exchange control regulations or currency restrictions in the Cayman Islands.

Pursuant to Section 6 of the Tax Concessions Law (2011 Revision) of the Cayman Islands, we have obtained an undertaking from the Governor-in-Council:

(i) that no law which is enacted in the Cayman Islands imposing any tax to be levied on profits or income or gains or appreciation shall apply to us or our operations; and

(ii) that the aforesaid tax or any tax in the nature of estate duty or inheritance tax shall not be payable on our shares, debentures or other obligations.

The undertaking for us is for a period of twenty years from March 25, 2014.

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People’s Republic of China Taxation

Under the EIT Law, an enterprise established outside the PRC with “de facto management bodies” within the PRC is considered a “resident enterprise” for PRC enterprise income tax purposes and is generally subject to a uniform 25% enterprise income tax rate on its worldwide income as well as tax reporting obligations. Under the Implementation Rules to the EIT Law, a “de facto management body” is defined as a body that has material and overall management and control over the manufacturing and business operations, personnel and human resources, finances and properties of an enterprise. In addition, Circular 82 issued by the SAT in April 2009, as amended in January 2014, specifies that certain offshore-incorporated enterprises controlled by PRC enterprises or PRC enterprise groups will be classified as PRC resident enterprises if the following are located or resident in the PRC: senior management personnel and departments that are responsible for daily production, operation and management; financial and personnel decision making bodies; key properties, accounting books, company seal, minutes of board meetings and shareholders’ meetings; and half or more of the senior management or directors having voting rights. Further to Circular 82, the SAT issued the Bulletin 45, which took effect in September 2011, to provide more guidance on the implementation of Circular 82. Bulletin 45 provides for procedures and administration details of determination on PRC resident enterprise status and administration on post-determination matters. We do not believe that Tarena International, Inc. is a PRC resident enterprise. If the PRC tax authorities determine that Tarena International, Inc. is a PRC resident enterprise for PRC enterprise income tax purposes, a number of unfavorable PRC tax consequences could follow. One example is that a 10% withholding tax would be imposed on dividends we pay to our non-PRC enterprise shareholders and with respect to gains derived by our non-PRC enterprise shareholders from transferring our shares or ADSs and potentially a 20% of withholding tax would be imposed on dividends we pay to our non-PRC individual shareholders and with respect to gains derived by our non-PRC individual shareholders from transferring our shares or ADSs.

Under the EIT Law, dividends generated from retained earnings after January 1, 2008 from a PRC company and distributed to a foreign parent company are subject to a withholding tax rate of 10% unless the foreign parent’s jurisdiction of incorporation has a tax treaty with China that provides for a preferential withholding arrangement. Pursuant to the Hong Kong Tax Treaty, which became effective on December 8, 2006, a company incorporated in Hong Kong, such as Tarena HK, will be subject to withholding income tax at a rate of 5% on dividends it receives from its PRC subsidiary if it holds a 25% or more interest in that particular PRC subsidiary, or 10% if it holds less than a 25% interest in that subsidiary. However, based on Circular 81, the 5% withholding tax rate does not automatically apply and certain requirements must be satisfied, including without limitation that (a) the Hong Kong enterprise must be the beneficial owner of the relevant dividends; and (b) the Hong Kong enterprise must directly hold at least 25% share ownership in the PRC enterprise during the 12 consecutive months preceding its receipt of the dividends. However, a transaction or arrangement entered into for the primary purpose of enjoying a preferential tax treatment should not be a reason for the application of the preferential tax treatment under the Hong Kong Tax Treaty. If a taxpayer inappropriately is entitled to such preferential tax treatment, the competent tax authority has the power to make appropriate adjustments. The SAT promulgated Circular 601, which provides that tax treaty benefits will be denied to “conduit” or shell companies without business substance, and a beneficial ownership analysis will be used based on a “substance-over-the-form” principle to determine whether or not to grant tax treaty benefits. On June 29, 2012, the SAT further issued the Announcement 30, which provides that a comprehensive analysis should be made when determining the beneficial owner status based on various factors supported by various types of documents including the articles of association, financial statements, records of cash movements, board meeting minutes, board resolutions, staffing and materials, relevant expenditures, functions and risk assumption as well as relevant contracts and other information. Based on Circular 60, non-resident enterprises are not required to obtain pre-approval from the relevant tax authority in order to enjoy the reduced withholding tax rate. Instead, non-resident enterprises and their withholding agents may, by self-assessment and on confirmation that the prescribed criteria to enjoy the tax treaty benefits are met, directly apply the reduced withholding tax rate, and file necessary forms and supporting documents when performing tax filings, which will be subject to post-tax filing examinations by the relevant tax authorities. However, if a competent tax authority finds out that it is necessary to apply the general anti-tax avoidance rules, it may start general investigation procedures for anti-tax avoidance and adopt corresponding measures for subsequent administration.

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The State Administration of Tax issued a Public Notice, or Public Notice 16, on March 18, 2015, to further regulate and strengthen the transfer pricing administration on outbound payments by a PRC enterprise to its overseas related parties. In addition to emphasizing that outbound payments by a PRC enterprise to its overseas related parties must comply with arm’s-length principles, Public Notice 16 specifies certain circumstances whereby such payments are not deductible for the purpose of the enterprise income tax of the PRC enterprise, including payments to an overseas related party which does not undertake any function, bear any risk or has no substantial operation or activities, payments for services which do not enable the PRC enterprise to obtain direct or indirect economic benefits, or for services that are unrelated to the functions and risks borne by the PRC enterprise, or relate to the protection of the investment interests of the direct or indirect investor of the PRC enterprise, or for services that have already been purchased from a third party or undertaken by the PRC enterprise itself, and royalties paid to an overseas related party which only owns the legal rights of the intangible assets but has no contribution to the creation of such intangible assets. Although we believe all our related party transactions, including all payments by our PRC subsidiaries and consolidated affiliated entities to our non-PRC entities, are made on an arm’s-length basis and our estimates are reasonable, the ultimate decisions by the relevant tax authorities may differ from the amounts recorded in our financial statements and may materially affect our financial results in the period or periods for which such determination is made.

It is unclear whether, if we are considered a PRC resident enterprise, holders of our shares or ADSs would be able to claim the benefit of income tax treaties or agreements entered into between China and other countries or areas. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—Under the PRC Enterprise Income Tax Law, we may be classified as a PRC “resident enterprise” for PRC enterprise income tax purposes. Such classification would likely result in unfavorable tax consequences to us and our non-PRC shareholders and have a material adverse effect on our results of operations and the value of your investment.”

The SAT issued a Circular 59 together with the Ministry of Finance in April 2009 and a Circular 698 in December 2009. Both Circular 59 and Circular 698 became effective retroactively as of January 1, 2008. By promulgating and implementing these two circulars, the PRC tax authorities have enhanced their scrutiny over the direct or indirect transfer of equity interests in a PRC resident enterprise by a non-resident enterprise. Under Circular 698, where a non-resident enterprise transfers the equity interests of a PRC “resident enterprise” indirectly by disposition of the equity interests of an overseas holding company, and such overseas holding company is located in certain low tax jurisdictions, the non-resident enterprise, being the transferor, must report to the relevant tax authority of the PRC “resident enterprise” this Indirect Transfer. The PRC tax authority may disregard the existence of the overseas holding company if it lacks a reasonable commercial purpose and was established for the purpose of reducing, avoiding or deferring PRC tax. As a result, gains derived from such Indirect Transfer may be subject to PRC tax at a rate of up to 10%. On February 3, 2015, the SAT issued a Public Notice [2015] No.7, or Public Notice 7, to supersede the existing tax rules in relation to the Indirect Transfer as set forth in Circular 698, while the other provisions of Circular 698 remain in force. Public Notice 7 introduces a new tax regime that is significantly different from that under Circular 698. Public Notice extend its tax jurisdiction to capture not only Indirect Transfer as set forth under Circular 698 but also transactions involving transfer of immovable property in China and assets held under the establishment and place, in China of a foreign company through the offshore transfer of a foreign intermediate holding company. Public Notice 7 also addresses the term transfer of the equity interest in a foreign intermediate holding company widely. In addition, Public Notice 7 provides clearer criteria than Circular 698 on how to assess reasonable commercial purposes and introduces safe harbor scenarios applicable to internal group restructurings. Where non-resident investors were involved in our private equity financing, if such transactions were determined by the tax authorities to lack reasonable commercial purpose, we and our non-resident investors may become at risk of being taxed under Circular 698 and Public Notice 7 and may be required to expend valuable resources to comply with Circular 698 and Public Notice 7 or to establish that we should not be taxed under Circular 698 and Public Notice 7. The PRC tax authorities have the discretion under SAT Circular 59, Circular 698 and Public Notice 7 to make adjustments to the taxable capital gains based on the difference between the fair value of the equity interests transferred and the cost of investment. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Doing Business in China—We face uncertainty regarding the PRC tax reporting obligations and consequences for certain indirect transfers of our operating company’s equity interests. Enhanced scrutiny over acquisition transactions by the PRC tax authorities may have a negative impact on potential acquisitions we may pursue in the future.”

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United States Federal Income Tax Considerations

The following discussion is a summary of United States federal income tax considerations relating to the ownership and disposition of our ADSs or ordinary shares by a U.S. Holder, as defined below, that holds our ADSs or ordinary shares as “capital assets” (generally, property held for investment) under the United States Internal Revenue Code of 1986, as amended (the “Code”). This discussion is based upon existing United States federal income tax law, which is subject to differing interpretations or change, possibly with retroactive effect. No ruling has been sought from the Internal Revenue Service (the “IRS”) with respect to any United States federal income tax consequences described below, and there can be no assurance that the IRS or a court will not take a contrary position. This discussion does not address all aspects of United States federal income taxation that may be important to particular investors in light of their individual circumstances, including investors subject to special tax rules (such as, for example, certain financial institutions, insurance companies, regulated investment companies, real estate investment trusts, broker-dealers, traders in securities that elect mark-to-market treatment, partnerships and their partners, tax-exempt organizations (including private foundations), investors who are not U.S. Holders, investors that own (directly, indirectly, or constructively) 10% or more of our voting stock, investors that hold their ADSs or ordinary shares as part of a straddle, hedge, conversion, constructive sale or other integrated transaction, or investors that have a functional currency other than the United States dollar, all of whom may be subject to tax rules that differ significantly from those summarized below). In addition, this discussion does not address any state, local, alternative minimum tax, non-United States tax considerations, or the Medicare contribution tax on net investment income. Each potential investor is urged to consult its tax advisor regarding the United States federal, state, local and non-United States income and other tax considerations of an investment in our ADSs or ordinary shares.

General

For purposes of this discussion, a “U.S. Holder” is a beneficial owner of our ADSs or ordinary shares that is, for United States federal income tax purposes, (i) an individual who is a citizen or resident of the United States, (ii) a corporation (or other entity treated as a corporation for United States federal income tax purposes) created in, or organized under the laws of, the United States or any state thereof or the District of Columbia, (iii) an estate the income of which is includible in gross income for United States federal income tax purposes regardless of its source, or (iv) a trust (A) the administration of which is subject to the primary supervision of a United States court and which has one or more United States persons who have the authority to control all substantial decisions of the trust or (B) that has otherwise elected to be treated as a United States person under the Code.

If a partnership (or other entity treated as a partnership for United States federal income tax purposes) is a beneficial owner of our ADSs or ordinary shares, the tax treatment of a partner in the partnership will generally depend upon the status of the partner and the activities of the partnership. Partnerships and partners of a partnership holding our ADSs or ordinary shares are urged to consult their tax advisors regarding an investment in our ADSs or ordinary shares.

Based in part on certain representations from the depositary bank, a U.S. Holder of ADSs will be treated as the beneficial owner for United States federal income tax purposes of the underlying shares represented by the ADSs.

Passive Foreign Investment Company Considerations

A non-United States corporation, such as our company, will be classified as a “passive foreign investment company,” or PFIC, for United States federal income tax purposes, if, in the case of any particular taxable year, either (i) 75% or more of its gross income for such year consists of certain types of “passive” income or (ii) 50% or more of its average quarterly assets (as determined on the basis of fair market value) during such year produce or are held for the production of passive income. For this purpose, cash is categorized as a passive asset and the company’s unbooked intangibles associated with active business activities may generally be classified as active assets. Passive income generally includes, among other things, dividends, interest, royalties, rents, annuities, net gains from the sale or exchange of passive assets (including property producing passive income) and net foreign currency gains. We will be treated as owning our proportionate share of the assets and earning our proportionate share of the income of any other corporation in which we own, directly or indirectly, more than 25% (by value) of the stock.

Based on our current income and assets and the value of our ADSs and ordinary shares, we do not believe that we were a PFIC for our taxable year ended December 31, 2016 and we do not expect to be classified as a PFIC for our taxable year ending December 31, 2017 or in the foreseeable future.

While we do not expect to become a PFIC in the current or future taxable years, the determination of whether we will be or become a PFIC will depend upon the composition of our income and assets and the value of our assets from time to time, including, in particular the value of our goodwill and other unbooked intangibles (which may depend upon the market value of our ADSs or ordinary shares from time to time, which may be volatile). Among other factors, if market capitalization is less than anticipated or subsequently declines, we may be classified as a PFIC for the current or future taxable years. It is also possible that the IRS, may challenge our classification or valuation of our goodwill and other unbooked intangibles, or determine that such assets should not be included in the determination of whether we are classified as a PFIC, which may result in our company being, or becoming classified as, a PFIC for the current or one or more future taxable years.

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The determination of whether we will be or become a PFIC may also depend, in part, on how, and how quickly, we use our liquid assets. Under circumstances where we determine not to deploy significant amounts of cash for active purposes, our risk of being classified as a PFIC may substantially increase. Because there are uncertainties in the application of the relevant rules and PFIC status is a factual determination made annually after the close of each taxable year, there can be no assurance that we will not be a PFIC for the current taxable year or any future taxable year. If we were classified as a PFIC for any year during which a U.S. holder held our ADSs or ordinary shares, we generally would continue to be treated as a PFIC for all succeeding years during which such U.S. holder held our ADSs or ordinary shares.

The discussion below under “Dividends” and “Sale or Other Disposition of ADSs or Ordinary Shares” is written on the basis that we will not be classified as a PFIC for United States federal income tax purposes. The United States federal income tax rules that apply if we are classified as a PFIC for the current taxable year or any subsequent taxable year are generally discussed below under “Passive Foreign Investment Company Rules.”

Dividends

Any cash distributions paid on our ADSs or ordinary shares (including the amount of any PRC tax withheld) out of our current or accumulated earnings and profits, as determined under United States federal income tax principles, will generally be includible in the gross income of a U.S. Holder as dividend income on the day actually or constructively received by the U.S. Holder, in the case of ordinary shares, or by the depositary bank, in the case of ADSs. Because we do not intend to determine our earnings and profits on the basis of United States federal income tax principles, any distribution paid will generally be treated as a “dividend” for United States federal income tax purposes. Individuals and other non-corporate recipients of dividend income will generally be subject to tax on dividend income from a “qualified foreign corporation” at a lower applicable capital gains rate rather than the marginal tax rates generally applicable to ordinary income provided that certain holding period and other requirements are met.

A non-United States corporation (other than a corporation that is classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year) will generally be considered to be a qualified foreign corporation (a) if it is eligible for the benefits of a comprehensive tax treaty with the United States which the Secretary of Treasury of the United States determines is satisfactory for purposes of this provision and which includes an exchange of information program, or (b) with respect to any dividend it pays on stock (or ADSs in respect of such stock) which is readily tradable on an established securities market in the United States. United States Treasury guidance indicates that common or ordinary shares, or ADSs representing such shares, are considered for the purpose of clause (b) above to be readily tradable on an established securities market in the United States if they are listed on the NASDAQ Global Select Market, as are our ADSs. Since we do not expect that our ordinary shares will be listed on established securities markets, it is unclear whether dividends that we pay on our ordinary shares that are not backed by ADSs currently meet the conditions required for the reduced tax rate. There can be no assurance that our ADSs will continue to be considered readily tradable on an established securities market in later years. In the event we are deemed to be a resident enterprise under the EIT Law, we may be eligible for the benefits of the United States-PRC income tax treaty (which the U.S. Treasury Department has determined is satisfactory for this purpose) and we would be treated as a qualified foreign corporation with respect to dividends paid on our ordinary shares or ADSs. U.S. Holders are urged to consult their tax advisors regarding the availability of the reduced tax rate on dividends in their particular circumstances. Dividends received on our ADSs or ordinary shares will not be eligible for the dividends received deduction allowed to corporations.

For United States foreign tax credit purposes, dividends paid on our ADSs or ordinary shares will generally be treated as income from foreign sources and will generally constitute passive category income. In the event that we are deemed to be a PRC resident enterprise under the EIT Law, a U.S. Holder may be subject to PRC withholding taxes on dividends paid, if any, on our ADSs or ordinary shares. A U.S. Holder may be eligible, subject to a number of complex limitations, to claim a foreign tax credit in respect of any nonrefundable foreign withholding taxes imposed on dividends received on our ADSs or ordinary shares. A U.S. Holder who does not elect to claim a foreign tax credit for foreign tax withheld may instead claim a deduction for United States federal income tax purposes in respect of such withholding, but only for a year in which such holder elects to do so for all creditable foreign income taxes. The rules governing the foreign tax credit are complex. U.S. Holders are urged to consult their tax advisors regarding the availability of the foreign tax credit under their particular circumstances.

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Sale or Other Disposition of ADSs or Ordinary Shares

A U.S. Holder will generally recognize capital gain or loss, if any, upon the sale or other disposition of ADSs or ordinary shares in an amount equal to the difference between the amount realized upon the disposition and the holder’s adjusted tax basis in such ADSs or ordinary shares. Any capital gain or loss will be long-term gain or loss if the ADSs or ordinary shares have been held for more than one year and will generally be United States source gain or loss for United States foreign tax credit purposes. In the event that we are treated as a PRC resident enterprise under the PRC Enterprise Income Tax Law, and gain from the disposition of the ADSs or ordinary shares is subject to tax in the PRC, such gain may be treated as PRC source gain for foreign tax credit purposes under the United States-PRC income tax treaty. The deductibility of a capital loss may be subject to limitations. U.S. Holders are urged to consult their tax advisors regarding the tax consequences if a foreign tax is imposed on a disposition of our ADSs or ordinary shares, including the availability of the foreign tax credit under their particular circumstances.

Passive Foreign Investment Company Rules

If we are classified as a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares, unless the U.S. Holder makes a mark-to-market election (as described below), the U.S. Holder will generally be subject to special tax rules that have a penalizing effect, regardless of whether we remain a PFIC, on (i) any excess distribution that we make to the U.S. Holder (which generally means any distribution received during a taxable year by a U.S. Holder that is greater than 125% of the average annual distributions received by such U.S. Holder during the three preceding taxable years or, if shorter, the U.S. Holder’s holding period for the ADSs or ordinary shares), and (ii) any gain realized on the sale or other disposition, including, under certain circumstances, a pledge, of ADSs or ordinary shares. Under the PFIC rules:

· the excess distribution and/or gain will be allocated ratably over the U.S. Holder’s holding period for the ADSs or ordinary shares;

· the amount allocated to the current taxable year and any taxable years in the U.S. Holder’s holding period prior to the first taxable year in which we are classified as a PFIC, or pre-PFIC year, will be taxable as ordinary income; and

· the amount allocated to each prior taxable year, other than the current taxable year or a pre-PFIC year, will be subject to tax at the highest tax rate in effect applicable to the individuals or corporations, as appropriate, for that year, and

· will be increased by an additional tax equal to interest on the resulting tax deemed deferred with respect to each such other taxable year.

If we are a PFIC for any taxable year during which a U.S. Holder holds our ADSs or ordinary shares and any of our non-United States subsidiaries is also a PFIC, such U.S. Holder would be treated as owning a proportionate amount (by value) of the shares of the lower-tier PFIC for purposes of the application of these rules. Each U.S. Holder is advised to consult its tax advisors regarding the application of the PFIC rules to any of our subsidiaries.

As an alternative to the foregoing rules, a U.S. Holder of “marketable stock” in a PFIC may make a mark-to-market election with respect to our ADSs, provided that the ADSs are regularly traded on the NASDAQ Global Market. In addition, we do not expect that holders of ordinary shares that are not represented by ADSs will be eligible to make a mark-to-market election. We believe that our ADSs qualify as being regularly traded, but no assurances can be given in this regard. If a mark-to-market election is made, the U.S. Holder will generally (i) include as ordinary income for each taxable year that we are a PFIC the excess, if any, of the fair market value of ADSs held at the end of the taxable year over the adjusted tax basis of such ADSs and (ii) deduct as an ordinary loss the excess, if any, of the adjusted tax basis of the ADSs over the fair market value of such ADSs held at the end of the taxable year, but only to the extent of the net amount previously included in income as a result of the mark-to-market election. The U.S. Holder’s adjusted tax basis in the ADSs would be adjusted to reflect any income or loss resulting from the mark-to-market election. If a U.S. Holder makes an effective mark-to-market election, in each year that we are a PFIC any gain recognized upon the sale or other disposition of the ADSs will be treated as ordinary income and loss will be treated as ordinary loss, but only to the extent of the net amount previously included in income as a result of the mark-to-market election.

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If a U.S. Holder makes a mark-to-market election in respect of a corporation classified as a PFIC and such corporation ceases to be classified as a PFIC, the U.S. Holder will not be required to take into account the mark-to-market gain or loss described above during any period that such corporation is not classified as a PFIC.

Because, as a technical matter, a mark-to-market election cannot be made for any lower-tier PFICs that a PFIC may own, a U.S. Holder who makes a mark-to-market election with respect to our ADSs may continue to be subject to the general PFIC rules with respect to such U.S. Holder’s indirect interest in any of our non-United States subsidiaries that is classified as a PFIC.

We do not intend to provide information necessary for U.S. Holders to make qualified electing fund elections, which, if available, would result in tax treatment different from the general tax treatment for PFICs described above.

As discussed above under “Dividends”, dividends that we pay on our ADSs or ordinary shares will not be eligible for the reduced tax rate that applies to qualified dividend income if we are classified as a PFIC for the taxable year in which the dividend is paid or the preceding taxable year. In addition, if a U.S. Holder owns our ADSs or ordinary shares during any taxable year that we are a PFIC, the holder must file an annual report with the IRS. U.S. Holders are urged to consult their tax advisors concerning the United States federal income tax consequences of purchasing, holding, and disposing ADSs or ordinary shares if we are or become a PFIC, including the possibility of making a mark-to-market election and the unavailability of the qualified electing fund election.

Information Reporting and Backup Withholding

Individual U.S. Holders and certain entities may be required to submit to the IRS certain information with respect to his or her beneficial ownership of the ADSs or ordinary shares, if such ADSs or ordinary shares are not held on his or her behalf by a U.S. financial institution. An individual U.S. Holder may be subject to penalties if such U.S. Holder is required to submit such information to the IRS and fails to do so.

In addition, U.S. Holders may be subject to information reporting to the IRS and United States backup withholding with respect to dividends on and proceeds from the sale or other disposition of our ADSs or ordinary shares. Backup withholding will not apply to you, however, if you furnish a correct taxpayer identification number and make any other required certification or that are otherwise exempt from backup withholding. U.S. Holders that are required to establish their exempt status generally must provide such certification on IRS Form W-9. U.S. Holders should consult their tax advisors regarding the application of the United States information reporting and backup withholding rules to their particular circumstances.

Backup withholding is not an additional tax. Amounts withheld as backup withholding can be credited against your United States federal income tax liability, and you may obtain a refund of any excess amounts withheld under the backup withholding rules by timely filing the appropriate claim for refund with the IRS and furnishing any required information in a timely manner.

F. Dividends and Paying Agents

Not Applicable.

G. Statement by Experts

Not Applicable.

H. Documents on Display

We previously filed with the SEC our registration statement on Form F-1 (Registration No. 333-194191), as amended, including the prospectus contained therein, to register our Class A ordinary shares in relation to our initial public offering . We have also filed with the SEC a related registration statement on F-6 (Registration No. 333-194662) to register the ADSs.

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We are subject to the periodic reporting and other informational requirements of the Securities Exchange Act of 1934, as amended, or the Exchange Act. Under the Exchange Act, we are required to file reports and other information with the SEC. Specifically, we are required to file annually a Form 20-F within four months after the end of each fiscal year, which is December 31. Copies of reports and other information, when so filed, may be inspected without charge and may be obtained at prescribed rates at the public reference facilities maintained by the Securities and Exchange Commission at 100 F Street, N.E., Room 1580, Washington, D.C. 20549. The public may obtain information regarding the Washington, D.C. Public Reference Room by calling the Commission at 1-800-SEC-0330. The SEC also maintains a website at www.sec.gov that contains reports, proxy and information statements, and other information regarding registrants that make electronic filings with the SEC using its EDGAR system. As a foreign private issuer, we are exempt from the rules under the Exchange Act prescribing the furnishing and content of quarterly reports and proxy statements, and officers, directors and principal shareholders are exempt from the reporting and short-swing profit recovery provisions contained in Section 16 of the Exchange Act.

We will furnish Citibank, N.A., the depositary of our ADSs, with our annual reports, which will include a review of operations and annual audited consolidated financial statements prepared in conformity with U.S. GAAP, and all notices of shareholders’ meetings and other reports and communications that are made generally available to our shareholders. The depositary will make such notices, reports and communications available to holders of ADSs and, upon our request, will mail to all record holders of ADSs the information contained in any notice of a shareholders’ meeting received by the depositary from us.

In accordance with NASDAQ Stock Market Rules 5250(d), we will post this annual report on Form 20-F on our website at http://ir.tarena.com.cn.

I. Subsidiary Information

Not applicable.

ITEM 11. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Foreign Exchange Risk

Substantially all of our net revenues, costs and expenses are denominated in Renminbi. The Renminbi is not freely convertible into foreign currencies for capital account transactions. Our exposure to foreign exchange risk primarily relates to the U.S. dollar proceeds of the offerings of our equity securities. We had a net foreign exchange gain of RMB3.8 million in 2016. In January 2016, we entered into foreign currency forward contracts with China Merchants Bank Co., Ltd. The notional amounts of the foreign currency forward contracts were RMB564.1 million and the settlement date was on May 19, 2016. We incurred a loss of RMB12.9 million as a result of such contracts in 2016, due to the fluctuation in the exchange rate between U.S. dollars and RMB.

The value of the Renminbi against the U.S. dollar and other currencies is affected by, among other things, changes in China’s political and economic conditions and China’s foreign exchange policies. In 2005, the PRC government changed its decade-old policy of pegging the value of the RMB to the U.S. dollar, and the Renminbi appreciated more than 20% against the U.S. dollar over the following three years. Between July 2008 and June 2010, this appreciation halted and the exchange rate between the Renminbi and the U.S. dollar remained within a narrow band. Since June 2010, the RMB has fluctuated against the U.S. dollar, at times significantly and unpredictably. In August 2015, the People’s Bank of China changed the way it calculates the mid-point price of Renminbi against the U.S. dollar, requiring the market-makers who submit for reference rates to consider the previous day’s closing spot rate, foreign-exchange demand and supply as well as changes in major currency rates. The value of the Renminbi depreciated approximately 5.8% against the U.S. dollar in 2015 and further by approximately 6.3% in 2016. On November 30, 2015, the Executive Board of the International Monetary Fund (IMF) completed the regular five-year review of the basket of currencies that make up the Special Drawing Right, or the SDR, and decided that with effect from October 1, 2016, Renminbi is determined to be a freely usable currency and will be included in the SDR basket as a fifth currency, along with the U.S. dollar, the Euro, the Japanese yen and the British pound. In the fourth quarter of 2016, the RMB has depreciated significantly in the backdrop of a surging U.S. dollar and persistent capital outflows of China. With the development of the foreign exchange market and progress towards interest rate liberalization and Renminbi internationalisation, the PRC government may in the future announce further changes to the exchange rate system and we cannot assure you that the Renminbi will not appreciate or depreciate significantly in value against the U.S. dollar in the future. It is difficult to predict how market forces or PRC or U.S. government policy may impact the exchange rate between the RMB and the U.S. dollar in the future.

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To the extent that we need to convert the U.S. dollars we received from our equity offerings into Renminbi to fund our operations, acquisitions, or for other uses within the PRC, appreciation of the Renminbi against the U.S. dollar would have an adverse effect on the Renminbi amount we receive from the conversion. To the extent that we seek to convert Renminbi into U.S. dollars, depreciation of the Renminbi against the U.S. dollar would have an adverse effect on the U.S. dollar amount we receive from the conversion. On the other hand, a decline in the value of the Renminbi against the U.S. dollar could reduce the value of your investment in the company and the dividends that we may pay in the future, if any, all of which may have a material adverse effect on the prices of our ADS.

A hypothetical 10% decrease in the exchange rate of the U.S. dollar against the RMB would have resulted in an increase of RMB41.8 million in the value of our U.S. dollar-denominated financial assets at December 31, 2016.

Interest Rate Risk

Our exposure to interest rate risk primarily relates to interest income generated by excess cash invested in demand deposits with original maturities of 6 months to 5 years. Interest-earning instruments carry a degree of interest rate risk. We have not used any significant derivative financial instruments to manage our interest rate risk exposure. We have not been exposed, nor do we anticipate being exposed to, material risks due to changes in interest rates. However, our future interest income may be different from expectations due to changes in market interest rates.

ITEM 12. DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

A. Debt Securities

Not applicable.

B. Warrants and Rights

Not applicable.

C. Other Securities

Not applicable.

D. American Depositary Shares

Fees and Charges Our ADS holders May Have to Pay

Holders of our ADSs will be required to pay the following service fees to the depositary bank:

Service	Fees
Issuance of ADSs	Up to U.S. 5¢ per ADS issued
Cancellation of ADSs	Up to U.S. 5¢ per ADS canceled
Distribution of cash dividends or other cash distributions	Up to U.S. 5¢ per ADS held
Distribution of ADSs pursuant to stock dividends, free stock distributions or exercise of rights	Up to U.S. 5¢ per ADS held
Distribution of securities other than ADSs or rights to purchase additional ADSs	Up to U.S. 5¢ per ADS held
Depositary Services	Up to U.S. 5¢ per ADS held on the applicable record date(s) established by the depositary bank

Holders of our ADSs will also be responsible to pay certain fees and expenses incurred by the depositary bank and certain taxes and governmental charges such as:

· fees for the transfer and registration of ordinary shares charged by the registrar and transfer agent for the ordinary shares in the Cayman Islands (i.e., upon deposit and withdrawal of ordinary shares);

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· expenses incurred for converting foreign currency into U.S. dollars;

· expenses for cable, telex and fax transmissions and for delivery of securities;

· taxes and duties upon the transfer of securities (i.e., when ordinary shares are deposited or withdrawn from deposit); and

· fees and expenses incurred in connection with the delivery or servicing of ordinary shares on deposit.

Depositary fees payable upon the issuance and cancellation of ADSs are typically paid to the depositary bank by the brokers (on behalf of their clients) receiving the newly issued ADSs from the depositary bank and by the brokers (on behalf of their clients) delivering the ADSs to the depositary bank for cancellation. The brokers in turn charge these fees to their clients. Depositary fees payable in connection with distributions of cash or securities to ADS holders and the depositary services fee are charged by the depositary bank to the holders of record of ADSs as of the applicable ADS record date.

The depositary fees payable for cash distributions are generally deducted from the cash being distributed. In the case of distributions other than cash (i.e., stock dividend, rights), the depositary bank charges the applicable fee to the ADS record date holders concurrent with the distribution. In the case of ADSs registered in the name of the investor (whether certificated or uncertificated in direct registration), the depositary bank sends invoices to the applicable record date ADS holders. In the case of ADSs held in brokerage and custodian accounts (via DTC), the depositary bank generally collects its fees through the systems provided by DTC (whose nominee is the registered holder of the ADSs held in DTC) from the brokers and custodians holding ADSs in their DTC accounts. The brokers and custodians who hold their clients’ ADSs in DTC accounts in turn charge their clients’ accounts the amount of the fees paid to the depositary banks.

In the event of refusal to pay the depositary fees, the depositary bank may, under the terms of the deposit agreement, refuse the requested service until payment is received or may set off the amount of the depositary fees from any distribution to be made to the ADS holder.

The fees and charges holders of our ADSs may be required to pay may vary over time and may be changed by us and by the depositary bank.

Fees and Other Payments Made by the Depositary to Us

The depositary has agreed to reimburse us for certain expenses we incur that are related to establishment and maintenance of the ADS program upon such terms and conditions as we and the depositary may agree from time to time. In 2016, we did not receive any payment from the depository for expenses incurred in connection with the establishment and maintenance of the ADS program.

PART II.

ITEM 13. DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

ITEM 14. MATERIAL MODIFICATIONS TO THE RIGHTS OF SECURITY HOLDERS AND USE OF PROCEEDS

Material Modifications to the Rights of Security Holders

See “Item 10. Additional Information—B. Memorandum and Articles of Association—Ordinary Shares” for a description of the rights of securities holders, which remain unchanged.

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Use of Proceeds

The following “Use of Proceeds” information relates to the Registration Statement on Form F-1, as amended (File number: 333-19419) in relation to the initial public offering of 15,300,000 ADSs representing 15,300,000 of our Class A ordinary shares, at an initial offering price of US$9.00 per ADS. We offered and sold 11,500,000 ADSs and the selling shareholders offered and sold 3,800,000 ADSs in our initial public offering. Our initial public offering closed in April 2014. Goldman Sachs (Asia) L.L.C. and Credit Suisse Security (USA) LLC were the representatives of the underwriters for our initial public offering. The aggregate price of the offering amount registered and sold were US$137.7 million.

We received net proceeds of approximately US$92.2 million from our initial public offering. Our expenses incurred and paid to others in connection with the issuance and distribution of the ADSs in our initial public offering totaled US$13.6 million, which included US$9.6 million for underwriting discounts and commissions and US$4.0 million for other expenses. Among the US$13.6 million in expenses, US$4.8 million were paid to Goldman Sachs (Asia) L.L.C., an affiliate of ours and one of the underwriters for our initial public offering.

For the period from April 2, 2014, the date that the F-1 Registration Statement was declared effective by the SEC, to December 31, 2016, we invested the net proceeds from our initial public offering in term deposits and still intend to use the proceeds from our initial public offering for general corporate purposes, which may include investing in course development, expanding our learning center network, sales and marketing activities, technology infrastructure and capital expenditures, upgrading facilities and other general and administrative matters. We may also use a portion of the net proceeds for investing in, or acquiring, complementary businesses.

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ITEM 15. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

As of the end of the period covered by this annual report, our management, with the participation of our chief executive officer and chief financial officer, has performed an evaluation of the effectiveness of our disclosure controls and procedures within the meaning of Rules 13a-15(e) and 15d-15(e) of the Exchange Act.

Based upon this evaluation, our management has concluded that, as of December 31, 2016, our existing disclosure controls and procedures were effective to provide reasonable assurance that material information required to be disclosed by us in the reports that we file with, or submit to, the SEC under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in by the SEC’s rules, regulations and forms, and that the information required to be disclosed by us in the reports that we file or submit under the Exchange Act is accumulated and communicated to our management, including our chief executive officer and chief financial officer, to allow timely decisions regarding required disclosure.

Management’s Annual Report on Internal Control over Financial Reporting and Attestation Report of the Registered Public Accounting Firm

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements in accordance with U.S. GAAP and includes those policies and procedures that (i) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of a company’s assets, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of consolidated financial statements in accordance with generally accepted accounting principles, and that a company’s receipts and expenditures are being made only in accordance with authorizations of a company’s management and directors, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of a company’s assets that could have a material effect on the consolidated financial statements. Our management, with the participation of our chief executive officer and chief financial officer, conducted an evaluation of the effectiveness of our company’s internal control over financial reporting as of December 31, 2016 based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on this evaluation, our management concluded that our internal control over financial reporting was effective as of December 31, 2016.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. In addition, projections of any evaluation of effectiveness of our internal control over financial reporting to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies and procedures may deteriorate. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Business—If we fail to maintain an effective system of internal controls, we may be unable to accurately report our results of operations or prevent fraud or fail to meet our reporting obligations, and investor confidence and the market price of our ADSs may be materially and adversely affected.”

This annual report does not include an attestation report of our independent registered public accounting firm regarding internal control over financial reporting as we qualify as an “emerging growth company” under section 3(a) of the Securities Exchange Act of 1934, as amended, and are therefore exempt from the attestation requirement.

Changes in Internal Control over Financial Reporting

We have adopted the following measures during the year ended December 31, 2016, which effectively improved our internal controls over financial reporting in areas subject to financial reporting disclosure. We have (i) executed improved workflow of system upgrade and performed quality control procedures regarding system design, development, testing and implementation, etc. (ii) reinforced the reasonableness test by accounting personnel over the system extracted data; and (iii) continuously reinforced the oversight and review procedure over high risk areas subject to significant estimates and judgments.

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We will continue to implement the necessary procedures and policies, including those outlined above, to improve our internal controls over financial reporting and remediate any potential significant deficiencies as we prepare for our initial Section 404 reporting requirement under the Sarbanes-Oxley Act of 2002.

Other than those measures mentioned above, there were no changes in our internal controls over financial reporting that occurred during the period covered by this annual report on Form 20-F that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

ITEM 16.A. AUDIT COMMITTEE FINANCIAL EXPERT

Our board of directors has determined that Mr. Xiaosong Zhang, an independent director and member of our audit committee, is an audit committee financial expert.

ITEM 16.B. CODE OF ETHICS

Our board of directors has adopted a code of ethics that applies to all of the directors, officers and employees of us and our subsidiaries, whether they work for us on a full-time, part-time, consultative, or temporary basis. Certain provisions of the code apply specifically to our chief executive officer, chief financial officer, senior finance officer, controller, senior vice presidents, vice presidents and any other persons who perform similar functions for us. We have posted a copy of our code of business conduct and ethics on our website at http://ir.tarena.com.cn/phoenix.zhtml?c=253008&p=irol-govhighlights.

ITEM 16.C. PRINCIPAL ACCOUNTANT FEES AND SERVICES

The following table sets forth the aggregate fees by the categories specified below in connection with certain professional services rendered by KPMG Huazhen LLP, formerly known as KPMG Huazhen (SGP), our independent registered public accounting firm, for the periods indicated. We did not pay any other fees to our auditors during the periods indicated below.

	2014		2015		2016
	(in thousands)
Audit Fees(1)		5,988		5,720		5,659
Tax Fees(2)		-		152		294
All Other Fees(3)		800		-		-

(1) “Audit fees” means the aggregate fees in each of the fiscal years listed for professional services rendered by our independent registered public accounting firm for the audit of our annual financial statements or services that are normally provided by the auditors in connection with and regulatory filing or engagements.

(2) “Tax fees” consist of fees billed for the aggregate fees for professional services rendered by our independent registered public accounting firm for tax compliance work and other tax related services.

(3) All Other Fees represent the aggregate fees for services rendered by our independent registered public accounting firm for risk management advisory services.

The policy of our audit committee is to pre-approve all audit and non-audit services provided by KPMG Huazhen LLP, including audit services, tax services and other services as described above, other than those for de minimis services which are approved by the Audit Committee prior to the completion of the audit.

ITEM 16.D. EXEMPTIONS FROM THE LISTING STANDARDS FOR AUDIT COMMITTEES

Not Applicable.

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ITEM 16.E. PURCHASES OF EQUITY SECURITIES BY THE ISSUER AND AFFILIATED PURCHASERS

On August 20, 2015, our board of directors authorized a share repurchase plan under which we may repurchase up to US$20 million of our shares over the next 12 months. The share repurchases may be made from time to time on the open market at prevailing market prices, in privately negotiated transactions, in block trades and/or through other legally permissible means, depending on market conditions and in accordance with applicable rules and regulations. For the period from May 27, 2016 to July 20, 2016, we repurchased 648,867ADSs for an aggregate consideration of RMB44.4 million (US$6.7 million) under our share repurchase plan.

The following table sets forth a summary of our repurchase of our ADSs made in the year 2016 under the share repurchase programs described in the paragraph above.

Period	Total Number of ADSs Purchased(1)		Average Price Paid Per ADS(1)		Total Number of ADSs Purchased as Part of Publicly Announced Plans or Programs		Maximum Dollar Value of ADSs that May Yet Be Purchased Under Plans or Programs (US$)
May (from May 27 to May 31)		40,634		10.4304		40,634	US$	11,837,327
June (from June 1 to June 30)		354,441		10.2474		354,441	US$	8,205,228
July (from July 1 to July 20)		253,792		10.4230		253,792	US$	5,559,954

(1) Each ADS represents one Class A ordinary share.

ITEM 16.F. CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16.G. CORPORATE GOVERNANCE

As a Cayman Islands company listed on the NASDAQ Global Select Market, we are subject to the NASDAQ corporate governance listing standards. However, NASDAQ rules permit a foreign private issuer like us to follow the corporate governance practices of its home country. Certain corporate governance practices in the Cayman Islands, which is our home country, may differ significantly from the NASDAQ corporate governance listing standards.

We relied on the exemption available to foreign private issuers for the requirement that it hold an annual general meeting of shareholders no later than December 31, 2016 in 2016. In this respect, we elected to follow home country practice and did not hold an annual general meeting of shareholders in 2016. If we continue to rely on this and other exemptions available to foreign private issuers in the future, our shareholders may be afforded less protection than they otherwise would under the NASDAQ corporate governance listing standards applicable to U.S. domestic issuers. See “Item 3. Key Information—D. Risk Factors—Risks Relating to Our ADSs—We are a foreign private issuer within the meaning of the rules under the Exchange Act, and as such we are exempt from certain provisions applicable to United States domestic public companies.”

ITEM 16.H. MINE SAFETY DISCLOSURE

Not applicable.

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PART III.

ITEM 17. FINANCIAL STATEMENTS

We have elected to provide financial statements pursuant to Item 18.

ITEM 18. FINANCIAL STATEMENTS

The consolidated financial statements of Tarena International, Inc. and its subsidiaries are included at the end of this annual report.

ITEM 19. EXHIBITS

Exhibit Number	Description of Document
1.1	Fifth Amended and Restated Memorandum and Articles of Association of the Registrant (incorporated herein by reference to Exhibit 3.2 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
2.1	Registrant’s Specimen American Depositary Receipt (included in Exhibit 2.3)
2.2	Registrant’s Specimen Certificate for Class A ordinary shares (incorporated herein by reference to Exhibit 4.2 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
2.3	Deposit Agreement, among the Registrant, the depositary and holder of the American Depositary Receipts (incorporated herein by reference to Exhibit 4.3 to the registration statement on Form S-8 (File No. 333-197226) filed with the SEC on July 3, 2014)
2.4	Second Amended and Restated Shareholders Agreement dated as of September 6, 2011 among the Registrant and certain shareholders of the Registrant. (incorporated herein by reference to Exhibit 4.4 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
2.5	Registration Rights Agreement dated as of April 8, 2014 among the Registrant and New Oriental Education & Technology Group Inc. (incorporated herein by reference to Exhibit 2.5 to the annual report on Form 20-F (File No. 001-36363) filed with the SEC on April 15, 2015)
2.6	Registration Rights Agreement dated as of July 17, 2015 among the Registrant and Talent Fortune Investment Limited (incorporated herein by reference to Exhibit 2.6 to the annual report on Form 20-F (File No. 001-36363) filed with the SEC on April 20, 2016)
4.1	2008 Share Incentive Plan, as amended on November 28, 2012 (incorporated herein by reference to Exhibit 10.1 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.2	2014 Share Incentive Plan (incorporated herein by reference to Exhibit 10.2 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.3	Form of Indemnification Agreement with the Registrant’s directors (incorporated herein by reference to Exhibit 10.3 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.4	Form of Employment Agreement between the Registrant and an Executive Officer of the Registrant (incorporated herein by reference to Exhibit 10.5 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)

125

Exhibit Number	Description of Document
4.5	Amended and Restated Exclusive Business Cooperation Agreement dated November 25, 2013 between Tarena Tech and Beijing Tarena (incorporated herein by reference to Exhibit 10.6 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.6	Power of Attorney dated November 25, 2013 granted to Tarena Tech by Mr. Shaoyun Han and acknowledged by Beijing Tarena (incorporated herein by reference to Exhibit 10.7 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.7	Power of Attorney dated November 25, 2013 granted to Tarena Tech by Mr. Jianguang Li and acknowledged by Beijing Tarena (incorporated herein by reference to Exhibit 10.8 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.8	Amended and Restated Exclusive Option Agreement dated November 25, 2013 among Tarena, Tarena Tech, Mr. Shaoyun Han and Beijing Tarena (incorporated herein by reference to Exhibit 10.9 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.9	Amended and Restated Exclusive Option Agreement dated November 25, 2013 among Tarena, Tarena Tech, Mr. Jianguang Li and Beijing Tarena (incorporated herein by reference to Exhibit 10.10 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.10	Amended and Restated Loan Agreement dated November 25, 2013 between Tarena Tech and Mr. Shaoyun Han in connection with Beijing Tarena (incorporated herein by reference to Exhibit 10.11 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.11	Amended and Restated Loan Agreement dated November 25, 2013 between Tarena Tech and Mr. Jianguang Li in connection with Beijing Tarena (incorporated herein by reference to Exhibit 10.12 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.12	Amended and Restated Share Pledge Agreement dated November 25, 2013 among Tarena Tech, Mr. Shaoyun Han and Beijing Tarena (incorporated herein by reference to Exhibit 10.13 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.13	Amended and Restated Share Pledge Agreement dated November 25, 2013 among Tarena Tech, Mr. Jianguang Li and Beijing Tarena (incorporated herein by reference to Exhibit 10.14 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.14	Spousal consent letter dated November 25, 2013 signed by Ying Sun in connection with Beijing Tarena (incorporated herein by reference to Exhibit 10.15 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.15	Spousal consent letter dated November 25, 2013 signed by Nan Li in connection with Beijing Tarena (incorporated herein by reference to Exhibit 10.16 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)

126

Exhibit Number	Description of Document
4.16	Amended and Restated Exclusive Business Cooperation Agreement dated November 25, 2013 between Tarena Tech and Shanghai Tarena (incorporated herein by reference to Exhibit 10.17 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.17	Power of Attorney dated November 25, 2013 granted to Tarena Tech by Mr. Shaoyun Han and acknowledged by Shanghai Tarena (incorporated herein by reference to Exhibit 10.18 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.18	Power of Attorney dated November 25, 2013 granted to Tarena Tech by Mr. Jianguang Li and acknowledged by Shanghai Tarena (incorporated herein by reference to Exhibit 10.19 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.19	Amended and Restated Exclusive Option Agreement dated November 25, 2013 among Tarena, Tarena Tech, Mr. Shaoyun Han and Shanghai Tarena (incorporated herein by reference to Exhibit 10.20 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.20	Amended and Restated Exclusive Option Agreement dated November 25, 2013 among Tarena, Tarena Tech, Mr. Jianguang Li and Shanghai Tarena (incorporated herein by reference to Exhibit 10.21 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.21	Amended and Restated Loan Agreement dated November 25, 2013 between Tarena Tech and Mr. Shaoyun Han in connection with Shanghai Tarena (incorporated herein by reference to Exhibit 10.22 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.22	Amended and Restated Loan Agreement dated November 25, 2013 between Tarena Tech and Mr. Jianguang Li in connection with Shanghai Tarena (incorporated herein by reference to Exhibit 10.23 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.23	Amended and Restated Share Pledge Agreement dated November 25, 2013 among Tarena Tech, Mr. Shaoyun Han and Shanghai Tarena (incorporated herein by reference to Exhibit 10.24 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.24	Amended and Restated Share Pledge Agreement dated November 25, 2013 among Tarena Tech, Mr. Jianguang Li and Shanghai Tarena (incorporated herein by reference to Exhibit 10.25 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.25	Spousal consent letter dated November 25, 2013 signed by Ying Sun in connection with Shanghai Tarena (incorporated herein by reference to Exhibit 10.26 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
4.26	Spousal consent letter dated November 25, 2013 signed by Nan Li in connection with Shanghai Tarena (incorporated herein by reference to Exhibit 10.27 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)

127

Exhibit Number	Description of Document
4.27*	Power of Attorney dated July 5, 2016 granted to Tarena Tech by Mr. Shaoyun Han and acknowledged by Beijing Tarena
4.28*	Power of Attorney dated  July 5, 2016 granted to Tarena Tech by Mr. Jianguang Li and acknowledged by Beijing Tarena
4.29*	Second Amended and Restated Exclusive Option Agreement dated July 5, 2016 among Tarena, Tarena Tech, Mr. Shaoyun Han and Beijing Tarena
4.30*	Second Amended and Restated Exclusive Option Agreement dated July 5, 2016 among Tarena, Tarena Tech, Mr. Jianguang Li and Beijing Tarena
4.31*	Second Amended and Restated Loan Agreement dated July 5, 2016 between Tarena Tech and Mr. Shaoyun Han in connection with Beijing Tarena
4.32*	Second Amended and Restated Loan Agreement dated July 5, 2016 between Tarena Tech and Mr. Jianguang Li in connection with Beijing Tarena
4.33*	Second Amended and Restated Share Pledge Agreement dated July 5, 2016 among Tarena Tech, Mr. Shaoyun Han and Beijing Tarena
4.34*	Second Amended and Restated Share Pledge Agreement dated July 5, 2016 among Tarena Tech, Mr. Jianguang Li and Shanghai Tarena
4.35*	Commodity Housing Presale Contract dated May 5, 2016 between Beijing Jingkai-Gongda Investment Management Co., Ltd. and Tarena Technologies Inc.
4.36*	Commodity Housing Presale Contract dated November 5, 2016 between Beijing Jingkai-Gongda Investment Management Co., Ltd. and Tarena Software Technology (Hangzhou) Co., Ltd.
8.1*	List of Subsidiaries of the Registrant
11.1	Code of Business Conduct and Ethics of the Registrant (incorporated herein by reference to Exhibit 99.1 to the registration statement on Form F-1 (File No. 333-194191), as amended, initially filed with the SEC on February 27, 2014)
12.1*	CEO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
12.2*	CFO Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
13.1**	CEO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
13.2**	CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
15.1*	Consent of Conyers Dill & Pearman
15.2*	Consent of Han Kun Law Offices
15.3*	Consent of KPMG Huazhen LLP
101.INS*	XBRL Instance Document

128

Exhibit Number	Description of Document
101.SCH*	XBRL Taxonomy Extension Schema Document
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document

* Filed herewith.

** Furnished herewith.

129

SIGNATURES

The registrant hereby certifies that it meets all of the requirements for filing its annual report on Form 20-F and that it has duly caused and authorized the undersigned to sign this annual report on its behalf.

Tarena International, Inc.
By:	/s/ Shaoyun Han
	Name:	Shaoyun Han
	Title:	Chairman and Chief Executive Officer

Date: April 25, 2017

130

INDEX TO CONSOLIDATED FINANCIAL STATEMENTS

	Page
Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm	F-2
Consolidated Balance Sheets as of December 31, 2015 and 2016	F-3
Consolidated Statements of Comprehensive Income for the years ended December 31, 2014, 2015 and 2016	F-4
Consolidated Statements of Changes in Equity (Deficit) for the years ended December 31, 2014, 2015 and 2016	F-5
Consolidated Statements of Cash Flows for the years ended December 31, 2014, 2015 and 2016	F-6
Notes to the Consolidated Financial Statements	F-7

F-1

Report of Independent Registered Public Accounting Firm

The Board of Directors and Shareholders

Tarena International, Inc.:

We have audited the accompanying consolidated balance sheets of Tarena International, Inc. and subsidiaries (the “Company”) as of December 31, 2015 and 2016, and the related consolidated statements of comprehensive income, changes in equity (deficit) and cash flows for each of the years in the three-year period ended December 31, 2016. These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Tarena International, Inc. and subsidiaries as of December 31, 2015 and 2016, and the results of their operations and their cash flows for each of the years in the three-year period ended December 31, 2016, in conformity with U.S. generally accepted accounting principles.

As described in note 2(c) to the consolidated financial statements, the Company has elected to change its reporting currency from U.S. dollars to Chinese Renminbi.

/s/ KPMG Huazhen LLP

Beijing, China

April 25, 2017

F-2

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Amounts in thousands of Renminbi (“RMB”) and US Dollar (“US$”),

except for number of shares and per share data)

			December 31,
	Note		2015			2016
			RMB			RMB
ASSETS
Current assets:
Cash (including cash of VIEs of RMB1,043 and RMB630 as of December 31, 2015 and 2016, respectively)				513,938			810,672
Time deposits				449,878			416,724
Restricted time deposits		2		150,000			—
Accounts receivable, net of allowance for doubtful accounts		3		146,999			97,374
Prepaid expenses and other current assets		4		66,103			126,088
Total current assets				1,326,918			1,450,858
Time deposits				114,227			58,667
Accounts receivable, net of allowance for doubtful accounts		3		7,771			1,176
Property and equipment, net (including property and equipment, net of VIEs of RMB18 and RMB3 as of December 31, 2015 and 2016, respectively)		5		127,864			437,337
Goodwill				—			3,365
Long term investments, including investment measured at fair value of nil and RMB15,000 as of December 31, 2015 and 2016 (including long term investments of VIEs of RMB18,000 and RMB35,000 as of December 31, 2015 and 2016, respectively)		6		24,000			41,760
Other non-current assets (including other non-current assets of VIEs of RMB266  and RMB716 as of December 31, 2015 and 2016, respectively)				53,111			91,849
Total assets				1,653,891			2,085,012
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current liabilities:
Accounts payable				4,413			4,502
Amounts due to a related party		11		879			79
Income taxes payable (including income taxes payable of VIEs of RMB3,737 and RMB3,729 as of December 31, 2015 and 2016, respectively)		10		56,293			91,240
Deferred revenue				164,524			266,061
Accrued expenses and other current liabilities (including accrued expenses and other current liabilities of VIEs of RMB892 and RMB176 as of December 31, 2015 and 2016, respectively)		7		79,835			117,867
Total current liabilities				305,944			479,749
Other non-current liabilities (including other non-current liabilities of VIEs of RMB267 and RMB267 as of December 31, 2015 and 2016, respectively)				9,333			7,043
Total liabilities				315,277			486,792
Commitments and contingencies		16		—			—
Shareholders’ equity:
Class A ordinary shares (US$0.001 par value, 860,000,000 shares authorized, 44,914,538 and 48,735,228  shares issued, 43,988,425 and 47,160,248 shares outstanding as of December 31, 2015 and 2016, respectively)		12		276			302
Class B ordinary shares (US$0.001 par value, 40,000,000 shares authorized, 10,574,896 shares and 8,895,249 shares issued and outstanding as of December 31, 2015 and 2016, respectively)		12		98			86
Treasury shares (926,113 and 1,574,980 Class A ordinary shares as of December 31, 2015 and 2016, respectively, at cost)		12		(49,355	)		(93,761	)
Additional paid-in capital				907,018			995,216
Accumulated other comprehensive income				30,232			58,204
Retained earnings				450,345			638,173
Total shareholders’ equity				1,338,614			1,598,220
Total liabilities and shareholders’ equity				1,653,891			2,085,012

The accompanying notes are an integral part of these consolidated financial statements.

F-3

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

 (Amounts in thousands of RMB and US$,

except for number of shares and per share data)

			Year Ended December 31,
	Note		2014			2015			2016
			RMB			RMB			RMB
Net revenues		8		836,941			1,178,008			1,579,604
Cost of revenues(a)				(240,084	)		(333,559	)		(449,104	)
Gross profit				596,857			844,449			1,130,500
Selling and marketing expenses(a)				(261,489	)		(384,954	)		(527,553	)
General and administrative expenses(a)				(183,998	)		(251,298	)		(307,519	)
Research and development expenses(a)				(33,454	)		(50,515	)		(65,594	)
Operating income				117,916			157,682			229,834
Interest income				26,802			42,732			23,974
Other income				14,568			11,812			15,960
Loss on foreign currency forward contract		9		—			—			(12,898	)
Foreign currency exchange gains (losses)				7,359			(29,499	)		3,760
Income before income taxes				166,645			182,727			260,630
Income tax expense		10		(14,795	)		(3,967	)		(18,776	)
Net income				151,850			178,760			241,854
Accretion of convertible redeemable preferred shares		13		(3,530	)		—			—
Net income attributable to Class A and Class B ordinary shareholders				148,320			178,760			241,854
Basic earnings per Class A and Class B ordinary share		15		3.11			3.32			4.35
Diluted earnings per Class A and Class B ordinary share		15		2.69			3.04			4.10
Net income				151,850			178,760			241,854
Other comprehensive income (loss)
Foreign currency translation adjustment, net of nil income taxes				(2,896	)		34,748			22,972
Unrealized holding gains on available for sale securities, net of RMB42 income taxes				—			—			5,235
Less: reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes				—			—			(235	)
Comprehensive income				148,954			213,508			269,826
(a)    Includes share-based compensation expense as follows (note 14):
Cost of revenues				(349	)		(664	)		(4,124	)
Selling and marketing expenses				(1,036	)		(1,959	)		(5,496	)
General and administrative expenses				(22,302	)		(28,274	)		(51,154	)
Research and development expenses				(1,289	)		(2,022	)		(7,050	)

The accompanying notes are an integral part of these consolidated financial statements.

F-4

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT)

 (Amounts in thousands of RMB and US$, except for number of shares and per share data)

	Ordinary Shares
	Number of Class A Ordinary Shares		Amount		Number of Class B Ordinary  Shares			Amount			Treasury Shares			Additional Paid-in Capital			Accumulated Other Comprehensive Income (loss)			Retained Earnings (Accumulated Deficit)			Total Shareholders’ Equity (Deficit)
			RMB					RMB			RMB			RMB			RMB			RMB			RMB
Balance as of December 31, 2013		—		—		12,226,558			107			—			—			(1,620	)		(406,222	)		(407,735	)
Net income		—		—		—			—			—			—			—			151,850			151,850
Foreign currency translation adjustment, net of nil income taxes		—		—		—			—			—			—			(2,896	)		—			(2,896	)
Share-based compensation		—		—		—			—			—			24,976			—			—			24,976
Accretion of convertible redeemable preferred shares		—		—		—			—			—			(3,030	)		—			(500	)		(3,530	)
Issuance of Class A ordinary shares, upon initial public offering (“IPO”), net of issuance cost of RMB24,801		11,500,000		71		—			—			—			567,289			—			—			567,360
Issuance of Class A ordinary shares in private placement concurrent with the IPO		1,500,000		9		—			—			—			83,043			—			—			83,052
Conversion of Series A convertible redeemable preferred shares to Class B ordinary shares		—		—		7,196,159			44			—			3,604			—			—			3,648
Conversion of Series B convertible redeemable preferred shares to Class B ordinary shares		—		—		7,319,820			45			—			107,949			—			—			107,994
Conversion of Series C convertible redeemable preferred shares to Class B ordinary shares		—		—		10,914,852			68			—			592,781			—			—			592,849
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares		1,788,393		11		—			—			—			1,507			—			—			1,518
Conversion of Class B ordinary shares to Class A ordinary shares		8,924,365		55		(8,924,365	)		(55	)		—			—			—			—			—
Reclassification of APIC and retained earnings (note 12(d))		—		—		—			—			—			(526,457	)		—			526,457			—
Balance as of December 31, 2014		23,712,758		146		28,733,024			209			—			851,662			(4,516	)		271,585			1,119,086
Net income		—		—		—			—			—			—			—			178,760			178,760
Conversion of Class B ordinary shares to Class A ordinary shares		18,158,128		111		(18,158,128	)		(111	)		—			—			—			—			—
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares		3,043,652		19		—			—			—			22,437			—			—			22,456
Foreign currency translation adjustment, net of nil income taxes		—		—		—			—			—			—			34,748			—			34,748
Share-based compensation		—		—		—			—			—			32,919			—			—			32,919
Purchase of Class A ordinary shares		—		—		—			—			(49,355	)		—			—			—			(49,355	)
Balance as of December 31, 2015		44,914,538		276		10,574,896			98			(49,355	)		907,018			30,232			450,345			1,338,614
Net income		—		—		—			—			—			—			—			241,854			241,854
Conversion of Class B ordinary shares to Class A ordinary shares		1,679,647		12		(1,679,647	)		(12	)		—			—			—			—			—
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares		2,141,043		14		—			—			—			20,374			—			—			20,388
Foreign currency translation adjustment, net of nil income taxes		—		—		—			—			—			—			22,972			—			22,972
Share-based compensation		—		—		—			—			—			67,824			—			—			67,824
Unrealized holding gains on available-for-sale security, net of RMB42 income taxes		—		—		—			—			—			—			5,235			—			5,235
Reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes		—		—		—			—			—			—			(235	)		—			(235	)
Dividends		—		—		—			—			—			—			—			(54,026	)		(54,026	)
Purchase of Class A ordinary shares		—		—		—			—			(44,406	)		—			—			—			(44,406	)
Balance as of December 31, 2016		48,735,228		302		8,895,249			86			(93,761	)		995,216			58,204			638,173			1,598,220

The accompanying notes are an integral part of these consolidated financial statements. 

F-5

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Amounts in thousands RMB and US$, except for number of shares and per share data)

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
Operating activities:
Net income		151,850			178,760			241,854
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation		43,478			54,981			72,757
Bad debt expense		46,000			63,103			33,605
Loss on disposal of property and equipment		1,102			500			297
Deferred income tax benefit		(4,190	)		(21,614	)		(18,895	)
Share based compensation expense		24,976			32,919			67,824
Other income		—			—			29
Foreign currency exchange losses (gains), net		(6,605	)		29,499			(3,760	)
Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou
Accounts receivable		(102,974	)		(66,901	)		22,928
Prepaid expenses and other current assets		(15,125	)		(16,713	)		(60,362	)
Accrued interest income on time deposits		(17,587	)		(655	)		5,264
Other non-current assets		(4,042	)		(3,757	)		(7,071	)
Accounts payable		(269	)		533			(248	)
Amounts due to a related party		—			879			(800	)
Income taxes payable		14,641			23,287			34,947
Deferred revenue		23,528			46,570			101,439
Accrued expenses and other current liabilities		11,992			27,362			36,781
Other non-current liabilities		8,568			(1,055	)		(2,559	)
Net cash provided by operating activities		175,343			347,698			524,030
Investing activities:
Purchase of property and equipment		(48,405	)		(99,961	)		(381,982	)
Proceeds from disposal of property and equipment		227			1,040			358
Purchase of short term investments		(622,800	)		(945,000	)		(1,937,000	)
Proceeds from maturity of short term investments		622,800			945,000			1,937,000
Purchase of long-term investments		—			(24,000	)		(12,755	)
Payment for acquisition of Hanru Hangzhou		—			(1,000	)		(4,360	)
Cash acquired from acquisition of Hanru Hangzhou		—			—			148
Purchase of time deposits		(708,124	)		(639,019	)		(421,170	)
Proceeds from maturity of time deposits		22,325			690,250			678,741
Issuance of loans to employees		(3,030	)		(1,227	)		(18,525	)
Proceeds from repayment of loans from employees		2,468			1,608			3,096
Net cash used in investing activities		(734,539	)		(72,309	)		(156,449	)
Financing activities:
Amounts received on behalf of a related party		—			1,432			—
Repayment of amounts received on behalf of a related party		—			(1,432	)		—
Issuance of Class A ordinary shares upon the IPO		592,161			—			—
Issuance of Class A ordinary shares in private placement concurrent with the IPO		83,052			—			—
Issuance of Class A ordinary shares in connection with exercise of share options		1,518			22,456			20,388
Payment of dividend		—			—			(54,026	)
Repurchase of treasury shares		—			(49,355	)		(44,406	)
Payment of IPO costs		(21,705	)		—			—
Net cash provided by (used in) financing activities		655,026			(26,899	)		(78,044	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		5,837			4,413			7,197
Net increase in cash and cash equivalents		101,667			252,903			296,734
Cash and cash equivalents at beginning of year		159,368			261,035			513,938
Cash and cash equivalents at end of year		261,035			513,938			810,672
Supplemental disclosure of cash flow information:
Income taxes paid		3,479			2,246			3,096
Non-cash investing and financing activities:
Accrual for purchase of equipment		1,758			3,685			3,692
Conversion of Series A convertible redeemable preferred shares to Class B ordinary shares		3,648			—			—
Conversion of Series B convertible redeemable preferred shares to Class B ordinary shares		107,994			—			—
Conversion of Series C convertible redeemable preferred shares to Class B ordinary shares		592,849			—			—

The accompanying notes are an integral part of these consolidated financial statements.

F-6

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

(a) Description of business

Tarena International, Inc. (“Tarena International”), through its wholly-owned subsidiaries and consolidated variable interest entities or VIEs (collectively referred to hereinafter as the “Company”), is principally engaged in providing professional education services including professional information technology (“IT”) training courses and non-IT training courses across the People’s Republic of China (“PRC”). To a lesser extent, the Company is also engaged in providing IT and non-IT training courses for children. All of the Company’s operations are located in the PRC with nearly all of its customers located in the PRC.

(b) Organization

Tarena International is a holding company that was incorporated in the Cayman Islands on October 8, 2003 by Mr. Han Shaoyun (“Mr. Han”), the founder and chief executive officer of the Company, and five other individuals. Tarena International is the parent company of a number of wholly-owned subsidiaries that are engaged in professional education services. The Company’s education services in certain locations of the PRC were previously conducted through Beijing Tarena Jinqiao Technology Co., Ltd. (“Beijing Tarena”) and Shanghai Tarena Software Technology Co., Ltd. (“Shanghai Tarena”)(collectively, the “Tarena Entities”), and their subsidiaries, in order to comply with the PRC laws and regulations which restricted foreign investments in companies that were engaged in education services. Tarena Entities and their subsidiaries were principally engaged in providing professional education services including professional IT training courses in those locations and operated 23 learning centers as of December 31, 2011. Pursuant to the VIE Agreements as described below, Tarena International has effective financial control over Tarena Entities and their initial capital funding was provided by Tarena Technologies Inc., (a wholly-owned subsidiary of Tarena International or the “WOFE”, formerly known as Beijing Tarena Technology Co., Ltd.). The recognized and unrecognized revenue-producing assets that were held by Tarena Entities and their subsidiaries primarily consisted of property and equipment, operating leases for the learning premises, ICP license, www.tmooc.cn website and assembled workforce in those learning centers. Because of change in PRC laws and regulations in 2012 which encourages foreign investments in education services, the Company began to transfer most of the operations, including related assets and liabilities of Tarena Entities and their subsidiaries to the wholly-owned subsidiaries of Tarena International. As of December 31, 2013, all of the learning center operations of Tarena Entities and their subsidiaries have been transferred to other subsidiaries of Tarena International. As of December 31, 2016 Beijing Tarena invested RMB35,000 in five PRC companies, which are mainly engaged in provision of educational products and services.

Upon the establishment of Tarena Entities in 2005, the registered capital of Beijing Tarena and Shanghai Tarena were RMB2,000 and RMB1,000, respectively. In 2016, Beijing Tarena received additional capital injection of RMB3,000 through its nominee equity holders. All of the equity interests of Tarena Entities are legally held by Mr. Han and Mr. Li Jianguang (“Mr. Li”), a director of Tarena International. Both individuals are nominee equity holders of Tarena Entities and holding their equity interests on behalf of Tarena International. Through a series of contractual agreements and arrangements as amended (the “VIE Agreements”), among Tarena International, WOFE, Tarena Entities and their nominee equity holders, the nominee equity holders of Tarena Entities have granted all their legal rights including voting rights and disposition rights of their equity interests in Tarena Entities to Tarena International. The nominee equity holders of Tarena Entities do not participate significantly in income and loss and do not have the power to direct the activities of the Tarena Entities that most significantly impact their economic performance. Accordingly, the Tarena Entities are considered variable interest entities.

F-7

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (CONTINUED)

(b) Organization (continued)

In accordance with Accounting Standards Codification (“ASC”) 810-10-25-38A, Tarena International has a controlling financial interest in Tarena Entities because Tarena International has (i) the power to direct activities of Tarena Entities that most significantly impact the economic performance of Tarena Entities; and (ii) the obligation to absorb the expected losses and the right to receive expected residual return of Tarena Entities that could potentially be significant to Tarena Entities. Thus, Tarena International is the primary beneficiary of the Tarena Entities.

Under the terms of the VIE Agreements, Tarena International has (i) the right to receive economic benefits that could potentially be significant to Tarena Entities in the form of service fees under the exclusive business cooperation agreements; (ii) the right to receive all dividends declared by Tarena Entities and the right to all undistributed earnings of Tarena Entities; (iii) the right to receive the residual benefits of Tarena Entities through its exclusive option to acquire 100% of the equity interests in Tarena Entities, to the extent permitted under PRC law. Accordingly, the financial statements of Tarena Entities are consolidated in Tarena International’s consolidated financial statements.

Under the terms of the VIE Agreements, Tarena Entities’ nominee equity holders have no rights to the net assets nor have the obligations to fund the deficit, and such rights and obligations have been vested to Tarena International. All of the equity (net assets) and net income of Tarena Entities are attributed to Tarena International.

The key terms of the VIE Agreements are as follows:

Loan Agreements: The WOFE provided RMB6,000 loans in aggregate to Tarena Entities’ nominee equity holders for the sole purpose of their contribution of Tarena Entities’ registered capital. The nominee equity holders of Tarena Entities can only repay the loans by transferring all of their legal equity interest in Tarena Entities to the WOFE or its designated representatives pursuant to the exclusive option agreements. The loans shall be interest-free, unless the transfer price exceeds the principal of the loans when each nominee equityholder of Tarena Entities transfers his equity interests in Tarena Entities to Tarena International or its designated representatives. Such excess over the principal of the loan shall be deemed as the interest of the loans to the extent permitted under the PRC law. The terms of the loans expire in 2026 as amended, which can be extended with the written notice of both the WOFE and Tarena Entities before expiration. In December 2016, the Company wound up Shanghai Tarena and received the repayment of RMB1,000 from Shanghai Tarena’s nominee equity holders in March 2017.

Exclusive Option Agreements: Each of the nominee equity holders irrevocably granted Tarena International, Inc. or its designated representatives an exclusive option to purchase, to the extent permitted under PRC law, all or part of his equity interests in Tarena Entities. In addition, Tarena International has the option to acquire the equity interests of Tarena Entities for a specified price equal to the loan provided by the WOFE to the nominee equity holders. If the lowest price permitted under PRC law is higher than the above price, the lowest price permitted under PRC law shall apply. Without Tarena International’s prior written consent, the nominee equity holders shall not sell, transfer, mortgage, or otherwise dispose any equity interests in Tarena Entities. These agreements will remain effective until all equity interests held in Tarena Entities by the nominee equity holders are transferred or assigned to Tarena International or its designated representatives.

F-8

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (CONTINUED)

(b) Organization (continued)

Exclusive Business Cooperation Agreements: The WOFE has the exclusive right to provide, among other things, technical support, business support and related consulting services to Tarena Entities and Tarena Entities agree to accept all the consultation and services provided by the WOFE. Without the WOFE’s prior written consent, Tarena Entities are prohibited from engaging any third party to provide any of the services under this agreement. In addition, the WOFE exclusively owns all intellectual property rights arising out of or created during the performance of this agreement. Tarena Entities agree to pay a monthly service fee to the WOFE at an amount determined solely by the WOFE after taking into account factors including the complexity and difficulty of the services provided, the time consumed, the seniority of the WOFE employees providing services to Tarena Entities, the value of services provided, the market price of comparable services and the operating conditions of Tarena Entities. Furthermore, to the extent permitted under the PRC law, the WOFE agrees to provide financial support to Tarena Entities. The term of the agreement will remain effective unless the WOFE terminates the agreement in writing or a competent governmental authority rejects the renewal applications by either Tarena Entities or the WOFE to renew its respective business license upon expiration. Tarena Entities are not permitted to terminate this agreement in any event unless required by applicable laws.

Power of Attorney: Each nominee equity holder of Tarena Entities appointed the WOFE as the attorney-in-fact to act on all matters pertaining to Tarena Entities and to exercise all of their rights as an equity holder of Tarena Entities, including but not limited to attend shareholders’ meetings, vote on their behalf on all matters of Tarena Entities requiring shareholders’ approval under PRC laws and regulations and the articles of association of Tarena Entities, designate and appoint directors and senior management members. The WOFE may authorize or assign its rights under this appointment to any other person or entity at its sole discretion without prior notice to the nominee equity holders of Tarena Entities. Each power of attorney will remain effective until the nominee equity holder ceases to hold any equity interest in Tarena Entities. 

Equity Interest Pledge Agreements: Pursuant to the equity interest pledge agreement, Tarena Entities’ nominee equity holders pledged all of their equity interests in Tarena Entities to the WOFE to guarantee their performance of the obligations under the contractual arrangements including but not limited to, the service fees due to the WOFE. If Tarena Entities or any of Tarena Entities’ nominee equity holders breaches its contractual obligations under the contractual arrangements, the WOFE, as the pledgee, will be entitled to certain rights and entitlements, including receiving proceeds from the auction or sale of whole or part of the pledged equity interests of Tarena Entities in accordance with legal procedures. The WOFE has the right to receive dividends generated by the pledged equity interests during the term of the pledge. If any event of default as provided in the contractual arrangements occurs, the WOFE, as the pledgee, will be entitled to dispose of the pledged equity interests in accordance with PRC laws and regulations. The equity interest pledge agreements became effective on the date when the agreements were duly executed. The pledge was registered with relevant local administration for industry and commerce in December 2013 and April 2017, respectively, and will remain binding until Tarena Entities and their nominee equity holders discharge all their obligations under the contractual arrangements. The registration of the equity pledge enables the WOFE to enforce the equity pledge against third parties who acquire the equity interests of Tarena Entities in good faith.

F-9

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (CONTINUED)

(b) Organization (continued)

Tarena International relies on the VIE Agreements to operate and control the Tarena Entities. However, these contractual arrangements may not be as effective as direct equity ownership in providing Tarena International with control over Tarena Entities. Any failure by Tarena Entities or the nominee equity holders to perform their obligations under the VIE Agreements would have a material adverse effect on the consolidated financial position and consolidated financial performance of the Company. All the VIE Agreements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit Tarena International’s ability to enforce these contractual arrangements. In addition, if the legal structure and the VIE Agreements were found to be in violation of any existing or future PRC laws and regulations, Tarena International may be subject to fines or other legal or administrative sanctions.

In the opinion of management, based on the legal opinion obtained from the Company’s PRC legal counsel, the above contractual arrangements are legally binding and enforceable and do not violate current PRC laws and regulations. However, there are uncertainties regarding the interpretation and application of existing and future PRC laws and regulations. Accordingly, Tarena International cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to its opinion. If the current ownership structure of the Company and the VIE Arrangements are found to be in violation of any existing or future PRC laws and regulations, the PRC government could:

• revoke the business and operating licenses of the WOFE, its subsidiaries and Tarena Entities;

• discontinue or restrict the conduct of any transactions between the WOFE, its subsidiaries and Tarena Entities;

• impose fines, confiscate the income from Tarena Entities, or impose other requirements with which the Company may not be able to comply;

• require Tarena International to restructure its ownership structure or operations, including terminating the contractual arrangements with Tarena Entities and deregistering the equity pledges of Tarena Entities; and

• restrict or prohibit the use of the proceeds of future offering to finance the Company’s business and operations in the PRC.

If the imposition of any of these government actions causes Tarena International to lose its right to direct the activities of Tarena Entities or its right to receive substantially all the economic benefits and residual returns from Tarena Entities and Tarena International is not able to restructure its ownership structure and operations in a satisfactory manner, Tarena International would no longer be able to consolidate the financial results of Tarena Entities and their subsidiaries. In the opinion of management, the likelihood of deconsolidation of the Tarena Entities and their subsidiaries is remote based on current facts and circumstances.

F-10

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (CONTINUED)

(b) Organization (continued)

The equity interests of Tarena Entities are legally held by Mr. Han and Mr. Li as nominee equity holders on behalf of the Company. Mr. Han and Mr. Li are also directors of Tarena International. Mr. Han and Mr. Li each holds 58.8% and 12.2% of the total voting rights as of December 31, 2016, respectively, assuming the exercise of all outstanding options held by Mr. Han and Mr. Li as of such date. The Company cannot assure that when conflicts of interest arise, either of the nominee equity holders will act in the best interests of the Company or such conflicts will be resolved in the Company’s favor. Currently, the Company does not have any arrangements to address potential conflicts of interest between the nominee equity holders and the Company, except that Tarena International could exercise the purchase option under the exclusive option agreement with the nominee equity holders to request them to transfer all of their equity ownership in Tarena Entities to a PRC entity or individual designated by Tarena International. The Company relies on the nominee equity holders, who are bothTarena International’s directors and who owe a fiduciary duty to Tarena International, to comply with the terms and conditions of the contractual arrangements. Such fiduciary duty requires directors to act in good faith and in the best interests of Tarena International and not to use their positions for personal gains. If the Company cannot resolve any conflict of interest or dispute between the Company and the nominee equity holders of Tarena Entities, the Company would have to rely on legal proceedings, which could result in disruption of the Company’s business and subject the Company to substantial uncertainty as to the outcome of any such legal proceedings.

The Company’s involvement with Tarena Entities under the VIE Agreements affected the Company’s consolidated financial position, results of operations and cash flows as indicated below.

The assets and liabilities of Tarena Entities and their subsidiaries that were included in the accompanying consolidated financial statements as of December 31, 2015 and 2016 are as follows:

	December 31,
	2015		2016
	RMB		RMB
Cash		1,043		630
Amounts due from related parties		25,109		21,650
Total current assets		26,152		22,280
Property and equipment, net		18		3
Long term investments		18,000		35,000
Other non-current assets		266		716
Total assets		44,436		57,999
Income taxes payable		3,737		3,729
Accrued expenses and other current liabilities		892		176
Amounts due to related parties, including amounts due to WOFE for accrued service fees		39,307		46,486
Total current liabilities		43,936		50,391
Other non-current liabilities		267		267
Total liabilities		44,203		50,658

Amounts due from/to related parties represents the amounts due from/to Tarena International and its wholly-owned subsidiaries, which are eliminated upon consolidation.

F-11

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (CONTINUED)

(b) Organization (continued)

The financial performance and cash flows of Tarena Entities and their subsidiaries that were included in the accompanying consolidated financial statements for the years ended December 31, 2014, 2015 and 2016 are as follows:

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
Net revenues		2,902			177			-
Net loss		(14,542	)		(2,415	)		(892	)
Net cash used in operating activities		(4,252	)		(2,201	)		(2,166	)
Net cash provided by (used in) investing activities		478			(18,000	)		(11,886	)
Net cash provided by financing activities		4,124			19,755			13,639

All of the assets of Tarena Entities and their subsidiaries can be used only to settle obligations of Tarena Entities and their subsidiaries. None of the assets of Tarena Entities and their subsidiaries have been pledged or collateralized. The creditors of Tarena Entities and their subsidiaries do not have recourse to the general credit of Tarena International and its wholly-owned subsidiaries. Assets of Tarena Entities and their subsidiaries that can be used only to settle obligations of Tarena Entities and their subsidiaries and liabilities of Tarena Entities and their subsidiaries for which creditors (or beneficial interest holders) do not have recourse to the general credit of Tarena International and its wholly owned subsidiaries have been presented parenthetically alongside each balance sheet caption on the face of the consolidated balance sheets.

During the periods presented, Tarena International and its wholly-owned subsidiaries provided financial support to Tarena Entities that they were not previously contractually required to provide in the form of advances. To the extent Tarena Entities require financial support, pursuant to the exclusive business cooperation agreements, the WOFE may, at its option and to the extent permitted under the PRC law, provide such support to Tarena Entities through loans to Tarena Entities’ nominee equity holders or entrustment loans to Tarena Entities.

(c) Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

F-12

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (CONTINUED)

(d) Significant concentrations and risks

Revenue concentration

A substantial portion of the Company’s total net revenues are generated from Java, Digital Arts and Web Front courses. The percentages of the Company’s total net revenues from Java, Digital Arts and Web Front training courses are as follows:

	Year Ended December 31,
	2014			2015			2016
Java		36.7	%		28.8	%		34.3	%
Digital Arts		29.1	%		32.2	%		28.0	%
Web Front		0.0	%		4.2	%		12.7	%
Total		65.8	%		65.2	%		75.0	%

The Company expects net revenues from these three training courses to continue to represent a substantial portion of its total net revenues in the future. Negative factors that adversely affect net revenues generated by these three training courses will have a material adverse effect on the Company’s business, financial condition and results of operations. There were no other courses that represented revenues greater than 10% of total revenues.

A substantial portion of the Company’s students financed their tuition fees through the loans offered to them by Baidu Small Loan Co., Ltd., RenRenDai, Bank of China Consumer Finance Co., Ltd., CreditEase Business Consulting (Beijing) Co., Ltd., and Bank of Beijing Consumer Finance Company during the three-years period ended December 31, 2016. The Company expects students financed by these companies to continue to represent a substantial portion of its total students in the future. The Company believes other companies could provide similar loans to its students on comparable terms. However, negative factors that adversely affect these companies will have a material adverse effect on the Company’s business, financial condition and results of operations.

Geographic concentration

A substantial portion of the Company’s total net revenues are derived from its business operations in Beijing and Hangzhou. The percentages of the Company’s total net revenues generated from its business operations in Beijing and Hangzhou are as follows:

	Year Ended December 31,
	2014			2015			2016
Hangzhou		25.5	%		33.0	%		31.9	%
Beijing		15.5	%		12.3	%		12.4	%
Total		41.0	%		45.3	%		44.3	%

The Company expects revenues derived from its business operations in Beijing and Hangzhou to continue to represent a significant portion of its total net revenues. Negative factors that adversely affect professional education services in Beijing or Hangzhou will have a material adverse effect on the Company’s business, financial condition and results of operations. There were no other cities that represented revenues greater than 10% of total revenues.

F-13

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of consolidation

The consolidated financial statements include the financial statements of Tarena International, its wholly-owned subsidiaries, VIEs in which Tarena International is the primary beneficiary and their wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation.

(b) Use of estimates

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the estimated selling price of deliverables in multiple element arrangements, the fair values of share-based compensation awards and available-for-sale investments, the collectability of accounts receivable, the realizability of deferred income tax assets, the accruals for tax uncertainties and other contingencies, the recoverability of the carrying amounts of property and equipment and the useful lives of property and equipment. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.

(c) Foreign currency

In 2016, the Company changed its reporting currency from United States Dollars (“USD”) to Chinese Renminbi (“RMB”). Prior years’ comparative financial information have been recasted as if the Company always used RMB as its reporting currency.

The functional currency of Tarena International and Tarena Hong Kong Limited (“Tarena HK”) is the USD. The functional currency of Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs is the RMB. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rate at the balance sheet date. The resulting exchange differences are recorded in foreign currency exchange gains (losses) in the consolidated statements of comprehensive income.

Assets and liabilities of entities with functional currencies other than RMB are translated into RMB using the exchange rate on the balance sheet date. Revenues and expenses are translated into RMB at average rates prevailing during the reporting period. The resulting foreign currency translation adjustment are recorded in accumulated other comprehensive income (loss) within shareholders’ equity (deficit).

Since the RMB is not a fully convertible currency, all foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC.

F-14

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(d) Cash, cash equivalents , time deposits and restricted time deposits

Cash consist of cash on hand and cash in bank, which are unrestricted as to withdrawal. Cash equivalents consist of interest-bearing certificates of deposit with initial term of no more than three months when purchased.

Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term of greater than three months when purchased. Time deposits which mature over one year as of the balance sheet date are included in non-current assets.

Time deposits that were pledged as collateral for line of credit with a financial institution in the U.S. with an initial term of greater than three months when purchased as of December 31, 2015 were reported as restricted time deposits.

Cash, time deposits and restricted time deposits maintained at banks consist of the following:

	December 31,
	2015		2016
	RMB		RMB
RMB denominated bank deposits with financial institutions in the PRC		627,148		867,811
US dollar denominated bank deposits with a financial institutions in the PRC		52,680		152,792
US dollar denominated bank deposits with financial institutions in Hong Kong Special Administrative Region (“HK SAR”)		645		3,535
HK dollar denominated bank deposits with a financial institution in HK SAR		99		1
RMB denominated bank deposits with a financial institution in HK SAR		3		3
RMB denominated bank deposits with financial institutions in the U.S.		547,388		-
US dollar denominated bank deposits with financial institutions in the U.S.		55		261,913

To limit exposure to credit risk relating to bank deposits, the Company primarily places bank deposits only with large financial institutions in the PRC, HK SAR and the U.S. with acceptable credit rating.

(e) Short-term investment

During the years ended December 31, 2014, 2015 and 2016, the Company invested RMB622,800, RMB945,000 and RMB1,937,000, respectively, in financial products managed by three financial institutions in the PRC. The terms of the financial products range between 5 days and 91 days. The financial products matured before December 31, 2014, 2015 and 2016, respectively. The Company earned investment income of RMB4,652, RMB5,961 and RMB12,676, respectively on the financial products, which was included in other income in the consolidated statements of comprehensive income for the years ended December 31, 2014, 2015 and 2016.

F-15

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(f) Accounts receivable

Accounts receivable primarily represent tuition fees due from students. Accounts receivable which are due over one year as of the balance sheet date are presented as non-current assets. The unearned interest on accounts receivable which are due over one year is reported in the consolidated balance sheets as a direct deduction from the principal amount of accounts receivable. See note 2(j). The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Accounts receivable is considered past due based on its contractual terms. In establishing the allowance, management considers historical losses, the students’ financial condition, the amount of accounts receivables in dispute, the accounts receivables aging and the students’ payment patterns. Accounts receivable which are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted.

(g) Property and equipment

Property and equipment are recorded at cost. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. The estimated useful life of property and equipment is as follows:

Office buildings	45 years
Furniture	5 years
Office equipment	3 to 4 years
Leasehold improvements	Shorter of the lease term or the estimated useful life of the assets

Ordinary maintenance and repairs are charged to expenses as incurred, while replacements and betterments are capitalized. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value of the item disposed and proceeds realized thereon.

Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment loss is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. No impairment of long-lived assets was recognized for any of the years presented.

(h) Goodwill

The excess of the purchase price over the fair value of net assets acquired is recorded on the consolidated balance sheets as goodwill. Goodwill is not amortized, but tested for impairment annually or more frequently if event and circumstances indicate that it might be impaired.

F-16

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(h) Goodwill (continued)

ASC 350-20, Goodwill, permits the Company to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test, using a two-step approach. If this is the case, the two-step goodwill impairment test is required. If it is more likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required.

If the two-step goodwill impairment test is required, the first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired and the second step is not required. If the fair value of the reporting unit is less than its carrying amount, the second step of the impairment test measures the amount of the impairment loss, if any, by comparing the implied fair value of goodwill to its carrying amount. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss is recognized equal to that excess. The implied fair value of goodwill is calculated in the same manner that goodwill is calculated in a business combination, whereby the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit, with the excess purchase price over the amounts assigned to assets and liabilities representing the implied fair value of goodwill.

(i) Long-term investments

The Company’s long-term investments consist of cost method investments, equity method investment and available-for-sale investment.

Cost method investments

Investments in entities in which the Company does not have an ability to exercise significant influence over the operating and financial matters of the investees and which do not have readily determinable fair value are accounted for using the cost method, under which the Company carries the investments at cost and recognizes as income for any dividend received from distribution of the investees’ earnings.

The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. No events or circumstances indicating a potential impairment were identified as of or for the year ended December 31, 2015 and 2016. The Company determines that it is not practicable to estimate fair value of cost method investments as of December 31, 2015 and 2016, because the sales prices or bid-and-asked quotations of the equity interests of these entities are not currently available and the cost of obtaining an independent valuation appears excessive considering the materiality of the investments to the Company.

Equity method investment

Investment in entity in which the Company has the ability to exercise significant influence, but does not have a controlling interest through investment in common shares or in-substance common shares, are accounted for using the equity method. Under the equity method, the Company initially records its investment at cost, its share of the post-acquisition profits or losses of the investee is recognized in the Company’s consolidated statements of comprehensive income; and the Company’s share of post-acquisition movements in equity is recognized in equity in the Company’s consolidated balance sheets. Unrealized gains on transactions between the Company and an investee in which the Company has recorded an equity investment are eliminated to the extent of the Company’s interest in the investee. To the extent of the Company’s interest in the investment, unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

F-17

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(i) Long-term investments (continued)

Available-for-sale investment

For investment in debt security, the Company accounts for it as available-for-sale investment when it is not classified as either trading or held-to-maturity investments. Available-for-sale security is reported at fair value, with unrealized holding gains or losses, net of the related tax effect, excluded from earnings and recorded as a separate component of accumulated other comprehensive income until realized. Realized gains or losses from the sale of available-for-sale investment are determined on a specific identification basis.

The Company’s consolidated statements of comprehensive income reflects the full impairment (that is, the difference between the security’s amortized cost basis and fair value) on debt securities that the Company intends to sell or would more-likely than-not be required to sell before the expected recovery of the amortized cost basis. For available-for-sale investment that management has no intent to sell and believes that it more likely than-not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the rest of the fair value loss is recognized in accumulated other comprehensive income.

A decline in the market value of any available-for-sale investments below cost that is deemed to be other-than-temporary results in an impairment to reduce the carrying amount to fair value. To determine whether an impairment is other-than-temporary, the Company considers all available information relevant to the collectibility of the financial product, including past events, current conditions, and reasonable and supportable forecasts when developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.

(j) Revenue recognition

Revenue is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. These criteria as they relate to each of the following major revenue generating activities are described below. Revenue is presented net of business tax and value added taxes (“VAT”) at rates ranging between 3% and 6%, and surcharges. VAT and business tax collected from customers, net of VAT paid for purchases, is recorded as a liability in the consolidated balance sheets until it is paid to the tax authorities.

Tuition fees

Tuition fees are recognized as revenue proportionately as the training courses are delivered, with unearned portion of tuition fees being recorded as deferred revenue. Certain qualified students are allowed to pay their tuition fees on installment for a period of time exceeding one year. When tuition services are sold on installment terms that exceeds one year beyond the point in time that revenue is recognized, the receivable, and therefore the revenue is recorded at the present value of the payments. The difference between the present value of the receivable and the nominal or principal value of the tuition fees is recognized as interest income over the contractual repayment period using the effective interest rate method. The interest rate used to determine the present value of total amount receivable is the rate at which the students can obtain financing of a similar nature from other sources at the date of the transaction.

F-18

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(j) Revenue recognition (continued)

The Company enters into arrangements with certain students that purchase multiple services, including classroom training and extended on-line case studies (“multiple-element arrangements”). Each element within the multiple-element arrangements is accounted for as a separate unit of accounting provided the following criteria are met: the delivered services have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered services, delivery or performance of the undelivered service is considered probable and is substantially controlled by the Company. A deliverable has standalone value if the service is sold separately by the Company or another vendor. The Company’s revenue arrangements do not include a general right of return relative to the delivered services.

The Company treats training contracts with multiple deliverable elements as separate units of accounting for revenue recognition purposes and recognizes revenue during the contract period when each deliverable service is provided. The Company allocates the contract price among all the deliverables at the inception of the arrangement on the basis of their relative selling prices according to the selling price hierarchy established by Accounting Standard Update No. 2009-13, Revenue Recognition - Multiple-Deliverable Revenue Arrangements. The Company first uses vendor-specific objective evidence (VSOE) of selling price, if it exists, otherwise the third-party evidence of selling price is used. If neither VSOE of selling price nor third-party evidence of selling price exists, the Company uses management’s best estimate of selling price for the deliverables.

Certification service revenue

The Company provides certification service to students who complete the training course and enroll for the exams. The Company is responsible for the certification service, including organization, proctoring and grading of exams. All certificates are issued by third parties to the students who pass the exam. The Company acts as the principal in providing this service and recognizes revenue on gross basis because the Company is the primary obligor in the arrangement and is responsible for fulfilling the ordered services by the students. Cash received before the students taking the exam, is recorded as deferred revenue, and subsequently recognized as certification service revenue upon completion of the certification service, which occurs when the certificates are provided to the students.

Loan referral service revenue

In 2016, pursuant to the agreements between the Company and a number of financial service providers, the Company promotes loan products of these financial service providers to its students, who need financial assistance for the payment of their tuition fees, in exchange for a referral fee at a rate of between 5% to 8% of the principal amount of the loans. The Company does not provide guarantee for the loans, which are between the financial service providers and its students. Loan referral service revenue is recognized upon the initiation of the loans.

(k) Cost of revenues

Cost of revenues consists of payroll and employee benefits, rent expenses of learning centers, depreciation relating to property and equipment used for operating the learning centers, and other operating costs that are directly attributed to the provision of training services.

(l) Advertising costs

Advertising costs are expensed as incurred and included in selling and marketing expenses. Advertising costs were RMB102,820, RMB151,533 and RMB201,298 for the years ended December 31, 2014, 2015 and 2016, respectively.

F-19

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(m) Operating lease

The Company leases premises for learning centers and offices under non-cancellable operating leases. Leases with escalated rent provisions are recognized on a straight-line basis commencing with the beginning of the lease term. There are no capital improvement funding, other lease concessions or contingent rent in the lease agreements. The lease terms of the Company’s learning centers range between 1 and 10 years. The Company has no legal or contractual asset retirement obligations at the end of the lease term.

Certain learning centers of the Company sublease a portion of the areas to certain students for their living accommodation. Income from subleases is recognized on a straight-line basis over the term of the lease and recognized as reduction of costs of revenues.

(n) Government grant

Government grant is recognized when there is reasonable assurance that the Company will comply with the conditions attach to it and the grant will be received. Government grant for the purpose of giving immediate financial support to the Company with no future related costs or obligation is recognized in the Company’s consolidated statements of comprehensive income when the grant becomes receivable. Government grants of RMB9,916, RMB5,851 and RMB3,199 were recognized and included in other income for the years ended December 31, 2014, 2015 and 2016, respectively.

(o) Research and development expense

Research and development costs are expensed as incurred.

(p) Employee benefits

Pursuant to relevant PRC regulations, the Company is required to make contributions to various defined contribution plans organized by municipal and provincial PRC governments. The contributions are made for each PRC employee at rates ranging from 22.3% to 53.1% on a standard salary base as determined by local social security bureau. Contributions to the defined contribution plans are charged to the consolidated statements of comprehensive income when the related service is provided. For the years ended December 31, 2014, 2015 and 2016, the costs of the Company’s obligations to the defined contribution plans amounted to RMB51,510, RMB69,370 and RMB85,325, respectively. The Company has no other obligation for the payment of employee benefits associated with these plans beyond the contributions described above.

(q) Income taxes

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax loss and tax credit carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or tax laws is recognized in the consolidated statements of comprehensive income in the period the change in tax rates or tax laws is enacted. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is considered more likely than not that some portion or all of the deferred income tax assets will not be realized.

F-20

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(q) Income taxes (continued)

The Company recognizes in the consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to an unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of comprehensive income.

(r) Deferred offering costs

Deferred offering costs consist principally of legal, printing and registration costs in connection with the IPO. Upon completion of the IPO on April 3, 2014, the deferred offering costs of RMB3,788 were recognized as a reduction of the offering proceeds.

(s) Share based compensation

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, net of estimated forfeitures, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. Forfeiture rates are estimated based on historical and future expectations of employee turnover rates.

(t) Commitments and contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.

(u) Earnings per share

Basic earnings per Class A and Class B ordinary share is computed by dividing net income attributable to Tarena International’s Class A and Class B ordinary shareholders by the weighted average number of Class A and Class B ordinary shares outstanding during the year using the two-class method. Under the two-class method, net income attributable to Tarena International’s Class A and Class B ordinary shareholders is allocated between Class A and Class B ordinary shares and other participating securities, if any, based on participating rights in undistributed earnings.

Tarena International’s Series A convertible redeemable preferred shares, Series B convertible redeemable preferred shares and Series C convertible redeemable preferred shares were participating securities since the holders of these securities participated in dividends on the same basis as Class A and Class B ordinary shareholders.

F-21

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(u) Earnings per share (continued)

Diluted earnings per share is calculated by dividing net income attributable to Tarena International’s Class A and Class B ordinary shareholders as adjusted for the effect of dilutive Class A and Class B ordinary share equivalents, if any, by the weighted average number of Class A and Class B ordinary and dilutive Class A and Class B ordinary share equivalents outstanding during the year. Class A and Class B ordinary share equivalents include the Class A and Class B ordinary shares issuable upon the exercise of the outstanding share options (using the treasury stock method) and conversion of convertible redeemable preferred shares (using the as-if-converted method). Potential dilutive securities are not included in the calculation of diluted earnings per Class A and Class B ordinary share if the impact is anti-dilutive.

(v) Segment reporting

The Company uses the management approach in determining its operating segments. The management approach considers the internal reporting used by the Company’s chief operating decision maker for making decisions about the allocation of resources to and the assessment of the performance of the segments of the Company. Management has determined that the Company has one operating segment, which is the training segment. All of the Company’s operations and customers are located in the PRC. Consequently, no geographic information is presented.

(w) Fair value measurements

The Company applies the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring and nonrecurring basis. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC Topic 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. In situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects management’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by management based on the best information available in the circumstances.

F-22

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(w) Fair value measurements (continued)

The carrying amounts of cash, current time deposits, restricted time deposits, accounts receivable, loans to employees, accounts payable, amounts due to a related party, accrued expenses and other current liabilities as of December 31, 2015 and 2016 approximate their fair value because of short maturity of these instruments.

The carrying amounts of non-current time deposits as of December 31, 2015 and 2016 approximates their fair value since the interest rates of the time deposits did not differ significantly from the market interest rates for similar types of time deposits.

The fair values of time deposits, restricted time deposits as of December 31, 2015 and 2016 are categorized as Level 2 measurement.

Available-for-sale investment as of December 31, 2016 is valued based on the implied enterprise value indirectly observed in a recent transaction at the reporting date and is categorized as Level 2 measurement.

(x) Recently issued accounting standards

The Financial Reporting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, in May 2014. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In December 2015, the FASB issued ASU No. 2015-14, Revenue from contracts with customers, which deferred the effective date of ASU 2014-09. The new standard is effective for annual reporting periods beginning after December 15, 2017. The Company will apply the new revenue standard beginning January 1, 2018. The Company has set up an implementation team that is currently in the process of analyzing each of the Company’s revenue streams in accordance with the new revenue standard to determine the impact on the Company’s consolidated financial statements. The Company plans to continue the evaluation, analysis, and documentation of its adoption of ASU 2014-09 (including those subsequently issued updates that clarify its provisions) in 2017 as the Company works towards the implementation and finalizes its determination of the impact that the adoption will have on its consolidated financial statements.

On January 5, 2016, the FASB issued ASU 2016-01 (“ASU 2016-01”), Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equity investments to be measured at fair value, with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

F-23

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(x) Recently issued accounting standards(continued)

On February 25, 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 specifies the accounting for leases. For operating leases, ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. ASU 2016-02 is effective for publicly-traded companies for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

On March 30, 2016, the FASB issued ASU 2016-09 (“ASU 2016-09”), Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification in the statement of cash flows; and (d) accounting for forfeitures of share-based payments. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company does not expect this standard to have a material impact on its consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures.

In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows — Classification of Certain Cash Receipts and Cash Payments, which clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures.

In November 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, and interim period within those fiscal years. Early adoption is permitted, including adoption in an interim period. The standard should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

F-24

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

(x) Recently issued accounting standards(continued)

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectively on or after the effective date. The Company will evaluate the impact of adopting this standard prospectively upon any transactions of acquisitions or disposals of assets or businesses.

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of a goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

F-25

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

3 ACCOUNTS RECEIVABLE

Accounts receivable consists of the following:

	December 31,
	2015			2016
	RMB			RMB
Accounts receivable:
Gross		237,624			214,142
Unearned interest		(15,997	)		(15,130	)
Total accounts receivable		221,627			199,012
Less: allowance for doubtful accounts		(66,857	)		(100,462	)
Accounts receivable, net		154,770			98,550

The classification of accounts receivable is as follows:

	December 31,
	2015		2016
	RMB		RMB
Accounts receivable, net – current portion		146,999		97,374
Accounts receivable, net – non-current portion		7,771		1,176
Total accounts receivable, net		154,770		98,550

The movements of the allowance for doubtful accounts are as follows:

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
Balance at the beginning of the year		14,041			35,347			66,857
Additions charged to bad debt expense		46,000			63,103			33,605
Write-off of bad debt allowance		(24,694	)		(31,593	)		-
Balance at the end of the year		35,347			66,857			100,462

The aging analysis of our accounts receivable based on due date is as follows:

	As of December 31,
	2015		2016
	RMB		RMB
Aging:
– current		104,368		78,276
– 1-3 months past due		37,005		15,306
– 4-6 months past due		13,373		10,846
– 7-12 months past due		18,015		22,748
– greater than one year past due		48,866		71,836
Total accounts receivable		221,627		199,012

F-26

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

4 PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following:

		December 31,
		2015		2016
		RMB		RMB
Prepaid expenses and other current assets:
Prepaid rental expenses			17,925		25,038
Interest receivable from time deposits			11,485		5,945
Prepaid advertising deposits			10,975		11,875
Prepaid advertising expenses			9,991		14,193
Prepaid value-added tax			7,176		50,587
Housing loans made to employees	(a)		2,290		4,968
Staff advances	(b)		423		1,404
Others	(c)		5,838		12,078
Total prepaid expenses and other current assets			66,103		126,088

(a)	Before 2016, the Company provided one-year housing loans to the employees to help them finance their purchase of apartments. In 2016, the Company provided five-year loans to the employees, which amounted to RMB12,751 and were included in other non-current assets.
(b)	Staff advances are provided to staff for traveling and related expenses and are expensed when incurred.
(c)	Others mainly represent other deposits, professional fees and other miscellaneous prepaid expenses.

5 PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following:

	December 31,
	2015			2016
	RMB			RMB
Office buildings		-			281,541
Furniture		10,510			18,078
Office equipment		211,385			271,862
Leasehold improvements		53,126			64,383
Total property and equipment		275,021			635,864
Less: accumulated depreciation		(147,157	)		(198,527	)
Property and equipment, net		127,864			437,337

Depreciation expense for property and equipment was allocated to the following:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Cost of revenues		38,088		48,553		61,967
Selling and marketing expenses		2,253		2,694		3,226
General and administrative expenses		2,649		3,031		6,455
Research and development expenses		488		703		1,109
Total		43,478		54,981		72,757

F-27

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

6 LONG-TERM INVESTMENTS

Long-term investments consisted of the following:

		December 31,
		2015		2016
		RMB		RMB
Cost method investments
Sino-German Know-How Education Investment Co., Ltd.	(a)		12,000		12,000
Juesheng.com	(b)		5,000		5,000
Mxsoft.com	(c)		4,000		4,000
Other cost method investments	(d)		3,000		5,000
Total cost method investments			24,000		26,000
Equity method investment
Hockey global resources investment limited	(e)		-		760
Available-for-sale investment	(f)		-		15,000
Total			24,000		41,760

(a)	In October 2015, the Company paid RMB12,000 in cash to acquire 2.86% of the total equity interest in Sino-German Know-How Education Investment Co., Ltd, which is engaged in provision of training for senior mechanic in vehicle maintenance and repair.
(b)	In November 2015, the Company paid RMB5,000 in cash to acquire 0.50% of the total equity interest of an online shopping platform providing education products.
(c)	In August 2015, the Company paid RMB4,000 in cash to acquire 5.71% of the total equity interest in Mxsoft.com, which provides IT environment management and monitoring solution to customers.
(d)	As of December 31, 2015, the Company paid RMB3,000 in cash to acquire 1.43% and 0.74% equity interest in two other entities which were accounted for under cost method. In June 2016, the Company paid RMB2,000 in cash to acquire 2.00% equity interest of an online platform providing vehicle sales and related services.
(e)	In October 2016, the Company paid RMB790 in cash to acquire 28.5% of equity interest of a hockey program management company through investment in its common shares and accounted for the investment using equity method.
(f)	In October 2016, the Company paid RMB10,000 in cash to acquire 13.9% equity interest in Beijing Crouching Tiger Hidden Dragon Internet Technology Co., Ltd., which provides employment course trainings and recruitment services. Because the investment terms contain both substantive liquidation preference over common stock and substantive redemption provision that is not available to common shareholders, the investment is not substantially similar to common stock. In addition, since the investment is redeemable at the option of the Company, the investment qualifies as a debt security. The Company recorded the investment as available-for-sale investment and recorded an increase of RMB5,000 in fair value of the investment with nil income tax effect in 2016, as a component of other comprehensive income.

F-28

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

7 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

	December 31,
	2015		2016
	RMB		RMB
VAT and other tax payables		18,347		29,995
Accrued payroll and employee benefits		37,396		59,512
Others		24,092		28,360
Total		79,835		117,867

Others mainly represent current deferred income under American Depositary Receipt program, accrual for employee reimbursement, rental expenses and other miscellaneous expenses.

8 NET REVENUES

Net revenues consist of the following:

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
Tuition fee		835,275			1,174,596			1,545,680
Certification service fee		18,038			27,466			35,980
Loan referral service fee		-			-			8,750
Others		2,873			1,136			1,875
Business taxes and surcharges		(19,245	)		(25,190	)		(12,681	)
Total net revenues		836,941			1,178,008			1,579,604

Others mainly represent miscellaneous fees, including franchise fee and guarantee fee (see note 11(a)).

9 LOSS ON FOREIGN CURRENCY FORWARD CONTRACT

The Company entered into a foreign currency forward contract on January 29, 2016 to sell its time deposits denominated in RMB for US dollars at a fixed rate at 6.7070 on May 19, 2016 with the notional amount of RMB564,095. The Company settled the forward contract on May 19, 2016 and incurred a loss on foreign currency forward contract in the amount of RMB12,898 for the year ended December 31, 2016.

F-29

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

10 INCOME TAXES

Under the current laws of the Cayman Islands, Tarena International is not subject to tax on its income or capital gains. For the period from its inception on October 22, 2012 to December 31, 2016, Tarena HK did not have any assessable profits arising in or derived from HK SAR. Tarena International’s PRC subsidiaries and consolidated VIEs and the subsidiaries of the VIEs file separate tax returns in the PRC. Effective from January 1, 2008, the PRC statutory income tax rate is 25% according to the Corporate Income Tax (“CIT”) Law which was passed by the National People’s Congress on March 16, 2007.

Under the CIT Law, entities that qualify as “Advanced and New Technology Enterprise” (“ANTE”) are entitled to a preferential income tax rate of 15%. In 2009, the WOFE qualified as an ANTE, which entitled it to the preferential income tax rate of 15% from January 1, 2009 to December 31, 2011. In 2012, the WOFE renewed its ANTE qualification, which entitled it to the preferential income tax rate of 15% from January 1, 2012 to December 31, 2014. In 2015, the WOFE renewed its ANTE qualification, which entitled it to the preferential income tax rate of 15% from January 1, 2015 to December 31, 2017.

Tarena Software Technology (Hangzhou) Co., Ltd. (“Tarena Hangzhou”) was established in 2013 and qualified as an eligible software enterprise. As a result of this qualification, it is entitled to a tax holiday of a two-year full exemption followed by a three-year 50% exemption, commencing from the year in which its taxable income is greater than zero. As a result, its income tax rates for the years ended December 31, 2014, 2015 and 2016 were nil, nil and 12.5%, respectively.

In 2016, Tarena Hangzhou acquired Hanru Education& Technology Co., Ltd. (“Hanru Hangzhou”), which was qualified as an eligible software enterprise, and was entitled to a tax holiday of a two-year full exemption followed by a three-year 50% exemption, commencing from the year in which its taxable income is greater than zero. As a result, the income tax rate of Hanru Hangzhou for the year ended December 31, 2016 was nil.

Certain Tarena International’s subsidiaries and branches qualified as “Small Profit Enterprises” in 2014, 2015 and 2016, and therefore are subject to the preferential income tax rate of 20%.

According to the approvals from the tax authorities in certain locations in the PRC, Tarena International’s subsidiaries and consolidated VIEs and the subsidiaries of the VIEs that are based in these locations are required to use the deemed profit method to determine their income tax. Under the deemed profit method, these subsidiaries are subject to income tax at 25% on its deemed profit which is calculated based on revenues less deemed expenses equal to 85% and 90% of revenues.

F-30

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

10 INCOME TAXES (CONTINUED)

The components of income before income taxes are as follows:

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
PRC		146,570			200,789			272,745
Hong Kong		(1,964	)		(1,908	)		(573	)
Cayman Islands		22,039			(16,154	)		(11,542	)
Total income before income taxes		166,645			182,727			260,630

Income tax expense consists of the following:

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
Current income tax expense		18,985			25,581			37,671
Deferred income tax benefit		(4,190	)		(21,614	)		(18,895	)
Total		14,795			3,967			18,776

The actual income tax expense reported in the consolidated statements of comprehensive income for each of the years ended December 31, 2014, 2015 and 2016 differs from the amount computed by applying the PRC statutory income tax rate to income before income taxes due to the following:

	Year Ended December 31,
	2014			2015			2016
PRC statutory income tax rate		25.0	%		25.0	%		25.0	%
Increase (decrease) in effective income tax rate resulting from:
Cayman and HK entities not subject to income taxes		(3.0	)%		2.5	%		1.2	%
Research and development bonus deduction		(2.7	)%		(3.3	)%		(2.7	)%
Non-deductible selling, general and administrative expenses
Share based compensation		3.8	%		4.5	%		6.5	%
Other non-deductible selling, general and administrative expenses		0.5	%		0.6	%		0.1	%
ANTE preferential tax rate		(1.0	)%		0.1	%		(0.7	)%
Tarena Hangzhou preferential tax rate		(0.1	)%		0.7	%		0.5	%
Change in valuation allowance		6.4	%		3.1	%		2.5	%
Tarena Hangzhou and Hanru Hangzhou tax holiday		(20.0	)%		(31.1	)%		(25.2	)%
Others		0.0	%		0.1	%		0.0	%
Actual income tax expense		8.9	%		2.2	%		7.2	%

Basic earnings per Class A ordinary share and Class B ordinary share effect of the Company’s tax holiday for the year ended December 31, 2014, 2015 and 2016 was RMB0.81, RMB1.06 and RMB1.18, respectively.

Diluted earnings per Class A ordinary share and Class B ordinary share effect of the Company’s tax holiday for the year ended December 31, 2014, 2015 and 2016 was RMB0.70, RMB0.97 and RMB1.11, respectively.

F-31

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

10 INCOME TAXES (CONTINUED)

The principal components of deferred income tax assets are as follows:

	December 31,
	2015			2016
	RMB			RMB
Deferred income tax assets:
Accounts receivable		34,616			47,126
Tax loss carry forwards		7,065			9,984
Advertising expense		13,666			23,401
Accrued expenses and other current liabilities		-			123
Total deferred income tax assets		55,347			80,634
Valuation allowance		(20,115	)		(26,507	)
Deferred income tax assets, net		35,232			54,127

The movements of the valuation allowance are as follows:

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
Balance at the beginning of the year		3,647			14,362			20,115
Additions of valuation allowance		11,198			9,069			13,076
Reduction of valuation allowance		(483	)		(3,316	)		(6,684	)
Balance at the end of the year		14,362			20,115			26,507

The valuation allowance as of December 31, 2015 and 2016 was primarily provided for the deferred income tax assets of certain Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs, which were at cumulative loss positions. In assessing the realization of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilizable. Management considers projected future taxable income and tax planning strategies in making this assessment. As of December 31, 2016, the Company had tax losses carryforwards of RMB 39,936. Tax losses of RMB227, RMB11,053, RMB8,165 and RMB20,491 will expire, if unused, by 2018, 2019, 2020 and 2021, respectively.

The CIT Law and its implementation rules impose a withholding income tax at 10%, unless reduced by a tax treaty or arrangement, on the amount of dividends distributed by a PRC-resident enterprise to its immediate holding company outside the PRC that are related to earnings accumulated beginning on January 1, 2008. Dividends relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholding income tax.

The Company has considered temporary differences on the book to tax differences pertaining to all investment in subsidiaries including the determination of the indefinite reinvestment assertion that would apply to each foreign subsidiary. The Company evaluated each entity’s historical, current business environment and plans to indefinitely reinvest all earnings accumulated in its respective jurisdiction for purpose of future business expansion.

Due to the plan to indefinitely reinvest its earnings in the PRC, the Company has not provided for deferred income tax liabilities on undistributed earnings of RMB604,218 and RMB937,735 as of December 31, 2015 and 2016, respectively. It is not practicable to estimate the unrecognized deferred income tax liabilities thereof.

F-32

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

10 INCOME TAXES (CONTINUED)

A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the years ended December 31, 2014, 2015 and 2016 is as follows:

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
Balance at beginning of year		18,764			36,921			53,404
Increase related to current year tax positions		35,436			51,050			66,122
Settlement		(17,279	)		(34,567	)		(49,704	)
Balance at end of year		36,921			53,404			69,822

RMB49,198 and RMB69,263 of unrecognized tax benefits as of December 31, 2015 and 2016, if recognized, would affect the effective tax rate. No interest and penalty expenses were recorded for the years ended December 31, 2014, 2015 or 2016. RMB42,489 and RMB62,665 of unrecognized tax benefits as of December 31, 2015 and 2016 were included in income taxes payable. RMB3,700 and RMB3,700 of unrecognized tax benefits as of December 31, 2015 and 2016 were included in other non-current liabilities. The remaining RMB7,215 and RMB3,457 unrecognized tax benefit as of December 31, 2015 and 2016, respectively were presented as a reduction of the deferred income tax assets for tax loss carry forwards since the uncertain tax position would reduce the tax loss carry forwards under the tax law. The unrecognized tax benefits represent the estimated income tax expenses the Company would be required to pay should its revenue for tax purposes be recognized in accordance with current PRC tax laws and regulations. Management believes that it is reasonably possible that RMB66,122 unrecognized tax benefits as of December 31, 2016 will be recognized in the next twelve months as a result of such revenue being reported in the income tax filing during the next twelve months.

According to the PRC Tax Administration and Collection Law, the statute of limitation is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitation is extended to five years under special circumstances where the underpayment of taxes is more than RMB100. In the case of transfer pricing issues, the statute of limitation is 10 years. There is no statute of limitation in the case of tax evasion. The income tax returns of Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs for the years from 2012 to 2016 are open to examination by the PRC tax authorities.

F-33

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

11 RELATED PARTY TRANSACTIONS

During the years ended December 31, 2014, 2015 and 2016, the Company entered into related party transactions with Mr. Han, Chuanbang Business Consulting (Beijing) Co., Ltd. (“Chuanbang”), which is wholly owned by Mr. Han, and Precise Advance Limited (“Precise”), which is owned by an executive of the Company’s shareholder. The significant related party transactions are summarized as follows:

		Year Ended December 31,
		2014		2015			2016
		RMB		RMB			RMB
Transactions with Chuanbang
Guarantee fee	(a)		112		—			—
Cash collection service fee	(b)		664		2,053			6,445
Transactions with others
Advances from Precise	(c)		—		(1,432	)		—
Repayment of advances from Precise	(c)		—		1,432			—

Notes:

(a) Starting from the second half of 2011, the Company began to refer its students who need financial assistance for the payment of their tuition fees to Chuanbang. Chuanbang is a person-to-person or a “peer-to-peer” (P2P) lending intermediary that assists students in obtaining loans to pay for their tuition fees by identifying potential third-party individual lenders (the “Student Loan Program”). The Company has no direct involvement in or is a party to the P2P arrangement, other than serving as the guarantor of the student loans. Under the Student Loan Program, the Company allocates the total consideration between the fair value of the tuition service and the loan guarantee. Subsequent to the initial recognition, the loan guarantee liability is recognized as guarantee fee revenue over the term of the guarantee on a straight-line basis. RMB112, nil and nil was recognized as guarantee fee revenue and included in other revenues for the years ended December 31, 2014, 2015 and 2016, respectively.

(b) Pursuant to an agreement between Chuanbang and the Company, beginning August 2013, Chuanbang provides cash collection service on the Company’s accounts receivable. The fee for the service is calculated based on 2%~12% of the amount collected. Employees of Chuanbang include former employees of the Company who worked in the credit evaluation department. Chuanbang also provides similar cash collection service to financial institutions in the PRC. The cash collection service fee which is included in general and administrative expenses in the consolidated statement of comprehensive income was RMB664, RMB2,053 and RMB6,445 for the years ended December 31, 2014, 2015 and 2016, respectively. The amount due to Chuanbang as of December 31, 2015 was RMB879. The amount due to Chuanbang as of December 31, 2016 was RMB79, which has been fully paid by March 31, 2017.

(c) In September 2015, Precise, which is owned by an executive of Kohlberg Kravis Roberts & Co. L.P (“KKR”), a shareholder of the Company, provided cash advances in the amount of RMB1,432 to the Company in order to fund its share repurchase plan. The Company has fully repaid the advances in October 2015.

F-34

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

12 ORDINARY SHARES AND STATUTORY RESERVE

(a) Ordinary shares

On October 8, 2003, Tarena International was established with authorized share capital of US$150 or 90,000,000 ordinary shares with a par value of US$0.001 (being retroactively adjusted to reflect the effect of the share split) and 60,000,000 preferred shares with a par value of US$0.001 (being retroactively adjusted to reflect the effect of the share split).

On December 16, 2008, the Board of Directors of Tarena International approved a 10:1 share split, which increased (i) the total number of authorized ordinary shares of 9,000,000, and issued and outstanding ordinary shares of 1,358,000 to 90,000,000 and 13,580,000 respectively; and (ii) the total number of authorized preferred shares of 6,000,000, and issued and outstanding preferred shares of 1,589,125 to 60,000,000 and 15,891,250 respectively. All applicable share and per share amounts in the accompanying consolidated financial statements have been retroactively adjusted to reflect the effect of the share split.

On April 9, 2013, IDG Technology Venture Investments, LP (“IDG”), the Series A convertible redeemable preferred shareholder, entered into a series of agreements with Mr. Han, Connion Capital Ltd. (“Connion”), a company incorporated in the Cayman Islands with limited liability and wholly owned by Mr. Han, Techedu Limited, a company incorporated in the British Virgin Islands (“BVI”) with limited liability and wholly owned by Mr. Han, and GF Tarena Limited, a third party company incorporated with limited liability under the law of the BVI, pursuant to which IDG sold 1,146,059 and 229,212 of its Series A convertible redeemable preferred shares to Techedu Limited and GF Tarena Limited for a consideration of RMB31,320 and RMB6,264, respectively, or RMB27.33 per share. At the same time, Connion sold 916,848 of its ordinary shares to GF Tarena Limited for a consideration of RMB25,056 or RMB27.33 per share. The 1,146,059 Series A convertible redeemable preferred shares purchased by Techedu Limited and 229,212 Series A convertible redeemable preferred shares purchased by GF Tarena Limited were converted to ordinary shares on December 10, 2013. To facilitate the purchase of the Series A convertible redeemable preferred shares, Techedu Limited borrowed a loan in the amount of RMB31,320 from GF Tarena Limited on April 9, 2013, with an annual interest rate of 19% for a period of 30 months.

On February 27, 2014, the Board of Directors of Tarena International approved the fifth amendment of the Memorandum and Articles of Association (the “Amended M&A”), pursuant to which the authorized share capital was amended to 1,000,000,000 ordinary shares at a par value of US$0.001 per share, of which 860,000,000 shares were designated as Class A ordinary shares, 40,000,000 as Class B ordinary shares and 100,000,000 shares were designated as Reserved Shares, each with such rights, preferences and privileges set forth in the Amended M&A. The rights of the holders of Class A and Class B ordinary shares are identical, except with respect to voting and conversion rights. Each share of Class A ordinary shares is entitled to one vote per share and is not convertible into Class B ordinary shares under any circumstances. Each share of Class B ordinary shares is entitled to ten votes per share and is convertible into one Class A ordinary share at any time by the holder thereof.

In the Amended M&A, the Board of Directors of Tarena International approved that the Company to adopt a dual class ordinary share structure immediately upon the completion of the IPO. Upon the completion of the IPO, the Group’s ordinary shares were divided into Class A ordinary shares and Class B ordinary shares. All of its issued and outstanding ordinary share prior to this offering were re-designated as Class B ordinary shares, all of its issued and outstanding preferred shares were automatically re-designated or converted into Class B ordinary shares on a one-for-one basis immediately upon the completion of the IPO and all of the issued and outstanding options, non-vested shares and non-vested share units granted by the Company pursuant to the 2008 Share Plan and the 2014 Share Incentive Plan were re-designated as options in Class A shares, non-vested Class A ordinary shares, non-vested Class A ordinary share units.

F-35

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

12 ORDINARY SHARES AND STATUTORY RESERVE(CONTINUED)

(a) Ordinary shares(continued)

In April 2014, in connection with its IPO, Tarena International issued 11,500,000 Class A ordinary shares with par value of US$0.001, at a price of US$9.00 per share to investors. Net proceeds from the issuance of 11,500,000 Class A ordinary shares amounted to RMB567,360 (net of issuance costs of RMB24,801), of which RMB71 and RMB 567,289 were recorded in the Class A ordinary shares and additional paid-in capital, respectively.

Concurrently upon the completion of the Company’s IPO, the Company issued 1,500,000 Class A ordinary shares with par value of US$0.001 to New Oriental Education & Technology Group Inc., in a private placement at a price of US$9.00 per share. Proceeds from the issuance of Class A ordinary shares were RMB83,052 of which RMB9 and RMB83,043 were recorded in the Class A ordinary shares and additional paid-in capital, respectively.

As a result of automatic conversion of Series A, Series B, and Series C convertible redeemable preferred shares into Class B ordinary shares upon completion of the Company’s IPO on April 3, 2014, 25,430,831 Class B ordinary shares were issued. From January 1, 2014 to December 31, 2014, a total of 8,924,365 Class B ordinary shares were converted to Class A ordinary shares. 1,788,393 Class A ordinary shares were issued upon exercise of share options and vesting of non-vested shares. From January 1, 2015 to December 31, 2015, a total of 18,158,128 Class B ordinary shares were converted to Class A ordinary shares. 3,043,652 Class A ordinary shares were issued upon exercise of share options and vesting of non-vested shares. From January 1, 2016 to December 31, 2016, a total of 1,679,647 Class B ordinary shares were converted to Class A ordinary shares. 2,141,043 Class A ordinary shares were issued upon exercise of share options and vesting of non-vested shares.

As of December 31, 2016, 860,000,000 Class A ordinary shares and 40,000,000 Class B ordinary shares have been authorized, 48,735,228 and 47,160,248 Class A ordinary shares have been issued and outstanding, respectively, and 8,895,249 Class B ordinary shares have been issued and outstanding.

(b) Treasury shares

On August 20, 2015, the board of directors of the Company authorized a share repurchase plan under which the Company may repurchase up to RMB133,556 of its ordinary shares over the next 12 months. The Company repurchased 926,113 ordinary shares on the open market with consideration of approximately RMB49,355 for the year ended December 31, 2015. For the year ended December 31, 2016, 648,867 ordinary shares were repurchased on the open market in the amount of RMB44,406.

(c) Statutory reserves

Under PRC rules and regulations, Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs (the “PRC Entities”) are required to appropriate 10% of their net profit, as determined in accordance with PRC accounting rules and regulations, to a statutory surplus reserve until the reserve balance reaches 50% of their registered capital. In addition, private schools (held by the PRC Entities) which require reasonable returns are required to appropriate 25% of their net profit, as determined in accordance with PRC accounting rules and regulations, to a statutory development fund, whereas in the case of private schools which do not require reasonable return, 25% of the annual increase of their net assets. The appropriation to these statutory reserves must be made before distribution of dividends to Tarena International can be made.

For the years ended December 31, 2014, 2015 and 2016, the PRC Entities made appropriations to the statutory reserves of RMB15,823, RMB36,524 and RMB40,491, respectively. As of December 31, 2014, 2015 and 2016, the accumulated balance of the statutory reserves was RMB38,228, RMB74,752 and RMB115,243, respectively.

F-36

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

12 ORDINARY SHARES AND STATUTORY RESERVE(CONTINUED)

(d) Reclassification between additional paid-in capital and retained earnings

On August 19, 2014, the Board of Directors approved the Company to undertake a reclassification of the balances between additional paid-in capital and retained earnings of RMB526,457. The reclassification was due to the accretion of convertible redeemable preferred shares, of which RMB526,457 were charged against the balance in accumulated deficit in the absence of additional paid-in capital.

(e) Dividend

On March 7, 2016, the Company’s board of directors approved to declare a cash dividend of US$0.15 per ordinary share to shareholders as of the close of trading on April 6, 2016. The aggregate amount of cash dividends was approximately RMB54,026, which was paid in May 2016.

13 PREFERRED SHARES

Series A convertible redeemable preferred shares

On January 16, 2004, pursuant to the Series A convertible redeemable preferred shares purchase agreements (“Series A Purchase Agreement”), Tarena International issued 8,571,430 Series A convertible redeemable preferred shares to a third party investor for a total consideration of RMB4,138 or RMB0.48 per share (“Series A Original Issuance Price”) (being retroactively adjusted to reflect the effect of the share split).

The Company determined that there was no embedded beneficial conversion feature attributable to the Series A convertible redeemable preferred shares at the commitment date since the initial conversion price of the Series A convertible redeemable preferred shares was greater than the estimated fair value of the Company’s ordinary shares as of January 16, 2004. The estimated fair value of the underlying ordinary shares on January 16, 2004 was determined by management based on a retrospective valuation with the assistance of American Appraisal China Limited (“American Appraisal”), an independent valuation firm, using an income approach which requires the estimation of future cash flows and the application of an appropriate discount rate with reference to comparable listed companies engaged in a similar industry to convert such future cash flows to a single present value.

The significant terms of Series A convertible redeemable preferred shares are as follows:

(i) Conversion

The holders of Series A convertible redeemable preferred shares have the right to convert all or any portion of their holdings into ordinary shares at a rate of one-for-one at any time, subject to a contingent conversion price adjustment if there are additional ordinary shares issued or deemed to be issued, as defined in Tarena International’s Memorandum and Articles of Association, at a price lower than the Series A Original Issuance Price. In addition, each Series A Preferred Share is automatically converted into ordinary shares upon the consummation of a Qualified Public Offering, as defined in the Series A Purchase Agreement.

The contingent conversion price adjustment may provide the holders of the Series A convertible redeemable preferred shares with a beneficial conversion feature. However, any such beneficial conversion feature relating to the conversion price adjustment, if any, is recognized when the contingency is resolved.

(ii) Voting

The holders of Series A convertible redeemable preferred shares have voting rights equivalent to the ordinary shareholders on an “if-converted” basis.

(iii) Dividends

Any dividend declared and paid on ordinary shares shall be also declared and paid in respect of the Series A convertible redeemable preferred shares as if all such Series A convertible redeemable preferred shares has been converted to ordinary shares.

F-37

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

13 PREFERRED SHARES (CONTINUED)

Series A convertible redeemable preferred shares (continued)

(iv) Liquidation preference

The liquidation preference of the holders of Series A convertible redeemable preferred shares as of December 31, 2013 is as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; (ii) second to the holders of Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares, (iii) third to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

From the date of September 25, 2008 to August 11, 2011 (the date of the issuance of Series C convertible redeemable preferred shares), the liquidation preference of the holders of Series A convertible redeemable preferred shares was as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares; (ii) second to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

From the date of its issuance (January 16, 2004) to September 25, 2008 (the date of the issuance of Series B convertible redeemable preferred shares), the liquidation preference of the holders of Series A convertible redeemable preferred shares was as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the holders of the outstanding Series A convertible redeemable preferred shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of Tarena International to the holders of the ordinary shares by reason of their ownership of such shares, an amount equal to the Series A Original Issuance Price plus dividends declared but unpaid on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of ordinary shares and Series A convertible redeemable preferred shares then outstanding, based on the number of ordinary shares then held by each shareholder on an “if-converted” basis.

F-38

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

13 PREFERRED SHARES (CONTINUED)

Series A convertible redeemable preferred shares (continued)

(v) Drag-along rights

Holders of a majority of the Series A convertible redeemable preferred shares have a drag-along right whereby they can require the ordinary shareholders to approve a third-party offer to directly or indirectly purchase all, or substantial all, of the equity interests or assets of the Company, provided that the transaction shall occur on or after the fifth anniversary of the closing of the issuance of the Series A convertible redeemable preferred shares or the transaction shall be at a price per share of not less than US$0.58 per share (being retroactively adjusted to reflect the effect of the share split). Triggering of this drag-along right results in a deemed liquidation of the Company at the option of a majority of the holders of Series A convertible redeemable preferred shares with a required distribution of the transaction proceeds in accordance with the Company’s Memorandum and Articles of Association.

Consequently, the Series A convertible redeemable preferred shares are classified outside of permanent equity.

Series B convertible redeemable preferred shares

On September 25, 2008, pursuant to Series B convertible redeemable preferred shares purchase agreement, Tarena International issued 5,630,630 Series B convertible redeemable preferred shares to a third party investor for a total consideration of RMB34,099 or RMB6.06 per share (“Series B Original Issuance Price”) (being retroactively adjusted to reflect the effect of the share split). On the same date, an outstanding short term borrowing in the amount of RMB10,230 was exchanged for 1,689,190 shares of Series B convertible redeemable preferred shares (being retroactively adjusted to reflect the effect of the share split).

The Company determined that there was no embedded beneficial conversion feature attributable to the Series B convertible redeemable preferred shares at the commitment date since the initial conversion price of the Series B convertible redeemable preferred shares was greater than the estimated fair value of the Company’s ordinary shares as of September 25, 2008. The estimated fair value of the underlying ordinary shares on September 25, 2008 was determined by management based on a retrospective valuation with the assistance of American Appraisal, using an income approach which requires the estimation of future cash flows and the application of an appropriate discount rate with reference to comparable listed companies engaged in a similar industry to convert such future cash flows to a single present value.

The significant terms of Series B convertible redeemable preferred shares are as follows:

(i) Conversion

The holders of Series B convertible redeemable preferred shares have the right to convert all or any portion of their holdings into ordinary shares at a rate of one-for-one at any time, subject to a contingent conversion price adjustment if there are additional ordinary shares issued or deemed to be issued, as defined in Tarena International’s Memorandum and Articles of Association, at a price lower than the Series B Original Issuance Price. In addition, each Series B convertible redeemable preferred share is automatically converted into ordinary shares upon the written consent of the holders of more than 45% of the then outstanding Series B convertible redeemable preferred shares and the holders of more than 45% of the then outstanding Series A convertible redeemable preferred shares or the consummation of a Qualified Public Offering, as defined in the Series B convertible redeemable preferred shares purchase agreement.

The contingent conversion price adjustment may provide the holders of the Series B convertible redeemable preferred shares with a beneficial conversion feature. However, any such beneficial conversion feature relating to the conversion price adjustment, if any, is recognized when the contingency is resolved.

F-39

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

13 PREFERRED SHARES (CONTINUED)

Series B convertible redeemable preferred shares (continued)

(ii) Voting

The holders of Series B convertible redeemable preferred shares have voting rights equivalent to the ordinary shareholders on an “if-converted” basis.

(iii) Dividends

Any dividend declared and paid on ordinary shares shall be also declared and paid in respect of the Series B convertible redeemable preferred shares as if all such Series B convertible redeemable preferred shares have been converted to ordinary shares.

(iv) Liquidation preference

The liquidation preference of the holders of Series B convertible redeemable preferred shares as of December 31, 2013 is as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; (ii) second to the holders of Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares, (iii) third to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

From the date of September 25, 2008 to August 11, 2011 (the date of the issuance of Series C convertible redeemable preferred shares), the liquidation preference of the holders of Series B convertible redeemable preferred shares was as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares; (ii) second to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

F-40

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

13 PREFERRED SHARES (CONTINUED)

Series B convertible redeemable preferred shares (continued)

(v) Redemption

If a Qualified Initial Public Offering or a Trade Sale, as defined in the Series B convertible redeemable preferred shares purchase agreement, did not occur by December 31, 2012 (the “Redemption Date”), the holders of Series B convertible redeemable preferred shares had the right to request for redemption any portion of the Series B convertible redeemable preferred shares they held at a price equal to the sum of:

• an amount equal to 150% of Series B Original Issuance Price; plus,

• an amount equal to all declared but unpaid dividends on each share of Series B convertible redeemable preferred shares; plus,

• 10% compound interest per annum on 150% of Series B Original Issuance Price for each Series B convertible redeemable preferred share from the date of issuance to the earliest redemption date of the security.

On August 11, 2011, in connection with the issuance of Series C convertible redeemable preferred shares, the Company and holders of Series B convertible redeemable preferred shares agreed to defer the Redemption Date until June 30, 2014.

F-41

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

13 PREFERRED SHARES (CONTINUED)

Series C convertible redeemable preferred shares

On August 11, 2011, pursuant to the Series C convertible redeemable preferred shares purchase agreement (“Series C Purchase Agreement”), Tarena International issued 10,914,852 Series C convertible redeemable preferred shares to a third party investor for a total consideration of RMB127,817 or RMB11.71 per share (“Series C Original Issuance Price”). Total issuance cost of Series C convertible redeemable preferred shares was RMB1,397.

The Company determined that there was no embedded beneficial conversion feature attributable to the Series C convertible redeemable preferred shares at the commitment date since the initial conversion price of the Series C convertible redeemable preferred shares was greater than the estimated fair value of the Company’s ordinary shares as of August 11, 2011. The estimated fair value of the underlying ordinary shares on August 11, 2011 was determined by management based on a retrospective valuation with the assistance of American Appraisal, a third party valuation firm, using an income approach which requires the estimation of future cash flows and the application of an appropriate discount rate with reference to comparable listed companies engaged in a similar industry to convert such future cash flows to a single present value.

The significant terms of Series C convertible redeemable preferred shares are as follows:

(i) Conversion

The holders of Series C convertible redeemable preferred shares have the right to convert all or any portion of their holdings into ordinary shares at a rate of one-for-one at any time, subject to a contingent conversion price adjustment if there are additional ordinary shares issued or deemed to be issued, as defined in Tarena International’s Memorandum and Articles of Association, at a price lower than the Series C Original Issuance Price. In addition, each Series C Preferred Share is automatically converted into ordinary shares upon the closing of a Qualified Public Offering, as defined in the Memorandum and Articles of Association or the written consent of 67% of the holders of the Series C convertible redeemable preferred shares as well as the written consent of the holders of more than 45% of the then outstanding Series B convertible redeemable preferred shares and the written consent of the holders of more than 45% of the then outstanding Series A convertible redeemable preferred shares for conversion.

The contingent conversion price adjustments may provide the holders of the Series C convertible redeemable preferred shares with a beneficial conversion feature. However, any such beneficial conversion feature relating to the conversion price adjustment, is recognized when the contingency is resolved.

(ii) Voting

The holders of Series C convertible redeemable preferred shares have voting rights equivalent to the ordinary shareholders on an “if-converted” basis.

(iii) Dividends

The board of directors of Tarena International may approve the payment of dividends at their discretion to the holders of Series C convertible redeemable preferred shares. Any dividend declared and paid on ordinary shares shall be also declared and paid in respect of the Series C convertible redeemable preferred shares as if all such Series C convertible redeemable preferred shares have been converted to ordinary shares.

F-42

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

13 PREFERRED SHARES (CONTINUED)

Series C convertible redeemable preferred shares (continued)

(iv) Liquidation preference

The liquidation preference of the holders of Series C convertible redeemable preferred shares is as follows:

In the event of liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; (ii) second to the holders of Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares, (iii) third to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

(v) Redemption

If a Qualified Initial Public Offering or a Trade Sale, as defined in the Series C convertible redeemable preferred shares purchase agreement, does not occur by June 30, 2014 (the “Redemption Date”), the holders of the Series C convertible redeemable preferred shares have the right to request for redemption for all or a portion of the Series C convertible redeemable preferred shares they hold at a price equal to the greater of (i) an amount equal to 137.50% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; or (ii) the fair market value of the Series C convertible redeemable preferred shares as of the most recent year end, as determined by an independent appraiser mutually agreeable to the Company and the holder of the Series C convertible redeemable preferred shares.

As of December 31, 2013, the Company concluded that it was probable that the Series B and Series C convertible redeemable preferred shares will become redeemable. The Company has elected to accrete changes in the redemption value over the period from the date of issuance to the earliest redemption date using the interest method. The total accretion of Series B and Series C convertible redeemable preferred shares in the amount of RMB3,530 and nil were recorded as a reduction to additional paid-in capital first and then charged against accumulated deficit in the absence of additional paid-in capital for the year ended December 31, 2014.

All the Series A, Series B and Series C convertible redeemable preferred shares were automatically converted into Class B ordinary shares upon completion of the Company’s IPO on April 3, 2014. As a result, 25,430,831 Class B ordinary shares were issued upon the conversion of Series A, Series B and Series C convertible preferred shares. Upon the conversion, the carrying amounts of the Series A, Series B and Series C convertible preferred shares were recorded in additional paid-in capital of RMB704,334 and Class B ordinary shares of RMB157.

F-43

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

14 SHARE BASED COMPENSATION

Share incentive plans

On September 22, 2008, Tarena International adopted the 2008 Share Plan (the “2008 Plan”), pursuant to which Tarena International is authorized to issue share options and other share-based awards to key employees, directors and consultants of the Company to purchase up to 6,002,020 of its Class A ordinary shares (being retroactively adjusted to reflect the effect of the share split) under the 2008 Plan. On November 28, 2012, the Company increased the number of Class A ordinary shares authorized for issuance under the 2008 Plan to 8,184,990 Class A ordinary shares. Share options issued before September 22, 2008 are also administered under the 2008 Plan.

On February 1, 2014, Tarena International adopted the 2014 Share Plan (the “2014 Plan”), pursuant to which Tarena International was authorized to issue options, non-vested shares and non-vested share units to qualified employees, directors and consultants of the Company. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, or the Award Pool, is 1,833,696, provided that the shares reserved in the Award Pool shall be increased on the first day of each calendar year, commencing with January 1, 2015, if the unissued shares reserved in the Award Pool on such day account for less than 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year, as a result of which increase the shares unissued and reserved in the Award Pool immediately after each such increase shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year.

Share options

On January 1, 2011 and September 26, 2011, the board of directors of Tarena International approved the grant of options to purchase 124,000 and 1,533,020 ordinary shares of Tarena International to certain employees and directors. These options vest over a five-year period. The option holders can only exercise their vested options upon the occurrence of the earliest of (i) a qualified IPO as defined in the Plan, (ii) a liquidation event as defined in the Company’s Memorandum and Articles of Association, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years. The fair value of Tarena International’s ordinary shares on January 1, 2011 and September 26, 2011 was determined to be US$0.63 and US$0.83 per share, respectively.

On January 1, 2013, the board of directors of Tarena International approved the grant of options to certain employees to purchase 2,029,386 ordinary shares of Tarena International. These options vest over a four year period. The option holders can only exercise their vested options upon the occurrence of the earliest of (i) a qualified IPO as defined in the Plan, (ii) a liquidation event as defined in the Company’s Memorandum and Articles of Association, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years.

On September 16, 2013, the board of directors of Tarena International approved the grant of options to an employee to purchase 30,000 ordinary shares of Tarena International. 25% of the options will be vested at the closing of the Company’s IPO while the remaining 75% will vest over a four-year period, that can only be exercised upon the occurrence of the earliest of (i) a qualified IPO, (ii) a liquidation event, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years.

F-44

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

14 SHARE BASED COMPENSATION (CONTINUED)

Share options (continued)

On September 16, 2013, the board of directors of Tarena International approved the grant of options to an officer to purchase 458,424 ordinary shares of Tarena International. If the Company undertakes any additional round of financing or any other activities to effect an increase of the total shares outstanding on a fully diluted basis before the IPO, the officer will be granted additional share options at the same exercise price. The total number of share options the officer will be granted will be equal to not less than 1% of the Company’s total shares outstanding on a fully diluted basis on the date immediately preceding the closing of the Company’s IPO. 25% of the options will be immediately and fully vested at the closing of the Company’s IPO while the remaining 75% will vest over a four-year period, that can only be exercised upon the occurrence of the earliest of (i) a qualified IPO, (ii) a liquidation event, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years. The fair value of Tarena International’s ordinary shares on January 1, 2013 and September 16, 2013 was determined to be US$3.75 and US$5.69 per share, respectively.

On February 20, 2014, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase 1,805,784 ordinary shares of Tarena International. The options vest over a four year period. The option holders can only exercise their vested options upon the occurrence of the earliest of (i) a qualified IPO, (ii) a liquidation event, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years. The fair value of Tarena International’s ordinary shares on February 20, 2014 was determined to be US$8.60 per share.

During the year ended December 31, 2015, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase 615,624 ordinary shares of Tarena International at exercise prices ranging from US$0.89 to US$4.36 per share. These options vest over a period ranging between 1 year and 4 years. The options have a contractual term of ten years.

During the year ended December 31, 2016, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase 1,115,807 ordinary shares of Tarena International at exercise prices ranging from US$0.058 to US$4.36 per share. These options vest over a period ranging between 0.5 year and 4 years. The options have a contractual term of ten years.

F-45

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

14 SHARE BASED COMPENSATION (CONTINUED)

Share options (continued)

A summary of share options activity for the years ended December 31, 2014, 2015 and 2016 is as follows:

	Number of Share Options			Weighted Average Exercise Price US$		Weighted Average Remaining Contractual Years		Aggregate Intrinsic Value US$
Outstanding at December 31, 2013		8,134,830			0.82
Granted		1,805,784			3.05
Exercised		(1,786,449	)		0.14
Forfeited		(115,215	)		2.91
Expired		—			—
Outstanding at December 31, 2014		8,038,950			1.44		6.19		77,658
Granted		615,624			3.38
Exercised		(3,015,872	)		1.20
Forfeited		(56,926	)		3.33
Expired		—			—
Outstanding at December 31, 2015		5,581,776			1.77		5.68		48,412
Granted		1,115,807			1.90
Exercised		(2,106,043	)		1.46
Forfeited		(263,671	)		2.98
Expired		—			—
Outstanding at December 31, 2016		4,327,869			1.88		5.84		56,743
Vested and expected to vest as of December 31, 2016		3,959,763			1.74		5.59		52,460
Exercisable as of December 31, 2016		2,536,418			1.17		4.09		35,045

The Company calculated the fair value of the share options on the grant date using the Binomial option-pricing valuation model. The assumptions used in the valuation model are summarized in the following table.

The total intrinsic value of options exercised during the years ended December 31, 2014, 2015 and 2016 were RMB153,860, RMB235,831 and RMB141,040, respectively.

	Year Ended December 31,
	2014		2015		2016
	US$		US$		US$
Expected volatility		51.7%		62.3%-70.9%		63.5%-68.8%
Expected dividends yield		0%		0%		0%
Exercise multiple		2.2		2.0		2.0
Risk-free interest rate per annum		3.81%		2.68%-2.99%		2.15%-3.18%
Estimated fair value of underlying ordinary shares (per share)		US$8.60		US$9.28-US$12.85		US$9.99-US$16.54

F-46

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

14 SHARE BASED COMPENSATION (CONTINUED)

Share options (continued)

Because the Company’s ordinary shares had a short trading history at the time the options were issued, the expected volatility was based on the historical volatilities of comparable publicly traded companies engaged in the similar industry.

The estimated fair value of the underlying ordinary shares on each date of grant prior to September 2013, was determined by management based on a retrospective valuation conducted by American Appraisal. The estimated fair values of the underlying ordinary shares on September 16, 2013 and February 20, 2014 were determined by management based on a contemporaneous valuation conducted by American Appraisal. The Company first determined its enterprise value by using income approach, which required the estimation of future cash flows, and the application of an appropriate discount rate with reference to comparable listed companies engaged in the similar industry to convert such future cash flows to a single present value, and then allocated the enterprise value between the ordinary shares and preferred shares. The fair values of the underlying ordinary shares on each date of grant after April 2014, were the closing prices of the Company’s Class A ordinary shares traded in the Stock Exchange.

No income tax benefit was recognized in the consolidated statements of comprehensive income as the share-based compensation expense was not tax deductible.

The fair values of the options granted for the years ended December 31, 2014, 2015 and 2016 are as follows:

	Year Ended December 31,
	2014		2015		2016
	US$		US$		US$
Weighted average grant date fair value of option per share		6.35		9.16		10.17
Aggregate grant date fair value of options		11,468		5,641		11,352

As of December 31, 2016, there was approximately RMB71,282 of total unrecognized compensation cost related to unvested share options. The unrecognized compensation costs are expected to be recognized over a weighted average period of approximately 2.18 years.

Non-vested shares

On April 3, 2014, the board of directors of Tarena International approved the grant of two batches of non-vested shares to three independent directors. The number of the first batch of non-vested shares is equal to 27,780 shares, which was calculated as US$250 divided by US$9 per share, i.e. the IPO price of ordinary share of Tarena International. Conditioned on the Grantee’s continuous services as a director of the Company, a second batch of non-vested shares should be granted with the number equal to US$250 divided by the closing price of ordinary share of Tarena International on April 3, 2015, which was calculated as US$250 divided by US$10 per share, with 25,000 non-vested shares were granted on April 3, 2015. The two batches of non-vested shares shall vest on the April 3, 2015 and 2016, respectively.

On November 11, 2014, the board of directors of Tarena International approved the grant of 1,944 non-vested shares to 8 employees. One hundred percent of the non-vested shares shall vest immediately on the grant date.

On April 3, 2016, the board of directors of Tarena International approved the grant of 20,000 non-vested shares to three independent directors, 25% of which vest at the end of every quarter within one year. Grantees of non-vested shares have no voting rights or dividend rights with respect to shares that have not been vested.

F-47

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

14 SHARE BASED COMPENSATION (CONTINUED)

Non-vested shares (continued)

A summary of the non-vested shares activity under the 2014 Share Plan is summarized as follows:

	Number of Non- vested Shares			Weighted Average Grant Date Fair Value
				US$
Outstanding as of December 31, 2013		-			-
Granted		29,724			9.38
Vested		(1,944	)		13.95
Forfeited		-			-
Outstanding as of December 31, 2014		27,780			9.06
Granted		25,000			9.63
Vested		(27,780	)		9.06
Forfeited		-			-
Outstanding as of December 31, 2015		25,000			9.63
Granted		20,000			10.82
Vested		(35,000	)		9.97
Forfeited		-			-
Outstanding as of December 31, 2016		10,000			10.82

As of December 31, 2016, there was approximately RMB244 of total unrecognized compensation cost related to non-vested shares, which is expected to be recognized over a weighted average period of approximately 0.25 years. The total fair value of shares vested during the year ended December 31, 2015 and 2016 was RMB1,567 and RMB2,316 respectively.

F-48

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

15 EARNINGS  PER SHARE

Basic and diluted earnings per share is calculated as follows:

	Year Ended December 31,
	2014			2015		2016
	RMB			RMB		RMB
Numerator:
Net income attributable to Class A and Class B ordinary shareholders		148,320			178,760		241,854
Less:
Earnings allocated to participating Series A convertible redeemable preferred shares		(5,648	)		—		—
Earnings allocated to participating Series B convertible redeemable preferred shares		(5,745	)		—		—
Earnings allocated to participating Series C convertible redeemable preferred shares		(8,566	)		—		—
Net income for basic and diluted earnings per share		128,361			178,760		241,854
Denominator:
Denominator for basic earnings per share:
Weighted average number of Class A and Class B ordinary shares outstanding		41,223,389			53,767,810		55,540,670
Dilutive effect of outstanding share options		6,546,743			4,983,046		3,464,591
Denominator for diluted earnings per share		47,770,132			58,750,856		59,005,261
Basic earnings per Class A and Class B ordinary share		3.11			3.32		4.35
Diluted earnings per Class A and Class B ordinary share		2.69			3.04		4.10

The Company uses the two-class method to calculate basic and diluted earnings per Class A and Class B ordinary share. Under the two-class method, when calculating the basic and dilutive earnings per Class A and Class B ordinary share, net income attributable to Class A and Class B ordinary shareholders is adjusted to reflect the net income which is allocated to preferred shares.

F-49

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

16 COMMITMENTS AND CONTINGENCIES

(a) Operating lease commitments

Future minimum lease payments under non-cancelable operating lease agreements as of December 31, 2016 were as follows. The Company’s leases do not contain any contingent rent payment terms.

	RMB
Year ending December 31,
2017		116,805
2018		100,736
2019		70,660
2020		47,230
2021		32,542
2022 and thereafter		53,924
Total		421,897

Gross rent expenses incurred under operating leases were RMB77,493, RMB108,992 and RMB136,076 for the years ended December 31, 2014, 2015 and 2016, respectively. Sublease rental income of RMB1,416, RMB382 and RMB 460 for the years ended December 31, 2014, 2015 and 2016, respectively, were recognized as reductions of gross rental expenses.

F-50

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

17 PARENT ONLY FINANCIAL INFORMATION

The following presents condensed parent company financial information of Tarena International.  

Condensed Balance Sheets

	December 31,
	2015			2016
	RMB			RMB
ASSETS
Current assets:
Cash		6,275			43,770
Time deposits		397,388			242,795
Restricted time deposits		150,000			—
Prepaid expenses and other current assets		10,843			1,855
Total current assets		564,506			288,420
Investments and loans to subsidiaries		786,264			1,316,552
Total assets		1,350,770			1,604,972
LIABILITIESAND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other current liabilities		6,522			3,409
Total current liabilities		6,522			3,409
Other non-current liabilities		5,634			3,343
Total liabilities		12,156			6,752
Commitments and contingencies		—			—
Shareholders’ equity:
Class A ordinary shares (US$0.001 par value,860,000,000 shares authorized, 44,914,538 and 48,735,228 shares issued, 43,988,425 and 47,160,248 shares outstanding as of December 31, 2015 and 2016, respectively)		276			302
Class B ordinary shares (US$0.001 par value, 40,000,000 shares authorized, 10,574,896 shares and 8,895,249 shares issued and outstanding as of December 31, 2015 and 2016, respectively)		98			86
Treasury shares (926,113 and 1,574,980 class A ordinary shares as of December 31, 2015 and 2016, respectively, at cost)		(49,355	)		(93,761	)
Additional paid-in capital		907,018			995,216
Accumulated other comprehensive income		30,232			58,204
Retained earnings		450,345			638,173
Total shareholders’ equity		1,338,614			1,598,220
Total liabilities and shareholders’ equity		1,350,770			1,604,972

F-51

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

17 PARENT ONLY FINANCIAL INFORMATION (CONTINUED)

Condensed Statements of Comprehensive Income

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
General and administrative expenses		(1,047	)		(4,241	)		(4,477	)
Operating loss		(1,047	)		(4,241	)		(4,477	)
Equity in income of subsidiaries		129,811			194,914			253,396
Foreign currency exchange gains (loss)		7,251			(31,923	)		(4,753	)
Interest income		14,059			17,610			8,027
Loss on foreign currency forward contract		—			—			(12,898	)
Other income		1,776			2,400			2,559
Income before income taxes		151,850			178,760			241,854
Income tax expense		—			—			—
Net income		151,850			178,760			241,854
Other comprehensive income
Foreign currency translation adjustment, net of nil income tax		(2,896	)		34,748			22,972
Unrealized holding gains on available for sale securities, net of RMB42 income taxes		—			—			5,235
Less: reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes		—			—			(235	)
Comprehensive income		148,954			213,508			269,826

F-52

TARENA INTERNATIONAL, INC. AND SUBSIDIARIES

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

(Amounts in thousands of RMB and US$,

except for number of shares and per share data)

17 PARENT ONLY FINANCIAL INFORMATION (CONTINUED)

Condensed Statements of Cash Flows

	Year Ended December 31,
	2014			2015			2016
	RMB			RMB			RMB
Operating activities:
Net cash provided by (used in) operating activities		19,036			9,770			(10,272	)
Investing activities:
Purchase of time deposits		(569,312	)		(588,426	)		(298,688	)
Proceeds from maturity of time deposits		3,071			603,501			620,607
Investments made to subsidiaries		(104,662	)		—			(198,137	)
Net cash provided by (used in) investing activities		(670,903	)		15,075			123,782
Financing activities:
Advances from a related party		—			1,432			—
Repayment of advances from a related party		—			(1,432	)		—
Issuance of Class A ordinary shares upon the IPO		592,161			—			—
Issuance of Class A ordinary shares in private placement concurrent with the IPO		83,052			—			—
Issuance of Class A ordinary shares in connection with exercise of share options		1,518			22,456			20,388
Payment of dividends		—			—			(54,026	)
Repurchase of treasury shares		—			(49,355	)		(44,406	)
Payment of IPO costs		(17,228	)		—			—
Net cash provided by (used in) financing activities		659,503			(26,899	)		(78,044	)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(27	)		398			2,029
Net increase (decrease) in cash and cash equivalents		7,609			(1,656	)		37,495
Cash and cash equivalents at beginning of year		322			7,931			6,275
Cash and cash equivalents at end of year		7,931			6,275			43,770
Non-cash investing and financing activities:
Conversion of Series A convertible redeemable preferred shares to Class B ordinary shares		3,648			—			—
Conversion of Series B convertible redeemable preferred shares to Class B ordinary shares		107,994			—			—
Conversion of Series C convertible redeemable preferred shares to Class B ordinary shares		592,849			—			—

18 SUBSEQUENT EVENTS

On February 28, 2017, The Board of Directors approved to declare a cash dividend of RMB1.10 (US$0.16) per ordinary share to shareholders as of the close of trading on March 27, 2017. The cash dividend will be paid on or about May 30, 2017. The aggregate amount of cash dividends to be paid is approximately RMB64,900 (US$9,500).

F-53

EX-4.27

Exhibit 4.27

Power of Attorney

This Power of Attorney (this “Power of Attorney”) shall supersede and replace the power of attorney I executed as of November 25, 2013 (the “Original Power of Attorney”) upon the effective date stipulated in this Power of Attorney.

I, Han Shaoyun, a Chinese citizen with Chinese Identification Card No.:          , and a holder of 70% of the entire registered capital in Beijing Tarena Jinqiao Technology Co., Ltd. (“Beijing Tarena”) as of the date when the Power of Attorney is executed, hereby irrevocably authorize Tarena Technologies Group Inc. (the “Designee”) to exercise the following rights relating to all equity interests held by me now and in the future in Beijing Tarena (“My Shareholding”) during the term of this Power of Attorney:

The Designee is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attending shareholders’ meetings of Beijing Tarena; 2) exercising all the shareholder’s rights and shareholder’s voting rights I am entitled to under the laws of China and Beijing Tarena’s Articles of Association, including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, the directors, supervisors, the chief executive officer and other senior management members of Beijing Tarena.

Without limiting the generality of the powers granted hereunder, the Designee shall have the power and authority to, on behalf of myself, execute all the documents I shall sign as stipulated in the Second Amended and Restated Exclusive Option Agreement entered into by and among me, the Designee and Tarena International Inc. on July 5, 2016 and the Second Amended and Restated Equity Pledge Agreement entered into by and among me, Beijing Tarena and the Designee on July 5, 2016 (including any modification, amendment and restatement thereto, collectively the “Transaction Documents”), and perform the terms of the Transaction Documents.

All the actions associated with My Shareholding conducted by the Designee shall be deemed as my own actions, and all the documents related to My Shareholding executed by the Designee shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the Designee.

The Designee is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. If required by PRC laws, the Designee shall designate a PRC citizen to exercise the aforementioned rights.

During the period that I am a shareholder of Beijing Tarena, this Power of Attorney shall be irrevocable and continuously effective and valid from the date of execution of this Power of Attorney.

During the term of this Power of Attorney, I hereby waive all the rights associated with My Shareholding, which have been authorized to the Designee through this Power of Attorney, and shall not exercise such rights by myself.

This Power of Attorney is written in Chinese and English. The Chinese version and English version shall have equal legal validity. In case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.

1

Han Shaoyun
By:	/s/ Han Shaoyun
Date: July 5, 2016

Accepted by

Tarena Technologies Group Inc.

By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative
Date:	July 5, 2016

Acknowledged by:

Beijing Tarena Jinqiao Technology Co., Ltd.

By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative
Date:	July 5, 2016

EX-4.28

Exhibit 4.28

Power of Attorney

This Power of Attorney (this “Power of Attorney”) shall supersede and replace the power of attorney I executed as of November 25, 2013 (the “Original Power of Attorney”) upon the effective date stipulated in this Power of Attorney.

I, Li Jianguang, a Chinese citizen with Chinese Identification Card No.:        , and a holder of 30% of the entire registered capital in Beijing Tarena Jinqiao Technology Co., Ltd. (“Beijing Tarena”) as of the date when the Power of Attorney is executed, hereby irrevocably authorize Tarena Technologies Group Inc. (the “Designee”) to exercise the following rights relating to all equity interests held by me now and in the future in Beijing Tarena (“My Shareholding”) during the term of this Power of Attorney:

The Designee is hereby authorized to act on behalf of myself as my exclusive agent and attorney with respect to all matters concerning My Shareholding, including without limitation to: 1) attending shareholders’ meetings of Beijing Tarena; 2) exercising all the shareholder’s rights and shareholder’s voting rights I am entitled to under the laws of China and Beijing Tarena’s Articles of Association, including but not limited to the sale or transfer or pledge or disposition of My Shareholding in part or in whole; and 3) designate and appoint on behalf of myself the legal representative, the directors, supervisors, the chief executive officer and other senior management members of Beijing Tarena.

Without limiting the generality of the powers granted hereunder, the Designee shall have the power and authority to, on behalf of myself, execute all the documents I shall sign as stipulated in the Second Amended and Restated Exclusive Option Agreement entered into by and among me, the Designee and Tarena International Inc. on July 5, 2016 and the Second Amended and Restated Equity Pledge Agreement entered into by and among me, Beijing Tarena and the Designee on July 5, 2016 (including any modification, amendment and restatement thereto, collectively the “Transaction Documents”), and perform the terms of the Transaction Documents.

All the actions associated with My Shareholding conducted by the Designee shall be deemed as my own actions, and all the documents related to My Shareholding executed by the Designee shall be deemed to be executed by me. I hereby acknowledge and ratify those actions and/or documents by the Designee.

The Designee is entitled to re-authorize or assign its rights related to the aforesaid matters to any other person or entity at its own discretion and without giving prior notice to me or obtaining my consent. If required by PRC laws, the Designee shall designate a PRC citizen to exercise the aforementioned rights.

During the period that I am a shareholder of Beijing Tarena, this Power of Attorney shall be irrevocable and continuously effective and valid from the date of execution of this Power of Attorney.

During the term of this Power of Attorney, I hereby waive all the rights associated with My Shareholding, which have been authorized to the Designee through this Power of Attorney, and shall not exercise such rights by myself.

This Power of Attorney is written in Chinese and English. The Chinese version and English version shall have equal legal validity. In case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.

1

Li Jianguang
By:	/s/ Li Jianguang

Accepted by

Tarena Technologies Group Inc.

By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative

Acknowledged by:

Beijing Tarena Jinqiao Technology Co., Ltd.

By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative

EX-4.29

Exhibit 4.29

Second Amended and Restated Exclusive Option Agreement

This Second Amended and Restated Exclusive Option Agreement (this “Agreement”) is executed by and among the Parties below as of July 5, 2016 in Beijing, the People’s Republic of China (“China” or the “PRC”):

Party A: Tarena International Inc.

Address: Fourth Floor, One Capital Place, P.O. Box 847GT, Grand Cayman, Cayman Islands

Party B: Tarena Technologies Group Inc.

Address: Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing

Party C: Han Shaoyun

ID No.:

Party D: Beijing Tarena Jinqiao Technology Co., Ltd.

Address: Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing

In this Agreement, each of Party A, Party B, Party C and Party D shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.

Whereas:

1. Party A is a company established in Cayman Islands and holds 100% of the equity interests of Party B.

2. Party C is a shareholder of Party D and as of the date hereof holds 70% of the equity interests of Party D, representing RMB3,500,000 in the registered capital of Party D.

3. Party B and Party C executed a Second Amended and Restated Loan Agreement on July 5, 2016 (the “Loan Agreement”).

4. Party B, Party C and Party D executed a Amended and Restated Exclusive Option Agreement (the “Original Exclusive Option Agreement”) on November 25, 2013. The Parties intend to enter this Agreement to replace and supersede the Original Exclusive Option Agreement by executing this Agreement.

Now therefore, upon mutual discussion and negotiation, the Parties have reached the following agreement:

1. Sale and Purchase of Equity Interest

1.1 Option Granted

1

In consideration of the payment of RMB10.00 by Party A, the receipt and adequacy of which is hereby acknowledged by Party C, Party C hereby irrevocably grants Party A an irrevocable and exclusive right to purchase, or designate one or more persons (each, a “Designee”) to purchase, the equity interests in Party D then held by Party C once or at multiple times at any time in part or in whole at Party A’s sole and absolute discretion to the extent permitted by Chinese laws and at the price described in Section 1.3 herein (such right being the “Equity Interest Purchase Option”). Except for Party A and the Designee(s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to the equity interests of Party C. Party D hereby agrees to the grant by Party C of the Equity Interest Purchase Option to Party A. The term “person” as used herein shall refer to individuals, corporations, partnerships, partners, enterprises, trusts or non-corporate organizations.

1.2 Steps for Exercise of Equity Interest Purchase Option

Subject to the provisions of the laws and regulations of China, Party A may exercise the Equity Interest Purchase Option by issuing a written notice to Party B (the “Equity Interest Purchase Option Notice”), specifying: (a) Party A’s decision to exercise the Equity Interest Purchase Option; (b) the portion of equity interests to be purchased from Party B (the “Optioned Interests”); and (c) the date for purchasing the Optioned Interests. Party A and/or the Designee(s) shall obtain all necessary government licenses and permits and take all necessary actions to purchase the equity interests in Party D.

1.3 Equity Interest Purchase Price

The purchase price of all equity interests held by Party C in Party D purchased by Party A by exercising the Equity Interest Purchase Option shall be RMB3,500,000; if Party A exercises the Equity Interest Purchase Option to purchase part of the equity interests held by Party C in Party D, the purchase price shall be calculated on a pro rata basis. If PRC law requires a minimum price higher than the aforementioned price when Party A exercises the Equity Interest Purchase Option, the minimum price regulated by PRC law shall be the purchase price (collectively, the “Equity Interest Purchase Price”).

1.4 Transfer of Optioned Interests

For each exercise of the Equity Interest Purchase Option by Party A:

1.4.1 Party C shall cause Party D to promptly convene a shareholders meeting, at which a resolution shall be adopted approving Party C’s transfer of the Optioned Interests to Party A and/or the Designee(s);

1.4.2 Party C shall obtain written statements from the other shareholders of Party D giving consent to the transfer of the equity interests to Party A and/or the Designee(s) and waiving any right of first refusal related thereto;

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1.4.3 Party C shall execute a share transfer contract with respect to each transfer with Party A and/or each Designee (whichever is applicable), in accordance with the provisions of this Agreement and the Equity Interest Purchase Option Notice regarding the Optioned Interests;

1.4.4 The relevant Parties shall execute all other necessary contracts, agreements or documents, obtain all necessary government licenses and permits and take all necessary actions to transfer valid ownership of the Optioned Interests to Party A and/or the Designee(s), unencumbered by any security interests, and cause Party A and/or the Designee(s) to become the registered owner(s) of the Optioned Interests. For the purpose of this Section and this Agreement, “security interests” shall include securities, mortgages, third party's rights or interests, any stock options, acquisition right, right of first refusal, right to offset, ownership retention or other security arrangements, but shall be deemed to exclude any security interest created by this Agreement, Party C’s Share Pledge Agreement and Party C’s Power of Attorney. “Party C’s Share Pledge Agreement” as used in this Agreement shall refer to the Amended and Restated Share Pledge Agreement executed by and among Party B, Party C and Party D on the date hereof and any modifications, amendments, and restatements thereto. “Party C’s Power of Attorney” as used in this Agreement shall refer to the Power of Attorney executed by Party C on the date hereof and any modifications, amendments, and restatements thereto.

1.5 Payment of the Equity Interest Purchase Price

The Parties have agreed in the Loan Agreement that any proceeds obtained by Party C through the transfer of its equity interests in Party D shall be used for repayment of the loan provided by Party B in accordance with the Loan Agreement. Accordingly, if Party A designates Party B as the Designee, upon exercise of the Equity Interest Purchase Option, Party B may elect to make payment of the Equity Interest Purchase Price through cancellation of the outstanding amount of the loan owed by Party C to Party B, in which case Party A shall not be required to pay any additional purchase price to Party C, unless the Equity Interest Purchase Price set forth herein is required to be adjusted in accordance with the applicable laws and regulations.

2. Covenants

2.1 Covenants regarding Party D

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Party C (as a shareholder of Party D) and Party D hereby covenant as follows:

2.1.1 Without the prior written consent of Party A, they shall not in any manner supplement, change or amend the articles of association and bylaws of Party D, increase or decrease its registered capital, or change its structure of registered capital in other manners;

2.1.2 They shall maintain Party D’s corporate existence in accordance with good financial and business standards and practices by prudently and effectively operating its business and handling its affairs;

2.1.3 Without the prior written consent of Party A, they shall not at any time following the date hereof, sell, transfer, mortgage or dispose of in any manner any assets of Party D or legal or beneficial interest in the business or revenues of Party D, or allow the encumbrance thereon of any security interest;

2.1.4 Without the prior written consent of Party A, they shall not incur, inherit, guarantee or suffer the existence of any debt, except forpayables incurred in the ordinary course of business other than through loans;

2.1.5 They shall always operate all of Party D’s businesses within the ordinary course of business to maintain the asset value of Party D and refrain from any action/omission that may affect Party D’s operating status and asset value;

2.1.6 Without the prior written consent of Party A, they shall not cause Party D to execute any major contract, except the contracts in the ordinary course of business (for purpose of this subsection, a contract with a value exceeding RMB 500,000 shall be deemed a major contract);

2.1.7 Without the prior written consent of Party A, they shall not cause Party D to provide any person with any loan or credit;

2.1.8 They shall provide Party A with information on Party D's business operations and financial condition at Party A's request;

2.1.9 If requested by Party A, they shall procure and maintain, at the cost of Party D, insurance in respect of Party D’s assets and business from an insurance carrier acceptable to Party A, at an amount and type of coverage typical for companies that operate similar businesses;

2.1.10 Without the prior written consent of Party A, they shall not cause or permit Party D to merge, consolidate with, acquire or invest in any person;

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2.1.11 They shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to Party D’s assets, business or revenue;

2.1.12 To maintain the ownership by Party D of all of its assets, they shall execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses against all claims;

2.1.13 Without the prior written consent of Party A, they shall ensure that Party D shall not in any manner distribute dividends to its shareholders, provided that upon Party A's written request, Party D shall immediately distribute all distributable profits to its shareholders;

2.1.14 At the request of Party A, they shall appoint any persons designated by Party A as directors of Party D;

2.1.15 Without Party A’s prior written consent, they shall not engage in any business in competition with Party A or its affiliates; and

2.1.16 Unless otherwise required by PRC law, Party D shall not be dissolved or liquated without prior written consent by Party A.

2.2 Other Covenants

Party C hereby covenants as follows:

2.2.1 Without the prior written consent of Party A, Party C shall not sell, transfer, mortgage or dispose of in any other manner any legal or beneficial interest in the equity interests in Party D held by Party C, or allow the encumbrance thereon of any security interest, except for the pledge placed on these equity interests in accordance with Party C’s Share Pledge Agreement;

2.2.2 Party C shall cause the shareholders’ meeting and/or the board of directors of Party D not to approve the sale, transfer, mortgage or disposition in any other manner of any legal or beneficial interest in the equity interests in Party D held by Party C, or allow the encumbrance thereon of any security interest, without the prior written consent of Party A, except for the pledge placed on these equity interests in accordance with Party C’s Share Pledge Agreement and Party C’s Power of Attorney;

2.2.3 Party C shall cause the shareholders’ meeting or the board of directors of Party D not to approve the merger or consolidation with any person, or the acquisition of or investment in any person, without the prior written consent of Party A;

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2.2.4 Party C shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the equity interests in Party D held by Party C;

2.2.5 Party C shall cause the shareholders’ meeting or the board of directors of Party D to vote their approval of the transfer of the Optioned Interests as set forth in this Agreement and to take any and all other actions that may be requested by Party A;

2.2.6 To the extent necessary to maintain Party C’s ownership in Party D, Party C shall execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses against all claims;

2.2.7 Party C shall appoint any designee of Party A as director of Party D, at the request of Party A;

2.2.8 Party C hereby waives its right of first refusal in regards to the transfer of equity interest by any other shareholder of Party D to Party A (if any), and gives consent to the execution by each other shareholder of Party D with Party A and Party D the exclusive option agreement, the share pledge agreement and the power of attorney similar to this Agreement, Party C’s Share Pledge Agreement, and Party C’s Power of Attorney, and undertakes not to take any actions in conflict with such documents executed by the other shareholders;

2.2.9 Party C shall promptly donate any profits, interests, dividends, or proceeds of liquidation to Party A or any other person designated by Party A to the extent permitted under the applicable PRC laws; and

2.2.10 Party C shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by and among Party C, Party D and Party A, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. To the extent that Party C has any remaining rights with respect to the equity interests subject to this Agreement hereunder or under Party C’sShare Pledge Agreement among the same parties hereto or under Party C’s Power of Attorney, Party C shall not exercise such rights except in accordance with the written instructions of Party A.

3. Representations and Warranties

Party C and Party D hereby represent and warrant to Party A, jointly and severally, as of the date of this Agreement and each date of transfer of the Optioned Interests, that:

3.1 They have the authority to execute and deliver this Agreement and any share transfer contracts to which they are parties concerning the Optioned Interests to be transferred thereunder (each, a “Transfer Contract”), and to perform their obligations under this Agreement and any Transfer Contracts. Party C and Party D agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of the Equity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal, valid and binding obligations and shall be enforceable against them in accordance with the provisions thereof;

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3.2 Party C and Party D have obtained any and all approvals and consents from the relevant government authorities and third parties (if required) for the execution, delivery, and performance of this Agreement;

3.3 The execution and delivery of this Agreement or any Transfer Contracts and the obligations under this Agreement or any Transfer Contracts shall not: (i) cause any violation of any applicable PRC laws; (ii) be inconsistent with the articles of association, bylaws or other organizational documents of Party D; (iii) cause the violation of any contracts or instruments to which they are a party or which are binding on them, or constitute any breach under any contracts or instruments to which they are a party or which are binding on them; (iv) cause any violation of any condition for the grant and/or continued effectiveness of any licenses or permits issued to either of them; or (v) cause the suspension or revocation of or imposition of additional conditions to any licenses or permits issued to either of them;

3.4 Party C has a good and merchantable title to the equity interests in Party D he holds. Except for Party C’s Share Pledge Agreement, Party C has not placed any security interest on such equity interests;

3.5 Party D has a good and merchantable title to all of its assets, and has not placed any security interest on the aforementioned assets;

3.6 Party D does not have any outstanding debts, except for (i) debt incurred in the ordinary course of business; and (ii) debts disclosed to Party A for which Party A’s written consent has been obtained;

3.7 Party D has complied with all laws and regulations of China applicable to asset acquisitions; and

3.8 There are no pending or threatened litigation, arbitration or administrative proceedings relating to the equity interests in Party D, assets of Party D or Party D.

4. Effective Date and Term

This Agreement shall become effective upon execution by the Parties, and remain in effect until all equity interests held by Party C in Party D have been transferred or assigned to Party A and/or any other person designated by Party A in accordance with this Agreement. Since the effective date of this Agreement, the Original Exclusive Option Agreement shall be terminated and shall be replaced and superseded by this Agreement.

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5. Governing Law and Resolution of Disputes

5.1 Governing Law

The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of the PRC.

5.2 Methods of Resolution of Disputes

In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate in good faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after any Party’s request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted in Beijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on all Parties.

6. Taxes and Fees

Each Party shall pay any and all transfer and registration taxes, expenses and fees incurred thereby or levied thereon in accordance with the laws of China in connection with the preparation and execution of this Agreement and the Transfer Contracts, as well as the consummation of the transactions contemplated under this Agreement and the Transfer Contracts.

7. Notices

7.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

7.1.1 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the address specified for notices.

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7.1.2 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

7.2 For the purpose of notices, the addresses of the Parties are as follows:

Party A:	Tarena International Inc.
Address:	Fourth Floor, One Capital Place, P.O. Box 847GT, Grand Cayman, Cayman Islands
Attn:
Phone:
Facsimile:
Party B:	Tarena Technologies Group Inc.
Address:	Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing
Attn:	Han Shaoyun
Phone:	86-10 6213-6369
Facsimile:	86-10 6211-0873
Party C:	Han Shaoyun
Address:
Tel:
Party D:	Beijing Tarena Jinqiao Technology Co., Ltd.
Address:	Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing
Attn:	Han Shaoyun
Phone:	86-10 6213-5687
Facsimile:	86-10 6211-0873

7.3 Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof.

8. Confidentiality

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance of this Agreement are regarded as confidential information. Each Party shall maintain the confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be featured in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, investors, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the staff members or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable for breach of this Agreement. This Section shall survive the termination of this Agreement for any reason.

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9. Further Warranties

The Parties agree to promptly execute the documents that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement and to take further actions that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement.

10. Breach of Agreement

10.1 If Party C or Party D conducts any material breach of any term of this Agreement, Party A shall have right to terminate this Agreement and/or require Party C or Party D to compensate all damages; this Section 10 shall not prejudice any other rights of Party A herein;

10.2 Party C or Party D shall not have any right to terminate this Agreement in any event unless otherwise required by the applicable laws.

11. Miscellaneous

11.1 Amendments, Changes and Supplements

Any amendments and supplements to this Agreement shall be made in writing. The amendment agreements and supplementary agreements that have been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement.

11.2 Entire Agreement

Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitute the entire agreement reached by and among the Parties hereto with respect to the subject matter hereof, and shall supersede all prior oral and written consultations, representations and contracts reached with respect to the subject matter of this Agreement. This Agreement supersedes, in its entirety, the Original Exclusive Option Agreement relating to the matters set forth herein, which shall be terminated as of the date hereof.

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11.3 Headings

The headings of this Agreement are for convenience only, and shall not be used to interpret, explain or otherwise affect the meanings of the provisions of this Agreement.

11.4 Language

This Agreement is written in both Chinese and English language in four copies, each Party having one copy with equal legal validity; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.

11.5 Severability

In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

11.6 Successors

This Agreement shall be binding on and shall inure to the interest of the respective successors of the Parties and the permitted assigns of such Parties.

11.7 Survival

11.7.1 Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive the expiration or early termination thereof.

11.7.2 The provisions of Sections 5, 7, 8 and this Section 11.7 shall survive the termination of this Agreement.

11.8 Waivers

Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing and shall require the signatures of the Parties. No waiver by any Party in certain circumstances with respect to a breach by other Parties shall operate as a waiver by such a Party with respect to any similar breach in other circumstances.

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Exclusive Option Agreement as of the date first above written.

Party A:	Tarena International Inc.
By:	/s/ Han Shaoyun
Name:	Han Shaoyun
Title:	Director
Party B:	Tarena Technologies Group Inc.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative
Party C:	Han Shaoyun
By:	/s/ Han Shaoyun
Party D:	Beijing Tarena Jinqiao Technology Co., Ltd.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative

EX-4.30

Exhibit 4.30

Second Amended and Restated Exclusive Option Agreement

This Second Amended and Restated Exclusive Option Agreement (this “Agreement”) is executed by and among the Parties below as of July 5, 2016 in Beijing, the People’s Republic of China (“China” or the “PRC”):

Party A: Tarena International Inc.

Address: Fourth Floor, One Capital Place, P.O. Box 847GT, Grand Cayman, Cayman Islands

Party B: Tarena Technologies Group Inc.

Address: Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing

Party C: Li Jianguang

ID No.:

Party D: Beijing Tarena Jinqiao Technology Co., Ltd.

Address: Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing

In this Agreement, each of Party A, Party B, Party C and Party D shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.

Whereas:

1. Party A is a company established in Cayman Islands and holds 100% of the equity interests of Party B.

2. Party C is a shareholder of Party D and as of the date hereof holds 30% of the equity interests of Party D, representing RMB1,500,000 in the registered capital of Party D.

3. Party B and Party C executed a Second Amended and Restated Loan Agreement on July 5, 2016 (the “Loan Agreement”).

4. Party B, Party C and Party D executed a Amended and Restated Exclusive Option Agreement (the “Original Exclusive Option Agreement”) on November 25, 2013. The Parties intend to enter this Agreement to replace and supersede the Original Exclusive Option Agreement by executing this Agreement.

Now therefore, upon mutual discussion and negotiation, the Parties have reached the following agreement:

1. Sale and Purchase of Equity Interest

1.1 Option Granted

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In consideration of the payment of RMB10.00 by Party A, the receipt and adequacy of which is hereby acknowledged by Party C, Party C hereby irrevocably grants Party A an irrevocable and exclusive right to purchase, or designate one or more persons (each, a “Designee”) to purchase, the equity interests in Party D then held by Party C once or at multiple times at any time in part or in whole at Party A’s sole and absolute discretion to the extent permitted by Chinese laws and at the price described in Section 1.3 herein (such right being the “Equity Interest Purchase Option”). Except for Party A and the Designee(s), no other person shall be entitled to the Equity Interest Purchase Option or other rights with respect to the equity interests of Party C. Party D hereby agrees to the grant by Party C of the Equity Interest Purchase Option to Party A. The term “person” as used herein shall refer to individuals, corporations, partnerships, partners, enterprises, trusts or non-corporate organizations.

1.2 Steps for Exercise of Equity Interest Purchase Option

Subject to the provisions of the laws and regulations of China, Party A may exercise the Equity Interest Purchase Option by issuing a written notice to Party B (the “Equity Interest Purchase Option Notice”), specifying: (a) Party A’s decision to exercise the Equity Interest Purchase Option; (b) the portion of equity interests to be purchased from Party B (the “Optioned Interests”); and (c) the date for purchasing the Optioned Interests. Party A and/or the Designee(s) shall obtain all necessary government licenses and permits and take all necessary actions to purchase the equity interests in Party D.

1.3 Equity Interest Purchase Price

The purchase price of all equity interests held by Party C in Party D purchased by Party A by exercising the Equity Interest Purchase Option shall be RMB1,500,000; if Party A exercises the Equity Interest Purchase Option to purchase part of the equity interests held by Party C in Party D, the purchase price shall be calculated on a pro rata basis. If PRC law requires a minimum price higher than the aforementioned price when Party A exercises the Equity Interest Purchase Option, the minimum price regulated by PRC law shall be the purchase price (collectively, the “Equity Interest Purchase Price”).

1.4 Transfer of Optioned Interests

For each exercise of the Equity Interest Purchase Option by Party A:

1.4.1 Party C shall cause Party D to promptly convene a shareholders meeting, at which a resolution shall be adopted approving Party C’s transfer of the Optioned Interests to Party A and/or the Designee(s);

1.4.2 Party C shall obtain written statements from the other shareholders of Party D giving consent to the transfer of the equity interests to Party A and/or the Designee(s) and waiving any right of first refusal related thereto;

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1.4.3 Party C shall execute a share transfer contract with respect to each transfer with Party A and/or each Designee (whichever is applicable), in accordance with the provisions of this Agreement and the Equity Interest Purchase Option Notice regarding the Optioned Interests;

1.4.4 The relevant Parties shall execute all other necessary contracts, agreements or documents, obtain all necessary government licenses and permits and take all necessary actions to transfer valid ownership of the Optioned Interests to Party A and/or the Designee(s), unencumbered by any security interests, and cause Party A and/or the Designee(s) to become the registered owner(s) of the Optioned Interests. For the purpose of this Section and this Agreement, “security interests” shall include securities, mortgages, third party's rights or interests, any stock options, acquisition right, right of first refusal, right to offset, ownership retention or other security arrangements, but shall be deemed to exclude any security interest created by this Agreement, Party C’s Share Pledge Agreement and Party C’s Power of Attorney. “Party C’s Share Pledge Agreement” as used in this Agreement shall refer to the Amended and Restated Share Pledge Agreement executed by and among Party B, Party C and Party D on the date hereof and any modifications, amendments, and restatements thereto. “Party C’s Power of Attorney” as used in this Agreement shall refer to the Power of Attorney executed by Party C on the date hereof and any modifications, amendments, and restatements thereto.

1.5 Payment of the Equity Interest Purchase Price

The Parties have agreed in the Loan Agreement that any proceeds obtained by Party C through the transfer of its equity interests in Party D shall be used for repayment of the loan provided by Party B in accordance with the Loan Agreement. Accordingly, if Party A designates Party B as the Designee, upon exercise of the Equity Interest Purchase Option, Party B may elect to make payment of the Equity Interest Purchase Price through cancellation of the outstanding amount of the loan owed by Party C to Party B, in which case Party A shall not be required to pay any additional purchase price to Party C, unless the Equity Interest Purchase Price set forth herein is required to be adjusted in accordance with the applicable laws and regulations.

2. Covenants

2.1 Covenants regarding Party D

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Party C (as a shareholder of Party D) and Party D hereby covenant as follows:

2.1.1 Without the prior written consent of Party A, they shall not in any manner supplement, change or amend the articles of association and bylaws of Party D, increase or decrease its registered capital, or change its structure of registered capital in other manners;

2.1.2 They shall maintain Party D’s corporate existence in accordance with good financial and business standards and practices by prudently and effectively operating its business and handling its affairs;

2.1.3 Without the prior written consent of Party A, they shall not at any time following the date hereof, sell, transfer, mortgage or dispose of in any manner any assets of Party D or legal or beneficial interest in the business or revenues of Party D, or allow the encumbrance thereon of any security interest;

2.1.4 Without the prior written consent of Party A, they shall not incur, inherit, guarantee or suffer the existence of any debt, except forpayables incurred in the ordinary course of business other than through loans;

2.1.5 They shall always operate all of Party D’s businesses within the ordinary course of business to maintain the asset value of Party D and refrain from any action/omission that may affect Party D’s operating status and asset value;

2.1.6 Without the prior written consent of Party A, they shall not cause Party D to execute any major contract, except the contracts in the ordinary course of business (for purpose of this subsection, a contract with a value exceeding RMB 500,000 shall be deemed a major contract);

2.1.7 Without the prior written consent of Party A, they shall not cause Party D to provide any person with any loan or credit;

2.1.8 They shall provide Party A with information on Party D's business operations and financial condition at Party A's request;

2.1.9 If requested by Party A, they shall procure and maintain, at the cost of Party D, insurance in respect of Party D’s assets and business from an insurance carrier acceptable to Party A, at an amount and type of coverage typical for companies that operate similar businesses;

2.1.10 Without the prior written consent of Party A, they shall not cause or permit Party D to merge, consolidate with, acquire or invest in any person;

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2.1.11 They shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to Party D’s assets, business or revenue;

2.1.12 To maintain the ownership by Party D of all of its assets, they shall execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses against all claims;

2.1.13 Without the prior written consent of Party A, they shall ensure that Party D shall not in any manner distribute dividends to its shareholders, provided that upon Party A's written request, Party D shall immediately distribute all distributable profits to its shareholders;

2.1.14 At the request of Party A, they shall appoint any persons designated by Party A as directors of Party D;

2.1.15 Without Party A’s prior written consent, they shall not engage in any business in competition with Party A or its affiliates; and

2.1.16 Unless otherwise required by PRC law, Party D shall not be dissolved or liquated without prior written consent by Party A.

2.2 Other Covenants

Party C hereby covenants as follows:

2.2.1 Without the prior written consent of Party A, Party C shall not sell, transfer, mortgage or dispose of in any other manner any legal or beneficial interest in the equity interests in Party D held by Party C, or allow the encumbrance thereon of any security interest, except for the pledge placed on these equity interests in accordance with Party C’s Share Pledge Agreement;

2.2.2 Party C shall cause the shareholders’ meeting and/or the board of directors of Party D not to approve the sale, transfer, mortgage or disposition in any other manner of any legal or beneficial interest in the equity interests in Party D held by Party C, or allow the encumbrance thereon of any security interest, without the prior written consent of Party A, except for the pledge placed on these equity interests in accordance with Party C’s Share Pledge Agreement and Party C’s Power of Attorney;

2.2.3 Party C shall cause the shareholders’ meeting or the board of directors of Party D not to approve the merger or consolidation with any person, or the acquisition of or investment in any person, without the prior written consent of Party A;

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2.2.4 Party C shall immediately notify Party A of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the equity interests in Party D held by Party C;

2.2.5 Party C shall cause the shareholders’ meeting or the board of directors of Party D to vote their approval of the transfer of the Optioned Interests as set forth in this Agreement and to take any and all other actions that may be requested by Party A;

2.2.6 To the extent necessary to maintain Party C’s ownership in Party D, Party C shall execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses against all claims;

2.2.7 Party C shall appoint any designee of Party A as director of Party D, at the request of Party A;

2.2.8 Party C hereby waives its right of first refusal in regards to the transfer of equity interest by any other shareholder of Party D to Party A (if any), and gives consent to the execution by each other shareholder of Party D with Party A and Party D the exclusive option agreement, the share pledge agreement and the power of attorney similar to this Agreement, Party C’s Share Pledge Agreement, and Party C’s Power of Attorney, and undertakes not to take any actions in conflict with such documents executed by the other shareholders;

2.2.9 Party C shall promptly donate any profits, interests, dividends, or proceeds of liquidation to Party A or any other person designated by Party A to the extent permitted under the applicable PRC laws; and

2.2.10 Party C shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by and among Party C, Party D and Party A, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. To the extent that Party C has any remaining rights with respect to the equity interests subject to this Agreement hereunder or under Party C’sShare Pledge Agreement among the same parties hereto or under Party C’s Power of Attorney, Party C shall not exercise such rights except in accordance with the written instructions of Party A.

3. Representations and Warranties

Party C and Party D hereby represent and warrant to Party A, jointly and severally, as of the date of this Agreement and each date of transfer of the Optioned Interests, that:

3.1 They have the authority to execute and deliver this Agreement and any share transfer contracts to which they are parties concerning the Optioned Interests to be transferred thereunder (each, a “Transfer Contract”), and to perform their obligations under this Agreement and any Transfer Contracts. Party C and Party D agree to enter into Transfer Contracts consistent with the terms of this Agreement upon Party A’s exercise of the Equity Interest Purchase Option. This Agreement and the Transfer Contracts to which they are parties constitute or will constitute their legal, valid and binding obligations and shall be enforceable against them in accordance with the provisions thereof;

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3.2 Party C and Party D have obtained any and all approvals and consents from the relevant government authorities and third parties (if required) for the execution, delivery, and performance of this Agreement;

3.3 The execution and delivery of this Agreement or any Transfer Contracts and the obligations under this Agreement or any Transfer Contracts shall not: (i) cause any violation of any applicable PRC laws; (ii) be inconsistent with the articles of association, bylaws or other organizational documents of Party D; (iii) cause the violation of any contracts or instruments to which they are a party or which are binding on them, or constitute any breach under any contracts or instruments to which they are a party or which are binding on them; (iv) cause any violation of any condition for the grant and/or continued effectiveness of any licenses or permits issued to either of them; or (v) cause the suspension or revocation of or imposition of additional conditions to any licenses or permits issued to either of them;

3.4 Party C has a good and merchantable title to the equity interests in Party D he holds. Except for Party C’s Share Pledge Agreement, Party C has not placed any security interest on such equity interests;

3.5 Party D has a good and merchantable title to all of its assets, and has not placed any security interest on the aforementioned assets;

3.6 Party D does not have any outstanding debts, except for (i) debt incurred in the ordinary course of business; and (ii) debts disclosed to Party A for which Party A’s written consent has been obtained;

3.7 Party D has complied with all laws and regulations of China applicable to asset acquisitions; and

3.8 There are no pending or threatened litigation, arbitration or administrative proceedings relating to the equity interests in Party D, assets of Party D or Party D.

4. Effective Date and Term

This Agreement shall become effective upon execution by the Parties, and remain in effect until all equity interests held by Party C in Party D have been transferred or assigned to Party A and/or any other person designated by Party A in accordance with this Agreement. Since the effective date of this Agreement, the Original Exclusive Option Agreement shall be terminated and shall be replaced and superseded by this Agreement.

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5. Governing Law and Resolution of Disputes

5.1 Governing Law

The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of the PRC.

5.2 Methods of Resolution of Disputes

In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate in good faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after any Party’s request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted in Beijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on all Parties.

6. Taxes and Fees

Each Party shall pay any and all transfer and registration taxes, expenses and fees incurred thereby or levied thereon in accordance with the laws of China in connection with the preparation and execution of this Agreement and the Transfer Contracts, as well as the consummation of the transactions contemplated under this Agreement and the Transfer Contracts.

7. Notices

7.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

7.1.1 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the address specified for notices.

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7.1.2 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

7.2 For the purpose of notices, the addresses of the Parties are as follows:

Party A:	Tarena International Inc.
Address:	Fourth Floor, One Capital Place, P.O. Box 847GT, Grand Cayman, Cayman Islands
Attn:
Phone:
Facsimile:
Party B:	Tarena Technologies Group Inc.
Address:	Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing
Attn:	Han Shaoyun
Phone:	86-10 6213-6369
Facsimile:	86-10 6211-0873
Party C:	Li Jianguang
Address:	5 Jianguomennei Avenue, Dongcheng District, Beijing
Tel:	86-10 6526-2400
Party D:	Beijing Tarena Jinqiao Technology Co., Ltd.
Address:	Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing
Attn:	Han Shaoyun
Phone:	86-10 6213-5687
Facsimile:	86-10 6211-0873

7.3 Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof.

8. Confidentiality

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance of this Agreement are regarded as confidential information. Each Party shall maintain the confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be featured in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, investors, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the staff members or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable for breach of this Agreement. This Section shall survive the termination of this Agreement for any reason.

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9. Further Warranties

The Parties agree to promptly execute the documents that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement and to take further actions that are reasonably required for or are conducive to the implementation of the provisions and purposes of this Agreement.

10. Breach of Agreement

10.1 If Party C or Party D conducts any material breach of any term of this Agreement, Party A shall have right to terminate this Agreement and/or require Party C or Party D to compensate all damages; this Section 10 shall not prejudice any other rights of Party A herein;

10.2 Party C or Party D shall not have any right to terminate this Agreement in any event unless otherwise required by the applicable laws.

11. Miscellaneous

11.1 Amendments, Changes and Supplements

Any amendments and supplements to this Agreement shall be made in writing. The amendment agreements and supplementary agreements that have been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement.

11.2 Entire Agreement

Except for the amendments, supplements or changes in writing executed after the execution of this Agreement, this Agreement shall constitute the entire agreement reached by and among the Parties hereto with respect to the subject matter hereof, and shall supersede all prior oral and written consultations, representations and contracts reached with respect to the subject matter of this Agreement. This Agreement supersedes, in its entirety, the Original Exclusive Option Agreement relating to the matters set forth herein, which shall be terminated as of the date hereof.

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11.3 Headings

The headings of this Agreement are for convenience only, and shall not be used to interpret, explain or otherwise affect the meanings of the provisions of this Agreement.

11.4 Language

This Agreement is written in both Chinese and English language in four copies, each Party having one copy with equal legal validity; in case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.

11.5 Severability

In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

11.6 Successors

This Agreement shall be binding on and shall inure to the interest of the respective successors of the Parties and the permitted assigns of such Parties.

11.7 Survival

11.7.1 Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive the expiration or early termination thereof.

11.7.2 The provisions of Sections 5, 7, 8 and this Section 11.7 shall survive the termination of this Agreement.

11.8 Waivers

Any Party may waive the terms and conditions of this Agreement, provided that such a waiver must be provided in writing and shall require the signatures of the Parties. No waiver by any Party in certain circumstances with respect to a breach by other Parties shall operate as a waiver by such a Party with respect to any similar breach in other circumstances.

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Exclusive Option Agreement as of the date first above written.

Party A:	Tarena International Inc.
By:	/s/ Han Shaoyun
Name:	Han Shaoyun
Title:	Director
Party B:	Tarena Technologies Group Inc.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative
Party C:	Li Jianguang
By:	/s/ Li Jianguang
Party D:	Beijing Tarena Jinqiao Technology Co., Ltd.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative

EX-4.31

Exhibit 4.31

Second Amended and Restated Loan Agreement

This Second Amended and Restated Loan Agreement (this “Agreement”) is made and entered into by and between the Parties below as of the 5th day of July, 2016 in Beijing, People's Republic of China (“PRC” or “China”):

(1) Tarena Technologies Group Inc. (the “Lender”), a Wholly Foreign-Owned Enterprise, organized and existing under the laws of China, with its address at Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing;

(2) Han Shaoyun (the “Borrower”), a citizen of the China with Chinese Identification No.:          .

Each of the Lender and the Borrower shall be hereinafter referred to as a “Party” respectively, and as the “Parties” collectively.

Whereas:

1. The Borrower holds 70% of equity interests in Beijing Tarena Jinqiao Technology Co., Ltd. (the “Borrower Company”). All of the equity interests now held and hereafter acquired by the Borrower in the Borrower Company shall be referred to as “the Borrower Equity Interest”. The Borrower Company is a limited company duly registered in Beijing, China with its registered capital of RMB 5,000,000;

2. The Lender confirms that it agrees to provide the Borrower with and the Borrower confirms that he/she has received a loan to be used for the purposes set forth under this agreement.

3. The Lender and the Borrower executed an Amended and Restated Loan Agreement (the “Original Loan Agreement”) on November 25, 2013. The Parties intend to enter this Agreement to replace and supersede the Original Loan Agreement by executing this Agreement.

After friendly consultation, the Parties agree as follows:

1. Loan

1.1 In accordance with the terms and conditions of this Agreement, the Lender agrees to provide an interest-free loan in the amount of RMB3,500,000 (the “Loan”) to the Borrower. For the avoidance of doubt, the interest-free loan in the amount of RMB1,400,000 provided in the Original Loan Agreement shall be part of the Loan provided in this Agreement, and the Lender will provide another interest-free loan in the amount of RMB2,100,000 to the Borrower pursuant to this Agreement so that the total amount of Loan under this Agreement will be RMB3,500,000. The term of the Loan shall be 10 years from the date of this Agreement, which may be extended upon mutual written consent of the Parties. During the term of the Loan or the extended term of the Loan, the Borrower shall immediately repay the full amount of the Loan in the event that any one or more of the following circumstances occur:

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1.1.1 30 days elapse after the Borrower receives a written notice from the Lender requesting repayment of the Loan;

1.1.2 The Borrower’s death, lack or limitation of civil capacity;

1.1.3 The Borrower ceases (for any reason) to be an employee of the Lender, the Borrower Company or their affiliates;

1.1.4 The Borrower engages in criminal act or is involved in criminal activities;

1.1.5 According to the applicable laws of China, foreign investors are permitted to invest in the business that is currently conducted by the Borrower Company in China with a controlling stake and/or in the form of wholly-foreign-owned enterprises, the relevant competent authorities of China begin to approve such investments, and Tarena International Inc., as the sole shareholder of Lender, exercises the exclusive option under the Exclusive Option Agreement described in this Agreement.

1.2 The Loan provided by the Lender under this Agreement shall inure to the Borrower’s benefit only and not to the Borrower’s successor(s) or assign(s).

1.3 The Borrower agrees to accept the aforementioned Loan provided by the Lender, and hereby agrees and warrants using the Loan to provide capital for the Borrower Company to develop the business of the Borrower Company. Without the Lender’s prior written consent, the Borrower shall not use the Loan for any purpose other than as set forth herein.

1.4 The Lender and the Borrower hereby agree and acknowledge that the Borrower’s method of repayment of the Loan set forth in Section 1.1 shall be at the sole discretion of the Lender, and may at the Lender’s option take the form of the Borrower’s transferring the Borrower Equity Interest in whole to Tarena International Inc. or Tarena International Inc.’s designated persons (legal or natural persons) to the extent permitted under the applicable PRC laws pursuant to the Tarena International Inc.’s exercise of its right to acquire the Borrower Equity Interest under the Exclusive Option Agreement.

1.5 The Borrower also undertakes to execute an irrevocable Power of Attorney (the “Power of Attorney”), which authorizes a legal or natural person designated by Tarena International Inc. to exercise all of the Borrower’s rights as a shareholder of the Borrower Company.

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1.6 The Parties agree hereof that the Loan shall be interest-free unless otherwise agreed in this Agreement. When the Borrower transfers the Borrower Equity Interest to the Tarena International Inc. or Tarena International Inc.’s designated person(s), in the event that the transfer price of such equity interest exceeds the principal of the Loan under this Agreement, the excess over the principal shall be deemed the interest of the Loan under this Agreement payable by the Borrower to the Lender.

2. Conditions Precedent

The obligation of the Lender to provide the Loan to the Borrower contemplated in Section 1.1 shall be subject to the satisfaction of the following conditions, unless waived in writing by the Lender.

2.1 The Borrower Company and the Lender or other person (legal or natural person) designated by the Lender have officially executed an Amended and Restated Exclusive Business Cooperation Agreement (the “Exclusive Business Cooperation Agreement”), under which the Lender or other person designated by the Lender, as an exclusive service provider, will provide the Borrower Company with business support service and business consulting service.

2.2 The Borrower, the Borrower Company and the Lender or other person (legal or natural person) designated by the Lender have executed an Amended and Restated Share Pledge Agreement (the “Share Pledge Agreement”), the contents of which have been confirmed, and according to the Share Pledge Agreement, the Borrower agrees to pledge the Borrower Equity Interest to the Lender or other person designated by the Lender.

2.3 The Borrower, the Lender, Tarena International Inc. and the Borrower Company have officially executed an Amended and Restated Exclusive Option Agreement (the “Exclusive Option Agreement”), the contents of which have been confirmed, and under which the Borrower shall irrevocably grant Tarena International Inc. an exclusive option to purchase all of the Borrower Equity Interest.

2.4 The Borrower has executed an irrevocable Power of Attorney (the “Power of Attorney”), which authorizes Lender or other person (legal or natural person) designated by Lender to exercise all of the Borrower’s rights as a shareholder in the Borrower Company.

2.5 The aforementioned Share Pledge Agreement, Power of Attorney, Exclusive Option Agreement and Exclusive Business Cooperation Agreement have been entered into before or on the date of execution of this Agreement and shall have full legal validity without any default or encumbrance related to these agreements or contracts, and all the related filing procedures, approvals, authorization, registrations and government procedures have been completed (as applicable).

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2.6 All the representations and warranties by the Borrower in Section 3.2 are true, complete, correct and not misleading.

2.7 The Borrower has not violated the covenants in Section 4 of this Agreement, and no event which may affect the Borrower’s performance of its obligations under this Agreement has occurred or is expected to occur.

3. Representations and Warranties

3.1 Between the date of this Agreement and the date of termination of this Agreement, the Lender hereby makes the following representations and warranties to the Borrower:

3.1.1 The Lender is a corporation duly organized and legally existing in accordance with the laws of China;

3.1.2 The Lender has the legal capacity to execute and perform this Agreement. The execution and performance by the Lender of this Agreement is consistent with the Lender’s scope of business and the provisions of the Lender’s corporate bylaws and other organizational documents, and the Lender has obtained all necessary and proper approvals and authorizations for the execution and performance of this Agreement; and

3.1.3 This Agreement constitutes the Lender’s legal, valid and binding obligations enforceable in accordance with its terms.

3.2 Between the date of this Agreement and the date of termination of this Agreement, the Borrower hereby makes the following representations and warranties:

3.2.1 The Borrower has the legal capacity to execute and perform this Agreement. The Borrower has obtained all necessary and proper approvals and authorizations for the execution and performance of this Agreement;

3.2.2 The Borrower has caused his/her spouse to agree never to claim any ownership rights in the Borrower Equity Interest, including, without limitation, claiming that the Borrower Equity Interest constitutes communal property of marriage;

3.2.3 This Agreement constitutes the Borrower’s legal, valid and binding obligations enforceable in accordance with its terms; and

3.2.4 There are no disputes, litigations, arbitrations, administrative proceedings or any other legal proceedings relating to the Borrower, nor are there any potential disputes, litigations, arbitrations, administrative proceedings or any other legal proceedings relating to the Borrower.

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4. Borrower's Covenants

4.1 As and when he/she becomes, as well as for so long as he/she remains a shareholder of the Borrower Company, the Borrower irrevocably covenants that during the term of this Agreement, the Borrower shall cause the Borrower Company:

4.1.1 to strictly abide by the provisions of the Exclusive Option Agreement and the Exclusive Business Cooperation Agreement, and to refrain from any action/omission that may affect the effectiveness and enforceability of the Exclusive Option Agreement and the Exclusive Business Cooperation Agreement;

4.1.2 at the request of the Lender (or a party designated by the Lender), to execute agreements/contracts on business cooperation with the Lender (or a party designated by the Lender), and to strictly abide by such agreements/contracts;

4.1.3 to provide the Lender with all of the information on the Borrower Company's business operations and financial situation at the Lender’s request;

4.1.4 to immediately notify the Lender of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the Borrower Company's assets, business or income;

4.1.5 at the request of the Lender, to appoint any persons designated by Lender as directors of the Borrower Company.

4.2 The Borrower covenants that during the term of this Agreement, he/she shall:

4.2.1 endeavor to keep the Borrower Company to engage in its principal businesses specified in its business license;

4.2.2 abide by the provisions of this Agreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement to which the Borrower is a party, perform his/her obligations under this Agreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement, and refrain from any action/omission that may affect the effectiveness and enforceability of this Agreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement;

4.2.3 not sell, transfer, mortgage or dispose of in any other manner the legal or beneficial interest in the Borrower Equity Interest, or allow the encumbrance thereon of any security interest or the encumbrance, except in accordance with the Share Pledge Agreement;

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4.2.4 cause any shareholders’ meeting and/or the board of directors of the Borrower Company to not approve the sale, transfer, mortgage or disposition in any other manner of any legal or beneficial interest in the Borrower Equity Interest, or allow the encumbrance thereon of any security interest, except to the Lender or the Lender’s designated person;

4.2.5 cause any shareholders’ meeting and/or the board of directors of the Borrower Company not to approve the merger or consolidation of the Borrower Company with any person, or its acquisition of or investment in any person, without the prior written consent of the Lender;

4.2.6 immediately notify the Lender of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the Borrower Equity Interest;

4.2.7 to the extent necessary to maintain his/her ownership of the Borrower Equity Interest, execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses against all claims;

4.2.8 without the prior written consent of the Lender, refrain from any action/omission that may have a material impact on the assets, business and liabilities of the Borrower Company;

4.2.9 appoint any designee of the Lender as director of the Borrower Company, at the request of the Lender;

4.2.10 to the extent permitted by the laws of China, at the request of the Lender at any time, promptly and unconditionally transfer all of the Borrower Equity Interest to the Lender or the Lender’s designated representative(s) at any time, and cause the other shareholders of the Borrower Company to waive their right of first refusal with respect to the share transfer described in this Section;

4.2.11 to the extent permitted by the laws of China, at the request of the Lender at any time, cause the other shareholders of the Borrower Company to promptly and unconditionally transfer all of their equity interests to the Lender or the Lender’s designated representative(s) at any time, and the Borrower hereby waives his/her right of first refusal (if any) with respect to the share transfer described in this Section;

4.2.12 without the prior written consent of the Lender, not to cause the Borrower Company to supplement, change, or amend its articles of association in any manner, increase or decrease its registered capital or change its share capital structure in any manner.

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5. Liability for Default

5.1 If the Borrower commits any material breach of any term of this Agreement, the Lender shall have the right to terminate this Agreement and require the Borrower to pay for all damages; this Section 5.1 shall be without prejudice to any other rights of the Lender herein.

5.2 The Borrower shall have no right to terminate this Agreement in any event unless otherwise required by the applicable laws.

5.3 In the event that the Borrower fails to perform the repayment obligations set forth in this Agreement, the Borrower shall pay an overdue interest of 0.01% per day for the outstanding payment, until the day the Borrower repays the full principal of the Loan, overdue interests and other payable amounts.

6. Notices

6.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

6.1.1 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery.

6.1.2 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of the transmission).

6.2 For the purpose of notices, the addresses of the Parties are as follows:

Party A:	Tarena Technologies Group Inc.
Attn:	Han Shaoyun
Address:	Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing
Phone:	010 6213-6369
Facsimile:	010 6211-0873
Party B:	Han Shaoyun
Address:
Phone:

6.3 Any Party may at any time change its address for notices by a notice delivered to the other Party in accordance with the terms hereof.

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7. Confidentiality

The Parties acknowledge that any oral or written information exchanged among them with respect to this Agreement is confidential information. The Parties shall maintain the confidentiality of all such information, and without the written consent of other Party, either Party shall not disclose any relevant information to any third party, except in the following circumstances: (a) such information is or will be in the public domain (provided that this is not the result of a public disclosure by the receiving party); (b) information disclosed as required by applicable laws or rules or regulations of any stock exchange; or (c) information required to be disclosed by any Party to its legal counsel or financial advisor regarding the transaction contemplated hereunder, and such legal counsel or financial advisor are also bound by confidentiality duties similar to the duties in this section. Disclosure of any confidential information by the staff members or agency hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable for breach of this Agreement. This section shall survive the termination of this Agreement for any reason.

8. Governing Law and Resolution of Disputes

8.1 The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes shall be governed by the laws of China.

8.2 In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate in good faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after any Party's request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted in Beijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on both Parties.

8.3 Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.

9. Miscellaneous

9.1 This Agreement shall become effective on the date thereof, and shall expire upon the date of full performance by the Parties of their respective obligations under this Agreement. Since the effective date of this Agreement, the Original Loan Agreement shall be terminated and shall be replaced and superseded by this Agreement.

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9.2 This Agreement is written in both Chinese and English language in two copies, with each Party having one copy with equal legal validity. In case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.

9.3 This Agreement may be amended or supplemented through written agreement by and between the Lender and the Borrower. Such written amendment agreement and/or supplementary agreement executed by and between the Lender and the Borrower are an integral part of this Agreement, and shall have the same legal validity as this Agreement.

9.4 In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by the relevant laws the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

9.5 The attachments (if any) to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement.

9.6 Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive the expiration or early termination thereof. The provisions of Sections 5, 7, 8, and this Section 9.6 shall survive the termination of this Agreement.

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Amended and Restated Loan Agreement as of the date first above written.

Lender:	Tarena Technologies Group Inc.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative
Borrower:	Han Shaoyun
By:	/s/ Han Shaoyun

EX-4.32

Exhibit 4.32

Second Amended and Restated Loan Agreement

This Second Amended and Restated Loan Agreement (this “Agreement”) is made and entered into by and between the Parties below as of the 5th day of July, 2016 in Beijing, People's Republic of China (“PRC” or “China”):

(1) Tarena Technologies Group Inc. (the “Lender”), a Wholly Foreign Owned Enterprise, organized and existing under the laws of China, with its address at Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing;

(2) Li Jianguang (the “Borrower”), a citizen of the China with Chinese Identification No.:         .

Each of the Lender and the Borrower shall be hereinafter referred to as a “Party” respectively, and as the “Parties” collectively.

Whereas:

1. The Borrower holds 30% of equity interests in Beijing Tarena Jinqiao Technology Co., Ltd. (the “Borrower Company”). All of the equity interests now held and hereafter acquired by the Borrower in the Borrower Company shall be referred to as “the Borrower Equity Interest”. The Borrower Company is a limited company duly registered in Beijing, China with its registered capital of RMB 5,000,000;

2. The Lender confirms that it agrees to provide the Borrower with and the Borrower confirms that he/she has received a loan to be used for the purposes set forth under this agreement.

3. The Lender and the Borrower executed a Loan Agreement (the “Original Loan Agreement”) on November 25, 2013. The Parties intend to enter this Agreement to replace and supersede the Original Loan Agreement by executing this Agreement.

After friendly consultation, the Parties agree as follows:

1. Loan

1.1 In accordance with the terms and conditions of this Agreement, the Lender agrees to provide an interest-free loan in the amount of RMB1,500,000 (the “Loan”) to the Borrower. For the avoidance of doubt, the interest-free loan in the amount of RMB600,000 provided in the Original Loan Agreement shall be part of the Loan provided in this Agreement, and the Lender will provide another interest-free loan in the amount of RMB900,000 to the Borrower pursuant to this Agreement so that the total amount of Loan under this Agreement will be RMB1,500,000. The term of the Loan shall be 10 years from the date of this Agreement, which may be extended upon mutual written consent of the Parties. During the term of the Loan or the extended term of the Loan, the Borrower shall immediately repay the full amount of the Loan in the event that any one or more of the following circumstances occur:

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1.1.1 30 days elapse after the Borrower receives a written notice from the Lender requesting repayment of the Loan;

1.1.2 The Borrower’s death, lack or limitation of civil capacity;

1.1.3 The Borrower ceases (for any reason) to be an employee of the Lender, the Borrower Company or their affiliates;

1.1.4 The Borrower engages in criminal act or is involved in criminal activities;

1.1.5 According to the applicable laws of China, foreign investors are permitted to invest in the business that is currently conducted by the Borrower Company in China with a controlling stake and/or in the form of wholly-foreign-owned enterprises, the relevant competent authorities of China begin to approve such investments, and Tarena International Inc., as the sole shareholder of Lender, exercises the exclusive option under the Exclusive Option Agreement described in this Agreement.

1.2 The Loan provided by the Lender under this Agreement shall inure to the Borrower’s benefit only and not to the Borrower’s successor(s) or assign(s).

1.3 The Borrower agrees to accept the aforementioned Loan provided by the Lender, and hereby agrees and warrants using the Loan to provide capital for the Borrower Company to develop the business of the Borrower Company. Without the Lender’s prior written consent, the Borrower shall not use the Loan for any purpose other than as set forth herein.

1.4 The Lender and the Borrower hereby agree and acknowledge that the Borrower’s method of repayment of the Loan set forth in Section 1.1 shall be at the sole discretion of the Lender, and may at the Lender’s option take the form of the Borrower’s transferring the Borrower Equity Interest in whole to Tarena International Inc. or Tarena International Inc.’s designated persons (legal or natural persons) to the extent permitted under the applicable PRC laws pursuant to the Tarena International Inc.’s exercise of its right to acquire the Borrower Equity Interest under the Exclusive Option Agreement.

1.5 The Borrower also undertakes to execute an irrevocable Power of Attorney (the “Power of Attorney”), which authorizes a legal or natural person designated by Tarena International Inc. to exercise all of the Borrower’s rights as a shareholder of the Borrower Company.

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1.6 The Parties agree hereof that the Loan shall be interest-free unless otherwise agreed in this Agreement. When the Borrower transfers the Borrower Equity Interest to the Tarena International Inc. or Tarena International Inc.’s designated person(s), in the event that the transfer price of such equity interest exceeds the principal of the Loan under this Agreement, the excess over the principal shall be deemed the interest of the Loan under this Agreement payable by the Borrower to the Lender.

2. Conditions Precedent

The obligation of the Lender to provide the Loan to the Borrower contemplated in Section 1.1 shall be subject to the satisfaction of the following conditions, unless waived in writing by the Lender.

2.1 The Borrower Company and the Lender or other person (legal or natural person) designated by the Lender have officially executed an Amended and Restated Exclusive Business Cooperation Agreement (the “Exclusive Business Cooperation Agreement”), under which the Lender or other person designated by the Lender, as an exclusive service provider, will provide the Borrower Company with business support service and business consulting service.

2.2 The Borrower, the Borrower Company and the Lender or other person (legal or natural person) designated by the Lender have executed an Amended and Restated Share Pledge Agreement (the “Share Pledge Agreement”), the contents of which have been confirmed, and according to the Share Pledge Agreement, the Borrower agrees to pledge the Borrower Equity Interest to the Lender or other person designated by the Lender.

2.3 The Borrower, the Lender, Tarena International Inc. and the Borrower Company have officially executed an Amended and Restated Exclusive Option Agreement (the “Exclusive Option Agreement”), the contents of which have been confirmed, and under which the Borrower shall irrevocably grant Tarena International Inc. an exclusive option to purchase all of the Borrower Equity Interest.

2.4 The Borrower has executed an irrevocable Power of Attorney (the “Power of Attorney”), which authorizes Lender or other person (legal or natural person) designated by Lender to exercise all of the Borrower’s rights as a shareholder in the Borrower Company.

2.5 The aforementioned Share Pledge Agreement, Power of Attorney, Exclusive Option Agreement and Exclusive Business Cooperation Agreement have been entered into before or on the date of execution of this Agreement and shall have full legal validity without any default or encumbrance related to these agreements or contracts, and all the related filing procedures, approvals, authorization, registrations and government procedures have been completed (as applicable).

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2.6 All the representations and warranties by the Borrower in Section 3.2 are true, complete, correct and not misleading.

2.7 The Borrower has not violated the covenants in Section 4 of this Agreement, and no event which may affect the Borrower’s performance of its obligations under this Agreement has occurred or is expected to occur.

3. Representations and Warranties

3.1 Between the date of this Agreement and the date of termination of this Agreement, the Lender hereby makes the following representations and warranties to the Borrower:

3.1.1 The Lender is a corporation duly organized and legally existing in accordance with the laws of China;

3.1.2 The Lender has the legal capacity to execute and perform this Agreement. The execution and performance by the Lender of this Agreement is consistent with the Lender’s scope of business and the provisions of the Lender’s corporate bylaws and other organizational documents, and the Lender has obtained all necessary and proper approvals and authorizations for the execution and performance of this Agreement; and

3.1.3 This Agreement constitutes the Lender’s legal, valid and binding obligations enforceable in accordance with its terms.

3.2 Between the date of this Agreement and the date of termination of this Agreement, the Borrower hereby makes the following representations and warranties:

3.2.1 The Borrower has the legal capacity to execute and perform this Agreement. The Borrower has obtained all necessary and proper approvals and authorizations for the execution and performance of this Agreement;

3.2.2 The Borrower has caused his/her spouse to agree never to claim any ownership rights in the Borrower Equity Interest, including, without limitation, claiming that the Borrower Equity Interest constitutes communal property of marriage;

3.2.3 This Agreement constitutes the Borrower’s legal, valid and binding obligations enforceable in accordance with its terms; and

3.2.4 There are no disputes, litigations, arbitrations, administrative proceedings or any other legal proceedings relating to the Borrower, nor are there any potential disputes, litigations, arbitrations, administrative proceedings or any other legal proceedings relating to the Borrower.

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4. Borrower's Covenants

4.1 As and when he/she becomes, as well as for so long as he/she remains a shareholder of the Borrower Company, the Borrower irrevocably covenants that during the term of this Agreement, the Borrower shall cause the Borrower Company:

4.1.1 to strictly abide by the provisions of the Exclusive Option Agreement and the Exclusive Business Cooperation Agreement, and to refrain from any action/omission that may affect the effectiveness and enforceability of the Exclusive Option Agreement and the Exclusive Business Cooperation Agreement;

4.1.2 at the request of the Lender (or a party designated by the Lender), to execute agreements/contracts on business cooperation with the Lender (or a party designated by the Lender), and to strictly abide by such agreements/contracts;

4.1.3 to provide the Lender with all of the information on the Borrower Company's business operations and financial situation at the Lender’s request;

4.1.4 to immediately notify the Lender of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the Borrower Company's assets, business or income;

4.1.5 at the request of the Lender, to appoint any persons designated by Lender as directors of the Borrower Company.

4.2 The Borrower covenants that during the term of this Agreement, he/she shall:

4.2.1 endeavor to keep the Borrower Company to engage in its principal businesses specified in its business license;

4.2.2 abide by the provisions of this Agreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement to which the Borrower is a party, perform his/her obligations under this Agreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement, and refrain from any action/omission that may affect the effectiveness and enforceability of this Agreement, the Power of Attorney, the Share Pledge Agreement and the Exclusive Option Agreement;

4.2.3 not sell, transfer, mortgage or dispose of in any other manner the legal or beneficial interest in the Borrower Equity Interest, or allow the encumbrance thereon of any security interest or the encumbrance, except in accordance with the Share Pledge Agreement;

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4.2.4 cause any shareholders’ meeting and/or the board of directors of the Borrower Company to not approve the sale, transfer, mortgage or disposition in any other manner of any legal or beneficial interest in the Borrower Equity Interest, or allow the encumbrance thereon of any security interest, except to the Lender or the Lender’s designated person;

4.2.5 cause any shareholders’ meeting and/or the board of directors of the Borrower Company not to approve the merger or consolidation of the Borrower Company with any person, or its acquisition of or investment in any person, without the prior written consent of the Lender;

4.2.6 immediately notify the Lender of the occurrence or possible occurrence of any litigation, arbitration or administrative proceedings relating to the Borrower Equity Interest;

4.2.7 to the extent necessary to maintain his/her ownership of the Borrower Equity Interest, execute all necessary or appropriate documents, take all necessary or appropriate actions and file all necessary or appropriate complaints or raise necessary and appropriate defenses against all claims;

4.2.8 without the prior written consent of the Lender, refrain from any action/omission that may have a material impact on the assets, business and liabilities of the Borrower Company;

4.2.9 appoint any designee of the Lender as director of the Borrower Company, at the request of the Lender;

4.2.10 to the extent permitted by the laws of China, at the request of the Lender at any time, promptly and unconditionally transfer all of the Borrower Equity Interest to the Lender or the Lender’s designated representative(s) at any time, and cause the other shareholders of the Borrower Company to waive their right of first refusal with respect to the share transfer described in this Section;

4.2.11 to the extent permitted by the laws of China, at the request of the Lender at any time, cause the other shareholders of the Borrower Company to promptly and unconditionally transfer all of their equity interests to the Lender or the Lender’s designated representative(s) at any time, and the Borrower hereby waives his/her right of first refusal (if any) with respect to the share transfer described in this Section;

4.2.12 without the prior written consent of the Lender, not to cause the Borrower Company to supplement, change, or amend its articles of association in any manner, increase or decrease its registered capital or change its share capital structure in any manner.

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5. Liability for Default

5.1 If the Borrower commits any material breach of any term of this Agreement, the Lender shall have the right to terminate this Agreement and require the Borrower to pay for all damages; this Section 5.1 shall be without prejudice to any other rights of the Lender herein.

5.2 The Borrower shall have no right to terminate this Agreement in any event unless otherwise required by the applicable laws.

5.3 In the event that the Borrower fails to perform the repayment obligations set forth in this Agreement, the Borrower shall pay an overdue interest of 0.01% per day for the outstanding payment, until the day the Borrower repays the full principal of the Loan, overdue interests and other payable amounts.

6. Notices

6.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such Party set forth below. A confirmation copy of each notice shall also be sent by email. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

6.1.1 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery.

6.1.2 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of the transmission).

6.2 For the purpose of notices, the addresses of the Parties are as follows:

Party A:	Tarena Technologies Group Inc.
Attn:	Han Shaoyun
Address:	Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing
Phone:	010 6213-6369
Facsimile:	010 6211-0873
Party B:	Li Jianguang
Address:	5 Jianguomennei Avenue, Dongcheng District, Beijing
Phone:	010 6526-2400

6.3 Any Party may at any time change its address for notices by a notice delivered to the other Party in accordance with the terms hereof.

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7. Confidentiality

The Parties acknowledge that any oral or written information exchanged among them with respect to this Agreement is confidential information. The Parties shall maintain the confidentiality of all such information, and without the written consent of other Party, either Party shall not disclose any relevant information to any third party, except in the following circumstances: (a) such information is or will be in the public domain (provided that this is not the result of a public disclosure by the receiving party); (b) information disclosed as required by applicable laws or rules or regulations of any stock exchange; or (c) information required to be disclosed by any Party to its legal counsel or financial advisor regarding the transaction contemplated hereunder, and such legal counsel or financial advisor are also bound by confidentiality duties similar to the duties in this section. Disclosure of any confidential information by the staff members or agency hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable for breach of this Agreement. This section shall survive the termination of this Agreement for any reason.

8. Governing Law and Resolution of Disputes

8.1 The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes shall be governed by the laws of China.

8.2 In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate in good faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after any Party's request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted in Beijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on both Parties.

8.3 Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.

9. Miscellaneous

9.1 This Agreement shall become effective on the date thereof, and shall expire upon the date of full performance by the Parties of their respective obligations under this Agreement. Since the effective date of this Agreement, the Original Loan Agreement shall be terminated and shall be replaced and superseded by this Agreement.

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9.2 This Agreement is written in both Chinese and English language in two copies, with each Party having one copy with equal legal validity. In case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.

9.3 This Agreement may be amended or supplemented through written agreement by and between the Lender and the Borrower. Such written amendment agreement and/or supplementary agreement executed by and between the Lender and the Borrower are an integral part of this Agreement, and shall have the same legal validity as this Agreement.

9.4 In the event that one or several of the provisions of this Agreement are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Agreement shall not be affected or compromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by the relevant laws the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

9.5 The attachments (if any) to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement.

9.6 Any obligations that occur or that are due as a result of this Agreement upon the expiration or early termination of this Agreement shall survive the expiration or early termination thereof. The provisions of Sections 5, 7, 8, and this Section 9.6 shall survive the termination of this Agreement.

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Loan Agreement as of the date first above written.

Lender:	Tarena Technologies Group Inc.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative
Borrower:	Li Jianguang
By:	/s/ Li Jianguang

EX-4.33

Exhibit 4.33

Second Amended and Restated Share Pledge Agreement

This Second Amended and Restated Share Pledge Agreement (this “Agreement”) has been executed by and among the following parties on July 5, 2016 in Beijing, the People’s Republic of China (“China” or the “PRC”):

Party A: Tarena Technologies Group Inc. (hereinafter “Pledgee”);

Address: Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing

Party B: Han Shaoyun (hereinafter “Pledgor”)

ID No.:

Party C: Beijing Tarena Jinqiao Technology Co., Ltd.

Address: Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing

In this Agreement, each of Pledgee, Pledgor and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.

Whereas:

1. Pledgor is a Chinese citizen and holds 70% of the equity interest in Party C. Party C is a limited liability company registered in Beijing, China engaging in technology development, technology transfer, technology consulting, etc.. Party C acknowledges the respective rights and obligations of Pledgor and Pledgee under this Agreement, and intends to provide any necessary assistance in registering the Pledge;

2. Pledgee is a wholly foreign-owned enterprise registered in China. Pledgee and Party C which is partially owned by Pledgor have executed an Exclusive Business Cooperation Agreements (as defined below) in Beijing; Party C, Pledgee, Pledgor and Tarena International Inc. have executed an Exclusive Option Agreements (as defined below); Pledgor has executed a Power of Attorney (as defined below) in favor of Tarena International Inc.; and Pledgee and Pledgor have executed a Loan Agreement (as defined below);

3. To ensure that Party C and Pledgor fully perform their obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Loan Agreement and the Power of Attorney, Pledgor hereby pledges to the Pledgee all of the equity interest that Pledgor holds in Party C as security for Party C’s and Pledgor’s obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Loan Agreement and the Power of Attorney.

4. Party A, Party B and Party C executed an Amended and Restated Share Pledge Agreement on November 25, 2013 (the “Original Share Pledge Agreement”). The Parties intend to enter this Agreement to replace and supersede the Original Share Pledge Agreement by executing this Agreement.

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To perform the provisions of the Transaction Documents (as defined below), the Parties have mutually agreed to execute this Agreement upon the following terms.

1. Definitions

Unless otherwise provided herein, the terms below shall have the following meanings:

1.1 Pledge: shall refer to the security interest granted by Pledgor to Pledgee pursuant to Article 2 of this Agreement, i.e., the right of Pledgee to be compensated on a preferential basis with the conversion, auction or sales price of the Equity Interest.

1.2 Equity Interest: shall refer to 70% equity interests in Party C currently held by Pledgor, representing RMB3,500,000 in the registered capital of Party C, and all of the equity interest hereafter acquired by Pledgor in Party C.

1.3 Term of Pledge: shall refer to the term set forth in Section 3.2 of this Agreement.

1.4 Transaction Documents: shall refer to the Amended and Restated Exclusive Business Cooperation Agreement executed by and between Party C and Pledgee on November 25, 2013 (the “Exclusive Option Agreements”; (ii) Second Amended and Restated Exclusive Option Agreement executed by and among Party C, Pledgee and Pledgor on July 5, 2016 (the “Exclusive Option Agreement”); (iii) Second Amended and Restated Loan Agreement executed by and between Pledgee and Pledgor on July 5, 2016 (the “Loan Agreement”); (iv) Power of Attorney executed on July 5, 2016 by Pledgor (the “Power of Attorney”) and any modification, amendment and restatement to the aforementioned documents.

1.5 Contract Obligations: shall refer to all the obligations of Pledgor under the Exclusive Option Agreement, the Power of Attorney, the Loan Agreement and this Agreement; all the obligations of Party C under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement and this Agreement.

1.6 Secured Indebtedness: shall refer to all the direct, indirect and derivative losses and losses of anticipated profits, suffered by Pledgee, incurred as a result of any Event of Default. The amount of such loss shall be calculated in accordance with the reasonable business plan and profit forecast of Pledgee, the consulting and service fees payable to Pledgee under the Exclusive Business Cooperation Agreement, all expenses occurred in connection with enforcement by Pledgee of Pledgor’s and/or Party C’s Contract Obligations and etc.

1.7 Event of Default: shall refer to any of the circumstances set forth in Article 7 of this Agreement.

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1.8 Notice of Default: shall refer to the notice issued by Pledgee in accordance with this Agreement declaring an Event of Default.

2. The Pledge

2.1 Pledgor agrees to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtedness under this Agreement. Party C hereby assents that Pledgor pledges the Equity Interest to the Pledgee pursuant to this Agreement.

2.2 During the term of the Pledge, Pledgee is entitled to receive dividends distributed on the Equity Interest. Pledgor may receive dividends distributed on the Equity Interest only with prior written consent of Pledgee. Dividends received by Pledgor on Equity Interest after deduction of individual income tax paid by Pledgor shall be, as required by Pledgee, (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

2.3 Pledgor may subscribe for capital increase in Party C only with prior written consent of Pledgee. Any equity interest obtained by Pledgor as a result of Pledgor’s subscription of the increased registered capital of the Company shall also be deemed as Equity Interest.

2.4 In the event that Party C is required by PRC law to be liquidated or dissolved, any interest distributed to Pledgor upon Party C’s dissolution or liquidation shall, upon the request of the Pledgee, be (1) deposited into an account designate and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

3. Term of Pledge

3.1 The Pledge shall become effective on such date when the pledge of the Equity Interest contemplated herein has been registered with relevant administration for industry and commerce (the “AIC”). The Pledge shall be continuously valid until all payments due under the Exclusive Business Cooperation Agreement have been fulfilled by Party C. The parties agree that within 3 business days following the execution of this Agreement, Pledgor and Party C shall register the Pledge in the shareholders’ register of Party C, and within 10 business days after the competent AIC has formally begun accepting applications for the registration of equity interest pledge, Pledgor and Party C shall submit application to the AIC for the registration of the Pledge of the Equity Interest contemplated herein. Pledgor and Party C shall submit all necessary documents and complete all necessary procedures, as required by the PRC laws and regulations and the relevant AIC, to ensure that the Pledge of the Equity Interest shall be registered with the AIC within 20 business days after filing (or such other time period normally required by the relevant AIC).

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3.2 During the Term of Pledge, in the event Party C fails to perform the Contract Obligations or pay Secured Indebtedness, Pledgee shall have the right, but not the obligation, to dispose of the Pledge in accordance with the provisions of this Agreement.

4. Custody of Records for Equity Interest subject to Pledge

During the Term of Pledge set forth in this Agreement, Pledgor shall deliver to Pledgee's custody the capital contribution certificate for the Equity Interest and the shareholders' register containing the Pledge within one week from the execution of this Agreement. Pledgee shall have custody of such items during the entire Term of Pledge set forth in this Agreement.

5. Representations and Warranties of Pledgor and Party C

As of the execution date of this Agreement, Pledgor and Party C hereby jointly and severally represent and warrant to Pledgee that:

5.1 Pledgor is the sole legal owner of the Equity Interest.

5.2 Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with the provisions set forth in this Agreement.

5.3 Except for the Pledge, Pledgor has not placed any security interest or other encumbrance on the Equity Interest.

5.4 Pledgor and Party C have obtained any and all approvals and consents from applicable government authorities and third parties (if required) for execution, delivery and performance of this Agreement.

5.5 The execution, delivery and performance of this Agreement will not: (i) violate any relevant PRC laws; (ii) conflict with Party C’s articles of association or other constitutional documents; (iii) result in any breach of or constitute any default under any contract or instrument to which it is a party or by which it is otherwise bound; (iv) result in any violation of any condition for the grant and/or maintenance of any permit or approval granted to any Party; or (v) cause any permit or approval granted to any Party to be suspended, cancelled or attached with additional conditions.

6. Covenants of Pledgor and Party C

6.1 During the term of this Agreement, Pledgor and Party C hereby jointly and severally covenant to the Pledgee:

6.1.1 not transfer the Equity Interest, place or permit the existence of any security interest or other encumbrance on the Equity Interest, without the prior written consent of Pledgee, except for the performance of the Transaction Documents;

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6.1.2 Pledgor and Party C shall comply with the provisions of all laws and regulations applicable to the pledge of rights, and within 5 days of receipt of any notice, order or recommendation issued or prepared by relevant competent authorities regarding the Pledge, shall present the aforementioned notice, order or recommendation to Pledgee, and shall comply with the aforementioned notice, order or recommendation or submit objections and representations with respect to the aforementioned matters upon Pledgee's reasonable request or upon consent of Pledgee;

6.1.3 Pledgor and Party C shall promptly notify Pledgee of any event or notice received by Pledgor that may have an impact on Pledgee's rights to the Equity Interest or any portion thereof, as well as any event or notice received by Pledgor that may have an impact on any guarantees and other obligations of Pledgor arising out of this Agreement.

6.1.4 Party C shall complete the registration procedures for extension of the term of operation within three (3) months prior to the expiration of such term to maintain the validity of this Agreement.

6.2 Pledgor agrees that the rights acquired by Pledgee in accordance with this Agreement with respect to the Pledge shall not be interrupted or harmed by Pledgor or any heirs or representatives of Pledgor or any other persons through any legal proceedings.

6.3 To protect or perfect the security interest granted by this Agreement for payment of the Service Fees under the Exclusive Business Cooperation Agreement, Pledgor hereby undertakes to execute in good faith and to cause other parties who have an interest in the Pledge to execute all certificates, agreements, deeds and/or covenants required by Pledgee. Pledgor also undertakes to perform and to cause other parties who have an interest in the Pledge to perform actions required by Pledgee, to facilitate the exercise by Pledgee of its rights and authority granted thereto by this Agreement, and to enter into all relevant documents regarding ownership of Equity Interest with Pledgee or designee(s) of Pledgee (natural persons/legal persons). Pledgor undertakes to provide Pledgee within a reasonable time with all notices, orders and decisions regarding the Pledge that are required by Pledgee.

6.4 Pledgor hereby undertakes to comply with and perform all guarantees, promises, agreements, representations and conditions under this Agreement. In the event of failure or partial performance of its guarantees, promises, agreements, representations and conditions, Pledgor shall indemnify Pledgee for all losses resulting therefrom.

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7. Event of Breach

7.1 The following circumstances shall be deemed Event of Default:

7.1.1 Pledgor’s any breach to any obligations under the Transaction Documents and/or this Agreement;

7.1.2 Party C’s any breach to any obligations under the Transaction Documents and/or this Agreement.

7.2 Upon notice or discovery of the occurrence of any circumstances or event that may lead to the aforementioned circumstances described in Section 7.1, Pledgor shall immediately notify Pledgee in writing accordingly.

7.3 Unless an Event of Default set forth in this Section 7.1 has been successfully resolved to Pledgee’s satisfaction within twenty (20) days after the Pledgee and /or Party C delivers a notice to the Pledgor requesting rectification of such Event of Default, Pledgee may issue a Notice of Default to Pledgor in writing upon the occurrence of the Event of Default or at any time thereafter and demand that Pledgor immediately pay all outstanding payments due under the Exclusive Business Cooperation Agreement and all other payments due to Pledgee, and/or dispose of the Pledge in accordance with the provisions of Article 8 of this Agreement.

8. Exercise of Pledge

8.1 Pledgee may issue a Notice of Default to Pledgor when exercising the Pledge.

8.2 Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge concurrently with the issuance of the Notice of Default in accordance with Section 8.1 or at any time after the issuance of the Notice of Default. Once Pledgee elects to enforce the Pledge, Pledgor shall cease to be entitled to any rights or interests associated with the Equity Interest.

8.3 After Pledgee issues a Notice of Default to Pledgor in accordance with Section 8.1, Pledgee may exercise any remedy measure under applicable PRC laws, the Transaction Documents and this Agreement, including but not limited to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest. The Pledgee shall not be liable for any loss incurred by its duly exercise of such rights and powers.

8.4 The proceeds from exercise of the Pledge by Pledgee shall be used to pay for tax and expenses incurred as result of disposing the Equity Interest and to perform Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment. After the payment of the aforementioned amounts, the remaining balance shall be returned to Pledgor or any other person who have rights to such balance under applicable laws or be deposited to the local notary public office where Pledgor resides, with all expense incurred being borne by Pledgor. To the extent permitted under applicable PRC laws, Pledgor shall unconditionally donate the aforementioned proceeds to Pledgee or any other person designated by Pledgee.

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8.5 Pledgee may exercise any remedy measure available simultaneously or in any order. Pledgee may exercise the right to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest under this Agreement, without exercising any other remedy measure first.

8.6 Pledgee is entitled to designate an attorney or other representatives to exercise the Pledge on its behalf, and Pledgor or Party C shall not raise any objection to such exercise.

8.7 When Pledgee disposes of the Pledge in accordance with this Agreement, Pledgor and Party C shall provide necessary assistance to enable Pledgee to enforce the Pledge in accordance with this Agreement.

9. Breach of Agreement

9.1 If Pledgor or Party C conducts any material breach of any term of this Agreement, Pledgee shall have right to terminate this Agreement and/or require Pledgor or Party C to indemnify all damages; this Section 9 shall not prejudice any other rights of Pledgee herein;

9.2 Pledgor or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by applicable laws.

10. Assignment

10.1 Without Pledgee's prior written consent, Pledgor and Party C shall not have the right to assign or delegate its rights and obligations under this Agreement.

10.2 This Agreement shall be binding on Pledgor and its successors and permitted assigns, and shall be valid with respect to Pledgee and each of its successors and assigns.

10.3 At any time, Pledgee may assign any and all of its rights and obligations under the Exclusive Business Cooperation Agreement to its designee(s) (natural/legal persons), in which case the designee shall have the rights and obligations of Pledgee under the Transaction Documents and this Agreement, as if it were the original party to the Transaction Documents and this Agreement.

10.4 In the event of a change in Pledgee due to an assignment, Pledgor and/or Party C shall, at the request of Pledgee, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register the same with the relevant AIC.

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10.5 Pledgor shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by the Parties hereto or any of them, including the Transaction Documents, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. Any remaining rights of Pledgor with respect to the Equity Interest pledged hereunder shall not be exercised by Pledgor except in accordance with the written instructions of Pledgee.

11. Termination

11.1 Upon the fulfillment of all Contract Obligations and the full payment of all Secured Indebtedness by Pledgor and Party C, Pledgee shall release the Pledge under this Agreement upon Pledgor’s request as soon as reasonably practicable and shall assist Pledgor to de-register the Pledge from the shareholders’ register of Party C and with relevant PRC local administration for industry and commerce.

11.2 The provisions under Sections 9, 13, 14 and 11.2 herein of this Agreement shall survive the expiration or termination of this Agreement.

12. Handling Fees and Other Expenses

All fees and out of pocket expenses relating to this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees, shall be borne by Party C.

13. Confidentiality

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, investors, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the staff members or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable for breach of this Agreement. This Section shall survive the termination of this Agreement for any reason.

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14. Governing Law and Resolution of Disputes

14.1 The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of the PRC.

14.2 In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate in good faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after any Party's request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted in Beijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on both Parties.

14.3 Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.

15. Notices

15.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such party set forth below. A confirmation copy of each notice shall also be sent by E-mail. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

15.2 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the address specified for notices.

15.3 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

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15.4 For the purpose of notices, the addresses of the Parties are as follows:

Party A:	Tarena Technologies Group Inc.
Address:	Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing
Attn:	Han Shaoyun
Phone:	86-10 6213-6369
Facsimile:	86-10 6211-0873
Party B:	Han Shaoyun
Address:
Tel:
Party C:	Beijing Tarena Jinqiao Technology Co., Ltd.
Address:	Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing
Attn:	Han Shaoyun
Phone:	86-10 6213-5687
Facsimile:	86-10 6211-0873

15.5 Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof.

16. Severability

In the event that one or several of the provisions of this Contract are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Contract shall not be affected or compromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

17. Attachments

The attachments set forth herein shall be an integral part of this Agreement.

18. Effectiveness

18.1 This Agreement shall become effective upon execution by the Parties hereto. Since the effective date of this Agreement, the Original Share Pledge Agreement shall be terminated and shall be replaced and superseded by this Agreement.

18.2 Any amendments and supplements to this Agreement shall be made in writing. The amendment agreements and supplementary agreements that have been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement.

18.3 This Agreement is written in Chinese and English in three copies. Pledgor, Pledgee and Party C shall hold one copy respectively. Each copy of this Agreement shall have equal validity. In case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Share Pledge Agreement as of the date first above written.

Party A:	Tarena Technologies Group Inc.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative
Party B:	Han Shaoyun
By:	/s/ Han Shaoyun
Party C:	Beijing Tarena Jinqiao Technology Co., Ltd.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative

Attachments:

1. Shareholders’ register of Party C;

2. The Capital Contribution Certificate for the Formation of Party C;

3. Exclusive Business Cooperation Agreement.

4. Exclusive Option Agreement

5. Loan Agreement

6. Power of Attorney

EX-4.34

Exhibit 4.34

Second Amended and Restated Share Pledge Agreement

This Second Amended and Restated Share Pledge Agreement (this “Agreement”) has been executed by and among the following parties on July 5, 2016 in Beijing, the People’s Republic of China (“China” or the “PRC”):

Party A: Tarena Technologies Group Inc. (hereinafter “Pledgee”);

Address: Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing

Party B: Li Jianguang (hereinafter “Pledgor”)

ID No.:

Party C: Beijing Tarena Jinqiao Technology Co., Ltd.

Address: Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing

In this Agreement, each of Pledgee, Pledgor and Party C shall be referred to as a “Party” respectively, and they shall be collectively referred to as the “Parties”.

Whereas:

1. Pledgor is a Chinese citizen and holds 30% of the equity interest in Party C. Party C is a limited liability company registered in Beijing, China engaging in technology development, technology transfer, technology consulting, etc.. Party C acknowledges the respective rights and obligations of Pledgor and Pledgee under this Agreement, and intends to provide any necessary assistance in registering the Pledge;

2. Pledgee is a wholly foreign-owned enterprise registered in China. Pledgee and Party C which is partially owned by Pledgor have executed an Exclusive Business Cooperation Agreements (as defined below) in Beijing; Party C, Pledgee, Pledgor and Tarena International Inc. have executed an Exclusive Option Agreements (as defined below); Pledgor has executed a Power of Attorney (as defined below) in favor of Tarena International Inc.; and Pledgee and Pledgor have executed a Loan Agreement (as defined below);

3. To ensure that Party C and Pledgor fully perform their obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Loan Agreement and the Power of Attorney, Pledgor hereby pledges to the Pledgee all of the equity interest that Pledgor holds in Party C as security for Party C’s and Pledgor’s obligations under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement, the Loan Agreement and the Power of Attorney.

4. Party A, Party B and Party C executed an Amended and Restated Share Pledge Agreement on November 25, 2013 (the “Original Share Pledge Agreement”). The Parties intend to enter this Agreement to replace and supersede the Original Share Pledge Agreement by executing this Agreement.

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To perform the provisions of the Transaction Documents (as defined below), the Parties have mutually agreed to execute this Agreement upon the following terms.

1. Definitions

Unless otherwise provided herein, the terms below shall have the following meanings:

1.1 Pledge: shall refer to the security interest granted by Pledgor to Pledgee pursuant to Article 2 of this Agreement, i.e., the right of Pledgee to be compensated on a preferential basis with the conversion, auction or sales price of the Equity Interest.

1.2 Equity Interest: shall refer to 30% equity interests in Party C currently held by Pledgor, representing RMB600,000 in the registered capital of Party C, and all of the equity interest hereafter acquired by Pledgor in Party C.

1.3 Term of Pledge: shall refer to the term set forth in Section 3.2 of this Agreement.

1.4 Transaction Documents: shall refer to the Amended and Restated Exclusive Business Cooperation Agreement executed by and between Party C and Pledgee on November 25, 2013 (the “Exclusive Option Agreements”; (ii) Second Amended and Restated Exclusive Option Agreement executed by and among Party C, Pledgee and Pledgor on July 5, 2016 (the “Exclusive Option Agreement”); (iii) Second Amended and Restated Loan Agreement executed by and between Pledgee and Pledgor on July 5, 2016 (the “Loan Agreement”); (iv) Power of Attorney executed on July 5, 2016 by Pledgor (the “Power of Attorney”) and any modification, amendment and restatement to the aforementioned documents.

1.5 Contract Obligations: shall refer to all the obligations of Pledgor under the Exclusive Option Agreement, the Power of Attorney, the Loan Agreement and this Agreement; all the obligations of Party C under the Exclusive Business Cooperation Agreement, the Exclusive Option Agreement and this Agreement.

1.6 Secured Indebtedness: shall refer to all the direct, indirect and derivative losses and losses of anticipated profits, suffered by Pledgee, incurred as a result of any Event of Default. The amount of such loss shall be calculated in accordance with the reasonable business plan and profit forecast of Pledgee, the consulting and service fees payable to Pledgee under the Exclusive Business Cooperation Agreement, all expenses occurred in connection with enforcement by Pledgee of Pledgor’s and/or Party C’s Contract Obligations and etc.

1.7 Event of Default: shall refer to any of the circumstances set forth in Article 7 of this Agreement.

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1.8 Notice of Default: shall refer to the notice issued by Pledgee in accordance with this Agreement declaring an Event of Default.

2. The Pledge

2.1 Pledgor agrees to pledge all the Equity Interest as security for performance of the Contract Obligations and payment of the Secured Indebtedness under this Agreement. Party C hereby assents that Pledgor pledges the Equity Interest to the Pledgee pursuant to this Agreement.

2.2 During the term of the Pledge, Pledgee is entitled to receive dividends distributed on the Equity Interest. Pledgor may receive dividends distributed on the Equity Interest only with prior written consent of Pledgee. Dividends received by Pledgor on Equity Interest after deduction of individual income tax paid by Pledgor shall be, as required by Pledgee, (1) deposited into an account designated and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

2.3 Pledgor may subscribe for capital increase in Party C only with prior written consent of Pledgee. Any equity interest obtained by Pledgor as a result of Pledgor’s subscription of the increased registered capital of the Company shall also be deemed as Equity Interest.

2.4 In the event that Party C is required by PRC law to be liquidated or dissolved, any interest distributed to Pledgor upon Party C’s dissolution or liquidation shall, upon the request of the Pledgee, be (1) deposited into an account designate and supervised by Pledgee and used to secure the Contract Obligations and pay the Secured Indebtedness prior and in preference to any other payment; or (2) unconditionally donated to Pledgee or any other person designated by Pledgee to the extent permitted under applicable PRC laws.

3. Term of Pledge

3.1 The Pledge shall become effective on such date when the pledge of the Equity Interest contemplated herein has been registered with relevant administration for industry and commerce (the “AIC”). The Pledge shall be continuously valid until all payments due under the Exclusive Business Cooperation Agreement have been fulfilled by Party C. The parties agree that within 3 business days following the execution of this Agreement, Pledgor and Party C shall register the Pledge in the shareholders’ register of Party C, and within 10 business days after the competent AIC has formally begun accepting applications for the registration of equity interest pledge, Pledgor and Party C shall submit application to the AIC for the registration of the Pledge of the Equity Interest contemplated herein. Pledgor and Party C shall submit all necessary documents and complete all necessary procedures, as required by the PRC laws and regulations and the relevant AIC, to ensure that the Pledge of the Equity Interest shall be registered with the AIC within 20 business days after filing (or such other time period normally required by the relevant AIC).

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3.2 During the Term of Pledge, in the event Party C fails to perform the Contract Obligations or pay Secured Indebtedness, Pledgee shall have the right, but not the obligation, to dispose of the Pledge in accordance with the provisions of this Agreement.

4. Custody of Records for Equity Interest subject to Pledge

During the Term of Pledge set forth in this Agreement, Pledgor shall deliver to Pledgee's custody the capital contribution certificate for the Equity Interest and the shareholders' register containing the Pledge within one week from the execution of this Agreement. Pledgee shall have custody of such items during the entire Term of Pledge set forth in this Agreement.

5. Representations and Warranties of Pledgor and Party C

As of the execution date of this Agreement, Pledgor and Party C hereby jointly and severally represent and warrant to Pledgee that:

5.1 Pledgor is the sole legal owner of the Equity Interest.

5.2 Pledgee shall have the right to dispose of and transfer the Equity Interest in accordance with the provisions set forth in this Agreement.

5.3 Except for the Pledge, Pledgor has not placed any security interest or other encumbrance on the Equity Interest.

5.4 Pledgor and Party C have obtained any and all approvals and consents from applicable government authorities and third parties (if required) for execution, delivery and performance of this Agreement.

5.5 The execution, delivery and performance of this Agreement will not: (i) violate any relevant PRC laws; (ii) conflict with Party C’s articles of association or other constitutional documents; (iii) result in any breach of or constitute any default under any contract or instrument to which it is a party or by which it is otherwise bound; (iv) result in any violation of any condition for the grant and/or maintenance of any permit or approval granted to any Party; or (v) cause any permit or approval granted to any Party to be suspended, cancelled or attached with additional conditions.

6. Covenants of Pledgor and Party C

6.1 During the term of this Agreement, Pledgor and Party C hereby jointly and severally covenant to the Pledgee:

6.1.1 not transfer the Equity Interest, place or permit the existence of any security interest or other encumbrance on the Equity Interest, without the prior written consent of Pledgee, except for the performance of the Transaction Documents;

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6.1.2 Pledgor and Party C shall comply with the provisions of all laws and regulations applicable to the pledge of rights, and within 5 days of receipt of any notice, order or recommendation issued or prepared by relevant competent authorities regarding the Pledge, shall present the aforementioned notice, order or recommendation to Pledgee, and shall comply with the aforementioned notice, order or recommendation or submit objections and representations with respect to the aforementioned matters upon Pledgee's reasonable request or upon consent of Pledgee;

6.1.3 Pledgor and Party C shall promptly notify Pledgee of any event or notice received by Pledgor that may have an impact on Pledgee's rights to the Equity Interest or any portion thereof, as well as any event or notice received by Pledgor that may have an impact on any guarantees and other obligations of Pledgor arising out of this Agreement.

6.1.4 Party C shall complete the registration procedures for extension of the term of operation within three (3) months prior to the expiration of such term to maintain the validity of this Agreement.

6.2 Pledgor agrees that the rights acquired by Pledgee in accordance with this Agreement with respect to the Pledge shall not be interrupted or harmed by Pledgor or any heirs or representatives of Pledgor or any other persons through any legal proceedings.

6.3 To protect or perfect the security interest granted by this Agreement for payment of the Service Fees under the Exclusive Business Cooperation Agreement, Pledgor hereby undertakes to execute in good faith and to cause other parties who have an interest in the Pledge to execute all certificates, agreements, deeds and/or covenants required by Pledgee. Pledgor also undertakes to perform and to cause other parties who have an interest in the Pledge to perform actions required by Pledgee, to facilitate the exercise by Pledgee of its rights and authority granted thereto by this Agreement, and to enter into all relevant documents regarding ownership of Equity Interest with Pledgee or designee(s) of Pledgee (natural persons/legal persons). Pledgor undertakes to provide Pledgee within a reasonable time with all notices, orders and decisions regarding the Pledge that are required by Pledgee.

6.4 Pledgor hereby undertakes to comply with and perform all guarantees, promises, agreements, representations and conditions under this Agreement. In the event of failure or partial performance of its guarantees, promises, agreements, representations and conditions, Pledgor shall indemnify Pledgee for all losses resulting therefrom.

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7. Event of Breach

7.1 The following circumstances shall be deemed Event of Default:

7.1.1 Pledgor’s any breach to any obligations under the Transaction Documents and/or this Agreement;

7.1.2 Party C’s any breach to any obligations under the Transaction Documents and/or this Agreement.

7.2 Upon notice or discovery of the occurrence of any circumstances or event that may lead to the aforementioned circumstances described in Section 7.1, Pledgor shall immediately notify Pledgee in writing accordingly.

7.3 Unless an Event of Default set forth in this Section 7.1 has been successfully resolved to Pledgee’s satisfaction within twenty (20) days after the Pledgee and /or Party C delivers a notice to the Pledgor requesting rectification of such Event of Default, Pledgee may issue a Notice of Default to Pledgor in writing upon the occurrence of the Event of Default or at any time thereafter and demand that Pledgor immediately pay all outstanding payments due under the Exclusive Business Cooperation Agreement and all other payments due to Pledgee, and/or dispose of the Pledge in accordance with the provisions of Article 8 of this Agreement.

8. Exercise of Pledge

8.1 Pledgee may issue a Notice of Default to Pledgor when exercising the Pledge.

8.2 Subject to the provisions of Section 7.3, Pledgee may exercise the right to enforce the Pledge concurrently with the issuance of the Notice of Default in accordance with Section 8.1 or at any time after the issuance of the Notice of Default. Once Pledgee elects to enforce the Pledge, Pledgor shall cease to be entitled to any rights or interests associated with the Equity Interest.

8.3 After Pledgee issues a Notice of Default to Pledgor in accordance with Section 8.1, Pledgee may exercise any remedy measure under applicable PRC laws, the Transaction Documents and this Agreement, including but not limited to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest. The Pledgee shall not be liable for any loss incurred by its duly exercise of such rights and powers.

8.4 The proceeds from exercise of the Pledge by Pledgee shall be used to pay for tax and expenses incurred as result of disposing the Equity Interest and to perform Contract Obligations and pay the Secured Indebtedness to the Pledgee prior and in preference to any other payment. After the payment of the aforementioned amounts, the remaining balance shall be returned to Pledgor or any other person who have rights to such balance under applicable laws or be deposited to the local notary public office where Pledgor resides, with all expense incurred being borne by Pledgor. To the extent permitted under applicable PRC laws, Pledgor shall unconditionally donate the aforementioned proceeds to Pledgee or any other person designated by Pledgee.

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8.5 Pledgee may exercise any remedy measure available simultaneously or in any order. Pledgee may exercise the right to being paid in priority with the Equity Interest based on the monetary valuation that such Equity Interest is converted into or from the proceeds from auction or sale of the Equity Interest under this Agreement, without exercising any other remedy measure first.

8.6 Pledgee is entitled to designate an attorney or other representatives to exercise the Pledge on its behalf, and Pledgor or Party C shall not raise any objection to such exercise.

8.7 When Pledgee disposes of the Pledge in accordance with this Agreement, Pledgor and Party C shall provide necessary assistance to enable Pledgee to enforce the Pledge in accordance with this Agreement.

9. Breach of Agreement

9.1 If Pledgor or Party C conducts any material breach of any term of this Agreement, Pledgee shall have right to terminate this Agreement and/or require Pledgor or Party C to indemnify all damages; this Section 9 shall not prejudice any other rights of Pledgee herein;

9.2 Pledgor or Party C shall not have any right to terminate this Agreement in any event unless otherwise required by applicable laws.

10. Assignment

10.1 Without Pledgee's prior written consent, Pledgor and Party C shall not have the right to assign or delegate its rights and obligations under this Agreement.

10.2 This Agreement shall be binding on Pledgor and its successors and permitted assigns, and shall be valid with respect to Pledgee and each of its successors and assigns.

10.3 At any time, Pledgee may assign any and all of its rights and obligations under the Exclusive Business Cooperation Agreement to its designee(s) (natural/legal persons), in which case the designee shall have the rights and obligations of Pledgee under the Transaction Documents and this Agreement, as if it were the original party to the Transaction Documents and this Agreement.

10.4 In the event of a change in Pledgee due to an assignment, Pledgor and/or Party C shall, at the request of Pledgee, execute a new pledge agreement with the new pledgee on the same terms and conditions as this Agreement, and register the same with the relevant AIC.

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10.5 Pledgor shall strictly abide by the provisions of this Agreement and other contracts jointly or separately executed by the Parties hereto or any of them, including the Transaction Documents, perform the obligations hereunder and thereunder, and refrain from any action/omission that may affect the effectiveness and enforceability thereof. Any remaining rights of Pledgor with respect to the Equity Interest pledged hereunder shall not be exercised by Pledgor except in accordance with the written instructions of Pledgee.

11. Termination

11.1 Upon the fulfillment of all Contract Obligations and the full payment of all Secured Indebtedness by Pledgor and Party C, Pledgee shall release the Pledge under this Agreement upon Pledgor’s request as soon as reasonably practicable and shall assist Pledgor to de-register the Pledge from the shareholders’ register of Party C and with relevant PRC local administration for industry and commerce.

11.2 The provisions under Sections 9, 13, 14 and 11.2 herein of this Agreement shall survive the expiration or termination of this Agreement.

12. Handling Fees and Other Expenses

All fees and out of pocket expenses relating to this Agreement, including but not limited to legal costs, costs of production, stamp tax and any other taxes and fees, shall be borne by Party C.

13. Confidentiality

The Parties acknowledge that the existence and the terms of this Agreement and any oral or written information exchanged between the Parties in connection with the preparation and performance this Agreement are regarded as confidential information. Each Party shall maintain confidentiality of all such confidential information, and without obtaining the written consent of the other Party, it shall not disclose any relevant confidential information to any third parties, except for the information that: (a) is or will be in the public domain (other than through the receiving Party’s unauthorized disclosure); (b) is under the obligation to be disclosed pursuant to the applicable laws or regulations, rules of any stock exchange, or orders of the court or other government authorities; or (c) is required to be disclosed by any Party to its shareholders, investors, legal counsels or financial advisors regarding the transaction contemplated hereunder, provided that such shareholders, investors, legal counsels or financial advisors shall be bound by the confidentiality obligations similar to those set forth in this Section. Disclosure of any confidential information by the staff members or agencies hired by any Party shall be deemed disclosure of such confidential information by such Party, which Party shall be held liable for breach of this Agreement. This Section shall survive the termination of this Agreement for any reason.

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14. Governing Law and Resolution of Disputes

14.1 The execution, effectiveness, construction, performance, amendment and termination of this Agreement and the resolution of disputes hereunder shall be governed by the laws of the PRC.

14.2 In the event of any dispute with respect to the construction and performance of the provisions of this Agreement, the Parties shall negotiate in good faith to resolve the dispute. In the event the Parties fail to reach an agreement on the resolution of such a dispute within 30 days after any Party's request for resolution of the dispute through negotiations, any Party may submit the relevant dispute to the China International Economic and Trade Arbitration Commission for arbitration, in accordance with its then-effective arbitration rules. The arbitration shall be conducted in Beijing, and the language used during arbitration shall be Chinese. The arbitration ruling shall be final and binding on both Parties.

14.3 Upon the occurrence of any disputes arising from the construction and performance of this Agreement or during the pending arbitration of any dispute, except for the matters under dispute, the Parties to this Agreement shall continue to exercise their respective rights under this Agreement and perform their respective obligations under this Agreement.

15. Notices

15.1 All notices and other communications required or permitted to be given pursuant to this Agreement shall be delivered personally or sent by registered mail, postage prepaid, by a commercial courier service or by facsimile transmission to the address of such party set forth below. A confirmation copy of each notice shall also be sent by E-mail. The dates on which notices shall be deemed to have been effectively given shall be determined as follows:

15.2 Notices given by personal delivery, by courier service or by registered mail, postage prepaid, shall be deemed effectively given on the date of delivery or refusal at the address specified for notices.

15.3 Notices given by facsimile transmission shall be deemed effectively given on the date of successful transmission (as evidenced by an automatically generated confirmation of transmission).

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15.4 For the purpose of notices, the addresses of the Parties are as follows:

Party A:	Tarena Technologies Group Inc.
Address:	Suite 3709, 18 Jia West Road of North Third Ring, Haidian District, Beijing
Attn:	Han Shaoyun
Phone:	86-10 6213-6369
Facsimile:	86-10 6211-0873
Party B:	Li Jianguang
Address:	5 Jianguomennei Avenue, Dongcheng District, Beijing
Tel:	86-10 6526-2400
Party C:	Beijing Tarena Jinqiao Technology Co., Ltd.
Address:	Room 4-3, No.4 Workshop, 10 Zhenggezhuang Village, Beiqijia Town, Changping District, Beijing
Attn:	Han Shaoyun
Phone:	86-10 6213-5687
Facsimile:	86-10 6211-0873

15.5 Any Party may at any time change its address for notices by a notice delivered to the other Parties in accordance with the terms hereof.

16. Severability

In the event that one or several of the provisions of this Contract are found to be invalid, illegal or unenforceable in any aspect in accordance with any laws or regulations, the validity, legality or enforceability of the remaining provisions of this Contract shall not be affected or compromised in any respect. The Parties shall strive in good faith to replace such invalid, illegal or unenforceable provisions with effective provisions that accomplish to the greatest extent permitted by law and the intentions of the Parties, and the economic effect of such effective provisions shall be as close as possible to the economic effect of those invalid, illegal or unenforceable provisions.

17. Attachments

The attachments set forth herein shall be an integral part of this Agreement.

18. Effectiveness

18.1 This Agreement shall become effective upon execution by the Parties hereto. Since the effective date of this Agreement, the Original Share Pledge Agreement shall be terminated and shall be replaced and superseded by this Agreement.

18.2 Any amendments and supplements to this Agreement shall be made in writing. The amendment agreements and supplementary agreements that have been signed by the Parties and that relate to this Agreement shall be an integral part of this Agreement and shall have the same legal validity as this Agreement.

18.3 This Agreement is written in Chinese and English in three copies. Pledgor, Pledgee and Party C shall hold one copy respectively. Each copy of this Agreement shall have equal validity. In case there is any conflict between the Chinese version and the English version, the Chinese version shall prevail.

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IN WITNESS WHEREOF, the Parties have caused their authorized representatives to execute this Second Amended and Restated Share Pledge Agreement as of the date first above written.

Party A:	Tarena Technologies Group Inc.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative
Party B:	Li Jianguang
By:	/s/ Li Jianguang
Party C:	Beijing Tarena Jinqiao Technology Co., Ltd.
By:	/s/ Han Shaoyun	(Company seal affixed)
Name:	Han Shaoyun
Title:	Legal Representative

Signature Page to Second Amended and Restated Share Pledge Agreement

Attachments:

1. Shareholders’ register of Party C;

2. The Capital Contribution Certificate for the Formation of Party C;

3. Exclusive Business Cooperation Agreement.

4. Exclusive Option Agreement

5. Loan Agreement

6. Power of Attorney

EX-4.35

Exhibit 4.35

BF—2005—0117 Contract No.:________________

Beijing Commodity Housing Presale Contract

(Non-residential properties including commercial/office houses)

Seller: Beijing Jingkai-Gongda Investment Management Co., Ltd.

Buyer: Tarena Technologies Inc.

Beijing Municipal Housing and Urban Construction Committee

Beijing Municipal Industrial and Commercial Administration Bureau

Revised in Oct. 2010

Printed on 5th Day of May, 2016

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Instructions

1. This contract is a model contract formulated jointly by the Beijing Municipal Construction Committee and the Beijing Municipal Industrial and Commercial Administration Bureau.

2. Before signing of the presale contract, the Seller shall show the Buyer the presale license of commodity housing and other related certificates and certifying documents.

3. The contracting parties shall conclude the contract on the basis of the principle of free will, fairness and good faith and honesty, and neither party may impose its will on the other party. The two parties may alter, supplement or delete contents of the articles of this contract text. After this contract comes into force, the printed contents of this text without alteration are to be deemed as stipulation made by the parties

4. Before execution of the commodity housing presale contract, the Buyer shall review the articles of the contract prudently, especially those alternative, supplementary contents and those filled or altered contents.

5. In order to present the principles of free will of contracting parties, there are blanks following some articles of this contract text, left for supplementary stipulation made by both parties separately. For any matters not covered or not stipulated sufficiently in this contract, the Seller and the Buyer may conclude supplementary agreements on a fair and reasonable basis and in light of the specific conditions of the sold housing, or make supplementary stipulations in the blanks following relevant articles.

6. With respect to the alternative contents in [ ] and the contents to be filled in blanks in this contract text, and other contents to be deleted or supplemented, the contracting parties shall make determination through negotiation. To select the items in [ ], please make a √. If any content does not refer to the actual case or the parties do not make stipulation, the parties shall delete such content by making a × in the blanks.

7. If any dispute arises between the two parties from the performance of this contract, they may either lodge a lawsuit to the people’s court of the place where the property is located, or apply to relevant arbitration commission for arbitration. If the parties select arbitration, they may apply to the Beijing Arbitration Commission, the China International Economic and Trade Arbitration Commission, or those arbitration commissions of places beyond Beijing.

8. The contracting parties may determine the number of original copies of this contract in light of the actual conditions, and must check the copies prudently so as to ensure that the contents in every copy are identical. Under any circumstance, the buyer shall hold at least one original copy of this contract.

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Beijing Commodity Housing Presale Contract

(Non-residential properties including commercial/office houses)

Seller:  Beijing  Jingkai-Gongda Investment Management Co., Ltd.

Address: 4/F Building 2, Unit A, No. 1 Disheng Northern Street, Beijing Economic & Technological Development Area, Beijing, China

Postal Code:  100176

Registration number of Business License: 110302003481318

Enterprise qualification certificate No.: JK-A-3352

Legal Representative:  Zhou Shiyi       Tel.:  67862520

Entrusted Agent:                     Tel.:

Entrusted Sales Agency: Beijing Jingkai-Yicheng Investment Consultant Co., Ltd.

Address: 1/F Building 2, Unit A, No. 1 Disheng Northern Street, Beijing Economic & Technological Development Area, Beijing, China

Postal Code:

Registration number of Business License:  110302012140425

Buyer: Tarena Technologies Inc.

[Legal Representative] [Principal]: Han Shaoyun  Nationality:   China

Registration number of Business License: 110000410175162

Date of birth:                            , Gender:

Address: Rm. 3709, No. 18A North Third Ring Rd. West, Haidian District, Beijing, China

Postal Code:    100089    Tel.:

[Legal representative] [Authorized agent]Nationality:

[ID Card No.] [Passport No.] [ ]:

Date of birth:                            , Gender:

Address:

Postal Code:                    Tel.:

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In accordance with the Contract Law of the People’s Republic of China, the Law of the People’s Republic of China on Administration of Urban Real Estate, the Measures on the Administration of Urban Real Estate Transfer in Beijing and other relevant laws and regulations, the Seller and the Buyer, on the basis of equality, voluntariness and fairness and through negotiations, do hereby agree as follows with respect to the purchase and sale of commercial house:

Article 1 Reference for Project Construction

The Seller has obtained the state-owned land use right of the plot located at D1F1 of the Beijing Economic & Technological Development Area through transfer of land use right and acquired the Certificate of Real Estate Title through legal registration of the use right. The number of the certificate is: No. 00008 (2015 Chu) and the land area is: 54,928.2 square meters, and the purpose of the land where the commodity house purchased by the Buyer  (hereinafter refers to as “the Commodity House”) is located is for _F2 public mixed-use residentials; the term for land use will start on Dec.12, 2011 and end on Dec.11, 2061. The number of Contract for State-Owned Construction Land Use Right Assignment: No. 32 JJGTCR[H]Z(2011). The purpose of the land where the Commodity House is located is for composite, commercial, residential types, and the term for land use right assignment starts on Dec.12, 2011 and end on Dec. 11, 2061.

Upon approval, the Seller has invested to build the commodity housing on the said land lot mentioned above, with a temporary name of Beijing Jiangkai One Center, the Construction Engineering Planning Permit number of No. 0032 [2014 G(K)JZ] , and the Construction Engineering Working License number of No. 0050 [2014]S[J]JZ; the starting date of the construction stipulated in the Contract shall be Jul. 16, 2014 and the completion date will be Feb. 21, 2016.

Article 2 Reference for Sales

The commodity housing has been approved to be qualified for presale by the Economic and Technological Development Zone Branch of Beijing Municipal Bureau of Land and Resources, with the Presale License number of ____________.

Article 3 Basic Information

The architectural structure of main building where the Commodity Houses are located is:       ; and the building consists of 10 storeys, including an over-ground part of 9_ floors and an underground of 1 floor.

The commodity housing refers to No.____ Unit____ Floor____ Building [B5] mentioned in the item of Article 1. The room number as a  [Approval Number] [Temporary Number] now will be subject to the final number approved by the Administration Department of Public Security; References can be made to Annex 1 for the housing plan and location plan in the whole building.

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The purpose of this commodity housing is to be office house: the floor height of the Commodity House is     meters, [net height of the slope roof] the minimum height:  X meters, the maximum height:  X meters. The orientation of the commodity housing is:   X ; there are  X  balconies, of which   X  enclosed balconies and X unclosed balconies.

The Seller entrusts a mapping institution of_ Beijing Jingheng Real Surveying Technology Co., Ltd to predict that the building area of the Commodity House is 8,389.91square meters totally, which includes 5,633.45 square meters of interior building area and 2,756.46 square meters of public share building area. References can be made to Annex 2 for the introduction of the public share building area.

When both parties sign the Contract, the construction progress status of the commodity housing building is      .

The floor height mentioned in this article refers to the vertical distance between an upper floor and a lower floor or between the floor and the ground. The net height refers to the vertical distance between a floor and the soffit of the upper floor or between the ground and the underside of the suspended ceiling.

Article 4 Reference for Mortgage

The mortgage condition of this House is:   2, 3.

1. The land use right shared by this House and the construction in progress are not set to mortgage.

2. The land use right shared by this House has been set to mortgage, with the mortgagee of the Beijing Economic and Technological Development Zone Branch of Industrial & Commercial Bank of China Ltd. at the mortgage registration department of the Housing and Land Administration Bureau of Beijing Economic and Technological Development Zone on the date of Apr. 20, 2015.

3. The construction in progress of this House has been set to mortgage, with the mortgagee of the Beijing Economic and Technological Development Zone Branch of Industrial & Commercial Bank of China Ltd. at the mortgage registration department of the Housing and Land Administration Bureau of Beijing Economic and Technological Development Zone on the date of Apr. 20, 2015.

The presale certificate of this House and other covering mortgage approved by the mortgagee refers to Annex 3.

Article 5 Pricing Mode and Purchase Price

As for commodity houses except for single-family villas, entire buildings, garage (carport) , the Seller and the Buyer shall agree to calculate the price of the Commodity House according to the 1st method below.

If the Commodity House type is [single-family villa], [entire building], [garage] or [carport], the Seller and the Buyer shall agree to calculate the price of the Commodity House according to the 1st method below.

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1. According to the interior building area, the Commodity House can be priced to be  ___X__ Yuan per square meter, with the total price of RMB ONE HUNDRED AND FOURTEEN MILLION SIX HUNDRED THOUSAND Yuan ONLY .

2. According to the building area, the Commodity House can be priced to be ___ ____  ______RMB Yuan per square meter, with the total price of RMB ___ BILLION _____ HUNDRED ______ MILLION _______ HUNDRED AND __  ___ THOUSAND _____ HUNDRED ______ Yuan ONLY.

3. According to the suite (unit), the total price of the Commodity House can be priced to be _________X__ BILLION __X___ HUNDRED ___X____ MILLION __X______ HUNDRED AND __X  ___ THOUSAND __X____ HUNDRED ___X_____ Yuan ONLY.

4. According to ___X___, the total price of the Commodity House can be priced to be  BILLION __X___ HUNDRED ___X____ MILLION __X______ HUNDRED AND __X  ___ THOUSAND __X____ HUNDRED ___X_____ Yuan ONLY.

For the detailed agreement on terms of pricing and cost, see the Annex 4.

The building area in this article refers to the horizontal projected area of each floor above the outside wall plinth of a permanent building with the floor height of over 2.20 meters (including 2.20 meters), including balconies, overhanging corridors, basements, and exterior stairs and so on, which is also roof covered and stably constructed.

The interior building area refers to the usable area, wall covering and balcony areas in total inside each unit of the commodity house.

Article 6 Payment Term and Deadline

The Buyer shall pay for the Commodity House by the following 1st method

1. Lump-sum settlement.

2. Installment payment

3. Credit payment: [commercial loan] The Buyer can pay ______ % of the total price of the Commodity House as down payment, and then pay the balance by credit from [       ].

4. Other methods.

References can be made to Annex 4 for the agreement on the detailed payment terms and deadline.

Article 7 Supervision and Management on Presale Funds

According to the provisions of the Interim Measures of Beijing on Supervision and Management of Pre-sale Funds for Commodity Houses, the pre-sale funds of the Commodity House shall be supervised by the bank: Beijing Economic and Technological Development Zone Branch of ICBC, with the special account name of Beijing Jingkai-Gongda Investment Management Co., Ltd (One Center) and the special account number: 0200059029200318384.  When the commodity house is pre-sold, the Buyer shall deposit the house purchase price directly into the special account. In case the Buyer applies for a mortgage, the Seller shall provide the special account for receiving the loan.

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Article 8 The Seller shall guarantee that the Commodity House for sale is not involved in any dispute of ownership. In case of the inability to handle ownership registration or occurrence of credit and debt disputes, the seller shall undertake all the responsibilities.

Article 9 Agreements on Planning Alteration

The Seller shall build the Commodity House according to the conditions stipulated in the Construction Planning Permit approved and issued by the Planning Administration Department and cannot alter the planning without authorization.

If the Seller wants to alter the conditions stipulated in the Construction Planning Permit, the Seller should obtain the agreement of the affected buyers in writing, as well as the approval of the Planning Administration Department. For the losses of the buyer’s interests caused by the planning alteration, the Seller should provide the corresponding compensation.

Article 10 Agreements on Design Alteration

I. With the approval of the design inspection unit entrusted by the Planning Administration Department, The following alterations on the construction design documents which will affect the quality and use functions of the Commodity House, the seller should inform the buyer by written notice within 10 days after the approval of the design inspection unit.

1. The construction, layout, space dimension and orientation of the Commodity House;

2. Heating methods.

If the seller doesn’t inform the buyer within the stipulated time, the buyer has the right to cancel the order.

II. The buyer should reply in written whether to cancel the order or not within 15 days after receiving the notice. If the buyer doesn’t give any reply within 15 days after receiving the notice, it will be deemed that the purchaser accepts the alterations.

III. If the Buyer wants to refund the house, the Buyer shall, within 30 days after effectively delivering the Refund Notice to the Seller, sign all documents necessary to cancel the pre-sale contract (including but not limited to the written agreement to cancel this contract, and the Power of Attorney necessary for undergoing formalities to cancel the registration of this pre-sale contract).  The seller shall, within 30 days after the above documents necessary to cancel the pre-sale contract take effect, refund the paid house purchase price to the Buyer, and shall pay an interest at the demand deposit interest rate specified by the People's Bank of China for the same period.

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If the Buyer does not refund the house, the Buyer shall separately enter into a supplementary agreement with the Seller within 30 days after receiving the written notice from the Seller. If the Buyer neither undergoes formalities to cancel the pre-sale contract nor enters into a supplementary agreement with the Seller within the above said time period, it shall be deemed that the Buyer accepts the changed plan and design, and agrees to carry out acceptance examination and take-over of the house as scheduled.

Article 11 Purchaser’s Responsibility for Breach of Contract Due to Overdue Payment

If the Buyer fails to make the payment in the stipulated time, the 1st method will be complied with:

1. Handle separately according to the overdue period, ((1) and (2) are not cumulative)

(1) If the overdue period is less than 30 days, the Buyer shall pay 0.006 percent of the overdue payment per day within 7 days after the actual payment date to the Seller as a penalty from the second day after the payment deadline stipulated in this contract to the actual payment date, and the contract continues to be effective.

(2) If the overdue period is over 30 days (this date shall be the same as the date mentioned in Item (1), the Seller has the right to terminate the contract. If the Seller terminates the contract, the Buyer shall pay 3 percent of the accumulative payables to the Seller as a penalty within_7_days after receiving the notification of terminating the contract, and the Seller shall return the total effected payment to the Buyer. If the Buyer is willing to continue performing the contract, the contract will continue to be effective with the approval of the Seller. From the second day after the payment deadline stipulated in this contract to the actual payment date, the purchaser shall pay 0.006 percent (This rate should be no less than the rate stipulated in the item (1)) of the overdue payment per day within 30 days after the actual payment date to the Seller as a penalty.

The overdue payment in this article refers to the balance between the due payable stipulated in Article Six of this contract and the actual payment in that term. If installment payment is adopted, the overdue payment shall be decided by the balance between the due installment and the actual payment in that term.

2.  X

Article 12 Delivery Term

I. The seller shall deliver the Commodity House before the date of Jul. 31, 2016. However, in case of force majeure or the influence of national policy or government action, the above house delivery time shall postpone accordingly, provided that the seller shall promptly notify the special circumstances to the Buyer in writing after the occurrence of such circumstances.

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II. When delivered, the Commodity House should meet the conditions of the following Items .

1. The Measured Area Report of the commodity House issued by a qualified real estate mapping organization;

2. The infrastructure conditions undertaken by the Seller in Article 13 should be met;

3. The Buyer shall have paid the full house purchase price agreed in this Contract to the Seller.

Article 13 Promise of the Seller on the Infrastructure and Other Facilities

The Seller promises that the infrastructure and other facilities directly related to the normal usage of this House should meet the following conditions by the appointed date:

1. Municipal infrastructure

(1) Water supply lines and sewers: shall meet the use requirements by Mar. 30, 2016

(2) Municipal two circuit feeding: shall meet the use requirements by Mar. 30, 2016;

(3) Heating: shall meet the use requirements by the date of Mar. 30, 2016;

(4) Gas: shall be available for use by     ×;

(5) Telephone: the ports shall be reserved in place by the date of Mar. 30, 2016, and will be reported for installation by customers;

(6) TV network: the ports shall be reserved in place by the date of Mar. 30, 2016 and will be reported for installation by customers;

If the above conditions haven’t been realized by the stipulated date, both parties can handle according to the following methods:

(1) It shall be handled according to the Seller's Responsibility for Breach of Contract Due to Overdue Delivery;

(2)  X

2. Other facilities

(1) Public green spaces: shall be available for use by Jul. 30, 2016;

(2) Public roads: shall be available for use by Jul. 30, 2016;

(3) Public parking lots: shall be available for use by Jul. 30, 2016;.

If the above conditions haven’t been realized by the stipulated date, both parties shall agree to handle according to the following methods:

(1) It shall be handled according to the Seller's Responsibility for Breach of Contract Due to Overdue Delivery

(2)  X

3. If the delivery time of municipal infrastructure and other facilities promised by the Seller is delayed due to force majeure or the influence of national policy or government action, such delivery time shall postpone accordingly.

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Article 14 Seller’s Responsibility for Breach of Contract Due to Overdue Delivery

Except for the force majeure, if the Seller cannot deliver the Commodity House to the Buyer according to the deadline and conditions stipulated in Article 12 of this contract, the following Method 1 can be complied with:

1. Handle separately according to the overdue period, ((1) and (2) are not cumulative)

(1) If the overdue period is less than 30 days (the time should be no less than the time mentioned in Item (1) of Article 10), the Seller shall pay 0.006 percent (This rate should be no less than the rate stipulated in the item (1) of Article 10) of the effected payment per day within 7 days after the actual delivery date to the Buyer as a penalty from the second day after the delivery deadline stipulated in this contract to the actual delivery date, and the contract continues to be effective.

(2) If the overdue period is over 30 days (this date should be the same as the date mentioned in Item (1), the Buyer has the right to terminate the contract. If the Buyer cancels the order, the Seller shall return the total effected payment to the Buyer, as well as 3percent of the effected payment to the Buyer as a penalty, within_7_days after receiving the notification of cancelling the order. If the Buyer requires to continue performing the contract, the contract will continue to be effective. From the second day after the delivery deadline stipulated in this contract to the actual delivery date, the Seller shall pay 0.006 percent (This rate should be no less than the rate stipulated in the item (1)) of the effected payment per day within 7 days after the actual delivery date to the Buyer as a penalty.

2. If the delivery time of municipal infrastructure and other facilities promised by the Seller is delayed due to force majeure or the influence of national policy or government action, such delivery time shall postpone accordingly.

Article 15 Solutions on Area Discrepancy

When delivering the Commodity House, the Seller shall demonstrate the Commodity Housing Area Mapping Report issued by the entrusted qualified Real Estate Mapping organization, and provide the actual measured area of the Commodity House to the Buyer (Hereinafter refers to as the Measure Area). If there are any discrepancy between the Measure Area and the predicted area stated in Article 3, both parties will agree to handle in accordance with Method   1:

1. According to the agreement on the pricing mode of the interior building area in Article 5, both parties shall agree to handle in accordance with the following principles:

(1) If the absolute discrepancy rate of the interior building area is within 3% (including 3%), it can be settled the payment of the Commodity House according to the fact;

(2) If the absolute discrepancy rate of the interior building area exceeds 3%, the Buyer has the right to cancel the order.

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If the Buyer cancels the order, the Seller must return the effected payment to the Buyer within 30 days after receiving the notification of canceling the order, and pay the corresponding interest rates according to the interest rate of individual housing loan issued by the bank in the corresponding period.

If the Buyer doesn’t cancel the order, when the Measured Area of the interior building area is larger than the predicted area with the discrepancy rate within 3% (including 3%), the Buyer shall pay for the extra area; while if the discrepancy rate exceeds 3%, the cost of the extra area will be borne by the Seller and the ownership belongs to the Buyer. When the Measured Area of the interior building area is smaller than the predicted area with the discrepancy rate within 3% (including 3%), the Seller shall return the cost of the less area to the Buyer; while if the discrepancy rate exceeds 3%, the Seller shall return twice more than the cost of the less area to the Buyer.

The absolute discrepancy rate of the interior building area =

The Measured Area – The Predicted Area
The Predicted Area	x100%

2. According to the agreement on the pricing mode of the interior building area in Article 5, both parties shall agree to handle in accordance with the following principles:

(1) If the absolute discrepancy rates of the building area and the interior building area both are within 3% (including 3%), it can be settled the payment of the Commodity House according to the fact;

(2) If either of the absolute discrepancy rates of the building area and the interior building area exceeds 3%, the Buyer has the right to cancel the order.

If the Buyer cancels the order, the Seller must return the effected payment to the Buyer within 30 days after receiving the notification of canceling the order, and pay the corresponding interest rates according to the interest rate of current deposit interest rate of the People's Bank of China_.

If the Buyer doesn’t cancel the order, when the Measured Area of the building area is larger than the predicted area with the discrepancy rate within 3% (including 3%), the Buyer shall pay for the extra area; while if the discrepancy rate exceeds 3%, the cost of the extra area will be borne by the Seller and the ownership belongs to the Buyer. When the Measured Area of the building area is smaller than the building area stipulated in the contract within 3% (including 3%), the Seller shall return the cost of the less area to the Buyer; while if the discrepancy rate exceeds 3%, the Seller shall return twice more than the cost of the less area to the Buyer.

The absolute discrepancy rate of the building area =

The Measured Area – The Predicted Area
The Predicted Area	x100%

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3. Both parties can achieve the agreements by themselves:

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Article 16 Handling-over Procedure

I. Delivery of the House means that the Seller sends the Move-in Notice for delivery of the Commodity House after its acceptance by the construction surveying, design and engineering supervision institutions etc.

After the Commodity House meets the delivery conditions stipulated in Article 12, the Seller shall inform the Buyer in written within 7 days before the delivery date of the handling-over time and place, as well as the required credentials. In the acceptance of the handling-over, the Seller shall demonstrate the certifications stipulated in Article 12, as well as those certificating the Commodity House meet the other conditions stipulated in Article 12. If the Seller cannot demonstrate the certifications or the certifications are not complete, or the other conditions in Article 12 haven’t been met, the Seller has the right to accept the Commodity House; and the Seller shall take the responsibility for breach of contract due to overdue delivery, which will be handled according to Article 14.

If the Buyer finds any item needing repair during the process of receiving the house, the Buyer shall require the Seller to repair it according to the provisions of this Contract .However, Such item shall not constitute a reason for the Buyer to refuse or delay the house take-over formalities, or to ask the Seller to bear the liability for breach of contract for overdue delivery.

II. If the take-over formalities cannot be undergone on time due to the Buyer’s reason, the Seller shall not bear the liability for breach of contract for overdue delivery, and both parties agree to settle this in the following way:

If the Buyer fails to undergo the receiving formalities within the notified time period after the Buyer receives or shall receive the “Move-in Notice”  from the Seller, or fails to complete the receiving formalities within 30 days after receiving the notice, it shall be deemed that the Buyer has received this commodity house at the time and in the place as stipulated in the “Move-in Notice” and according to the delivery conditions agreed in this Contract. Any damage, loss and other risks of the commodity house shall be transferred to the Buyer from the time of house receiving stipulated in the Move-in Notice. Relevant costs of this commodity house, including all taxes and fees, property management fees, heating costs and other incidental expenses occurring from the receiving time stipulated in the Move-in Notice shall all be borne by the Buyer. The Buyer shall bear the loss or additional costs sustained by the Seller due to the Buyer delaying in undergoing the receiving formalities. If the Buyer fails to undergo or complete the receiving formalities more than one year overdue, the Seller shall have the right to cancel this Contract, take back the commodity house and dispose of it otherwise. The Buyer shall support the Seller in undergoing relevant formalities to cancel the Contract. The Seller shall refund the remaining house purchase price paid by the Buyer after deducting all relevant costs which shall be borne by the Buyer according to this Contract as well as liquidated damages equal to 3% of the total purchase price. In addition, the Buyer shall also compensate the Seller for all losses arising herefrom.

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III. Both parties shall agree to pay the taxes according to the following Methods 1 2:

1.  The Buyer shall agree to entrust the Seller to pay the following taxes of (5), and entrust the property service enterprise to collect the 3rd of the following fees on behalf of it, and pay the aforesaid taxes to the Seller and the property service enterprise while receiving the commodity house.

(1) Special housing maintenance funds;

(2) Contract tax;

(3) Heating fees

(4) Stamp tax of the Title Certificate;

(5) Other relevant fees for handling house acceptance

2. The Buyer shall pay the following taxes of (2) and (4) to the related departments and show the vouchers to the Seller when accepting the Commodity House.

(1) Special housing maintenance funds;

(2) Contract tax;

(3) Heating fees

(4) Stamp tax of the Title Certificate;

(5) Other relevant fees for handling house acceptance

Article 17 Agreement on the Quality, Ornament and Facility Standard of the House

I. The Seller shall promise that the building materials and the components of the House are qualified and the House quality meet the requirements of the construction quality specifications and standards issued by the state and Beijing Municipal Government and the Construction drawing documents.

II. The Seller and the Buyer agree on the following items:

1. If the foundation basis and main structure quality of this House are detected to be unqualified, the Buyer has the right to cancel the order within 60 days. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days after receiving the notification of canceling the order, and pay the corresponding interest rates according to the interest rate of individual housing loan issued by the bank in the corresponding period, and also compensate the Buyer for the corresponding losses if necessary. Hence, the detection charge will be at the Seller’s expenses.

If the Buyer chooses not to refund the house, or if the commodity house has been delivered and used for more than 60 days, the Buyer shall sign a supplemental agreement with the Seller.

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2. When delivering the House after the units of construction, investigation and design, as well as the builders and Engineering Project Supervisor, have passed the acceptance inspection, the Seller shall check the House for acceptance together with the Buyer; if any other problems, both parties shall agree on the Method (3):

(1) The Seller shall deliver the repaired House within × days. The Seller shall take the responsibility for breach of contract due to overdue delivery, which will be handled according to Article 14.

(2) The Seller shall be responsible to repair the House within × days after the delivery date according to the national and municipal regulations and standards related to the engineering quality, account for the repairing expense and compensate the Buyer for the corresponding losses.

(3) After the Commodity House meets the delivery and use conditions specified in the pre-sale contract, the Buyer shall have the right to conduct on-site inspection on this commodity house. If the Buyer finds any item needing repair in such inspection, the Seller shall repair it, until the commodity house meets the requirements of relevant regulations and standards of the country or the city on project quality, and shall bear the cost of repair. The Buyer shall not refuse to receive this commodity house just because of this.

3. The ornaments and facilities of the delivered House shall meet the contracted standard. If fail to meet the standard, the Buyer has the right to request the Seller to manage it according to the following Methods (1) and (2):

(1) If the decoration or equipment standard of the Commodity House delivered by the Seller is lower than the agreed one, the Seller shall compensate double the price differences of the ornaments and facilities;

(2) If the decoration or equipment standard of the Commodity House delivered by the Seller is higher than the agreed one, the Seller may not notify the Seller, but the Seller shall not charge any additional fees for this, and the Buyer shall not refuse to receive this commodity house just because of this, and shall not require the Seller to bear the liability for breach of contract.

References can be made to Annex 6 for the detailed agreements on the ornament and facility standard.

III. When the Seller and the Buyer have any disputes on the construction quality, either party can entrust a qualified detection organization of construction engineering quality for test; and both parties shall have the obligation to cooperate with each other to detect the House.

If it is tested to be qualified, the test costs shall be borne by the Buyer. Otherwise, the test costs shall be borne by the Seller.

Article 18 Responsibility for Housing Warranty

I. Both Parties agree on the scope of warranty, warranty period and warranty liability in detail in Annex VII of this Contract. The scope of warranty and warranty period must meet applicable laws and regulations of the country and Beijing City, as well as the requirements of relevant standards and codes.

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II. When the House has any quality problem within the warranty scope in the warranty period, if both parties have contracted to cancel the order, it shall be subject to the contract; while if both parties haven’t contracted to cancel the order, the Seller shall perform the obligation of warranty and the Buyer shall cooperate. If the loss is not caused due to the Seller, the Seller will not be responsible for it.

Article 19 Energy-efficiency Measures for the House

The Commodity House shall meet the requirements of the Design Standard for Energy Efficiency of Public Buildings  of the country and Beijing city. Otherwise, the Seller shall make up energy efficiency measures according to the requirements of relevant standards, and take charge of the total costs; if it causes any losses to the Buyer, the Seller shall compensate for them.

Article 20 Building Sound Insulation

If the building sound insulation of the Commodity House fails to meet the standard, the Seller shall make up construction sound insulation measures according to the requirements of the planning and design, and shall bear all costs. If any damage is caused to the Buyer, the Seller shall bear the liability for compensating the Buyer.

Article 21 Commitment on the Use

1. When using this House, the Buyer must not change the main building structure, bearing structure and usage without authorization. Except for the agreements in the contract, supplemental agreements and the annexes, the Buyer has the right to share the common parts and facilities related to the House with other obligees and undertake the obligations according to the appointed areas of the common parts and shared buildings.

In case of any violation of the above provisions, the Buyer shall bear relevant economic and legal liability arising herefrom. In addition, the Buyer shall not change the public parts and facilities associated with this Commodity House without authorization. If the Buyer has changed  them without authorization, the Buyer shall restore them immediately or no later than within 15 days after receiving a written notice from the Seller, the property service enterprise or the party actually suffering loss, and shall compensate the Seller, the property service enterprise or the party actually suffering loss for actual loss arising herefrom.

2. The Seller shall not arbitrarily change the use nature of the public parts and facilities associated with the Commodity House. The Seller shall promise not to change the planned purpose of the Commodity House, not to sell the Commodity House by dividing it, not to sell the Commodity House by means of cost-returned sale or any such means in disguised forms, and not to sell the uncompleted Commodity House by the after-sale lease guarantee or by any such means in disguised forms.

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3. During the usage of the Commodity House, the Buyer shall not arbitrarily change or destroy the appearance and current situations of the exterior eaves, building structure and building roof. Otherwise, the Buyer shall unconditionally restore them to their original conditions according to the requirements of the Seller or the property service enterprise. If this causes any loss to the Seller or a third party, the Buyer shall bear all the compensation liability.

Article 22 Ownership Registration

I. Primary registration

The Seller shall get the ownership certificate of the building of this House before Oct. 31, 2016. If the ownership certificate hasn’t been got within the time stipulated in this Article due to the Seller, both parties agree to manage it according to the following Method 1:

1. The Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days after receiving the notification of canceling the order, and pay the interests at the rate of 3% of the total effected payment to the Buyer. If the Buyer doesn’t cancel the order, the contract will continue to be effective; from the second day after the deadline to get the ownership certificate from the actual date of getting the certificate, the Seller shall pay 0.006% of the total effected payment per day to the Buyer as a penalty.

2  X

II. Transfer registration

1. After the House has been delivered for use, both parties agree to manage it according to the following Method (2):

(1) Both parties apply to the registration authority for the registration of ownership transfer. The fees for handling the registration of ownership shall be borne by the Buyer.

(2) The Buyer agrees to entrust seller or the entrusted agency_ to apply to the registration authority for the registration of ownership transfer with the entrust fee of RMB _2,000_______ YUAN.

2. If the Buyer cannot get the ownership certificate of the House within360 days after the delivery date due to the Seller, both partied shall agree to manage it according to the following Methods:

(1) The Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days after receiving the notification of canceling the order, and pay the corresponding interest rates to the Buyer according to the interest rate of individual housing loan issued by the bank in the corresponding period. If the Buyer doesn’t cancel the order, from the second day after the deadline to get the ownership certificate from the actual date of getting the certificate, the Seller shall pay 0.006% of the total effected payment per day to the Buyer as a penalty within7days after the actual date.

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2. If the housing ownership certificate cannot be obtained as scheduled due to the Buyer's responsibility (including but not limited to the Buyer failing to pay relevant taxes and fees according to the requirements of relevant government departments, failing to submit relevant materials, or failing to sign legal documents required for property rights, etc.), the Buyer shall be held responsible for it, and Seller shall assume no liability for breach of contract.

3. If the Buyer fails to obtain the housing ownership certificate after the expiry of the period specified by this Contract due to the fault of the Seller, the Buyer shall have the right to notify the Seller whether to cancel this Contract or not within 60 days after the expiry of this period. If the Buyer does not do so within this time period, the Buyer shall not notify the Seller to cancel the contract any more. This contract shall be cancelled as of the date when the Buyer issues a written cancellation notice to the Seller.

4. If the Buyer cannot obtain the housing ownership certificate within 360 days after this Commodity House has been delivered due to force majeure, national policy adjustment or government action, the Seller shall not bear the liability for breach of contract.

Article 23 Agreement on Common Rights and Interests

1. The use right of the roof of the House building belongs to all the owners(the use right of the roof of each unit of a duplex building shall belong to the property owner of each unit);

2. The use right of the exterior wall of the House building belongs to all the owners; (the use right of the roof of each unit of a duplex building shall belong to the property owner of each unit)

3. The naming right of the building where the house is located shall belong to all proprietors of this building (the naming right of each unit of a duplex building shall belong to the property owner of each unit);

4. The naming right of the Housing District belongs to the Seller.

Article 24 Agreement on Ancillary Buildings and Other Structures

Both parties agree to manage the ancillary buildings and other structures of the House such as the underground garages and so on according to the following Method 2:

1. When the Seller presales the House, the ancillary buildings of _X__, _ X__, _ X__ shall be transferred together with the House.

2. The Seller shall disclose parking spaces on the ground and unshared public areas will not be transferred together with the House.

Article 25 Prophase Property Management Service

I. The property management company selected by the Seller according to law is: Beijing Jingkai Investment Advisor, Co., Ltd. with the qualification number of No. 0075 JWQZS [2014].

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II. During the prophase of property management, the property service charge will be RMB 5.50 Yuan /month/m² (building area), which will be charged by the property management company annually. The charge includes cleaning fee of the property region, public order maintenance fee, daily maintenance fee of public areas and facilities, greening maintenance fees, comprehensive management fees.

Therein to, the fees for parking on the ground is 150 Yuan/month while the fees for underground parking is 400 Yuan/month. The above charging standard will be adjusted according to national policy adjustment.

III. The property management company shall charge the property service charge according to the Method 1.

1. Charge by year: the Buyer shall pay for the charges before the date required by the service company.

2. Charge by half a year: the Buyer shall pay for the charges before the dates of __X__ and __X__ each year separately.

3. Charge by quarter: the Buyer shall pay for the charges before the dates of __X__, __X__, __X__ and __X__ each year separately.

IV. References can be made to Annex 8 for the contents of property service and the owners’ temporary agreement. The Buyer should read all the content of Annex8 carefully and agree that the property management service selected by the Seller will provide the prophase property service and the Buyer will abide by the owners’ temporary agreement.

The preliminary property management period mentioned in this Article shall refer to the period from the time when the first proprietor moves in to the time when all the proprietors and the Project Owner complete the take-over of the property shared areas.

Article 26 Housing Maintenance Funds

If the Buyer entrusts the Seller to pay the housing maintenance fund, the Seller shall give the Buyer the payment voucher within7days after the date of entrustment.

If the Buyer pays the housing maintenance fund in person, the Buyer shall show the payment voucher to the property management company [at the delivery date of the house] [within __X__ days after the delivery date].

Article 27 Exceptions

1. If the contract cannot be performed according to the agreements due to force majeure, partial or total responsibility can be exempted according to the effect of the force majeure; however, either party who cannot perform the contract due to force majeure should inform the other party in time and provide proofs to the other party within60days after the end date of the force majeure event.

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2. If the Seller cannot perform part or all of the terms of the Contract due to the change of national policies or the behaviors of government, the Seller may be exempted from partial or all liabilities, and shall inform the Buyer in time after the occurrence of the exemptions. The Buyer shall have the right to choose to continue or terminate the performance of this Contract, but the Seller shall not bear the liability for breach of contract.

Article 28 Dispute Settlement

If there are any disputes during the performance of the contract, both parties shall settle it through negotiation or application for mediation; if fail through negotiation or mediation, should sue to the Beijing Daxing District People’s Court according to relevant laws.

Article 29 This contract will come into effect upon both parties’ signature. As for the issues excluded or stipulated unclearly or inapplicably in this contract, both parties can sign written supplemental agreements for modification or supplementation according to the particular cases; but if the supplemental agreements include any unreasonable articles to lighten or exempt the responsibility stipulated in this contract of the Seller or to enhance the Buyer’s responsibility and remove the Buyer’s main rights, this contract will prevail. The dissolution of this contract shall be made in written. The contract annexes and supplemental agreements bear the equivalent legal force as this contract.

Article 30 The contract and its annexes are totally 93 pages, in quintuplicate, with the equivalent legal force, the contract holding situation include the followings:

TWO copies for the Seller, TWO copies for the Buyer, _ONE_ copy for the Economic and Technological Development Zone Branch of Beijing Municipal Bureau of Land and Resources.

Article 31 After the Seller and the Buyer sign and seal this Contract, the Seller shall perform online recording for this commodity house pre-sale contract in Beijing real estate transaction management system, and shall print and give one stamped copy of the online recording form to the Buyer.

The formalities for the online recording for this Commodity House Pre-sale Contract shall be completed within 7 days.

Seller (Signature):	Buyer (Signature):
/seal/ Beijing Jingkai-Gongda Investment	/seal/ Tarena Technologies Inc.
Management Co., Ltd.	Group Co., Ltd.
[Legal Representative]:	[Legal Representative]:
/s/Shiyi Zhou	/s/ Shaoyun Han
[Entrusted Agent] (Signature):	[The Principal]:
[Entrusted Sales Agency]	[Entrusted Agent]
(Signature):	(Signature):
Date: May 5, 2016	Date: May 5, 2016
Place:	Place:

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Annex 1: Floor plan and location plan of the House in the entire building

B1 office building   B13 office building   B11 office building   B10 office building   B9 office building

B2 office building   B14 office building   B12 office building

B3 office building

B4 office building   B5 office building   B6 office building   B7 office building  B8 office building

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Floor plan:

B5 floor plan (1/F)

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B5 floor plan (2/F)

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B5 floor plan (3/F)

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B5 floor plan (4/F)

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B5 floor plan (5/F)

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B5 floor plan (6/F)

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B5 floor plan (7/F)

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B5 floor plan (8/F)

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B5 floor plan (9/F)

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B5 floor plan (ancillary accommodation)

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Floor plan of underground garage, equipment room and multi-functional hall at the office area

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Annex 2: Description of apportioned building area composition of commonly shared sections and commonly shared house

Description of B5 apportionment:

Description of building area apportionment for commonly shared sections of B1 office building, other 15 items (Digital Technology Park) and B5 office building

I. Project description

B1 office building and other 15 items (digital technology park) are located at D1F1 lot of Ludong District, Beijing Economic Technological Development Area, and B5 office building is composed of ground 9 floors and provided with the reinforced concrete structure.

The distribution of functional zones in B5 office building is as follows:

1. B5 office building: 1/F-9/F;

II. Details of commonly shared sections

(1) Commonly shared sections of B1 office building, B2 office building, B3 office building, B4 office building, B5 office building, B6 office building, B7 office building, B8 office building, B9 office building, B10 office building, B11 office building, B12 office building, B13 office building, B14 office building, parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; air shaft 1, electric transformer and distribution room, TV room, heat exchange station, fire pump room, reclaimed water pump room, living water pump room, fire control room, telephone network machine room, duty room of electric transformer and distribution room and tool room of electric transformer and distribution room.

(2) Commonly shared sections of B5 office services;

1. B5 office building 1/F: staircase, elevator room, front room, aisle, hallway, toilet, air shaft, water well, plumbing well, power distribution room and half of outer wall;

2. B5 office building 2/F-9/F: staircase, elevator room, front room, air shaft, water well, plumbing well, power distribution room and half of outer wall;

3. Ancillary accommodation floor of B5 office building: staircase, elevator machine room air shaft, plumbing well and door header;

4. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 5 and weak electricity engine room 5.

Beijing Jingkai-Gongda Investment Management Co., Ltd.

Date: Sep. 7, 2014

Apportionment description of underground garage, equipment room and multi-functional hall at the office area

Description of building area apportionment for commonly shared sections of underground garage, equipment room and multi-functional hall at B1 office building and other 15 items (digital technology park) at the office area

I. Project description

B1 office building and other 15 items (digital technology park) are located at D1F1 lot of Ludong District, Beijing Economic Technological Development Area, and underground garage, equipment room and multi-functional room at the office area are located at the ground floor and are provided with the reinforced concrete structure.

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The distribution of functional zones for underground garage, equipment room and multi-functional room at the office area is as follows:

1. Parking stall of office building: ground floor;

2. Mechanical parking stall of office building: ground floor;

3. Multi-functional hall: ground floor;

4. Tool room: ground floor;

II. Details of commonly shared sections

(I) commonly shared sections of B1 office building, B2 office building, B3 office building, B4 office building, B5 office building, B6 office building, B7 office building, B8 office building, B9 office building, B10 office building, B11 office building, B12 office building, B13 office building, B14 office building, parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; air shaft 1, electric transformer and distribution room, TV room, heat exchange station, fire pump room, reclaimed water pump room, living water pump room, fire control room, telephone network machine room, duty room of electric transformer and distribution room and tool room of electric transformer and distribution room;

(II) The apportionable commonly shared sections of underground garage, equipment room and multi-functional room at the office area:

1. Commonly shared sections of parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services;

(1) Ground floor of underground garage, equipment room and multi-functional room at the office area; lane, elevator room, staircase, air shaft, ventilation room, front room plumbing room, toilet, aisle and half of outer wall;

(III) Commonly shared sections of B1 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 1.

(IV) Commonly shared sections of B2 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 2.

(V) Commonly shared sections of B3 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 3.

(VI) Commonly shared sections of B4 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 4.

(VII) Commonly shared sections of B5 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 5.

(VIII) Commonly shared sections of B6 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 6.

(IX) Commonly shared sections of B7 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 7.

(X) Commonly shared sections of B8 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 8.

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(XI) Commonly shared sections of B9 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 9.

(XII) Commonly shared sections of B10 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 10.

(XIII) Commonly shared sections of B11 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 11.

(XIV) Commonly shared sections of B12 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak electricity engine room 12.

(XV) Commonly shared sections of B13 office services;

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Annex 3: Certificate of commodity housing sale approval from pledgee and related provisions of pledge parties

Statement of bank’s approval for handling of commodity housing advance sale license for pledged houses

Housing and Land Administration of Beijing Economic Technological Development Area:

Beijing Jingkai One Center project (corresponding construction project planning license no.: 2014 G(K)JZ No. 0032), located at D1F1 lot at Ludong District, Beijing Economic Technological Development Area, that is developed and constructed by Beijing Jingkai-Gongda Investment Management Co., Ltd. has been pledged to our bank and our bank agrees the advance housing sale within the following pledge scope;

National land use certificate number: JJGY (2015) No. 00008

Building number: B1-B14 office buildings

Notes:

1.  The project name must be filled according to the name approved by the Place Name Administration Office; the building number must be filled according to the building number approved on the planning permit.

2.  The pledge scope covers part of the houses inside the building and the pledged house number shall be filled according to the building number.

Opening bank: Beijing Economic Technological Development Area Branch of Industrial
and Commercial Bank of China Limited

(Seal)

YY        MM        DD

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Annex 4: Pricing mode and other provisions of housing fund

1. Payment method: Lump sum payment.

2. Total commodity housing fund (in RMB) under the advance sale contract: one hundred and fourteen million six hundred thousand yuan (RMB 114,600,000), will be paid by the Buyer once and for all to the Seller within 15 days after the signing of the advance sale contract and the down payment of two hundred million yuan (RMB 2,000,000) already paid by the Buyer will automatically be converted into the housing fund.

3. On the premise of receiving the full housing fund from the Buyer, the Seller shall be obliged to handle the commodity housing handover procedures with the Buyer in accordance with the agreement in Paragraph 1, Article 16 of the advance sale contract. If the Buyer fails to pay the housing fund in due time, the Seller shall be entitled to delay the handling of commodity housing handover procedures with the Buyer and shall not bear the default responsibilities arising from this.

4. After the advance sale contract is signed, if the Buyer requests for changing to the bank mortgage loan, the Seller and the Buyer shall sign the change agreement according to the related contents in Article 6 of the advance sale contract and Annex 4. The housing fund of the Buyer shall be determined by the mortgage loan discount again and the total housing fund shall be calculated again.

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Annex 5: Other provisions

1. Handling of property rights:

If the Buyer entrusts the Seller or the agent company designated by the Seller (hereinafter referred to “assignee”) with the registration of property right during the occupancy settlement, the Buyer shall issue the letter of attorney to the assignee for handling of commodity housing property certificate, provide all the data related to this and offer the necessary assistance during the handling of property right by the Seller, including but not limited to, carry out the relevant procedures at the designated place jointly with the Seller, pay the related fees according to the national provisions, provide the related data and sign the related legal documents for handling of property right. The Buyer confirms that all fees required for handling of commodity housing property certificate (including but not limited to deed tax, agency fee, property registration fee, property certificate stamp tax etc.) shall be borne by the Buyer.

2. If either party proposes to terminate the contract, the non-defaulting party shall be entitled to request continuing to perform the contract, unless otherwise agreed in the advance sale contract. If the defaulting party refuses to continue the performance, it shall pay the liquidated damages of three percent of the total house fund to the non-defaulting party according to the advance sale contract and shall also bear the corresponding liabilities for loss incurred to the non-defaulting party.

3. The Buyer shall ensure that the production and operation activities within the area under the jurisdiction of Beijing Jingkai One Center project comply with the stipulations of laws, administrative regulations and rules of the related departments and won’t engage in any illegal acts, otherwise the Buyer shall bear all legal, economic and administrative consequences, and shall compensate for losses incurred to other proprietors or property management enterprises.

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Annex 6: Provisions of decoration and equipment standard

1. Heating system:

(1) Central heating: fan coil;

(2) Brand of heating equipment: ELCO.

2. Insulation materials:

(1) Outer wall insulation: rock wool board.

3. Outer wall: mainly composed of glass curtain wall and aluminum plate curtain wall, locally made of stone curtain wall.

4 Inner wall: concrete wall surface extending to the structural layer, block wall surface extending to DP-HP bottoming mortar.

5. Ceiling:

1)       B5/B7: 1/F-5/F, 7/F, 8/F: concrete structure, 6/F: concrete structure, locally coated steel sheet; 9/F: coated steel sheet;

2)       B6/B10: 1/F-4/F, 6/F: concrete structure, 5/F: concrete structure, locally coated steel sheet; 7/F: coated steel sheet;

3)       B11/B13: 1/F-5/F: concrete structure, 6/F: Al-Zn coated steel sheet;

4)       B12/B14: 1/F-4/F: concrete structure, 5/F: Al-Zn coated steel sheet;

6. Indoor floor: concrete structural layer.

7. Door and window:

(1) Opening mode: flat opening;

(2) Profiles of door and window: aluminum alloy thermal-break profiles.

8. Elevator:

(1) Elevator brand: Hitachi;

(2) Elevator speed: 1.75m/s;

(3) Elevator capacity: 1100kg;

9. Floor load: uniformly distributed live load of 1/F ground: 5KN/M², live load of standard floor: 2KN/M².

10. Others:

(1) Insulation: central insulation;

(2) Canopy: steel joist, aluminum plate;

(3) Handrail: the steel tube of the staircase is painted and the glass breast board is provided on the external façade where the protection is necessary;

(4) Entrance step and disabled ramp: granite face;

(5) Cable TV system: weak current room is set at each floor and the data cable is connected to each floor through the internal vertical shaft;

(6) Telephone network system: weak current room is set at each floor and the data cable is connected to each floor through the internal vertical shaft;

(7) Power distribution: two independent 10KV high-voltage powers are introduced from the municipal electricity for the project;

(8) Fire control: with automatic fire alarm and fire linkage control system;

(9) Security system: with monitoring system and quarter parking lot management system indoors and outdoors.

11. Electric load of the building: 1000KVA.

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Annex 7: Related provisions of warranty liability

I. Scope and term of warranty

For the installed and constructed items under normal service conditions when the Seller delivers the houses, their quality problems concerning civil engineering, water, heat, electricity and other facilities within the warranty period will be subject to warranty by the following scope and term.

Warranty items	Warranty period of the project
Wall surface leakage	5 years
Roofing waterproof	5 years
Outer curtain wall, door and window	2 years
Wall, ceiling	2 years
Crack of door and window, damage of hardware	2 years
Strong and weak electric wires, water inlet and outlet pipelines and corresponding components	2 years
Fire alarm system	2 years
Foundation and primary bearing structure	Designed endurance life: 50 years
Other components	According to the related provisions of related authorities in Beijing

II. Start date of warranty

The warranty period of the house purchased by the Buyer will start from the date of house completion acceptance. The warranty period of the elevator will start from the date that the governmental authorities issue the inspection conformance report and the related license.

III. Problems outside warranty scope

(1) The quality damages resulting from natural disaster and force majeure are not within the warranty scope;

(2) The warranty items that have been installed, removed, modified or repaired by the proprietor and the house user at discretion after occupancy are not within the warranty scope;

(3) The quality problems of the above-mentioned warranty items resulting from improper application by the proprietor or the house user after occupancy are not within the warranty scope, however, the Seller may assist in the maintenance and the related costs shall be borne by the Buyer.

IV. Warranty liability

(1) The paid maintenance services may be provided for the quality maintenance outside the warranty period or the warranty scope stipulated in the Annex.

(2) The Seller shall not be liable for the quality problems resulting from improper application of proprietor and house user, unauthorized modification of house structure, adding equipment or changing position at discretion and inappropriate decoration.

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(3) The Seller shall assume the corresponding warranty liabilities within the warranty period and the property service enterprise will provide the paid maintenance after the warranty period expires.

(4) If the Seller fails to repair the defected houses due to proprietor, house user and relevant party, the Seller shall not be entitled to bear any responsibility, which shall be assumed by the corresponding proprietor, house user and relevant party connecting to this.

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Annex 8: Preliminary Property Management

Preliminary Property Service Contract of Beijing Jingkai One Center Project

The contract was entered into between Beijing Jingkai-Gongda Investment Management Co., Ltd. and Beijing Jingkai Investment Development Co., Ltd. on __________in Beijing, China.

Principal: Beijing Jingkai-Gongda Investment Management Co., Ltd. (hereinafter referred to as the “Party A”)

Address: 4/F, Block 2, No. 1 North Disheng Street, Beijing Economic-Technological Development Area

Legal Representative: Zhou Shiyi

Trustee: Beijing Jingkai Investment Development Co., Ltd. (hereinafter referred to as the “Party B”)

Address: Block 1, No. 1 North Disheng Street, Beijing Economic-Technological Development Area

Legal representative: Guo Guangqing

Property Management Qualification: Level 3

Certificate No.: D0075 JWQZS [2014]

In accordance with the Regulations on Property Management and relevant laws and regulations, Party A entrusts Party B to implement property management for the Beijing Jingkai One Center project (hereinafter referred to as the “Project”), and the parties have entered into this Contract through equal consultation.

Chapter I General Provisions

Article 1 Party A entrusts Party B to provide property management and service for the project, and Party B is the sole property manager of the project;

Article 2 Party B accepts the entrustment of Party A and agrees to provide property management and service for the project in accordance with this Contract, the Regulations on Property Management and the relevant laws and regulations.

Article 3 In this Contract, references to any legislation shall be construed as laws and regulations promulgated by the state government or the government of Beijing municipality. If significant changes occur in the economic interests of either party as a result of changes in laws and regulations, the parties shall consult in a timely manner and make the necessary adjustments or modifications to the relevant provisions of this Contract in order to safeguard the interests of both parties under this Contract.

Chapter II Basic Conditions of the Property Project

Article 4 Basic Conditions of the Property

1. Approved property name: Beijing Jingkai One Center

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2. Property type: office building, commercial property, residential property

3. Property location: Lots D1C1 and D1F1, No. D1 Block of Eastern Zone, Beijing Economic-Technological Development Area

4. Scope: west to the 1st Jinghai Road, east to the 3rd Jinghai Road, south to the 13^th Kechuang Street, north to the southern green belt of the 12^th Kechuang Street.

5. Area: 92,392.1m³; construction area: a total construction area of 293,692 m³, area for which property management fee is collectable is 204,840 m³. Underground parking lot: 83,002 m³, among which the number of parking lots with the right to get parking fee is 1,834. The above data of area is based on estimates and the final measured area shall prevail.

Chapter III Scope and Content of Property Management Services

Article 6 The scope of the property management services provided by Party B shall be as follows: the buildings and the ancillary facilities and equipment within the scope of the red line of the project, including all kinds of public roads and landscaping, and various types of public service facilities.

Article 7 Party B shall provide the following property management services in two phases:

1. Preparatory period of property management: For the service in this period, please refer to Article 8 of this Contract.

2. Normal management period of property management: For the service in this period, please refer to Article 9 of this Contract.

Article 8 Services provided in the preparatory period of property management:

1. To propose suggestions on the selection of type for facilities and equipment and the selection of construction materials.

2. To follow up on the progress of the project and make recommendations.

3. To propose suggestions on the vehicle moving line and parking spaces of the underground parking lot.

4. To assist Party A in the development of interim management provisions.

5. To establish the project property management agency.

Party B will set up a project property management institution during the preparatory period, and put it into normal operation as soon as possible. The details of work are as follows:

(1) To develop organizational structure, departmental set-up and staffing;

(2) To work out the function distribution method among various departments and the duties of the various positions;

(3) To develop internal management system, service standards and working procedures.

6. To complete staff recruitment and professional training.

7. To develop item procurement plans.

8. To prepare annual work plan for property management.

During the preparatory period of project management, Party B will be responsible for the preparation of the annual work plan of the project management, including the following:

(1) Work plan for daily operation, repair and regular maintenance of housing and its ancillary facilities, and equipment;

(2) Work plan for security and fire management;

(3) Work plan for daily cleaning and regular cleaning;

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(4) Work plan for road traffic and parking management;

(5) Work plan for customer service;

(6) Work plan for financial management and development of human resources;

(7) Emergency response procedures and proposals;

(8) Establishing a coordinated relationship with the local government authorities.

9. To prepare the customer manual.

10. To prepare decoration guide.

11. To establish special service items and collection and payment items.

12. To assist Party A in completing the project acceptance.

13. To take over and accept the project.

14. To take charge of the cleanup land reclamation of the public areas of the project.

15. To prepare for moving-in of the owners of the project.

Article 9 Services provided during the normal property management period include:

1. To develop a work plan of property management services, and organize the implementation of the plan; manage property-related engineering drawings, customer files, as well as completion and acceptance materials; establish property management system.

2. To carry out the daily maintenance, operation and management of shared facilities and equipment. Shared facilities and equipment include: shared water pipes, pressurized pumps, water pipes, shared lighting, transformation and distribution systems, security systems, fire systems, transportation facilities, rain sewage lift pump.

3. To carry out the daily maintenance and management of public facilities, ancillary buildings and structures, including roads, fences, septic tanks, pumping stations, green water systems, outdoor ground parking, garbage transfer stations, and litter bins in public areas.

4. To carry out conservation and management of public green spaces, flowers and trees, and small architectural works

5. To be responsible for the public environmental sanitation, including the daily cleaning in public areas and peripheral areas, collection, sorting and removal of daily garbage and refuse, and regular cleaning of septic tanks, as well as regular pest control services.

6. To maintain public order, including safety monitoring, public area inspections, gate service and so on.

7. To maintain the order of vehicles in the facility, and manage and offer service to the vehicles parked on the parking spaces in the public areas and the vehicles parked in the underground parking lot.

12. To provide fire management services, including fire safety monitoring and inspection, fire safety warning and publicity, and maintenance and repair of firefighting facilities in public areas.

13. To provide house decoration management services.

14. When property owners and users entrust Party B to carry out repair and maintenance of their own premises, self-use facilities and equipment, Party B should accept the commission and charge a reasonable fee.

15. To provide special services, including collection and payment services, according to the actual needs of Party A and property users.

16. To set up service supervision telephone, and publicize the phone number in the bulletin board and other prominent position of the managed property area.

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17. To organize cultural and recreational activities and festive decorations.

Chapter IV Service Standards

Article 10 The service standards for the management of the project are as follows:

1. The 3rd level standards for property service shall be refereed to during provision of services.

2. The management procedures, quality standards and assessment of the project are carried out according to the requirements of the ISO 9001: 2008 quality management system.

Chapter V Service Term of Entrusted Management

Article 11 The term of property service is 3 years from the day after the completion of the check-in procedure for the first property user of the property, which shall end at the day when the first property owner of the property has moved in for 3 years. If the property delivery is made in advance or delayed, the starting day of property service term under the contract shall be correspondingly brought forward or delayed, under which case the property service term remains 3 years, and the final property delivery date shall be confirmed by Party A and Party B in writing.

Chapter VI Property Management and Related Matters

Article 12 Property management fee

1. Remuneration shall be paid for the project’s property management.

2. The property management fee shall be paid by the property owners in advance according to the building area owned by the owners based on the following criteria:

Office Building: 5.50 yuan / month / m³

Commercial Property: 5.50 yuan / month / m³

Residential Property: 3.00 yuan / month /m³

The property service funds are jointly owned by the property owners who have contributed to the funds and the funds are managed by Party B on behalf of the property owners. The funds include property service expenses and the remuneration made to the property service enterprise.

1. The property management fee consists of the following:

(1) The wages, social insurance, dismissal compensation and the welfare fees legally set aside for Party B’s employees;

(2) The daily operation and maintenance costs of the shared locations and the commonly shared facilities and equipment of the property;

(3) The cleanup costs of the managed area of the property;

(4) The landscaping and maintenance costs of the managed area of the property;

(1) The order maintenance costs of the managed area of the property;

(2) Party B’s overhead expenses;

(3) Depreciation of fixed assets of Party B;

(4) The premium of property insurance, machine damage insurance and public liability insurance for the property’s shared locations, commonly shared facilities and equipment.

(5) Financial audit fees;

(6) Corporate tax and corporate income tax;

(7) Refunding of advance payment made by Party A for preliminary operation;

(8) Management remuneration.

a) The property management fee shall be calculated based on the total construction area, the construction area of each functional area, the condition  of equipment system and the energy consumption data provided by Party A, taking into account the personnel and the relevant expenses and other management expenses required by Party B in providing services for the project. If the data and the conditions of facilities and equipment provided by Party A are not in accordance with the actual situation, the above fees shall be adjusted accordingly.

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b) Where government-approved adjustment of energy unit price and changes in national laws and regulations lead to mandatory changes in labor costs, property management fees shall be adjusted accordingly.

c) The property owners shall pay the Property Management Fee on a yearly basis as of the date of move-in as specified in the notice. For the property management fees that shall be borne by Party A according to the Property Management Measures of Beijing Municipality and its implementation rules, as well as the preliminary property service contract and commercial housing sales contract signed between Party A and the buyer, Party A shall pay property management fees to Party B within the agreed period as agreed by Party A and the buyer in the property service contract.

d) Expenditure on property services should be restricted to expenses agreed upon in the Contract, and the balance of the expenditure on property services will be calculated once a year. The balance can be used to improve the quality of the scene, including but not limited to the increase in equipment and facilities. However, any transformation shall be subject to the approval of Party A before implementation. After the establishment of the owners 'committee, the approval authority shall be conferred to the owners' committee. Party B shall return the balance to the owner every two years in accordance with the proportion of property costs paid by the owners.

e) Where Party A undertakes to reduce or exempt the property management fee of the property buyer, Party B shall pay Party B the property management fee after reduction or exemption on the basis of Party A's written confirmation.

f) If the owners refuse to pay full or part of the property management fees due to the nonperformance of commitment made in the sales contract, changes in planning, construction quality issues and other reasons of Party A, Party A shall make up the balance to Party B.

g) For the facilities in the scope of property management that have been completed but have not yet been sold, or the properties that have been sold but not yet been delivered to the Buyers for the reasons of Party A or the facilities in Party A’s property management space, the property management fees and the water, heat, electricity and gas expenses shall be borne by Party A.

h) It is the responsibility of Party A to provide Party B with true and complete information on the owners to whom the properties have been sold but the check-in have not been completed. To ensure the quality of service, after the property is completed and delivered, the property management fees for properties sold but having not completed the check-in shall be collected against the owners by Party B.

Chapter VII Parking Management

Article 13 Parking management fee

The parking management fee shall be collected by Party B against the users of parking lots according to the following standards:

Ground parking fees and temporary parking fees shall be collected in accordance with the provisions of the competent government departments;

Underground parking management fee: RMB 400 Yuan/month/m³

Article 14 Party B shall sign a written management service agreement with the users of the parking lot to clarify the rights and obligations of both parties in respect of parking spaces and parking management services.

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Chapter VIII Special Maintenance Fees

Article 15 The daily minor maintenance expenses of the shared areas, commonly shared facilities, equipment and public spots after the expiration of the house warranty shall be included as costs and expenses of property management. The overhaul and renovation costs shall be paid from the special maintenance expenses. When the special maintenance fees need to be used, a report shall be sent to Party A for approval, and a general meeting of the owners shall be convened in accordance with the provisions of the Measures on the Management of Special Maintenance Fees to decide the cost expenditure issues.

Chapter IX Property Management Areas

Article 16 Party A shall, at the commencement day of the preparatory period of property management, provide the property management areas needed for the property management activities to Party B without charging fees and according to the actual needs, and Party A shall be responsible for the renovation of the property management areas, which include the following parts:

1. Customer reception room

2. Property office and conference room

3. Staff dining lounge

4. Storehouse

5. Other areas (depending on the specific circumstances of the project)

Chapter X Remuneration and Payment of Property Management Services

Article 17    The remuneration of property management services charged by Beijing Development Area Co., Ltd shall be as follows:

1. In case the D1F1 plot is in the preparatory period and the occupancy rate is less than 60% (excluded), the remuneration shall be charged at RMB 30,000 / month. In case the occupancy rate ranges from 60% (inclusive) to 80% (excluded), the remuneration shall be charged at RMB 50,000 / month. In case the occupancy rate is greater than 80% (inclusive), the remuneration shall be charged at RMB 70,000 / month.

2. In case the D1C1 plot is in the preparatory period and the occupancy rate is less than 60% (excluded), the remuneration shall be charged at RMB 30,000 / month. In case the occupancy rate ranges from 60% (inclusive) to 80% (excluded), the remuneration shall be charged at RMB 50,000 / month. In case the occupancy rate is greater than 80% (inclusive), the remuneration shall be charged at RMB 70,000 / month.

Article 18    During the preparatory period of property management, the remuneration for Party B’s property management services shall be disbursed from the property management start-up capital and shall be paid at the same time as the property management start-up capital.

Article 19    After business opening (move-in) of this project, Party B shall withdraw the remuneration of current month from the property management fees on the 25th of each month.

Chapter XI Business Opening (Move-in) Conditions

Article 20    Party A shall obtain all necessary permits, licenses, etc. from the government as soon as possible after the signing of this Contract, and make them continuously valid, so that Party B can carry out its work in accordance with the terms of this Contract.

Article 21    Party A shall be responsible for opening the supply channels for water, electricity, heating, gas, communications, post and telecommunications, and cable television for this project, and shall handle relevant business licenses.

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Article 22    Party A shall inform Party B in writing of the proprietors' information known by Party A and relevant undertakings made by Party A to proprietors in the second month after the commencement of the preparatory period, and thereafter shall inform Party B in writing of the proprietors’ information known by Party A and relevant undertakings made by Party A to proprietors from time to time in writing during Party A’s sales process. Party B shall carry out confidential management for customers’ information.

Article 23    After the project has been completed and passed completion examination and acceptance according to relevant provisions of the country, Party A and Party B shall jointly organize the take-over acceptance of public parts, public facilities and equipment. Party B shall, within 15 days after receiving Party A’s application for take-over acceptance, perform take-over acceptance according to the National Housing Take-over Acceptance Standard. If they are examined to meet applicable requirements, the acceptance qualification certificate shall be signed within 7 days, and relevant take-over documents shall be issued timely.

Article 24    Party A shall transfer the following information to Party B when undergoing formalities for take-over acceptance of the property:

1. Site plan of the completion, drawings of the completed individual buildings, architectural structures, equipment, supporting facilities and underground pipelines;

2. Technical information on the installation, use and maintenance of the facilities and equipment;

3. Property quality warranty documents and property use instructions;

4. Counterparts or copies of inspection and acceptance reports, government approval documents, lists of items of civil works, ownership list of property rights of the house and supporting facilities; and

5. Other information necessary for property management

Article 25    After the completion of take-over acceptance of the project, Party A shall send a Move-in Notice to proprietors and shall notify Party B in writing two weeks in advance of move-in time.

Article 26    The facilities and equipment of the project which are entrusted to Party B for property management shall meet national acceptance standards. Imported equipment shall be equipped with enough spare parts and the corresponding supply channels shall be made available. In case any quality problem occurs to the project, facilities or equipment, Party A shall urge suppliers to rework until it is qualified within an agreed period. At the same time, since the date of take-over acceptance, Party A shall be responsible for warranty according to national regulations on warranty of construction projects.

Chapter XII Other Management

Article 27    The premiums of all insurances necessary for the property management of the project, including but not limited to all-risk insurance, machinery breakdown insurance and public liability insurance, shall all be disbursed from the costs and expenses of property management operation. Above insurances need not be bought repeatedly if they have been bought by Party A.

Article 28    All insurance policies of this project shall be insured by an local insurance company recognized and designated by Party A, and registered in the People’s Republic of China. The types of insurances and insured amounts shall be handled according to relevant provisions of insurance companies in China and the actual situation of the project. The insured amounts shall be jointly determined by Party A and Party B. The insurance period shall be the same as the period during which Party B provides property management services.

Article 29    Party B shall provide Party A with all original documents of relevant insurances, so that Party A can review, photocopy and record them. Party B shall keep the aforesaid insurances valid during the entrustment period. Without Party A's prior written consent, Party B and / or its insurance company shall not cancel relevant insurance policies under this Contract or amend information under any insurance policy.

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Chapter XIII Human Resource Management

Article 30    Party B shall, before the commencement of the preparatory period of this project, recommend a project manager and candidates to Party A. The project manager (project leader) shall have more than 1 year experience in managing similar projects, and shall have experience in equipment and property management. Party A may also recommend a project manager and other property personnel as alternatives. If the project manager is to be replaced within the period of the Contract, Party B shall provide an alternative to the project manager confirmed by Party A. Other personnel shall be assigned to various management and service levels according to the preparatory work plan.

Article 31    Party B shall carry out training for the personnel before they assume their posts, and the expenses incurred for this purpose shall be disbursed from the property management start-up capital before the business opening of this project, and shall be disbursed from the property management operation costs and expenses after the business opening of this project.

Article 32    Party B shall be responsible for formulating the organizational structure and remuneration standard of the property management organization of this project and shall prepare the annual staff structure and remuneration system of the project department according to the needs of each work by the end of each year. The staff structure shall include Party B's own employees and all the outsourcing business staff, as well as the duty description of each post, and shall be used as the reference for the recruitment of personnel after it has been approved by Party A.

Article 33    The personnel sent by Party B for this project shall provide full-time services to the project, and shall not concurrently hold any office in Party B 's functional departments or in other projects.

Article 34    The labor costs incurred by all levels of management and service personnel sent or recruited by Party B shall be disbursed from the property management start-up capital before the business opening of this project, and shall be disbursed from the property management operation expenses after the business opening of this project.

Chapter XIV Rights and Obligations of Both Parties

Article 35    Party A’s rights and obligations

1. Party A shall review the property management work plan prepared by Party B, inspect and supervise the implementation of Party B’s property management, and have the right to require Party B to rectify those failing to meet the plan indicators within a specified period;

2. Party A shall provide a property management room to Party B according to relevant provisions of this Contract;

3. Party A shall conduct property take-over acceptance with Party B according to relevant provisions of this Contract, and transfer relevant materials to Party B;

4. Party A shall be responsible for formulating the Temporary Management Convention, specify according to law the issues such as the use, maintenance and management of the property; proprietors’ common interests; obligations proprietors shall perform; responsibilities which shall be borne in violation of the Convention, and shall require proprietors and property users to comply with them;

5. Party A shall show and explain the Temporary Management Convention to the property buyer prior to the sale of the property; and shall require the property buyer to comply with the Temporary Management Convention and make written commitment in signing the property sale contract with the property buyer;

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6. The sale contract signed with the property buyer shall include relevant contents agreed in this Contract;

7. Party A shall pay to Party B the property management service remuneration, property management start-up capital, property management fees and other related costs which shall be borne by Party A according to relevant provisions of this Contract;

8. Party A shall assist Party B in coordinating the relationship with local government administrative departments;

9. Party A shall assist  Party B in property management, publicity and education and cultural activities;

10. Before the establishment of the proprietors committee, Party A shall not arbitrarily occupy or change the use function of shared facilities of this project. If it is necessary to reconstruct, expand or improve supporting items within the project, it shall be negotiated with all proprietors of the project and Party B, and shall be reported to competent departments for approval before it can be implemented;

11. Party A shall ensure that the property delivered for use meets the provisions of national acceptance standards, and shall bear the warranty responsibility for the project according to the warranty period and warranty coverage stipulated by the country;

12. If the property fails to meet the use function and causes a major accident due to the house construction quality, the quality of equipment and facilities or installation technology or other reasons, and it is identified by relevant government departments to be the responsibility of Party A, Party A shall bear the responsibility and deal with the aftermath.

13. If Party B violates relevant provisions of this Contract, and fails to complete the agreed management services, Party A shall have the right to require Party B to rectify it within a specified time limit. Party A shall have the right to send a notice to Party B. If it causes economic loss to Party A, Party B shall give Party A corresponding economic compensation.

(1) Notice: Party B shall, within 5 working days after receiving the Notice, make a reply and propose a rectification plan.

(2) Re-notice: If Party B fails to propose a rectification plan for no reason within 10 working days after receiving the Notice, or Party B’s rectification fails to meet Party A’s requirements, Party A may issue a "Re-notice " to deduct 5% of Party B's management remuneration of that month as liquidated damages, but not more than 25% of the management remuneration of that month.

(3) Final notice: If Party B fails to propose a rectification plan for no reason within 10 working days after receiving the Re-notice, or Party B’s rectification fails to meet Party A’s requirements, Party A may issue a "Final Notice". If Party B still fails to rectify it for no reason or Party B’s rectification fails to meet Party A’s requirements within 5 working days after receiving the Final Notice, Party A shall have the right to terminate the contract in advance, without bearing any liability, provided that Party A shall notify Party B in writing at least one month in advance and complete the formalities for replacing the property management enterprise. Costs and expenses of Party B sustained for such early termination of the Contract, such as staff dismissal fees, shall be disbursed from the property management fees.

14. Party A shall have the right to provide value-added services to proprietors or property users according to the needs of the property and for the purpose of improving the quality of the property, provided that such value-added services do not affect the normal property management services. Party A shall ensure that the value-added services provided comply with the provisions of national laws and regulations, as well as the Temporary Management Convention for the proprietors of the property.

15. If this Contract is terminated for any reason, Party A shall have the right to take over this project by itself or re-entrust a new property management service enterprise to take over this project.

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Article 36    Party B 's rights and obligations

1. Party B shall provide property management services within this property area according to relevant laws and regulations and this Contract;

2. Party B shall charge property management fees, decoration management fees, decoration waste clearance fees, parking management fees, specially engaged paid service fees and other related fees from proprietors and property users according to relevant provisions of this Contract;

3. If proprietors or property users violate the Temporary Management Convention, laws or regulations, Party B shall take measures to discourage or stop it or file a lawsuit according to the seriousness of the case;

4. With the prior consent of Party A, Party B shall have the right to hire a professional service enterprise to undertake the project's special service business, but Party B shall not entrust all property management to a third party;

5. Party B shall accept the supervision and guidance from Party A, competent property management departments and relevant government departments;

6. Party B shall ensure and continuously improve the quality of services, control costs and reduce energy consumption;

7. Party B shall be responsible for preparing annual minor repair and maintenance plans for the house, ancillary buildings, public parts, shared facilities and equipment and greening, and shall organize their implementation;

8. Party B shall be responsible for preparing annual medium and major repair and renovation and maintenance plans for the house, ancillary buildings, public parts, shared facilities and equipment and greening, and shall organize their implementation after they are voted by the proprietors meeting.

9. Party B shall inform relevant provisions on the use of the property to proprietors and property users. When proprietors and property users decorate, Party B shall inform relevant provisions, enter into a written agreement with them, and be responsible for supervision;

10. Party B shall be responsible for preparing the annual property management plan, fund use plan and final accounting report;

11. Party B shall publish the income and expenditure account of property management fees to all proprietors and property users every six months;

12. Party B  shall conduct a property service satisfaction survey to all proprietors and property users every six months;

13. Party B shall not arbitrarily occupy or change the use function of the public facilities of the property. If it is necessary to reconstruct, expand or improve supporting items within the property, it shall be approved by relevant proprietors and shall be reported to relevant approving parties for approval before it can be implemented;

14. If the property management fees are undercollected not due to Party B’s reason, resulting in that it is difficult to carry out property management work, Party B shall have the right to terminate this Contract and withdraw from the property management of the project, provided that Party B shall notify Party A in writing three months in advance and assist Party A in aftermath and take-over work;

15. The quality of the building and its ancillary equipment and facilities of this project shall meet the quality standards set by the country. For any accident or loss caused by its quality or defects which cannot be improved, Party B shall bear no responsibility. However, Party B shall be obliged to take timely and effective measures to prevent expansion of the loss, and promptly notify Party A;

16. During the management period of Party B, if any damage to the equipment and facilities or accident occurs due to Party B’s poor management, and thus causes property damage or personal injury to a third party, and it is identified by relevant government departments to be the responsibility of Party B, Party B shall bear corresponding responsibility;

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17. Upon the termination of this Contract, Party B shall hand over various archival data kept during its management period to Party A or the proprietors committee;

18. If Party A violates relevant provisions of this Contract, and causes Party B not to complete management services, Party B shall have the right to require Party A to resolve it within a certain period of time. If this causes economic loss to Party B, Party A shall give Party B corresponding economic compensation;

19. Party B shall fully cooperate with Party A to provide value-added services to proprietors and property users, and provide all the convenience for this;

20. If this Contract is terminated for any reason, Party B shall unconditionally undergo formalities to hand over property management to Party A or a property management unit designed by Party A, and shall in no case delay the hand-over or create any take-over obstacle. The period for such take-over shall be 30 days;

21. If the property management services provided by Party B cause any liability accident, unexpected accident or litigation due to Party B’s reason, Party B shall be solely responsible for this. If relevant events cause economic loss to Party A due to Party B’s reason, Party B shall compensate Party A for this;

22. All acts relating to the provision of property management services by Party B shall comply with Chinese laws and regulations and orders issued by government departments. If Party A’s  aspects, such as reputation, are affected by Party B’s unlawful act, Party A shall have the right to reserve the rights of recourse for any loss sustained, such as in reputation, from Party B;

23. If Party B, after the termination of this Contract, does not transfer the property management right to Party A or a property management enterprise designated by Party A, or withdraw from the property under this Contract, or hand over the management room or relevant archival data, Party B shall pay RMB 2,500 as liquidated damages to Party A for each overdue day. If Party B still fails to transfer the property management right and withdraw from the property within 30 days after the termination of this Contract, Party A shall have the right to take all measures according to relevant laws and regulations, and all legal liabilities and economic consequences arising herefrom shall be borne by Party B.

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Chapter XV Handling of Unforeseeable Events

Article 37    In order to safeguard the vital interests of the public, proprietors and property users, if Party B sustains necessary economic loss due to taking emergency measures in case of unforeseeable events, such as gas leakage, electric leakage, fire, water pipe burst, rescue of life, assisting the public security organs in carrying out tasks, both parties shall handle such events according to relevant laws and regulations.

Chapter XVI Termination of Contract

Article 38    Party A and Party B agree that this Contract can be terminated if any of the following cases occurs, provided that the terminating party shall notify the other party in writing in advance:

1. This Contract shall be automatically terminated upon the expiry of the validity term agreed in this Contract;

2. This Contract shall be terminated after the property service contract signed between the proprietors committee of this project on behalf of all proprietors and the property management enterprise takes effect;

3. This Contract shall be terminated if Party A and Party B mutually agree and reach a written agreement;

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4. This Contract cannot be fulfilled due to force majeure;

5. Either party is subject to legal sanction, and suffers bankruptcy liquidation; and

6. Other provisions specified by laws and regulations.

Article 39    After the termination of this contract, Party A and Party B shall well handle their creditor’s rights and debts, including the liquidation of property management fees and various agreements signed with an external party. Party B shall assist Party A in handover and aftermath work of property services.

Article 40    In 3 months prior to the expiration of this Contract, Party B may apply to Party A for the renewal of this Contract. After Party A reviews and approves it, both parties may agree to renew this Contract in the form of a supplementary agreement.

Chapter XVII Liability for Breach of Contract and Dispute Resolution

Article 41    If Party B violates relevant provisions of this Contract and fails to complete the agreed management services, Party A shall have the right to require Party B to rectify it within a specified time limit.  If the rectification still fails to meet the requirements within this time lime, Party A shall have the right to terminate this Contract. If this causes economic loss to Party A, Party B shall give Party A corresponding economic compensation.

Article 42    If Party A violates relevant provisions of this Contract, causing Party B not to complete management services, Party B shall have the right to request Party A to settle it within a certain period of time. If Party A fails to settle it within this time period, Party B shall have the right to terminate this Contract. It this causes economic loss to Party B, Party A shall give Party B corresponding economic compensation.

Article 43    Party B shall bear no responsibility in the following cases:

1. If the property management services are interrupted due to force majeure (including natural disasters, war, etc.), Party B shall inform Party A about relevant information within 48 hours after the end of the force majeure event, and at the same time provide effective evidence for the occurrence of this force majeure event;

2. Party B has fulfilled the obligations of this Contract, but the inherent defect of the property itself causes loss, Party B shall be obliged to take timely and effective measures to prevent the expansion of this loss, and shall promptly notify Party A;

3. If loss is caused due to maintenance of the shared areas, public facilities and equipment of the property, which has been informed to proprietors and property users in advance, or loss is caused by temporary interruption of water supply, power supply and public facilities and equipment; or

4. If loss is caused by the interruption of water supply, power supply heating, communications, cable television and other public facilities and equipment not due to Party B responsibility.

Article 44    For any dispute arising from or in connection with the performance of this Contract, both parties shall settle it through friendly negotiation. If no settlement can be reached through negotiation, either party may bring a lawsuit to the people's court of the place where this Contract is performed. In the course of the proceedings, the contract shall continue to be fulfilled except where the parties are in dispute.

Chapter XVIII Supplementary Provisions

Article 45    Both parties agree that Party B shall, according to Party A’s commission, undergo take-over acceptance formalities 30 days prior to the move-in of the first proprietor.

Article 46    Both parties shall cooperate with law enforcement activities, rescue and other public affairs to be carried out within the property area, and shall not obstruct such affairs.

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Article 47    Neither party shall transfer or sell or assign its rights, responsibilities and obligations under this Contract in any manner without the written consent of the other party. Meanwhile, neither party shall disclose any trade secrets obtained from the other party to a third party. Otherwise, the default party shall compensate for the loss caused to the other party.

Article 48    This Contract shall only take Party A and Party B as beneficiaries. Except for both parties to this Contract, this Contract cannot be implemented by any other person.

Article 49    During the execution period of this Contract, both parties agree that each party may refer to the name and service identification of the other party in the following way in its business promotion and producing relevant publicity materials, and each party shall not charge any fees from the other party for this .The reference shall be as follows:

Party B referred by Party A: Entrusted property services: Beijing Development Area Co., Ltd

Party A referred by Party B: Entrusted service project: Beijing Jingkai One Center

Article 50    After the termination of this Contract, neither party shall continue to refer to the name and service identification of the other party in its business promotion or on its relevant publicity materials.

Article 51 The annexes to this Contract are an integral part of this Contract, and shall have the same legal effect as this Contract.

Article 52    As for issues not mentioned in this Contract, or if any objection arises in interpreting this Contract, both parties shall settle or sign a supplementary agreement on the basis of friendly negotiation.

Article 53    Any amendment or supplement to this Contract shall be confirmed in writing by both parties, and shall have the same legal effect as this Contract. The contents of such amendment or supplement shall not be inconsistent with the contents of this Contract and the Temporary Management Convention.

Article 54    This Contract shall be made in sextuplicate, with Party A and Party B each holding three copies. Each of these 6 copies shall be original, and shall have the same legal effect.

Article 55    The counterpart copies (stamped) of Party A and Party B’s business licenses within the validity period shall be attached as annexes.

This Contract shall take effect as of the date when the representatives of both parties sign and seal this Contract on the date specified on the first page of this Contract, and shall be valid as an annex to the "Commodity Housing Presale Contract" or the "Contract for Sale of Finished Commodity Housing", and shall be binding on all proprietors of this property.

Party A: Beijing Jingkai-Gongda Investment Management Co., Ltd /sBeijing Jingkai-Gongda Investment Management Co., Ltd	Party B: Beijing Development Area Co.,Ltd /s/Beijing Development Area Co.,Ltd
Signature and seal: /s/ Shiyi Zhou	Signature and seal: /s/ Guangqing Guo
Date:	Date:

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Annexes:

1. Layout Plan

2. Details of Property Constitution

3. Details of Commonly Shared Sections of the Property

4. Details of Commonly Shared Facilities and Equipment of the Property

5. Details of Property Service

6. List of Hand-over Materials

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Annex 1: Layout Plan

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Annex 2:

Details of Property Constitution

Boundaries of Property	Corresponding Planned Building Number	Planned Construction Area (m3)		Floor Area (m3)		Remarks
	B1 office building		6674.59
	B2 office building		5999.00
	B3 office building		5013.55
	B4 office building		4605.2
	B5 office building		6262.02
	B6 office building		4893.38
	B7 office building		6262.02
	B8 office building		3419.06
	B9 office building		3433.89
	B10 office building		4914.03
	B11 office building		2895.65
Stage 1 D1F1	B12 office building		2715.48
Parcel (east to	B13 office building		2895.65		54928.2
Jinghai 3rd  Road;	B14 office building		2715.48
west to Jinghai	Subtotal		83832.86
1st  Road; south to Kechuang 13th	A1 Residential Building and Supporting Commercial Properties		9398.70
Street; north to  D1 Block Road)	A2 Residential Building and Supporting Commercial Properties		11102.12
	A3 residential building		5107.47
	A4 residential building		8122.87
	A5 residential building		5107.47
	A6 residential building		8191.73
	Subtotal		47030.36
	Total		130863.22
Stage 2 D1C1	C1 office building		33639.54
Parcel (east to	C2 office building		24753.57
Jinghai 3rd Road;	C3 office building		15049.66
west to Jinghai	C4 office building		19990.67
1st Road; south to D1 Block Road; north to Kechuang 12th Street;)	DX1 underground garage, commercial properties, ancillary facilities, and air raid shelters		37924.56		37994.9
	Total		131358

The final area shall be determined by the actually measured area in the report.

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Annex 3:

Details of Commonly Shared Sections of the Property

1. Load-carrying structure of the building

2. Main structure of the building

3. Public hallways

4. Public corridors

5. Public staircases

6. Inner courtyard

7. Outdoor wall surfaces

8. Roofs

9. Fire control and security surveillance rooms

10. Machine rooms

11. Public restrooms

12. Public greens

13. Rooms used by property service company

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Annex 4:

Details of Commonly Shared Facilities and Equipment of the Property

1. Elevators: 36 units

2. Septic tanks and rainwater retention tanks

3. Power distribution room

4. Power distribution room

5. Main boxes

6. Property service rooms

7. Rooms for commonly-shared facilities and equipment

8. Underground motor vehicle parking garages

9. Roads

10. Inter-building and central greens

11. Sewer manholes

12. Catch basins

13. Power transformation and distribution system

14. Public lighting facilities

15. High pressure water pumps

16. Fire facilities

17. Lightning protection facilities...

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Annex 5

Standard for Beijing Residential Property Management (Class III)

DB11/T 751-2010

Class III Standard of for Beijing Residential Property Service

1. Basic requirements

1.1 Customer service premises

1) A customer service center with office furniture, telephones, and other office equipment shall be set up.

2) An original copy or photocopy of the qualification certificate of the property service company, photos of persons in charge of the project, property service items, service standards, chargeable items, charge rates, and all other relevant information shall be made public.

3) The customer service center shall be open for business for at least 8 hours during work days and shall have watch-keepers on duty beyond the work hours.

4) 24-hour service hotlines shall be set up and made public.

1.2 Staffing

1) All staff shall obtain vocational qualification certificates as required.

2) The staff shall wear uniforms and badges according to their respective job posts.

3) A project leader in charge of the property service project, as well as building safety administrators, shall be appointed.

4) The project leader shall have more than 2 years of work experience on an equivalent job post with a property service company and shall be currently registered in the municipal credit information database of project leaders.

1.3 Rules

1) Management rules shall be established for the maintenance and repair of commonly-shared sections and facilities, fire safety and prevention, greening and landscape maintenance, environmental sanitation, and maintenance of public order.

2) An emergency plan shall be established for unexpected public events.

3) A training system shall be established to organic training and examination on a regular basis.

4) A property service log shall be created.

1.4 Archives

1) A property management file shall be created

2) Personnel shall be appointed for file management

3) Basic information, basic records, repair and maintenance records, and charging records shall be managed with computers.

1.5 Signs

Property service signs, such as safety warnings, operation and construction warnings, and kindly reminders shall be set up.

1.6 Customer service

1) The performance of the property service contract and the income and expenditures in the previous year, as well as the budget for the current year, shall be made public in the first quarter of every year.

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2) For important matters of property service which are related to the normal life of proprietors or house users, notices shall be posted at main entrances and exits as well as the entrance to each apartment unit.

3) Conducts in violation of laws and regulations on public security, planning, and environmental protection shall be discouraged and reported to competent authorities.

4) For urgent repairs of water and power facilities, repair workers shall reach the site within 20 minutes. For other repairs, repair workers shall reach the site within the time limit agreed upon by both Parties. Notices shall be given within 30 minutes of repairs of facilities and equipment for which specialized service enterprises are responsible, and return visits shall be paid for such repairs.

5) Responses shall be made within 2 work days to the opinions, suggestions, and complaints made by the proprietors or house users. Return visits shall be paid for complaints.

6) Opinions on property service shall be publicly solicited once every year; subsequent rectifications shall be made public.

7) Service quality of the project shall be examined once every month. Safety inspections shall be conducted before important holidays and festivals.

8) Proprietors shall be invited to visit the machine rooms for commonly-shared facilities and equipment every year.

9) At least one community culture event shall be organized every year.

10) Bulletin boards shall be set up, in order to assist relevant authorities in public welfare publicity programs.

11) Insurances for shared sections, shared facilities and equipment, and public liability shall be bought as required.

12) If conditions permit, specially engaged services, such as indoor cleaning, laundry, cooking, car wash, property custody, and ticketing shall be provided.

1.7 Commissioning of the management specialized services

1) Commissioning contracts for specialized services shall be signed to define the rights and obligations of each party.

2) Specialized service enterprises shall meet the qualification requirements set out by competent authorities; operating personnel shall have corresponding vocational qualification certificates.

3) The staff of specialized service enterprises shall wear uniforms and badges.

4) Specialized services shall be supervised, managed, and assessed.

2. Operation, repair, and maintenance of commonly-shared sections, facilities, and equipment

2.1 Integrated management

1) Basic files of housing and commonly-shared facilities and equipment shall be created.

2) Operation, inspection, and maintenance records shall be archived on a monthly basis.

3) Inspections shall be conducted to assess the safety of the use of houses.

4) For problems identified during the inspection of commonly-shared sections, repair plans shall be developed according to the scopes of responsibility and the problems shall be repaired in accordance with their respective repair plans; failures in the operation of commonly-shared facilities and equipment, as well as problems identified during inspections, shall be repaired promptly.

5) The repair and maintenance plan for the next year shall be determined in the fourth quarter of every year.

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6) Special-purpose equipment shall be operated, repaired, maintained, and regularly tested in accordance with relevant regulations.

7) Inspections shall be conducted and preventive measures shall be implemented before and after extreme weather conditions, such as thundering, heavy rainfall, strong winds, and sandstorms.

8) Machine rooms

(1) Machine rooms shall be cleaned once per month and shall be clear of sundries

(2) Mouse baffles, raticide boxes, or mouse glue traps shall be set up.

(3) Fire equipment shall be provided in easily visible and accessible positions. Fire equipment shall be checked once per month to make sure it is intact and effective.

(4) Facilities and equipment shall have all necessary signs and nameplates.

(5) Relevant rules and certificates shall be posted or hung in easily visible positions

(6) Shift handover records and work logs shall be full and complete.

2.2 Commonly-shared sections

1) Building structure

Structural members, such as beams, plates, and columns shall be checked once per quarter. If any deformation or crack is detected during visual inspection, a request for building safety assessment shall be filed, necessary protection measures shall be taken, and repairs shall be carried out according to the assessment results.

2) Building components

A) Wall finish, plastering, eaves, balconies, rainshades, and supporting members for outdoor units of air conditioners shall be checked once per quarter

B) Patrol inspection shall be conducted once per month for doors, windows, and glass of commonly-shared sections.

C) Indoor flooring, wall surfaces, ceilings, outdoor roofs, and water aprons of commonly-shared sections shall be checked once per quarter.

D) Waterproofing and rainwater down pipes shall be checked before the flood season every year and after heavy rainfall

3. Ancillary structures

1) Patrol inspection shall be conducted once per month for roads, yards, stairs and handrails, curb stones, tube wells, ditches, and channels.

2) Rainwater and sewage wells shall be checked once per quarter.

3) Patrol inspection shall be conducted once per month for gates, enclosing walls, and fences.

4) Patrol inspection shall be conducted once per month for leisure chairs, pavilions, sculptures, and featured landscapes.

5) Lightening protection devices shall be tested once per year.

2.3 Air conditioning system

1) Before operation, a systematic inspection shall be conducted for the water chilling unit, circulating water pumps, cooling tower, fans, fan coils, and water treatment facilities and equipment.

2) During operation, patrol inspection shall be conducted once per day for the air conditioning system in order to ensure that the indoor temperature meets relevant requirements.

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3) Energy saving measures shall be developed and energy consumption shall be counted and analyzed on a monthly basis.

4) Pipes and valves shall be checked and derusted once per year.

5) Pressure vessels, meters, and noise of the cooling tower shall be checked once per year.

6) The fresh air ventilator, air processor filter screen, surface air cooler, box body, and fan coil filter screen shall be cleaned and sterilized once per year.

7) An overhaul shall be conducted on the air conditioning system every year.

2.4 Secondary water supply facilities

1) Sterilizing equipment shall be used in accordance with requirements by health and disease prevention authorities. Cleaning and sterilizing shall be conducted according to relevant requirements. Water quality measured in water quality tests shall meet national hygienic standards on domestic and drinking water.

2) Patrol inspection shall be conducted twice per day on the water tank room and water pump room in order to check the operating status of equipment.

3) The standby water pump shall be switched online once per quarter.

4) Lubrication of water pumps shall be checked once per year; the lubricant shall be replenished or replaced as necessary. Water pumps shall be maintained once per year.

5) Water supply pipes and valves shall be derusted and painted every year. All exposed pipes shall be freeze-proofed before the beginning of each winter.

6) Cover plates of the water tank and the impounding reservoir shall be kept intact and locked; the key shall be kept by specially assigned persons. The overflow pipe orifice and the ventilation pipe orifice shall be covered with metal protection screens and shall be kept intact.

2.5 Drainage system

1) Drainage facilities

Before each flood season, the rainwater and sewage wells and roof rainwater inlets shall be inspected, cleaned, and dredged. After every rainfall, the main drainage outlets and tubular wells shall be inspected.

2) Sewage pumps

Patrol inspection shall be conducted twice per day during the flood season and once per week beyond the flood season in order to check the operating status of the equipment; a manual startup test shall be conducted once every two weeks; maintenance shall be done once per quarter.

3) Septic tanks

Septic tanks shall be checked once every six months and shall be dredged if necessary.

2.6 Lighting and electrical equipment

1) In-building lighting

Patrol inspection shall be conducted three times per week. General failures shall be fixed within one day; complicated failures shall be fixed within 5 days.

2) Outside-building lighting

Patrol inspection shall be conducted once per week. General failures shall be fixed within one day and complicated failures shall be fixed within one week. The time controller shall be adjusted once per month.

3) Emergency lighting

Patrol inspection shall be conducted once per day. Any failures identified shall be instantly fixed.

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4) LV cabinets

Patrol inspection shall be conducted twice per day on the operating status of equipment. Maintenance shall be done once per year, including fastening, testing, and cleaning; electrical safety shall be checked once per year.

5) LV power distribution cabinets and LV lines

Patrol inspection shall be conducted once per month on the operating status of equipment; Maintenance shall be done once per year, including fastening, testing, and cleaning.

6) Control cabinets

Patrol inspection shall be conducted once every two weeks on the operating status of equipment; Maintenance shall be done once per year, including fastening, testing, commissioning, and cleaning.

7) Power generators

Commissioning shall be done once per month to ensure normal operation. Storage batteries shall be activated once per year. Patrol inspection shall be conducted once per week for battery chargers and storage batteries.

8) Testing

The in-house power meter shall be tested once every five years.

9) Power distribution rooms and power distribution compartments on every floor

Proper measures shall be taken to keep out small animals. Perimeters of wiring ducts passing through walls shall be tightly sealed. Locks shall be intact. Incoming and outgoing lines of cables and switches shall have proper signs.

2.7 Security system

1) Alarm control host

Patrol inspection shall be conducted once per day to check the operating status of equipment. Surfaces shall be cleaned once every two weeks and interiors shall be cleared of dust once every six months.

2) Door machine of intercom

Buttons and display shall be checked once per month. Surfaces shall be cleaned once per month; Interiors shall be cleared of dust once every six months.

3) Network control cabinet

Appearance shall be checked once every six months. For connecting wires, surface cleaning shall be done once per quarter and internal dedusting shall be done once per six months.

4) Infrared emission detectors

Wiring, detecting range, and waterproofing shall be checked once per quarter. Surfaces shall be cleaned once per quarter and interiors shall be cleared of dust once every six months.

5) Video acquisition devices

Surveillance images and video recording functions shall be checked once per week. Surfaces shall be cleaned once every two weeks and interiors shall be cleared of dust once every six months.

6) Cameras

A) Focusing, infrared night vision, wiring, and waterproofing shall be checked once per quarter and adjustments and tests shall be performed as appropriate. Surface cleaning shall be done for lenses once per quarter. Internal dedusting shall be done for the protective housing once every six months.

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B) During operation, patrol inspection shall be conducted on the spray pond, water pumps, and ancillary facilities twice per week and the anti-creeping facilities shall be checked once per month.

C) Safety warning signs shall be set up as necessary.

D) Water quality shall meet hygienic requirements.

3. Fire safety and prevention

3.1 Integrated management

1) A fire safety responsibility system shall be established and implemented. Persons responsible for fire safety shall be appointed. Fire safety responsibilities shall be clearly defined for every level and every job post.

2) A voluntary firefighting team armed with necessary firefighting equipment shall be set up. Relevant personnel shall master the basic firefighting knowledge and skills. A fire drill involving employees and proprietors or house users shall be organized annually.

3) Fire safety bulletins shall be set up and regular fire safety education shall be carried out. Two fire safety trainings shall be provided for employees every year.

4) Patrol inspection shall be conducted on fire protection once per day. Fire protection inspection shall be conducted once per month. Firefighting equipment shall be tested once per year according to relevant regulations in order to ensure that the evacuation paths, safety exits, fire lanes, and firefighting facilities and equipment meet relevant safety requirements.

5) An conduct in violation of fire safety rules, as well as fire hazards, must be immediately corrected or eliminated once discovered. Any conduct or hazard that cannot be corrected or eliminated must be reported to the fire department of the local police.

6) The fire control room shall be manned by watch-keepers around the clock. Each shift, which consists of two persons, shall promptly process all kinds of alarms and failure information.

7) In the event of a fire, the police must be immediately notified. Attempts shall be made to put out fire in its initial stage, personnel in danger shall be evacuated, and assistance shall be offered to the fire department.

3.2 Repair and maintenance of firefighting facilities and equipment

1) Automatic fire alarm system

(1) Patrol inspection shall be conducted once per day on fire alarm controllers interlock control equipment to check the functioning of equipment and to ensure uninterrupted around-clock normal operation. The alarm function of alarm controllers and interlock control equipment, as well as the interlock control, display, and printing functions, shall be checked and tested once per month. Interiors of machine cabinets shall be dedusted once per year.

(2) Fire alarm controllers, manual alarm buttons, and alarm devices shall be randomly selected for testing once per month. After having been in use for 2 years, the alarm and warning functions of manual alarm buttons and alarm devices shall be cleaned by specialized cleaning companies once every three years.

(3) Standby power supply

The master power supply and standby power supply shall be tested and switched between each other once per month. The standby power supply and storage batteries shall be put to one charge-discharge test every quarter.

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2) Fire control broadcast system

The interlock and forced switchover functions of fire emergency telephones, intercom phones in important locations, intercom telephone hosts, broadcast equipment, megaphones, and loudspeakers shall be checked and tested once per month, and their volume shall be tested as well; the interiors of machines shall be removed of dust once per year and the equipment inside cabinets shall be removed of dust once per year.

3) Smoke control and exhaust system

Irrigation shall be well planned. The irrigating water shall completely and evenly permeate the soil to prevent conspicuous drought and flood; Generally, plants must be watered 4 months before germination, 5 months before germination, in autumn, and before winter, respectively. For cool-season lawns, a higher frequency of irrigation may be adopted according to the growth and soil conditions.

2) Fertilization

Fertilizers shall be administered according to plant growth. Arboreal trees shall be fertilized once or twice every two years; shrubs shall be fertilized once or twice per year; Ground cover and lawn plants shall be fertilized twice or thrice per year. Additional fertilization may be used for bedding plants according to their growth. Dependence on chemical fertilizers shall be minimized.

3) Pest and plant disease control

Based on the pattern of plant pests and diseases, plants shall be inspected at least three times per month during the growing season and pests and diseases shall be controlled in accordance with the inspection results, so that leaves do not fall prematurely and plants do not die because of pest or disease.

4) Trimming

Arboreal trees shall be trimmed once every winter. Shrubs shall be trimmed once during the growing season and in the winter, respectively. The green hedges and color lumps shall be trimmed once before the Labor Day, before the National Day, and in the winter, respectively. Cool-season lawns shall be trimmed at least once or twice per month, depending on the growth, during the growing season and at least 12 times per year.

5) Weeding

Full weeding shall be carried out three times per year. The weeding frequency shall be elevated for important green belts. Green belts with weeds shall not exceed 10% of the total green belt area. Seasonal weeds shall be effectively controlled.

6) Garbage disposal

Waste created during greening work and garbage in the green belts shall be cleared three times per week.

4.3 Inspection of work

1) Greening work shall be checked three times per month during the growing season.

2) Landscape maintenance measures and work plans shall be developed for each quarter.

3) Greening files shall be present.

5. Environmental hygiene

5.1 Collection and removal of household garbage

1) Sorted collection shall be implemented for household garbage.

2) Hermetic garbage collection vessels with sort signs shall be provided.

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3) Garbage collection vessels shall be cleaned at least once every two weeks. Pesticides shall be sprayed daily during the breeding season of flies and mosquitos.

4) Garbage shall be moved to designated garbage disposal sites once per day and shall not be dumped randomly.

5) Garbage trucks shall be clean and tidy in appearance.

5.2 Cleaning of commonly-shared sections of property

1) Inside buildings

(1) Lobby and elevator hall on 1^st floor

The ground of the lobby and the elevator hall on the 1^st floor shall be swept and mopped once per day. The mailboxes and glass surfaces in the lobby shall be wiped once per week. The wall surfaces in the lobby and in the elevator hall shall be wiped once per month. Patrol inspection and cleaning shall be done for the lobby and the elevator hall on the 1^st floor once per day.

(2) Corridors and stairs

Grounds of corridors and stairs shall be swept once per week and mopped once every two weeks. Shared facilities, such as handrails, windowsills, fire doors, fire hydrants, and signs of the stairs, shall be wiped once every two weeks. Light fixtures in the building shall be dedusted once per quarter. Patrol inspection and cleaning shall be done for the corridors and stairs on a daily basis.

2) Elevator compartment

The doors and panels of the elevator compartment shall be wiped once per day. The ground of the elevator compartment shall be mopped once per day. Elevator compartments decorated with stainless steel or other materials shall be maintained once per month. Elevator compartments decorated with stone materials shall be maintained once per quarter. Patrol inspection and cleaning shall be done twice per day for the elevator compartment.

3) Terrace and roof: The terrace and roof shall be swept once per quarter; during the rain season, the terrace and the roof shall be swept once every 2 months. Patrol inspection shall be conducted once per month on the terrace and internal courtyard and any sundries shall be promptly removed.

4) Outdoor roads and facilities

Sweeping shall be done once per day and patrol inspection and cleaning shall be done twice per day for the outdoor roads. The outdoor public lighting and shared facilities shall be cleaned once per month. Rain hoods and door awnings shall be cleaned once per quarter.

5) Waterscape

Sterilization and purification shall be carried out according to the water quality. During operation, the water surface shall be cleaned twice per week and the bottom of the pond shall be cleaned twice per year.

6) Pest control and prevention

Assistance shall be offered to competent authorities in pest control and prevention. Prior notices shall be given of pesticides to be administered. Easily visible signs shall be set up where pesticides have been administered.

7) Cleaning in rainy and snowy weathers

After a rain, water in the main roads and trunk roads of the community shall be swept away. In snowy weathers, ground snow shall be promptly swept away and ground ice shoveled. If it snows at night, the ice and snow on main roads shall be removed before 10:00 AM next morning.

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5.3 Inspection and logging of work

1) Quality of cleaning shall be checked once per day and proper records shall be kept.

2) Quality of cleaning shall be fully checked once per quarter and proper records shall be kept.

3) Complete cleaning files shall be kept

6. Maintenance of public order

6.1 Main entrances and exits shall be guarded by specially assigned watch-keepers around the clock.

6.2 Patrol inspection routes shall be set. Patrol inspection shall be properly carried out and recorded, twice between 6:00 and 22:00 and once between 22:30 6:00.

6.3 Patrol inspection shall be conducted on parking lots and order shall be properly maintained for the use of roads and sites.

6.4 Motor vehicles must have proper permits when entering or exiting the property.

6.5 Security control rooms shall be manned by specially assigned watch-keepers around the clock; Surveillance videos and alarm records shall be retained for 30 days in case of the need to investigate. Management rules and emergency plans shall be posted in conspicuous positions.

6.6 Illegal conducts shall be immediately reported to the police and assistance shall be offered to competent authorities in processing illegal conducts.

6.7 Two special emergency plan drills shall be conducted every year and proper records shall be kept.

6.8 Duty personnel shall stand by around the clock.

6.9 Records and files

1) Complete and valid records shall be kept of all items of work.

2) Complete files shall be kept.

7. Decoration and fitting management

7.1 Decoration and fitting management service rules shall be established.

7.2 Decoration and fitting management files shall be created.

7.3 Declaration and registration of proprietors or house users for decoration and fitting shall be proper handled. Interior decoration and fitting management service agreements shall be signed with proprietors or house users, who shall be informed of the forbidden behavior and precautions in the decoration and fitting work.

7.4 During decoration and fitting, patrol inspection shall be conducted for the site once per day. If it is discovered that the proprietor or the house user fails to declare and register the decoration and fitting project or violate the law or any relevant regulation, such behavior shall be immediately dissuaded. If the proprietor or the house user refuses to correct such behavior, the violation shall be reported to competent authorities, the proprietor, and the proprietors committee and shall be made public within the range of the property management.

7.5 Inspection shall be carried out after decoration and fitting is completed. Any interested party that violates the interior decoration and fitting management service agreement shall be treated as agreed.

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7.6 If the removal of decoration waste is commissioned to a third party, the waste shall be temporarily piled in designated locations and retention and covering measures shall be taken. Such waste shall be removed within 2 days. If the decoration waste is to be removed by the constructor, the waste shall be transported out of the property in bags or in hermetic vessels within 2 days.

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Property Service Contract of Beijing Jingkai One Center Project

Annex 6:

List of Hand-over Materials

1. Site plan of the completion; as-built drawings of individual buildings, structures, and equipment; as-built drawings of supporting facilities and underground pipes; and layout drawings of pipelines for buildings.

2. Technical data on the installation, use, and maintenance of facilities and equipment

3. Quality warranty documents and user's instruction documents of the property (Building Quality Warranty and Building User's Manual)

4. Materials of acceptance inspection by related professional agencies

5. List of property rights of the house and supporting facilities (including proprietor's name, construction area, and contact information)

6. Pressure test reports for water supply and heat supply systems

7. Report on measured area

8. Other materials required for property service

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Beijing Jingkai·One Center Project

Temporary Management Convention

Project Owner: Beijing Jingkai-Gongda Investment Management Co., Ltd.

(MM)/(DD)/(YY)

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Table of contents

Part 1	General provisions	72
Part 2	Overview of property	72
Part 3	Use, maintenance and management of exclusive areas of property	73
Part 4	Use, maintenance and management of shared areas of property	76
Part 5	Decoration and furnishing	78
Part 6	Preliminary property service	79
Part 7	Inspection and handover of project items	80
Part 8	Property service fee	81
Part 9	Other matters	83
Part 10	Supplementary provisions	83
Letter of Commitment for Temporary Management Convention		85

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Part 1 General provisions

To carry out the after-sales property management of Beijing Jingkai · One Center Project (this “Property”), safeguard legitimate rights and interests of all proprietors and house users, and to preserve public environment and order in the shared areas of the property, the project owner, prior to sales of the property, develops this temporary management convention (this “Convention”) with respect to use, maintenance and management of the property, common interests and obligations of proprietors, and liability for violation of this convention in accordance with the Regulations of Beijing Municipality for Realty Management (Decree of the People’s Government of Beijing Municipality No. 219) and the relevant laws, regulations and policies.

The Owner shall present and explain this convention to the Buyer prior to sales of the property. This convention shall be attached to the Beijing Commodity Housing Presale Contract or the Contract for Sale of Finished Commodity Housing in Beijing to be made by and between the first Buyer of the property and the Owner (the “Housing Purchase Contract”) as an annex thereto. By written undertaking in connection with this convention, the first Buyer acknowledges this convention, and effects of this convention shall be extended to subsequent Buyers of the property.

This convention shall be binding upon the Owner, proprietors and the house users. The proprietor shall warrant that the co-occupier and the relevant person to use this property in compliance with this convention and the relevant regulations.

Agreements involving common interests of proprietors contained in the Preliminary Property Service Contract by and between the project owner and the property service enterprise shall be consistent with those of this convention.

Part 2 Overview of property

I. Overview of properties within the property area:

Name of property: Beijing Jingkai · One Center

Location: Lot D1F1, Eastern Zone, Beijing Economic-Technological Development Area Road

Type of property: office and commercial properties

Floor area: 83,832.86m² (measured area prevails)

Scope of the property

East to: 3rd Jinghai Road

South to: 13^th Kechuang Street

West to: 1st Jinghai Road

North to: Qujian Road D1#

Details concerning properties situated within area of this property are found in the Preliminary Property Service Contract.

II. Rooms for property service within area of this property are located on the aboveground 1F and underground 1F of A2, with floor area: aboveground 100m², and underground 50m².

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III. Overview of property service enterprise:

Name of enterprise: Beijing Jingkai Investment Development Co., Ltd.

Legal representative: Guo Guangqing

Business license number: 110000001699163

Qualification class and qualification certificate number: No.0075 JWQZS [2014]

Registered office: Building 1, Zone A, Beijing Gongda Software Park, No. 1 Disheng North Street, Beijing Economic-Technological Development Area, Beijing, 100176, China

Contact phone: 010-67873388

Part 3 Use, maintenance and management of exclusive areas of property

IV. A proprietor is entitled to occupation, use, income and disposal of the exclusive area of the property, and shall also comply with the relevant laws and regulations of the country and Beijing municipality without endangering safety of the building or infringing upon legitimate rights and interests of any other person. The proprietor and the house user shall comply with regulations on supply of power, water, heating, and of gas, drainage, accessibility, ventilation, lighting, decoration & outfitting, surrounding sanitation and environmental protection, and properly deal with his or her relationship with proprietors of neighboring houses in the principles of facilitation of use, safety and neatness of the property, fairness and rationality without jeopardizing public interests and interests of any other person.

V. A proprietor shall, upon expiration of the warranty period of the property, solely take charge of maintenance and repair of the exclusive area of his or her property. Such proprietor shall be liable for any loss of any other proprietor incurred due to delay in repair or maintenance or failure to take actions to eliminate potential safety risk.

VI. A proprietor and a house user shall use the property for the planned purpose set forth in the house purchase contract, and annex and supplementary agreement thereto, and where the planned purpose of the property has to be changed, such proprietor and house user shall complete the relevant procedures in accordance with the laws subject to approval by the relevant competent governmental authority with written consent of the interested proprietor, project owner and the property service enterprise, and shall notify the property service enterprise, property right holder and proprietors committee of such change. Nature of use of the shared sections and facilities that are developed within the property management area according to the planning shall not be changed.

VII. A proprietor and a house user shall promptly deal with any potential safety risk that is revealed during use of water, electricity, gas, heating, cooling and ventilation facilities and equipment in accordance with the relevant regulations and report such risk to the property service enterprise and authority concerned; coordinate with the relevant authority to take actions to avoid danger when emergency event occurs; comply with and ensure their employees, visitors, customers, agents and contractors to comply with regulations concerning fire protection safety and safety rules developed by property the property service enterprise, and shall make sufficient fire extinguishers available within his or her unit.

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VIII. For outdoor and indoor equipment, facilities, and garden greening and sites of a proprietor,, which are either situated within the exclusive area or are used by such proprietor independently, such proprietor shall entrust the qualified professional enterprise with regular inspection, repair and maintenance of items including (but not limited to) lifting equipment, pressure vessel equipment, pressure gauge, fire-fighting facility and equipment, greening support facility and equipment, and central air-conditioning equipment, obtain the permit for safe operation from the competent governmental authority, and shall be liable for any and all expenses incurred in connection therewith pursuant to the relevant regulations of the country and Beijing municipality.

VX. Neither a proprietor nor a house user shall modify structure, appearance and use of the house without authorization; engage in catering and other trades resulting in excessive noises to residents and environmental pollution in the ground floor store of the residential property; open or block exterior door and window or change their sizes and styles without authorization; change material and color of finish of outer wall; erect or develop any building and structure on the roof, building body, and accessory platform and within any other commonly shared sections; and change the pipe without authorization.

X. In the event that the property service enterprise has to access the exclusive area for repair, maintenance, renewal and renovation of the shared areas of the property, it shall give a prior notice to the relevant proprietor and house user, and proprietor and house user of the relevant exclusive area shall coordinate with such enterprise. If a proprietor or house user hinders or provide negative coordination in connection with such repair, maintenance, renewal and renovation, resulting in damage to or any other loss of the property, such proprietor or house user shall be liable for aggravation of the loss incurred from such hindering or negative coordination.

If the proprietor refuses or fails to repair after receipt of notice, the property service enterprise is entitled either to perform on its own or to cause any third party to perform such repair , in which case the proprietor shall be liable for any and all consequential losses and expenses, and it shall also pay the property service enterprise the fines equal to 2‱ of total property purchase price on daily basis for the period commencing from the date on which the property service enterprise gives oral or written warning and ending on the date on which such repair is completed. Such fines shall be fully paid one time on the date of remedy of the breach, and shall be allocated to the public fund of the community.

If the proprietor refuses to accept liability for repair or loss, or fails to pay the fines on due date, hindering normal operation of the property or resulting in damage to the property or loss of any other proprietor, such other proprietor and the property service enterprise have the right to entrust professional lawyer with safeguarding their rights, and such proprietor shall bear any and all consequential costs and expenses (including but not limited to attorney's fee).

In the event that the property service enterprise, as a result of an emergency that endangers public interests and legitimate rights or interests of any other proprietor, has to access the exclusive area of a property for maintenance or repair, the property service enterprise shall notify the relevant proprietor or house user of such property in advance, and if it is indeed impossible to notify such proprietor or house user, the property service enterprise is allowed to perform such repair or maintenance under supervision of the public security authority, government of the relevant jurisdiction, and other non-interested proprietor, provided that the enterprise shall notify the relevant proprietor or house user thereafter and shall well settle the problems arising thereafter.

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XI. In the event that a proprietor or house user has to temporarily occupy or dig road or site due to repair or maintenance of property or due to public interest, such proprietor or house user shall complete the relevant formalities in accordance with the relevant laws and regulations, issue public announcement in advance, obtain written consent from the property service enterprise hired by the project owner, and shall reinstate such road or site within the agreed period. Such proprietor or house user shall be liable for any consequential loss of the property service enterprise, any other proprietor or house user, and any third party.

XII. If a property poses safety threat or endangers public interests or legitimate rights or interests of any other proprietor, the relevant responsible person such as proprietor or house user of such property shall immediately take actions to eliminate such threat.

1. Neither a proprietor nor a house user shall raise any animal and pet within the area of property in the office park.

2. Where a proprietor or house user engages in such activities as production, processing, office and R&D in buildings in the park, such proprietor or house user shall execute the relevant national standards, develop the relevant management, production and safety measures, as well as prevention measures, and shall arrange and use park facilities and energy facilities in a reasonable manner.

3. To transport goods into or out of the park, the organization shall comply with the relevant property management rules, and the proprietor or house user shall go through the relevant formalities with the property service enterprise. Any large transportation vehicle with capacity more than 30t (including 30t) is prohibited from accessing into the park, and in case of transportation in such large vehicle, the proprietor or the house user shall arrange lighter on its own.

XIII. Where a proprietor leases out, transfers or otherwise dispose of his or her exclusive area, such proprietor shall notify the project owner and the property service enterprise in writing in advance, notify the tenant and the buyer of this convention in compliance with the regulations for leasing and transfer of house, and shall notify the project owner and property service enterprise of the lease and transfer (i.e., attach this convention to the relevant contract or document as annex thereto, notify the project owner and the property service enterprise of disposal of the realty in writing within three days as of the date of execution of such relevant contract and document, and submit the letter of commitment for the right successor signing this convention to the property service enterprise), otherwise the proprietor shall be severally and jointly liable for loss and overdue fee incurred due to violation of the property management system and this convention on part of the tenant and the transferee.

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Part 4  Use, maintenance and management of shared areas of property

XIV. A proprietor shall be entitled to rights and assume obligations in connection with shared area of the property, and shall not refuse to fulfill obligations by reason of waiver of any right. When using shared area of the property, a proprietor or house user shall comply with regulations and rules developed by the project owner for use of shared area of property, and maintenance of public order, environment and sanitation in accordance with the Preliminary Property Service Contract. In case of damage to the shared area of property as a result of improper use on part of the user, the responsible person shall assume the legal liabilities such as reinstatement and compensation for loss.

XV. A proprietor or house user shall reasonably use the shared facility and equipment, consciously maintain the property neat and good-looking, and comply with regulations of the governmental for appearance and environment of the municipality. A proprietor or house user shall not erect any facility, building or structure, permanent or temporary, within the public area; not damage pipe well or cable above or ground the greening area, not shade or enclose the well lid, and not disturb necessary infrastructure within the greening area, installation and normal operation of the equipment.

XVI. When driving and parking a vehicle within the property management area (including motor vehicle and non-motor vehicle), a proprietor or house user shall comply with the rules for driving and parking within the property management area without parking the vehicle on the shared road, public greening area and other public sites and without occupying fire-fighting passageway or outdoor hydrant and equipment pipe well.

A property service staff has the right to instruct any person who violates the parking management rules to rectify such violation immediately, and such person shall be liable for any and all consequential losses. Any person shall otherwise sign the agreement for use and management of parking space with the property service enterprise and pay the relevant parking space management fee no matter how such person obtains the right of use of the parking space.

XVII. A proprietor or house user shall operate and use the lift in compliance with the relevant regulations of competent governmental authority.

XVIII. To erect company nameplates and sign boards (including but not limited to emblem) that are erected within public area, the proprietors or house users shall not install any such nameplate or sign board on their own but shall contact the property service enterprise for centralized fabrication and installation at the relevant expenses of such proprietors or house users. The project owner will provide spaces for hanging corporate guidance emblem at the entrance lobby on the ground floor, provided that the proprietor or house user shall notify the property service enterprise of the emblem details 7 days ahead of mobilization.

XIX. A proprietor or house user shall reasonably use water, electricity, gas, heating, cooling, ventilation, fire protection and security facilities and equipment without any unauthorized removal or modification in accordance with the relevant regulations, and shall be liable for any and all consequences and losses of public area, shared equipment, and neighboring proprietor or house user as a result of unauthorized removal or modification. The property service enterprise has the right to claim repair, recovery or compensation against a proprietor or house user in connection with any loss caused by such proprietor or house user, and to report such loss to the competent governmental authority and the competent industry authority. If any equipment or facility that is so removed or modified remains within its warranty period, then warranty obligation of the relevant warranty provide shall be terminated.

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XX. Garbage of each building shall be classified according to the Regulations of Beijing Municipality for Administration of Domestic Garbage (Bulletin No. 20 issued by the Standing Committee of the 3rd Municipal People's Congress of Beijing), and shall be stored in area specified by the property service enterprise, which in turn shall arrange to clear such garbage.

XXI. The following acts shall be prohibited within the property management area:

1. unauthorized removal or modification of load bearing structure and main structure of the house, unauthorized change of appearance of the house, unauthorized occupation of or damage to shared area of property, shared facility and equipment and the relevant site, and unauthorized relocation of shared facility and equipment of property;

2. damage to or scratch of any public items of the property such as glass curtain wall, wall of passageway/corridor and glass/column, in which case the relevant responsible person shall be liable for costs in connection with repair.

3. drilling on the glass curtain wall or sticking any type of facility, object or advertisement board on the indoor or outdoor surfaces of the curtain wall. Any device shall not touch any structural member of the curtain wall, Correctly use and specially protect external door and window, and do not support the external window with a hard object. Promptly close and lock external door and window when all persons leave the property.

4. non-compliance of building load capacity of the property by installing (placing) any furniture, equipment, mechanical device and other articles exceeding the roof load capacity onto any part of the roof.

5. unauthorized placement of articles, unauthorized erection of any building, structure, bracket,  canopy, advertisement board, signboard, umbrella and any other article not approved by all other proprietors or house users onto the common terrace or roof platform.

6. stacking of flammable, explosive, hypertoxic, or radioactive substance, and emission of harmful substances such as air pollutant, water pollutant, noise, light, and electromagnetic wave.

7. blockage or obstacle of any public item or public site, or placement or disposal of any garbage or article in public item or public site or out of the window.

8. unauthorized hanging, posting, alteration, scratching, erection of flag, distribution of brochure, or installation of neon light in public item or the relevant site.

9. encroachment of or damage to public greening area (including but not limited to cutting and digging), road, flowers, trees, artistic landscape, and facilities and equipment for culture, recreation, sports and leisure.

10. parking on public road, or washing or repair of vehicles on public road.

11. installation of satellite receiver or any other high-power receiving device that shall be subject to approval by the governmental approval, without approval by the governmental approval.

12. engaging in activities endangering public interests and infringing legitimate rights and interests of any other person using the property.

13. demanding the property service enterprise for services irrelevant to the property management.

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14. any other act prohibited by laws, regulations and this convention.

XXII. Any proprietor shall pay the specific repair fund as prescribed, and shall pay the property service fee in accordance with the Preliminary Property Service Contract. If a proprietor sells, transfers, mortgages or contributes his or her property, the repair fund he or she pays for the public item and shared facility and equipment shall remain the funds for repair and renewal of the public item and shared facility and equipment of the property.

XXIII. The order preservation staff has the right to inquire about a strange visitor and register such visit in order to preserve safety and order within the property management area, and a proprietor or house user shall cause the visitor to coordinate with such staff.

In case of fire, theft, personal injury or death and any other safety accident, the proprietor, house user, property service enterprise, and the project owner shall report to the public security authority. The property service enterprise and the project owner shall coordinate with such authority to conduct investigations and evidence gathering. The supervision video shall be kept in compliance with the relevant regulations.

XXIV. Where a proprietor or house user violates this convention, the property service enterprise has the right to urge such proprietor or house user to rectify such violation by advice, warning, prevention or any other measure permitted by laws, and such proprietor shall remedy such violation until he or she becomes compliant with this convention as required by the property service enterprise within the prescribed time limit at his or her remedy costs. If the proprietor fails to remedy his or her violation of this convention even through coordination, the property service enterprise is entitled to directly initiate civil litigation to the people's court, and if the proprietor violates the relevant regulations and policies, the property service enterprise is entitled to complain about and report such violation to the competent authority concerned.

Part 5  Decoration and furnishing

XXV. In order to maintain quality of the property, the proprietor and house user undertake that the decoration recipient and decoration & furnishing enterprise engaged by such recipient, as well as the project owner shall comply with the Guidance for Decoration for the property area to perform decoration. The proprietor or house user and the decoration recipient shall declare the decoration to and register the decoration with the property service enterprise prior to decoration, and sign the Housing Decoration Management Service Agreement with the property service enterprise, defining the relevant rights and obligations, components of service and liability for breach of agreement. The proprietor or house user shall conduct decoration & furnishing in accordance with the housing decoration management service agreement, and observe the precautions for decoration & furnishing, and shall not perform any decoration prohibition. The proprietor shall place the decoration & furnishing materials and waste resulted from decoration in the designated area without unauthorized occupation of the public items and public site of the property. The proprietor or house user shall pay fees in connection with decoration management (including but not limited to decoration management fee, decoration garbage disposal fee and decoration deposit).

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During decoration & furnishing construction within the property management area, decoration work generating noises is prohibited in the building from 8:30 a.m. to 18:00 p.m. in working days, and actions shall be taken for decoration work to be performed in other times in order to mitigate interference with surroundings. The proprietor or house user shall post an announcement in the building, indicating the date and time of decoration & furnishing to be performed.

XXVI. Where decoration & furnishing of house influences normal operation of public item and shared facilities and equipment, and infringes upon legitimate rights and interests of neighboring proprietor or house user, the proprietor or house user of the property under decoration shall promptly reinstate normal operation and legitimate rights and interests, and shall assume the relevant compensation liability. The proprietor or house user shall coordinate with the property service enterprise to bind and manage the decoration & furnishing enterprise. The proprietor or house user shall promptly reinstate normal operation of the public items and shared facilities and equipment that is influenced by decoration of the house, and shall repair the public area if consequentially damaged and shall be liable for any consequential loss of any other proprietor or house user.

XXVII. During decoration of house, the proprietor and house user shall take finished product protection measures for the relevant public area, and shall neither remove or modify the load-bearing wall and pipes nor damage waterproofing course. The property service enterprise has the right to supervise and inspect decoration activities of the proprietor and the house user.

If any decoration work shall be subject to approval and acceptance by the governmental authority concerned pursuant to the relevant regulations, the proprietor and house user shall complete such approval and acceptance in accordance with such regulations, and shall file such decoration work with the property service enterprise. If modification of fire-fighting system is involved in the decoration, the proprietor or house user shall submit such modification to the fire protection authority for approval and acceptance and file such modification with the property service enterprise. Any proprietor or house user shall not move, relocate, close, replace, cancel or remove any fire-fighting equipment and facility without prior written consent of the property service enterprise, and shall not damage the fire-fighting facilities or result in wrong alarm of or damage to fire alarm system for human-made reason, otherwise such proprietor or house user shall be liable for any and all consequences incurred due to any act under the laws and regulations such as fire control law and the relevant fire control regulations, and shall also bear all repair costs, losses, and penalties imposed by the government.

Part 6  Preliminary property service

XXVIII. The project owner and property service enterprise shall take charge of preliminary property service for the property management area. Regarding exact property services, service standard and property service fee, the Preliminary Property Service Contract shall apply.  Any proprietor shall fully pay the payable fees under the property purchase contract or the Preliminary Property Service Contract .

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XXIX. In order to safeguard their common interests, all proprietors agree to grant the following rights to the project owner with respect to property management activities:

1. to develop regulations and rules for use of public items and shared facilities & equipment of the property, preservation of public order, public greening area and environmental sanitation, and for other property service aspects.

2. to prevent the proprietor or house user from violating this convention and the regulations and rules by warning, advice, publicity and other necessary actions.

3. to withhold property service fee payable by the proprietor and any other fee collected and handed over on behalf of the proprietor under the laws, regulations and the Preliminary Property Service Contract.

4. to pay property service fee for unsold houses commencing from the due date of the property service fee. Where the property service fee for any unsold house paid by the project owner includes the property service fee that become payable after such house is sold, the project owner has the right to, following such sales, withdraw the balance of the said property service fee it pays without written confirmation by the proprietor.

5. to fully withdraw the balance of the preliminary property service fee the project owner pays as the preliminary property service provider without written confirmation by the proprietor, provided that the audited preliminary property service fee assumed by the project owner exceeds the actual fee incurred for the preliminary property service period, in which case the excess property service fee shall be the property of the project owner.

XXX. In order to safeguard their common interests, all proprietors agree to grant the following rights to the property service enterprise with respect to property management activities:

1. to cooperate with the project owner to develop regulations and rules for use of public items and shared facilities & equipment of the property, preservation of public order, public greening area and environmental sanitation, and for other property service aspects, in accordance with this convention.

2. it is lawful for property service staff to damage exclusive area of any proprietor without any liability, provided that such damage is indeed necessary for urgent danger prevention.

3. property service staff can open channel or door to any part of the property from time to time for any national administrative authority, law enforcement authority, or judicial authority if any such authority has to access the park in order to perform its duties, in which case the proprietor shall understand and cooperate with such authority.

4. there is no any personal, property custody or insurance relationship within this property with the proprietor and house user.

5. the property service enterprise may be relieved from liability for inconvenience brought to the proprietor or house user as a result of necessary maintenance or repair of the public item or shared facilities and equipment.

Part 7  Inspection and handover of project items

XXXI. In the event that all proprietors decide to terminate the preliminary property service contract and that they determine the property management mode, the project owner shall verify the shared areas of the property with the proprietors and handover the shared areas to the proprietors in the manner as prescribed in the regulations of Beijing for handover of property items.

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XXXII. Where inspections demonstrate that the shared areas of the property comply with the relevant standards, or after inspection and handover are completed under the property purchase contract (including deemed completion of inspection and handover), the project owner shall fully fulfill obligations and responsibilities in connection with the shared areas in addition to the warranty liability, which shall be performed on the basis of the warranty period and warranty scope as provided in the national regulations and the property purchase contract.

XXXIII. The proprietors meeting shall, within 30 days after it is established and after the property management mode is determined, carry out post-inspection and handover of shared areas of the property with the project owner. The preliminary property service contract shall be terminated on the date on which the inspection and handover of shared areas of property are accomplished. In the event that the handover is not accomplished within the said 30 days for any reason not attributable to the project owner, the date on which the said 30-day period expires shall be deemed as the completion date of property handover.

XXXIV. If the proprietors meeting continues choosing the property service enterprise appointed by the project owner (including deemed de facto management), the project owner is not required to complete such formalities as handover and inspection with the property service enterprise given that the project owner has inspected the property and shared areas with and handed over the relevant documentations to the property service enterprise in accordance with the Measures for Property Undertaking and Inspection (J. F. [2010] No. 165), and Measures of Beijing Municipality for Realty Management (Decree of the People's Government of Beijing No. 219) when the project owner appointed the property service enterprise, and that the property service enterprise has been managing and maintaining the shared areas, and the date on which the proprietors meeting makes decision shall be deemed as the completion date of handover and inspection, commencing from which the Buyer shall pay the property service fee.

XXXV. If any dispute arises out of inspection of the shared areas between the proprietor and the property service enterprise, and if authoritative organization determines that the shared areas satisfy the relevant criteria, the handover shall be deemed to be completed at time of inspection, and the proprietor shall pay the due but not paid property service fee if any.

XXXVI. The shared areas of property shall be inspected and handed over as long as they materially comply with the handover conditions, and any repairable defect in the shared area shall not influence receipt of the property, provided that the project owner shall be responsible for repair of such defect.

Part 8  Property service fee

XXXVII. Any proprietor or house user shall pay the project owner or property service enterprise the property service fee promptly in accordance with the Preliminary Property Service Contract, and if a proprietor entrusts the property service enterprise with providing specially engaged service other than those set forth therein, such proprietor and the property service enterprise shall otherwise agree upon fees for such specially engaged service.

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1. Property service rate:

Office Building (sold as a whole): 5.50yuan/month• m'

Office Building (partially sold ): 6.50yuan/month• m'

Commercial property: 5.50yuan/month• m'

2. Payment period of property service fee: the project owner or the property service enterprise shall pre-collect the property service fee on annual basis. A proprietor shall pay the property service fee for the first year when he or she moves in the property.

3. Subsequent payment of property service fee: the property service enterprise will remind the proprietor of paying the property service fee for the next year thirty days prior to expiration of the period related to the property service fee that has been paid by the proprietor. The proprietor shall, prior to expiration of the period related to the paid property service fee, pay the next tranche of property service fee to the project owner or the property service enterprise in cash or by cheque or T/T, and accordingly the payee shall issue the formal invoice.

4. Commencement date of property service fee: the commencement date of property service fee shall be the date from which the formal move-in procedures can be performed as indicated on the move-in notice or similar instrument issued by the developer. In the event that a proprietor fails to complete the move-in procedures promptly for his or her own reason, such proprietor shall still pay the property service fee accrued from the said date.

5. If a proprietor fails to pay the due and payable property service fee, such proprietor shall pay the project owner or the property service enterprise the liquidated damages equal to 3% of the payable property service fee per day. Where a proprietor fails to pay the property service fee for more than 6 months after the due date, the project owner or the property service enterprise has the right to publish the overdue payment at obvious positions in the property management area, and where a proprietor owes the due property service fee for more than 12 months, the project owner or the property service enterprise has the right to initiate an action against such proprietor.

6. In case of forced change in labor cost as a result of adjustment in unit price of energy fee which is approved by the government or change in the national laws, regulations and policies, the property service rate shall be adjusted following the relevant procedures stipulated by the government.

XXXVIII. Where the proprietor and the house user agree that the property service fee shall be paid by the house user, such agreement shall prevail, in which case the proprietor shall be severally and jointly liable for payment of the property service fee. The proprietor shall immediately notify the property service enterprise in writing of any payment agreement reached by and between the proprietor and the house user.

XXXIX. All proprietors within the property area shall pay, use and manage the specific repair fund as prescribed, and if balance of the fund is less than 30% of the initial collection amount, the proprietors shall contribute to the specific repair fund as prescribed.

XXXX. Where the project owner or the property service enterprise undertakes entrustment with collection and handover for competent governmental or industry authorities, the proprietor shall pay the project owner or property service enterprise the payable fees such as those for water, electricity and gas that are covered by such collection and handover.

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Part 9 Other matters

XXXXI. When completing the move-in formalities, a proprietor or house user shall fully complete various forms, and shall provide the property service enterprise with the minimum 2 lawful and valid contact phone numbers so that the property service enterprise could contact the proprietor or house user in case of emergency. The proprietor or house user shall promptly notify the property service enterprise in writing of any change in such phone numbers, otherwise the proprietor or house user shall solely assume any liability and loss incurred in connection with consequential failure of the property service enterprise to contact the proprietor or house user.

XXXXII. A proprietor shall be liable for losses of any other person due to negligence and improper conduct of employee, temporary visitor, contractor, tenant, and agent of such proprietor and any other house user.

XXXXIII. A bulletin board shall be erected within the property area, and the relevant management information the project owner and the property service enterprise announce on such board, and notice or announcement the project owner and the property service enterprise issue to the proprietor shall be deemed to be delivered to all proprietors on the third day as of the date of publicity.

Part 10 Supplementary provisions

XXXIV. In the event that a proprietor, house user, project owner or property service enterprise violates the laws, regulations and this convention, disturbing normal operation of the property or resulting in personal injury or loss of property of the right holder, the infringed party is entitled to initiate a legal action to local people's court with jurisdiction.

XXXXV. For the purpose of this convention, the public item and shared facilities and equipment of the property shall mean house, space, site and the relevant facilities and equipment owned or used by several or all proprietors other than the exclusive area of individual proprietor.

XXXXVI. For the purpose of this convention, the house user shall mean family and employee of a proprietor, tenant and its employee, co-user, temporary user, borrower, visitor, and authorized caretaker of the house, and any other person whom is authorized by the proprietor to use such house.

XXXXVII. This convention shall be binding upon proprietors and house users within the property management area only. In case of transfer of this property, effects of this convention shall be extended to the property transferee. Where the house user violates this convention, the proprietor shall be jointly and severally liable for such violation.

XXXXVIII. The project owner shall be entitled to proprietor's rights of and undertake proprietor's obligations in connection with unsold portions and sold but not delivered portions within the property management area.

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XXXXIX. The proprietor, project owner and property service enterprise shall hold each copy of this convention.

XXXXX. This convention shall be attached to the Beijing Commodity Housing Presale Contract as an annex thereto, and shall come into force as of the date on which the first Buyer of this property signs the commitment (letter of commitment provided in the annex) and expire on the effective date of the management convention developed by the proprietors meeting.

XXXXXI. If there is any conflict between provisions hereof and the relevant laws and regulations, such provisions shall be null and void without influencing effects of the remaining provisions hereof.

XXXXXII. The person developing this convention shall be bound to interpret this convention. This convention shall not be amended in any way unless the proprietors meeting is established, and the proprietors meeting shall re-consider and re-develop the proprietor management convention after the meeting is established.

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Annex: Letter of Commitment

Beijing Jingkai·One Center Project

Letter of Commitment for Management Convention

I / our company is the Buyer of Unit No.         of Building B5 of Beijing Jingkai • One Center Project (hereinafter refers to as “this Property”). In order to safeguard the common interests of all the proprietors in this property management area, I / our company agrees and represents as below:

I. Acknowledges that “the Temporary Management Convention for Beijing Jingkai • One Center Project” (hereinafter refers to as “this Convention”) as stipulated by Beijing Jingkai-Gongda Investment Management Co., Ltd. has been read thoroughly.

II. Agrees to fulfill, comply with and cause the persons related to this Property fulfill and comply with the all the liabilities and obligations for the proprietors as well as the property users as specified in the Management Convention.

III. I / our company agrees to assume the corresponding liabilities resulted from breach of this Convention and furthers agrees to assume any joint liability from any action of any user of this Property in breaching of this Convention.

IV. I / our company agrees to acquire the Letter of Commitment for this Convention executed by successor of this Property at the time of assignment of this Property, and deliver the same to the Project Owner or the property service enterprise, and this Letter of Commitment shall remain in full force and effect until receipt of the successor’s Letter of Commitment by the Project Owner or the property service enterprise.

Promisee (Seal):

/seal/ Tarena Technologies Inc.

Date of Signature: May 5, 2016

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Annex IX: Other Provisions

Supplementary Agreement to Beijing Commodity Housing Presale

Contract on Beijing Jingkai • One Center Project

The Seller: Beijing Jingkai-Gongda Investment Management Co., Ltd.

The Buyer: Tarena Technologies Inc.

Both the Seller and the Buyer agree to enter into and comply with this Supplementary Agreement (hereinafter referred to as “the Supplementary Agreement”) so as to supplement the Beijing Commodity Housing Presale Contract (Contract No.:            , hereinafter referred to as “the Presale Contract”) executed between both parties through friendly negotiation and based on voluntariness with respect to the outstanding issues related to the Presale Contract.

Article 1 Definitions and Interpretations in the Presale Contract

1. “Delivery” as mentioned in the annexes to the Contract shall mean “delivery for use”, and only refer to transfer for occupation and risk transfer of this Commodity Housing, excluding the contents of title transfer and registration of this Commodity Housing to be dealt with by the Buyer.

2. “The Seller shall ‘show’ the relevant documents to the Buyer” as mentioned in the Presale Contract shall mean “that the Seller shall keep the relevant documents at the marketing place or the handover & takeover place of this Commodity Housing and make the same available to the Buyer for consultation other than providing duplicates to the Buyer”; “the Buyer shall ‘show’ the relevant documents to the Seller” shall mean “the Buyer shall show expressly the duplicates of the relevant documents and the Seller shall have the right to consult the same”; “the Seller shall ‘provide’ the relevant documents to the Buyer” shall mean “the Seller shall deliver the data or documents to the Buyer in person or with the mode of service as agreed in this Supplementary Agreement”.

3. “The project quality codes, standards and working drawing design documents issued by the State and Beijing Municipality” as mentioned in the Presale Contract refers to “the mandatory project quality codes, standards and working drawing design documents of the State and Beijing Municipality in effect at the time of design and construction”.

“The orientation of this Commodity Housing” as given in Article 3 of the Presale Contract shall refer to “the orientations of some of the rooms of this Commodity Housing”.

4. “Day” as mentioned in the Presale Contract shall refer to “calendar day”.

5. “The date of duly receipt” as mentioned in the Presale Contract shall refer to:

(1) In case of delivery by mail, the 5^th day after the date of delivery by mail shall be deemed as the date of duly receipt.

(2) In case of delivery by courier, in person or taking delivery by the assigned person, the date of receipt as indicated on the receipt form shall be deemed as the date of duly receipt; when no receipt form is made, the date given on the letter shall be deemed as the date of duly receipt.

(3) In case of transmission by fax or email, the second day after the date indicated on the notice shall be deemed as the date of duly receipt.

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Article 2 Supplementary Provisions for House Delivery

1. In case the Buyer asserts its right for sales return of the commodity housing to the Seller for reason that the commodity housing has serious quality defect(s) in accordance with the relevant provisions as given in the Presale Contract, the Buyer shall show the valid testing report as issued by a statutory appraisal agency within 60 days (including the 60^th day) after the date of handover of the commodity housing by the Seller. Any failure to show or being unable to show within the said deadline shall be deemed as the commodity housing is acceptable in quality, and the Buyer has waived its right for asserting sales return, in this case, the Presale Contract shall continue to be fulfilled and Buyer shall not assert its right for sales return to the Seller according to these provisions. The Buyer shall assume the responsibility for not taking delivery of the commodity housing in time if it has rejected to take over this Commodity Housing.

In case the Buyer asserts its right for sales return of the commodity housing to the Seller according to the provisions as given under Article 17 (2) of the Presale Contract, the Buyer shall show the valid testing report as issued by a statutory appraisal agency within 60 days (including the 60^th day) after the date of handover of the commodity housing by the Seller. Any failure to show or being unable to show within the said deadline shall be deemed as the commodity housing is acceptable in indoor air quality. In this case, the Buyer shall assume the responsibility for not taking delivery of the commodity housing in time.

Air quality measure shall be based on the initial state of the Commodity Housing at the time of delivery. The Seller shall assume no responsibility for any non-conformity with the standards of the state with respect to indoor air quality after the Buyer has made any decoration or transformation to the Commodity Housing.

2. Unless otherwise agreed between both parties, the Seller shall deliver this Commodity Housing to the Buyer at the time as specified in the Presale Contract. In case the delivery conditions for this Commodity Housing as specified in the Presale Contract have been satisfied ahead of the time as specified, the Seller can make delivery ahead of the time as specified, and the date of taking delivery shall be the date as indicated on the written document “Notice on Taking Delivery” issued by the Seller to notify the Buyer to handle the relevant formalities and take over the Commodity Housing.

3. For any Commodity Housing of which the acceptance and registration formalities upon project completion have been satisfied, if the Commodity Housing is defective identified at the time of taking delivery, the Buyer shall reject this Commodity Housing by virtue of the said defect. The Seller shall assume its obligations for warranty and maintenance, but not bear any liability for breach of contract due to late delivery.

4. After actual delivery of this Commodity Housing by the Buyer, any occupation and damage to this Commodity Housing by any other person, and damage to the devices and equipment of the property shall be under the responsibility of the Buyer.

5. The Buyer shall pay up the taxes as specified in Article 16(5) of the Presale Contract before the formalities of taking over the keys. The Seller may have the right to refuse to handle the formalities of handing over the keys to the Buyer if the Buyer has not paid of the above taxes.

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Article 3 Property Management Service Related to this Commodity Housing

1. The Buyer agrees that the Seller will select or replace a property management company to exercise property management by law before formal establishment of the Proprietors Committees. After formal establishment of the Proprietors Committees, the Proprietors Committees shall have the right to further employ the existing property service enterprise or select another property management entity by law.

2. If the Buyer carries out decoration on this Commodity Housing by itself after the occupancy formalities, it shall comply with “the Temporary Management Convention for Beijing Jingkai • One Center Project”, and shall not make any damage to this Commodity Housing and bring any nuisance to the proprietors in the vicinity.

3. The Buyer shall not use this property for other purposes other than those specified in the Presale Contract.

Article 4 Special Provisions for Cancellation of the Presale Contract

l. In case of occurrence of any circumstance in which the Buyer shall be entitled to terminate the contract due to the Seller’s default as specified in the Presale Contract, the Buyer shall issue a written notice for cancellation of the Presale Contract to the Seller within 60 days (including the 60^th day) after occurrence of the said circumstance. The Buyer’s failure’s to do so shall be deemed as the Buyer has waived its right for cancellation of the contract and agreement to further fulfillment of the Presale Contract.

2. In case of occurrence of any circumstance which may lead to cancellation of the contract by either party as referred in the Presale Contract as well as this Supplementary Agreement, the Buyer shall issue its written application for cancellation of the contract to the Seller, then, execute the Agreement on Cancellation of the Commodity Housing Presale Contract within 5 days after delivery of the said application, and assist the Seller to complete all the formalities for cancellation of the presale contract for this Commodity Housing at the competent government authorities, otherwise, the Buyer shall pay liquidated damages to the Seller at 2/10000 of the total price of this Commodity Housing to the Seller per each day’s delay in payment (excluding the delay caused by the Seller).

Article 5 Notification

l. The Buyer shall provide its correct contact information in detail (including the address, telephone, fax and contact person, etc.) to the Buyer at the time of concluding the Presale Contract, and issue its written notice to the Seller within 7 days after any change to the said address or any other contact information, otherwise, the original contact information provided by the Buyer shall further remain in effect, and the Seller shall assume no legal liability for the Buyer’s not receiving any relevant notice from the Seller due to change to the Buyer’s contact information.

2. According to the Presale Contract and this Agreement, important documents such as any notice from one party to the other party shall be delivered to the address as specified in the Presale Contract as well as this Agreement or otherwise given by the written notice from the other party.

Article 6 Other Provisions

l. The Seller’s sales advertisement and publicity presentation materials (including but not limited to postings, brochures, sand table, models and advertisements, etc.) for this Commodity Housing shall not be deemed as a contractual offer, and the rights and obligations of both parties shall be based on the provisions as specified in the Presale Contract as well as the corresponding supplementary agreements. The Seller shall not assume any liability for any matter which has not been agreed between both parties in the Presale Contract (including but not limited to any oral promise, recommendation and publicity made by the Seller as well as its staff).

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2. If a fire sprinkler system is provided in the commodity housing purchased by the Buyer, when performing fine decoration on the commodity housing after purchase, the Buyer shall comply with the requirements as specified in the relevant laws, regulations and codes of the state.

3. The Seller shall be responsible for warranty of this Commodity Housing according to Article 18 of the Presale Contract, Nevertheless, the Seller shall not be responsible for any damage due to any force majeure event or modification out of artificial reasons or any defect upon expiry of the warranty period which shall be under the Buyer’s responsibility. In addition, the Seller shall not take any warranty obligation for any change to the original state of this Commodity Housing caused by decoration by the Buyer.

4. The Presale Contract (including the annexes as well as this Supplementary Agreement) shall constitute all the contents with respect to selling and purchase of this Commodity Housing between the Buyer and the Seller and supersede all the previous agreements made between both parties and all the literal and picture materials provided by the Seller immediately upon execution. This Supplementary Agreement and the Presale Contract shall have equal legal effect. This Supplementary Agreement shall prevail in case of any conflict between the provisions in this Supplementary Agreement and the Presale Contract.

Article 7 Special Provisions

1. After purchase of this Commodity Housing, this Commodity Housing can be only used by the legal entity which has been registered at Beijing Economic-Technological Development Area.

2. When handling the title transfer and registration processes related to this Commodity Housing by the Buyer and the Seller, both parties shall execute the relevant legal documents as required by the title registration authority, and shall comply with the relevant conditions and requirements as imposed by the competent government authority. In case that the title certificate of this Commodity Housing has not been obtained on time at the Buyer’s fault (including but not limited to that the Buyer has not satisfied the relevant requirements for admission to the development area, the Buyer has failed to pay the relevant taxes, provide the relevant information and execute the legal documents necessary for handling the property right according to the Seller’s requirements, etc.), the Buyer shall assume the liability and Seller shall not assume any liability for breach of the contract.

3. Agreement on “Specialized Housing Maintenance Funds”

The Buyer agrees that the Buyer shall be liable to pay the public maintenance cost in full and in time at the amount and due time as given in the written notice from the property service enterprise when the public locations and public facilities and devices in the area where this Commodity Housing is located require maintenance, renewal or reconstruction upon expiry of the warranty period.

4. The Seller shall issue the VAT invoice in full to the Buyer within 60 days after the Buyer has completed registration of the new company (i.e. the property owner of this house) and the Seller has received the purchase price in full.

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5. “The Buyer” in the Beijing Commodity Housing Presale Contract as well as its annexes and this Supplementary Agreement shall refer to the Buyer or any subsidiary of which the Buyer holds shares.

Seller (Seal)	Buyer (Seal)
/seal/ Beijing Jingkai-Gongda Investment	/seal/ Tarena Technologies Inc.
Management Co., Ltd.
Date: May 5, 2016	Date: May 5, 2016

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EX-4.36

Exhibit 4.36

BF—2005—0117 Contract No.:

Beijing Commodity Housing Presale

Contract

(Non-residential properties including

commercial/office houses)

Seller:  Beijing Jingkai-Gongda Investment Management Co., Ltd.

Buyer:  Tarena Software Technology (Hangzhou) Co., Ltd.

Beijing Municipal Housing and Urban Construction Committee

Beijing Municipal Industrial and Commercial Administration Bureau

Revised in Oct. 2010

Printed on    Day    Month   Year

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 Instructions

1. This contract is a model contract formulated jointly by the Beijing Municipal Construction Committee and the Beijing Municipal Industrial and Commercial Administration Bureau.

2. Before signing of the presale contract, the Seller shall show the Buyer the presale license of commodity housing and other related certificates and certifying documents.

3. The contracting parties shall conclude the contract on the basis of the principle of free will, fairness and good faith and honesty, and neither party may impose its will on the other party. The two parties may alter, supplement or delete contents of the articles of this contract text. After this contract comes into force, the printed contents of this text without alteration are to be deemed as stipulation made by the parties

4. Before execution of the commodity housing presale contract, the Buyer shall review the articles of the contract prudently, especially those alternative, supplementary contents and those filled or altered contents.

5. In order to present the principles of free will of contracting parties, there are blanks following some articles of this contract text, left for supplementary stipulation made by both parties separately. For any matters not covered or not stipulated sufficiently in this contract, the Seller and the Buyer may conclude supplementary agreements on a fair and reasonable basis and in light of the specific conditions of the sold housing, or make supplementary stipulations in the blanks following relevant articles.

6. With respect to the alternative contents in [ ] and the contents to be filled in blanks in this contract text, and other contents to be deleted or supplemented, the contracting parties shall make determination through negotiation. To select the items in [ ], please make a √. If any content does not refer to the actual case or the parties do not make stipulation, the parties shall delete such content by making a × in the blanks.

7. If any dispute arises between the two parties from the performance of this contract, they may either lodge a lawsuit to the people’s court of the place where the property is located, or apply to relevant arbitration commission for arbitration. If the parties select arbitration, they may apply to the Beijing Arbitration Commission, the China International Economic and Trade Arbitration Commission, or those arbitration commissions of places beyond Beijing.

8. The contracting parties may determine the number of original copies of this contract in light of the actual conditions, and must check the copies prudently so as to ensure that the contents in every copy are identical. Under any circumstance, the buyer shall hold at least one original copy of this contract.

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Beijing Commodity Housing Presale

Contract

(Non-residential properties including commercial/office houses)

Seller:  Beijing  Jingkai-Gongda Investment Management Co., Ltd.

Address: 4/F Building 2, Unit A, No. 1 Disheng Northern Street, Beijing Economic-Technological Development Area, Beijing, China

Postal Code:  100176

Registration number of Business License: 110302003481318

Enterprise qualification certificate No.: JK-A-3352

Legal Representative:  Zhou Shiyi       Tel.:  67862520

Entrusted Agent:                     Tel.:                                

Entrusted Sales Agency: Beijing Jingkai-Yicheng Investment Consultant Co., Ltd.

Address: 1/F Building 2, Unit A, No. 1 Disheng Northern Street, Beijing Economic-Technological Development Area, Beijing, China

Postal Code:                                                    

Registration number of Business License:  110302012140425

Buyer: Tarena Software Technology (Hangzhou) Co., Ltd.

[Legal Representative] [Principal]: Han Shaoyun  Nationality:   China     

Registration number of Business License: 330100400045853

Date of birth:                            , Gender:                         

Address: 1/F Unit A of Shixun Building, No. 65 Kejiyuan Rd., Baiyang Subdistrict, Hangzhou Economic & Technological Development Area, Hangzhou, China

Postal Code:                    Tel.:                                                    

[Legal representative] [Authorized agent]Nationality:

[ID Card No.] [Passport No.] [ ]:

Date of birth:                            , Gender:                                                    

Address:

Postal Code:                    Tel.:                                                    

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In accordance with the Contract Law of the People’s Republic of China, the Law of the People’s Republic of China on Administration of Urban Real Estate, the Measures on the Administration of Urban Real Estate Transfer in Beijing and other relevant laws and regulations, the Seller and the Buyer, on the basis of equality, voluntariness and fairness and through negotiations, do hereby agree as follows with respect to the purchase and sale of commercial house:

Article 1 Reference for Project Construction

The Seller has obtained the state-owned land use right of the plot located at D1F1 of the Beijing Economic-Technological Development Area through transfer of land use right and acquired the Certificate of Real Estate Title through legal registration of the use right. The number of the certificate is: No. 00008 (2015 Chu) and the land area is: 54,928.2 square meters, and the purpose of the land where the commodity house purchased by the Buyer  (hereinafter refers to as “the Commodity House”) is located is for _F2 public mixed-use residentials; the term for land use will start on Dec.12, 2011 and end on Dec.11, 2061. The number of Contract for State-Owned Construction Land Use Right Assignment: No. 32 JJGTCR[H]Z(2011). The purpose of the land where the Commodity House is located is for composite, commercial, residential types, and the term for land use right assignment starts on Dec.12, 2011 and end on Dec. 11, 2061.

Upon approval, the Seller has invested to build the commodity housing on the said land lot mentioned above, with a temporary name of Beijing Jiangkai One Center, the Construction Engineering Planning Permit number of No. 0032 [2014 G(K)JZ] , and the Construction Engineering Working License number of No. 0050 [2014]S[J]JZ; the starting date of the construction stipulated in the Contract shall be Jul. 16, 2014 and the completion date will be Feb. 21, 2016.

Article 2 Reference for Sales

The commodity housing has been approved to be qualified for presale by the Economic and Technological Development Zone Branch of Beijing Municipal Bureau of Land and Resources, with the Presale License number of No. 4 JFSZZ (2016)K.

Article 3 Basic Information

The architectural structure of main building where the Commodity Houses are located is: reinforced concrete structure; and the building consists of 10 storeys, including an over-ground part of 9_ floors and an underground of 1 floor.

The commodity housing refers to No.____ Unit____ Floor____ Building [B7] mentioned in the item of Article 1. The room number as a  [Approval Number] [Temporary Number] now will be subject to the final number approved by the Administration Department of Public Security; References can be made to Annex 1 for the housing plan and location plan in the whole building.

The purpose of this commodity housing is to be office house: the floor height of the Commodity House is     meters, [net height of the slope roof] the minimum height:  X meters, the maximum height:  X meters. The orientation of the commodity housing is:   X ; there are  X  balconies, of which   X  enclosed balconies and  X  unclosed balconies.

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The Seller entrusts a mapping institution of Beijing Jingheng Real Surveying Technology Co., Ltd to predict that the building area of the Commodity House is 8,169.39 square meters totally, which includes 6884.32 square meters of interior building area and 1285.07 square meters of public share building area. References can be made to Annex 2 for the introduction of the public share building area.

When both parties sign the Contract, the construction progress status of the commodity housing building is      .

The floor height mentioned in this article refers to the vertical distance between an upper floor and a lower floor or between the floor and the ground. The net height refers to the vertical distance between a floor and the soffit of the upper floor or between the ground and the underside of the suspended ceiling.

Article 4 Reference for Mortgage

The mortgage condition of this House is: 2, 3.

1. The land use right shared by this House and the construction in progress are not set to mortgage.

2. The land use right shared by this House has been set to mortgage, with the mortgagee of the Beijing Economic and Technological Development Zone Branch of Industrial & Commercial Bank of China Ltd. at the mortgage registration department of the Housing and Land Administration Bureau of Beijing Economic and Technological Development Zone on the date of Apr. 20, 2015.

3. The construction in progress of this House has been set to mortgage, with the mortgagee of the Beijing Economic and Technological Development Zone Branch of Industrial & Commercial Bank of China Ltd. at the mortgage registration department of the Housing and Land Administration Bureau of Beijing Economic and Technological Development Zone on the date of Apr. 20, 2015.

The presale certificate of this House and other covering mortgage approved by the mortgagee refers to Annex 3.

Article 5 Pricing Mode and Purchase Price

As for commodity houses except for single-family villas, entire buildings, garage (carport) , the Seller and the Buyer shall agree to calculate the price of the Commodity House according to the 1st method below.

If the Commodity House type is [single-family villa], [entire building], [garage] or [carport], the Seller and the Buyer shall agree to calculate the price of the Commodity House according to the 1st method below.

1. According to the interior building area, the Commodity House can be priced to be  ___X__ Yuan per square meter, with the total price of RMB ONE HUNDRED AND EIGHTEEN MILLION THREE HUNDRED THOUSAND Yuan ONLY .

2. According to the building area, the Commodity House can be priced to be ___ ____ ____ __RMB Yuan per square meter, with the total price of RMB ___ BILLION _____ HUNDRED ______ MILLION __ _____ HUNDRED AND __   ___ THOUSAND _____ HUNDRED ______ Yuan ONLY.

3. According to the suite (unit), the total price of the Commodity House can be priced to be _________X__ BILLION __X___ HUNDRED ___X____ MILLION __ X______ HUNDRED AND __ X  ___ THOUSAND __X____ HUNDRED ___X_____ Yuan ONLY.

4. According to ___ X___, the total price of the Commodity House can be priced to be  BILLION __X___ HUNDRED ___X____ MILLION __ X______ HUNDRED AND __ X  ___ THOUSAND __X____ HUNDRED ___X_____ Yuan ONLY.

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For the detailed agreement on terms of pricing and cost, see the Annex 4.

The building area in this article refers to the horizontal projected area of each floor above the outside wall plinth of a permanent building with the floor height of over 2.20 meters (including 2.20 meters), including balconies, overhanging corridors, basements, and exterior stairs and so on, which is also roof covered and stably constructed.

The interior building area refers to the usable area, wall covering and balcony areas in total inside each unit of the commodity house.

Article 6 Payment Term and Deadline

The Buyer shall pay for the Commodity House by the following 1st method

1. Lump-sum settlement.

2. Installment payment

3. Credit payment: [commercial loan] The Buyer can pay ___/___ % of the total price of the Commodity House as down payment, and then pay the balance by credit from [    /   ].

4. Other methods.

References can be made to Annex 4 for the agreement on the detailed payment terms and deadline.

Article 7 Supervision and Management on Presale Funds

According to the provisions of the Interim Measures of Beijing on Supervision and Management of Pre-sale Funds for Commodity Houses, the pre-sale funds of the Commodity House shall be supervised by the bank: Beijing Economic and Technological Development Zone Branch of ICBC, with the special account name of Beijing Jingkai-Gongda Investment Management Co., Ltd (One Center) and the special account number: 0200059029200318384. When the commodity house is pre-sold, the Buyer shall deposit the house purchase price directly into the special account. In case the Buyer applies for a mortgage, the Seller shall provide the special account for receiving the loan.

Article 8 The Seller shall guarantee that the Commodity House for sale is not involved in any dispute of ownership. In case of the inability to handle ownership registration or occurrence of credit and debt disputes, the seller shall undertake all the responsibilities.

Article 9 Agreements on Planning Alteration

The Seller shall build the Commodity House according to the conditions stipulated in the Construction Planning Permit approved and issued by the Planning Administration Department and cannot alter the planning without authorization.

If the Seller wants to alter the conditions stipulated in the Construction Planning Permit, the Seller should obtain the agreement of the affected buyers in writing, as well as the approval of the Planning Administration Department. For the losses of the buyer’s interests caused by the planning alteration, the Seller should provide the corresponding compensation.

Article 10 Agreements on Design Alteration

I. With the approval of the design inspection unit entrusted by the Planning Administration Department, The following alterations on the construction design documents which will affect the quality and use functions of the Commodity House, the seller should inform the buyer by written notice within 10 days after the approval of the design inspection unit.

1. The construction, layout, space dimension and orientation of the Commodity House;

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2. Heating methods.

If the seller doesn’t inform the buyer within the stipulated time, the buyer has the right to cancel the order.

II. The buyer should reply in written whether to cancel the order or not within 15 days after receiving the notice. If the buyer doesn’t give any reply within 15 days after receiving the notice, it will be deemed that the purchaser accepts the alterations.

III. If the Buyer wants to refund the house, the Buyer shall, within 30 days after effectively delivering the Refund Notice to the Seller, sign all documents necessary to cancel the pre-sale contract (including but not limited to the written agreement to cancel this contract, and the Power of Attorney necessary for undergoing formalities to cancel the registration of this pre-sale contract).  The seller shall, within 30 days after the above documents necessary to cancel the pre-sale contract take effect, refund the paid house purchase price to the Buyer, and shall pay an interest at the demand deposit interest rate specified by the People's Bank of China for the same period.

If the Buyer does not refund the house, the Buyer shall separately enter into a supplementary agreement with the Seller within 30 days after receiving the written notice from the Seller. If the Buyer neither undergoes formalities to cancel the pre-sale contract nor enters into a supplementary agreement with the Seller within the above said time period, it shall be deemed that the Buyer accepts the changed plan and design, and agrees to carry out acceptance examination and take-over of the house as scheduled.

Article 11 Purchaser’s Responsibility for Breach of Contract Due to Overdue Payment

If the Buyer fails to make the payment in the stipulated time, the 1st method will be complied with:

1. Handle separately according to the overdue period, ((1) and (2) are not cumulative)

(1) If the overdue period is less than 30 days, the Buyer shall pay 0.006 percent of the overdue payment per day within 7 days after the actual payment date to the Seller as a penalty from the second day after the payment deadline stipulated in this contract to the actual payment date, and the contract continues to be effective.

(2) If the overdue period is over 30 days (this date shall be the same as the date mentioned in Item (1), the Seller has the right to terminate the contract. If the Seller terminates the contract, the Buyer shall pay 3 percent of the accumulative payables to the Seller as a penalty within_7_days after receiving the notification of terminating the contract, and the Seller shall return the total effected payment to the Buyer. If the Buyer is willing to continue performing the contract, the contract will continue to be effective with the approval of the Seller. From the second day after the payment deadline stipulated in this contract to the actual payment date, the purchaser shall pay 0.006 percent (This rate should be no less than the rate stipulated in the item (1)) of the overdue payment per day within 30 days after the actual payment date to the Seller as a penalty.

The overdue payment in this article refers to the balance between the due payable stipulated in Article Six of this contract and the actual payment in that term. If installment payment is adopted, the overdue payment shall be decided by the balance between the due installment and the actual payment in that term.

2._______________________________X____________________________

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Article 12 Delivery Term

I. The seller shall deliver the Commodity House before the date of Jul. 31, 2016. However, in case of force majeure or the influence of national policy or government action, the above house delivery time shall postpone accordingly, provided that the seller shall promptly notify the special circumstances to the Buyer in writing after the occurrence of such circumstances.

II. When delivered, the Commodity House should meet the conditions of the following Items .

1. The Measured Area Report of the commodity House issued by a qualified real estate mapping organization;

2. The infrastructure conditions undertaken by the Seller in Article 13 should be met;

3. The Buyer shall have paid the full house purchase price agreed in this Contract to the Seller.

Article 13 Promise of the Seller on the Infrastructure and Other Facilities

The Seller promises that the infrastructure and other facilities directly related to the normal usage of this House should meet the following conditions by the appointed date:

1. Municipal infrastructure

(1) Water supply lines and sewers: shall meet the use requirements by Mar. 30, 2016

(2) Municipal two circuit feeding: shall meet the use requirements by Mar. 30, 2016;

(3) Heating: shall meet the use requirements by the date of Mar. 30, 2016;

(4) Gas: shall be available for use by     ×;

(5) Telephone: the ports shall be reserved in place by the date of Mar. 30, 2016, and will be reported for installation by customers;

(6) TV network: the ports shall be reserved in place by the date of Mar. 30, 2016 and will be reported for installation by customers;

If the above conditions haven’t been realized by the stipulated date, both parties can handle according to the following methods:

(1) It shall be handled according to the Seller's Responsibility for Breach of Contract Due to Overdue Delivery;

(2) __________________________________X_______________________.

2. Other facilities

(1) Public green spaces: shall be available for use by Jul. 30, 2016;

(2) Public roads: shall be available for use by Jul. 30, 2016;

(3) Public parking lots: shall be available for use by Jul. 30, 2016;.

If the above conditions haven’t been realized by the stipulated date, both parties shall agree to handle according to the following methods:

(1) It shall be handled according to the Seller's Responsibility for Breach of Contract Due to Overdue Delivery

(2) __________________________________X_______________________.

3. If the delivery time of municipal infrastructure and other facilities promised by the Seller is delayed due to force majeure or the influence of national policy or government action, such delivery time shall postpone accordingly.

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Article 14 Seller’s Responsibility for Breach of Contract Due to Overdue Delivery

Except for the force majeure, if the Seller cannot deliver the Commodity House to the Buyer according to the deadline and conditions stipulated in Article 12 of this contract, the following Method 1 can be complied with:

1. Handle separately according to the overdue period, ((1) and (2) are not cumulative)

(1) If the overdue period is less than 30 days (the time should be no less than the time mentioned in Item (1) of Article 10), the Seller shall pay 0.006 percent (This rate should be no less than the rate stipulated in the item (1) of Article 10) of the effected payment per day within 7 days after the actual delivery date to the Buyer as a penalty from the second day after the delivery deadline stipulated in this contract to the actual delivery date, and the contract continues to be effective.

(2) If the overdue period is over 30 days (this date should be the same as the date mentioned in Item (1), the Buyer has the right to terminate the contract. If the Buyer cancels the order, the Seller shall return the total effected payment to the Buyer, as well as 3percent of the effected payment to the Buyer as a penalty, within_7_days after receiving the notification of cancelling the order. If the Buyer requires to continue performing the contract, the contract will continue to be effective. From the second day after the delivery deadline stipulated in this contract to the actual delivery date, the Seller shall pay 0.006 percent (This rate should be no less than the rate stipulated in the item (1)) of the effected payment per day within 7 days after the actual delivery date to the Buyer as a penalty.

2. If the delivery time of municipal infrastructure and other facilities promised by the Seller is delayed due to force majeure or the influence of national policy or government action, such delivery time shall postpone accordingly.

Article 15 Solutions on Area Discrepancy

When delivering the Commodity House, the Seller shall demonstrate the Commodity Housing Area Mapping Report issued by the entrusted qualified Real Estate Mapping organization, and provide the actual measured area of the Commodity House to the Buyer (Hereinafter refers to as the Measure Area). If there are any discrepancy between the Measure Area and the predicted area stated in Article 3, both parties will agree to handle in accordance with Method   1:

1. According to the agreement on the pricing mode of the interior building area in Article 5, both parties shall agree to handle in accordance with the following principles:

(1) If the absolute discrepancy rate of the interior building area is within 3% (including 3%), it can be settled the payment of the Commodity House according to the fact;

(2) If the absolute discrepancy rate of the interior building area exceeds 3%, the Buyer has the right to cancel the order.

If the Buyer cancels the order, the Seller must return the effected payment to the Buyer within 30 days after receiving the notification of canceling the order, and pay the corresponding interest rates according to the interest rate of individual housing loan issued by the People Bank of China in the corresponding period.

If the Buyer doesn’t cancel the order, when the Measured Area of the interior building area is larger than the predicted area with the discrepancy rate within 3% (including 3%), the Buyer shall pay for the extra area; while if the discrepancy rate exceeds 3%, the cost of the extra area will be borne by the Seller and the ownership belongs to the Buyer. When the Measured Area of the interior building area is smaller than the predicted area with the discrepancy rate within 3% (including 3%), the Seller shall return the cost of the less area to the Buyer; while if the discrepancy rate exceeds 3%, the Seller shall return twice more than the cost of the less area to the Buyer.

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The absolute discrepancy rate of the interior building area =

The Measured Area – The Predicted Area
The Predicted Area	x100%

2. According to the agreement on the pricing mode of the interior building area in Article 5, both parties shall agree to handle in accordance with the following principles:

(1) If the absolute discrepancy rates of the building area and the interior building area both are within 3% (including 3%), it can be settled the payment of the Commodity House according to the fact;

(2) If either of the absolute discrepancy rates of the building area and the interior building area exceeds 3%, the Buyer has the right to cancel the order.

If the Buyer cancels the order, the Seller must return the effected payment to the Buyer within 30 days after receiving the notification of canceling the order, and pay the corresponding interest rates according to the interest rate of current deposit interest rate of the People's Bank of China_.

If the Buyer doesn’t cancel the order, when the Measured Area of the building area is larger than the predicted area with the discrepancy rate within 3% (including 3%), the Buyer shall pay for the extra area; while if the discrepancy rate exceeds 3%, the cost of the extra area will be borne by the Seller and the ownership belongs to the Buyer. When the Measured Area of the building area is smaller than the building area stipulated in the contract within 3% (including 3%), the Seller shall return the cost of the less area to the Buyer; while if the discrepancy rate exceeds 3%, the Seller shall return twice more than the cost of the less area to the Buyer.

The absolute discrepancy rate of the building area =

The Measured Area – The Predicted Area
The Predicted Area	x100%

3. Both parties can achieve the agreements by themselves:

_______________________________X_____________________________ ..

Article 16 Handling-over Procedure

I. Delivery of the House means that the Seller sends the Move-in Notice for delivery of the Commodity House after its acceptance by the construction surveying, design and engineering supervision institutions etc.

After the Commodity House meets the delivery conditions stipulated in Article 12, the Seller shall inform the Buyer in written within 7 days before the delivery date of the handling-over time and place, as well as the required credentials. In the acceptance of the handling-over, the Seller shall demonstrate the certifications stipulated in Article 12, as well as those certificating the Commodity House meet the other conditions stipulated in Article 12. If the Seller cannot demonstrate the certifications or the certifications are not complete, or the other conditions in Article 12 haven’t been met, the Seller has the right to accept the Commodity House; and the Seller shall take the responsibility for breach of contract due to overdue delivery, which will be handled according to Article 14.

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If the Buyer finds any item needing repair during the process of receiving the house, the Buyer shall require the Seller to repair it according to the provisions of this Contract .However, Such item shall not constitute a reason for the Buyer to refuse or delay the house take-over formalities, or to ask the Seller to bear the liability for breach of contract for overdue delivery.

II. If the take-over formalities cannot be undergone on time due to the Buyer’s reason, the Seller shall not bear the liability for breach of contract for overdue delivery, and both parties agree to settle this in the following way:

If the Buyer fails to undergo the receiving formalities within the notified time period after the Buyer receives or shall receive the “Move-in Notice”  from the Seller, or fails to complete the receiving formalities within 30 days after receiving the notice, it shall be deemed that the Buyer has received this commodity house at the time and in the place as stipulated in the “Move-in Notice” and according to the delivery conditions agreed in this Contract. Any damage, loss and other risks of the commodity house shall be transferred to the Buyer from the time of house receiving stipulated in the Move-in Notice. Relevant costs of this commodity house, including all taxes and fees, property management fees, heating costs and other incidental expenses occurring from the receiving time stipulated in the Move-in Notice shall all be borne by the Buyer. The Buyer shall bear the loss or additional costs sustained by the Seller due to the Buyer delaying in undergoing the receiving formalities. If the Buyer fails to undergo or complete the receiving formalities more than one year overdue, the Seller shall have the right to cancel this Contract, take back the commodity house and dispose of it otherwise. The Buyer shall support the Seller in undergoing relevant formalities to cancel the Contract. The Seller shall refund the remaining house purchase price paid by the Buyer after deducting all relevant costs which shall be borne by the Buyer according to this Contract as well as liquidated damages equal to 3% of the total purchase price. In addition, the Buyer shall also compensate the Seller for all losses arising herefrom.

III. Both parties shall agree to pay the taxes according to the following Methods 1, 2:

1.  The Buyer shall agree to entrust the Seller to pay the following taxes of (5), and entrust the property service enterprise to collect the 3rd of the following fees on behalf of it, and pay the aforesaid taxes to the Seller and the property service enterprise while receiving the commodity house.

(1) Special housing maintenance funds;

(2) Contract tax;

(3) Heating fees

(4) Stamp tax of the Title Certificate;

(5) Other relevant fees for handling house acceptance

2. The Buyer shall pay the following taxes of (2) and (4) to the related departments and show the vouchers to the Seller when accepting the Commodity House.

(1) Special housing maintenance funds;

(2) Contract tax;

(3) Heating fees

(4) Stamp tax of the Title Certificate;

(5) Other relevant fees for handling house acceptance

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Article 17 Agreement on the Quality, Ornament and Facility Standard of the House

I. The Seller shall promise that the building materials and the components of the House are qualified and the House quality meet the requirements of the construction quality specifications and standards issued by the state and Beijing Municipal Government and the Construction drawing documents.

II. The Seller and the Buyer agree on the following items:

1. If the foundation basis and main structure quality of this House are detected to be unqualified, the Buyer has the right to cancel the order within 60 days. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days after receiving the notification of canceling the order, and pay the corresponding interest rates according to the interest rate of individual housing loan issued by the bank in the corresponding period, and also compensate the Buyer for the corresponding losses if necessary. Hence, the detection charge will be at the Seller’s expenses.

If the Buyer chooses not to refund the house, or if the commodity house has been delivered and used for more than 60 days, the Buyer shall sign a supplemental agreement with the Seller.

2.  When delivering the House after the units of construction, investigation and design, as well as the builders and Engineering Project Supervisor, have passed the acceptance inspection, the Seller shall check the House for acceptance together with the Buyer; if any other problems, both parties shall agree on the Method (3):

(1) The Seller shall deliver the repaired House within × days. The Seller shall take the responsibility for breach of contract due to overdue delivery, which will be handled according to Article 14.

(2) The Seller shall be responsible to repair the House within × days after the delivery date according to the national and municipal regulations and standards related to the engineering quality, account for the repairing expense and compensate the Buyer for the corresponding losses.

(3) After the Commodity House meets the delivery and use conditions specified in the pre-sale contract, the Buyer shall have the right to conduct on-site inspection on this commodity house. If the Buyer finds any item needing repair in such inspection, the Seller shall repair it, until the commodity house meets the requirements of relevant regulations and standards of the country or the city on project quality, and shall bear the cost of repair. The Buyer shall not refuse to receive this commodity house just because of this.

3. The ornaments and facilities of the delivered House shall meet the contracted standard. If fail to meet the standard, the Buyer has the right to request the Seller to manage it according to the following Methods (1) and (2):

(1) If the decoration or equipment standard of the Commodity House delivered by the Seller is lower than the agreed one, the Seller shall compensate double the price differences of the ornaments and facilities;

(2) If the decoration or equipment standard of the Commodity House delivered by the Seller is higher than the agreed one, the Seller may not notify the Seller, but the Seller shall not charge any additional fees for this, and the Buyer shall not refuse to receive this commodity house just because of this, and shall not require the Seller to bear the liability for breach of contract.

References can be made to Annex 6 for the detailed agreements on the ornament and facility standard.

III. When the Seller and the Buyer have any disputes on the construction quality, either party can entrust a qualified detection organization of construction engineering quality for test; and both parties shall have the obligation to cooperate with each other to detect the House.

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If it is tested to be qualified, the test costs shall be borne by the Buyer. Otherwise, the test costs shall be borne by the Seller.

Article 18 Responsibility for Housing Warranty

I. Both Parties agree on the scope of warranty, warranty period and warranty liability in detail in Annex VII of this Contract. The scope of warranty and warranty period must meet applicable laws and regulations of the country and Beijing City, as well as the requirements of relevant standards and codes.

II. When the House has any quality problem within the warranty scope in the warranty period, if both parties have contracted to cancel the order, it shall be subject to the contract; while if both parties haven’t contracted to cancel the order, the Seller shall perform the obligation of warranty and the Buyer shall cooperate. If the loss is not caused due to the Seller, the Seller will not be responsible for it.

Article 19 Energy-efficiency Measures for the House

The Commodity House shall meet the requirements of the Design Standard for Energy Efficiency of Public Buildings  of the country and Beijing city. Otherwise, the Seller shall make up energy efficiency measures according to the requirements of relevant standards, and take charge of the total costs; if it causes any losses to the Buyer, the Seller shall compensate for them.

Article 20 Building Sound Insulation

If the building sound insulation of the Commodity House fails to meet the standard, the Seller shall make up construction sound insulation measures according to the requirements of the planning and design, and shall bear all costs. If any damage is caused to the Buyer, the Seller shall bear the liability for compensating the Buyer.

Article 21 Commitment on the Use

1. When using this House, the Buyer must not change the main building structure, bearing structure and usage without authorization. Except for the agreements in the contract, supplemental agreements and the annexes, the Buyer has the right to share the common parts and facilities related to the House with other obligees and undertake the obligations according to the appointed areas of the common parts and shared buildings.

In case of any violation of the above provisions, the Buyer shall bear relevant economic and legal liability arising herefrom. In addition, the Buyer shall not change the public parts and facilities associated with this Commodity House without authorization. If the Buyer has changed  them without authorization, the Buyer shall restore them immediately or no later than within 15 days after receiving a written notice from the Seller, the property service enterprise or the party actually suffering loss, and shall compensate the Seller, the property service enterprise or the party actually suffering loss for actual loss arising herefrom.

2. The Seller shall not arbitrarily change the use nature of the public parts and facilities associated with the Commodity House. The Seller shall promise not to change the planned purpose of the Commodity House, not to sell the Commodity House by dividing it, not to sell the Commodity House by means of cost-returned sale or any such means in disguised forms, and not to sell the uncompleted Commodity House by the after-sale lease guarantee or by any such means in disguised forms.

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3. During the usage of the Commodity House, the Buyer shall not arbitrarily change or destroy the appearance and current situations of the exterior eaves, building structure and building roof. Otherwise, the Buyer shall unconditionally restore them to their original conditions according to the requirements of the Seller or the property service enterprise. If this causes any loss to the Seller or a third party, the Buyer shall bear all the compensation liability.

Article 22 Ownership Registration

I. Primary registration

The Seller shall get the ownership certificate of the building of this House before Oct. 31, 2016. If the ownership certificate hasn’t been got within the time stipulated in this Article due to the Seller, both parties agree to manage it according to the following Method 1:

1. The Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days after receiving the notification of canceling the order, and pay the interests at the rate of 3% of the total effected payment to the Buyer. If the Buyer doesn’t cancel the order, the contract will continue to be effective; from the second day after the deadline to get the ownership certificate from the actual date of getting the certificate, the Seller shall pay 0.006% of the total effected payment per day to the Buyer as a penalty.

2.________________________________X__________________________ ..

II. Transfer registration

1. After the House has been delivered for use, both parties agree to manage it according to the following Method (2):

(1) Both parties apply to the registration authority for the registration of ownership transfer. The fees for handling the registration of ownership shall be borne by the Buyer.

(2) The Buyer agrees to entrust seller or the entrusted agency_ to apply to the registration authority for the registration of ownership transfer with the entrust fee of RMB _2,000_______ YUAN.

2. If the Buyer cannot get the ownership certificate of the House within360 days after the delivery date due to the Seller, both partied shall agree to manage it according to the following Methods:

(1) The Buyer has the right to cancel the order. If the Buyer cancels the order, the Seller must return all the effected payment to the Buyer within 60 days after receiving the notification of canceling the order, and pay the corresponding interest rates to the Buyer according to the interest rate of individual housing loan issued by the bank in the corresponding period. If the Buyer doesn’t cancel the order, from the second day after the deadline to get the ownership certificate from the actual date of getting the certificate, the Seller shall pay 0.006% of the total effected payment per day to the Buyer as a penalty within7days after the actual date.

2. If the housing ownership certificate cannot be obtained as scheduled due to the Buyer's responsibility (including but not limited to the Buyer failing to pay relevant taxes and fees according to the requirements of relevant government departments, failing to submit relevant materials, or failing to sign legal documents required for property rights, etc.), the Buyer shall be held responsible for it, and Seller shall assume no liability for breach of contract.

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3. If the Buyer fails to obtain the housing ownership certificate after the expiry of the period specified by this Contract due to the fault of the Seller, the Buyer shall have the right to notify the Seller whether to cancel this Contract or not within 60 days after the expiry of this period. If the Buyer does not do so within this time period, the Buyer shall not notify the Seller to cancel the contract any more. This contract shall be cancelled as of the date when the Buyer issues a written cancellation notice to the Seller.

4. If the Buyer cannot obtain the housing ownership certificate within 360 days after this Commodity House has been delivered due to force majeure, national policy adjustment or government action, the Seller shall not bear the liability for breach of contract.

Article 23 Agreement on Common Rights and Interests

1. The use right of the roof of the House building belongs to all the owners(the use right of the roof of each unit of a duplex building shall belong to the property owner of each unit);

2. The use right of the exterior wall of the House building belongs to all the owners; (the use right of the roof of each unit of a duplex building shall belong to the property owner of each unit)

3. The naming right of the building where the house is located shall belong to all proprietors of this building (the naming right of each unit of a duplex building shall belong to the property owner of each unit);

4. The naming right of the Housing District belongs to the Seller.

Article 24 Agreement on Ancillary Buildings and Other Structures

Both parties agree to manage the ancillary buildings and other structures of the House such as the underground garages and so on according to the following Method 2:

1. When the Seller presales the House, the ancillary buildings of _X__, _ X__, _ X__ shall be transferred together with the House.

2. The Seller shall disclose parking spaces on the ground and unshared public areas will not be transferred together with the House.

Article 25 Prophase Property Management Service

I. The property management company selected by the Seller according to law is: Beijing Jingkai Investment Advisor, Co., Ltd. with the qualification number of No. 0075 JWQZS [2014].

II. During the prophase of property management, the property service charge will be RMB 5.50 Yuan /month/m² (building area), which will be charged by the property management company annually. The charge includes cleaning fee of the property region, public order maintenance fee, daily maintenance fee of public areas and facilities, greening maintenance fees, comprehensive management fees.

Therein to, the fees for parking on the ground is 150 Yuan/month while the fees for underground parking is 400 Yuan/month. The above charging standard will be adjusted according to national policy adjustment.

III. The property management company shall charge the property service charge according to the Method 1.

1. Charge by year: the Buyer shall pay for the charges before the date required by the service company.

2. Charge by half a year: the Buyer shall pay for the charges before the dates of __X__ and __X__ each year separately.

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3. Charge by quarter: the Buyer shall pay for the charges before the dates of __X__, __X__, __X__ and __X__ each year separately.

IV. References can be made to Annex 8 for the contents of property service and the owners’ temporary agreement. The Buyer should read all the content of Annex8 carefully and agree that the property management service selected by the Seller will provide the prophase property service and the Buyer will abide by the owners’ temporary agreement.

The preliminary property management period mentioned in this Article shall refer to the period from the time when the first proprietor moves in to the time when all the proprietors and the Project Owner complete the take-over of the property shared areas.

Article 26 Housing Maintenance Funds

If the Buyer entrusts the Seller to pay the housing maintenance fund, the Seller shall give the Buyer the payment voucher within7days after the date of entrustment.

If the Buyer pays the housing maintenance fund in person, the Buyer shall show the payment voucher to the property management company [at the delivery date of the house] [within __X__ days after the delivery date].

Article 27 Exceptions

1. If the contract cannot be performed according to the agreements due to force majeure, partial or total responsibility can be exempted according to the effect of the force majeure; however, either party who cannot perform the contract due to force majeure should inform the other party in time and provide proofs to the other party within60days after the end date of the force majeure event.

2. If the Seller cannot perform part or all of the terms of the Contract due to the change of national policies or the behaviors of government, the Seller may be exempted from partial or all liabilities, and shall inform the Buyer in time after the occurrence of the exemptions. The Buyer shall have the right to choose to continue or terminate the performance of this Contract, but the Seller shall not bear the liability for breach of contract.

Article 28 Dispute Settlement

If there are any disputes during the performance of the contract, both parties shall settle it through negotiation or application for mediation; if fail through negotiation or mediation, should sue to the Beijing Daxing District People’s Court according to relevant laws.

Article 29 This contract will come into effect upon both parties’ signature. As for the issues excluded or stipulated unclearly or inapplicably in this contract, both parties can sign written supplemental agreements for modification or supplementation according to the particular cases; but if the supplemental agreements include any unreasonable articles to lighten or exempt the responsibility stipulated in this contract of the Seller or to enhance the Buyer’s responsibility and remove the Buyer’s main rights, this contract will prevail. The dissolution of this contract shall be made in written. The contract annexes and supplemental agreements bear the equivalent legal force as this contract.

Article 30 The contract and its annexes are totally ____ pages, in quintuplicate, with the equivalent legal force, the contract holding situation include the followings:

TWO copies for the Seller, TWO copies for the Buyer, _ONE_ copy for the Economic and Technological Development Zone Branch of Beijing Municipal Bureau of Land and Resources.

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Article 31 After the Seller and the Buyer sign and seal this Contract, the Seller shall perform online recording for this commodity house pre-sale contract in Beijing real estate transaction management system, and shall print and give one stamped copy of the online recording form to the Buyer.

The formalities for the online recording for this Commodity House Pre-sale Contract shall be completed within 7 days.

Seller (signature and seal):	Buyer (signature and seal):
/seal/ Beijing Jingkai-Gongda Investment	/seal/ Tarena Software Technology (Hangzhou) Co., Ltd.
Management Co., Ltd.
[Legal Representative]: /s/ Shiyi Zhou	[Legal Representative]:
[Entrusted Agent] (Signature):	[The Principal]:
[Entrusted Sales Agency]	[Entrusted Agent]
(Signature and seal):	(Signature and seal):
Date:	Date: November 5, 2016
Place:	Place:

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Annex 1: Floor plan and location plan of the House in the entire building

B1 office building	B13 office building	B11 office building	B10 office building	B9 office building
B2 office building	B14 office building	B12 office building
B3 office building
B4 office building	B5 office building	B6 office building	B7 office building	B8 office building

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Floor plan:

B7 floor plan (1/F)

 

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B7 floor plan (2/F)

  

20

B7 floor plan (3/F)

21

B7 floor plan (4/F)

22

B7 floor plan (5/F)

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B7 floor plan (6/F)

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B7 floor plan (7/F)

25

B7 floor plan (8/F)

  

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B7 floor plan (9/F)

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B7 floor plan (ancillary accommodation)

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Floor plan of underground garage, equipment room and multi-functional hall at the office area

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Annex 2: Description of apportioned building area composition of commonly shared sections and commonly shared house

Description of B7 apportionment:

Description of building area apportionment for commonly shared sections of B1 office building, other 15 items (Digital Technology Park) and B7 office building

I. Project description

B1 office building and other 15 items (digital technology park) are located at D1F1 lot of Ludong District, Beijing Economic Technological Development Area, and B7 office building is composed of ground 9 floors and provided with the reinforced concrete structure.

The distribution of functional zones in B7 office building is as follows:

1. B7 office building: 1/F-9/F;

II. Details of commonly shared sections

(1) Commonly shared sections of B1 office building, B2 office building, B3 office building, B4 office building, B5 office building, B6 office building, B7 office building, B8 office building, B9 office building, B10 office building, B11 office building, B12 office building, B13 office building, B14 office building, parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; air shaft 1, electric transformer and distribution room, TV room, heat exchange station, fire pump room, reclaimed water pump room, living water pump room, fire control room, telephone network machine room, duty room of electric transformer and distribution room and tool room of electric transformer and distribution room.

(2) Commonly shared sections of B7 office services;

1. B7 office building 1/F: staircase, elevator room, front room, aisle, hallway, toilet, air shaft, water well, plumbing well, power distribution room and half of outer wall;

2. B7 office building 2/F-9/F: staircase, elevator room, front room, air shaft, water well, plumbing well, power distribution room and half of outer wall;

3. Ancillary accommodation floor of B7 office building: staircase, elevator machine room air shaft, plumbing well and door header;

4. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 7 and weak electricity engine room 7.

Beijing Jingkai-Gongda Investment Management Co., Ltd.

 /s/ Beijing Jingkai-Gongda Investment Management Co., Ltd.

 Date: Sep. 7, 2014

Apportionment description of underground garage, equipment room and multi-functional hall at the office area

Description of building area apportionment for commonly shared sections of underground garage, equipment room and multi-functional hall at B1 office building and other 15 items (digital technology park) at the office area

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I. Project description

B1 office building and other 15 items (digital technology park) are located at D1F1 lot of Ludong District, Beijing Economic Technological Development Area, and underground garage, equipment room and multi-functional room at the office area are located at the ground floor and are provided with the reinforced concrete structure.

The distribution of functional zones for underground garage, equipment room and multi-functional room at the office area is as follows:

1. Parking stall of office building: ground floor;

2. Mechanical parking stall of office building: ground floor;

3. Multi-functional hall: ground floor;

4. Tool room: ground floor;

II. Details of commonly shared sections

(I) commonly shared sections of B1 office building, B2 office building, B3 office building, B4 office building, B5 office building, B6 office building, B7 office building, B8 office building, B9 office building, B10 office building, B11 office building, B12 office building, B13 office building, B14 office building, parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; air shaft 1, electric transformer and distribution room, TV room, heat exchange station, fire pump room, reclaimed water pump room, living water pump room, fire control room, telephone network machine room, duty room of electric transformer and distribution room and tool room of electric transformer and distribution room;

(II) The apportionable commonly shared sections of underground garage, equipment room and multi-functional room at the office area:

1. Commonly shared sections of parking stall of office building, mechanical parking stall of office building, multi-functional hall and tool room common services;

(1) Ground floor of underground garage, equipment room and multi-functional room at the office area; lane, elevator room, staircase, air shaft, ventilation room, front room plumbing room, toilet, aisle and half of outer wall;

(III) Commonly shared sections of B1 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 1.

(IV) Commonly shared sections of B2 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 2.

(V) Commonly shared sections of B3 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 3.

(VI) Commonly shared sections of B4 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 4.

(VII) Commonly shared sections of B5 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 5.

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(VIII) Commonly shared sections of B6 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 6.

(IX) Commonly shared sections of B7 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 7.

(X) Commonly shared sections of B8 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 8.

(XI) Commonly shared sections of B9 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 9.

(XII) Commonly shared sections of B10 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 10.

(XIII) Commonly shared sections of B11 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 11.

(XIV) Commonly shared sections of B12 office services;

1. Ground floor of underground garage, equipment room and multi-functional room at the office area; force electricity engine room 1 and weak current machine room 12.

(XV) Commonly shared sections of B13 office services;

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Annex 3: Certificate of commodity housing sale approval from pledgee and related provisions of pledge parties

Statement of bank’s approval for handling of commodity housing advance sale license for pledged houses

Housing and Land Administration of Beijing Economic Technological Development Area:

Beijing Jingkai One Center project (corresponding construction project planning license no.: 2014 G(K)JZ No. 0032), located at D1F1 lot at Ludong District, Beijing Economic Technological Development Area, that is developed and constructed by Beijing Jingkai-Gongda Investment Management Co., Ltd. has been pledged to our bank and our bank agrees the advance housing sale within the following pledge scope;

National land use certificate number: JJGY (2015) No. 00008

Building number: B1-B14 office buildings

Notes:

1. The project name must be filled according to the name approved by the Place Name Administration Office; the building number must be filled according to the building number approved on the planning permit.

2. The pledge scope covers part of the houses inside the building and the pledged house number shall be filled according to the building number.

Opening bank: Beijing Economic Technological Development Area Branch of

Industrial and Commercial Bank of China Limited

 (Seal)

/s/ Beijing Economic Technological Development Area Branch of Industrial and

Commercial Bank of China Limited

YY    MM    DD

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Annex 4: Pricing mode and other provisions of housing fund

1. Payment method: Lump sum payment.

2. Total commodity housing fund (in RMB) under the advance sale contract: one hundred and fourteen million six hundred thousand yuan (RMB 118,300,000), will be paid by the Buyer once and for all to the Seller within 15 days after the signing of the advance sale contract and the down payment of two hundred million yuan (RMB 2,000,000) already paid by the Buyer will automatically be converted into the housing fund.

3. On the premise of receiving the full housing fund from the Buyer, the Seller shall be obliged to handle the commodity housing handover procedures with the Buyer in accordance with the agreement in Paragraph 1, Article 16 of the advance sale contract. If the Buyer fails to pay the housing fund in due time, the Seller shall be entitled to delay the handling of commodity housing handover procedures with the Buyer and shall not bear the default responsibilities arising from this.

4. After the advance sale contract is signed, if the Buyer requests for changing to the bank mortgage loan, the Seller and the Buyer shall sign the change agreement according to the related contents in Article 6 of the advance sale contract and Annex 4. The housing fund of the Buyer shall be determined by the mortgage loan discount again and the total housing fund shall be calculated again.

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Annex 5: Other provisions

1. Handling of property rights:

If the Buyer entrusts the Seller or the agent company designated by the Seller (hereinafter referred to “assignee”) with the registration of property right during the occupancy settlement, the Buyer shall issue the letter of attorney to the assignee for handling of commodity housing property certificate, provide all the data related to this and offer the necessary assistance during the handling of property right by the Seller, including but not limited to, carry out the relevant procedures at the designated place jointly with the Seller, pay the related fees according to the national provisions, provide the related data and sign the related legal documents for handling of property right. The Buyer confirms that all fees required for handling of commodity housing property certificate (including but not limited to deed tax, agency fee, property registration fee, property certificate stamp tax etc.) shall be borne by the Buyer.

2. If either party proposes to terminate the contract, the non-defaulting party shall be entitled to request continuing to perform the contract, unless otherwise agreed in the advance sale contract. If the defaulting party refuses to continue the performance, it shall pay the liquidated damages of three percent of the total house fund to the non-defaulting party according to the advance sale contract and shall also bear the corresponding liabilities for loss incurred to the non-defaulting party.

3. The Buyer shall ensure that the production and operation activities within the area under the jurisdiction of Beijing Jingkai One Center project comply with the stipulations of laws, administrative regulations and rules of the related departments and won’t engage in any illegal acts, otherwise the Buyer shall bear all legal, economic and administrative consequences, and shall compensate for losses incurred to other proprietors or property management enterprises.

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Annex 6: Provisions of decoration and equipment standard

1. Heating system:

(1) Central heating: fan coil;

(2) Brand of heating equipment: ELCO.

2. Insulation materials:

(1) Outer wall insulation: rock wool board.

3. Outer wall: mainly composed of glass curtain wall and aluminum plate curtain wall, locally made of stone curtain wall.

4 Inner wall: concrete wall surface extending to the structural layer, block wall surface extending to DP-HP bottoming mortar.

5. Ceiling:

1) B5/B7: 1/F-5/F, 7/F, 8/F: concrete structure, 6/F: concrete structure, locally coated steel sheet; 9/F: coated steel sheet;

2) B6/B10: 1/F-4/F, 6/F: concrete structure, 5/F: concrete structure, locally coated steel sheet; 7/F: coated steel sheet;

3) B11/B13: 1/F-5/F: concrete structure, 6/F: Al-Zn coated steel sheet;

4) B12/B14: 1/F-4/F: concrete structure, 5/F: Al-Zn coated steel sheet;

6. Indoor floor: concrete structural layer.

7. Door and window:

(1) Opening mode: flat opening;

(2) Profiles of door and window: aluminum alloy thermal-break profiles.

8. Elevator:

(1) Elevator brand: Hitachi;

(2) Elevator speed: 1.75m/s;

(3) Elevator capacity: 1100kg;

9. Floor load: uniformly distributed live load of 1/F ground: 5KN/M², live load of standard floor: 2KN/M².

10. Others:

(1) Insulation: central insulation;

(2) Canopy: steel joist, aluminum plate;

(3) Handrail: the steel tube of the staircase is painted and the glass breast board is provided on the external façade where the protection is necessary;

(4) Entrance step and disabled ramp: granite face;

(5) Cable TV system: weak current room is set at each floor and the data cable is connected to each floor through the internal vertical shaft;

(6) Telephone network system: weak current room is set at each floor and the data cable is connected to each floor through the internal vertical shaft;

(7) Power distribution: two independent 10KV high-voltage powers are introduced from the municipal electricity for the project;

(8) Fire control: with automatic fire alarm and fire linkage control system;

(9) Security system: with monitoring system and quarter parking lot management system indoors and outdoors.

11. Electric load of the building: 1200KVA.

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Annex 7: Related provisions of warranty liability

I. Scope and term of warranty

For the installed and constructed items under normal service conditions when the Seller delivers the houses, their quality problems concerning civil engineering, water, heat, electricity and other facilities within the warranty period will be subject to warranty by the following scope and term.

Warranty items	Warranty period of the project
Wall surface leakage	5 years
Roofing waterproof	5 years
Outer curtain wall, door and window	2 years
Wall, ceiling	2 years
Crack of door and window, damage of hardware	2 years
Strong and weak electric wires, water inlet and outlet pipelines and corresponding components	2 years
Fire alarm system	2 years
Foundation and primary bearing structure	Designed endurance life: 50 years
Other components	According to the related provisions of related authorities in Beijing

II. Start date of warranty

The warranty period of the house purchased by the Buyer will start from the date of house completion acceptance. The warranty period of the elevator will start from the date that the governmental authorities issue the inspection conformance report and the related license.

III. Problems outside warranty scope

(1) The quality damages resulting from natural disaster and force majeure are not within the warranty scope;

(2) The warranty items that have been installed, removed, modified or repaired by the proprietor and the house user at discretion after occupancy are not within the warranty scope;

(3) The quality problems of the above-mentioned warranty items resulting from improper application by the proprietor or the house user after occupancy are not within the warranty scope, however, the Seller may assist in the maintenance and the related costs shall be borne by the Buyer.

IV. Warranty liability

(1) The paid maintenance services may be provided for the quality maintenance outside the warranty period or the warranty scope stipulated in the Annex.

(2) The Seller shall not be liable for the quality problems resulting from improper application of proprietor and house user, unauthorized modification of house structure, adding equipment or changing position at discretion and inappropriate decoration.

(3) The Seller shall assume the corresponding warranty liabilities within the warranty period and the property service enterprise will provide the paid maintenance after the warranty period expires.

(4) If the Seller fails to repair the defected houses due to proprietor, house user and relevant party, the Seller shall not be entitled to bear any responsibility, which shall be assumed by the corresponding proprietor, house user and relevant party connecting to this.

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Annex 8: Preliminary Property Management

Preliminary Property Service Contract of Beijing

Jingkai One Center Project

The contract was entered into between Beijing Jingkai-Gongda Investment Management Co., Ltd. and Beijing Jingkai Investment Development Co., Ltd. on __________in Beijing, China.

Principal: Beijing Jingkai-Gongda Investment Management Co., Ltd. (hereinafter referred to as the “Party A”)

Address: 4/F, Block 2, No. 1 North Disheng Street, Beijing Economic-Technological Development Area

Legal Representative: Zhou Shiyi

Trustee: Beijing Jingkai Investment Development Co., Ltd. (hereinafter referred to as the “Party B”)

Address: Block 1, No. 1 North Disheng Street, Beijing Economic-Technological Development Area

Legal representative: Guo Guangqing

Property Management Qualification: Level 3

Certificate No.: D0075 JWQZS [2014]

In accordance with the Regulations on Property Management and relevant laws and regulations, Party A entrusts Party B to implement property management for the Beijing Jingkai One Center project (hereinafter referred to as the “Project”), and the parties have entered into this Contract through equal consultation.

Chapter I General Provisions

Article 1 Party A entrusts Party B to provide property management and service for the project, and Party B is the sole property manager of the project;

Article 2 Party B accepts the entrustment of Party A and agrees to provide property management and service for the project in accordance with this Contract, the Regulations on Property Management and the relevant laws and regulations.

Article 3 In this Contract, references to any legislation shall be construed as laws and regulations promulgated by the state government or the government of Beijing municipality. If significant changes occur in the economic interests of either party as a result of changes in laws and regulations, the parties shall consult in a timely manner and make the necessary adjustments or modifications to the relevant provisions of this Contract in order to safeguard the interests of both parties under this Contract.

Chapter II Basic Conditions of the Property Project

Article 4 Basic Conditions of the Property

1. Approved property name: Beijing Jingkai One Center

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2. Property type: office building, commercial property, residential property

3. Property location: Lots D1C1 and D1F1, No. D1 Block of Eastern Zone, Beijing Economic-Technological Development Area

4. Scope: west to the 1st Jinghai Road, east to the 3rd Jinghai Road, south to the 13^th Kechuang Street, north to the southern green belt of the 12^th Kechuang Street.

5. Area: 92,392.1m³; construction area: a total construction area of 293,692 m³, area for which property management fee is collectable is 204,840 m³. Underground parking lot: 83,002 m³, among which the number of parking lots with the right to get parking fee is 1,834. The above data of area is based on estimates and the final measured area shall prevail.

Chapter III Scope and Content of Property Management Services

Article 6 The scope of the property management services provided by Party B shall be as follows: the buildings and the ancillary facilities and equipment within the scope of the red line of the project, including all kinds of public roads and landscaping, and various types of public service facilities.

Article 7 Party B shall provide the following property management services in two phases:

1. Preparatory period of property management: For the service in this period, please refer to Article 8 of this Contract.

2. Normal management period of property management: For the service in this period, please refer to Article 9 of this Contract.

Article 8 Services provided in the preparatory period of property management:

1. To propose suggestions on the selection of type for facilities and equipment and the selection of construction materials.

2. To follow up on the progress of the project and make recommendations.

3. To propose suggestions on the vehicle moving line and parking spaces of the underground parking lot.

4. To assist Party A in the development of interim management provisions.

5. To establish the project property management agency.

Party B will set up a project property management institution during the preparatory period, and put it into normal operation as soon as possible. The details of work are as follows:

(1) To develop organizational structure, departmental set-up and staffing;

(2) To work out the function distribution method among various departments and the duties of the various positions;

(3) To develop internal management system, service standards and working procedures.

6. To complete staff recruitment and professional training.

7. To develop item procurement plans.

8. To prepare annual work plan for property management.

During the preparatory period of project management, Party B will be responsible for the preparation of the annual work plan of the project management, including the following:

(1) Work plan for daily operation, repair and regular maintenance of housing and its ancillary facilities, and equipment;

(2) Work plan for security and fire management;

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(3) Work plan for daily cleaning and regular cleaning;

(4) Work plan for road traffic and parking management;

(5) Work plan for customer service;

(6) Work plan for financial management and development of human resources;

(7) Emergency response procedures and proposals;

(8) Establishing a coordinated relationship with the local government authorities.

9. To prepare the customer manual.

10. To prepare decoration guide.

11. To establish special service items and collection and payment items.

12. To assist Party A in completing the project acceptance.

13. To take over and accept the project.

14. To take charge of the cleanup land reclamation of the public areas of the project.

15. To prepare for moving-in of the owners of the project.

Article 9 Services provided during the normal property management period include:

1. To develop a work plan of property management services, and organize the implementation of the plan; manage property-related engineering drawings, customer files, as well as completion and acceptance materials; establish property management system.

2. To carry out the daily maintenance, operation and management of shared facilities and equipment. Shared facilities and equipment include: shared water pipes, pressurized pumps, water pipes, shared lighting, transformation and distribution systems, security systems, fire systems, transportation facilities, rain sewage lift pump.

3. To carry out the daily maintenance and management of public facilities, ancillary buildings and structures, including roads, fences, septic tanks, pumping stations, green water systems, outdoor ground parking, garbage transfer stations, and litter bins in public areas.

4. To carry out conservation and management of public green spaces, flowers and trees, and small architectural works

5. To be responsible for the public environmental sanitation, including the daily cleaning in public areas and peripheral areas, collection, sorting and removal of daily garbage and refuse, and regular cleaning of septic tanks, as well as regular pest control services.

6. To maintain public order, including safety monitoring, public area inspections, gate service and so on.

7. To maintain the order of vehicles in the facility, and manage and offer service to the vehicles parked on the parking spaces in the public areas and the vehicles parked in the underground parking lot.

12. To provide fire management services, including fire safety monitoring and inspection, fire safety warning and publicity, and maintenance and repair of firefighting facilities in public areas.

13. To provide house decoration management services.

14. When property owners and users entrust Party B to carry out repair and maintenance of their own premises, self-use facilities and equipment, Party B should accept the commission and charge a reasonable fee.

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15. To provide special services, including collection and payment services, according to the actual needs of Party A and property users.

16. To set up service supervision telephone, and publicize the phone number in the bulletin board and other prominent position of the managed property area.

17. To organize cultural and recreational activities and festive decorations.

Chapter IV Service Standards

Article 10 The service standards for the management of the project are as follows:

1. The 3rd level standards for property service shall be refereed to during provision of services.

2. The management procedures, quality standards and assessment of the project are carried out according to the requirements of the ISO 9001: 2008 quality management system.

Chapter V Service Term of Entrusted Management

Article 11 The term of property service is 3 years from the day after the completion of the check-in procedure for the first property user of the property, which shall end at the day when the first property owner of the property has moved in for 3 years. If the property delivery is made in advance or delayed, the starting day of property service term under the contract shall be correspondingly brought forward or delayed, under which case the property service term remains 3 years, and the final property delivery date shall be confirmed by Party A and Party B in writing.

Chapter VI Property Management and Related Matters

Article 12 Property management fee

1. Remuneration shall be paid for the project’s property management.

2. The property management fee shall be paid by the property owners in advance according to the building area owned by the owners based on the following criteria:

Office Building: 5.50 yuan / month / m³

Commercial Property: 5.50 yuan / month / m³

Residential Property: 3.00 yuan / month /m³

The property service funds are jointly owned by the property owners who have contributed to the funds and the funds are managed by Party B on behalf of the property owners. The funds include property service expenses and the remuneration made to the property service enterprise.

1. The property management fee consists of the following:

(1) The wages, social insurance, dismissal compensation and the welfare fees legally set aside for Party B’s employees;

(2) The daily operation and maintenance costs of the shared locations and the commonly shared facilities and equipment’s of the property;

(3) The cleanup costs of the managed area of the property;

(4) The landscaping and maintenance costs of the managed area of the property;

(1) The order maintenance costs of the managed area of the property;

(2) Party B’s overhead expenses;

(3) Depreciation of fixed assets of Party B;

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(4)   The premium of property insurance, machine damage insurance and public liability insurance for the property’s shared locations, commonly shared facilities and equipment’s.

(5) Financial audit fees;

(6) Corporate tax and corporate income tax;

(7) Refunding of advance payment made by Party A for preliminary operation;

(8) Management remuneration.

a) The property management fee shall be calculated based on the total construction area, the construction area of each functional area, the condition  of equipment system and the energy consumption data provided by Party A, taking into account the personnel and the relevant expenses and other management expenses required by Party B in providing services for the project. If the data and the conditions of facilities and equipment provided by Party A are not in accordance with the actual situation, the above fees shall be adjusted accordingly.

b) Where government-approved adjustment of energy unit price and changes in national laws and regulations lead to mandatory changes in labor costs, property management fees shall be adjusted accordingly.

c) The property owners shall pay the Property Management Fee on a yearly basis as of the date of move-in as specified in the notice. For the property management fees that shall be borne by Party A according to the Property Management Measures of Beijing Municipality and its implementation rules, as well as the preliminary property service contract and commercial housing sales contract signed between Party A and the buyer, Party A shall pay property management fees to Party B within the agreed period as agreed by Party A and the buyer in the property service contract.

d) Expenditure on property services should be restricted to expenses agreed upon in the Contract, and the balance of the expenditure on property services will be calculated once a year. The balance can be used to improve the quality of the scene, including but not limited to the increase in equipment and facilities. However, any transformation shall be subject to the approval of Party A before implementation. After the establishment of the owners 'committee, the approval authority shall be conferred to the owners' committee. Party B shall return the balance to the owner every two years in accordance with the proportion of property costs paid by the owners.

e) Where Party A undertakes to reduce or exempt the property management fee of the property buyer, Party B shall pay Party B the property management fee after reduction or exemption on the basis of Party A's written confirmation.

f) If the owners refuse to pay full or part of the property management fees due to the nonperformance of commitment made in the sales contract, changes in planning, construction quality issues and other reasons of Party A, Party A shall make up the balance to Party B.

g) For the facilities in the scope of property management that have been completed but have not yet been sold, or the properties that have been sold but not yet been delivered to the Buyers for the reasons of Party A or the facilities in Party A’s property management space, the property management fees and the water, heat, electricity and gas expenses shall be borne by Party A.

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h) It is the responsibility of Party A to provide Party B with true and complete information on the owners to whom the properties have been sold but the check-in have not been completed. To ensure the quality of service, after the property is completed and delivered, the property management fees for properties sold but having not completed the check-in shall be collected against the owners by Party B.

Chapter VII Parking Management

Article 13 Parking management fee

The parking management fee shall be collected by Party B against the users of parking lots according to the following standards:

Ground parking fees and temporary parking fees shall be collected in accordance with the provisions of the competent government departments;

Underground parking management fee: RMB 400 Yuan/month/m³

Article 14 Party B shall sign a written management service agreement with the users of the parking lot to clarify the rights and obligations of both parties in respect of parking spaces and parking management services.

Chapter VIII Special Maintenance Fees

Article 15 The daily minor maintenance expenses of the shared areas, commonly shared facilities, equipment’s and public spots after the expiration of the house warranty shall be included as costs and expenses of property management. The overhaul and renovation costs shall be paid from the special maintenance expenses. When the special maintenance fees need to be used, a report shall be sent to Party A for approval, and a general meeting of the owners shall be convened in accordance with the provisions of the Measures on the Management of Special Maintenance Fees to decide the cost expenditure issues.

Chapter IX Property Management Areas

Article 16 Party A shall, at the commencement day of the preparatory period of property management, provide the property management areas needed for the property management activities to Party B without charging fees and according to the actual needs, and Party A shall be responsible for the renovation of the property management areas, which include the following parts:

1. Customer reception room

2. Property office and conference room

3. Staff dining lounge

4. Storehouse

5. Other areas (depending on the specific circumstances of the project)

Chapter X Remuneration and Payment of Property Management Services

Article 17 The remuneration of property management services charged by Beijing Development Area Co., Ltd shall be as follows:

1. In case the D1F1 plot is in the preparatory period and the occupancy rate is less than 60% (excluded), the remuneration shall be charged at RMB 30,000 / month. In case the occupancy rate ranges from 60% (inclusive) to 80% (excluded), the remuneration shall be charged at RMB 50,000 / month. In case the occupancy rate is greater than 80% (inclusive), the remuneration shall be charged at RMB 70,000 / month.

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2. In case the D1C1 plot is in the preparatory period and the occupancy rate is less than 60% (excluded), the remuneration shall be charged at RMB 30,000 / month. In case the occupancy rate ranges from 60% (inclusive) to 80% (excluded), the remuneration shall be charged at RMB 50,000 / month. In case the occupancy rate is greater than 80% (inclusive), the remuneration shall be charged at RMB 70,000 / month.

Article 18    During the preparatory period of property management, the remuneration for Party B’s property management services shall be disbursed from the property management start-up capital and shall be paid at the same time as the property management start-up capital.

Article 19   After business opening (move-in) of this project, Party B shall withdraw the remuneration of current month from the property management fees on the 25th of each month.

Chapter XI Business Opening (Move-in) Conditions

Article 20    Party A shall obtain all necessary permits, licenses, etc. from the government as soon as possible after the signing of this Contract, and make them continuously valid, so that Party B can carry out its work in accordance with the terms of this Contract.

Article 21    Party A shall be responsible for opening the supply channels for water, electricity, heating, gas, communications, post and telecommunications, and cable television for this project, and shall handle relevant business licenses.

Article 22    Party A shall inform Party B in writing of the proprietors' information known by Party A and relevant undertakings made by Party A to proprietors in the second month after the commencement of the preparatory period, and thereafter shall inform Party B in writing of the proprietors’ information known by Party A and relevant undertakings made by Party A to proprietors from time to time in writing during Party A’s sales process. Party B shall carry out confidential management for customers’ information.

Article 23    After the project has been completed and passed completion examination and acceptance according to relevant provisions of the country, Party A and Party B shall jointly organize the take-over acceptance of public parts, public facilities and equipment. Party B shall, within 15 days after receiving Party A’s application for take-over acceptance, perform take-over acceptance according to the National Housing Take-over Acceptance Standard. If they are examined to meet applicable requirements, the acceptance qualification certificate shall be signed within 7 days, and relevant take-over documents shall be issued timely.

Article 24    Party A shall transfer the following information to Party B when undergoing formalities for take-over acceptance of the property:

1. Site plan of the completion, drawings of the completed individual buildings, architectural structures, equipment, supporting facilities and underground pipelines;

2. Technical information on the installation, use and maintenance of the facilities and equipment;

3. Property quality warranty documents and property use instructions;

4. Counterparts or copies of inspection and acceptance reports, government approval documents, lists of items of civil works, ownership list of property rights of the house and supporting facilities; and

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5. Other information necessary for property management

Article 25    After the completion of take-over acceptance of the project, Party A shall send a Move-in Notice to proprietors and shall notify Party B in writing two weeks in advance of move-in time.

Article 26    The facilities and equipment of the project which are entrusted to Party B for property management shall meet national acceptance standards. Imported equipment shall be equipped with enough spare parts and the corresponding supply channels shall be made available. In case any quality problem occurs to the project, facilities or equipment, Party A shall urge suppliers to rework until it is qualified within an agreed period. At the same time, since the date of take-over acceptance, Party A shall be responsible for warranty according to national regulations on warranty of construction projects.

Chapter XII Other Management

Article 27    The premiums of all insurances necessary for the property management of the project, including but not limited to all-risk insurance, machinery breakdown insurance and public liability insurance, shall all be disbursed from the costs and expenses of property management operation. Above insurances need not be bought repeatedly if they have been bought by Party A.

Article 28    All insurance policies of this project shall be insured by an local insurance company recognized and designated by Party A, and registered in the People’s Republic of China. The types of insurances and insured amounts shall be handled according to relevant provisions of insurance companies in China and the actual situation of the project. The insured amounts shall be jointly determined by Party A and Party B. The insurance period shall be the same as the period during which Party B provides property management services.

Article 29    Party B shall provide Party A with all original documents of relevant insurances, so that Party A can review, photocopy and record them. Party B shall keep the aforesaid insurances valid during the entrustment period. Without Party A's prior written consent, Party B and / or its insurance company shall not cancel relevant insurance policies under this Contract or amend information under any insurance policy.

Chapter XIII Human Resource Management

Article 30    Party B shall, before the commencement of the preparatory period of this project, recommend a project manager and candidates to Party A. The project manager (project leader) shall have more than 1 year experience in managing similar projects, and shall have experience in equipment and property management. Party A may also recommend a project manager and other property personnel as alternatives. If the project manager is to be replaced within the period of the Contract, Party B shall provide an alternative to the project manager confirmed by Party A. Other personnel shall be assigned to various management and service levels according to the preparatory work plan.

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Article 31    Party B shall carry out training for the personnel before they assume their posts, and the expenses incurred for this purpose shall be disbursed from the property management start-up capital before the business opening of this project, and shall be disbursed from the property management operation costs and expenses after the business opening of this project.

Article 32    Party B shall be responsible for formulating the organizational structure and remuneration standard of the property management organization of this project and shall prepare the annual staff structure and remuneration system of the project department according to the needs of each work by the end of each year. The staff structure shall include Party B's own employees and all the outsourcing business staff, as well as the duty description of each post, and shall be used as the reference for the recruitment of personnel after it has been approved by Party A.

Article 33    The personnel sent by Party B for this project shall provide full-time services to the project, and shall not concurrently hold any office in Party B 's functional departments or in other projects.

Article 34    The labor costs incurred by all levels of management and service personnel sent or recruited by Party B shall be disbursed from the property management start-up capital before the business opening of this project, and shall be disbursed from the property management operation expenses after the business opening of this project.

Chapter XIV Rights and Obligations of Both Parties

Article 35    Party A’s rights and obligations

1. Party A shall review the property management work plan prepared by Party B, inspect and supervise the implementation of Party B’s property management, and have the right to require Party B to rectify those failing to meet the plan indicators within a specified period;

2. Party A shall provide a property management room to Party B according to relevant provisions of this Contract;

3. Party A shall conduct property take-over acceptance with Party B according to relevant provisions of this Contract, and transfer relevant materials to Party B;

4. Party A shall be responsible for formulating the Temporary Management Convention, specify according to law the issues such as the use, maintenance and management of the property; proprietors’ common interests; obligations proprietors shall perform; responsibilities which shall be borne in violation of the Convention, and shall require proprietors and property users to comply with them;

5. Party A shall show and explain the Temporary Management Convention to the property buyer prior to the sale of the property; and shall require the property buyer to comply with the Temporary Management Convention and make written commitment in signing the property sale contract with the property buyer;

6. The sale contract signed with the property buyer shall include relevant contents agreed in this Contract;

7. Party A shall pay to Party B the property management service remuneration, property management start-up capital, property management fees and other related costs which shall be borne by Party A according to relevant provisions of this Contract;

8. Party A shall assist Party B in coordinating the relationship with local government administrative departments;

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9. Party A shall assist  Party B in property management, publicity and education and cultural activities;

10. Before the establishment of the proprietors committee, Party A shall not arbitrarily occupy or change the use function of shared facilities of this project. If it is necessary to reconstruct, expand or improve supporting items within the project, it shall be negotiated with all proprietors of the project and Party B, and shall be reported to competent departments for approval before it can be implemented;

11. Party A shall ensure that the property delivered for use meets the provisions of national acceptance standards, and shall bear the warranty responsibility for the project according to the warranty period and warranty coverage stipulated by the country;

12. If the property fails to meet the use function and causes a major accident due to the house construction quality, the quality of equipment and facilities or installation technology or other reasons, and it is identified by relevant government departments to be the responsibility of Party A, Party A shall bear the responsibility and deal with the aftermath.

13. If Party B violates relevant provisions of this Contract, and fails to complete the agreed management services, Party A shall have the right to require Party B to rectify it within a specified time limit. Party A shall have the right to send a notice to Party B. If it causes economic loss to Party A, Party B shall give Party A corresponding economic compensation.

(1) Notice: Party B shall, within 5 working days after receiving the Notice, make a reply and propose a rectification plan.

(2) Re-notice: If Party B fails to propose a rectification plan for no reason within 10 working days after receiving the Notice, or Party B’s rectification fails to meet Party A’s requirements, Party A may issue a "Re-notice " to deduct 5% of Party B's management remuneration of that month as liquidated damages, but not more than 25% of the management remuneration of that month.

(3) Final notice: If Party B fails to propose a rectification plan for no reason within 10 working days after receiving the Re-notice, or Party B’s rectification fails to meet Party A’s requirements, Party A may issue a "Final Notice". If Party B still fails to rectify it for no reason or Party B’s rectification fails to meet Party A’s requirements within 5 working days after receiving the Final Notice, Party A shall have the right to terminate the contract in advance, without bearing any liability, provided that Party A shall notify Party B in writing at least one month in advance and complete the formalities for replacing the property management enterprise. Costs and expenses of Party B sustained for such early termination of the Contract, such as staff dismissal fees, shall be disbursed from the property management fees.

14. Party A shall have the right to provide value-added services to proprietors or property users according to the needs of the property and for the purpose of improving the quality of the property, provided that such value-added services do not affect the normal property management services. Party A shall ensure that the value-added services provided comply with the provisions of national laws and regulations, as well as the Temporary Management Convention for the proprietors of the property.

15. If this Contract is terminated for any reason, Party A shall have the right to take over this project by itself or re-entrust a new property management service enterprise to take over this project.

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Article 36    Party B 's rights and obligations

1. Party B shall provide property management services within this property area according to relevant laws and regulations and this Contract;

2. Party B shall charge property management fees, decoration management fees, decoration waste clearance fees, parking management fees, specially engaged paid service fees and other related fees from proprietors and property users according to relevant provisions of this Contract;

3. If proprietors or property users violate the Temporary Management Convention, laws or regulations, Party B shall take measures to discourage or stop it or file a lawsuit according to the seriousness of the case;

4. With the prior consent of Party A, Party B shall have the right to hire a professional service enterprise to undertake the project's special service business, but Party B shall not entrust all property management to a third party;

5. Party B shall accept the supervision and guidance from Party A, competent property management departments and relevant government departments;

6. Party B shall ensure and continuously improve the quality of services, control costs and reduce energy consumption;

7. Party B shall be responsible for preparing annual minor repair and maintenance plans for the house, ancillary buildings, public parts, shared facilities and equipment and greening, and shall organize their implementation;

8. Party B shall be responsible for preparing annual medium and major repair and renovation and maintenance plans for the house, ancillary buildings, public parts, shared facilities and equipment and greening, and shall organize their implementation after they are voted by the proprietors meeting.

9. Party B shall inform relevant provisions on the use of the property to proprietors and property users. When proprietors and property users decorate, Party B shall inform relevant provisions, enter into a written agreement with them, and be responsible for supervision;

10. Party B shall be responsible for preparing the annual property management plan, fund use plan and final accounting report;

11. Party B shall publish the income and expenditure account of property management fees to all proprietors and property users every six months;

12. Party B  shall conduct a property service satisfaction survey to all proprietors and property users every six months;

13. Party B shall not arbitrarily occupy or change the use function of the public facilities of the property. If it is necessary to reconstruct, expand or improve supporting items within the property, it shall be approved by relevant proprietors and shall be reported to relevant approving parties for approval before it can be implemented;

14. If the property management fees are undercollected not due to Party B’s reason, resulting in that it is difficult to carry out property management work, Party B shall have the right to terminate this Contract and withdraw from the property management of the project, provided that Party B shall notify Party A in writing three months in advance and assist Party A in aftermath and take-over work;

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15. The quality of the building and its ancillary equipment and facilities of this project shall meet the quality standards set by the country. For any accident or loss caused by its quality or defects which cannot be improved, Party B shall bear no responsibility. However, Party B shall be obliged to take timely and effective measures to prevent expansion of the loss, and promptly notify Party A;

16. During the management period of Party B, if any damage to the equipment and facilities or accident occurs due to Party B’s poor management, and thus causes property damage or personal injury to a third party, and it is identified by relevant government departments to be the responsibility of Party B, Party B shall bear corresponding responsibility;

17. Upon the termination of this Contract, Party B shall hand over various archival data kept during its management period to Party A or the proprietors committee;

18. If Party A violates relevant provisions of this Contract, and causes Party B not to complete management services, Party B shall have the right to require Party A to resolve it within a certain period of time. If this causes economic loss to Party B, Party A shall give Party B corresponding economic compensation;

19. Party B shall fully cooperate with Party A to provide value-added services to proprietors and property users, and provide all the convenience for this;

20. If this Contract is terminated for any reason, Party B shall unconditionally undergo formalities to hand over property management to Party A or a property management unit designed by Party A, and shall in no case delay the hand-over or create any take-over obstacle. The period for such take-over shall be 30 days;

21. If the property management services provided by Party B cause any liability accident, unexpected accident or litigation due to Party B’s reason, Party B shall be solely responsible for this. If relevant events cause economic loss to Party A due to Party B’s reason, Party B shall compensate Party A for this;

22. All acts relating to the provision of property management services by Party B shall comply with Chinese laws and regulations and orders issued by government departments. If Party A’s  aspects, such as reputation, are affected by Party B’s unlawful act, Party A shall have the right to reserve the rights of recourse for any loss sustained, such as in reputation, from Party B;

23. If Party B, after the termination of this Contract, does not transfer the property management right to Party A or a property management enterprise designated by Party A, or withdraw from the property under this Contract, or hand over the management room or relevant archival data, Party B shall pay RMB 2,500 as liquidated damages to Party A for each overdue day. If Party B still fails to transfer the property management right and withdraw from the property within 30 days after the termination of this Contract, Party A shall have the right to take all measures according to relevant laws and regulations, and all legal liabilities and economic consequences arising herefrom shall be borne by Party B.

24.

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Chapter XV Handling of Unforeseeable Events

Article 37    In order to safeguard the vital interests of the public, proprietors and property users, if Party B sustains necessary economic loss due to taking emergency measures in case of unforeseeable events, such as gas leakage, electric leakage, fire, water pipe burst, rescue of life, assisting the public security organs in carrying out tasks, both parties shall handle such events according to relevant laws and regulations.

Chapter XVI Termination of Contract

Article 38    Party A and Party B agree that this Contract can be terminated if any of the following cases occurs, provided that the terminating party shall notify the other party in writing in advance:

1. This Contract shall be automatically terminated upon the expiry of the validity term agreed in this Contract;

2. This Contract shall be terminated after the property service contract signed between the proprietors committee of this project on behalf of all proprietors and the property management enterprise takes effect;

3. This Contract shall be terminated if Party A and Party B mutually agree and reach a written agreement;

4. This Contract cannot be fulfilled due to force majeure;

5. Either party is subject to legal sanction, and suffers bankruptcy liquidation; and

6. Other provisions specified by laws and regulations.

Article 39    After the termination of this contract, Party A and Party B shall well handle their creditor’s rights and debts, including the liquidation of property management fees and various agreements signed with an external party. Party B shall assist Party A in handover and aftermath work of property services.

Article 40    In 3 months prior to the expiration of this Contract, Party B may apply to Party A for the renewal of this Contract. After Party A reviews and approves it, both parties may agree to renew this Contract in the form of a supplementary agreement.

Chapter XVII Liability for Breach of Contract and Dispute Resolution

Article 41    If Party B violates relevant provisions of this Contract and fails to complete the agreed management services, Party A shall have the right to require Party B to rectify it within a specified time limit.  If the rectification still fails to meet the requirements within this time lime, Party A shall have the right to terminate this Contract. If this causes economic loss to Party A, Party B shall give Party A corresponding economic compensation.

Article 42    If Party A violates relevant provisions of this Contract, causing Party B not to complete management services, Party B shall have the right to request Party A to settle it within a certain period of time. If Party A fails to settle it within this time period, Party B shall have the right to terminate this Contract. It this causes economic loss to Party B, Party A shall give Party B corresponding economic compensation.

Article 43    Party B shall bear no responsibility in the following cases:

1. If the property management services are interrupted due to force majeure (including natural disasters, war, etc.), Party B shall inform Party A about relevant information within 48 hours after the end of the force majeure event, and at the same time provide effective evidence for the occurrence of this force majeure event;

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2. Party B has fulfilled the obligations of this Contract, but the inherent defect of the property itself causes loss, Party B shall be obliged to take timely and effective measures to prevent the expansion of this loss, and shall promptly notify Party A;

3. If loss is caused due to maintenance of the shared areas, public facilities and equipment of the property, which has been informed to proprietors and property users in advance, or loss is caused by temporary interruption of water supply, power supply and public facilities and equipment; or

4. If loss is caused by the interruption of water supply, power supply heating, communications, cable television and other public facilities and equipment not due to Party B responsibility.

Article 44    For any dispute arising from or in connection with the performance of this Contract, both parties shall settle it through friendly negotiation. If no settlement can be reached through negotiation, either party may bring a lawsuit to the people's court of the place where this Contract is performed. In the course of the proceedings, the contract shall continue to be fulfilled except where the parties are in dispute.

Chapter XVIII Supplementary Provisions

Article 45    Both parties agree that Party B shall, according to Party A’s commission, undergo take-over acceptance formalities 30 days prior to the move-in of the first proprietor.

Article 46    Both parties shall cooperate with law enforcement activities, rescue and other public affairs to be carried out within the property area, and shall not obstruct such affairs.

Article 47    Neither party shall transfer or sell or assign its rights, responsibilities and obligations under this Contract in any manner without the written consent of the other party. Meanwhile, neither party shall disclose any trade secrets obtained from the other party to a third party. Otherwise, the default party shall compensate for the loss caused to the other party.

Article 48    This Contract shall only take Party A and Party B as beneficiaries. Except for both parties to this Contract, this Contract cannot be implemented by any other person.

Article 49    During the execution period of this Contract, both parties agree that each party may refer to the name and service identification of the other party in the following way in its business promotion and producing relevant publicity materials, and each party shall not charge any fees from the other party for this .The reference shall be as follows:

Party B referred by Party A: Entrusted property services: Beijing Development Area Co., Ltd

Party A referred by Party B: Entrusted service project: Beijing Jingkai One Center

Article 50    After the termination of this Contract, neither party shall continue to refer to the name and service identification of the other party in its business promotion or on its relevant publicity materials.

Article 51    The annexes to this Contract are an integral part of this Contract, and shall have the same legal effect as this Contract.

Article 52    As for issues not mentioned in this Contract, or if any objection arises in interpreting this Contract, both parties shall settle or sign a supplementary agreement on the basis of friendly negotiation.

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Article 53    Any amendment or supplement to this Contract shall be confirmed in writing by both parties, and shall have the same legal effect as this Contract. The contents of such amendment or supplement shall not be inconsistent with the contents of this Contract and the Temporary Management Convention.

Article 54    This Contract shall be made in sextuplicate, with Party A and Party B each holding three copies. Each of these 6 copies shall be original, and shall have the same legal effect.

Article 55    The counterpart copies (stamped) of Party A and Party B’s business licenses within the validity period shall be attached as annexes.

This Contract shall take effect as of the date when the representatives of both parties sign and seal this Contract on the date specified on the first page of this Contract, and shall be valid as an annex to the "Commodity Housing Presale Contract" or the "Contract for Sale of Finished Commodity Housing", and shall be binding on all proprietors of this property.

Party A: Beijing  Jingkai-Gongda Investment Management Co., Ltd /s/Beijing  Jingkai-Gongda Investment Management Co., Ltd	Party B: Beijing Development Area Co.,Ltd /s/Beijing Development Area Co.,Ltd
Signature and seal: /s/Shiyi Zhou	Signature and seal: /s/Guangqing Guo
Date:	Date:

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Annexes:

1. Layout Plan

2. Details of Property Constitution

3. Details of Commonly Shared Sections of the Property

4. Details of Commonly Shared Facilities and Equipment of the Property

5. Details of Property Service

6. List of Hand-over Materials

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Annex 1: Layout Plan

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Annex 2:

Details of Property Constitution

Boundaries of Property	Corresponding Planned Building Number	Planned Construction Area (m3)		Floor Area (m3)		Remarks
	B1 office building		6674.59
	B2 office building		5999.00
	B3 office building		5013.55
	B4 office building		4605.2
	B5 office building		6262.02
	B6 office building		4893.38
	B7 office building		6262.02
	B8 office building		3419.06
	B9 office building		3433.89
	B10 office building		4914.03
	B11 office building		2895.65
Stage 1 D1F1	B12 office building		2715.48
Parcel (east to	B13 office building		2895.65		54928.2
Jinghai 3rd  Road;	B14 office building		2715.48
west to Jinghai	Subtotal		83832.86
1st  Road; south to Kechuang 13th	A1 Residential Building and Supporting Commercial Properties		9398.70
Street; north to  D1 Block Road)	A2 Residential Building and Supporting Commercial Properties		11102.12
	A3 residential building		5107.47
	A4 residential building		8122.87
	A5 residential building		5107.47
	A6 residential building		8191.73
	Subtotal		47030.36
	Total		130863.22
Stage 2 D1C1	C1 office building		33639.54
Parcel (east to	C2 office building		24753.57
Jinghai 3rd Road;	C3 office building		15049.66
west to Jinghai	C4 office building		19990.67
1st Road; south to D1 Block Road; north to Kechuang 12th Street;)	DX1 underground garage, commercial properties, ancillary facilities, and air raid shelters		37924.56		37994.9
	Total		131358

The final area shall be determined by the actually measured area in the report.

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Annex 3:

Details of Commonly Shared Sections of the Property

1. Load-carrying structure of the building

2. Main structure of the building

3. Public hallways

4. Public corridors

5. Public staircases

6. Inner courtyard

7. Outdoor wall surfaces

8. Roofs

9. Fire control and security surveillance rooms

10. Machine rooms

11. Public restrooms

12. Public greens

13. Rooms used by property service company

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Annex 4:

Details of Commonly Shared Facilities and Equipment of the Property

1. Elevators: 36 units

2. Septic tanks and rainwater retention tanks

3. Power distribution room

4. Power distribution room

5. Main boxes

6. Property service rooms

7. Rooms for commonly-shared facilities and equipment

8. Underground motor vehicle parking garages

9. Roads

10. Inter-building and central greens

11. Sewer manholes

12. Catch basins

13. Power transformation and distribution system

14. Public lighting facilities

15. High pressure water pumps

16. Fire facilities

17. Lightning protection facilities...

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Annex 5

Standard for Beijing Residential Property Management (Class III)

DB11/T 751-2010

Class III Standard for Beijing Residential Property Service

1. Basic requirements

1.1 Customer service premises

1) A customer service center with office furniture, telephones, and other office equipment shall be set up.

2) An original copy or photocopy of the qualification certificate of the property service company, photos of persons in charge of the project, property service items, service standards, chargeable items, charge rates, and all other relevant information shall be made public.

3) The customer service center shall be open for business for at least 8 hours during work days and shall have watch-keepers on duty beyond the work hours.

4) 24-hour service hotlines shall be set up and made public.

1.2 Staffing

1) All staff shall obtain vocational qualification certificates as required.

2) The staff shall wear uniforms and badges according to their respective job posts.

3) A project leader in charge of the property service project, as well as building safety administrators, shall be appointed.

4) The project leader shall have more than 2 years of work experience on an equivalent job post with a property service company and shall be currently registered in the municipal credit information database of project leaders.

1.3 Rules

1) Management rules shall be established for the maintenance and repair of commonly-shared sections and facilities, fire safety and prevention, greening and landscape maintenance, environmental sanitation, and maintenance of public order.

2) An emergency plan shall be established for unexpected public events.

3) A training system shall be established to organic training and examination on a regular basis.

4) A property service log shall be created.

1.4 Archives

1) A property management file shall be created

2) Personnel shall be appointed for file management

3) Basic information, basic records, repair and maintenance records, and charging records shall be managed with computers.

1.5 Signs

Property service signs, such as safety warnings, operation and construction warnings, and kindly reminders shall be set up.

1.6 Customer service

1) The performance of the property service contract and the income and expenditures in the previous year, as well as the budget for the current year, shall be made public in the first quarter of every year.

2) For important matters of property service which are related to the normal life of proprietors or house users, notices shall be posted at main entrances and exits as well as the entrance to each apartment unit.

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3) Conducts in violation of laws and regulations on public security, planning, and environmental protection shall be discouraged and reported to competent authorities.

4) For urgent repairs of water and power facilities, repair workers shall reach the site within 20 minutes. For other repairs, repair workers shall reach the site within the time limit agreed upon by both Parties. Notices shall be given within 30 minutes of repairs of facilities and equipment for which specialized service enterprises are responsible, and return visits shall be paid for such repairs.

5) Responses shall be made within 2 work days to the opinions, suggestions, and complaints made by the proprietors or house users. Return visits shall be paid for complaints.

6) Opinions on property service shall be publicly solicited once every year; subsequent rectifications shall be made public.

7) Service quality of the project shall be examined once every month. Safety inspections shall be conducted before important holidays and festivals.

8) Proprietors shall be invited to visit the machine rooms for commonly-shared facilities and equipment every year.

9) At least one community culture event shall be organized every year.

10) Bulletin boards shall be set up, in order to assist relevant authorities in public welfare publicity programs.

11) Insurances for shared sections, shared facilities and equipment, and public liability shall be bought as required.

12) If conditions permit, specially engaged services, such as indoor cleaning, laundry, cooking, car wash, property custody, and ticketing shall be provided.

1.7 Commissioning of the management specialized services

1) Commissioning contracts for specialized services shall be signed to define the rights and obligations of each party.

2) Specialized service enterprises shall meet the qualification requirements set out by competent authorities; operating personnel shall have corresponding vocational qualification certificates.

3) The staff of specialized service enterprises shall wear uniforms and badges.

4) Specialized services shall be supervised, managed, and assessed.

2. Operation, repair, and maintenance of commonly-shared sections, facilities, and equipment

2.1 Integrated management

1) Basic files of housing and commonly-shared facilities and equipment shall be created.

2) Operation, inspection, and maintenance records shall be archived on a monthly basis.

3) Inspections shall be conducted to assess the safety of the use of houses.

4) For problems identified during the inspection of commonly-shared sections, repair plans shall be developed according to the scopes of responsibility and the problems shall be repaired in accordance with their respective repair plans; failures in the operation of commonly-shared facilities and equipment, as well as problems identified during inspections, shall be repaired promptly.

5) The repair and maintenance plan for the next year shall be determined in the fourth quarter of every year.

6) Special-purpose equipment shall be operated, repaired, maintained, and regularly tested in accordance with relevant regulations.

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7) Inspections shall be conducted and preventive measures shall be implemented before and after extreme weather conditions, such as thundering, heavy rainfall, strong winds, and sandstorms.

8) Machine rooms

(1) Machine rooms shall be cleaned once per month and shall be clear of sundries

(2) Mouse baffles, raticide boxes, or mouse glue traps shall be set up.

(3) Fire equipment shall be provided in easily visible and accessible positions. Fire equipment shall be checked once per month to make sure it is intact and effective.

(4) Facilities and equipment shall have all necessary signs and nameplates.

(5) Relevant rules and certificates shall be posted or hung in easily visible positions

(6) Shift handover records and work logs shall be full and complete.

2.2 Commonly-shared sections

1) Building structure

Structural members, such as beams, plates, and columns shall be checked once per quarter. If any deformation or crack is detected during visual inspection, a request for building safety assessment shall be filed, necessary protection measures shall be taken, and repairs shall be carried out according to the assessment results.

2) Building components

A) Wall finish, plastering, eaves, balconies, rainshades, and supporting members for outdoor units of air conditioners shall be checked once per quarter

B) Patrol inspection shall be conducted once per month for doors, windows, and glass of commonly-shared sections.

C) Indoor flooring, wall surfaces, ceilings, outdoor roofs, and water aprons of commonly-shared sections shall be checked once per quarter.

D) Waterproofing and rainwater down pipes shall be checked before the flood season every year and after heavy rainfall

3. Ancillary structures

1) Patrol inspection shall be conducted once per month for roads, yards, stairs and handrails, curb stones, tube wells, ditches, and channels.

2) Rainwater and sewage wells shall be checked once per quarter.

3) Patrol inspection shall be conducted once per month for gates, enclosing walls, and fences.

4) Patrol inspection shall be conducted once per month for leisure chairs, pavilions, sculptures, and featured landscapes.

5) Lightening protection devices shall be tested once per year.

2.3 Air conditioning system

1) Before operation, a systematic inspection shall be conducted for the water chilling unit, circulating water pumps, cooling tower, fans, fan coils, and water treatment facilities and equipment.

2) During operation, patrol inspection shall be conducted once per day for the air conditioning system in order to ensure that the indoor temperature meets relevant requirements.

3) Energy saving measures shall be developed and energy consumption shall be counted and analyzed on a monthly basis.

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4) Pipes and valves shall be checked and derusted once per year.

5) Pressure vessels, meters, and noise of the cooling tower shall be checked once per year.

6) The fresh air ventilator, air processor filter screen, surface air cooler, box body, and fan coil filter screen shall be cleaned and sterilized once per year.

7) An overhaul shall be conducted on the air conditioning system every year.

2.4 Secondary water supply facilities

1) Sterilizing equipment shall be used in accordance with requirements by health and disease prevention authorities. Cleaning and sterilizing shall be conducted according to relevant requirements. Water quality measured in water quality tests shall meet national hygienic standards on domestic and drinking water.

2) Patrol inspection shall be conducted twice per day on the water tank room and water pump room in order to check the operating status of equipment.

3) The standby water pump shall be switched online once per quarter.

4) Lubrication of water pumps shall be checked once per year; the lubricant shall be replenished or replaced as necessary. Water pumps shall be maintained once per year.

5) Water supply pipes and valves shall be derusted and painted every year. All exposed pipes shall be freeze-proofed before the beginning of each winter.

6) Cover plates of the water tank and the impounding reservoir shall be kept intact and locked; the key shall be kept by specially assigned persons. The overflow pipe orifice and the ventilation pipe orifice shall be covered with metal protection screens and shall be kept intact.

2.5 Drainage system

1) Drainage facilities

Before each flood season, the rainwater and sewage wells and roof rainwater inlets shall be inspected, cleaned, and dredged. After every rainfall, the main drainage outlets and tubular wells shall be inspected.

2) Sewage pumps

Patrol inspection shall be conducted twice per day during the flood season and once per week beyond the flood season in order to check the operating status of the equipment; a manual startup test shall be conducted once every two weeks; maintenance shall be done once per quarter.

3) Septic tanks

Septic tanks shall be checked once every six months and shall be dredged if necessary.

2.6 Lighting and electrical equipment

1) In-building lighting

Patrol inspection shall be conducted three times per week. General failures shall be fixed within one day; complicated failures shall be fixed within 5 days.

2) Outside-building lighting

Patrol inspection shall be conducted once per week. General failures shall be fixed within one day and complicated failures shall be fixed within one week. The time controller shall be adjusted once per month.

3) Emergency lighting

Patrol inspection shall be conducted once per day. Any failures identified shall be instantly fixed.

4) LV cabinets

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Patrol inspection shall be conducted twice per day on the operating status of equipment. Maintenance shall be done once per year, including fastening, testing, and cleaning; electrical safety shall be checked once per year.

5) LV power distribution cabinets and LV lines

Patrol inspection shall be conducted once per month on the operating status of equipment; Maintenance shall be done once per year, including fastening, testing, and cleaning.

6) Control cabinets

Patrol inspection shall be conducted once every two weeks on the operating status of equipment; Maintenance shall be done once per year, including fastening, testing, commissioning, and cleaning.

7) Power generators

Commissioning shall be done once per month to ensure normal operation. Storage batteries shall be activated once per year. Patrol inspection shall be conducted once per week for battery chargers and storage batteries.

8) Testing

The in-house power meter shall be tested once every five years.

9) Power distribution rooms and power distribution compartments on every floor

Proper measures shall be taken to keep out small animals. Perimeters of wiring ducts passing through walls shall be tightly sealed. Locks shall be intact. Incoming and outgoing lines of cables and switches shall have proper signs.

2.7 Security system

1) Alarm control host

Patrol inspection shall be conducted once per day to check the operating status of equipment. Surfaces shall be cleaned once every two weeks and interiors shall be cleared of dust once every six months.

2) Door machine of intercom

Buttons and display shall be checked once per month. Surfaces shall be cleaned once per month; Interiors shall be cleared of dust once every six months.

3) Network control cabinet

Appearance shall be checked once every six months. For connecting wires, surface cleaning shall be done once per quarter and internal dedusting shall be done once per six months.

4) Infrared emission detectors

Wiring, detecting range, and waterproofing shall be checked once per quarter. Surfaces shall be cleaned once per quarter and interiors shall be cleared of dust once every six months.

5) Video acquisition devices

Surveillance images and video recording functions shall be checked once per week. Surfaces shall be cleaned once every two weeks and interiors shall be cleared of dust once every six months.

6) Cameras

A) Focusing, infrared night vision, wiring, and waterproofing shall be checked once per quarter and adjustments and tests shall be performed as appropriate. Surface cleaning shall be done for lenses once per quarter. Internal dedusting shall be done for the protective housing once every six months.

B) During operation, patrol inspection shall be conducted on the spray pond, water pumps, and ancillary facilities twice per week and the anti-creeping facilities shall be checked once per month.

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C) Safety warning signs shall be set up as necessary.

D) Water quality shall meet hygienic requirements.

3. Fire safety and prevention

3.1 Integrated management

1) A fire safety responsibility system shall be established and implemented. Persons responsible for fire safety shall be appointed. Fire safety responsibilities shall be clearly defined for every level and every job post.

2) A voluntary firefighting team armed with necessary firefighting equipment shall be set up. Relevant personnel shall master the basic firefighting knowledge and skills. A fire drill involving employees and proprietors or house users shall be organized annually.

3) Fire safety bulletins shall be set up and regular fire safety education shall be carried out. Two fire safety trainings shall be provided for employees every year.

4) Patrol inspection shall be conducted on fire protection once per day. Fire protection inspection shall be conducted once per month. Firefighting equipment shall be tested once per year according to relevant regulations in order to ensure that the evacuation paths, safety exits, fire lanes, and firefighting facilities and equipment meet relevant safety requirements.

5) An conduct in violation of fire safety rules, as well as fire hazards, must be immediately corrected or eliminated once discovered. Any conduct or hazard that cannot be corrected or eliminated must be reported to the fire department of the local police.

6) The fire control room shall be manned by watch-keepers around the clock. Each shift, which consists of two persons, shall promptly process all kinds of alarms and failure information.

7) In the event of a fire, the police must be immediately notified. Attempts shall be made to put out fire in its initial stage, personnel in danger shall be evacuated, and assistance shall be offered to the fire department.

3.2 Repair and maintenance of firefighting facilities and equipment

1) Automatic fire alarm system

(1) Patrol inspection shall be conducted once per day on fire alarm controllers interlock control equipment to check the functioning of equipment and to ensure uninterrupted around-clock normal operation. The alarm function of alarm controllers and interlock control equipment, as well as the interlock control, display, and printing functions, shall be checked and tested once per month. Interiors of machine cabinets shall be dedusted once per year.

(2) Fire alarm controllers, manual alarm buttons, and alarm devices shall be randomly selected for testing once per month. After having been in use for 2 years, the alarm and warning functions of manual alarm buttons and alarm devices shall be cleaned by specialized cleaning companies once every three years.

(3) Standby power supply

The master power supply and standby power supply shall be tested and switched between each other once per month. The standby power supply and storage batteries shall be put to one charge-discharge test every quarter.

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2) Fire control broadcast system

The interlock and forced switchover functions of fire emergency telephones, intercom phones in important locations, intercom telephone hosts, broadcast equipment, megaphones, and loudspeakers shall be checked and tested once per month, and their volume shall be tested as well; the interiors of machines shall be removed of dust once per year and the equipment inside cabinets shall be removed of dust once per year.

3) Smoke control and exhaust system

Irrigation shall be well planned. The irrigating water shall completely and evenly permeate the soil to prevent conspicuous drought and flood; Generally, plants must be watered 4 months before germination, 5 months before germination, in autumn, and before winter, respectively. For cool-season lawns, a higher frequency of irrigation may be adopted according to the growth and soil conditions.

2) Fertilization

Fertilizers shall be administered according to plant growth. Arboreal trees shall be fertilized once or twice every two years; shrubs shall be fertilized once or twice per year; Ground cover and lawn plants shall be fertilized twice or thrice per year. Additional fertilization may be used for bedding plants according to their growth. Dependence on chemical fertilizers shall be minimized.

3) Pest and plant disease control

Based on the pattern of plant pests and diseases, plants shall be inspected at least three times per month during the growing season and pests and diseases shall be controlled in accordance with the inspection results, so that leaves do not fall prematurely and plants do not die because of pest or disease.

4) Trimming

Arboreal trees shall be trimmed once every winter. Shrubs shall be trimmed once during the growing season and in the winter, respectively. The green hedges and color lumps shall be trimmed once before the Labor Day, before the National Day, and in the winter, respectively. Cool-season lawns shall be trimmed at least once or twice per month, depending on the growth, during the growing season and at least 12 times per year.

5) Weeding

Full weeding shall be carried out three times per year. The weeding frequency shall be elevated for important green belts. Green belts with weeds shall not exceed 10% of the total green belt area. Seasonal weeds shall be effectively controlled.

6) Garbage disposal

Waste created during greening work and garbage in the green belts shall be cleared three times per week.

4.3 Inspection of work

1) Greening work shall be checked three times per month during the growing season.

2) Landscape maintenance measures and work plans shall be developed for each quarter.

3) Greening files shall be present.

5. Environmental hygiene

5.1 Collection and removal of household garbage

1) Sorted collection shall be implemented for household garbage.

2) Hermetic garbage collection vessels with sort signs shall be provided.

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3) Garbage collection vessels shall be cleaned at least once every two weeks. Pesticides shall be sprayed daily during the breeding season of flies and mosquitos.

4) Garbage shall be moved to designated garbage disposal sites once per day and shall not be dumped randomly.

5) Garbage trucks shall be clean and tidy in appearance.

5.2 Cleaning of commonly-shared sections of property

1) Inside buildings

(1) Lobby and elevator hall on 1^st floor

The ground of the lobby and the elevator hall on the 1^st floor shall be swept and mopped once per day. The mailboxes and glass surfaces in the lobby shall be wiped once per week. The wall surfaces in the lobby and in the elevator hall shall be wiped once per month. Patrol inspection and cleaning shall be done for the lobby and the elevator hall on the 1^st floor once per day.

(2) Corridors and stairs

Grounds of corridors and stairs shall be swept once per week and mopped once every two weeks. Shared facilities, such as handrails, windowsills, fire doors, fire hydrants, and signs of the stairs, shall be wiped once every two weeks. Light fixtures in the building shall be dedusted once per quarter. Patrol inspection and cleaning shall be done for the corridors and stairs on a daily basis.

2) Elevator compartment

The doors and panels of the elevator compartment shall be wiped once per day. The ground of the elevator compartment shall be mopped once per day. Elevator compartments decorated with stainless steel or other materials shall be maintained once per month. Elevator compartments decorated with stone materials shall be maintained once per quarter. Patrol inspection and cleaning shall be done twice per day for the elevator compartment.

3) Terrace and roof: The terrace and roof shall be swept once per quarter; during the rain season, the terrace and the roof shall be swept once every 2 months. Patrol inspection shall be conducted once per month on the terrace and internal courtyard and any sundries shall be promptly removed.

4) Outdoor roads and facilities

Sweeping shall be done once per day and patrol inspection and cleaning shall be done twice per day for the outdoor roads. The outdoor public lighting and shared facilities shall be cleaned once per month. Rain hoods and door awnings shall be cleaned once per quarter.

5) Waterscape

Sterilization and purification shall be carried out according to the water quality. During operation, the water surface shall be cleaned twice per week and the bottom of the pond shall be cleaned twice per year.

6) Pest control and prevention

Assistance shall be offered to competent authorities in pest control and prevention. Prior notices shall be given of pesticides to be administered. Easily visible signs shall be set up where pesticides have been administered.

7) Cleaning in rainy and snowy weathers

After a rain, water in the main roads and trunk roads of the community shall be swept away. In snowy weathers, ground snow shall be promptly swept away and ground ice shoveled. If it snows at night, the ice and snow on main roads shall be removed before 10:00 AM next morning.

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5.3 Inspection and logging of work

1) Quality of cleaning shall be checked once per day and proper records shall be kept.

2) Quality of cleaning shall be fully checked once per quarter and proper records shall be kept.

3) Complete cleaning files shall be kept

6. Maintenance of public order

6.1 Main entrances and exits shall be guarded by specially assigned watch-keepers around the clock.

6.2 Patrol inspection routes shall be set. Patrol inspection shall be properly carried out and recorded, twice between 6:00 and 22:00 and once between 22:30 6:00.

6.3 Patrol inspection shall be conducted on parking lots and order shall be properly maintained for the use of roads and sites.

6.4 Motor vehicles must have proper permits when entering or exiting the property.

6.5 Security control rooms shall be manned by specially assigned watch-keepers around the clock; Surveillance videos and alarm records shall be retained for 30 days in case of the need to investigate. Management rules and emergency plans shall be posted in conspicuous positions.

6.6 Illegal conducts shall be immediately reported to the police and assistance shall be offered to competent authorities in processing illegal conducts.

6.7 Two special emergency plan drills shall be conducted every year and proper records shall be kept.

6.8 Duty personnel shall stand by around the clock.

6.9 Records and files

1) Complete and valid records shall be kept of all items of work.

2) Complete files shall be kept.

7. Decoration and fitting management

7.1 Decoration and fitting management service rules shall be established.

7.2 Decoration and fitting management files shall be created.

7.3 Declaration and registration of proprietors or house users for decoration and fitting shall be proper handled. Interior decoration and fitting management service agreements shall be signed with proprietors or house users, who shall be informed of the forbidden behavior and precautions in the decoration and fitting work.

7.4 During decoration and fitting, patrol inspection shall be conducted for the site once per day. If it is discovered that the proprietor or the house user fails to declare and register the decoration and fitting project or violate the law or any relevant regulation, such behavior shall be immediately dissuaded. If the proprietor or the house user refuses to correct such behavior, the violation shall be reported to competent authorities, the proprietor, and the proprietors committee and shall be made public within the range of the property management.

7.5 Inspection shall be carried out after decoration and fitting is completed. Any interested party that violates the interior decoration and fitting management service agreement shall be treated as agreed.

7.6 If the removal of decoration waste is commissioned to a third party, the waste shall be temporarily piled in designated locations and retention and covering measures shall be taken. Such waste shall be removed within 2 days. If the decoration waste is to be removed by the constructor, the waste shall be transported out of the property in bags or in hermetic vessels within 2 days.

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Property Service Contract of Beijing Jingkai One Center Project

Annex 6:

List of Hand-over Materials

1. Site plan of the completion; as-built drawings of individual buildings, structures, and equipment; as-built drawings of supporting facilities and underground pipes; and layout drawings of pipelines for buildings.

2. Technical data on the installation, use, and maintenance of facilities and equipment

3. Quality warranty documents and user's instruction documents of the property (Building Quality Warranty and Building User's Manual)

4. Materials of acceptance inspection by related professional agencies

5. List of property rights of the house and supporting facilities (including proprietor's name, construction area, and contact information)

6. Pressure test reports for water supply and heat supply systems

7. Report on measured area

8. Other materials required for property service

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Beijing Jingkai·One Center Project

Temporary Management Convention

Project Owner: Beijing Jingkai-Gongda Investment Management Co., Ltd.

(MM)/(DD)/(YY)

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Table of contents

Part 1	General provisions	71
Part 2	Overview of property	71
Part 3	Use, maintenance and management of exclusive areas of property	72
Part 4	Use, maintenance and management of shared areas of property	75
Part 5	Decoration and furnishing	78
Part 6	Preliminary property service	79
Part 7	Inspection and handover of project items	80
Part 8	Property service fee	81
Part 9	Other matters	82
Part 10	Supplementary provisions	82
Letter of Commitment for Temporary Management Convention		84

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Part 1 General provisions

To carry out the after-sales property management of Beijing Jingkai · One Center Project (this “Property”), safeguard legitimate rights and interests of all proprietors and house users, and to preserve public environment and order in the shared areas of the property, the project owner, prior to sales of the property, develops this temporary management convention (this “Convention”) with respect to use, maintenance and management of the property, common interests and obligations of proprietors, and liability for violation of this convention in accordance with the Regulations of Beijing Municipality for Realty Management (Decree of the People’s Government of Beijing Municipality No. 219) and the relevant laws, regulations and policies.

The Owner shall present and explain this convention to the Buyer prior to sales of the property. This convention shall be attached to the Beijing Commodity Housing Presale Contract or the Contract for Sale of Finished Commodity Housing in Beijing to be made by and between the first Buyer of the property and the Owner (the “Housing Purchase Contract”) as an annex thereto. By written undertaking in connection with this convention, the first Buyer acknowledges this convention, and effects of this convention shall be extended to subsequent Buyers of the property.

This convention shall be binding upon the Owner, proprietors and the house users. The proprietor shall warrant that the co-occupier and the relevant person to use this property in compliance with this convention and the relevant regulations.

Agreements involving common interests of proprietors contained in the Preliminary Property Service Contract by and between the project owner and the property service enterprise shall be consistent with those of this convention.

Part 2 Overview of property

I. Overview of properties within the property area:

Name of property: Beijing Jingkai · One Center

Location: Lot D1F1, Eastern Zone, Beijing Economic-Technological Development Area Road

Type of property: office and commercial properties

Floor area: 83,832.86m² (measured area prevails)

Scope of the property

East to: 3rd Jinghai Road

South to: 13^th Kechuang Street

West to: 1st Jinghai Road

North to: Qujian Road D1#

Details concerning properties situated within area of this property are found in the Preliminary Property Service Contract.

II. Rooms for property service within area of this property are located on the aboveground 1F and underground 1F of A2, with floor area: aboveground 100m², and underground 50m².

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III. Overview of property service enterprise:

Name of enterprise: Beijing Jingkai Investment Development Co., Ltd.

Legal representative: Guo Guangqing

Business license number: 110000001699163

Qualification class and qualification certificate number: No.0075 JWQZS [2014]

Registered office: Building 1, Zone A, Beijing Gongda Software Park, No. 1 Disheng North Street, Beijing Economic-Technological Development Area, Beijing, 100176, China

Contact phone: 010-67873388

Part 3 Use, maintenance and management of exclusive areas of property

IV. A proprietor is entitled to occupation, use, income and disposal of the exclusive area of the property, and shall also comply with the relevant laws and regulations of the country and Beijing municipality without endangering safety of the building or infringing upon legitimate rights and interests of any other person. The proprietor and the house user shall comply with regulations on supply of power, water, heating, and of gas, drainage, accessibility, ventilation, lighting, decoration & outfitting, surrounding sanitation and environmental protection, and properly deal with his or her relationship with proprietors of neighboring houses in the principles of facilitation of use, safety and neatness of the property, fairness and rationality without jeopardizing public interests and interests of any other person.

V. A proprietor shall, upon expiration of the warranty period of the property, solely take charge of maintenance and repair of the exclusive area of his or her property. Such proprietor shall be liable for any loss of any other proprietor incurred due to delay in repair or maintenance or failure to take actions to eliminate potential safety risk.

VI. A proprietor and a house user shall use the property for the planned purpose set forth in the house purchase contract, and annex and supplementary agreement thereto, and where the planned purpose of the property has to be changed, such proprietor and house user shall complete the relevant procedures in accordance with the laws subject to approval by the relevant competent governmental authority with written consent of the interested proprietor, project owner and the property service enterprise, and shall notify the property service enterprise, property right holder and proprietors committee of such change. Nature of use of the shared sections and facilities that are developed within the property management area according to the planning shall not be changed.

VII. A proprietor and a house user shall promptly deal with any potential safety risk that is revealed during use of water, electricity, gas, heating, cooling and ventilation facilities and equipment in accordance with the relevant regulations and report such risk to the property service enterprise and authority concerned; coordinate with the relevant authority to take actions to avoid danger when emergency event occurs; comply with and ensure their employees, visitors, customers, agents and contractors to comply with regulations concerning fire protection safety and safety rules developed by property the property service enterprise, and shall make sufficient fire extinguishers available within his or her unit.

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VIII. For outdoor and indoor equipment, facilities, and garden greening and sites of a proprietor,, which are either situated within the exclusive area or are used by such proprietor independently, such proprietor shall entrust the qualified professional enterprise with regular inspection, repair and maintenance of items including (but not limited to) lifting equipment, pressure vessel equipment, pressure gauge, fire-fighting facility and equipment, greening support facility and equipment, and central air-conditioning equipment, obtain the permit for safe operation from the competent governmental authority, and shall be liable for any and all expenses incurred in connection therewith pursuant to the relevant regulations of the country and Beijing municipality.

VX. Neither a proprietor nor a house user shall modify structure, appearance and use of the house without authorization; engage in catering and other trades resulting in excessive noises to residents and environmental pollution in the ground floor store of the residential property; open or block exterior door and window or change their sizes and styles without authorization; change material and color of finish of outer wall; erect or develop any building and structure on the roof, building body, and accessory platform and within any other commonly shared sections; and change the pipe without authorization.

X. In the event that the property service enterprise has to access the exclusive area for repair, maintenance, renewal and renovation of the shared areas of the property, it shall give a prior notice to the relevant proprietor and house user, and proprietor and house user of the relevant exclusive area shall coordinate with such enterprise. If a proprietor or house user hinders or provide negative coordination in connection with such repair, maintenance, renewal and renovation, resulting in damage to or any other loss of the property, such proprietor or house user shall be liable for aggravation of the loss incurred from such hindering or negative coordination.

If the proprietor refuses or fails to repair after receipt of notice, the property service enterprise is entitled either to perform on its own or to cause any third party to perform such repair , in which case the proprietor shall be liable for any and all consequential losses and expenses, and it shall also pay the property service enterprise the fines equal to 2‱ of total property purchase price on daily basis for the period commencing from the date on which the property service enterprise gives oral or written warning and ending on the date on which such repair is completed. Such fines shall be fully paid one time on the date of remedy of the breach, and shall be allocated to the public fund of the community.

If the proprietor refuses to accept liability for repair or loss, or fails to pay the fines on due date, hindering normal operation of the property or resulting in damage to the property or loss of any other proprietor, such other proprietor and the property service enterprise have the right to entrust professional lawyer with safeguarding their rights, and such proprietor shall bear any and all consequential costs and expenses (including but not limited to attorney's fee).

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In the event that the property service enterprise, as a result of an emergency that endangers public interests and legitimate rights or interests of any other proprietor, has to access the exclusive area of a property for maintenance or repair, the property service enterprise shall notify the relevant proprietor or house user of such property in advance, and if it is indeed impossible to notify such proprietor or house user, the property service enterprise is allowed to perform such repair or maintenance under supervision of the public security authority, government of the relevant jurisdiction, and other non-interested proprietor, provided that the enterprise shall notify the relevant proprietor or house user thereafter and shall well settle the problems arising thereafter.

XI. In the event that a proprietor or house user has to temporarily occupy or dig road or site due to repair or maintenance of property or due to public interest, such proprietor or house user shall complete the relevant formalities in accordance with the relevant laws and regulations, issue public announcement in advance, obtain written consent from the property service enterprise hired by the project owner, and shall reinstate such road or site within the agreed period. Such proprietor or house user shall be liable for any consequential loss of the property service enterprise, any other proprietor or house user, and any third party.

XII. If a property poses safety threat or endangers public interests or legitimate rights or interests of any other proprietor, the relevant responsible person such as proprietor or house user of such property shall immediately take actions to eliminate such threat.

1. Neither a proprietor nor a house user shall raise any animal and pet within the area of property in the office park.

2. Where a proprietor or house user engages in such activities as production, processing, office and R&D in buildings in the park, such proprietor or house user shall execute the relevant national standards, develop the relevant management, production and safety measures, as well as prevention measures, and shall arrange and use park facilities and energy facilities in a reasonable manner.

3. To transport goods into or out of the park, the organization shall comply with the relevant property management rules, and the proprietor or house user shall go through the relevant formalities with the property service enterprise. Any large transportation vehicle with capacity more than 30t (including 30t) is prohibited from accessing into the park, and in case of transportation in such large vehicle, the proprietor or the house user shall arrange lighter on its own.

XIII. Where a proprietor leases out, transfers or otherwise dispose of his or her exclusive area, such proprietor shall notify the project owner and the property service enterprise in writing in advance, notify the tenant and the buyer of this convention in compliance with the regulations for leasing and transfer of house, and shall notify the project owner and property service enterprise of the lease and transfer (i.e., attach this convention to the relevant contract or document as annex thereto, notify the project owner and the property service enterprise of disposal of the realty in writing within three days as of the date of execution of such relevant contract and document, and submit the letter of commitment for the right successor signing this convention to the property service enterprise), otherwise the proprietor shall be severally and jointly liable for loss and overdue fee incurred due to violation of the property management system and this convention on part of the tenant and the transferee.

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Part 4  Use, maintenance and management of shared areas of property

XIV. A proprietor shall be entitled to rights and assume obligations in connection with shared area of the property, and shall not refuse to fulfill obligations by reason of waiver of any right. When using shared area of the property, a proprietor or house user shall comply with regulations and rules developed by the project owner for use of shared area of property, and maintenance of public order, environment and sanitation in accordance with the Preliminary Property Service Contract. In case of damage to the shared area of property as a result of improper use on part of the user, the responsible person shall assume the legal liabilities such as reinstatement and compensation for loss.

XV. A proprietor or house user shall reasonably use the shared facility and equipment, consciously maintain the property neat and good-looking, and comply with regulations of the governmental for appearance and environment of the municipality. A proprietor or house user shall not erect any facility, building or structure, permanent or temporary, within the public area; not damage pipe well or cable above or ground the greening area, not shade or enclose the well lid, and not disturb necessary infrastructure within the greening area, installation and normal operation of the equipment.

XVI. When driving and parking a vehicle within the property management area (including motor vehicle and non-motor vehicle), a proprietor or house user shall comply with the rules for driving and parking within the property management area without parking the vehicle on the shared road, public greening area and other public sites and without occupying fire-fighting passageway or outdoor hydrant and equipment pipe well.

A property service staff has the right to instruct any person who violates the parking management rules to rectify such violation immediately, and such person shall be liable for any and all consequential losses. Any person shall otherwise sign the agreement for use and management of parking space with the property service enterprise and pay the relevant parking space management fee no matter how such person obtains the right of use of the parking space.

XVII. A proprietor or house user shall operate and use the lift in compliance with the relevant regulations of competent governmental authority.

XVIII. To erect company nameplates and sign boards (including but not limited to emblem) that are erected within public area, the proprietors or house users shall not install any such nameplate or sign board on their own but shall contact the property service enterprise for centralized fabrication and installation at the relevant expenses of such proprietors or house users. The project owner will provide spaces for hanging corporate guidance emblem at the entrance lobby on the ground floor, provided that the proprietor or house user shall notify the property service enterprise of the emblem details 7 days ahead of mobilization.

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XIX. A proprietor or house user shall reasonably use water, electricity, gas, heating, cooling, ventilation, fire protection and security facilities and equipment without any unauthorized removal or modification in accordance with the relevant regulations, and shall be liable for any and all consequences and losses of public area, shared equipment, and neighboring proprietor or house user as a result of unauthorized removal or modification. The property service enterprise has the right to claim repair, recovery or compensation against a proprietor or house user in connection with any loss caused by such proprietor or house user, and to report such loss to the competent governmental authority and the competent industry authority. If any equipment or facility that is so removed or modified remains within its warranty period, then warranty obligation of the relevant warranty provide shall be terminated.

XX. Garbage of each building shall be classified according to the Regulations of Beijing Municipality for Administration of Domestic Garbage (Bulletin No. 20 issued by the Standing Committee of the 3rd Municipal People's Congress of Beijing), and shall be stored in area specified by the property service enterprise, which in turn shall arrange to clear such garbage.

XXI. The following acts shall be prohibited within the property management area:

1. unauthorized removal or modification of load bearing structure and main structure of the house, unauthorized change of appearance of the house, unauthorized occupation of or damage to shared area of property, shared facility and equipment and the relevant site, and unauthorized relocation of shared facility and equipment of property;

2. damage to or scratch of any public items of the property such as glass curtain wall, wall of passageway/corridor and glass/column, in which case the relevant responsible person shall be liable for costs in connection with repair.

3. drilling on the glass curtain wall or sticking any type of facility, object or advertisement board on the indoor or outdoor surfaces of the curtain wall. Any device shall not touch any structural member of the curtain wall, Correctly use and specially protect external door and window, and do not support the external window with a hard object. Promptly close and lock external door and window when all persons leave the property.

4. non-compliance of building load capacity of the property by installing (placing) any furniture, equipment, mechanical device and other articles exceeding the roof load capacity onto any part of the roof.

5. unauthorized placement of articles, unauthorized erection of any building, structure, bracket,  canopy, advertisement board, signboard, umbrella and any other article not approved by all other proprietors or house users onto the common terrace or roof platform.

6. stacking of flammable, explosive, hypertoxic, or radioactive substance, and emission of harmful substances such as air pollutant, water pollutant, noise, light, and electromagnetic wave.

7. blockage or obstacle of any public item or public site, or placement or disposal of any garbage or article in public item or public site or out of the window.

8. unauthorized hanging, posting, alteration, scratching, erection of flag, distribution of brochure, or installation of neon light in public item or the relevant site.

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9. encroachment of or damage to public greening area (including but not limited to cutting and digging), road, flowers, trees, artistic landscape, and facilities and equipment for culture, recreation, sports and leisure.

10. parking on public road, or washing or repair of vehicles on public road.

11. installation of satellite receiver or any other high-power receiving device that shall be subject to approval by the governmental approval, without approval by the governmental approval.

12. engaging in activities endangering public interests and infringing legitimate rights and interests of any other person using the property.

13. demanding the property service enterprise for services irrelevant to the property management.

14. any other act prohibited by laws, regulations and this convention.

XXII. Any proprietor shall pay the specific repair fund as prescribed, and shall pay the property service fee in accordance with the Preliminary Property Service Contract. If a proprietor sells, transfers, mortgages or contributes his or her property, the repair fund he or she pays for the public item and shared facility and equipment shall remain the funds for repair and renewal of the public item and shared facility and equipment of the property.

XXIII. The order preservation staff has the right to inquire about a strange visitor and register such visit in order to preserve safety and order within the property management area, and a proprietor or house user shall cause the visitor to coordinate with such staff.

In case of fire, theft, personal injury or death and any other safety accident, the proprietor, house user, property service enterprise, and the project owner shall report to the public security authority. The property service enterprise and the project owner shall coordinate with such authority to conduct investigations and evidence gathering. The supervision video shall be kept in compliance with the relevant regulations.

XXIV. Where a proprietor or house user violates this convention, the property service enterprise has the right to urge such proprietor or house user to rectify such violation by advice, warning, prevention or any other measure permitted by laws, and such proprietor shall remedy such violation until he or she becomes compliant with this convention as required by the property service enterprise within the prescribed time limit at his or her remedy costs. If the proprietor fails to remedy his or her violation of this convention even through coordination, the property service enterprise is entitled to directly initiate civil litigation to the people's court, and if the proprietor violates the relevant regulations and policies, the property service enterprise is entitled to complain about and report such violation to the competent authority concerned.

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Part 5  Decoration and furnishing

XXV. In order to maintain quality of the property, the proprietor and house user undertake that the decoration recipient and decoration & furnishing enterprise engaged by such recipient, as well as the project owner shall comply with the Guidance for Decoration for the property area to perform decoration. The proprietor or house user and the decoration recipient shall declare the decoration to and register the decoration with the property service enterprise prior to decoration, and sign the Housing Decoration Management Service Agreement with the property service enterprise, defining the relevant rights and obligations, components of service and liability for breach of agreement. The proprietor or house user shall conduct decoration & furnishing in accordance with the housing decoration management service agreement, and observe the precautions for decoration & furnishing, and shall not perform any decoration prohibition. The proprietor shall place the decoration & furnishing materials and waste resulted from decoration in the designated area without unauthorized occupation of the public items and public site of the property. The proprietor or house user shall pay fees in connection with decoration management (including but not limited to decoration management fee, decoration garbage disposal fee and decoration deposit).

During decoration & furnishing construction within the property management area, decoration work generating noises is prohibited in the building from 8:30 a.m. to 18:00 p.m. in working days, and actions shall be taken for decoration work to be performed in other times in order to mitigate interference with surroundings. The proprietor or house user shall post an announcement in the building, indicating the date and time of decoration & furnishing to be performed.

XXVI. Where decoration & furnishing of house influences normal operation of public item and shared facilities and equipment, and infringes upon legitimate rights and interests of neighboring proprietor or house user, the proprietor or house user of the property under decoration shall promptly reinstate normal operation and legitimate rights and interests, and shall assume the relevant compensation liability. The proprietor or house user shall coordinate with the property service enterprise to bind and manage the decoration & furnishing enterprise. The proprietor or house user shall promptly reinstate normal operation of the public items and shared facilities and equipment that is influenced by decoration of the house, and shall repair the public area if consequentially damaged and shall be liable for any consequential loss of any other proprietor or house user.

XXVII. During decoration of house, the proprietor and house user shall take finished product protection measures for the relevant public area, and shall neither remove or modify the load-bearing wall and pipes nor damage waterproofing course. The property service enterprise has the right to supervise and inspect decoration activities of the proprietor and the house user.

If any decoration work shall be subject to approval and acceptance by the governmental authority concerned pursuant to the relevant regulations, the proprietor and house user shall complete such approval and acceptance in accordance with such regulations, and shall file such decoration work with the property service enterprise. If modification of fire-fighting system is involved in the decoration, the proprietor or house user shall submit such modification to the fire protection authority for approval and acceptance and file such modification with the property service enterprise. Any proprietor or house user shall not move, relocate, close, replace, cancel or remove any fire-fighting equipment and facility without prior written consent of the property service enterprise, and shall not damage the fire-fighting facilities or result in wrong alarm of or damage to fire alarm system for human-made reason, otherwise such proprietor or house user shall be liable for any and all consequences incurred due to any act under the laws and regulations such as fire control law and the relevant fire control regulations, and shall also bear all repair costs, losses, and penalties imposed by the government.

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Part 6  Preliminary property service

XXVIII. The project owner and property service enterprise shall take charge of preliminary property service for the property management area. Regarding exact property services, service standard and property service fee, the Preliminary Property Service Contract shall apply.  Any proprietor shall fully pay the payable fees under the property purchase contract or the Preliminary Property Service Contract .

XXIX. In order to safeguard their common interests, all proprietors agree to grant the following rights to the project owner with respect to property management activities:

1. to develop regulations and rules for use of public items and shared facilities & equipment of the property, preservation of public order, public greening area and environmental sanitation, and for other property service aspects.

2. to prevent the proprietor or house user from violating this convention and the regulations and rules by warning, advice, publicity and other necessary actions.

3. to withhold property service fee payable by the proprietor and any other fee collected and handed over on behalf of the proprietor under the laws, regulations and the Preliminary Property Service Contract.

4. to pay property service fee for unsold houses commencing from the due date of the property service fee. Where the property service fee for any unsold house paid by the project owner includes the property service fee that become payable after such house is sold, the project owner has the right to, following such sales, withdraw the balance of the said property service fee it pays without written confirmation by the proprietor.

5. to fully withdraw the balance of the preliminary property service fee the project owner pays as the preliminary property service provider without written confirmation by the proprietor, provided that the audited preliminary property service fee assumed by the project owner exceeds the actual fee incurred for the preliminary property service period, in which case the excess property service fee shall be the property of the project owner.

XXX. In order to safeguard their common interests, all proprietors agree to grant the following rights to the property service enterprise with respect to property management activities:

1. to cooperate with the project owner to develop regulations and rules for use of public items and shared facilities & equipment of the property, preservation of public order, public greening area and environmental sanitation, and for other property service aspects, in accordance with this convention.

2. it is lawful for property service staff to damage exclusive area of any proprietor without any liability, provided that such damage is indeed necessary for urgent danger prevention.

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3. property service staff can open channel or door to any part of the property from time to time for any national administrative authority, law enforcement authority, or judicial authority if any such authority has to access the park in order to perform its duties, in which case the proprietor shall understand and cooperate with such authority.

4. there is no any personal, property custody or insurance relationship within this property with the proprietor and house user.

5. the property service enterprise may be relieved from liability for inconvenience brought to the proprietor or house user as a result of necessary maintenance or repair of the public item or shared facilities and equipment.

Part 7  Inspection and handover of project items

XXXI. In the event that all proprietors decide to terminate the preliminary property service contract and that they determine the property management mode, the project owner shall verify the shared areas of the property with the proprietors and handover the shared areas to the proprietors in the manner as prescribed in the regulations of Beijing for handover of property items.

XXXII. Where inspections demonstrate that the shared areas of the property comply with the relevant standards, or after inspection and handover are completed under the property purchase contract (including deemed completion of inspection and handover), the project owner shall fully fulfill obligations and responsibilities in connection with the shared areas in addition to the warranty liability, which shall be performed on the basis of the warranty period and warranty scope as provided in the national regulations and the property purchase contract.

XXXIII. The proprietors meeting shall, within 30 days after it is established and after the property management mode is determined, carry out post-inspection and handover of shared areas of the property with the project owner. The preliminary property service contract shall be terminated on the date on which the inspection and handover of shared areas of property are accomplished. In the event that the handover is not accomplished within the said 30 days for any reason not attributable to the project owner, the date on which the said 30-day period expires shall be deemed as the completion date of property handover.

XXXIV. If the proprietors meeting continues choosing the property service enterprise appointed by the project owner (including deemed de facto management), the project owner is not required to complete such formalities as handover and inspection with the property service enterprise given that the project owner has inspected the property and shared areas with and handed over the relevant documentations to the property service enterprise in accordance with the Measures for Property Undertaking and Inspection (J. F. [2010] No. 165), and Measures of Beijing Municipality for Realty Management (Decree of the People's Government of Beijing No. 219) when the project owner appointed the property service enterprise, and that the property service enterprise has been managing and maintaining the shared areas, and the date on which the proprietors meeting makes decision shall be deemed as the completion date of handover and inspection, commencing from which the Buyer shall pay the property service fee.

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XXXV. If any dispute arises out of inspection of the shared areas between the proprietor and the property service enterprise, and if authoritative organization determines that the shared areas satisfy the relevant criteria, the handover shall be deemed to be completed at time of inspection, and the proprietor shall pay the due but not paid property service fee if any.

XXXVI. The shared areas of property shall be inspected and handed over as long as they materially comply with the handover conditions, and any repairable defect in the shared area shall not influence receipt of the property, provided that the project owner shall be responsible for repair of such defect.

Part 8  Property service fee

XXXVII. Any proprietor or house user shall pay the project owner or property service enterprise the property service fee promptly in accordance with the Preliminary Property Service Contract, and if a proprietor entrusts the property service enterprise with providing specially engaged service other than those set forth therein, such proprietor and the property service enterprise shall otherwise agree upon fees for such specially engaged service.

1. Property service rate:

Office Building (sold as a whole): 5.50yuan/month• m'

Office Building (partially sold ): 6.50yuan/month• m'

Commercial property: 5.50yuan/month• m'

2. Payment period of property service fee: the project owner or the property service enterprise shall pre-collect the property service fee on annual basis. A proprietor shall pay the property service fee for the first year when he or she moves in the property.

3. Subsequent payment of property service fee: the property service enterprise will remind the proprietor of paying the property service fee for the next year thirty days prior to expiration of the period related to the property service fee that has been paid by the proprietor. The proprietor shall, prior to expiration of the period related to the paid property service fee, pay the next tranche of property service fee to the project owner or the property service enterprise in cash or by cheque or T/T, and accordingly the payee shall issue the formal invoice.

4. Commencement date of property service fee: the commencement date of property service fee shall be the date from which the formal move-in procedures can be performed as indicated on the move-in notice or similar instrument issued by the developer. In the event that a proprietor fails to complete the move-in procedures promptly for his or her own reason, such proprietor shall still pay the property service fee accrued from the said date.

5. If a proprietor fails to pay the due and payable property service fee, such proprietor shall pay the project owner or the property service enterprise the liquidated damages equal to 3% of the payable property service fee per day. Where a proprietor fails to pay the property service fee for more than 6 months after the due date, the project owner or the property service enterprise has the right to publish the overdue payment at obvious positions in the property management area, and where a proprietor owes the due property service fee for more than 12 months, the project owner or the property service enterprise has the right to initiate an action against such proprietor.

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6. In case of forced change in labor cost as a result of adjustment in unit price of energy fee which is approved by the government or change in the national laws, regulations and policies, the property service rate shall be adjusted following the relevant procedures stipulated by the government.

XXXVIII. Where the proprietor and the house user agree that the property service fee shall be paid by the house user, such agreement shall prevail, in which case the proprietor shall be severally and jointly liable for payment of the property service fee. The proprietor shall immediately notify the property service enterprise in writing of any payment agreement reached by and between the proprietor and the house user.

XXXIX. All proprietors within the property area shall pay, use and manage the specific repair fund as prescribed, and if balance of the fund is less than 30% of the initial collection amount, the proprietors shall contribute to the specific repair fund as prescribed.

XXXX. Where the project owner or the property service enterprise undertakes entrustment with collection and handover for competent governmental or industry authorities, the proprietor shall pay the project owner or property service enterprise the payable fees such as those for water, electricity and gas that are covered by such collection and handover.

Part 9 Other matters

XXXXI. When completing the move-in formalities, a proprietor or house user shall fully complete various forms, and shall provide the property service enterprise with the minimum 2 lawful and valid contact phone numbers so that the property service enterprise could contact the proprietor or house user in case of emergency. The proprietor or house user shall promptly notify the property service enterprise in writing of any change in such phone numbers, otherwise the proprietor or house user shall solely assume any liability and loss incurred in connection with consequential failure of the property service enterprise to contact the proprietor or house user.

XXXXII. A proprietor shall be liable for losses of any other person due to negligence and improper conduct of employee, temporary visitor, contractor, tenant, and agent of such proprietor and any other house user.

XXXXIII. A bulletin board shall be erected within the property area, and the relevant management information the project owner and the property service enterprise announce on such board, and notice or announcement the project owner and the property service enterprise issue to the proprietor shall be deemed to be delivered to all proprietors on the third day as of the date of publicity.

Part 10 Supplementary provisions

XXXIV. In the event that a proprietor, house user, project owner or property service enterprise violates the laws, regulations and this convention, disturbing normal operation of the property or resulting in personal injury or loss of property of the right holder, the infringed party is entitled to initiate a legal action to local people's court with jurisdiction.

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XXXXV. For the purpose of this convention, the public item and shared facilities and equipment of the property shall mean house, space, site and the relevant facilities and equipment owned or used by several or all proprietors other than the exclusive area of individual proprietor.

XXXXVI. For the purpose of this convention, the house user shall mean family and employee of a proprietor, tenant and its employee, co-user, temporary user, borrower, visitor, and authorized caretaker of the house, and any other person whom is authorized by the proprietor to use such house.

XXXXVII. This convention shall be binding upon proprietors and house users within the property management area only. In case of transfer of this property, effects of this convention shall be extended to the property transferee. Where the house user violates this convention, the proprietor shall be jointly and severally liable for such violation.

XXXXVIII. The project owner shall be entitled to proprietor's rights of and undertake proprietor's obligations in connection with unsold portions and sold but not delivered portions within the property management area.

XXXXIX. The proprietor, project owner and property service enterprise shall hold each copy of this convention.

XXXXX. This convention shall be attached to the Beijing Commodity Housing Presale Contract as an annex thereto, and shall come into force as of the date on which the first Buyer of this property signs the commitment (letter of commitment provided in the annex) and expire on the effective date of the management convention developed by the proprietors meeting.

XXXXXI. If there is any conflict between provisions hereof and the relevant laws and regulations, such provisions shall be null and void without influencing effects of the remaining provisions hereof.

XXXXXII. The person developing this convention shall be bound to interpret this convention. This convention shall not be amended in any way unless the proprietors meeting is established, and the proprietors meeting shall re-consider and re-develop the proprietor management convention after the meeting is established.

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Annex: Letter of Commitment

Beijing Jingkai·One Center Project

Letter of Commitment for Management Convention

I / our company is the Buyer of Unit No.         of Building B7 of Beijing Jingkai • One Center Project (hereinafter refers to as “this Property”). In order to safeguard the common interests of all the proprietors in this property management area, I / our company agrees and represents as below:

I. Acknowledges that “the Temporary Management Convention for Beijing Jingkai • One Center Project” (hereinafter refers to as “this Convention”) as stipulated by Beijing Jingkai-Gongda Investment Management Co., Ltd. has been read thoroughly.

II. Agrees to fulfill, comply with and cause the persons related to this Property fulfill and comply with the all the liabilities and obligations for the proprietors as well as the property users as specified in the Management Convention.

III. I / our company agrees to assume the corresponding liabilities resulted from breach of this Convention and furthers agrees to assume any joint liability from any action of any user of this Property in breaching of this Convention.

IV. I / our company agrees to acquire the Letter of Commitment for this Convention executed by successor of this Property at the time of assignment of this Property, and deliver the same to the Project Owner or the property service enterprise, and this Letter of Commitment shall remain in full force and effect until receipt of the successor’s Letter of Commitment by the Project Owner or the property service enterprise.

Promisee (Seal):

/seal/ Tarena Software Technology (Hangzhou) Co., Ltd.

Date of Signature: __________

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Annex IX: Other Provisions

Supplementary Agreement to Beijing Commodity Housing Presale Contract on Beijing Jingkai • One Center Project

The Seller: Beijing Jingkai-Gongda Investment Management Co., Ltd.

The Buyer: Tarena Software Technology (Hangzhou) Co., Ltd.

Both the Seller and the Buyer agree to enter into and comply with this Supplementary Agreement (hereinafter referred to as “the Supplementary Agreement”) so as to supplement the Beijing Commodity Housing Presale Contract (Contract No.:            , hereinafter referred to as “the Presale Contract”) executed between both parties through friendly negotiation and based on voluntariness with respect to the outstanding issues related to the Presale Contract.

Article 1 Definitions and Interpretations in the Presale Contract

1. “Delivery” as mentioned in the annexes to the Contract shall mean “delivery for use”, and only refer to transfer for occupation and risk transfer of this Commodity Housing, excluding the contents of title transfer and registration of this Commodity Housing to be dealt with by the Buyer.

2. “The Seller shall ‘show’ the relevant documents to the Buyer” as mentioned in the Presale Contract shall mean “that the Seller shall keep the relevant documents at the marketing place or the handover & takeover place of this Commodity Housing and make the same available to the Buyer for consultation other than providing duplicates to the Buyer”; “the Buyer shall ‘show’ the relevant documents to the Seller” shall mean “the Buyer shall show expressly the duplicates of the relevant documents and the Seller shall have the right to consult the same”; “the Seller shall ‘provide’ the relevant documents to the Buyer” shall mean “the Seller shall deliver the data or documents to the Buyer in person or with the mode of service as agreed in this Supplementary Agreement”.

3. “The project quality codes, standards and working drawing design documents issued by the State and Beijing Municipality” as mentioned in the Presale Contract refers to “the mandatory project quality codes, standards and working drawing design documents of the State and Beijing Municipality in effect at the time of design and construction”.

“The orientation of this Commodity Housing” as given in Article 3 of the Presale Contract shall refer to “the orientations of some of the rooms of this Commodity Housing”.

4. “Day” as mentioned in the Presale Contract shall refer to “calendar day”.

5. “The date of duly receipt” as mentioned in the Presale Contract shall refer to:

(1) In case of delivery by mail, the 5^th day after the date of delivery by mail shall be deemed as the date of duly receipt.

(2) In case of delivery by courier, in person or taking delivery by the assigned person, the date of receipt as indicated on the receipt form shall be deemed as the date of duly receipt; when no receipt form is made, the date given on the letter shall be deemed as the date of duly receipt.

(3) In case of transmission by fax or email, the second day after the date indicated on the notice shall be deemed as the date of duly receipt.

85

Article 2 Supplementary Provisions for House Delivery

1. In case the Buyer asserts its right for sales return of the commodity housing to the Seller for reason that the commodity housing has serious quality defect(s) in accordance with the relevant provisions as given in the Presale Contract, the Buyer shall show the valid testing report as issued by a statutory appraisal agency within 60 days (including the 60^th day) after the date of handover of the commodity housing by the Seller. Any failure to show or being unable to show within the said deadline shall be deemed as the commodity housing is acceptable in quality, and the Buyer has waived its right for asserting sales return, in this case, the Presale Contract shall continue to be fulfilled and Buyer shall not assert its right for sales return to the Seller according to these provisions. The Buyer shall assume the responsibility for not taking delivery of the commodity housing in time if it has rejected to take over this Commodity Housing.

In case the Buyer asserts its right for sales return of the commodity housing to the Seller according to the provisions as given under Article 17 (2) of the Presale Contract, the Buyer shall show the valid testing report as issued by a statutory appraisal agency within 60 days (including the 60^th day) after the date of handover of the commodity housing by the Seller. Any failure to show or being unable to show within the said deadline shall be deemed as the commodity housing is acceptable in indoor air quality. In this case, the Buyer shall assume the responsibility for not taking delivery of the commodity housing in time.

Air quality measure shall be based on the initial state of the Commodity Housing at the time of delivery. The Seller shall assume no responsibility for any non-conformity with the standards of the state with respect to indoor air quality after the Buyer has made any decoration or transformation to the Commodity Housing.

2. Unless otherwise agreed between both parties, the Seller shall deliver this Commodity Housing to the Buyer at the time as specified in the Presale Contract. In case the delivery conditions for this Commodity Housing as specified in the Presale Contract have been satisfied ahead of the time as specified, the Seller can make delivery ahead of the time as specified, and the date of taking delivery shall be the date as indicated on the written document “Notice on Taking Delivery” issued by the Seller to notify the Buyer to handle the relevant formalities and take over the Commodity Housing.

3. For any Commodity Housing of which the acceptance and registration formalities upon project completion have been satisfied, if the Commodity Housing is defective identified at the time of taking delivery, the Buyer shall reject this Commodity Housing by virtue of the said defect. The Seller shall assume its obligations for warranty and maintenance, but not bear any liability for breach of contract due to late delivery.

4. After actual delivery of this Commodity Housing by the Buyer, any occupation and damage to this Commodity Housing by any other person, and damage to the devices and equipment of the property shall be under the responsibility of the Buyer.

5. The Buyer shall pay up the taxes as specified in Article 16(5) of the Presale Contract before the formalities of taking over the keys. The Seller may have the right to refuse to handle the formalities of handing over the keys to the Buyer if the Buyer has not paid of the above taxes.

86

Article 3 Property Management Service Related to this Commodity Housing

1. The Buyer agrees that the Seller will select or replace a property management company to exercise property management by law before formal establishment of the Proprietors Committees. After formal establishment of the Proprietors Committees, the Proprietors Committees shall have the right to further employ the existing property service enterprise or select another property management entity by law.

2. If the Buyer carries out decoration on this Commodity Housing by itself after the occupancy formalities, it shall comply with “the Temporary Management Convention for Beijing Jingkai • One Center Project”, and shall not make any damage to this Commodity Housing and bring any nuisance to the proprietors in the vicinity.

3. The Buyer shall not use this property for other purposes other than those specified in the Presale Contract.

Article 4 Special Provisions for Cancellation of the Presale Contract

l. In case of occurrence of any circumstance in which the Buyer shall be entitled to terminate the contract due to the Seller’s default as specified in the Presale Contract, the Buyer shall issue a written notice for cancellation of the Presale Contract to the Seller within 60 days (including the 60^th day) after occurrence of the said circumstance. The Buyer’s failure’s to do so shall be deemed as the Buyer has waived its right for cancellation of the contract and agreement to further fulfillment of the Presale Contract.

2. In case of occurrence of any circumstance which may lead to cancellation of the contract by either party as referred in the Presale Contract as well as this Supplementary Agreement, the Buyer shall issue its written application for cancellation of the contract to the Seller, then, execute the Agreement on Cancellation of the Commodity Housing Presale Contract within 5 days after delivery of the said application, and assist the Seller to complete all the formalities for cancellation of the presale contract for this Commodity Housing at the competent government authorities, otherwise, the Buyer shall pay liquidated damages to the Seller at 2/10000 of the total price of this Commodity Housing to the Seller per each day’s delay in payment (excluding the delay caused by the Seller).

Article 5 Notification

l. The Buyer shall provide its correct contact information in detail (including the address, telephone, fax and contact person, etc.) to the Buyer at the time of concluding the Presale Contract, and issue its written notice to the Seller within 7 days after any change to the said address or any other contact information, otherwise, the original contact information provided by the Buyer shall further remain in effect, and the Seller shall assume no legal liability for the Buyer’s not receiving any relevant notice from the Seller due to change to the Buyer’s contact information.

2. According to the Presale Contract and this Agreement, important documents such as any notice from one party to the other party shall be delivered to the address as specified in the Presale Contract as well as this Agreement or otherwise given by the written notice from the other party.

87

Article 6 Other Provisions

l. The Seller’s sales advertisement and publicity presentation materials (including but not limited to postings, brochures, sand table, models and advertisements, etc.) for this Commodity Housing shall not be deemed as a contractual offer, and the rights and obligations of both parties shall be based on the provisions as specified in the Presale Contract as well as the corresponding supplementary agreements. The Seller shall not assume any liability for any matter which has not been agreed between both parties in the Presale Contract (including but not limited to any oral promise, recommendation and publicity made by the Seller as well as its staff).

2. If a fire sprinkler system is provided in the commodity housing purchased by the Buyer, when performing fine decoration on the commodity housing after purchase, the Buyer shall comply with the requirements as specified in the relevant laws, regulations and codes of the state.

3. The Seller shall be responsible for warranty of this Commodity Housing according to Article 18 of the Presale Contract, Nevertheless, the Seller shall not be responsible for any damage due to any force majeure event or modification out of artificial reasons or any defect upon expiry of the warranty period which shall be under the Buyer’s responsibility. In addition, the Seller shall not take any warranty obligation for any change to the original state of this Commodity Housing caused by decoration by the Buyer.

4. The Presale Contract (including the annexes as well as this Supplementary Agreement) shall constitute all the contents with respect to selling and purchase of this Commodity Housing between the Buyer and the Seller and supersede all the previous agreements made between both parties and all the literal and picture materials provided by the Seller immediately upon execution. This Supplementary Agreement and the Presale Contract shall have equal legal effect. This Supplementary Agreement shall prevail in case of any conflict between the provisions in this Supplementary Agreement and the Presale Contract.

Article 7 Special Provisions

1. After purchase of this Commodity Housing, this Commodity Housing can be only used by the legal entity which has been registered at Beijing Economic-Technological Development Area.

2. When handling the title transfer and registration processes related to this Commodity Housing by the Buyer and the Seller, both parties shall execute the relevant legal documents as required by the title registration authority, and shall comply with the relevant conditions and requirements as imposed by the competent government authority. In case that the title certificate of this Commodity Housing has not been obtained on time at the Buyer’s fault (including but not limited to that the Buyer has not satisfied the relevant requirements for admission to the development area, the Buyer has failed to pay the relevant taxes, provide the relevant information and execute the legal documents necessary for handling the property right according to the Seller’s requirements, etc.), the Buyer shall assume the liability and Seller shall not assume any liability for breach of the contract.

3. Agreement on “Specialized Housing Maintenance Funds”

88

The Buyer agrees that the Buyer shall be liable to pay the public maintenance cost in full and in time at the amount and due time as given in the written notice from the property service enterprise when the public locations and public facilities and devices in the area where this Commodity Housing is located require maintenance, renewal or reconstruction upon expiry of the warranty period.

4. The Seller shall issue the VAT invoice in full to the Buyer within 60 days after the Buyer has completed registration of the new company (i.e. the property owner of this house) and the Seller has received the purchase price in full.

5. “The Buyer” in the Beijing Commodity Housing Presale Contract as well as its annexes and this Supplementary Agreement shall refer to the Buyer or any company under the same control.

Seller (Seal)	Buyer (Seal)
/seal/ Beijing Jingkai-Gongda Investment	/seal/ Tarena Software Technology (Hangzhou) Co., Ltd.
Management Co., Ltd.
Date:	Date: November 5, 2016

89

EX-8.1

Exhibit 8.1

List of Major Subsidiaries and Variable interest entity

Name	Jurisdiction of Incorporation	Affiliate Relationship with  The Registrant
Tarena Hong Kong Limited	Hong Kong	Wholly-owned subsidiary
Tarena Software Technology (Hangzhou) Co., Ltd.	PRC	Wholly-owned subsidiary
Tarena Technologies Inc.	PRC	Wholly-owned subsidiary
Shenyang Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Jinan Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Qingdao Tarena Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Tarena (Wuhan) Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Chongqing Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Kunming Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Nanjing Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Zhuhai Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Guangzhou Tarena Information Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Shenzhen Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Beijing Yingcai Tianyi Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Heilongjiang Tarena Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Harbin Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Shijiazhuang Tarena Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Changchun Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Tianjin Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Yantai Tarena Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Xi’an Tarena Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Suzhou Tarena Information Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Wuxi Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Ningbo Tarena Information Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Nanchang Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Fuzhou Tarena Information Technology Co., Ltd.	PRC	Wholly-owned subsidiary

Name	Jurisdiction of Incorporation	Affiliate Relationship with  The Registrant
Nanjing Tarena Weishang Information Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Guangxi Nanning Tarena Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Zhengzhou Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Changsha Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Chengdu Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Hefei Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Xiamen Tarena Information Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Dalian Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Wuhan Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Shanghai Tarena Weishang Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Shanghai Tarena Weiguan Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Shanghai Tarena Weicheng Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Shanghai Tarena Weixin Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Changchun Yingcai Tianyi Technology Co. Ltd.	PRC	Wholly-owned subsidiary
Beijing Pairuite Internet Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Shanghai Tarena Weiying Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Chengdu Tarena Weishang Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Taiyuan Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Hangzhou Tarena Weishang Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Dongguan Tarena Software Co., Ltd.	PRC	Wholly-owned subsidiary
Weifang Tarena Times Software Co., Ltd.	PRC	Wholly-owned subsidiary
Luoyang Tarena Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Tianjin Tarena Software Development Co. Ltd.	PRC	Wholly-owned subsidiary
Tianjin Weishang Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Gansu Tarena Information Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Beijing Caixiu Renren Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Shanghai Tarena Software Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Shanghai Tarena Weijia Software Co., Ltd.	PRC	Wholly-owned subsidiary

Name	Jurisdiction of Incorporation	Affiliate Relationship with  The Registrant
Guizhou Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Hainan Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Haikou Tarena Technology Co., Ltd.	PRC	Wholly-owned subsidiary
Linyi Tarena Technology Software Co., Ltd.	PRC	Wholly-owned subsidiary
Shenzhen Tarena Weishang Software Co., Ltd.	PRC	Wholly-owned subsidiary
Shenyang Tarena Professional Education School	PRC	School sponsored by Shenyang Tarena Technology Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Jinan Tarena Professional Education School	PRC	School sponsored by Jinan Tarena Software Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Qingdao Tarena Professional Education School	PRC	School sponsored by Qingdao Tarena Software Technology Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Wuhan Tarena Professional Education School	PRC	School sponsored by Wuhan Tarena Software Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Chongqing Jiulongpo Tarena Professional Education School	PRC	School sponsored by Chongqing Tarena Software Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Kunming Guandu Tarena Professional Education School	PRC	School sponsored by Kunming Tarena Technology Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Nanjing Tarena Professional Education School	PRC	School sponsored by Nanjing Tarena Software Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Zhuhai Tarena Professional Education School	PRC	School sponsored by Zhuhai Tarena Software Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Guangzhou Tarena Software Professional Education School	PRC	School sponsored by Guangzhou Tarena Information Technology Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.

Name	Jurisdiction of Incorporation	Affiliate Relationship with  The Registrant
Shenzhen Bao’an Tarena Professional Education School	PRC	School sponsored by Shenzhen Tarena Software Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Harbin Tarena Professional Education School	PRC	School sponsored by Harbin Tarena Technology Co., Ltd., a wholly-owned subsidiary of Tarena International, Inc.
Dalian High-Tech Zone Tarena Professional Education School	PRC	School sponsored by Dalian Tarena Software Co., Ltd.
Nanjing Tarena Weishang Education School	PRC	School sponsored by Nanjing Tarena Weishang Information Technology Co., Ltd.
Shenyang Tarena Times Professional Education School	PRC	School sponsored by Shenyang Tarena Technology Co., Ltd.
Zhengzhou Tarena Professional Education School	PRC	School sponsored by Zhengzhou Tarena Technology Co., Ltd.
Dalian Shahekou Tarena Accounting Professional Education School	PRC	School sponsored by Dalian Tarena Software Technology Co., Ltd.
Chengdu High-tech Zone Tarena Professional Education School	PRC	School sponsored by Chengdu Tarena Technology Co., Ltd.
Chengdu Tarena Professional Education School	PRC	School sponsored by Chengdu Tarena Technology Co., Ltd.
Chongqing Nanan Tarena Professional Education School	PRC	School sponsored by Chongqing Tarena Software Co., Ltd.
Wuhan Technology Tarena Professional Education School	PRC	School sponsored by Wuhan Tarena Software Co., Ltd.
Weifang Tarena Professional Education School	PRC	School sponsored by Tarena Technology Co., Ltd.
Shenzhen Longhua Xinqu Tarena Professional Skills Education School	PRC	School sponsored by Shenzhen Tarena Software Technology Co., Ltd.
Beijing Tarena Jinqiao Technology Co., Ltd.	PRC	Variable interest entity
Guangzhou Huicai Software Co., Ltd.	PRC	Subsidiary of Variable interest entity
Hangzhou Tarena Technology Co., Ltd.	PRC	Subsidiary of Variable interest entity
Hangzhou Tarena Computer Co., Ltd.	PRC	Subsidiary of Variable interest entity

EX-12.1

Exhibit 12.1

Certification by the Principal Executive Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Shaoyun Han, certify that:

1. I have reviewed this Annual Report on Form 20-F of Tarena International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the period presented in this report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a.          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.          Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.          Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

a.          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b.          Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: April 25, 2017

/s/ Shaoyun Han
Name:	Shaoyun Han
Title:	Chief Executive Officer

EX-12.2

Exhibit 12.2

Certification by the Principal Financial Officer Pursuant to
Section 302 of the Sarbanes-Oxley Act of 2002

I, Yuduo Yang, certify that:

1. I have reviewed this Annual Report on Form 20-F of Tarena International, Inc.;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the Company as of, and for, the period presented in this report;

4. The Company’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the Company and have:

a.          Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the Company, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b.          Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c.          Evaluated the effectiveness of the Company’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d.          Disclosed in this report any change in the Company’s internal control over financial reporting that occurred during the period covered by the annual report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting; and

5. The Company’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the Company’s auditors and the audit committee of the Company’s board of directors (or persons performing the equivalent functions):

a.          All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the Company’s ability to record, process, summarize and report financial information; and

b.          Any fraud, whether or not material, that involves management or other employees who have a significant role in the Company’s internal control over financial reporting.

Date: April 25, 2017

/s/ Yuduo Yang
Name:	Yuduo Yang
Title:	Chief Financial Officer

EX-13.1

EXHIBIT 13.1

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Tarena International, Inc. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Shaoyun Han, Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 25, 2017

/s/ Shaoyun Han
Name:	Shaoyun Han
Title:	Chief Executive Officer

EX-13.2

EXHIBIT 13.2

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Tarena International, Inc. (the “Company”) on Form 20-F for the fiscal year ended December 31, 2016 as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Yuduo Yang, Chief Financial Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that to my knowledge:

(1) The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

(2) The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

April 25, 2017

/s/ Yuduo Yang
Name:	Yuduo Yang
Title:	Chief Financial Officer

EX-15.1

EXHIBIT 15.1

25 April, 2017

Matter No.: 824093

Doc Ref: 103291636

852 2842 9556

Christopher.bickleyl@conyersdill.com

Tarena International, Inc.

Suite 10017, Building E, Zhongkun Plaza

A18 Bei San Huan West Road

Haidian District
Beijing 100098

The People’s Republic of China

Dear Sirs,

Re: Tarena International, Inc.

We consent to the reference to our firm under the heading “Item 10. Additional Information — E. Taxation — Cayman Islands Taxation” in Tarena International, Inc.’s Annual Report on Form 20-F for the year ended 31 December 2016 (the “Annual Report”), which will be filed with the Securities and Exchange Commission (the “SEC”) in the month of April 2017, and further consent to the incorporation by reference into the Registration Statements on Form S-8 (File No.: 333-197226) filed on July 3, 2014 and on Form S-8 (File No.: 333-204494) filed on May 28, 2015, in each case pertaining to Tarena International, Inc.’s 2008 share plan and 2014 share incentive plan of the summary of our opinion under the heading “Item 10. Additional Information — E. Taxation — Cayman Islands Taxation” in the Annual Report. We also consent to the filing with the SEC of this consent letter as an exhibit to the Annual Report.

In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.

Yours faithfully,

/s/ Conyers Dill & Pearman

Conyers Dill & Pearman

EX-15.2

EXHIBIT 15.2

[Han Kun Law Offices Letterhead]

April 25, 2017

Tarena International, Inc.
Suite 10017, Building E, Zhongkun Plaza
A18 Bei San Huan West Road, Haidian District
Beijing 100098 The People’s Republic of China

Dear Sir/Madam:

We hereby consent to the reference of our name under the heading “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure,” “Item 4. Information on the Company—C. Organizational Structure” and “Item 10. Additional Information—E. Taxation—People’s Republic of China Taxation” in Tarena International, Inc.’s Annual Report on Form 20-F for the year ended December 31, 2016 (the “Annual Report”), which will be filed with the Securities and Exchange Commission (the “SEC”) in the month of April 2017, and further consent to the incorporation by reference into the Registration Statements on Form S-8 (File No.: 333-197226) filed on July 3, 2014 and on Form S-8 (File No.: 333-204494) filed on May 28, 2015, in each case pertaining to Tarena International, Inc.’s 2008 share plan and 2014 share incentive plan of the summary of our opinion under the heading “Item 3. Key Information—D. Risk Factors—Risks Relating to Our Corporate Structure,” “Item 4. Information on the Company—C. Organizational Structure” and “Item 10. Additional Information—E. Taxation—People’s Republic of China Taxation” in the Annual Report. We also consent to the filing of this consent letter with the SEC as an exhibit to the Annual Report.

In giving such consent, we do not thereby admit that we come within the category of persons whose consent is required under Section 7 of the Securities Act of 1933, or under the Securities Exchange Act of 1934, in each case, as amended, or the regulations promulgated thereunder.

Very truly yours,

/s/ Han Kun Law Offices

Han Kun Law Offices

EX-15.3

EXHIBIT 15.3

Consent of Independent Registered Public Accounting Firm

Board of Directors

Tarena International, Inc.

We consent to the incorporation by reference in the registration statements (No. 333-204494 and No. 333-197226) on Form S-8 of Tarena International, Inc. of our report dated April 25, 2017, with respect to the consolidated balance sheets of Tarena International, Inc. as of December 31, 2015 and 2016, and the related consolidated statements of comprehensive income, changes in equity (deficit) and cash flows for each of the years in the three-year period ended December 31, 2016, which report appears in the December 31, 2016 annual report on Form 20-F of Tarena International, Inc.

Our report dated April 25, 2017 contains an explanatory paragraph that states that the Company has elected to change its reporting currency from U.S. dollars to Chinese Renminbi.

/s/ KPMG Huazhen LLP

Beijing, China
April 25, 2017

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Document And Entity Information	12 Months Ended
	Dec. 31, 2016 shares
Document Information [Line Items]
Document Type	20-F
Document Period End Date	Dec. 31, 2016
Amendment Flag	false
Entity Registrant Name	Tarena International, Inc.
Entity Central Index Key	0001592560
Entity Current Reporting Status	Yes
Current Fiscal Year End Date	--12-31
Entity Filer Category	Accelerated Filer
Entity Well-known Seasoned Issuer	No
Document Fiscal Year Focus	2016
Document Fiscal Period Focus	FY
Common Class A [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding	47,160,248
Common Class B [Member]
Document Information [Line Items]
Entity Common Stock, Shares Outstanding	8,895,249

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CONSOLIDATED BALANCE SHEETS - CNY (¥) ¥ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Current assets:
Cash	¥ 810,672	¥ 513,938
Time deposits	416,724	449,878
Restricted time deposits		150,000
Accounts receivable, net of allowance for doubtful accounts	97,374	146,999
Prepaid expenses and other current assets	126,088	66,103
Total current assets	1,450,858	1,326,918
Time deposits	58,667	114,227
Accounts receivable, net of allowance for doubtful accounts	1,176	7,771
Property and equipment, net	437,337	127,864
Goodwill	3,365
Long term investments	41,760	24,000
Other non-current assets	91,849	53,111
Total assets	2,085,012	1,653,891
Current liabilities:
Accounts payable	4,502	4,413
Amounts due to a related party	79	879
Income taxes payable	91,240	56,293
Deferred revenue	266,061	164,524
Accrued expenses and other current liabilities	117,867	79,835
Total current liabilities	479,749	305,944
Other non-current liabilities	7,043	9,333
Total liabilities	486,792	315,277
Commitments and contingencies
Shareholders' equity:
Treasury shares (926,113 and 1,574,980 class A ordinary shares as of December 31, 2015 and 2016, respectively, at cost)	(93,761)	(49,355)
Additional paid-in capital	995,216	907,018
Accumulated other comprehensive income	58,204	30,232
Retained earnings	638,173	450,345
Total shareholders' equity	1,598,220	1,338,614
Total liabilities and shareholders' equity	2,085,012	1,653,891
Class A [Member]
Shareholders' equity:
Ordinary shares	302	276
Class B [Member]
Shareholders' equity:
Ordinary shares	¥ 86	¥ 98

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CONSOLIDATED BALANCE SHEETS (Parenthetical) ¥ in Thousands	Dec. 31, 2016 CNY (¥) shares	Dec. 31, 2016 USD ($) $ / shares shares	Dec. 31, 2015 CNY (¥) shares	Dec. 31, 2015 USD ($) $ / shares shares
Current assets:
Cash	¥ 810,672		¥ 513,938
Property and equipment, net	437,337		127,864
Investments, Fair Value Disclosure	15,000
Long-term Investments	41,760		24,000
Other non-current assets	91,849		53,111
Current liabilities:
Income taxes payable	91,240		56,293
Accrued expenses and other current liabilities	117,867		79,835
Other non-current liabilities	¥ 7,043		¥ 9,333
Common Class A [Member]
Ordinary shares
Ordinary shares, par value | $ / shares		$ 0.001		$ 0.001
Authorized | shares	860,000,000	860,000,000	860,000,000	860,000,000
Issued | shares	48,735,228	48,735,228	44,914,538	44,914,538
Outstanding | shares	47,160,248	47,160,248	43,988,425	43,988,425
Treasury shares | shares	1,574,980	1,574,980	926,113	926,113
Common Class B [Member]
Ordinary shares
Ordinary shares, par value | $ / shares		$ 0.001		$ 0.001
Authorized | shares	40,000,000	40,000,000	40,000,000	40,000,000
Issued | shares	8,895,249	8,895,249	10,574,896	10,574,896
Outstanding | shares	8,895,249	8,895,249	10,574,896	10,574,896
VIE [Member]
Current assets:
Cash	¥ 630		¥ 1,043
Property and equipment, net	3		18
Investments, Fair Value Disclosure
Long-term Investments	35,000		18,000
Other non-current assets	716		266
Current liabilities:
Income taxes payable	3,729		3,737
Accrued expenses and other current liabilities	176		892
Other non-current liabilities	¥ 267		¥ 267

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - CNY (¥) ¥ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Condensed Statement of Income Captions [Line Items]
Net revenues		¥ 1,579,604	¥ 1,178,008	¥ 836,941
Cost of revenues	[1]	(449,104)	(333,559)	(240,084)
Gross profit		1,130,500	844,449	596,857
Selling and marketing expenses	[1]	(527,553)	(384,954)	(261,489)
General and administrative expenses	[1]	(307,519)	(251,298)	(183,998)
Research and development expenses	[1]	(65,594)	(50,515)	(33,454)
Operating income		229,834	157,682	117,916
Interest income		23,974	42,732	26,802
Other income		15,960	11,812	14,568
Loss on foreign currency forward contract		(12,898)
Foreign currency exchange gains (losses)		3,760	(29,499)	7,359
Income before income taxes		260,630	182,727	166,645
Income tax expense		(18,776)	(3,967)	(14,795)
Net income		241,854	178,760	151,850
Accretion of convertible redeemable preferred shares				(3,530)
Net income attributable to Class A and Class B ordinary shareholders		¥ 241,854	¥ 178,760	¥ 148,320
Basic earnings per Class A and Class B ordinary share		¥ 4.35	¥ 3.32	¥ 3.11
Diluted earnings per Class A and Class B ordinary share		¥ 4.10	¥ 3.04	¥ 2.69
Net income		¥ 241,854	¥ 178,760	¥ 151,850
Other comprehensive income (loss)
Foreign currency translation adjustment, net of nil income taxes		22,972	34,748	(2,896)
Unrealized holding gains on available for sale securities, net of RMB42 income taxes		5,235
Less: reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes		(235)
Comprehensive income		¥ 269,826	¥ 213,508	¥ 148,954

[1] Includes share-based compensation expense as follows (note 14):

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CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Foreign currency translation adjustment, taxes
Share-based compensation expense	(67,824)	(32,919)	(24,976)
Unrealized holding gains on available for sale securities, net of income taxes	42
Reclassification adjustment for gains on available for sale securities realized in net income, net of income taxes	42
Cost of revenues [Member]
Share-based compensation expense	(4,124)	(664)	(349)
Selling and marketing expenses [Member]
Share-based compensation expense	(5,496)	(1,959)	(1,036)
General and administrative expenses [Member]
Share-based compensation expense	(51,154)	(28,274)	(22,302)
Research and development expenses [Member]
Share-based compensation expense	¥ (7,050)	¥ (2,022)	¥ (1,289)

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) - CNY (¥) ¥ in Thousands	Total	Series A Convertible Redeemable Preferred Shares [Member]	Series B Convertible Redeemable Preferred Shares [Member]	Series C Convertible Redeemable Preferred Shares [Member]	Class A [Member]	Class B [Member]	Ordinary Shares [Member]	Ordinary Shares [Member] Class A [Member]	Ordinary Shares [Member] Class A [Member] Series A Convertible Redeemable Preferred Shares [Member]	Ordinary Shares [Member] Class A [Member] Series B Convertible Redeemable Preferred Shares [Member]	Ordinary Shares [Member] Class A [Member] Series C Convertible Redeemable Preferred Shares [Member]	Ordinary Shares [Member] Class B [Member]	Ordinary Shares [Member] Class B [Member] Series A Convertible Redeemable Preferred Shares [Member]	Ordinary Shares [Member] Class B [Member] Series B Convertible Redeemable Preferred Shares [Member]	Ordinary Shares [Member] Class B [Member] Series C Convertible Redeemable Preferred Shares [Member]	Treasury Shares [Member]	Treasury Shares [Member] Series A Convertible Redeemable Preferred Shares [Member]	Treasury Shares [Member] Series B Convertible Redeemable Preferred Shares [Member]	Treasury Shares [Member] Series C Convertible Redeemable Preferred Shares [Member]	Additional Paid-in Capital [Member]	Additional Paid-in Capital [Member] Series A Convertible Redeemable Preferred Shares [Member]	Additional Paid-in Capital [Member] Series B Convertible Redeemable Preferred Shares [Member]	Additional Paid-in Capital [Member] Series C Convertible Redeemable Preferred Shares [Member]	Accumulated Other Comprehensive Income (loss) [Member]	Accumulated Other Comprehensive Income (loss) [Member] Series A Convertible Redeemable Preferred Shares [Member]	Accumulated Other Comprehensive Income (loss) [Member] Series B Convertible Redeemable Preferred Shares [Member]	Accumulated Other Comprehensive Income (loss) [Member] Series C Convertible Redeemable Preferred Shares [Member]	Retained Earnings (Accumulated Deficit) [Member]	Retained Earnings (Accumulated Deficit) [Member] Series A Convertible Redeemable Preferred Shares [Member]	Retained Earnings (Accumulated Deficit) [Member] Series B Convertible Redeemable Preferred Shares [Member]	Retained Earnings (Accumulated Deficit) [Member] Series C Convertible Redeemable Preferred Shares [Member]
Balance at Dec. 31, 2013	¥ (407,735)											¥ 107												¥ (1,620)				¥ (406,222)
Balance, shares at Dec. 31, 2013												12,226,558
Net income	151,850																											151,850
Conversion of Class B ordinary shares to Class A ordinary shares								¥ 55				¥ (55)
Conversion of Class B ordinary shares to Class A ordinary shares, shares								8,924,365				(8,924,365)
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares	1,518							¥ 11												1,507
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares, shares								1,788,393
Foreign currency translation adjustment, net of nil income taxes	(2,896)																							(2,896)
Share-based compensation	24,976																			24,976
Accretion of convertible redeemable preferred shares	(3,530)																			(3,030)								(500)
Issuance of Class A ordinary shares, upon initial public offering (“IPO”), net of issuance cost of RMB24,801, shares								11,500,000
Issuance of Class A ordinary shares, upon initial public offering (“IPO”), net of issuance cost of RMB24,801	567,360						¥ 71	¥ 71												567,289
Issuance of Class A ordinary shares in private placement concurrent with the IPO	83,052						¥ 9	¥ 9												83,043
Issuance of Class A ordinary shares in private placement concurrent with the IPO, shares								1,500,000
Reclassification of APIC and retained earnings (note 12(d))																				(526,457)								526,457
Conversion of convertible redeemable preferred shares to ordinary shares		¥ 3,648	¥ 107,994	¥ 592,849									¥ 44	¥ 45	¥ 68						¥ 3,604	¥ 107,949	¥ 592,781
Conversion of convertible redeemable preferred shares to ordinary shares, shares													7,196,159	7,319,820	10,914,852
Reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes
Balance at Dec. 31, 2014	1,119,086							¥ 146				¥ 209								851,662				(4,516)				271,585
Balance, shares at Dec. 31, 2014								23,712,758				28,733,024
Net income	178,760																											178,760
Conversion of Class B ordinary shares to Class A ordinary shares								¥ 111				¥ (111)
Conversion of Class B ordinary shares to Class A ordinary shares, shares								18,158,128				(18,158,128)
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares	22,456							¥ 19												22,437
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares, shares								3,043,652
Foreign currency translation adjustment, net of nil income taxes	34,748																							34,748
Share-based compensation	32,919																			32,919
Reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes
Purchase of Class A ordinary shares	(49,355)															(49,355)
Balance at Dec. 31, 2015	1,338,614							¥ 276				¥ 98				(49,355)				907,018				30,232				450,345
Balance, shares at Dec. 31, 2015					44,914,538	10,574,896		44,914,538				10,574,896
Net income	241,854																											241,854
Conversion of Class B ordinary shares to Class A ordinary shares								¥ 12				¥ (12)
Conversion of Class B ordinary shares to Class A ordinary shares, shares								1,679,647				(1,679,647)
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares	20,388							¥ 14												20,374
Issuance of Class A ordinary shares upon exercise of share options and vesting of non-vested shares, shares								2,141,043
Foreign currency translation adjustment, net of nil income taxes	22,972																							22,972
Share-based compensation	67,824																			67,824
Unrealized holding gains on available-for-sale security, net of RMB42 income taxes	5,235																							5,235
Reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes	(235)																							(235)
Dividends	(54,026)																											(54,026)
Purchase of Class A ordinary shares	(44,406)															(44,406)
Balance at Dec. 31, 2016	¥ 1,598,220							¥ 302				¥ 86				¥ (93,761)				¥ 995,216				¥ 58,204				¥ 638,173
Balance, shares at Dec. 31, 2016					48,735,228	8,895,249		48,735,228				8,895,249

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CONSOLIDATED STATEMENTS OF CHANGES IN EQUITY (DEFICIT) (Parenthetical) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Condensed Statement of Income Captions [Line Items]
Foreign currency translation adjustment, taxes
Issuance cost			¥ 24,801
Other Comprehensive Income (Loss), Unrealized Holding Gain (Loss) on Securities Arising During Period, Tax	42
Other Comprehensive Income (Loss), Reclassification Adjustment from AOCI for Sale of Securities, Tax	¥ 42

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CONSOLIDATED STATEMENTS OF CASH FLOWS - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Operating activities:
Net income	¥ 241,854	¥ 178,760	¥ 151,850
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation	72,757	54,981	43,478
Bad debt expense	33,605	63,103	46,000
Loss on disposal of property and equipment	297	500	1,102
Deferred income tax benefit	(18,895)	(21,614)	(4,190)
Share based compensation expense	67,824	32,919	24,976
Other income	29
Foreign currency exchange losses (gains), net	(3,760)	29,499	(6,605)
Changes in operating assets and liabilities, net of effects from acquisition of Hanru Hangzhou
Accounts receivable	22,928	(66,901)	(102,974)
Prepaid expenses and other current assets	(60,362)	(16,713)	(15,125)
Accrued interest income on time deposits	5,264	(655)	(17,587)
Other non-current assets	(7,071)	(3,757)	(4,042)
Accounts payable	(248)	533	(269)
Amounts due to a related party	(800)	879
Income taxes payable	34,947	23,287	14,641
Deferred revenue	101,439	46,570	23,528
Accrued expenses and other current liabilities	36,781	27,362	11,992
Other non-current liabilities	(2,559)	(1,055)	8,568
Net cash provided by operating activities	524,030	347,698	175,343
Investing activities:
Purchase of property and equipment	(381,982)	(99,961)	(48,405)
Proceeds from disposal of property and equipment	358	1,040	227
Purchase of short term investments	(1,937,000)	(945,000)	(622,800)
Proceeds from maturity of short term investments	1,937,000	945,000	622,800
Purchase of long-term investments	(12,755)	(24,000)
Payment for acquisition of Hanru Hangzhou	(4,360)	(1,000)
Cash acquired from acquisition of Hanru Hangzhou	148
Purchase of time deposits	(421,170)	(639,019)	(708,124)
Proceeds from maturity of time deposits	678,741	690,250	22,325
Issuance of loans to employees	(18,525)	(1,227)	(3,030)
Proceeds from repayment of loans from employees	3,096	1,608	2,468
Net cash provided by (used in) investing activities	(156,449)	(72,309)	(734,539)
Financing activities:
Amounts received on behalf of a related party		1,432
Repayment of amounts received on behalf of a related party		(1,432)
Issuance of Class A ordinary shares upon the IPO			592,161
Issuance of Class A ordinary shares in private placement concurrent with the IPO			83,052
Issuance of Class A ordinary shares in connection with exercise of share options	20,388	22,456	1,518
Payment of dividend	(54,026)
Repurchase of treasury shares	(44,406)	(49,355)
Payment of IPO costs			(21,705)
Net cash provided by (used in) financing activities	(78,044)	(26,899)	655,026
Effect of foreign currency exchange rate changes on cash and cash equivalents	7,197	4,413	5,837
Net increase in cash and cash equivalents	296,734	252,903	101,667
Cash and cash equivalents at beginning of year	513,938	261,035	159,368
Cash and cash equivalents at end of year	810,672	513,938	261,035
Supplemental disclosure of cash flow information:
Income taxes paid	3,096	2,246	3,479
Non-cash investing and financing activities:
Accrual for purchase of equipment	3,692	3,685	1,758
Series A [Member]
Non-cash investing and financing activities:
Conversion of convertible redeemable preferred shares			3,648
Series B [Member]
Non-cash investing and financing activities:
Conversion of convertible redeemable preferred shares			107,994
Series C [Member]
Non-cash investing and financing activities:
Conversion of convertible redeemable preferred shares			¥ 592,849

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DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

12 Months Ended

Dec. 31, 2016

DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS [Abstract]

DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

1 DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS

(a) Description of business

Tarena International, Inc. (“Tarena International”), through its wholly-owned subsidiaries and consolidated variable interest entities or VIEs (collectively referred to hereinafter as the “Company”), is principally engaged in providing professional education services including professional information technology (“IT”) training courses and non-IT training courses across the People’s Republic of China (“PRC”). To a lesser extent, the Company is also engaged in providing IT and non-IT training courses for children. All of the Company’s operations are located in the PRC with nearly all of its customers located in the PRC.

(b) Organization

Tarena International is a holding company that was incorporated in the Cayman Islands on October 8, 2003 by Mr. Han Shaoyun (“Mr. Han”), the founder and chief executive officer of the Company, and five other individuals. Tarena International is the parent company of a number of wholly-owned subsidiaries that are engaged in professional education services. The Company’s education services in certain locations of the PRC were previously conducted through Beijing Tarena Jinqiao Technology Co., Ltd. (“Beijing Tarena”) and Shanghai Tarena Software Technology Co., Ltd. (“Shanghai Tarena”)(collectively, the “Tarena Entities”), and their subsidiaries, in order to comply with the PRC laws and regulations which restricted foreign investments in companies that were engaged in education services. Tarena Entities and their subsidiaries were principally engaged in providing professional education services including professional IT training courses in those locations and operated 23 learning centers as of December 31, 2011. Pursuant to the VIE Agreements as described below, Tarena International has effective financial control over Tarena Entities and their initial capital funding was provided by Tarena Technologies Inc., (a wholly-owned subsidiary of Tarena International or the “WOFE”, formerly known as Beijing Tarena Technology Co., Ltd.). The recognized and unrecognized revenue-producing assets that were held by Tarena Entities and their subsidiaries primarily consisted of property and equipment, operating leases for the learning premises, ICP license, www.tmooc.cn website and assembled workforce in those learning centers. Because of change in PRC laws and regulations in 2012 which encourages foreign investments in education services, the Company began to transfer most of the operations, including related assets and liabilities of Tarena Entities and their subsidiaries to the wholly-owned subsidiaries of Tarena International. As of December 31, 2013, all of the learning center operations of Tarena Entities and their subsidiaries have been transferred to other subsidiaries of Tarena International. As of December 31, 2016 Beijing Tarena invested RMB35,000 in five PRC companies, which are mainly engaged in provision of educational products and services.

Upon the establishment of Tarena Entities in 2005, the registered capital of Beijing Tarena and Shanghai Tarena were RMB2,000 and RMB1,000, respectively. In 2016, Beijing Tarena received additional capital injection of RMB3,000 through its nominee equity holders. All of the equity interests of Tarena Entities are legally held by Mr. Han and Mr. Li Jianguang (“Mr. Li”), a director of Tarena International. Both individuals are nominee equity holders of Tarena Entities and holding their equity interests on behalf of Tarena International. Through a series of contractual agreements and arrangements as amended (the “VIE Agreements”), among Tarena International, WOFE, Tarena Entities and their nominee equity holders, the nominee equity holders of Tarena Entities have granted all their legal rights including voting rights and disposition rights of their equity interests in Tarena Entities to Tarena International. The nominee equity holders of Tarena Entities do not participate significantly in income and loss and do not have the power to direct the activities of the Tarena Entities that most significantly impact their economic performance. Accordingly, the Tarena Entities are considered variable interest entities.

In accordance with Accounting Standards Codification (“ASC”) 810-10-25-38A, Tarena International has a controlling financial interest in Tarena Entities because Tarena International has (i) the power to direct activities of Tarena Entities that most significantly impact the economic performance of Tarena Entities; and (ii) the obligation to absorb the expected losses and the right to receive expected residual return of Tarena Entities that could potentially be significant to Tarena Entities. Thus, Tarena International is the primary beneficiary of the Tarena Entities.

Under the terms of the VIE Agreements, Tarena International has (i) the right to receive economic benefits that could potentially be significant to Tarena Entities in the form of service fees under the exclusive business cooperation agreements; (ii) the right to receive all dividends declared by Tarena Entities and the right to all undistributed earnings of Tarena Entities; (iii) the right to receive the residual benefits of Tarena Entities through its exclusive option to acquire 100% of the equity interests in Tarena Entities, to the extent permitted under PRC law. Accordingly, the financial statements of Tarena Entities are consolidated in Tarena International’s consolidated financial statements.

Under the terms of the VIE Agreements, Tarena Entities’ nominee equity holders have no rights to the net assets nor have the obligations to fund the deficit, and such rights and obligations have been vested to Tarena International. All of the equity (net assets) and net income of Tarena Entities are attributed to Tarena International.

The key terms of the VIE Agreements are as follows:

Loan Agreements: The WOFE provided RMB6,000 loans in aggregate to Tarena Entities’ nominee equity holders for the sole purpose of their contribution of Tarena Entities’ registered capital. The nominee equity holders of Tarena Entities can only repay the loans by transferring all of their legal equity interest in Tarena Entities to the WOFE or its designated representatives pursuant to the exclusive option agreements. The loans shall be interest-free, unless the transfer price exceeds the principal of the loans when each nominee equityholder of Tarena Entities transfers his equity interests in Tarena Entities to Tarena International or its designated representatives. Such excess over the principal of the loan shall be deemed as the interest of the loans to the extent permitted under the PRC law. The terms of the loans expire in 2026 as amended, which can be extended with the written notice of both the WOFE and Tarena Entities before expiration. In December 2016, the Company wound up Shanghai Tarena and received the repaymentof RMB1,000 from Shanghai Tarena’s nominee equity holders in March 2017.

Exclusive Option Agreements: Each of the nominee equity holders irrevocably granted Tarena International, Inc. or its designated representatives an exclusive option to purchase, to the extent permitted under PRC law, all or part of his equity interests in Tarena Entities. In addition, Tarena International has the option to acquire the equity interests of Tarena Entities for a specified price equal to the loan provided by the WOFE to the nominee equity holders. If the lowest price permitted under PRC law is higher than the above price, the lowest price permitted under PRC law shall apply. Without Tarena International’s prior written consent, the nominee equity holders shall not sell, transfer, mortgage, or otherwise dispose any equity interests in Tarena Entities. These agreements will remain effective until all equity interests held in Tarena Entities by the nominee equity holders are transferred or assigned to Tarena International or its designated representatives.

Exclusive Business Cooperation Agreements: The WOFE has the exclusive right to provide, among other things, technical support, business support and related consulting services to Tarena Entities and Tarena Entities agree to accept all the consultation and services provided by the WOFE. Without the WOFE’s prior written consent, Tarena Entities are prohibited from engaging any third party to provide any of the services under this agreement. In addition, the WOFE exclusively owns all intellectual property rights arising out of or created during the performance of this agreement. Tarena Entities agree to pay a monthly service fee to the WOFE at an amount determined solely by the WOFE after taking into account factors including the complexity and difficulty of the services provided, the time consumed, the seniority of the WOFE employees providing services to Tarena Entities, the value of services provided, the market price of comparable services and the operating conditions of Tarena Entities. Furthermore, to the extent permitted under the PRC law, the WOFE agrees to provide financial support to Tarena Entities. The term of the agreement will remain effective unless the WOFE terminates the agreement in writing or a competent governmental authority rejects the renewal applications by either Tarena Entities or the WOFE to renew its respective business license upon expiration. Tarena Entities are not permitted to terminate this agreement in any event unless required by applicable laws.

Power of Attorney: Each nominee equity holder of Tarena Entities appointed the WOFE as the attorney-in-fact to act on all matters pertaining to Tarena Entities and to exercise all of their rights as an equity holder of Tarena Entities, including but not limited to attend shareholders’ meetings, vote on their behalf on all matters of Tarena Entities requiring shareholders’ approval under PRC laws and regulations and the articles of association of Tarena Entities, designate and appoint directors and senior management members. The WOFE may authorize or assign its rights under this appointment to any other person or entity at its sole discretion without prior notice to the nominee equity holders of Tarena Entities. Each power of attorney will remain effective until the nominee equity holder ceases to hold any equity interest in Tarena Entities.

Equity Interest Pledge Agreements: Pursuant to the equity interest pledge agreement, Tarena Entities’ nominee equity holders pledged all of their equity interests in Tarena Entities to the WOFE to guarantee their performance of the obligations under the contractual arrangements including but not limited to, the service fees due to the WOFE. If Tarena Entities or any of Tarena Entities’ nominee equity holders breaches its contractual obligations under the contractual arrangements, the WOFE, as the pledgee, will be entitled to certain rights and entitlements, including receiving proceeds from the auction or sale of whole or part of the pledged equity interests of Tarena Entities in accordance with legal procedures. The WOFE has the right to receive dividends generated by the pledged equity interests during the term of the pledge. If any event of default as provided in the contractual arrangements occurs, the WOFE, as the pledgee, will be entitled to dispose of the pledged equity interests in accordance with PRC laws and regulations. The equity interest pledge agreements became effective on the date when the agreements were duly executed. The pledge was registered with relevant local administration for industry and commerce in December 2013 and April 2017, respectively, and will remain binding until Tarena Entities and their nominee equity holders discharge all their obligations under the contractual arrangements. The registration of the equity pledge enables the WOFE to enforce the equity pledge against third parties who acquire the equity interests of Tarena Entities in good faith.

Tarena International relies on the VIE Agreements to operate and control the Tarena Entities. However, these contractual arrangements may not be as effective as direct equity ownership in providing Tarena International with control over Tarena Entities. Any failure by Tarena Entities or the nominee equity holders to perform their obligations under the VIE Agreements would have a material adverse effect on the consolidated financial position and consolidated financial performance of the Company. All the VIE Agreements are governed by PRC law and provide for the resolution of disputes through arbitration in the PRC. Accordingly, these contracts would be interpreted in accordance with PRC law and any disputes would be resolved in accordance with PRC legal procedures. The legal system in the PRC is not as developed as some other jurisdictions, such as the United States. As a result, uncertainties in the PRC legal system could limit Tarena International’s ability to enforce these contractual arrangements. In addition, if the legal structure and the VIE Agreements were found to be in violation of any existing or future PRC laws and regulations, Tarena International may be subject to fines or other legal or administrative sanctions.

In the opinion of management, based on the legal opinion obtained from the Company’s PRC legal counsel, the above contractual arrangements are legally binding and enforceable and do not violate current PRC laws and regulations. However, there are uncertainties regarding the interpretation and application of existing and future PRC laws and regulations. Accordingly, Tarena International cannot be assured that PRC regulatory authorities will not ultimately take a contrary view to its opinion. If the current ownership structure of the Company and the VIE Arrangements are found to be in violation of any existing or future PRC laws and regulations, the PRC government could:

• revoke the business and operating licenses of the WOFE, its subsidiaries and Tarena Entities;

• discontinue or restrict the conduct of any transactions between the WOFE, its subsidiaries and Tarena Entities;

• impose fines, confiscate the income from Tarena Entities, or impose other requirements with which the Company may not be able to comply;

• require Tarena International to restructure its ownership structure or operations, including terminating the contractual arrangements with Tarena Entities and deregistering the equity pledges of Tarena Entities; and

• restrict or prohibit the use of the proceeds of future offering to finance the Company’s business and operations in the PRC.

If the imposition of any of these government actions causes Tarena International to lose its right to direct the activities of Tarena Entities or its right to receive substantially all the economic benefits and residual returns from Tarena Entities and Tarena International is not able to restructure its ownership structure and operations in a satisfactory manner, Tarena International would no longer be able to consolidate the financial results of Tarena Entities and their subsidiaries. In the opinion of management, the likelihood of deconsolidation of the Tarena Entities and their subsidiaries is remote based on current facts and circumstances.

The equity interests of Tarena Entities are legally held by Mr. Han and Mr. Li as nominee equity holders on behalf of the Company. Mr. Han and Mr. Li are also directors of Tarena International. Mr. Han and Mr. Li each holds 58.8% and 12.2% of the total voting rights as of December 31, 2016, respectively, assuming the exercise of all outstanding options held by Mr. Han and Mr. Li as of such date. The Company cannot assure that when conflicts of interest arise, either of the nominee equity holders will act in the best interests of the Company or such conflicts will be resolved in the Company’s favor. Currently, the Company does not have any arrangements to address potential conflicts of interest between the nominee equity holders and the Company, except that Tarena International could exercise the purchase option under the exclusive option agreement with the nominee equity holders to request them to transfer all of their equity ownership in Tarena Entities to a PRC entity or individual designated by Tarena International. The Company relies on the nominee equity holders, who are bothTarena International’s directors and who owe a fiduciary duty to Tarena International, to comply with the terms and conditions of the contractual arrangements. Such fiduciary duty requires directors to act in good faith and in the best interests of Tarena International and not to use their positions for personal gains. If the Company cannot resolve any conflict of interest or dispute between the Company and the nominee equity holders of Tarena Entities, the Company would have to rely on legal proceedings, which could result in disruption of the Company’s business and subject the Company to substantial uncertainty as to the outcome of any such legal proceedings.

The Company’s involvement with Tarena Entities under the VIE Agreements affected the Company’s consolidated financial position, results of operations and cash flows as indicated below.

The assets and liabilities of Tarena Entities and their subsidiaries that were included in the accompanying consolidated financial statements as of December 31, 2015 and 2016 are as follows:

	December 31,
	2015		2016
	RMB		RMB
Cash		1,043		630
Amounts due from related parties		25,109		21,650
Total current assets		26,152		22,280
Property and equipment, net		18		3
Long term investments		18,000		35,000
Other non-current assets		266		716
Total assets		44,436		57,999
Income taxes payable		3,737		3,729
Accrued expenses and other current liabilities		892		176
Amounts due to related parties, including amounts due to WOFE for accrued service fees		39,307		46,486
Total current liabilities		43,936		50,391
Other non-current liabilities		267		267
Total liabilities		44,203		50,658

Amounts due from/to related parties represents the amounts due from/to Tarena International and its wholly-owned subsidiaries, which are eliminated upon consolidation.

The financial performance and cash flows of Tarena Entities and their subsidiaries that were included in the accompanying consolidated financial statements for the years ended December 31, 2014, 2015 and 2016 are as follows:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Net revenues		2,902		177		-
Net loss		(14,542)		(2,415)		(892)
Net cash used in operating activities		(4,252)		(2,201)		(2,166)
Net cash provided by (used in) investing activities		478		(18,000)		(11,886)
Net cash provided by financing activities		4,124		19,755		13,639

All of the assets of Tarena Entities and their subsidiaries can be used only to settle obligations of Tarena Entities and their subsidiaries. None of the assets of Tarena Entities and their subsidiaries have been pledged or collateralized. The creditors of Tarena Entities and their subsidiaries do not have recourse to the general credit of Tarena International and its wholly-owned subsidiaries. Assets of Tarena Entities and their subsidiaries that can be used only to settle obligations of Tarena Entities and their subsidiaries and liabilities of Tarena Entities and their subsidiaries for which creditors (or beneficial interest holders) do not have recourse to the general credit of Tarena International and its wholly owned subsidiaries have been presented parenthetically alongside each balance sheet caption on the face of the consolidated balance sheets.

During the periods presented, Tarena International and its wholly-owned subsidiaries provided financial support to Tarena Entities that they were not previously contractually required to provide in the form of advances. To the extent Tarena Entities require financial support, pursuant to the exclusive business cooperation agreements, the WOFE may, at its option and to the extent permitted under the PRC law, provide such support to Tarena Entities through loans to Tarena Entities’ nominee equity holders or entrustment loans to Tarena Entities.

(c) Basis of presentation

The accompanying consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”).

(d) Significant concentrations and risks

Revenue concentration

A substantial portion of the Company’s total net revenues are generated from Java, Digital Arts and Web Front courses. The percentages of the Company’s total net revenues from Java, Digital Arts and Web Front training courses are as follows:

	Year Ended December 31,
	2014			2015			2016
Java		36.7	%		28.8	%		34.3	%
Digital Arts		29.1	%		32.2	%		28.0	%
Web Front		0.0	%		4.2	%		12.7	%
Total		65.8	%		65.2	%		75.0	%

The Company expects net revenues from these three training courses to continue to represent a substantial portion of its total net revenues in the future. Negative factors that adversely affect net revenues generated by these three training courses will have a material adverse effect on the Company’s business, financial condition and results of operations. There were no other courses that represented revenues greater than 10% of total revenues.

A substantial portion of the Company’s students financed their tuition fees through the loans offered to them by Baidu Small Loan Co., Ltd., RenRenDai, Bank of China Consumer Finance Co., Ltd., CreditEase Business Consulting (Beijing) Co., Ltd., and Bank of Beijing Consumer Finance Company during the three-years period ended December 31, 2016. The Company expects students financed by these companies to continue to represent a substantial portion of its total students in the future. The Company believes other companies could provide similar loans to its students on comparable terms. However, negative factors that adversely affect these companies will have a material adverse effect on the Company’s business, financial condition and results of operations.

Geographic concentration

A substantial portion of the Company’s total net revenues are derived from its business operations in Beijing and Hangzhou. The percentages of the Company’s total net revenues generated from its business operations in Beijing and Hangzhou are as follows:

	Year Ended December 31,
	2014			2015			2016
Hangzhou		25.5	%		33.0	%		31.9	%
Beijing		15.5	%		12.3	%		12.4	%
Total		41.0	%		45.3	%		44.3	%

The Company expects revenues derived from its business operations in Beijing and Hangzhou to continue to represent a significant portion of its total net revenues. Negative factors that adversely affect professional education services in Beijing or Hangzhou will have a material adverse effect on the Company’s business, financial condition and results of operations. There were no other cities that represented revenues greater than 10% of total revenues.

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

12 Months Ended

Dec. 31, 2016

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a) Principles of consolidation

The consolidated financial statements include the financial statements of Tarena International, its wholly-owned subsidiaries, VIEs in which Tarena International is the primary beneficiary and their wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation.

(b) Use of estimates

 

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the estimated selling price of deliverables in multiple element arrangements, the fair values of share-based compensation awards and available-for-sale investments, the collectability of accounts receivable, the realizability of deferred income tax assets, the accruals for tax uncertainties and other contingencies, the recoverability of the carrying amounts of property and equipment and the useful lives of property and equipment. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.

(c) Foreign currency

 

In 2016, the Company changed its reporting currency from United States Dollars (“USD”) to Chinese Renminbi (“RMB”). Prior years’ comparative financial information have been recasted as if the Company always used RMB as its reporting currency.

The functional currency of Tarena International and Tarena Hong Kong Limited (“Tarena HK”) is the USD. The functional currency of Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs is the RMB. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rate at the balance sheet date. The resulting exchange differences are recorded in foreign currency exchange gains (losses) in the consolidated statements of comprehensive income.

Assets and liabilities of entities with functional currencies other than RMB are translated into RMB using the exchange rate on the balance sheet date. Revenues and expenses are translated into RMB at average rates prevailing during the reporting period. The resulting foreign currency translation adjustment are recorded in accumulated other comprehensive income (loss) within shareholders’ equity (deficit).

Since the RMB is not a fully convertible currency, all foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC.

(d) Cash, cash equivalents , time deposits and restricted time deposits

Cash consist of cash on hand and cash in bank, which are unrestricted as to withdrawal. Cash equivalents consist of interest-bearing certificates of deposit with initial term of no more than three months when purchased.

Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term of greater than three months when purchased. Time deposits which mature over one year as of the balance sheet date are included in non-current assets.

Time deposits that were pledged as collateral for line of credit with a financial institution in the U.S. with an initial term of greater than three months when purchased as of December 31, 2015 were reported as restricted time deposits.

Cash, time deposits and restricted time deposits maintained at banks consist of the following:

	December 31,
	2015		2016
	RMB		RMB
RMB denominated bank deposits with financial institutions in the PRC		627,148		867,811
US dollar denominated bank deposits with a financial institutions in the PRC		52,680		152,792
US dollar denominated bank deposits with financial institutions in Hong Kong Special Administrative Region (“HK SAR”)		645		3,535
HK dollar denominated bank deposits with a financial institution in HK SAR		99		1
RMB denominated bank deposits with a financial institution in HK SAR		3		3
RMB denominated bank deposits with financial institutions in the U.S.		547,388		-
US dollar denominated bank deposits with financial institutions in the U.S.		55		261,913

To limit exposure to credit risk relating to bank deposits, the Company primarily places bank deposits only with large financial institutions in the PRC, HK SAR and the U.S. with acceptable credit rating.

 

(e) Short-term investment

During the years ended December 31, 2014, 2015 and 2016, the Company invested RMB622,800, RMB945,000 and RMB1,937,000, respectively, in financial products managed by three financial institutions in the PRC. The terms of the financial products range between 5 days and 91 days. The financial products matured before December 31, 2014, 2015 and 2016, respectively. The Company earned investment income of RMB4,652, RMB5,961 and RMB12,676, respectively on the financial products, which was included in other income in the consolidated statements of comprehensive income for the years ended December 31, 2014, 2015 and 2016.

(f) Accounts receivable

Accounts receivable primarily represent tuition fees due from students. Accounts receivable which are due over one year as of the balance sheet date are presented as non-current assets. The unearned interest on accounts receivable which are due over one year is reported in the consolidated balance sheets as a direct deduction from the principal amount of accounts receivable. See note 2(j). The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Accounts receivable is considered past due based on its contractual terms. In establishing the allowance, management considers historical losses, the students’ financial condition, the amount of accounts receivables in dispute, the accounts receivables aging and the students’ payment patterns. Accounts receivable which are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted.

(g) Property and equipment

Property and equipment are recorded at cost. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. The estimated useful life of property and equipment is as follows:

Office buildings	45 years
Furniture	5 years
Office equipment	3 to  4 years
Leasehold improvements	Shorter of the lease term or the estimated useful life of the assets

Ordinary maintenance and repairs are charged to expenses as incurred, while replacements and betterments are capitalized. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value of the item disposed and proceeds realized thereon.

Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment loss is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. No impairment of long-lived assets was recognized for any of the years presented.

(h) Goodwill

The excess of the purchase price over the fair value of net assets acquired is recorded on the consolidated balance sheets as goodwill. Goodwill is not amortized, but tested for impairment annually or more frequently if event and circumstances indicate that it might be impaired.

ASC 350-20, Goodwill, permits the Company to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test, using a two-step approach. If this is the case, the two-step goodwill impairment test is required. If it is more likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required.

If the two-step goodwill impairment test is required, the first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired and the second step is not required. If the fair value of the reporting unit is less than its carrying amount, the second step of the impairment test measures the amount of the impairment loss, if any, by comparing the implied fair value of goodwill to its carrying amount. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss is recognized equal to that excess. The implied fair value of goodwill is calculated in the same manner that goodwill is calculated in a business combination, whereby the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit, with the excess purchase price over the amounts assigned to assets and liabilities representing the implied fair value of goodwill. 

 

(i) Long-term investments

The Company’s long-term investments consist of cost method investments, equity method investment and available-for-sale investment.

Cost method investments

Investments in entities in which the Company does not have an ability to exercise significant influence over the operating and financial matters of the investees and which do not have readily determinable fair value are accounted for using the cost method, under which the Company carries the investments at cost and recognizes as income for any dividend received from distribution of the investees’ earnings.

The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. No events or circumstances indicating a potential impairment were identified as of or for the year ended December 31, 2015 and 2016. The Company determines that it is not practicable to estimate fair value of cost method investments as of December 31, 2015 and 2016, because the sales prices or bid-and-asked quotations of the equity interests of these entities are not currently available and the cost of obtaining an independent valuation appears excessive considering the materiality of the investments to the Company.

Equity method investment

Investment in entity in which the Company has the ability to exercise significant influence, but does not have a controlling interest through investment in common shares or in-substance common shares, are accounted for using the equity method. Under the equity method, the Company initially records its investment at cost, its share of the post-acquisition profits or losses of the investee is recognized in the Company’s consolidated statements of comprehensive income; and the Company’s share of post-acquisition movements in equity is recognized in equity in the Company’s consolidated balance sheets. Unrealized gains on transactions between the Company and an investee in which the Company has recorded an equity investment are eliminated to the extent of the Company’s interest in the investee. To the extent of the Company’s interest in the investment, unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Available-for-sale investment

For investment in debt security, the Company accounts for it as available-for-sale investment when it is not classified as either trading or held-to-maturity investments. Available-for-sale security is reported at fair value, with unrealized holding gains or losses, net of the related tax effect, excluded from earnings and recorded as a separate component of accumulated other comprehensive income until realized. Realized gains or losses from the sale of available-for-sale investment are determined on a specific identification basis.

The Company’s consolidated statements of comprehensive income reflects the full impairment (that is, the difference between the security’s amortized cost basis and fair value) on debt securities that the Company intends to sell or would more-likely than-not be required to sell before the expected recovery of the amortized cost basis. For available-for-sale investment that management has no intent to sell and believes that it more likely than-not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the rest of the fair value loss is recognized in accumulated other comprehensive income.

A decline in the market value of any available-for-sale investments below cost that is deemed to be other-than-temporary results in an impairment to reduce the carrying amount to fair value. To determine whether an impairment is other-than-temporary, the Company considers all available information relevant to the collectibility of the financial product, including past events, current conditions, and reasonable and supportable forecasts when developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.

(j) Revenue recognition

Revenue is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. These criteria as they relate to each of the following major revenue generating activities are described below. Revenue is presented net of business tax and value added taxes (“VAT”) at rates ranging between 3% and 6%, and surcharges. VAT and business tax collected from customers, net of VAT paid for purchases, is recorded as a liability in the consolidated balance sheets until it is paid to the tax authorities.

Tuition fees

Tuition fees are recognized as revenue proportionately as the training courses are delivered, with unearned portion of tuition fees being recorded as deferred revenue. Certain qualified students are allowed to pay their tuition fees on installment for a period of time exceeding one year. When tuition services are sold on installment terms that exceeds one year beyond the point in time that revenue is recognized, the receivable, and therefore the revenue is recorded at the present value of the payments. The difference between the present value of the receivable and the nominal or principal value of the tuition fees is recognized as interest income over the contractual repayment period using the effective interest rate method. The interest rate used to determine the present value of total amount receivable is the rate at which the students can obtain financing of a similar nature from other sources at the date of the transaction.

The Company enters into arrangements with certain students that purchase multiple services, including classroom training and extended on-line case studies (“multiple-element arrangements”). Each element within the multiple-element arrangements is accounted for as a separate unit of accounting provided the following criteria are met: the delivered services have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered services, delivery or performance of the undelivered service is considered probable and is substantially controlled by the Company. A deliverable has standalone value if the service is sold separately by the Company or another vendor. The Company’s revenue arrangements do not include a general right of return relative to the delivered services.

The Company treats training contracts with multiple deliverable elements as separate units of accounting for revenue recognition purposes and recognizes revenue during the contract period when each deliverable service is provided. The Company allocates the contract price among all the deliverables at the inception of the arrangement on the basis of their relative selling prices according to the selling price hierarchy established by Accounting Standard Update No. 2009-13, Revenue Recognition - Multiple-Deliverable Revenue Arrangements. The Company first uses vendor-specific objective evidence (VSOE) of selling price, if it exists, otherwise the third-party evidence of selling price is used. If neither VSOE of selling price nor third-party evidence of selling price exists, the Company uses management’s best estimate of selling price for the deliverables.

Certification service revenue

The Company provides certification service to students who complete the training course and enroll for the exams. The Company is responsible for the certification service, including organization, proctoring and grading of exams. All certificates are issued by third parties to the students who pass the exam. The Company acts as the principal in providing this service and recognizes revenue on gross basis because the Company is the primary obligor in the arrangement and is responsible for fulfilling the ordered services by the students. Cash received before the students taking the exam, is recorded as deferred revenue, and subsequently recognized as certification service revenue upon completion of the certification service, which occurs when the certificates are provided to the students.

Loan referral service revenue

In 2016, pursuant to the agreements between the Company and a number of financial service providers, the Company promotes loan products of these financial service providers to its students, who need financial assistance for the payment of their tuition fees, in exchange for a referral fee at a rate of between 5% to 8% of the principal amount of the loans. The Company does not provide guarantee for the loans, which are between the financial service providers and its students. Loan referral service revenue is recognized upon the initiation of the loans.

 

(k) Cost of revenues

Cost of revenues consists of payroll and employee benefits, rent expenses of learning centers, depreciation relating to property and equipment used for operating the learning centers, and other operating costs that are directly attributed to the provision of training services.

(l) Advertising costs

 

Advertising costs are expensed as incurred and included in selling and marketing expenses. Advertising costs were RMB102,820, RMB151,533 and RMB201,298 for the years ended December 31, 2014, 2015 and 2016, respectively.

 

(m) Operating lease

The Company leases premises for learning centers and offices under non-cancellable operating leases. Leases with escalated rent provisions are recognized on a straight-line basis commencing with the beginning of the lease term. There are no capital improvement funding, other lease concessions or contingent rent in the lease agreements. The lease terms of the Company’s learning centers range between 1 and 10 years. The Company has no legal or contractual asset retirement obligations at the end of the lease term.

Certain learning centers of the Company sublease a portion of the areas to certain students for their living accommodation. Income from subleases is recognized on a straight-line basis over the term of the lease and recognized as reduction of costs of revenues.

 

(n) Government grant

Government grant is recognized when there is reasonable assurance that the Company will comply with the conditions attach to it and the grant will be received. Government grant for the purpose of giving immediate financial support to the Company with no future related costs or obligation is recognized in the Company’s consolidated statements of comprehensive income when the grant becomes receivable. Government grants of RMB9,916, RMB5,851 and RMB3,199 were recognized and included in other income for the years ended December 31, 2014, 2015 and 2016, respectively.

(o) Research and development expense

Research and development costs are expensed as incurred.

(p) Employee benefits

Pursuant to relevant PRC regulations, the Company is required to make contributions to various defined contribution plans organized by municipal and provincial PRC governments. The contributions are made for each PRC employee at rates ranging from 22.3% to 53.1% on a standard salary base as determined by local social security bureau. Contributions to the defined contribution plans are charged to the consolidated statements of comprehensive income when the related service is provided. For the years ended December 31, 2014, 2015 and 2016, the costs of the Company’s obligations to the defined contribution plans amounted to RMB51,510, RMB69,370 and RMB85,325, respectively. The Company has no other obligation for the payment of employee benefits associated with these plans beyond the contributions described above.

(q) Income taxes

 

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax loss and tax credit carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or tax laws is recognized in the consolidated statements of comprehensive income in the period the change in tax rates or tax laws is enacted. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is considered more likely than not that some portion or all of the deferred income tax assets will not be realized.

The Company recognizes in the consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to an unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of comprehensive income.

(r) Deferred offering costs

 

Deferred offering costs consist principally of legal, printing and registration costs in connection with the IPO. Upon completion of the IPO on April 3, 2014, the deferred offering costs of RMB3,788 were recognized as a reduction of the offering proceeds.

(s) Share based compensation

 

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, net of estimated forfeitures, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. Forfeiture rates are estimated based on historical and future expectations of employee turnover rates.

(t) Commitments and contingencies

 

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.

(u) Earnings per share

 

Basic earnings per Class A and Class B ordinary share is computed by dividing net income attributable to Tarena International’s Class A and Class B ordinary shareholders by the weighted average number of Class A and Class B ordinary shares outstanding during the year using the two-class method. Under the two-class method, net income attributable to Tarena International’s Class A and Class B ordinary shareholders is allocated between Class A and Class B ordinary shares and other participating securities, if any, based on participating rights in undistributed earnings.

Tarena International’s Series A convertible redeemable preferred shares, Series B convertible redeemable preferred shares and Series C convertible redeemable preferred shares were participating securities since the holders of these securities participated in dividends on the same basis as Class A and Class B ordinary shareholders.

Diluted earnings per share is calculated by dividing net income attributable to Tarena International’s Class A and Class B ordinary shareholders as adjusted for the effect of dilutive Class A and Class B ordinary share equivalents, if any, by the weighted average number of Class A and Class B ordinary and dilutive Class A and Class B ordinary share equivalents outstanding during the year. Class A and Class B ordinary share equivalents include the Class A and Class B ordinary shares issuable upon the exercise of the outstanding share options (using the treasury stock method) and conversion of convertible redeemable preferred shares (using the as-if-converted method). Potential dilutive securities are not included in the calculation of diluted earnings per Class A and Class B ordinary share if the impact is anti-dilutive.

(v) Segment reporting

The Company uses the management approach in determining its operating segments. The management approach considers the internal reporting used by the Company’s chief operating decision maker for making decisions about the allocation of resources to and the assessment of the performance of the segments of the Company. Management has determined that the Company has one operating segment, which is the training segment. All of the Company’s operations and customers are located in the PRC. Consequently, no geographic information is presented.

(w) Fair value measurements

The Company applies the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring and nonrecurring basis. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC Topic 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. In situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects management’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by management based on the best information available in the circumstances.

The carrying amounts of cash, current time deposits, restricted time deposits, accounts receivable, loans to employees, accounts payable, amounts due to a related party, accrued expenses and other current liabilities as of December 31, 2015 and 2016 approximate their fair value because of short maturity of these instruments.

The carrying amounts of non-current time deposits as of December 31, 2015 and 2016 approximates their fair value since the interest rates of the time deposits did not differ significantly from the market interest rates for similar types of time deposits.

The fair values of time deposits, restricted time deposits as of December 31, 2015 and 2016 are categorized as Level 2 measurement.  

Available-for-sale investment as of December 31, 2016 is valued based on the implied enterprise value indirectly observed in a recent transaction at the reporting date and is categorized as Level 2 measurement.

(x) Recently issued accounting standards

 

The Financial Reporting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, in May 2014. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In December 2015, the FASB issued ASU No. 2015-14, Revenue from contracts with customers, which deferred the effective date of ASU 2014-09. The new standard is effective for annual reporting periods beginning after December 15, 2017. The Company will apply the new revenue standard beginning January 1, 2018. The Company has set up an implementation team that is currently in the process of analyzing each of the Company’s revenue streams in accordance with the new revenue standard to determine the impact on the Company’s consolidated financial statements. The Company plans to continue the evaluation, analysis, and documentation of its adoption of ASU 2014-09 (including those subsequently issued updates that clarify its provisions) in 2017 as the Company works towards the implementation and finalizes its determination of the impact that the adoption will have on its consolidated financial statements.

On January 5, 2016, the FASB issued ASU 2016-01 (“ASU 2016-01”), Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equity investments to be measured at fair value, with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

On February 25, 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 specifies the accounting for leases. For operating leases, ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. ASU 2016-02 is effective for publicly-traded companies for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

On March 30, 2016, the FASB issued ASU 2016-09 (“ASU 2016-09”), Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification in the statement of cash flows; and (d) accounting for forfeitures of share-based payments. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company does not expect this standard to have a material impact on its consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures.

In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows — Classification of Certain Cash Receipts and Cash Payments, which clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures.

In November 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, and interim period within those fiscal years. Early adoption is permitted, including adoption in an interim period. The standard should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectively on or after the effective date. The Company will evaluate the impact of adopting this standard prospectively upon any transactions of acquisitions or disposals of assets or businesses.

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of a goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

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ACCOUNTS RECEIVABLE

12 Months Ended

Dec. 31, 2016

ACCOUNTS RECEIVABLE [Abstract]

ACCOUNTS RECEIVABLE

3 ACCOUNTS RECEIVABLE

Accounts receivable consists of the following:

	December 31,
	2015		2016
	RMB		RMB
Accounts receivable:
Gross		237,624		214,142
Unearned interest		(15,997)		(15,130)
Total accounts receivable		221,627		199,012
Less: allowance for doubtful accounts		(66,857)		(100,462)
Accounts receivable, net		154,770		98,550

The classification of accounts receivable is as follows:

	December 31,
	2015		2016
	RMB		RMB
Accounts receivable, net – current portion		146,999		97,374
Accounts receivable, net – non-current portion		7,771		1,176
Total accounts receivable, net		154,770		98,550

The movements of the allowance for doubtful accounts are as follows:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Balance at the beginning of the year		14,041		35,347		66,857
Additions charged to bad debt expense		46,000		63,103		33,605
Write-off of bad debt allowance		(24,694)		(31,593)		-
Balance at the end of the year		35,347		66,857		100,462

The aging analysis of our accounts receivable based on due date is as follows:

	As of December 31,
	2015		2016
	RMB		RMB
Aging:
– current		104,368		78,276
– 1-3 months past due		37,005		15,306
– 4-6 months past due		13,373		10,846
– 7-12 months past due		18,015		22,748
– greater than one year past due		48,866		71,836
Total accounts receivable		221,627		199,012

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PREPAID EXPENSES AND OTHER CURRENT ASSETS

12 Months Ended

Dec. 31, 2016

PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract]

PREPAID EXPENSES AND OTHER CURRENT ASSETS

4 PREPAID EXPENSES AND OTHER CURRENT ASSETS

Prepaid expenses and other current assets consist of the following: 

		December 31,
		2015		2016
		RMB		RMB
Prepaid expenses and other current assets:
Prepaid rental expenses			17,925		25,038
Interest receivable from time deposits			11,485		5,945
Prepaid advertising deposits			10,975		11,875
Prepaid advertising expenses			9,991		14,193
Prepaid value-added tax			7,176		50,587
Housing loans made to employees	(a)		2,290		4,968
Staff advances	(b)		423		1,404
Others	(c)		5,838		12,078
Total prepaid expenses and other current assets			66,103		126,088

(a)	Before 2016, the Company provided one-year housing loans to the employees to help them finance their purchase of apartments. In 2016, the Company provided five-year loans to the employees, which amounted to RMB12,751 and were included in other non-current assets.
(b)	Staff advances are provided to staff for traveling and related expenses and are expensed when incurred.
(c)	Others mainly represent other deposits, professional fees and other miscellaneous prepaid expenses.

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PROPERTY AND EQUIPMENT, NET

12 Months Ended

Dec. 31, 2016

PROPERTY AND EQUIPMENT, NET [Abstract]

PROPERTY AND EQUIPMENT, NET

5 PROPERTY AND EQUIPMENT, NET

Property and equipment consists of the following: 

	December 31,
	2015		2016
	RMB		RMB
Office buildings		-		281,541
Furniture		10,510		18,078
Office equipment		211,385		271,862
Leasehold improvements		53,126		64,383
Total property and equipment		275,021		635,864
Less: accumulated depreciation		(147,157)		(198,527)
Property and equipment, net		127,864		437,337

Depreciation expense for property and equipment was allocated to the following:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Cost of revenues		38,088		48,553		61,967
Selling and marketing expenses		2,253		2,694		3,226
General and administrative expenses		2,649		3,031		6,455
Research and development expenses		488		703		1,109
Total		43,478		54,981		72,757

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LONG-TERM INVESTMENTS

12 Months Ended

Dec. 31, 2016

Schedule of Investments [Abstract]

LONG-TERM INVESTMENTS

6 LONG-TERM INVESTMENTS

Long-term investments consisted of the following:

		December 31,
		2015		2016
		RMB		RMB
Cost method investments
Sino-German Know-How Education Investment Co., Ltd.	(a)		12,000		12,000
Juesheng.com	(b)		5,000		5,000
Mxsoft.com	(c)		4,000		4,000
Other cost method investments	(d)		3,000		5,000
Total cost method investments			24,000		26,000
Equity method investment
Hockey global resources investment limited	(e)		-		760
Available-for-sale investment	(f)		-		15,000
Total			24,000		41,760

(a)	In October 2015, the Company paid RMB12,000 in cash to acquire  2.86% of the total equity interest in Sino-German Know-How Education Investment Co., Ltd, which is engaged in provision of training for senior mechanic in vehicle maintenance and repair.
(b)	In November 2015, the Company paid RMB5,000 in cash to acquire 0.50% of the total equity interest of an online shopping platform providing education products.
(c)	In August 2015, the Company paid RMB4,000 in cash to acquire 5.71% of the total equity interest in Mxsoft.com, which provides IT environment management and monitoring solution to customers.
(d)	As of December 31, 2015, the Company paid RMB3,000 in cash to acquire 1.43% and 0.74% equity interest in two other entities which were accounted for under cost method. In June 2016, the Company paid RMB2,000 in cash to acquire 2.00% equity interest of an online platform providing vehicle sales and related services.
(e)	In October 2016, the Company paid RMB790 in cash to acquire 28.5% of equity interest of a hockey program management company through investment in its common shares and accounted for the investment using equity method.
(f)	In October 2016, the Company paid RMB10,000 in cash to acquire 13.9% equity interest in Beijing Crouching Tiger Hidden Dragon Internet Technology Co., Ltd., which provides employment course trainings and recruitment services. Because the investment terms contain both substantive liquidation preference over common stock and substantive redemption provision that is not available to common shareholders, the investment is not substantially similar to common stock. In addition, since the investment is redeemable at the option of the Company, the investment qualifies as a debt security.  The Company recorded the investment as available-for-sale investment and recorded an increase of RMB5,000 in fair value of the investment with nil income tax effect in 2016, as a component of other comprehensive income.

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

12 Months Ended

Dec. 31, 2016

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract]

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

7 ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES

 

	December 31,
	2015		2016
	RMB		RMB
VAT and other tax payables		18,347		29,995
Accrued payroll and employee benefits		37,396		59,512
Others		24,092		28,360
Total		79,835		117,867

Others mainly represent current deferred income under American Depositary Receipt program, accrual for employee reimbursement, rental expenses and other miscellaneous expenses.

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NET REVENUES

12 Months Ended

Dec. 31, 2016

NET REVENUES [Abstract]

NET REVENUES

8   NET REVENUES

Net revenues consist of the following:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Tuition fee		835,275		1,174,596		1,545,680
Certification service fee		18,038		27,466		35,980
Loan referral service fee		-		-		8,750
Others		2,873		1,136		1,875
Business taxes and surcharges		(19,245)		(25,190)		(12,681)
Total net revenues		836,941		1,178,008		1,579,604

Others mainly represent miscellaneous fees, including franchise fee and guarantee fee (see note 11(a)).

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LOSS ON FOREIGN CURRENCY FORWARD CONTRACT

12 Months Ended

Dec. 31, 2016

Foreign Currency [Abstract]

LOSS ON FOREIGN CURRENCY FORWARD CONTRACT

9 LOSS ON FOREIGN CURRENCY FORWARD CONTRACT

 

The Company entered into a foreign currency forward contract on January 29, 2016 to sell its time deposits denominated in RMB for US dollars at a fixed rate at 6.7070 on May 19, 2016 with the notional amount of RMB564,095. The Company settled the forward contract on May 19, 2016 and incurred a loss on foreign currency forward contract in the amount of RMB12,898 for the year ended December 31, 2016.

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INCOME TAXES

12 Months Ended

Dec. 31, 2016

INCOME TAXES [Abstract]

INCOME TAXES

10 INCOME TAXES

Under the current laws of the Cayman Islands, Tarena International is not subject to tax on its income or capital gains. For the period from its inception on October 22, 2012 to December 31, 2016, Tarena HK did not have any assessable profits arising in or derived from HK SAR. Tarena International’s PRC subsidiaries and consolidated VIEs and the subsidiaries of the VIEs file separate tax returns in the PRC. Effective from January 1, 2008, the PRC statutory income tax rate is 25% according to the Corporate Income Tax (“CIT”) Law which was passed by the National People’s Congress on March 16, 2007.

Under the CIT Law, entities that qualify as “Advanced and New Technology Enterprise” (“ANTE”) are entitled to a preferential income tax rate of 15%. In 2009, the WOFE qualified as an ANTE, which entitled it to the preferential income tax rate of 15% from January 1, 2009 to December 31, 2011. In 2012, the WOFE renewed its ANTE qualification, which entitled it to the preferential income tax rate of 15% from January 1, 2012 to December 31, 2014. In 2015, the WOFE renewed its ANTE qualification, which entitled it to the preferential income tax rate of 15% from January 1, 2015 to December 31, 2017.

Tarena Software Technology (Hangzhou) Co., Ltd. (“Tarena Hangzhou”) was established in 2013 and qualified as an eligible software enterprise. As a result of this qualification, it is entitled to a tax holiday of a two-year full exemption followed by a three-year 50% exemption, commencing from the year in which its taxable income is greater than zero. As a result, its income tax rates for the years ended December 31, 2014, 2015 and 2016 were nil, nil and 12.5%, respectively.

In 2016, Tarena Hangzhou acquired Hanru Education& Technology Co., Ltd. (“Hanru Hangzhou”), which was qualified as an eligible software enterprise, and was entitled to a tax holiday of a two-year full exemption followed by a three-year 50% exemption, commencing from the year in which its taxable income is greater than zero. As a result, the income tax rate of Hanru Hangzhou for the year ended December 31, 2016 was nil.

Certain Tarena International’s subsidiaries and branches qualified as “Small Profit Enterprises” in 2014, 2015 and 2016, and therefore are subject to the preferential income tax rate of 20%.

According to the approvals from the tax authorities in certain locations in the PRC, Tarena International’s subsidiaries and consolidated VIEs and the subsidiaries of the VIEs that are based in these locations are required to use the deemed profit method to determine their income tax. Under the deemed profit method, these subsidiaries are subject to income tax at 25% on its deemed profit which is calculated based on revenues less deemed expenses equal to 85% and 90% of revenues.

The components of income before income taxes are as follows:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
PRC		146,570		200,789		272,745
Hong Kong		(1,964)		(1,908)		(573)
Cayman Islands		22,039		(16,154)		(11,542)
Total income before income taxes		166,645		182,727		260,630

Income tax expense consists of the following:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Current income tax expense		18,985		25,581		37,671
Deferred income tax benefit		(4,190)		(21,614)		(18,895)
Total		14,795		3,967		18,776

 

The actual income tax expense reported in the consolidated statements of comprehensive income for each of the years ended December 31, 2014, 2015 and 2016 differs from the amount computed by applying the PRC statutory income tax rate to income before income taxes due to the following:

	Year Ended December 31,
	2014			2015			2016
PRC statutory income tax rate		25.0	%		25.0	%		25.0	%
Increase (decrease) in effective income tax rate resulting from:
Cayman and HK entities not subject to income taxes		(3.0)	%		2.5	%		1.2	%
Research and development bonus deduction		(2.7)	%		(3.3)	%		(2.7)	%
Non-deductible selling, general and administrative expenses
Share based compensation		3.8	%		4.5	%		6.5	%
Other non-deductible selling, general and administrative expenses		0.5	%		0.6	%		0.1	%
ANTE preferential tax rate		(1.0)	%		0.1	%		(0.7)	%
Tarena Hangzhou preferential tax rate		(0.1)	%		0.7	%		0.5	%
Change in valuation allowance		6.4	%		3.1	%		2.5	%
Tarena Hangzhou and Hanru Hangzhou tax holiday		(20.0)	%		(31.1)	%		(25.2)	%
Others		0.0	%		0.1	%		0.0	%
Actual income tax expense		8.9	%		2.2	%		7.2	%

Basic earnings per Class A ordinary share and Class B ordinary share effect of the Company’s tax holiday for the year ended December 31, 2014, 2015 and 2016 was RMB0.81, RMB1.06 and RMB1.18, respectively.  

Diluted earnings per Class A ordinary share and Class B ordinary share effect of the Company’s tax holiday for the year ended December 31, 2014, 2015 and 2016 was RMB0.70, RMB0.97 and RMB1.11, respectively.

The principal components of deferred income tax assets are as follows:

	December 31,
	2015		2016
	RMB		RMB
Deferred income tax assets:
Accounts receivable		34,616		47,126
Tax loss carry forwards		7,065		9,984
Advertising expense		13,666		23,401
Accrued expenses and other current liabilities		-		123
Total deferred income tax assets		55,347		80,634
Valuation allowance		(20,115)		(26,507)
Deferred income tax assets, net		35,232		54,127

The movements of the valuation allowance are as follows:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Balance at the beginning of the year		3,647		14,362		20,115
Additions of valuation allowance		11,198		9,069		13,076
Reduction of valuation allowance		(483)		(3,316)		(6,684)
Balance at the end of the year		14,362		20,115		26,507

The valuation allowance as of December 31, 2015 and 2016 was primarily provided for the deferred income tax assets of certain Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs, which were at cumulative loss positions. In assessing the realization of deferred income tax assets, management considers whether it is more likely than not that some portion or all of the deferred income tax assets will not be realized. The ultimate realization of deferred income tax assets is dependent upon the generation of future taxable income during the periods in which those temporary differences become deductible or utilizable. Management considers projected future taxable income and tax planning strategies in making this assessment. As of December 31, 2016, the Company had tax losses carryforwards of RMB 39,936. Tax losses of RMB227, RMB11,053, RMB8,165 and RMB20,491 will expire, if unused, by 2018, 2019, 2020 and 2021, respectively.

The CIT Law and its implementation rules impose a withholding income tax at 10%, unless reduced by a tax treaty or arrangement, on the amount of dividends distributed by a PRC-resident enterprise to its immediate holding company outside the PRC that are related to earnings accumulated beginning on January 1, 2008. Dividends relating to undistributed earnings generated prior to January 1, 2008 are exempt from such withholding income tax.

The Company has considered temporary differences on the book to tax differences pertaining to all investment in subsidiaries including the determination of the indefinite reinvestment assertion that would apply to each foreign subsidiary. The Company evaluated each entity’s historical, current business environment and plans to indefinitely reinvest all earnings accumulated in its respective jurisdiction for purpose of future business expansion.

Due to the plan to indefinitely reinvest its earnings in the PRC, the Company has not provided for deferred income tax liabilities on undistributed earnings of RMB604,218 and RMB937,735 as of December 31, 2015 and 2016, respectively. It is not practicable to estimate the unrecognized deferred income tax liabilities thereof.

A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the years ended December 31, 2014, 2015 and 2016 is as follows:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Balance at beginning of year		18,764		36,921		53,404
Increase related to current year tax positions		35,436		51,050		66,122
Settlement		(17,279)		(34,567)		(49,704)
Balance at end of year		36,921		53,404		69,822

RMB49,198 and RMB69,263 of unrecognized tax benefits as of December 31, 2015 and 2016, if recognized, would affect the effective tax rate. No interest and penalty expenses were recorded for the years ended December 31, 2014, 2015 or 2016. RMB42,489 and RMB62,665 of unrecognized tax benefits as of December 31, 2015 and 2016 were included in income taxes payable. RMB3,700 and RMB3,700 of unrecognized tax benefits as of December 31, 2015 and 2016 were included in other non-current liabilities. The remaining RMB7,215 and RMB3,457 unrecognized tax benefit as of December 31, 2015 and 2016, respectively were presented as a reduction of the deferred income tax assets for tax loss carry forwards since the uncertain tax position would reduce the tax loss carry forwards under the tax law. The unrecognized tax benefits represent the estimated income tax expenses the Company would be required to pay should its revenue for tax purposes be recognized in accordance with current PRC tax laws and regulations. Management believes that it is reasonably possible that RMB66,122 unrecognized tax benefits as of December 31, 2016 will be recognized in the next twelve months as a result of such revenue being reported in the income tax filing during the next twelve months.

According to the PRC Tax Administration and Collection Law, the statute of limitation is three years if the underpayment of taxes is due to computational errors made by the taxpayer or the withholding agent. The statute of limitation is extended to five years under special circumstances where the underpayment of taxes is more than RMB100. In the case of transfer pricing issues, the statute of limitation is 10 years. There is no statute of limitation in the case of tax evasion. The income tax returns of Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs for the years from 2012 to 2016 are open to examination by the PRC tax authorities.

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RELATED PARTY TRANSACTIONS

12 Months Ended

Dec. 31, 2016

RELATED PARTY TRANSACTIONS [Abstract]

RELATED PARTY TRANSACTIONS

11 RELATED PARTY TRANSACTIONS

During the years ended December 31, 2014, 2015 and 2016, the Company entered into related party transactions with Mr. Han, Chuanbang Business Consulting (Beijing) Co., Ltd. (“Chuanbang”), which is wholly owned by Mr. Han, and Precise Advance Limited (“Precise”), which is owned by an executive of the Company’s shareholder. The significant related party transactions are summarized as follows:

		Year Ended December 31,
		2014		2015		2016
		RMB		RMB		RMB
Transactions with Chuanbang
Guarantee fee	(a)		112		—		—
Cash collection service fee	(b)		664		2,053		6,445
Transactions with others
Advances from Precise	(c)		—		(1,432)		—
Repayment of advances from Precise	(c)		—		1,432		—

Notes: 

 

(a) Starting from the second half of 2011, the Company began to refer its students who need financial assistance for the payment of their tuition fees to Chuanbang. Chuanbang is a person-to-person or a “peer-to-peer” (P2P) lending intermediary that assists students in obtaining loans to pay for their tuition fees by identifying potential third-party individual lenders (the “Student Loan Program”). The Company has no direct involvement in or is a party to the P2P arrangement, other than serving as the guarantor of the student loans. Under the Student Loan Program, the Company allocates the total consideration between the fair value of the tuition service and the loan guarantee. Subsequent to the initial recognition, the loan guarantee liability is recognized as guarantee fee revenue over the term of the guarantee on a straight-line basis. RMB112, nil and nil was recognized as guarantee fee revenue and included in other revenues for the years ended December 31, 2014, 2015 and 2016, respectively.

(b) Pursuant to an agreement between Chuanbang and the Company, beginning August 2013, Chuanbang provides cash collection service on the Company’s accounts receivable. The fee for the service is calculated based on 2%~12% of the amount collected. Employees of Chuanbang include former employees of the Company who worked in the credit evaluation department. Chuanbang also provides similar cash collection service to financial institutions in the PRC. The cash collection service fee which is included in general and administrative expenses in the consolidated statement of comprehensive income was RMB664, RMB2,053 and RMB6,445 for the years ended December 31, 2014, 2015 and 2016, respectively. The amount due to Chuanbang as of December 31, 2015 was RMB879. The amount due to Chuanbang as of December 31, 2016 was RMB79, which has been fully paid by March 31, 2017.

(c) In September 2015, Precise, which is owned by an executive of Kohlberg Kravis Roberts & Co. L.P (“KKR”), a shareholder of the Company, provided cash advances in the amount of RMB1,432 to the Company in order to fund its share repurchase plan. The Company has fully repaid the advances in October 2015.

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ORDINARY SHARES AND STATUTORY RESERVE

12 Months Ended

Dec. 31, 2016

ORDINARY SHARES AND STATUTORY RESERVE [Abstract]

ORDINARY SHARES AND STATUTORY RESERVE

12 ORDINARY SHARES AND STATUTORY RESERVE

(a) Ordinary shares

 

On October 8, 2003, Tarena International was established with authorized share capital of US$150 or 90,000,000 ordinary shares with a par value of US$0.001 (being retroactively adjusted to reflect the effect of the share split) and 60,000,000 preferred shares with a par value of US$0.001 (being retroactively adjusted to reflect the effect of the share split).

On December 16, 2008, the Board of Directors of Tarena International approved a 10:1 share split, which increased (i) the total number of authorized ordinary shares of 9,000,000, and issued and outstanding ordinary shares of 1,358,000 to 90,000,000 and 13,580,000 respectively; and (ii) the total number of authorized preferred shares of 6,000,000, and issued and outstanding preferred shares of 1,589,125 to 60,000,000 and 15,891,250 respectively. All applicable share and per share amounts in the accompanying consolidated financial statements have been retroactively adjusted to reflect the effect of the share split.

On April 9, 2013, IDG Technology Venture Investments, LP (“IDG”), the Series A convertible redeemable preferred shareholder, entered into a series of agreements with Mr. Han, Connion Capital Ltd. (“Connion”), a company incorporated in the Cayman Islands with limited liability and wholly owned by Mr. Han, Techedu Limited, a company incorporated in the British Virgin Islands (“BVI”) with limited liability and wholly owned by Mr. Han, and GF Tarena Limited, a third party company incorporated with limited liability under the law of the BVI, pursuant to which IDG sold 1,146,059 and 229,212 of its Series A convertible redeemable preferred shares to Techedu Limited and GF Tarena Limited for a consideration of RMB31,320 and RMB6,264, respectively, or RMB27.33 per share. At the same time, Connion sold 916,848 of its ordinary shares to GF Tarena Limited for a consideration of RMB25,056 or RMB27.33 per share. The 1,146,059 Series A convertible redeemable preferred shares purchased by Techedu Limited and 229,212 Series A convertible redeemable preferred shares purchased by GF Tarena Limited were converted to ordinary shares on December 10, 2013. To facilitate the purchase of the Series A convertible redeemable preferred shares, Techedu Limited borrowed a loan in the amount of RMB31,320 from GF Tarena Limited on April 9, 2013, with an annual interest rate of 19% for a period of 30 months.

On February 27, 2014, the Board of Directors of Tarena International approved the fifth amendment of the Memorandum and Articles of Association (the “Amended M&A”), pursuant to which the authorized share capital was amended to 1,000,000,000 ordinary shares at a par value of US$0.001 per share, of which 860,000,000 shares were designated as Class A ordinary shares, 40,000,000 as Class B ordinary shares and 100,000,000 shares were designated as Reserved Shares, each with such rights, preferences and privileges set forth in the Amended M&A. The rights of the holders of Class A and Class B ordinary shares are identical, except with respect to voting and conversion rights. Each share of Class A ordinary shares is entitled to one vote per share and is not convertible into Class B ordinary shares under any circumstances. Each share of Class B ordinary shares is entitled to ten votes per share and is convertible into one Class A ordinary share at any time by the holder thereof.

In the Amended M&A, the Board of Directors of Tarena International approved that the Company to adopt a dual class ordinary share structure immediately upon the completion of the IPO. Upon the completion of the IPO, the Group’s ordinary shares were divided into Class A ordinary shares and Class B ordinary shares. All of its issued and outstanding ordinary share prior to this offering were re-designated as Class B ordinary shares, all of its issued and outstanding preferred shares were automatically re-designated or converted into Class B ordinary shares on a one-for-one basis immediately upon the completion of the IPO and all of the issued and outstanding options, non-vested shares and non-vested share units granted by the Company pursuant to the 2008 Share Plan and the 2014 Share Incentive Plan were re-designated as options in Class A shares, non-vested Class A ordinary shares, non-vested Class A ordinary share units.

In April 2014, in connection with its IPO, Tarena International issued 11,500,000 Class A ordinary shares with par value of US$0.001, at a price of US$9.00 per share to investors. Net proceeds from the issuance of 11,500,000 Class A ordinary shares amounted to RMB567,360 (net of issuance costs of RMB24,801), of which RMB71 and RMB 567,289 were recorded in the Class A ordinary shares and additional paid-in capital, respectively.

Concurrently upon the completion of the Company’s IPO, the Company issued 1,500,000 Class A ordinary shares with par value of US$0.001 to New Oriental Education & Technology Group Inc., in a private placement at a price of US$9.00 per share. Proceeds from the issuance of Class A ordinary shares were RMB83,052 of which RMB9 and RMB83,043 were recorded in the Class A ordinary shares and additional paid-in capital, respectively.

As a result of automatic conversion of Series A, Series B, and Series C convertible redeemable preferred shares into Class B ordinary shares upon completion of the Company’s IPO on April 3, 2014, 25,430,831 Class B ordinary shares were issued. From January 1, 2014 to December 31, 2014, a total of 8,924,365 Class B ordinary shares were converted to Class A ordinary shares. 1,788,393 Class A ordinary shares were issued upon exercise of share options and vesting of non-vested shares. From January 1, 2015 to December 31, 2015, a total of 18,158,128 Class B ordinary shares were converted to Class A ordinary shares. 3,043,652 Class A ordinary shares were issued upon exercise of share options and vesting of non-vested shares. From January 1, 2016 to December 31, 2016, a total of 1,679,647 Class B ordinary shares were converted to Class A ordinary shares. 2,141,043 Class A ordinary shares were issued upon exercise of share options and vesting of non-vested shares.

As of December 31, 2016, 860,000,000 Class A ordinary shares and 40,000,000 Class B ordinary shares have been authorized, 48,735,228 and 47,160,248 Class A ordinary shares have been issued and outstanding, respectively, and 8,895,249 Class B ordinary shares have been issued and outstanding.

(b) Treasury shares

 

On August 20, 2015, the board of directors of the Company authorized a share repurchase plan under which the Company may repurchase up to RMB133,556 of its ordinary shares over the next 12 months. The Company repurchased 926,113 ordinary shares on the open market with consideration of approximately RMB49,355 for the year ended December 31, 2015. For the year ended December 31, 2016, 648,867 ordinary shares were repurchased on the open market in the amount of RMB44,406.

(c) Statutory reserves

 

Under PRC rules and regulations, Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs (the “PRC Entities”) are required to appropriate 10% of their net profit, as determined in accordance with PRC accounting rules and regulations, to a statutory surplus reserve until the reserve balance reaches 50% of their registered capital. In addition, private schools (held by the PRC Entities) which require reasonable returns are required to appropriate 25% of their net profit, as determined in accordance with PRC accounting rules and regulations, to a statutory development fund, whereas in the case of private schools which do not require reasonable return, 25% of the annual increase of their net assets. The appropriation to these statutory reserves must be made before distribution of dividends to Tarena International can be made.

For the years ended December 31, 2014, 2015 and 2016, the PRC Entities made appropriations to the statutory reserves of RMB15,823, RMB36,524 and RMB40,491, respectively. As of December 31, 2014, 2015 and 2016, the accumulated balance of the statutory reserves was RMB38,228, RMB74,752 and RMB115,243, respectively.

(d) Reclassification between additional paid-in capital and retained earnings

On August 19, 2014, the Board of Directors approved the Company to undertake a reclassification of the balances between additional paid-in capital and retained earnings of RMB526,457. The reclassification was due to the accretion of convertible redeemable preferred shares, of which RMB526,457 were charged against the balance in accumulated deficit in the absence of additional paid-in capital.  

  

(e) Dividend

 

On March 7, 2016, the Company’s board of directors approved to declare a cash dividend of US$0.15 per ordinary share to shareholders as of the close of trading on April 6, 2016. The aggregate amount of cash dividends was approximately RMB54,026, which was paid in May 2016.

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PREFERRED SHARES

12 Months Ended

Dec. 31, 2016

PREFERRED SHARES [Abstract]

PREFERRED SHARES

13 PREFERRED SHARES

Series A convertible redeemable preferred shares

On January 16, 2004, pursuant to the Series A convertible redeemable preferred shares purchase agreements (“Series A Purchase Agreement”), Tarena International issued 8,571,430 Series A convertible redeemable preferred shares to a third party investor for a total consideration of RMB4,138 or RMB0.48 per share (“Series A Original Issuance Price”) (being retroactively adjusted to reflect the effect of the share split).

The Company determined that there was no embedded beneficial conversion feature attributable to the Series A convertible redeemable preferred shares at the commitment date since the initial conversion price of the Series A convertible redeemable preferred shares was greater than the estimated fair value of the Company’s ordinary shares as of January 16, 2004. The estimated fair value of the underlying ordinary shares on January 16, 2004 was determined by management based on a retrospective valuation with the assistance of American Appraisal China Limited (“American Appraisal”), an independent valuation firm, using an income approach which requires the estimation of future cash flows and the application of an appropriate discount rate with reference to comparable listed companies engaged in a similar industry to convert such future cash flows to a single present value.

The significant terms of Series A convertible redeemable preferred shares are as follows:

(i) Conversion

The holders of Series A convertible redeemable preferred shares have the right to convert all or any portion of their holdings into ordinary shares at a rate of one-for-one at any time, subject to a contingent conversion price adjustment if there are additional ordinary shares issued or deemed to be issued, as defined in Tarena International’s Memorandum and Articles of Association, at a price lower than the Series A Original Issuance Price. In addition, each Series A Preferred Share is automatically converted into ordinary shares upon the consummation of a Qualified Public Offering, as defined in the Series A Purchase Agreement.

The contingent conversion price adjustment may provide the holders of the Series A convertible redeemable preferred shares with a beneficial conversion feature. However, any such beneficial conversion feature relating to the conversion price adjustment, if any, is recognized when the contingency is resolved.

(ii) Voting

The holders of Series A convertible redeemable preferred shares have voting rights equivalent to the ordinary shareholders on an “if-converted” basis.

(iii) Dividends

Any dividend declared and paid on ordinary shares shall be also declared and paid in respect of the Series A convertible redeemable preferred shares as if all such Series A convertible redeemable preferred shares has been converted to ordinary shares.

(iv) Liquidation preference

The liquidation preference of the holders of Series A convertible redeemable preferred shares as of December 31, 2013 is as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; (ii) second to the holders of Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares, (iii) third to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

From the date of September 25, 2008 to August 11, 2011 (the date of the issuance of Series C convertible redeemable preferred shares), the liquidation preference of the holders of Series A convertible redeemable preferred shares was as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares; (ii) second to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

From the date of its issuance (January 16, 2004) to September 25, 2008 (the date of the issuance of Series B convertible redeemable preferred shares), the liquidation preference of the holders of Series A convertible redeemable preferred shares was as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the holders of the outstanding Series A convertible redeemable preferred shares shall be entitled to receive, prior and in preference to any distribution of any of the assets of Tarena International to the holders of the ordinary shares by reason of their ownership of such shares, an amount equal to the Series A Original Issuance Price plus dividends declared but unpaid on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of ordinary shares and Series A convertible redeemable preferred shares then outstanding, based on the number of ordinary shares then held by each shareholder on an “if-converted” basis.

(v) Drag-along rights

Holders of a majority of the Series A convertible redeemable preferred shares have a drag-along right whereby they can require the ordinary shareholders to approve a third-party offer to directly or indirectly purchase all, or substantial all, of the equity interests or assets of the Company, provided that the transaction shall occur on or after the fifth anniversary of the closing of the issuance of the Series A convertible redeemable preferred shares or the transaction shall be at a price per share of not less than US$0.58 per share (being retroactively adjusted to reflect the effect of the share split). Triggering of this drag-along right results in a deemed liquidation of the Company at the option of a majority of the holders of Series A convertible redeemable preferred shares with a required distribution of the transaction proceeds in accordance with the Company’s Memorandum and Articles of Association.

Consequently, the Series A convertible redeemable preferred shares are classified outside of permanent equity.

Series B convertible redeemable preferred shares

On September 25, 2008, pursuant to Series B convertible redeemable preferred shares purchase agreement, Tarena International issued 5,630,630 Series B convertible redeemable preferred shares to a third party investor for a total consideration of RMB34,099 or RMB6.06 per share (“Series B Original Issuance Price”) (being retroactively adjusted to reflect the effect of the share split). On the same date, an outstanding short term borrowing in the amount of RMB10,230 was exchanged for 1,689,190 shares of Series B convertible redeemable preferred shares (being retroactively adjusted to reflect the effect of the share split).

The Company determined that there was no embedded beneficial conversion feature attributable to the Series B convertible redeemable preferred shares at the commitment date since the initial conversion price of the Series B convertible redeemable preferred shares was greater than the estimated fair value of the Company’s ordinary shares as of September 25, 2008. The estimated fair value of the underlying ordinary shares on September 25, 2008 was determined by management based on a retrospective valuation with the assistance of American Appraisal, using an income approach which requires the estimation of future cash flows and the application of an appropriate discount rate with reference to comparable listed companies engaged in a similar industry to convert such future cash flows to a single present value. 

 

The significant terms of Series B convertible redeemable preferred shares are as follows:

(i) Conversion

The holders of Series B convertible redeemable preferred shares have the right to convert all or any portion of their holdings into ordinary shares at a rate of one-for-one at any time, subject to a contingent conversion price adjustment if there are additional ordinary shares issued or deemed to be issued, as defined in Tarena International’s Memorandum and Articles of Association, at a price lower than the Series B Original Issuance Price. In addition, each Series B convertible redeemable preferred share is automatically converted into ordinary shares upon the written consent of the holders of more than 45% of the then outstanding Series B convertible redeemable preferred shares and the holders of more than 45% of the then outstanding Series A convertible redeemable preferred shares or the consummation of a Qualified Public Offering, as defined in the Series B convertible redeemable preferred shares purchase agreement.

The contingent conversion price adjustment may provide the holders of the Series B convertible redeemable preferred shares with a beneficial conversion feature. However, any such beneficial conversion feature relating to the conversion price adjustment, if any, is recognized when the contingency is resolved.

(ii) Voting

The holders of Series B convertible redeemable preferred shares have voting rights equivalent to the ordinary shareholders on an “if-converted” basis.

(iii) Dividends

Any dividend declared and paid on ordinary shares shall be also declared and paid in respect of the Series B convertible redeemable preferred shares as if all such Series B convertible redeemable preferred shares have been converted to ordinary shares.

(iv) Liquidation preference

The liquidation preference of the holders of Series B convertible redeemable preferred shares as of December 31, 2013 is as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; (ii) second to the holders of Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares, (iii) third to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

From the date of September 25, 2008 to August 11, 2011 (the date of the issuance of Series C convertible redeemable preferred shares), the liquidation preference of the holders of Series B convertible redeemable preferred shares was as follows:

In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares; (ii) second to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

(v) Redemption

If a Qualified Initial Public Offering or a Trade Sale, as defined in the Series B convertible redeemable preferred shares purchase agreement, did not occur by December 31, 2012 (the “Redemption Date”), the holders of Series B convertible redeemable preferred shares had the right to request for redemption any portion of the Series B convertible redeemable preferred shares they held at a price equal to the sum of:

• an amount equal to 150% of Series B Original Issuance Price; plus,

• an amount equal to all declared but unpaid dividends on each share of Series B convertible redeemable preferred shares; plus,

• 10% compound interest per annum on 150% of Series B Original Issuance Price for each Series B convertible redeemable preferred share from the date of issuance to the earliest redemption date of the security.

On August 11, 2011, in connection with the issuance of Series C convertible redeemable preferred shares, the Company and holders of Series B convertible redeemable preferred shares agreed to defer the Redemption Date until June 30, 2014.

Series C convertible redeemable preferred shares

On August 11, 2011, pursuant to the Series C convertible redeemable preferred shares purchase agreement (“Series C Purchase Agreement”), Tarena International issued 10,914,852 Series C convertible redeemable preferred shares to a third party investor for a total consideration of RMB127,817 or RMB11.71 per share (“Series C Original Issuance Price”). Total issuance cost of Series C convertible redeemable preferred shares was RMB1,397.

The Company determined that there was no embedded beneficial conversion feature attributable to the Series C convertible redeemable preferred shares at the commitment date since the initial conversion price of the Series C convertible redeemable preferred shares was greater than the estimated fair value of the Company’s ordinary shares as of August 11, 2011. The estimated fair value of the underlying ordinary shares on August 11, 2011 was determined by management based on a retrospective valuation with the assistance of American Appraisal, a third party valuation firm, using an income approach which requires the estimation of future cash flows and the application of an appropriate discount rate with reference to comparable listed companies engaged in a similar industry to convert such future cash flows to a single present value.

The significant terms of Series C convertible redeemable preferred shares are as follows:

(i) Conversion

The holders of Series C convertible redeemable preferred shares have the right to convert all or any portion of their holdings into ordinary shares at a rate of one-for-one at any time, subject to a contingent conversion price adjustment if there are additional ordinary shares issued or deemed to be issued, as defined in Tarena International’s Memorandum and Articles of Association, at a price lower than the Series C Original Issuance Price. In addition, each Series C Preferred Share is automatically converted into ordinary shares upon the closing of a Qualified Public Offering, as defined in the Memorandum and Articles of Association or the written consent of 67% of the holders of the Series C convertible redeemable preferred shares as well as the written consent of the holders of more than 45% of the then outstanding Series B convertible redeemable preferred shares and the written consent of the holders of more than 45% of the then outstanding Series A convertible redeemable preferred shares for conversion.

The contingent conversion price adjustments may provide the holders of the Series C convertible redeemable preferred shares with a beneficial conversion feature. However, any such beneficial conversion feature relating to the conversion price adjustment, is recognized when the contingency is resolved.

(ii) Voting

The holders of Series C convertible redeemable preferred shares have voting rights equivalent to the ordinary shareholders on an “if-converted” basis.

(iii) Dividends

The board of directors of Tarena International may approve the payment of dividends at their discretion to the holders of Series C convertible redeemable preferred shares. Any dividend declared and paid on ordinary shares shall be also declared and paid in respect of the Series C convertible redeemable preferred shares as if all such Series C convertible redeemable preferred shares have been converted to ordinary shares.

(iv) Liquidation preference

The liquidation preference of the holders of Series C convertible redeemable preferred shares is as follows:

In the event of liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i) first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; (ii) second to the holders of Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares, (iii) third to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an “if-converted” basis.

(v) Redemption

If a Qualified Initial Public Offering or a Trade Sale, as defined in the Series C convertible redeemable preferred shares purchase agreement, does not occur by June 30, 2014 (the “Redemption Date”), the holders of the Series C convertible redeemable preferred shares have the right to request for redemption for all or a portion of the Series C convertible redeemable preferred shares they hold at a price equal to the greater of (i) an amount equal to 137.50% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; or (ii) the fair market value of the Series C convertible redeemable preferred shares as of the most recent year end, as determined by an independent appraiser mutually agreeable to the Company and the holder of the Series C convertible redeemable preferred shares.

As of December 31, 2013, the Company concluded that it was probable that the Series B and Series C convertible redeemable preferred shares will become redeemable. The Company has elected to accrete changes in the redemption value over the period from the date of issuance to the earliest redemption date using the interest method. The total accretion of Series B and Series C convertible redeemable preferred shares in the amount of RMB3,530 and nil were recorded as a reduction to additional paid-in capital first and then charged against accumulated deficit in the absence of additional paid-in capital for the year ended December 31, 2014.

All the Series A, Series B and Series C convertible redeemable preferred shares were automatically converted into Class B ordinary shares upon completion of the Company’s IPO on April 3, 2014. As a result, 25,430,831 Class B ordinary shares were issued upon the conversion of Series A, Series B and Series C convertible preferred shares. Upon the conversion, the carrying amounts of the Series A, Series B and Series C convertible preferred shares were recorded in additional paid-in capital of RMB704,334 and Class B ordinary shares of RMB157.

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SHARE BASED COMPENSATION

12 Months Ended

Dec. 31, 2016

SHARE BASED COMPENSATION [Abstract]

SHARE BASED COMPENSATION

14 SHARE BASED COMPENSATION

 

Share incentive plans

On September 22, 2008, Tarena International adopted the 2008 Share Plan (the “2008 Plan”), pursuant to which Tarena International is authorized to issue share options and other share-based awards to key employees, directors and consultants of the Company to purchase up to 6,002,020 of its Class A ordinary shares (being retroactively adjusted to reflect the effect of the share split) under the 2008 Plan. On November 28, 2012, the Company increased the number of Class A ordinary shares authorized for issuance under the 2008 Plan to 8,184,990 Class A ordinary shares. Share options issued before September 22, 2008 are also administered under the 2008 Plan.

On February 1, 2014, Tarena International adopted the 2014 Share Plan (the “2014 Plan”), pursuant to which Tarena International was authorized to issue options, non-vested shares and non-vested share units to qualified employees, directors and consultants of the Company. The maximum aggregate number of shares which may be issued pursuant to all awards under the 2014 Plan, or the Award Pool, is 1,833,696, provided that the shares reserved in the Award Pool shall be increased on the first day of each calendar year, commencing with January 1, 2015, if the unissued shares reserved in the Award Pool on such day account for less than 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year, as a result of which increase the shares unissued and reserved in the Award Pool immediately after each such increase shall equal 2% of the total number of shares issued and outstanding on a fully-diluted basis on December 31 of the immediately preceding calendar year.

Share options

On January 1, 2011 and September 26, 2011, the board of directors of Tarena International approved the grant of options to purchase 124,000 and 1,533,020 ordinary shares of Tarena International to certain employees and directors. These options vest over a five-year period. The option holders can only exercise their vested options upon the occurrence of the earliest of (i) a qualified IPO as defined in the Plan, (ii) a liquidation event as defined in the Company’s Memorandum and Articles of Association, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years. The fair value of Tarena International’s ordinary shares on January 1, 2011 and September 26, 2011 was determined to be US$0.63 and US$0.83 per share, respectively.

On January 1, 2013, the board of directors of Tarena International approved the grant of options to certain employees to purchase 2,029,386 ordinary shares of Tarena International. These options vest over a four year period. The option holders can only exercise their vested options upon the occurrence of the earliest of (i) a qualified IPO as defined in the Plan, (ii) a liquidation event as defined in the Company’s Memorandum and Articles of Association, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years.

On September 16, 2013, the board of directors of Tarena International approved the grant of options to an employee to purchase 30,000 ordinary shares of Tarena International. 25% of the options will be vested at the closing of the Company’s IPO while the remaining 75% will vest over a four-year period, that can only be exercised upon the occurrence of the earliest of (i) a qualified IPO, (ii) a liquidation event, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years.

On September 16, 2013, the board of directors of Tarena International approved the grant of options to an officer to purchase 458,424 ordinary shares of Tarena International. If the Company undertakes any additional round of financing or any other activities to effect an increase of the total shares outstanding on a fully diluted basis before the IPO, the officer will be granted additional share options at the same exercise price. The total number of share options the officer will be granted will be equal to not less than 1% of the Company’s total shares outstanding on a fully diluted basis on the date immediately preceding the closing of the Company’s IPO. 25% of the options will be immediately and fully vested at the closing of the Company’s IPO while the remaining 75% will vest over a four-year period, that can only be exercised upon the occurrence of the earliest of (i) a qualified IPO, (ii) a liquidation event, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years. The fair value of Tarena International’s ordinary shares on January 1, 2013 and September 16, 2013 was determined to be US$3.75 and US$5.69 per share, respectively.

On February 20, 2014, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase 1,805,784 ordinary shares of Tarena International. The options vest over a four year period. The option holders can only exercise their vested options upon the occurrence of the earliest of (i) a qualified IPO, (ii) a liquidation event, or (iii) the five-year anniversary of the option grant date. The options have a contractual term of ten years. The fair value of Tarena International’s ordinary shares on February 20, 2014 was determined to be US$8.60 per share.

During the year ended December 31, 2015, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase 615,624 ordinary shares of Tarena International at exercise prices ranging from US$0.89 to US$4.36 per share. These options vest over a period ranging between 1 year and 4 years. The options have a contractual term of ten years.

During the year ended December 31, 2016, the board of the directors of Tarena International approved the grant of options to certain officers and employees to purchase 1,115,807 ordinary shares of Tarena International at exercise prices ranging from US$0.058 to US$4.36 per share. These options vest over a period ranging between 0.5 year and 4 years. The options have a contractual term of ten years.

A summary of share options activity for the years ended December 31, 2014, 2015 and 2016 is as follows:

					Weighted
			Weighted		Average
	Number of		Average		Remaining		Aggregate
	Share		Exercise Price		Contractual		Intrinsic
	Options		US$		Years		Value US$
Outstanding at December 31, 2013		8,134,830		0.82
Granted		1,805,784		3.05
Exercised		(1,786,449)		0.14
Forfeited		(115,215)		2.91
Expired		—		—
Outstanding at December 31, 2014		8,038,950		1.44		6.19		77,658
Granted		615,624		3.38
Exercised		(3,015,872)		1.20
Forfeited		(56,926)		3.33
Expired		—		—
Outstanding at December 31, 2015		5,581,776		1.77		5.68		48,412
Granted		1,115,807		1.90
Exercised		(2,106,043)		1.46
Forfeited		(263,671)		2.98
Expired		—		—
Outstanding at December 31, 2016		4,327,869		1.88		5.84		56,743
Vested and expected to vest as of December 31, 2016		3,959,763		1.74		5.59		52,460
Exercisable as of December 31, 2016		2,536,418		1.17		4.09		35,045

The Company calculated the fair value of the share options on the grant date using the Binomial option-pricing valuation model. The assumptions used in the valuation model are summarized in the following table.

The total intrinsic value of options exercised during the years ended December 31, 2014, 2015 and 2016 were RMB153,860, RMB235,831 and RMB141,040, respectively.

	Year Ended December 31,
	2014		2015		2016
	US$		US$		US$
Expected volatility		51.7%		62.3%-70.9%		63.5%-68.8%
Expected dividends yield		0%		0%		0%
Exercise multiple		2.2		2.0		2.0
Risk-free interest rate per annum		3.81%		2.68%-2.99%		2.15%-3.18%
Estimated fair value of underlying ordinary shares (per share)		US$8.60		US$9.28-US$12.85		US$9.99-US$16.54

Because the Company’s ordinary shares had a short trading history at the time the options were issued, the expected volatility was based on the historical volatilities of comparable publicly traded companies engaged in the similar industry.

The estimated fair value of the underlying ordinary shares on each date of grant prior to September 2013, was determined by management based on a retrospective valuation conducted by American Appraisal. The estimated fair values of the underlying ordinary shares on September 16, 2013 and February 20, 2014 were determined by management based on a contemporaneous valuation conducted by American Appraisal. The Company first determined its enterprise value by using income approach, which required the estimation of future cash flows, and the application of an appropriate discount rate with reference to comparable listed companies engaged in the similar industry to convert such future cash flows to a single present value, and then allocated the enterprise value between the ordinary shares and preferred shares. The fair values of the underlying ordinary shares on each date of grant after April 2014, were the closing prices of the Company’s Class A ordinary shares traded in the Stock Exchange.

No income tax benefit was recognized in the consolidated statements of comprehensive income as the share-based compensation expense was not tax deductible.

The fair values of the options granted for the years ended December 31, 2014, 2015 and 2016 are as follows:

	Year Ended December 31,
	2014		2015		2016
	US$		US$		US$
Weighted average grant date fair value of option per share		6.35		9.16		10.17
Aggregate grant date fair value of options		11,468		5,641		11,352

As of December 31, 2016, there was approximately RMB71,282 of total unrecognized compensation cost related to unvested share options. The unrecognized compensation costs are expected to be recognized over a weighted average period of approximately 2.18 years.

Non-vested shares

On April 3, 2014, the board of directors of Tarena International approved the grant of two batches of non-vested shares to three independent directors. The number of the first batch of non-vested shares is equal to 27,780 shares, which was calculated as US$250 divided by US$9 per share, i.e. the IPO price of ordinary share of Tarena International. Conditioned on the Grantee’s continuous services as a director of the Company, a second batch of non-vested shares should be granted with the number equal to US$250 divided by the closing price of ordinary share of Tarena International on April 3, 2015, which was calculated as US$250 divided by US$10 per share, with 25,000 non-vested shares were granted on April 3, 2015. The two batches of non-vested shares shall vest on the April 3, 2015 and 2016, respectively.

On November 11, 2014, the board of directors of Tarena International approved the grant of 1,944 non-vested shares to 8 employees. One hundred percent of the non-vested shares shall vest immediately on the grant date.

On April 3, 2016, the board of directors of Tarena International approved the grant of 20,000 non-vested shares to three independent directors, 25% of which vest at the end of every quarter within one year. Grantees of non-vested shares have no voting rights or dividend rights with respect to shares that have not been vested. 

A summary of the non-vested shares activity under the 2014 Share Plan is summarized as follows:

			Weighted Average
	Number of Non-		Grant Date Fair
	vested Shares		Value
			US$
Outstanding as of December 31, 2013		-		-
Granted		29,724		9.38
Vested		(1,944)		13.95
Forfeited		-		-
Outstanding as of December 31, 2014		27,780		9.06
Granted		25,000		9.63
Vested		(27,780)		9.06
Forfeited		-		-
Outstanding as of December 31, 2015		25,000		9.63
Granted		20,000		10.82
Vested		(35,000)		9.97
Forfeited		-		-
Outstanding as of December 31, 2016		10,000		10.82

As of December 31, 2016, there was approximately RMB244 of total unrecognized compensation cost related to non-vested shares, which is expected to be recognized over a weighted average period of approximately 0.25 years. The total fair value of shares vested during the year ended December 31, 2015 and 2016 was RMB1,567 and RMB2,316 respectively.

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EARNINGS PER SHARE

12 Months Ended

Dec. 31, 2016

EARNINGS (LOSS) PER SHARE [Abstract]

EARNINGS PER SHARE

15 EARNINGS  PER SHARE

 

Basic and diluted earnings per share is calculated as follows:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Numerator:
Net income attributable to Class A and Class B ordinary shareholders		148,320		178,760		241,854
Less:
Earnings allocated to participating Series A convertible redeemable preferred shares		(5,648)		—		—
Earnings allocated to participating Series B convertible redeemable preferred shares		(5,745)		—		—
Earnings allocated to participating Series C convertible redeemable preferred shares		(8,566)		—		—
Net income for basic and diluted earnings per share		128,361		178,760		241,854
Denominator:
Denominator for basic earnings per share:
Weighted average number of Class A and Class B ordinary shares outstanding		41,223,389		53,767,810		55,540,670
Dilutive effect of outstanding share options		6,546,743		4,983,046		3,464,591
Denominator for diluted earnings per share		47,770,132		58,750,856		59,005,261
Basic earnings per Class A and Class B ordinary share		3.11		3.32		4.35
Diluted earnings per Class A and Class B ordinary share		2.69		3.04		4.10

The Company uses the two-class method to calculate basic and diluted earnings per Class A and Class B ordinary share. Under the two-class method, when calculating the basic and dilutive earnings per Class A and Class B ordinary share, net income attributable to Class A and Class B ordinary shareholders is adjusted to reflect the net income which is allocated to preferred shares.

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COMMITMENTS AND CONTINGENCIES

12 Months Ended

Dec. 31, 2016

COMMITMENTS AND CONTINGENCIES [Abstract]

COMMITMENTS AND CONTINGENCIES

16 COMMITMENTS AND CONTINGENCIES

(a) Operating lease commitments

Future minimum lease payments under non-cancelable operating lease agreements as of December 31, 2016 were as follows. The Company’s leases do not contain any contingent rent payment terms.

	RMB
Year ending December 31,
2017		116,805
2018		100,736
2019		70,660
2020		47,230
2021		32,542
2022 and thereafter		53,924
Total		421,897

Gross rent expenses incurred under operating leases were RMB77,493, RMB108,992 and RMB136,076 for the years ended December 31, 2014, 2015 and 2016, respectively. Sublease rental income of RMB1,416, RMB382 and RMB 460 for the years ended December 31, 2014, 2015 and 2016, respectively, were recognized as reductions of gross rental expenses.

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PARENT ONLY FINANCIAL INFORMATION

12 Months Ended

Dec. 31, 2016

PARENT ONLY FINANCIAL INFORMATION [Abstract]

PARENT ONLY FINANCIAL INFORMATION

17 PARENT ONLY FINANCIAL INFORMATION

The following presents condensed parent company financial information of Tarena International.  

 

Condensed Balance Sheets

	December 31,
	2015		2016
	RMB		RMB
ASSETS
Current assets:
Cash		6,275		43,770
Time deposits		397,388		242,795
Restricted time deposits		150,000		—
Prepaid expenses and other current assets		10,843		1,855
Total current assets		564,506		288,420
Investments and loans to subsidiaries		786,264		1,316,552
Total assets		1,350,770		1,604,972
LIABILITIESAND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other current liabilities		6,522		3,409
Total current liabilities		6,522		3,409
Other non-current liabilities		5,634		3,343
Total liabilities		12,156		6,752
Commitments and contingencies		—		—
Shareholders’ equity:
Class A ordinary shares (US$0.001 par value,860,000,000 shares authorized, 44,914,538 and 48,735,228 shares issued, 43,988,425 and 47,160,248 shares outstanding as of December 31, 2015 and 2016, respectively)		276		302
Class B ordinary shares (US$0.001 par value, 40,000,000 shares authorized, 10,574,896 shares and 8,895,249 shares issued and outstanding as of December 31, 2015 and 2016, respectively)		98		86
Treasury shares (926,113 and 1,574,980 class A ordinary shares as of December 31, 2015 and 2016, respectively, at cost)		(49,355)		(93,761)
Additional paid-in capital		907,018		995,216
Accumulated other comprehensive income		30,232		58,204
Retained earnings		450,345		638,173
Total shareholders’ equity		1,338,614		1,598,220
Total liabilities and shareholders’ equity		1,350,770		1,604,972

Condensed Statements of Comprehensive Income

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
General and administrative expenses		(1,047)		(4,241)		(4,477)
Operating loss		(1,047)		(4,241)		(4,477)
Equity in income of subsidiaries		129,811		194,914		253,396
Foreign currency exchange gains (loss)		7,251		(31,923)		(4,753)
Interest income		14,059		17,610		8,027
Loss on foreign currency forward contract		—		—		(12,898)
Other income		1,776		2,400		2,559
Income before income taxes		151,850		178,760		241,854
Income tax expense		—		—		—
Net income		151,850		178,760		241,854
Other comprehensive income
Foreign currency translation adjustment, net of nil income tax		(2,896)		34,748		22,972
Unrealized holding gains on available for sale securities, net of RMB42 income taxes		—		—		5,235
Less: reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes		—		—		(235)
Comprehensive income		148,954		213,508		269,826

Condensed Statements of Cash Flows

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Operating activities:
Net cash provided by (used in) operating activities		19,036		9,770		(10,272)
Investing activities:
Purchase of time deposits		(569,312)		(588,426)		(298,688)
Proceeds from maturity of time deposits		3,071		603,501		620,607
Investments made to subsidiaries		(104,662)		—		(198,137)
Net cash provided by (used in) investing activities		(670,903)		15,075		123,782
Financing activities:
Advances from a related party		—		1,432		—
Repayment of advances from a related party		—		(1,432)		—
Issuance of Class A ordinary shares upon the IPO		592,161		—		—
Issuance of Class A ordinary shares in private placement concurrent with the IPO		83,052		—		—
Issuance of Class A ordinary shares in connection with exercise of share options		1,518		22,456		20,388
Payment of dividends		—		—		(54,026)
Repurchase of treasury shares		—		(49,355)		(44,406)
Payment of IPO costs		(17,228)		—		—
Net cash provided by (used in) financing activities		659,503		(26,899)		(78,044)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(27)		398		2,029
Net increase (decrease) in cash and cash equivalents		7,609		(1,656)		37,495
Cash and cash equivalents at beginning of year		322		7,931		6,275
Cash and cash equivalents at end of year		7,931		6,275		43,770
Non-cash investing and financing activities:
Conversion of Series A convertible redeemable preferred shares to Class B ordinary shares		3,648		—		—
Conversion of Series B convertible redeemable preferred shares to Class B ordinary shares		107,994		—		—
Conversion of Series C convertible redeemable preferred shares to Class B ordinary shares		592,849		—		—

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SUBSEQUENT EVENTS

12 Months Ended

Dec. 31, 2016

SUBSEQUENT EVENTS [Abstract]

SUBSEQUENT EVENTS

18 SUBSEQUENT EVENTS

 

On February 28, 2017, The Board of Directors approved to declare a cash dividend of RMB1.10 (US$0.16) per ordinary share to shareholders as of the close of trading on March 27, 2017. The cash dividend will be paid on or about May 30, 2017. The aggregate amount of cash dividends to be paid is approximately RMB64,900 (US$9,500).

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)

12 Months Ended

Dec. 31, 2016

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Principles of consolidation

(a) Principles of consolidation

The consolidated financial statements include the financial statements of Tarena International, its wholly-owned subsidiaries, VIEs in which Tarena International is the primary beneficiary and their wholly-owned subsidiaries. All significant intercompany balances and transactions have been eliminated upon consolidation.

Use of estimates

(b) Use of estimates

 

The preparation of consolidated financial statements in accordance with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Significant items subject to such estimates and assumptions include the estimated selling price of deliverables in multiple element arrangements, the fair values of share-based compensation awards and available-for-sale investments, the collectability of accounts receivable, the realizability of deferred income tax assets, the accruals for tax uncertainties and other contingencies, the recoverability of the carrying amounts of property and equipment and the useful lives of property and equipment. The current economic environment has increased the degree of uncertainty inherent in those estimates and assumptions.

Foreign currency

(c) Foreign currency

 

In 2016, the Company changed its reporting currency from United States Dollars (“USD”) to Chinese Renminbi (“RMB”). Prior years’ comparative financial information have been recasted as if the Company always used RMB as its reporting currency.

The functional currency of Tarena International and Tarena Hong Kong Limited (“Tarena HK”) is the USD. The functional currency of Tarena International’s PRC subsidiaries, consolidated VIEs, and the subsidiaries of the VIEs is the RMB. Transactions denominated in currencies other than the functional currency are translated into the functional currency at the exchange rates prevailing at the date of the transaction. Monetary assets and liabilities denominated in foreign currencies are translated into the functional currency using the applicable exchange rate at the balance sheet date. The resulting exchange differences are recorded in foreign currency exchange gains (losses) in the consolidated statements of comprehensive income.

Assets and liabilities of entities with functional currencies other than RMB are translated into RMB using the exchange rate on the balance sheet date. Revenues and expenses are translated into RMB at average rates prevailing during the reporting period. The resulting foreign currency translation adjustment are recorded in accumulated other comprehensive income (loss) within shareholders’ equity (deficit).

Since the RMB is not a fully convertible currency, all foreign exchange transactions involving RMB must take place either through the People’s Bank of China (the “PBOC”) or other institutions authorized to buy and sell foreign exchange. The exchange rates adopted for the foreign exchange transactions are the rates of exchange quoted by the PBOC.

Cash, cash equivalents, time deposits and restricted time deposits

(d) Cash, cash equivalents , time deposits and restricted time deposits

Cash consist of cash on hand and cash in bank, which are unrestricted as to withdrawal. Cash equivalents consist of interest-bearing certificates of deposit with initial term of no more than three months when purchased.

Time deposits, which mature within one year as of the balance sheet date, represent interest-bearing certificates of deposit with an initial term of greater than three months when purchased. Time deposits which mature over one year as of the balance sheet date are included in non-current assets.

Time deposits that were pledged as collateral for line of credit with a financial institution in the U.S. with an initial term of greater than three months when purchased as of December 31, 2015 were reported as restricted time deposits.

Cash, time deposits and restricted time deposits maintained at banks consist of the following:

	December 31,
	2015		2016
	RMB		RMB
RMB denominated bank deposits with financial institutions in the PRC		627,148		867,811
US dollar denominated bank deposits with a financial institutions in the PRC		52,680		152,792
US dollar denominated bank deposits with financial institutions in Hong Kong Special Administrative Region (“HK SAR”)		645		3,535
HK dollar denominated bank deposits with a financial institution in HK SAR		99		1
RMB denominated bank deposits with a financial institution in HK SAR		3		3
RMB denominated bank deposits with financial institutions in the U.S.		547,388		-
US dollar denominated bank deposits with financial institutions in the U.S.		55		261,913

To limit exposure to credit risk relating to bank deposits, the Company primarily places bank deposits only with large financial institutions in the PRC, HK SAR and the U.S. with acceptable credit rating.

Short-term investment

(e) Short-term investment

During the years ended December 31, 2014, 2015 and 2016, the Company invested RMB622,800, RMB945,000 and RMB1,937,000, respectively, in financial products managed by three financial institutions in the PRC. The terms of the financial products range between 5 days and 91 days. The financial products matured before December 31, 2014, 2015 and 2016, respectively. The Company earned investment income of RMB4,652, RMB5,961 and RMB12,676, respectively on the financial products, which was included in other income in the consolidated statements of comprehensive income for the years ended December 31, 2014, 2015 and 2016.

Accounts receivable

(f) Accounts receivable

Accounts receivable primarily represent tuition fees due from students. Accounts receivable which are due over one year as of the balance sheet date are presented as non-current assets. The unearned interest on accounts receivable which are due over one year is reported in the consolidated balance sheets as a direct deduction from the principal amount of accounts receivable. See note 2(j). The Company maintains an allowance for doubtful accounts for estimated losses resulting from the inability of its customers to make required payments. Accounts receivable is considered past due based on its contractual terms. In establishing the allowance, management considers historical losses, the students’ financial condition, the amount of accounts receivables in dispute, the accounts receivables aging and the students’ payment patterns. Accounts receivable which are deemed to be uncollectible are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. There is a time lag between when the Company estimates a portion of or the entire account balances to be uncollectible and when a write off of the account balances is taken. The Company takes a write off of the account balances when the Company can demonstrate all means of collection on the outstanding balances have been exhausted.

Property and equipment

(g) Property and equipment

Property and equipment are recorded at cost. Depreciation is calculated on the straight-line method over the estimated useful lives of the assets. The estimated useful life of property and equipment is as follows:

Office buildings	45 years
Furniture	5 years
Office equipment	3 to  4 years
Leasehold improvements	Shorter of the lease term or the estimated useful life of the assets

Ordinary maintenance and repairs are charged to expenses as incurred, while replacements and betterments are capitalized. When items are retired or otherwise disposed of, income is charged or credited for the difference between net book value of the item disposed and proceeds realized thereon.

Property and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value of such assets may not be recoverable. Recoverability of a long-lived asset or asset group to be held and used is measured by a comparison of the carrying amount of an asset or asset group to the estimated undiscounted future cash flows expected to be generated by the asset or asset group. If the carrying value of an asset or asset group exceeds its estimated undiscounted future cash flows, an impairment loss is recognized by the amount that the carrying value exceeds the estimated fair value of the asset or asset group. Fair value is determined through various valuation techniques including discounted cash flow models, quoted market values and third party independent appraisals, as considered necessary. Assets to be disposed are reported at the lower of carrying amount or fair value less costs to sell, and are no longer depreciated. No impairment of long-lived assets was recognized for any of the years presented.

Goodwill

(h) Goodwill

The excess of the purchase price over the fair value of net assets acquired is recorded on the consolidated balance sheets as goodwill. Goodwill is not amortized, but tested for impairment annually or more frequently if event and circumstances indicate that it might be impaired.

ASC 350-20, Goodwill, permits the Company to first assess qualitative factors to determine whether it is "more likely than not" that the fair value of a reporting unit is less than its carrying amount as a basis for determining whether it is necessary to perform the quantitative impairment test, using a two-step approach. If this is the case, the two-step goodwill impairment test is required. If it is more likely-than-not that the fair value of a reporting unit is greater than its carrying amount, the two-step goodwill impairment test is not required.

If the two-step goodwill impairment test is required, the first step compares the fair value of a reporting unit to its carrying amount, including goodwill. If the fair value of the reporting unit is greater than its carrying amount, goodwill is not considered impaired and the second step is not required. If the fair value of the reporting unit is less than its carrying amount, the second step of the impairment test measures the amount of the impairment loss, if any, by comparing the implied fair value of goodwill to its carrying amount. If the carrying amount of goodwill exceeds its implied fair value, an impairment loss is recognized equal to that excess. The implied fair value of goodwill is calculated in the same manner that goodwill is calculated in a business combination, whereby the fair value of the reporting unit is allocated to all of the assets and liabilities of that unit, with the excess purchase price over the amounts assigned to assets and liabilities representing the implied fair value of goodwill. 

Long-term investments

(i) Long-term investments

The Company’s long-term investments consist of cost method investments, equity method investment and available-for-sale investment.

Cost method investments

Investments in entities in which the Company does not have an ability to exercise significant influence over the operating and financial matters of the investees and which do not have readily determinable fair value are accounted for using the cost method, under which the Company carries the investments at cost and recognizes as income for any dividend received from distribution of the investees’ earnings.

The fair value of a cost method investment is not estimated if there are no identified events or changes in circumstances that may have a significant adverse effect on the fair value of the investment. No events or circumstances indicating a potential impairment were identified as of or for the year ended December 31, 2015 and 2016. The Company determines that it is not practicable to estimate fair value of cost method investments as of December 31, 2015 and 2016, because the sales prices or bid-and-asked quotations of the equity interests of these entities are not currently available and the cost of obtaining an independent valuation appears excessive considering the materiality of the investments to the Company.

Equity method investment

Investment in entity in which the Company has the ability to exercise significant influence, but does not have a controlling interest through investment in common shares or in-substance common shares, are accounted for using the equity method. Under the equity method, the Company initially records its investment at cost, its share of the post-acquisition profits or losses of the investee is recognized in the Company’s consolidated statements of comprehensive income; and the Company’s share of post-acquisition movements in equity is recognized in equity in the Company’s consolidated balance sheets. Unrealized gains on transactions between the Company and an investee in which the Company has recorded an equity investment are eliminated to the extent of the Company’s interest in the investee. To the extent of the Company’s interest in the investment, unrealized losses are eliminated unless the transaction provides evidence of an impairment of the asset transferred.

Available-for-sale investment

For investment in debt security, the Company accounts for it as available-for-sale investment when it is not classified as either trading or held-to-maturity investments. Available-for-sale security is reported at fair value, with unrealized holding gains or losses, net of the related tax effect, excluded from earnings and recorded as a separate component of accumulated other comprehensive income until realized. Realized gains or losses from the sale of available-for-sale investment are determined on a specific identification basis.

The Company’s consolidated statements of comprehensive income reflects the full impairment (that is, the difference between the security’s amortized cost basis and fair value) on debt securities that the Company intends to sell or would more-likely than-not be required to sell before the expected recovery of the amortized cost basis. For available-for-sale investment that management has no intent to sell and believes that it more likely than-not will not be required to sell prior to recovery, only the credit loss component of the impairment is recognized in earnings, while the rest of the fair value loss is recognized in accumulated other comprehensive income.

A decline in the market value of any available-for-sale investments below cost that is deemed to be other-than-temporary results in an impairment to reduce the carrying amount to fair value. To determine whether an impairment is other-than-temporary, the Company considers all available information relevant to the collectibility of the financial product, including past events, current conditions, and reasonable and supportable forecasts when developing estimate of cash flows expected to be collected. Evidence considered in this assessment includes the reasons for the impairment, the severity and duration of the impairment, changes in value subsequent to year-end, forecasted performance of the investee, and the general market condition in the geographic area or industry the investee operates in.

Revenue recognition

(j) Revenue recognition

Revenue is recognized when all of the following conditions are met: persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, the price is fixed or determinable and collectability is reasonably assured. These criteria as they relate to each of the following major revenue generating activities are described below. Revenue is presented net of business tax and value added taxes (“VAT”) at rates ranging between 3% and 6%, and surcharges. VAT and business tax collected from customers, net of VAT paid for purchases, is recorded as a liability in the consolidated balance sheets until it is paid to the tax authorities.

Tuition fees

Tuition fees are recognized as revenue proportionately as the training courses are delivered, with unearned portion of tuition fees being recorded as deferred revenue. Certain qualified students are allowed to pay their tuition fees on installment for a period of time exceeding one year. When tuition services are sold on installment terms that exceeds one year beyond the point in time that revenue is recognized, the receivable, and therefore the revenue is recorded at the present value of the payments. The difference between the present value of the receivable and the nominal or principal value of the tuition fees is recognized as interest income over the contractual repayment period using the effective interest rate method. The interest rate used to determine the present value of total amount receivable is the rate at which the students can obtain financing of a similar nature from other sources at the date of the transaction.

The Company enters into arrangements with certain students that purchase multiple services, including classroom training and extended on-line case studies (“multiple-element arrangements”). Each element within the multiple-element arrangements is accounted for as a separate unit of accounting provided the following criteria are met: the delivered services have value to the customer on a standalone basis; and for an arrangement that includes a general right of return relative to the delivered services, delivery or performance of the undelivered service is considered probable and is substantially controlled by the Company. A deliverable has standalone value if the service is sold separately by the Company or another vendor. The Company’s revenue arrangements do not include a general right of return relative to the delivered services.

The Company treats training contracts with multiple deliverable elements as separate units of accounting for revenue recognition purposes and recognizes revenue during the contract period when each deliverable service is provided. The Company allocates the contract price among all the deliverables at the inception of the arrangement on the basis of their relative selling prices according to the selling price hierarchy established by Accounting Standard Update No. 2009-13, Revenue Recognition - Multiple-Deliverable Revenue Arrangements. The Company first uses vendor-specific objective evidence (VSOE) of selling price, if it exists, otherwise the third-party evidence of selling price is used. If neither VSOE of selling price nor third-party evidence of selling price exists, the Company uses management’s best estimate of selling price for the deliverables.

Certification service revenue

The Company provides certification service to students who complete the training course and enroll for the exams. The Company is responsible for the certification service, including organization, proctoring and grading of exams. All certificates are issued by third parties to the students who pass the exam. The Company acts as the principal in providing this service and recognizes revenue on gross basis because the Company is the primary obligor in the arrangement and is responsible for fulfilling the ordered services by the students. Cash received before the students taking the exam, is recorded as deferred revenue, and subsequently recognized as certification service revenue upon completion of the certification service, which occurs when the certificates are provided to the students.

Loan referral service revenue

In 2016, pursuant to the agreements between the Company and a number of financial service providers, the Company promotes loan products of these financial service providers to its students, who need financial assistance for the payment of their tuition fees, in exchange for a referral fee at a rate of between 5% to 8% of the principal amount of the loans. The Company does not provide guarantee for the loans, which are between the financial service providers and its students. Loan referral service revenue is recognized upon the initiation of the loans.

Cost of revenues

(k) Cost of revenues

Cost of revenues consists of payroll and employee benefits, rent expenses of learning centers, depreciation relating to property and equipment used for operating the learning centers, and other operating costs that are directly attributed to the provision of training services.

Advertising costs

(l) Advertising costs

 

Advertising costs are expensed as incurred and included in selling and marketing expenses. Advertising costs were RMB102,820, RMB151,533 and RMB201,298 for the years ended December 31, 2014, 2015 and 2016, respectively.

Operating lease

(m) Operating lease

The Company leases premises for learning centers and offices under non-cancellable operating leases. Leases with escalated rent provisions are recognized on a straight-line basis commencing with the beginning of the lease term. There are no capital improvement funding, other lease concessions or contingent rent in the lease agreements. The lease terms of the Company’s learning centers range between 1 and 10 years. The Company has no legal or contractual asset retirement obligations at the end of the lease term.

Certain learning centers of the Company sublease a portion of the areas to certain students for their living accommodation. Income from subleases is recognized on a straight-line basis over the term of the lease and recognized as reduction of costs of revenues.

Government grant

(n) Government grant

Government grant is recognized when there is reasonable assurance that the Company will comply with the conditions attach to it and the grant will be received. Government grant for the purpose of giving immediate financial support to the Company with no future related costs or obligation is recognized in the Company’s consolidated statements of comprehensive income when the grant becomes receivable. Government grants of RMB9,916, RMB5,851 and RMB3,199 were recognized and included in other income for the years ended December 31, 2014, 2015 and 2016, respectively.

Research and development expense

(o) Research and development expense

Research and development costs are expensed as incurred.

Employee benefits

(p) Employee benefits

Pursuant to relevant PRC regulations, the Company is required to make contributions to various defined contribution plans organized by municipal and provincial PRC governments. The contributions are made for each PRC employee at rates ranging from 22.3% to 53.1% on a standard salary base as determined by local social security bureau. Contributions to the defined contribution plans are charged to the consolidated statements of comprehensive income when the related service is provided. For the years ended December 31, 2014, 2015 and 2016, the costs of the Company’s obligations to the defined contribution plans amounted to RMB51,510, RMB69,370 and RMB85,325, respectively. The Company has no other obligation for the payment of employee benefits associated with these plans beyond the contributions described above.

Income taxes

(q) Income taxes

 

Income taxes are accounted for under the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases and tax loss and tax credit carry forwards. Deferred income tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the periods in which those temporary differences are expected to be recovered or settled. The effect on deferred income tax assets and liabilities of a change in tax rates or tax laws is recognized in the consolidated statements of comprehensive income in the period the change in tax rates or tax laws is enacted. A valuation allowance is provided to reduce the carrying amount of deferred income tax assets if it is considered more likely than not that some portion or all of the deferred income tax assets will not be realized.

The Company recognizes in the consolidated financial statements the impact of a tax position, if that position is more likely than not of being sustained upon examination, based on the technical merits of the position. Recognized income tax positions are measured at the largest amount that is greater than 50% likely of being realized. Changes in recognition or measurement are reflected in the period in which the change in judgment occurs. The Company has elected to classify interest and penalties related to an unrecognized tax benefits, if and when required, as part of income tax expense in the consolidated statements of comprehensive income.

Deferred offering costs

(r) Deferred offering costs

 

Deferred offering costs consist principally of legal, printing and registration costs in connection with the IPO. Upon completion of the IPO on April 3, 2014, the deferred offering costs of RMB3,788 were recognized as a reduction of the offering proceeds.

Share based compensation

(s) Share based compensation

 

The Company measures the cost of employee services received in exchange for an award of equity instruments based on the grant-date fair value of the award and recognizes the cost over the period the employee is required to provide service in exchange for the award, which generally is the vesting period. The Company recognizes compensation cost for an award with only service conditions that has a graded vesting schedule on a straight-line basis over the requisite service period for the entire award, net of estimated forfeitures, provided that the cumulative amount of compensation cost recognized at any date at least equals the portion of the grant-date value of such award that is vested at that date. Forfeiture rates are estimated based on historical and future expectations of employee turnover rates.

Commitments and contingencies

(t) Commitments and contingencies

In the normal course of business, the Company is subject to loss contingencies, such as legal proceedings and claims arising out of its business, that cover a wide range of matters, including, among others, government investigations, shareholder lawsuits, and non-income tax matters. An accrual for a loss contingency is recognized when it is probable that a liability has been incurred and the amount of loss can be reasonably estimated. If a potential material loss contingency is not probable but is reasonably possible, or is probable but cannot be estimated, then the nature of the contingent liability, together with an estimate of the range of possible loss if determinable and material, is disclosed.

Earnings per share

(u) Earnings per share

 

Basic earnings per Class A and Class B ordinary share is computed by dividing net income attributable to Tarena International’s Class A and Class B ordinary shareholders by the weighted average number of Class A and Class B ordinary shares outstanding during the year using the two-class method. Under the two-class method, net income attributable to Tarena International’s Class A and Class B ordinary shareholders is allocated between Class A and Class B ordinary shares and other participating securities, if any, based on participating rights in undistributed earnings.

Tarena International’s Series A convertible redeemable preferred shares, Series B convertible redeemable preferred shares and Series C convertible redeemable preferred shares were participating securities since the holders of these securities participated in dividends on the same basis as Class A and Class B ordinary shareholders.

Diluted earnings per share is calculated by dividing net income attributable to Tarena International’s Class A and Class B ordinary shareholders as adjusted for the effect of dilutive Class A and Class B ordinary share equivalents, if any, by the weighted average number of Class A and Class B ordinary and dilutive Class A and Class B ordinary share equivalents outstanding during the year. Class A and Class B ordinary share equivalents include the Class A and Class B ordinary shares issuable upon the exercise of the outstanding share options (using the treasury stock method) and conversion of convertible redeemable preferred shares (using the as-if-converted method). Potential dilutive securities are not included in the calculation of diluted earnings per Class A and Class B ordinary share if the impact is anti-dilutive.

Segment reporting

(v) Segment reporting

The Company uses the management approach in determining its operating segments. The management approach considers the internal reporting used by the Company’s chief operating decision maker for making decisions about the allocation of resources to and the assessment of the performance of the segments of the Company. Management has determined that the Company has one operating segment, which is the training segment. All of the Company’s operations and customers are located in the PRC. Consequently, no geographic information is presented.

Fair value measurements

(w) Fair value measurements

The Company applies the provisions of ASC Topic 820, Fair Value Measurements and Disclosures, for fair value measurements of financial assets and financial liabilities and for fair value measurements of nonfinancial items that are recognized or disclosed at fair value in the financial statements on a recurring and nonrecurring basis. ASC Topic 820 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. When determining the fair value measurements for assets and liabilities required or permitted to be recorded at fair value, the Company considers the principal or most advantageous market in which it would transact and it considers assumptions that market participants would use when pricing the asset or liability. ASC Topic 820 also establishes a framework for measuring fair value and expands disclosures about fair value measurements.

ASC Topic 820 establishes a fair value hierarchy that requires an entity to maximize the use of observable inputs and minimize the use of unobservable inputs when measuring fair value. ASC Topic 820 establishes three levels of inputs that may be used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to measurements involving significant unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are as follows:

• Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities that the Company has the ability to access at the measurement date.

• Level 2 inputs are inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.

• Level 3 inputs are unobservable inputs for the asset or liability.

The level in the fair value hierarchy within which a fair value measurement in its entirety falls is based on the lowest level input that is significant to the fair value measurement in its entirety. In situations where there is little, if any, market activity for the asset or liability at the measurement date, the fair value measurement reflects management’s own judgments about the assumptions that market participants would use in pricing the asset or liability. Those judgments are developed by management based on the best information available in the circumstances.

The carrying amounts of cash, current time deposits, restricted time deposits, accounts receivable, loans to employees, accounts payable, amounts due to a related party, accrued expenses and other current liabilities as of December 31, 2015 and 2016 approximate their fair value because of short maturity of these instruments.

The carrying amounts of non-current time deposits as of December 31, 2015 and 2016 approximates their fair value since the interest rates of the time deposits did not differ significantly from the market interest rates for similar types of time deposits.

The fair values of time deposits, restricted time deposits as of December 31, 2015 and 2016 are categorized as Level 2 measurement.  

Available-for-sale investment as of December 31, 2016 is valued based on the implied enterprise value indirectly observed in a recent transaction at the reporting date and is categorized as Level 2 measurement.

Recently issued accounting standards

(x) Recently issued accounting standards

 

The Financial Reporting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, in May 2014. ASU 2014-09 requires an entity to recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity should also disclose sufficient quantitative and qualitative information to enable users of financial statements to understand the nature, amount, timing, and uncertainty of revenue and cash flows arising from contracts with customers. In December 2015, the FASB issued ASU No. 2015-14, Revenue from contracts with customers, which deferred the effective date of ASU 2014-09. The new standard is effective for annual reporting periods beginning after December 15, 2017. The Company will apply the new revenue standard beginning January 1, 2018. The Company has set up an implementation team that is currently in the process of analyzing each of the Company’s revenue streams in accordance with the new revenue standard to determine the impact on the Company’s consolidated financial statements. The Company plans to continue the evaluation, analysis, and documentation of its adoption of ASU 2014-09 (including those subsequently issued updates that clarify its provisions) in 2017 as the Company works towards the implementation and finalizes its determination of the impact that the adoption will have on its consolidated financial statements.

On January 5, 2016, the FASB issued ASU 2016-01 (“ASU 2016-01”), Recognition and Measurement of Financial Assets and Financial Liabilities, which amends certain aspects of recognition, measurement, presentation and disclosure of financial instruments. This amendment requires all equity investments to be measured at fair value, with changes in the fair value recognized through net income (other than those accounted for under the equity method of accounting or those that result in consolidation of the investee). This standard will be effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

On February 25, 2016, the FASB issued ASU No. 2016-02 (“ASU 2016-02”), Leases. ASU 2016-02 specifies the accounting for leases. For operating leases, ASU 2016-02 requires a lessee to recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, in its balance sheet. The standard also requires a lessee to recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term, on a generally straight-line basis. In addition, this standard requires both lessees and lessors to disclose certain key information about lease transactions. ASU 2016-02 is effective for publicly-traded companies for annual reporting periods, and interim periods within those years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

On March 30, 2016, the FASB issued ASU 2016-09 (“ASU 2016-09”), Compensation - Stock Compensation: Improvements to Employee Share-Based Payment Accounting, which relates to accounting for employee share-based payments. This standard addresses several aspects of the accounting for share-based payment award transactions, including (a) income tax consequences; (b) classification of awards as either equity or liabilities; and (c) classification in the statement of cash flows; and (d) accounting for forfeitures of share-based payments. This standard will be effective for fiscal years beginning after December 15, 2016, including interim periods within those fiscal years. The Company does not expect this standard to have a material impact on its consolidated financial statements.

In June 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-13, Financial Instruments-Credit Losses (Topic 326), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. This guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2019. Early application will be permitted for all entities for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures.

In August 2016, the FASB issued Accounting Standards Update (“ASU”) 2016-15, Statement of Cash Flows — Classification of Certain Cash Receipts and Cash Payments, which clarifies the presentation and classification of certain cash receipts and cash payments in the statement of cash flows. This guidance is effective for financial statements issued for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. Early adoption is permitted. The Company is currently evaluating the impact that the standard will have on its consolidated financial statements and related disclosures.

In November 2016, the FASB issued Accounting Standards Update (“ASU”) No. 2016-18, Statement of Cash Flows (Topic 230): Restricted Cash. The guidance requires that a statement of cash flows explain the change during the period in the total of cash, cash equivalents, and amounts generally described as restricted cash or restricted cash equivalents. Therefore, amounts generally described as restricted cash and restricted cash equivalents should be included with cash and cash equivalents when reconciling the beginning-of-period and end-of-period total amounts shown in the statement of cash flows. The standard is effective for fiscal years beginning after December 15, 2017, and interim period within those fiscal years. Early adoption is permitted, including adoption in an interim period. The standard should be applied using a retrospective transition method to each period presented. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

In January 2017, the FASB issued Accounting Standards Update (“ASU”) No. 2017-01, Business Combinations (Topic 805): Clarifying the Definition of a Business, which clarifies the definition of a business with the objective of adding guidance to assist entities with evaluating whether transactions should be accounted for as acquisitions or disposals of assets or businesses. The standard is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. Early adoption is permitted. The standard should be applied prospectively on or after the effective date. The Company will evaluate the impact of adopting this standard prospectively upon any transactions of acquisitions or disposals of assets or businesses.

In January 2017, the FASB issued Accounting Standards Update (“ASU”) 2017-04, Simplifying the Test for Goodwill Impairment. The guidance removes Step 2 of a goodwill impairment test, which requires a hypothetical purchase price allocation. A goodwill impairment will now be the amount by which a reporting unit’s carrying value exceeds its fair value, not to exceed the carrying amount of goodwill. The guidance should be adopted on a prospective basis for the annual or any interim goodwill impairment tests beginning after December 15, 2019. Early adoption is permitted for interim or annual goodwill impairment tests performed on testing dates after January 1, 2017. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements.

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DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (Tables)

12 Months Ended

Dec. 31, 2016

Concentration Risk [Line Items]

Schedule of Variable Interest Entity Information

	December 31,
	2015		2016
	RMB		RMB
Cash		1,043		630
Amounts due from related parties		25,109		21,650
Total current assets		26,152		22,280
Property and equipment, net		18		3
Long term investments		18,000		35,000
Other non-current assets		266		716
Total assets		44,436		57,999
Income taxes payable		3,737		3,729
Accrued expenses and other current liabilities		892		176
Amounts due to related parties, including amounts due to WOFE for accrued service fees		39,307		46,486
Total current liabilities		43,936		50,391
Other non-current liabilities		267		267
Total liabilities		44,203		50,658

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Net revenues		2,902		177		-
Net loss		(14,542)		(2,415)		(892)
Net cash used in operating activities		(4,252)		(2,201)		(2,166)
Net cash provided by (used in) investing activities		478		(18,000)		(11,886)
Net cash provided by financing activities		4,124		19,755		13,639

Net revenues [Member] | Product concentration [Member]

Concentration Risk [Line Items]

Schedule of Revenue Concentration

	Year Ended December 31,
	2014			2015			2016
Java		36.7	%		28.8	%		34.3	%
Digital Arts		29.1	%		32.2	%		28.0	%
Web Front		0.0	%		4.2	%		12.7	%
Total		65.8	%		65.2	%		75.0	%

Net revenues [Member] | Geographic concentration [Member]

Concentration Risk [Line Items]

Schedule of Revenue Concentration

	Year Ended December 31,
	2014			2015			2016
Hangzhou		25.5	%		33.0	%		31.9	%
Beijing		15.5	%		12.3	%		12.4	%
Total		41.0	%		45.3	%		44.3	%

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SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)

12 Months Ended

Dec. 31, 2016

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES [Abstract]

Schedule of Cash, Cash Equivalents, Time Deposits and Restricted Time Deposits

	December 31,
	2015		2016
	RMB		RMB
RMB denominated bank deposits with financial institutions in the PRC		627,148		867,811
US dollar denominated bank deposits with a financial institutions in the PRC		52,680		152,792
US dollar denominated bank deposits with financial institutions in Hong Kong Special Administrative Region (“HK SAR”)		645		3,535
HK dollar denominated bank deposits with a financial institution in HK SAR		99		1
RMB denominated bank deposits with a financial institution in HK SAR		3		3
RMB denominated bank deposits with financial institutions in the U.S.		547,388		-
US dollar denominated bank deposits with financial institutions in the U.S.		55		261,913

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ACCOUNTS RECEIVABLE (Tables)

12 Months Ended

Dec. 31, 2016

ACCOUNTS RECEIVABLE [Abstract]

Schedule of Accounts Receivable

	December 31,
	2015		2016
	RMB		RMB
Accounts receivable:
Gross		237,624		214,142
Unearned interest		(15,997)		(15,130)
Total accounts receivable		221,627		199,012
Less: allowance for doubtful accounts		(66,857)		(100,462)
Accounts receivable, net		154,770		98,550

Classification of Accounts Receivable

	December 31,
	2015		2016
	RMB		RMB
Accounts receivable, net – current portion		146,999		97,374
Accounts receivable, net – non-current portion		7,771		1,176
Total accounts receivable, net		154,770		98,550

Summary of Allowance for Doubtful Accounts

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Balance at the beginning of the year		14,041		35,347		66,857
Additions charged to bad debt expense		46,000		63,103		33,605
Write-off of bad debt allowance		(24,694)		(31,593)		-
Balance at the end of the year		35,347		66,857		100,462

Schedule of Aging Accounts Receivable

	As of December 31,
	2015		2016
	RMB		RMB
Aging:
– current		104,368		78,276
– 1-3 months past due		37,005		15,306
– 4-6 months past due		13,373		10,846
– 7-12 months past due		18,015		22,748
– greater than one year past due		48,866		71,836
Total accounts receivable		221,627		199,012

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PREPAID EXPENSES AND OTHER CURRENT ASSETS (Tables)

12 Months Ended

Dec. 31, 2016

PREPAID EXPENSES AND OTHER CURRENT ASSETS [Abstract]

Schedule of Prepaid Expenses and Other Current Assets

		December 31,
		2015		2016
		RMB		RMB
Prepaid expenses and other current assets:
Prepaid rental expenses			17,925		25,038
Interest receivable from time deposits			11,485		5,945
Prepaid advertising deposits			10,975		11,875
Prepaid advertising expenses			9,991		14,193
Prepaid value-added tax			7,176		50,587
Housing loans made to employees	(a)		2,290		4,968
Staff advances	(b)		423		1,404
Others	(c)		5,838		12,078
Total prepaid expenses and other current assets			66,103		126,088

(a)	Before 2016, the Company provided one-year housing loans to the employees to help them finance their purchase of apartments. In 2016, the Company provided five-year loans to the employees, which amounted to RMB12,751 and were included in other non-current assets.
(b)	Staff advances are provided to staff for traveling and related expenses and are expensed when incurred.
(c)	Others mainly represent other deposits, professional fees and other miscellaneous prepaid expenses.

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PROPERTY AND EQUIPMENT, NET (Tables)

12 Months Ended

Dec. 31, 2016

PROPERTY AND EQUIPMENT, NET [Abstract]

Schedule of Property and Equipment

Property and equipment consists of the following: 

	December 31,
	2015		2016
	RMB		RMB
Office buildings		-		281,541
Furniture		10,510		18,078
Office equipment		211,385		271,862
Leasehold improvements		53,126		64,383
Total property and equipment		275,021		635,864
Less: accumulated depreciation		(147,157)		(198,527)
Property and equipment, net		127,864		437,337

Schedule of Depreciation Expense

Depreciation expense for property and equipment was allocated to the following:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Cost of revenues		38,088		48,553		61,967
Selling and marketing expenses		2,253		2,694		3,226
General and administrative expenses		2,649		3,031		6,455
Research and development expenses		488		703		1,109
Total		43,478		54,981		72,757

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LONG-TERM INVESTMENTS (Tables)

12 Months Ended

Dec. 31, 2016

Schedule of Investments [Abstract]

Schedule for Cost and Equity Method Investment

		December 31,
		2015		2016
		RMB		RMB
Cost method investments
Sino-German Know-How Education Investment Co., Ltd.	(a)		12,000		12,000
Juesheng.com	(b)		5,000		5,000
Mxsoft.com	(c)		4,000		4,000
Other cost method investments	(d)		3,000		5,000
Total cost method investments			24,000		26,000
Equity method investment
Hockey global resources investment limited	(e)		-		760
Available-for-sale investment	(f)		-		15,000
Total			24,000		41,760

(a)	In October 2015, the Company paid RMB12,000 in cash to acquire  2.86% of the total equity interest in Sino-German Know-How Education Investment Co., Ltd, which is engaged in provision of training for senior mechanic in vehicle maintenance and repair.
(b)	In November 2015, the Company paid RMB5,000 in cash to acquire 0.50% of the total equity interest of an online shopping platform providing education products.
(c)	In August 2015, the Company paid RMB4,000 in cash to acquire 5.71% of the total equity interest in Mxsoft.com, which provides IT environment management and monitoring solution to customers.
(d)	As of December 31, 2015, the Company paid RMB3,000 in cash to acquire 1.43% and 0.74% equity interest in two other entities which were accounted for under cost method. In June 2016, the Company paid RMB2,000 in cash to acquire 2.00% equity interest of an online platform providing vehicle sales and related services.
(e)	In October 2016, the Company paid RMB790 in cash to acquire 28.5% of equity interest of a hockey program management company through investment in its common shares and accounted for the investment using equity method.
(f)	In October 2016, the Company paid RMB10,000 in cash to acquire 13.9% equity interest in Beijing Crouching Tiger Hidden Dragon Internet Technology Co., Ltd., which provides employment course trainings and recruitment services. Because the investment terms contain both substantive liquidation preference over common stock and substantive redemption provision that is not available to common shareholders, the investment is not substantially similar to common stock. In addition, since the investment is redeemable at the option of the Company, the investment qualifies as a debt security.  The Company recorded the investment as available-for-sale investment and recorded an increase of RMB5,000 in fair value of the investment with nil income tax effect in 2016, as a component of other comprehensive income.

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Tables)

12 Months Ended

Dec. 31, 2016

ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES [Abstract]

Schedule of Accrued Expenses and Other Current Liabilities

	December 31,
	2015		2016
	RMB		RMB
VAT and other tax payables		18,347		29,995
Accrued payroll and employee benefits		37,396		59,512
Others		24,092		28,360
Total		79,835		117,867

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NET REVENUES (Tables)

12 Months Ended

Dec. 31, 2016

NET REVENUES [Abstract]

Schedule of Net Revenues

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Tuition fee		835,275		1,174,596		1,545,680
Certification service fee		18,038		27,466		35,980
Loan referral service fee		-		-		8,750
Others		2,873		1,136		1,875
Business taxes and surcharges		(19,245)		(25,190)		(12,681)
Total net revenues		836,941		1,178,008		1,579,604

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INCOME TAXES (Tables)

12 Months Ended

Dec. 31, 2016

INCOME TAXES [Abstract]

Schedule of Income before Income Taxes

The components of income before income taxes are as follows:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
PRC		146,570		200,789		272,745
Hong Kong		(1,964)		(1,908)		(573)
Cayman Islands		22,039		(16,154)		(11,542)
Total income before income taxes		166,645		182,727		260,630

Schedule of Income Tax Expense

Income tax expense consists of the following:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Current income tax expense		18,985		25,581		37,671
Deferred income tax benefit		(4,190)		(21,614)		(18,895)
Total		14,795		3,967		18,776

Schedule of Income Tax Rate Reconciliation

The actual income tax expense reported in the consolidated statements of comprehensive income for each of the years ended December 31, 2014, 2015 and 2016 differs from the amount computed by applying the PRC statutory income tax rate to income before income taxes due to the following:

	Year Ended December 31,
	2014			2015			2016
PRC statutory income tax rate		25.0	%		25.0	%		25.0	%
Increase (decrease) in effective income tax rate resulting from:
Cayman and HK entities not subject to income taxes		(3.0)	%		2.5	%		1.2	%
Research and development bonus deduction		(2.7)	%		(3.3)	%		(2.7)	%
Non-deductible selling, general and administrative expenses
Share based compensation		3.8	%		4.5	%		6.5	%
Other non-deductible selling, general and administrative expenses		0.5	%		0.6	%		0.1	%
ANTE preferential tax rate		(1.0)	%		0.1	%		(0.7)	%
Tarena Hangzhou preferential tax rate		(0.1)	%		0.7	%		0.5	%
Change in valuation allowance		6.4	%		3.1	%		2.5	%
Tarena Hangzhou and Hanru Hangzhou tax holiday		(20.0)	%		(31.1)	%		(25.2)	%
Others		0.0	%		0.1	%		0.0	%
Actual income tax expense		8.9	%		2.2	%		7.2	%

Schedule of Deferred Income Tax Assets

The principal components of deferred income tax assets are as follows:

	December 31,
	2015		2016
	RMB		RMB
Deferred income tax assets:
Accounts receivable		34,616		47,126
Tax loss carry forwards		7,065		9,984
Advertising expense		13,666		23,401
Accrued expenses and other current liabilities		-		123
Total deferred income tax assets		55,347		80,634
Valuation allowance		(20,115)		(26,507)
Deferred income tax assets, net		35,232		54,127

Summary of Valuation Allowance

The movements of the valuation allowance are as follows:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Balance at the beginning of the year		3,647		14,362		20,115
Additions of valuation allowance		11,198		9,069		13,076
Reduction of valuation allowance		(483)		(3,316)		(6,684)
Balance at the end of the year		14,362		20,115		26,507

Schedule of Unrecognized Tax Benefits

A reconciliation of the beginning and ending amount of total unrecognized tax benefits for the years ended December 31, 2014, 2015 and 2016 is as follows:

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Balance at beginning of year		18,764		36,921		53,404
Increase related to current year tax positions		35,436		51,050		66,122
Settlement		(17,279)		(34,567)		(49,704)
Balance at end of year		36,921		53,404		69,822

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RELATED PARTY TRANSACTIONS (Tables)

12 Months Ended

Dec. 31, 2016

RELATED PARTY TRANSACTIONS [Abstract]

Schedule of Related Party Transactions

The significant related party transactions are summarized as follows:

		Year Ended December 31,
		2014		2015		2016
		RMB		RMB		RMB
Transactions with Chuanbang
Guarantee fee	(a)		112		—		—
Cash collection service fee	(b)		664		2,053		6,445
Transactions with others
Advances from Precise	(c)		—		(1,432)		—
Repayment of advances from Precise	(c)		—		1,432		—

Notes: 

 

(a) Starting from the second half of 2011, the Company began to refer its students who need financial assistance for the payment of their tuition fees to Chuanbang. Chuanbang is a person-to-person or a “peer-to-peer” (P2P) lending intermediary that assists students in obtaining loans to pay for their tuition fees by identifying potential third-party individual lenders (the “Student Loan Program”). The Company has no direct involvement in or is a party to the P2P arrangement, other than serving as the guarantor of the student loans. Under the Student Loan Program, the Company allocates the total consideration between the fair value of the tuition service and the loan guarantee. Subsequent to the initial recognition, the loan guarantee liability is recognized as guarantee fee revenue over the term of the guarantee on a straight-line basis. RMB112, nil and nil was recognized as guarantee fee revenue and included in other revenues for the years ended December 31, 2014, 2015 and 2016, respectively.

(b) Pursuant to an agreement between Chuanbang and the Company, beginning August 2013, Chuanbang provides cash collection service on the Company’s accounts receivable. The fee for the service is calculated based on 2%~12% of the amount collected. Employees of Chuanbang include former employees of the Company who worked in the credit evaluation department. Chuanbang also provides similar cash collection service to financial institutions in the PRC. The cash collection service fee which is included in general and administrative expenses in the consolidated statement of comprehensive income was RMB664, RMB2,053 and RMB6,445 for the years ended December 31, 2014, 2015 and 2016, respectively. The amount due to Chuanbang as of December 31, 2015 was RMB879. The amount due to Chuanbang as of December 31, 2016 was RMB79, which has been fully paid by March 31, 2017.

(c) In September 2015, Precise, which is owned by an executive of Kohlberg Kravis Roberts & Co. L.P (“KKR”), a shareholder of the Company, provided cash advances in the amount of RMB1,432 to the Company in order to fund its share repurchase plan. The Company has fully repaid the advances in October 2015.

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SHARE BASED COMPENSATION (Tables)

12 Months Ended

Dec. 31, 2016

SHARE BASED COMPENSATION [Abstract]

Summary of Stock Option Activity

					Weighted
			Weighted		Average
	Number of		Average		Remaining		Aggregate
	Share		Exercise Price		Contractual		Intrinsic
	Options		US$		Years		Value US$
Outstanding at December 31, 2013		8,134,830		0.82
Granted		1,805,784		3.05
Exercised		(1,786,449)		0.14
Forfeited		(115,215)		2.91
Expired		—		—
Outstanding at December 31, 2014		8,038,950		1.44		6.19		77,658
Granted		615,624		3.38
Exercised		(3,015,872)		1.20
Forfeited		(56,926)		3.33
Expired		—		—
Outstanding at December 31, 2015		5,581,776		1.77		5.68		48,412
Granted		1,115,807		1.90
Exercised		(2,106,043)		1.46
Forfeited		(263,671)		2.98
Expired		—		—
Outstanding at December 31, 2016		4,327,869		1.88		5.84		56,743
Vested and expected to vest as of December 31, 2016		3,959,763		1.74		5.59		52,460
Exercisable as of December 31, 2016		2,536,418		1.17		4.09		35,045

Summary of Fair Value Assumptions

	Year Ended December 31,
	2014		2015		2016
	US$		US$		US$
Expected volatility		51.7%		62.3%-70.9%		63.5%-68.8%
Expected dividends yield		0%		0%		0%
Exercise multiple		2.2		2.0		2.0
Risk-free interest rate per annum		3.81%		2.68%-2.99%		2.15%-3.18%
Estimated fair value of underlying ordinary shares (per share)		US$8.60		US$9.28-US$12.85		US$9.99-US$16.54

Schedule of Fair Values of the Options Granted

	Year Ended December 31,
	2014		2015		2016
	US$		US$		US$
Weighted average grant date fair value of option per share		6.35		9.16		10.17
Aggregate grant date fair value of options		11,468		5,641		11,352

Summary of Non-vested Shares Activity

			Weighted Average
	Number of Non-		Grant Date Fair
	vested Shares		Value
			US$
Outstanding as of December 31, 2013		-		-
Granted		29,724		9.38
Vested		(1,944)		13.95
Forfeited		-		-
Outstanding as of December 31, 2014		27,780		9.06
Granted		25,000		9.63
Vested		(27,780)		9.06
Forfeited		-		-
Outstanding as of December 31, 2015		25,000		9.63
Granted		20,000		10.82
Vested		(35,000)		9.97
Forfeited		-		-
Outstanding as of December 31, 2016		10,000		10.82

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EARNINGS PER SHARE (Tables)

12 Months Ended

Dec. 31, 2016

EARNINGS (LOSS) PER SHARE [Abstract]

Schedule of Basic and Diluted Earnings Per Share

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Numerator:
Net income attributable to Class A and Class B ordinary shareholders		148,320		178,760		241,854
Less:
Earnings allocated to participating Series A convertible redeemable preferred shares		(5,648)		—		—
Earnings allocated to participating Series B convertible redeemable preferred shares		(5,745)		—		—
Earnings allocated to participating Series C convertible redeemable preferred shares		(8,566)		—		—
Net income for basic and diluted earnings per share		128,361		178,760		241,854
Denominator:
Denominator for basic earnings per share:
Weighted average number of Class A and Class B ordinary shares outstanding		41,223,389		53,767,810		55,540,670
Dilutive effect of outstanding share options		6,546,743		4,983,046		3,464,591
Denominator for diluted earnings per share		47,770,132		58,750,856		59,005,261
Basic earnings per Class A and Class B ordinary share		3.11		3.32		4.35
Diluted earnings per Class A and Class B ordinary share		2.69		3.04		4.10

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COMMITMENTS AND CONTINGENCIES (Tables)

12 Months Ended

Dec. 31, 2016

COMMITMENTS AND CONTINGENCIES [Abstract]

Schedule of Future Minimum Lease Payments

The Company’s leases do not contain any contingent rent payment terms.

	RMB
Year ending December 31,
2017		116,805
2018		100,736
2019		70,660
2020		47,230
2021		32,542
2022 and thereafter		53,924
Total		421,897

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PARENT ONLY FINANCIAL INFORMATION (Tables)

12 Months Ended

Dec. 31, 2016

PARENT ONLY FINANCIAL INFORMATION [Abstract]

Condensed Balance Sheets

	December 31,
	2015		2016
	RMB		RMB
ASSETS
Current assets:
Cash		6,275		43,770
Time deposits		397,388		242,795
Restricted time deposits		150,000		—
Prepaid expenses and other current assets		10,843		1,855
Total current assets		564,506		288,420
Investments and loans to subsidiaries		786,264		1,316,552
Total assets		1,350,770		1,604,972
LIABILITIESAND SHAREHOLDERS’ EQUITY
Current liabilities:
Accrued expenses and other current liabilities		6,522		3,409
Total current liabilities		6,522		3,409
Other non-current liabilities		5,634		3,343
Total liabilities		12,156		6,752
Commitments and contingencies		—		—
Shareholders’ equity:
Class A ordinary shares (US$0.001 par value,860,000,000 shares authorized, 44,914,538 and 48,735,228 shares issued, 43,988,425 and 47,160,248 shares outstanding as of December 31, 2015 and 2016, respectively)		276		302
Class B ordinary shares (US$0.001 par value, 40,000,000 shares authorized, 10,574,896 shares and 8,895,249 shares issued and outstanding as of December 31, 2015 and 2016, respectively)		98		86
Treasury shares (926,113 and 1,574,980 class A ordinary shares as of December 31, 2015 and 2016, respectively, at cost)		(49,355)		(93,761)
Additional paid-in capital		907,018		995,216
Accumulated other comprehensive income		30,232		58,204
Retained earnings		450,345		638,173
Total shareholders’ equity		1,338,614		1,598,220
Total liabilities and shareholders’ equity		1,350,770		1,604,972

Condensed Statements of Comprehensive Income

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
General and administrative expenses		(1,047)		(4,241)		(4,477)
Operating loss		(1,047)		(4,241)		(4,477)
Equity in income of subsidiaries		129,811		194,914		253,396
Foreign currency exchange gains (loss)		7,251		(31,923)		(4,753)
Interest income		14,059		17,610		8,027
Loss on foreign currency forward contract		—		—		(12,898)
Other income		1,776		2,400		2,559
Income before income taxes		151,850		178,760		241,854
Income tax expense		—		—		—
Net income		151,850		178,760		241,854
Other comprehensive income
Foreign currency translation adjustment, net of nil income tax		(2,896)		34,748		22,972
Unrealized holding gains on available for sale securities, net of RMB42 income taxes		—		—		5,235
Less: reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes		—		—		(235)
Comprehensive income		148,954		213,508		269,826

Condensed Statements of Cash Flows

	Year Ended December 31,
	2014		2015		2016
	RMB		RMB		RMB
Operating activities:
Net cash provided by (used in) operating activities		19,036		9,770		(10,272)
Investing activities:
Purchase of time deposits		(569,312)		(588,426)		(298,688)
Proceeds from maturity of time deposits		3,071		603,501		620,607
Investments made to subsidiaries		(104,662)		—		(198,137)
Net cash provided by (used in) investing activities		(670,903)		15,075		123,782
Financing activities:
Advances from a related party		—		1,432		—
Repayment of advances from a related party		—		(1,432)		—
Issuance of Class A ordinary shares upon the IPO		592,161		—		—
Issuance of Class A ordinary shares in private placement concurrent with the IPO		83,052		—		—
Issuance of Class A ordinary shares in connection with exercise of share options		1,518		22,456		20,388
Payment of dividends		—		—		(54,026)
Repurchase of treasury shares		—		(49,355)		(44,406)
Payment of IPO costs		(17,228)		—		—
Net cash provided by (used in) financing activities		659,503		(26,899)		(78,044)
Effect of foreign currency exchange rate changes on cash and cash equivalents		(27)		398		2,029
Net increase (decrease) in cash and cash equivalents		7,609		(1,656)		37,495
Cash and cash equivalents at beginning of year		322		7,931		6,275
Cash and cash equivalents at end of year		7,931		6,275		43,770
Non-cash investing and financing activities:
Conversion of Series A convertible redeemable preferred shares to Class B ordinary shares		3,648		—		—
Conversion of Series B convertible redeemable preferred shares to Class B ordinary shares		107,994		—		—
Conversion of Series C convertible redeemable preferred shares to Class B ordinary shares		592,849		—		—

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DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (Organization) (Details) - CNY (¥) ¥ in Thousands	1 Months Ended	12 Months Ended
	Mar. 31, 2017	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Variable Interest Entity [Line Items]
Cash		¥ 810,672	¥ 513,938	¥ 261,035	¥ 159,368
Total current assets		1,450,858	1,326,918
Property and equipment, net		437,337	127,864
Long term investments		41,760	24,000
Other non-current assets		91,849	53,111
Total assets		2,085,012	1,653,891
Income taxes payable		91,240	56,293
Accrued expenses and other current liabilities		117,867	79,835
Amounts due to related parties including amounts due to WOFE for accrued service fees		79	879
Total current liabilities		479,749	305,944
Other non-current liabilities		7,043	9,333
Total liabilities		486,792	315,277
Net revenues		1,579,604	1,178,008	836,941
Net loss		241,854	178,760	151,850
Net cash used in operating activities		524,030	347,698	175,343
Net cash provided by (used in) investing activities		(156,449)	(72,309)	(734,539)
Net cash provided by financing activities		(78,044)	(26,899)	655,026
Investment amount in PRC companies, which are engaged in provision of educational products and services		¥ 35,000
Equity Method Investments, Percentage of Equity Acquired through Options		100.00%
Proceeds from Collection of Loans Receivable		¥ 3,096	1,608	2,468
Beijing Tarena Jinqiao Technology Co. Ltd. [Member]
Variable Interest Entity [Line Items]
Proceeds from Contributed Capital		¥ 3,000
Shanghai Tarena Software Technology Co., Ltd. [Member] | Subsequent Event [Member]
Variable Interest Entity [Line Items]
Proceeds from Collection of Loans Receivable	¥ 1,000
Mr. Han [Member] | Tarena Entities [Member]
Variable Interest Entity [Line Items]
Equity Method Investment, Ownership Percentage		58.80%
Mr. Li [Member] | Tarena Entities [Member]
Variable Interest Entity [Line Items]
Equity Method Investment, Ownership Percentage		12.20%
Loan Agreements [Member] | Equity Holders [Member]
Variable Interest Entity [Line Items]
Debt Instrument, Face Amount		¥ 6,000
Debt Instrument, Initial Expiration Year		2026
Beijing Tarena [Member]
Variable Interest Entity [Line Items]
Equity Method Investment Summarized Financial Information, Equity			2,000
Shanghai Tarena [Member]
Variable Interest Entity [Line Items]
Equity Method Investment Summarized Financial Information, Equity			1,000
Tarena Entities [Member]
Variable Interest Entity [Line Items]
Cash		¥ 630	1,043
Amounts due from related parties		21,650	25,109
Total current assets		22,280	26,152
Property and equipment, net		3	18
Long term investments		35,000	18,000
Other non-current assets		716	266
Total assets		57,999	44,436
Income taxes payable		3,729	3,737
Accrued expenses and other current liabilities		176	892
Amounts due to related parties including amounts due to WOFE for accrued service fees		46,486	39,307
Total current liabilities		50,391	43,936
Other non-current liabilities		267	267
Total liabilities		50,658	44,203
Net revenues			177	2,902
Net loss		(892)	(2,415)	(14,542)
Net cash used in operating activities		(2,166)	(2,201)	(4,252)
Net cash provided by (used in) investing activities		(11,886)	(18,000)	478
Net cash provided by financing activities		¥ 13,639	¥ 19,755	¥ 4,124

XML

DESCRIPTION OF BUSINESS, ORGANIZATION, BASIS OF PRESENTATION AND SIGNIFICANT CONCENTRATIONS AND RISKS (Significant Concentrations and Risks) (Details) - Net revenues [Member]	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Product concentration [Member]
Concentration Risk [Line Items]
Concentration percentage	75.00%	65.20%	65.80%
Product concentration [Member] | Java [Member]
Concentration Risk [Line Items]
Concentration percentage	34.30%	28.80%	36.70%
Product concentration [Member] | Digital Arts [Member]
Concentration Risk [Line Items]
Concentration percentage	28.00%	32.20%	29.10%
Product concentration [Member] | Web Front [Member]
Concentration Risk [Line Items]
Concentration percentage	12.70%	4.20%	0.00%
Geographic concentration [Member]
Concentration Risk [Line Items]
Concentration percentage	44.30%	45.30%	41.00%
Geographic concentration [Member] | Beijing [Member]
Concentration Risk [Line Items]
Concentration percentage	12.40%	12.30%	15.50%
Geographic concentration [Member] | Hangzhou [Member]
Concentration Risk [Line Items]
Concentration percentage	31.90%	33.00%	25.50%

XML

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Apr. 03, 2014
Significant Accounting Policies [Line Items]
Short-term investment	¥ 1,937,000	¥ 945,000	¥ 622,800
Investment income	12,676	5,961	4,652
Advertising costs	201,298	151,533	102,820
Government grants	3,199	5,851	9,916
Contributions to employee benefits	85,325	69,370	¥ 51,510
Deferred offering costs				¥ 3,788
PRC [Member] | RMB Denominated Bank Deposits [Member]
Significant Accounting Policies [Line Items]
Cash, cash equivalents, time deposits and restricted time deposits	867,811	627,148
PRC [Member] | US Dollar Denominated Bank Deposits [Member]
Significant Accounting Policies [Line Items]
Cash, cash equivalents, time deposits and restricted time deposits	152,792	52,680
HK SAR [Member]
Significant Accounting Policies [Line Items]
Cash, cash equivalents, time deposits and restricted time deposits	3,535	645
HK SAR [Member] | RMB Denominated Bank Deposits [Member]
Significant Accounting Policies [Line Items]
Cash, cash equivalents, time deposits and restricted time deposits	3	3
HK SAR [Member] | HK Dollar Denominated Bank Deposits [Member]
Significant Accounting Policies [Line Items]
Cash, cash equivalents, time deposits and restricted time deposits	1	99
US [Member] | RMB Denominated Bank Deposits [Member]
Significant Accounting Policies [Line Items]
Cash, cash equivalents, time deposits and restricted time deposits	0	547,388
US [Member] | US Dollar Denominated Bank Deposits [Member]
Significant Accounting Policies [Line Items]
Cash, cash equivalents, time deposits and restricted time deposits	¥ 261,913	¥ 55
Office buildings [Member]
Significant Accounting Policies [Line Items]
Useful life	45 years
Furniture [Member]
Significant Accounting Policies [Line Items]
Useful life	5 years
Minimum [Member]
Significant Accounting Policies [Line Items]
Operating lease term	1 year
Contributions to employee benefits, percentage of salary	22.30%
Loan Referral Service Revenue, Percentage	5.00%
Minimum [Member] | Office equipment [Member]
Significant Accounting Policies [Line Items]
Useful life	3 years
Maximum [Member]
Significant Accounting Policies [Line Items]
Operating lease term	10 years
Contributions to employee benefits, percentage of salary	53.10%
Loan Referral Service Revenue, Percentage	8.00%
Maximum [Member] | Office equipment [Member]
Significant Accounting Policies [Line Items]
Useful life	4 years

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ACCOUNTS RECEIVABLE (Schedule of Accounts Receivable) (Details) - CNY (¥) ¥ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Accounts receivable:
Gross	¥ 214,142	¥ 237,624
Unearned interest	(15,130)	(15,997)
Total accounts receivable	199,012	221,627
Less: allowance for doubtful accounts	(100,462)	(66,857)	¥ (35,347)	¥ (14,041)
Total accounts receivable, net	¥ 98,550	¥ 154,770

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ACCOUNTS RECEIVABLE (Classification of Accounts Receivable) (Details) - CNY (¥) ¥ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Accounts receivable, net - current portion	¥ 97,374	¥ 146,999
Accounts receivable, net - non-current portion	1,176	7,771
Total accounts receivable, net	¥ 98,550	¥ 154,770

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ACCOUNTS RECEIVABLE (Summary of Allowance for Doubtful Accounts) (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Balance at the beginning of the year	¥ 66,857	¥ 35,347	¥ 14,041
Additions charged to bad debt expense	33,605	63,103	46,000
Write-off of bad debt allowance	0	(31,593)	(24,694)
Balance at the end of the year	¥ 100,462	¥ 66,857	¥ 35,347

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ACCOUNTS RECEIVABLE (Schedule of Aging Accounts Receivable) (Details) - CNY (¥) ¥ in Thousands	Dec. 31, 2016	Dec. 31, 2015
current	¥ 78,276	¥ 104,368
1-3 months past due	15,306	37,005
4-6 months past due	10,846	13,373
7-12 months past due	22,748	18,015
greater than one year past due	71,836	48,866
Total accounts receivable	¥ 199,012	¥ 221,627

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PREPAID EXPENSES AND OTHER CURRENT ASSETS (Details) - CNY (¥) ¥ in Thousands		Dec. 31, 2016	Dec. 31, 2015
Prepaid rental expenses		¥ 25,038	¥ 17,925
Interest receivable from time deposits		5,945	11,485
Prepaid advertising deposits		11,875	10,975
Prepaid advertising expenses		14,193	9,991
Prepaid value-added tax		50,587	7,176
Housing loans made to employees	[1]	4,968	2,290
Staff advances	[2]	1,404	423
Others	[3]	12,078	5,838
Total prepaid expenses and other current assets		126,088	¥ 66,103
Other Noncurrent Assets [Member]
Long Term Loans to Employees		¥ 12,751

[1] Before 2016, the Company provided one-year housing loans to the employees to help them finance their purchase of apartments. In 2016, the Company provided five-year loans to the employees, which amounted to RMB12,751 and were included in other non-current assets.

[2] Staff advances are provided to staff for traveling and related expenses and are expensed when incurred.

[3] Others mainly represent other deposits, professional fees and other miscellaneous prepaid expenses.

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PROPERTY AND EQUIPMENT, NET (Schedule of Property and Equipment) (Details) - CNY (¥) ¥ in Thousands	Dec. 31, 2016	Dec. 31, 2015
Property, Plant and Equipment [Line Items]
Property and equipment	¥ 635,864	¥ 275,021
Less: accumulated depreciation	(198,527)	(147,157)
Property and equipment, net	437,337	127,864
Office Building [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	281,541
Furniture [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	18,078	10,510
Office equipment [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	271,862	211,385
Leasehold improvements [Member]
Property, Plant and Equipment [Line Items]
Property and equipment	¥ 64,383	¥ 53,126

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PROPERTY AND EQUIPMENT, NET (Schedule of Depreciation Expense) (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Property, Plant and Equipment [Line Items]
Depreciation	¥ 72,757	¥ 54,981	¥ 43,478
Cost of revenues [Member]
Property, Plant and Equipment [Line Items]
Depreciation	61,967	48,553	38,088
Selling and marketing expenses [Member]
Property, Plant and Equipment [Line Items]
Depreciation	3,226	2,694	2,253
General and administrative expenses [Member]
Property, Plant and Equipment [Line Items]
Depreciation	6,455	3,031	2,649
Research and development expenses [Member]
Property, Plant and Equipment [Line Items]
Depreciation	¥ 1,109	¥ 703	¥ 488

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LONG-TERM INVESTMENTS (Details) ¥ in Thousands, $ in Thousands		1 Months Ended						12 Months Ended		13 Months Ended
		Oct. 31, 2016 CNY (¥)		Jun. 30, 2016 CNY (¥)	Nov. 30, 2015 CNY (¥)	Oct. 31, 2015	Aug. 31, 2015 CNY (¥)	Dec. 31, 2016 USD ($)	Dec. 31, 2015 CNY (¥) Item	Dec. 31, 2016 CNY (¥)
Schedule of Investments and Cost Method Investments [Line Items]
Cost method investments									¥ 24,000	¥ 26,000
Available-for-sale investment	[1]									15,000
Long-term Investments									24,000	41,760
Sino-German Know-How Education Investment Co., Ltd. [Member]
Schedule of Investments and Cost Method Investments [Line Items]
Cost method investments	[2]								12,000	12,000
Cash paid to acquire equity interest										12,000
Equity interest acquired						2.86%
Juesheng.com [Member]
Schedule of Investments and Cost Method Investments [Line Items]
Cost method investments	[3]								5,000	5,000
Cash paid to acquire equity interest					¥ 5,000
Equity interest acquired					0.50%
Mxsoft.com [Member]
Schedule of Investments and Cost Method Investments [Line Items]
Cost method investments	[4]								4,000	4,000
Cash paid to acquire equity interest							¥ 4,000
Equity interest acquired							5.71%
Other cost method investments [Member]
Schedule of Investments and Cost Method Investments [Line Items]
Cost method investments	[5]								¥ 3,000	5,000
Number of Entities Accounted Using Cost Method | Item									2
Available-for-sale Securities, Change in Net Unrealized Holding Gain (Loss), Net of Tax		¥ 5,000	[1]					$ 0
Other cost method investments, one [Member]
Schedule of Investments and Cost Method Investments [Line Items]
Equity interest acquired									1.43%
Other Cost Method Investments Two [Member]
Schedule of Investments and Cost Method Investments [Line Items]
Equity interest acquired									0.74%
Equity Interest Of An Online Platform [Member]
Schedule of Investments and Cost Method Investments [Line Items]
Cash paid to acquire equity interest				¥ 2,000
Equity interest acquired				2.00%
Hockey Global Resources Investment Limited [Member]
Schedule of Investments and Cost Method Investments [Line Items]
Equity method investment	[6]									¥ 760
Payments to Acquire Equity Method Investments		¥ 790
Equity Method Investment, Ownership Percentage		28.50%
Beijing Crouching Tiger Hidden Dragon Internet Technology Co Ltd [Member]
Schedule of Investments and Cost Method Investments [Line Items]
Payments to Acquire Available-for-sale Securities		¥ 10,000
Available-For-Sale Investment, Ownership Interest Acquired		13.90%

[1] In October 2016, the Company paid RMB10,000 in cash to acquire 13.9% equity interest in Beijing Crouching Tiger Hidden Dragon Internet Technology Co., Ltd., which provides employment course trainings and recruitment services. Because the investment terms contain both substantive liquidation preference over common stock and substantive redemption provision that is not available to common shareholders, the investment is not substantially similar to common stock. In addition, since the investment is redeemable at the option of the Company, the investment qualifies as a debt security. The Company recorded the investment as available-for-sale investment and recorded an increase of RMB5,000 in fair value of the investment with nil income tax effect in 2016, as a component of other comprehensive income.

[2] In October 2015, the Company paid RMB12,000 in cash to acquire 2.86% of the total equity interest in Sino-German Know-How Education Investment Co., Ltd, which is engaged in provision of training for senior mechanic in vehicle maintenance and repair.

[3] In November 2015, the Company paid RMB5,000 in cash to acquire 0.50%of the total equity interest of an online shopping platform providing education products.

[4] In August 2015, the Company paid RMB4,000 in cash to acquire 5.71%of the total equity interest in Mxsoft.com, which provides IT environment management and monitoring solution to customers.

[5] As of December 31, 2015, the Company paid RMB3,000 in cash to acquire 1.43% and 0.74% equity interest in two other entities which were accounted for under cost method. In June 2016, the Company paid RMB2,000 in cash to acquire 2.00% equity interest of an online platform providing vehicle sales and related services.

[6] In October 2016, the Company paid RMB790 in cash to acquire 28.5% of equity interest of a hockey program management company through investment in its common shares and accounted for the investment using equity method.

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ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES (Details) - CNY (¥) ¥ in Thousands	Dec. 31, 2016	Dec. 31, 2015
VAT and other tax payables	¥ 29,995	¥ 18,347
Accrued payroll and employee benefits	59,512	37,396
Others	28,360	24,092
Total	¥ 117,867	¥ 79,835

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NET REVENUES (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Tuition fee	¥ 1,545,680	¥ 1,174,596	¥ 835,275
Certification service fee	35,980	27,466	18,038
Loan referral service fee	8,750
Others	1,875	1,136	2,873
Business taxes and surcharges	(12,681)	(25,190)	(19,245)
Total net revenues	¥ 1,579,604	¥ 1,178,008	¥ 836,941

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LOSS ON FOREIGN CURRENCY FORWARD CONTRACT (Narrative) (Details) ¥ in Thousands	1 Months Ended	12 Months Ended
	May 19, 2016 CNY (¥)	Dec. 31, 2016 CNY (¥)	Dec. 31, 2015 CNY (¥)	Dec. 31, 2014 CNY (¥)
Gain (Loss) on Derivative Instruments, Net, Pretax		¥ (12,898)
Foreign Exchange Forward [Member]
Derivative, Notional Amount	¥ 564,095
Gain (Loss) on Derivative Instruments, Net, Pretax		¥ 12,898
Derivative, Inception Date	Jan. 29, 2016
Derivative, Forward Exchange Rate	6.7070
Derivative, Maturity Date	May 19, 2016

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INCOME TAXES (Schedule of Income before Income Taxes) (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Income Taxes [Line Items]
Income before income taxes	¥ 260,630	¥ 182,727	¥ 166,645
PRC [Member]
Income Taxes [Line Items]
Income before income taxes	272,745	200,789	146,570
Hong Kong [Member]
Income Taxes [Line Items]
Income before income taxes	(573)	(1,908)	(1,964)
Cayman Islands [Member]
Income Taxes [Line Items]
Income before income taxes	¥ (11,542)	¥ (16,154)	¥ 22,039

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INCOME TAXES (Schedule of Income Tax Expenses) (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Current income tax expense	¥ 37,671	¥ 25,581	¥ 18,985
Deferred income tax benefit	(18,895)	(21,614)	(4,190)
Total	¥ 18,776	¥ 3,967	¥ 14,795

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INCOME TAXES (Schedule of Income Tax Rate Reconciliation) (Details)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Effective income tax rate reconciliation [Line Items]
PRC statutory income tax rate	25.00%	25.00%	25.00%
Cayman and HK entities not subject to income taxes	1.20%	2.50%	(3.00%)
Research and development bonus deduction	(2.70%)	(3.30%)	(2.70%)
Non-deductible selling, general and administrative expenses
Share based compensation	6.50%	4.50%	3.80%
Other non-deductible selling, general and administrative expenses	0.10%	0.60%	0.50%
Change in valuation allowance	2.50%	3.10%	6.40%
Tax holiday	(25.20%)	(31.10%)	(20.00%)
Others	0.00%	0.10%	0.00%
Actual income tax expense	7.20%	2.20%	8.90%
ANTE [Member]
Non-deductible selling, general and administrative expenses
Preferential tax rates	(0.70%)	0.10%	(1.00%)
Tarena Hangzhou [Member]
Effective income tax rate reconciliation [Line Items]
PRC statutory income tax rate	12.50%
Non-deductible selling, general and administrative expenses
Preferential tax rates	0.50%	0.70%	(0.10%)

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INCOME TAXES (Schedule of Deferred Income Tax Assets) (Details) - CNY (¥) ¥ in Thousands	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Accounts receivable	¥ 47,126	¥ 34,616
Tax loss carry forwards	9,984	7,065
Advertising expense	23,401	13,666
Accrued expenses and other current liabilities	123
Total deferred income tax assets	80,634	55,347
Valuation allowance	(26,507)	(20,115)	¥ (14,362)	¥ (3,647)
Deferred income tax assets, net	¥ 54,127	¥ 35,232

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INCOME TAXES (Summary of Valuation Allowance) (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Balance at the beginning of the year	¥ 20,115	¥ 14,362	¥ 3,647
Additions of valuation allowance	13,076	9,069	11,198
Reduction of valuation allowance	(6,684)	(3,316)	(483)
Balance at the end of the year	¥ 26,507	¥ 20,115	¥ 14,362

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INCOME TAXES (Schedule of Unrecognized Tax Benefits) (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Balance at beginning of year	¥ 53,404	¥ 36,921	¥ 18,764
Increase related to current year tax positions	66,122	51,050	35,436
Settlement	(49,704)	(34,567)	(17,279)
Balance at end of year	¥ 69,822	¥ 53,404	¥ 36,921

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INCOME TAXES (Narrative) (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands	12 Months Ended
	Dec. 31, 2018	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Dec. 31, 2013
Undistributed earnings		¥ 937,735	¥ 604,218
Interest and penalty expenses		0	0	¥ 0
Unrecognized tax benefits that would impact the income tax rate		69,263	49,198
Unrecognized tax benefits		69,822	¥ 53,404	¥ 36,921	¥ 18,764
Unrecognized tax benefits reasonably possible will be recognized		66,122
Tax losses carry forwards		¥ 39,936
PRC statutory income tax rate		25.00%	25.00%	25.00%
Income Taxes, Preferential Income Tax Rate Advanced and New Technology Enterprises		15.00%	15.00%	15.00%	15.00%
Income Taxes, Calculation Basis under Deemed Profit Method		income tax at 25% on its deemed profit which is calculated based on revenues less deemed expenses equal to 85% and 90% of revenues.
Income Tax Examination, Open Years for Examination		2012 to 2016
Deferred Income Tax Charge [Member]
Unrecognized tax benefits		¥ 3,457	¥ 7,215
Basic Earnings [Member]
Per share effect of the tax holiday		¥ 1.18	¥ 1.06	¥ 0.81
Diluted Earnings [Member]
Per share effect of the tax holiday		¥ 1.11	¥ 0.97	¥ 0.70
Income Tax Payable [Member]
Unrecognized tax benefits		¥ 62,665	¥ 42,489
Other Noncurrent Liabilities [Member]
Unrecognized tax benefits		¥ 3,700	¥ 3,700
Computational Errors [Member]
Income Tax Examination, Statute of Limitation		3 years
Underpayment of Taxes is More Than RMB100 [Member]
Income Tax Examination, Statute of Limitation		5 years
Transfer Pricing [Member]
Income Tax Examination, Statute of Limitation		10 years
State Administration of Taxation, China [Member]
Withholding Tax Percentage On Repatriated Earnings		10.00%
Maximum [Member]
Income Taxes, Preferential Income Tax Rate Small Profit Enterprises		20.00%
Tarena Hangzhou [Member]
PRC statutory income tax rate		12.50%
Effective Income Tax Rate Reconciliation, Tax Exempt Income, Percent		50.00%
Hanru Education Technology Co., Ltd [Member] | Scenario, Forecast [Member]
Effective Income Tax Rate Reconciliation, Tax Exempt Income, Percent	50.00%
2018 [Member]
Tax losses carry forwards		¥ 227
2019 [Member]
Tax losses carry forwards		11,053
2020 [Member]
Tax losses carry forwards		8,165
2021 [Member]
Tax losses carry forwards		¥ 20,491

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RELATED PARTY TRANSACTIONS (Schedule of Related Party Transactions) (Details) - CNY (¥) ¥ in Thousands		1 Months Ended	12 Months Ended
		Sep. 30, 2015	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Related Party Transaction [Line Items]
Due to Related Parties, Current			¥ 79	¥ 879
Guarantee Fee [Member]
Related Party Transaction [Line Items]
Related party transactions					¥ 112
Service Fee [Member]
Related Party Transaction [Line Items]
Related party transactions			¥ 6,445	2,053	664
Chuanbang [Member]
Related Party Transaction [Line Items]
Receivable Collection Services, Fee Description			2%~12% of the amount collected
Due to Related Parties, Current			¥ 79	879
Chuanbang [Member] | Guarantee Fee [Member]
Related Party Transaction [Line Items]
Related party transactions	[1]				112
Chuanbang [Member] | Service Fee [Member]
Related Party Transaction [Line Items]
Related party transactions	[2]		6,445	2,053	664
Precise [Member]
Related Party Transaction [Line Items]
Proceeds from Related Party Debt		¥ 1,432
Precise [Member] | Amounts Received [Member]
Related Party Transaction [Line Items]
Related party transactions	[3]			(1,432)
Precise [Member] | Repayments [Member]
Related Party Transaction [Line Items]
Related party transactions	[3]			¥ 1,432

[1] Starting from the second half of 2011, the Company began to refer its students who need financial assistance for the payment of their tuition fees to Chuanbang. Chuanbang is a person-to-person or a “peer-to-peer” (P2P) lending intermediary that assists students in obtaining loans to pay for their tuition fees by identifying potential third-party individual lenders (the “Student Loan Program”). The Company has no direct involvement in or is a party to the P2P arrangement, other than serving as the guarantor of the student loans. Under the Student Loan Program, the Company allocates the total consideration between the fair value of the tuition service and the loan guarantee. Subsequent to the initial recognition, the loan guarantee liability is recognized as guarantee fee revenue over the term of the guarantee on a straight-line basis. RMB112, nil and nil was recognized as guarantee fee revenue and included in other revenues for the years ended December 31, 2014, 2015 and 2016 respectively.

[2] Pursuant to an agreement between Chuanbang and the Company, beginning August 2013, Chuanbang provides cash collection service on the Company’s accounts receivable. The fee for the service is calculated based on 2%!12% of the amount collected. Employees of Chuanbang include former employees of the Company who worked in the credit evaluation department. Chuanbang also provides similar cash collection service to financial institutions in the PRC. The cash collection service fee which is included in General and administrative expenses in the consolidated statement of comprehensive income was RMB664, RMB2,053 and RMB6,445 for the years ended December 31, 2014, 2015 and 2016, respectively. The amount due to Chuanbang as of December 31, 2015 was RMB879. The amount due to Chuanbang as of December 31, 2016 was RMB79, which has been fully paid by March 31, 2017.

[3] In September 2015,Precise, which is owned by an executive of Kohlberg Kravis Roberts & Co. L.P (“KKR”), a shareholder of the Company, provided cash advances in the amount of RMB1,432 to the Company in order to fund its share repurchase plan. The Company has fully repaid the advances in October 2015.

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ORDINARY SHARES AND STATUTORY RESERVE (Ordinary Shares) (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands				1 Months Ended			12 Months Ended
	Apr. 03, 2014 shares	Dec. 10, 2013 shares	Apr. 09, 2013 CNY (¥) ¥ / shares shares	May 31, 2016 CNY (¥)	Dec. 16, 2008 shares	Jan. 16, 2004 CNY (¥) ¥ / shares shares	Dec. 31, 2016 CNY (¥) shares	Dec. 31, 2015 CNY (¥) shares	Dec. 31, 2014 CNY (¥) shares	Dec. 31, 2016 $ / shares shares	Mar. 07, 2016 $ / shares	Dec. 31, 2015 $ / shares	Dec. 31, 2014 $ / shares shares	Apr. 30, 2014 $ / shares	Feb. 27, 2014 $ / shares shares	Dec. 31, 2013 shares	Dec. 15, 2008 shares	Oct. 08, 2003 USD ($) $ / shares shares
Class of Stock [Line Items]
Authorized share capital | $																		$ 150
Conversion ratio					10
Ordinary shares authorized | shares					90,000,000										1,000,000,000		9,000,000	90,000,000
Ordinary shares, par value | $ / shares															$ 0.001			$ 0.001
Ordinary shares issued | shares					13,580,000												1,358,000
Ordinary shares outstanding | shares					13,580,000												1,358,000
Preferred shares authorized | shares					60,000,000												6,000,000	60,000,000
Preferred shares, par value | $ / shares																		$ 0.001
Preferred shares issued | shares					15,891,250												1,589,125
Preferred shares outstanding | shares					15,891,250												1,589,125
Value of shares issued in IPO									¥ 567,360
Value of shares issued in Private Placement									83,052
Stock issuance costs									24,801
Share price | $ / shares													$ 8.60
Reclassification of the balances between additional paid-in capital and accumulated deficit
Ordinary shares issued upon exercise of share options and vesting of non-vested shares | shares							2,106,043	3,015,872	1,786,449
Total consideration of Shares repurchased							¥ 44,406	¥ 49,355
Dividends Payable, Amount Per Share | $ / shares											$ 0.15
Dividends, Common Stock, Cash				¥ 54,026
Techedu Limited [Member]
Class of Stock [Line Items]
Interest rate			19.00%
Term			30 months
Long-term Debt			¥ 31,320
Ordinary Shares [Member]
Class of Stock [Line Items]
Value of shares issued in IPO									¥ 71
Value of shares issued in Private Placement									9
Ordinary Shares [Member] | GF Tarena Limited [Member]
Class of Stock [Line Items]
Shares issued during period | shares			916,848
Value of shares issued during period			¥ 25,056
Share price | ¥ / shares			¥ 27.33
Additional Paid-in Capital [Member]
Class of Stock [Line Items]
Value of shares issued in IPO									567,289
Value of shares issued in Private Placement									83,043
Reclassification of the balances between additional paid-in capital and accumulated deficit									(526,457)
Total consideration of Shares repurchased
Retained Earnings (Accumulated Deficit) [Member]
Class of Stock [Line Items]
Value of shares issued in IPO
Value of shares issued in Private Placement
Reclassification of the balances between additional paid-in capital and accumulated deficit									526,457
Total consideration of Shares repurchased
Treasury Shares [Member]
Class of Stock [Line Items]
Value of shares issued in IPO
Value of shares issued in Private Placement
Reclassification of the balances between additional paid-in capital and accumulated deficit
Share repurchase plan, authorized amount								¥ 133,556
Shares repurchased | shares							648,867	926,113
Total consideration of Shares repurchased							¥ 44,406	¥ 49,355
Class A [Member]
Class of Stock [Line Items]
Ordinary shares authorized | shares								860,000,000		860,000,000					860,000,000
Ordinary shares, par value | $ / shares										$ 0.001		$ 0.001
Ordinary shares issued | shares								44,914,538		48,735,228
Ordinary shares outstanding | shares								43,988,425		47,160,248
Conversion of Class B ordinary shares into shares | shares							1,679,647	18,158,128	8,924,365
Ordinary shares issued upon exercise of share options and vesting of non-vested shares | shares							2,141,043	3,043,652	1,788,393
Class A [Member] | Ordinary Shares [Member]
Class of Stock [Line Items]
Ordinary shares, par value | $ / shares													$ 0.001
Ordinary shares issued | shares								44,914,538		48,735,228			23,712,758
Shares issued during period | shares									11,500,000
Value of shares issued in IPO									¥ 71
Shares issued in Private Placement | shares									1,500,000
Value of shares issued in Private Placement									¥ 9
Conversion of convertible redeemable preferred shares to ordinary shares, shares | shares
Share price | $ / shares													$ 9.00
Reclassification of the balances between additional paid-in capital and accumulated deficit
Total consideration of Shares repurchased
Class A [Member] | Ordinary Shares [Member] | New Oriental Education Technology Group Inc. [Member]
Class of Stock [Line Items]
Ordinary shares, par value | $ / shares														$ 0.001
Shares issued in Private Placement | shares									1,500,000
Share price | $ / shares													$ 9.00
Class B [Member]
Class of Stock [Line Items]
Ordinary shares authorized | shares								40,000,000		40,000,000					40,000,000
Ordinary shares, par value | $ / shares										$ 0.001		$ 0.001
Ordinary shares issued | shares								10,574,896		8,895,249
Ordinary shares outstanding | shares								10,574,896		8,895,249
Class B [Member] | Ordinary Shares [Member]
Class of Stock [Line Items]
Ordinary shares issued | shares								10,574,896		8,895,249			28,733,024			12,226,558
Value of shares issued in IPO
Shares issued in Private Placement | shares
Value of shares issued in Private Placement
Conversion of convertible redeemable preferred shares to ordinary shares, shares | shares	25,430,831
Reclassification of the balances between additional paid-in capital and accumulated deficit
Total consideration of Shares repurchased
Reserved Shares [Member]
Class of Stock [Line Items]
Ordinary shares authorized | shares															100,000,000
Series A [Member]
Class of Stock [Line Items]
Shares issued during period | shares						8,571,430
Value of shares issued during period						¥ 4,138
Share price | ¥ / shares						¥ 0.48
Series A [Member] | Techedu Limited [Member]
Class of Stock [Line Items]
Shares issued during period | shares			1,146,059
Value of shares issued during period			¥ 31,320
Conversion of convertible redeemable preferred shares to ordinary shares, shares | shares		1,146,059
Share price | ¥ / shares			¥ 27.33
Series A [Member] | GF Tarena Limited [Member]
Class of Stock [Line Items]
Shares issued during period | shares			229,212
Value of shares issued during period			¥ 6,264
Conversion of convertible redeemable preferred shares to ordinary shares, shares | shares		229,212

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ORDINARY SHARES AND STATUTORY RESERVE (Statutory Reserve) (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Appropriations	¥ 40,491	¥ 36,524	¥ 15,823
Statutory reserve	¥ 115,243	¥ 74,752	¥ 38,228
Statutory Reserves, Percentage of Appropriation From Net Profit	10.00%
Statutory Reserves, Balance As Percentage to Capital	50.00%
Statutory Reserves for Private Schools Requiring Reasonable Returns, Percentage of Appropriation From Net Profit	25.00%
Statutory Reserves for Private Schools Not Requiring Reasonable Returns, Percentage of Expected Annual Increase in Net Assets	25.00%

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PREFERRED SHARES (Details)			1 Months Ended		12 Months Ended
	Apr. 03, 2014 CNY (¥) shares	Aug. 11, 2011 CNY (¥) ¥ / shares shares	Sep. 25, 2008 CNY (¥) ¥ / shares shares	Jan. 16, 2004 CNY (¥) ¥ / shares shares	Dec. 31, 2016 $ / shares	Dec. 31, 2014 CNY (¥)	Dec. 31, 2015 $ / shares	Dec. 31, 2014 $ / shares	Jan. 01, 2013 $ / shares	Jan. 16, 2009 $ / shares
Temporary Equity [Line Items]
Share price | $ / shares								$ 8.60
Stock issuance costs						¥ 24,801,000
Minimum [Member]
Temporary Equity [Line Items]
Share price | $ / shares					$ 9.99		$ 9.28		$ 3.75
Preferred Stock [Member]
Temporary Equity [Line Items]
Liquidation Basis of Accounting, Liquidation Plan					In the event of any liquidation, dissolution, or winding up of the Company, the proceeds shall be distributed according to the following sequence: (i)first to the holders of the Series C convertible redeemable preferred shares at 150% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; (ii)second to the holders of Series B convertible redeemable preferred shares at 150% of the Series B Original Issuance Price, plus declared but unpaid dividends on each share of Series B convertible redeemable preferred shares, (iii)third to the holders of Series A convertible redeemable preferred shares at 100% of the Series A Original Issuance Price, plus declared but unpaid dividends on each share of Series A convertible redeemable preferred shares. The remaining assets of the Company, if any, shall be distributed pro rata to the holders of Series C convertible redeemable preferred shares, Series B convertible redeemable preferred shares, Series A convertible redeemable preferred shares and ordinary shares on an if-converted basis.
Series A [Member]
Temporary Equity [Line Items]
Shares issued during period | shares				8,571,430
Value of shares issued during period				¥ 4,138,000
Share price | ¥ / shares				¥ 0.48
Series A [Member] | Minimum [Member]
Temporary Equity [Line Items]
Share price | $ / shares										$ 0.58
Series B [Member]
Temporary Equity [Line Items]
Shares issued during period | shares			5,630,630
Value of shares issued during period			¥ 34,099,000
Share price | ¥ / shares			¥ 6.06
Conversion of debt			¥ 10,230
Shares issued for debt conversion | shares			1,689,190
Series C [Member]
Temporary Equity [Line Items]
Shares issued during period | shares		10,914,852
Value of shares issued during period		¥ 127,817,000
Share price | ¥ / shares		¥ 11.71
Stock issuance costs		¥ 1,397,000
Class B [Member] | Ordinary Shares [Member]
Temporary Equity [Line Items]
Shares issued for conversion of convertible redeemable preferred shares | shares	25,430,831
Conversion of convertible redeemable preferred shares	¥ 157,000
Series B convertible redeemable preferred shares [Member]
Temporary Equity [Line Items]
Preferred Stock, Redemption Terms					an amount equal to 150% of Series B Original Issuance Price; plus, an amount equal to all declared but unpaid dividends on each share of Series B convertible redeemable preferred shares; plus, 10% compound interest per annum on 150% of Series B Original Issuance Price for each Series B convertible redeemable preferred share from the date of issuance to the earliest redemption date of the security.
Accretion of Convertible Redeemable Preferred Stock						3,530,000
Series C convertible redeemable preferred shares [Member]
Temporary Equity [Line Items]
Preferred Stock, Redemption Terms					(i)an amount equal to 137.50% of the Series C Original Issuance Price, plus declared but unpaid dividends on each share of Series C convertible redeemable preferred shares; or (ii)the fair market value of the Series C convertible redeemable preferred shares as of the most recent year end, as determined by an independent appraiser mutually agreeable to the Company and the holder of the Series C convertible redeemable preferred shares.
Accretion of Convertible Redeemable Preferred Stock						¥ 0

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SHARE BASED COMPENSATION (Narrative) (Details) $ / shares in Units, ¥ in Thousands, $ in Thousands					1 Months Ended	12 Months Ended
	Apr. 03, 2016 $ / shares shares	Apr. 03, 2015 USD ($) shares	Nov. 11, 2014 shares	Apr. 03, 2014 USD ($) $ / shares shares	Sep. 16, 2016	Dec. 31, 2016 CNY (¥) shares	Dec. 31, 2015 CNY (¥) shares	Dec. 31, 2014 CNY (¥) shares	Dec. 31, 2013 shares	Dec. 31, 2011 $ / shares shares	Dec. 31, 2016 $ / shares	Dec. 31, 2015 $ / shares	Dec. 31, 2014 $ / shares shares	Sep. 16, 2013 $ / shares	Jan. 31, 2013 $ / shares	Jan. 01, 2013 $ / shares	Nov. 28, 2012 shares	Sep. 22, 2008 shares
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted						1,115,807	615,624	1,805,784
Expiration period					10 years		10 years
Total intrinsic value of options exercised | ¥						¥ 141,040	¥ 235,831	¥ 153,860
Share price | $ / shares													$ 8.60
Non-vested shares granted						20,000	25,000	29,724
Non-vested shares granted, aggregate value | $		$ 250
Unrecognized stock option compensation expense | ¥						¥ 71,282
Unrecognized stock option compensation expense, period for recognition						2 years 2 months 5 days
Unrecognized non-vested shares compensation expense | ¥						¥ 244
Unrecognized non-vested shares compensation expense, period for recognition						3 months
Fair value of vested restricted shares | ¥						¥ 2,316	¥ 1,567
Director [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested shares granted	20,000
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise prices | $ / shares											$ 0.058	$ 0.89
Vesting period						6 months	1 year
Share price | $ / shares											9.99	9.28				$ 3.75
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Exercise prices | $ / shares											4.36	4.36
Vesting period						4 years	4 years
Share price | $ / shares											$ 16.54	$ 12.85		$ 5.69
January 1 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted									2,029,386	124,000
Vesting period									4 years	5 years
Expiration period									10 years	10 years
Fair Value of Ordinary Share by Valuation | $ / shares										$ 0.63					$ 3.75
February 20 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted								1,805,784
Vesting period								4 years
Expiration period								10 years
Fair Value of Ordinary Share by Valuation | $ / shares													$ 8.60
April 3 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Share price | $ / shares	$ 0			$ 9
Non-vested shares granted	20,000	25,000		27,780
Non-vested shares granted, aggregate value | $		$ 250		$ 250
September 16 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted									30,000
Expiration period									10 years
September 16 [Member] | IPO [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage									25.00%
September 16 [Member] | Remaining [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period									4 years
Vesting percentage									75.00%
September 16, Second Issuance [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted									458,424
Expiration period									10 years
Fair Value of Ordinary Share by Valuation | $ / shares														$ 5.69
September 16, Second Issuance [Member] | IPO [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting percentage									25.00%
September 16, Second Issuance [Member] | Remaining [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Vesting period									4 years
Vesting percentage									75.00%
September 26 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Options granted										1,533,020
Vesting period										5 years
Expiration period										10 years
Fair Value of Ordinary Share by Valuation | $ / shares										$ 0.83
November 11 [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Non-vested shares granted			1,944
2008 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized																	8,184,990	6,002,020
2014 Plan [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Authorized													1,833,696

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SHARE BASED COMPENSATION (Summary of Stock Option Activity) (Details) - USD ($)	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Number of Share Options
Outstanding, beginning balance	5,581,776	8,038,950	8,134,830
Granted	1,115,807	615,624	1,805,784
Exercised	(2,106,043)	(3,015,872)	(1,786,449)
Forfeited	(263,671)	(56,926)	(115,215)
Expired
Outstanding, ending balance	4,327,869	5,581,776	8,038,950
Vested and expected to vest	3,959,763
Exercisable	2,536,418
Weighted Average Exercise Price
Outstanding, beginning balance	$ 1.77	$ 1.44	$ 0.82
Granted	1.90	3.38	3.05
Exercised	1.46	1.20	0.14
Forfeited	2.98	3.33	2.91
Expired
Outstanding, ending balance	1.88	$ 1.77	$ 1.44
Vested and expected to vest	1.74
Exercisable	$ 1.17
Weighted Average Remaining Contractual Years
Outstanding	5 years 10 months 2 days	5 years 8 months 5 days	6 years 2 months 8 days
Vested and expected to vest	5 years 7 months 2 days
Exercisable	4 years 1 month 2 days
Outstanding, Aggregate Intrinsic Value	$ 56,743	$ 48,412	$ 77,658
Vested and expected to vest, Aggregate Intrinsic Value	52,460
Exercisable, Aggregate Intrinsic Value	$ 35,045

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SHARE BASED COMPENSATION (Summary of Fair Value Assumptions) (Details) - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014	Sep. 16, 2013	Jan. 01, 2013
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility			51.70%
Expected dividends yield	0.00%	0.00%	0.00%
Exercise multiple	2.0	2.0	2.2
Risk-free interest rate per annum			3.81%
Estimated fair value of underlying ordinary shares (per share)			$ 8.60
Minimum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	63.50%	62.30%
Risk-free interest rate per annum	2.15%	2.68%
Estimated fair value of underlying ordinary shares (per share)	$ 9.99	$ 9.28			$ 3.75
Maximum [Member]
Share-based Compensation Arrangement by Share-based Payment Award [Line Items]
Expected volatility	68.80%	70.90%
Risk-free interest rate per annum	3.18%	2.99%
Estimated fair value of underlying ordinary shares (per share)	$ 16.54	$ 12.85		$ 5.69

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SHARE BASED COMPENSATION (Schedule of Fair Value of the Options Granted) (Details) - USD ($) $ / shares in Units, $ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Weighted average grant date fair value of option per share	$ 10.17	$ 9.16	$ 6.35
Aggregate grant date fair value of options	$ 11,352	$ 5,641	$ 11,468

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SHARE BASED COMPENSATION (Summary of Non-vested Shares Activity) (Details) - $ / shares	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Number of Non-vested Shares
Outstanding, beginning balance	25,000	27,780
Granted	20,000	25,000	29,724
Vested	(35,000)	(27,780)	(1,944)
Forfeited
Outstanding, ending balance	10,000	25,000	27,780
Weighted Average Grant Date Fair Value
Outstanding, beginning balance	$ 9.63	$ 9.06
Granted	10.82	9.63	9.38
Vested	9.97	9.06	13.95
Forfeited
Outstanding, ending balance	$ 10.82	$ 9.63	$ 9.06

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EARNINGS PER SHARE (Schedule of Basic and Diluted Earnings Per Share) (Details) - CNY (¥) ¥ / shares in Units, ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Numerator:
Net income attributable to Class A and Class B ordinary shareholders	¥ 241,854	¥ 178,760	¥ 148,320
Net income for basic and diluted earnings per share	¥ 241,854	¥ 178,760	¥ 128,361
Denominator:
Weighted average number of Class A and Class B ordinary shares outstanding	55,540,670	53,767,810	41,223,389
Dilutive effect of outstanding share options	3,464,591	4,983,046	6,546,743
Denominator for diluted earnings per share	59,005,261	58,750,856	47,770,132
Basic earnings per Class A and Class B ordinary share	¥ 4.35	¥ 3.32	¥ 3.11
Diluted earnings per Class A and Class B ordinary share	¥ 4.10	¥ 3.04	¥ 2.69
Series A [Member]
Numerator:
Earnings allocated to participating convertible redeemable preferred shares			¥ (5,648)
Series B [Member]
Numerator:
Earnings allocated to participating convertible redeemable preferred shares			(5,745)
Series C [Member]
Numerator:
Earnings allocated to participating convertible redeemable preferred shares			¥ (8,566)

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COMMITMENTS AND CONTINGENCIES (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Gross rent expenses	¥ 136,076	¥ 108,992	¥ 77,493
Sublease rental income	460	¥ 382	¥ 1,416
Future minimum lease payments:
2017	116,805
2018	100,736
2019	70,660
2020	47,230
2021	32,542
2022 and thereafter	53,924
Total	¥ 421,897

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PARENT ONLY FINANCIAL INFORMATION (Condensed Balance Sheets) (Details) ¥ in Thousands	Dec. 31, 2016 CNY (¥) shares	Dec. 31, 2016 $ / shares	Dec. 31, 2015 CNY (¥) shares	Dec. 31, 2015 $ / shares	Dec. 31, 2014 CNY (¥)	Feb. 27, 2014 $ / shares shares	Dec. 31, 2013 CNY (¥)	Dec. 16, 2008 shares	Dec. 15, 2008 shares	Oct. 08, 2003 $ / shares shares
Current assets:
Cash	¥ 810,672		¥ 513,938		¥ 261,035		¥ 159,368
Time deposits	416,724		449,878
Restricted time deposits			150,000
Prepaid expenses and other current assets	126,088		66,103
Total current assets	1,450,858		1,326,918
Total assets	2,085,012		1,653,891
Current liabilities:
Accrued expenses and other current liabilities	117,867		79,835
Total current liabilities	479,749		305,944
Other non-current liabilities	7,043		9,333
Total liabilities	486,792		315,277
Commitments and contingencies
Shareholders' equity:
Treasury shares (926,113 and 1,574,980 class A ordinary shares as of December 31, 2015 and 2016, respectively, at cost)	(93,761)		(49,355)
Additional paid-in capital	995,216		907,018
Accumulated other comprehensive income	58,204		30,232
Retained earnings	638,173		450,345
Total shareholders' equity	1,598,220		1,338,614		¥ 1,119,086		¥ (407,735)
Total liabilities and shareholders' equity	2,085,012		1,653,891
Ordinary shares
Ordinary shares, par value | $ / shares						$ 0.001				$ 0.001
Authorized | shares						1,000,000,000		90,000,000	9,000,000	90,000,000
Issued | shares								13,580,000	1,358,000
Outstanding | shares								13,580,000	1,358,000
Class A [Member]
Shareholders' equity:
Ordinary shares	¥ 302		¥ 276
Ordinary shares
Ordinary shares, par value | $ / shares		$ 0.001		$ 0.001
Authorized | shares	860,000,000		860,000,000			860,000,000
Issued | shares	48,735,228		44,914,538
Outstanding | shares	47,160,248		43,988,425
Treasury shares | shares	1,574,980		926,113
Class B [Member]
Shareholders' equity:
Ordinary shares	¥ 86		¥ 98
Ordinary shares
Ordinary shares, par value | $ / shares		0.001		0.001
Authorized | shares	40,000,000		40,000,000			40,000,000
Issued | shares	8,895,249		10,574,896
Outstanding | shares	8,895,249		10,574,896
Parent Company [Member]
Current assets:
Cash	¥ 43,770		¥ 6,275
Time deposits	242,795		397,388
Restricted time deposits			150,000
Prepaid expenses and other current assets	1,855		10,843
Total current assets	288,420		564,506
Investments and loans to subsidiaries	1,316,552		786,264
Total assets	1,604,972		1,350,770
Current liabilities:
Accrued expenses and other current liabilities	3,409		6,522
Total current liabilities	3,409		6,522
Other non-current liabilities	3,343		5,634
Total liabilities	6,752		12,156
Commitments and contingencies
Shareholders' equity:
Treasury shares (926,113 and 1,574,980 class A ordinary shares as of December 31, 2015 and 2016, respectively, at cost)	(93,761)		(49,355)
Additional paid-in capital	995,216		907,018
Accumulated other comprehensive income	58,204		30,232
Retained earnings	638,173		450,345
Total shareholders' equity	1,598,220		1,338,614
Total liabilities and shareholders' equity	1,604,972		1,350,770
Parent Company [Member] | Class A [Member]
Shareholders' equity:
Ordinary shares	¥ 302		¥ 276
Ordinary shares
Ordinary shares, par value | $ / shares		0.001		0.001
Authorized | shares	860,000,000		860,000,000
Issued | shares	48,735,228		44,914,538
Outstanding | shares	47,160,248		43,988,425
Treasury shares | shares	1,574,980		926,113
Parent Company [Member] | Class B [Member]
Shareholders' equity:
Ordinary shares	¥ 86		¥ 98
Ordinary shares
Ordinary shares, par value | $ / shares		$ 0.001		$ 0.001
Authorized | shares	40,000,000		40,000,000
Issued | shares	8,895,249		10,574,896
Outstanding | shares	8,895,249		10,574,896

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PARENT ONLY FINANCIAL INFORMATION (Condensed Statements of Comprehensive Income) (Details) - CNY (¥) ¥ in Thousands		12 Months Ended
		Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Condensed Income Statements, Captions [Line Items]
General and administrative expenses	[1]	¥ (307,519)	¥ (251,298)	¥ (183,998)
Operating income (loss)		229,834	157,682	117,916
Foreign currency exchange gains (loss)		3,760	(29,499)	7,359
Interest income		23,974	42,732	26,802
Loss on foreign currency forward contract		(12,898)
Other income		15,960	11,812	14,568
Income before income taxes		260,630	182,727	166,645
Income tax expense		(18,776)	(3,967)	(14,795)
Net income		241,854	178,760	151,850
Other comprehensive income
Foreign currency translation adjustment, net of nil income tax		22,972	34,748	(2,896)
Unrealized holding gains on available for sale securities, net of RMB42 income taxes		5,235
Less: reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes		(235)
Comprehensive income		269,826	213,508	148,954
Unrealized holding gains on available for sale securities, net of income taxes		42
Reclassification adjustment for gains on available for sale securities realized in net income, net of income taxes		42
Parent Company [Member]
Condensed Income Statements, Captions [Line Items]
General and administrative expenses		(4,477)	(4,241)	(1,047)
Operating income (loss)		(4,477)	(4,241)	(1,047)
Equity in income of subsidiaries		253,396	194,914	129,811
Foreign currency exchange gains (loss)		(4,753)	(31,923)	7,251
Interest income		8,027	17,610	14,059
Loss on foreign currency forward contract		(12,898)
Other income		2,559	2,400	1,776
Income before income taxes		241,854	178,760	151,850
Income tax expense
Net income		241,854	178,760	151,850
Other comprehensive income
Foreign currency translation adjustment, net of nil income tax		22,972	34,748	(2,896)
Unrealized holding gains on available for sale securities, net of RMB42 income taxes		5,235
Less: reclassification adjustment for gains on available for sale securities realized in net income, net of RMB42 income taxes		(235)
Comprehensive income		269,826	¥ 213,508	¥ 148,954
Unrealized holding gains on available for sale securities, net of income taxes		42
Reclassification adjustment for gains on available for sale securities realized in net income, net of income taxes		¥ 42

[1] Includes share-based compensation expense as follows (note 14):

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PARENT ONLY FINANCIAL INFORMATION (Condensed Statements of Cash Flows) (Details) - CNY (¥) ¥ in Thousands	12 Months Ended
	Dec. 31, 2016	Dec. 31, 2015	Dec. 31, 2014
Operating activities:
Net cash provided by (used in) operating activities	¥ 524,030	¥ 347,698	¥ 175,343
Investing activities:
Purchase of time deposits	(421,170)	(639,019)	(708,124)
Proceeds from maturity of time deposits	678,741	690,250	22,325
Net cash provided by (used in) investing activities	(156,449)	(72,309)	(734,539)
Financing activities:
Issuance of Class A ordinary shares upon the IPO			592,161
Issuance of Class A ordinary shares in private placement concurrent with the IPO			83,052
Issuance of Class A ordinary shares in connection with exercise of share options	20,388	22,456	1,518
Payment of dividends	(54,026)
Repurchase of treasury shares	(44,406)	(49,355)
Payment of IPO costs			(21,705)
Net cash provided by (used in) financing activities	(78,044)	(26,899)	655,026
Effect of foreign currency exchange rate changes on cash and cash equivalents	7,197	4,413	5,837
Series A [Member]
Non-cash investing and financing activities:
Conversion of convertible redeemable preferred shares			3,648
Series B [Member]
Non-cash investing and financing activities:
Conversion of convertible redeemable preferred shares			107,994
Series C [Member]
Non-cash investing and financing activities:
Conversion of convertible redeemable preferred shares			592,849
Parent Company [Member]
Operating activities:
Net cash provided by (used in) operating activities	(10,272)	9,770	19,036
Investing activities:
Purchase of time deposits	(298,688)	(588,426)	(569,312)
Proceeds from maturity of time deposits	620,607	603,501	3,071
Investments made to subsidiaries	(198,137)		(104,662)
Net cash provided by (used in) investing activities	123,782	15,075	(670,903)
Financing activities:
Advances from a related party		1,432
Repayment of advances from a related party		(1,432)
Issuance of Class A ordinary shares upon the IPO			592,161
Issuance of Class A ordinary shares in private placement concurrent with the IPO			83,052
Issuance of Class A ordinary shares in connection with exercise of share options	20,388	22,456	1,518
Payment of dividends	(54,026)
Repurchase of treasury shares	(44,406)	(49,355)
Payment of IPO costs			(17,228)
Net cash provided by (used in) financing activities	(78,044)	(26,899)	659,503
Effect of foreign currency exchange rate changes on cash and cash equivalents	2,029	398	(27)
Net increase (decrease) in cash and cash equivalents	37,495	(1,656)	7,609
Cash and cash equivalents at beginning of year	6,275	7,931	322
Cash and cash equivalents at end of year	43,770	6,275	7,931
Parent Company [Member] | Series A [Member]
Non-cash investing and financing activities:
Conversion of convertible redeemable preferred shares			3,648
Parent Company [Member] | Series B [Member]
Non-cash investing and financing activities:
Conversion of convertible redeemable preferred shares			107,994
Parent Company [Member] | Series C [Member]
Non-cash investing and financing activities:
Conversion of convertible redeemable preferred shares			¥ 592,849

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SUBSEQUENT EVENTS (Narrative) (Details) ¥ / shares in Units, $ / shares in Units, ¥ in Thousands, $ in Thousands	1 Months Ended
	May 30, 2017 CNY (¥)	May 30, 2017 USD ($)	May 31, 2016 CNY (¥)	Feb. 28, 2017 $ / shares	Feb. 28, 2017 ¥ / shares	Mar. 07, 2016 $ / shares
Subsequent Event [Line Items]
Dividend declared per ordinary share | $ / shares						$ 0.15
Amount of cash dividends to be paid | ¥			¥ 54,026
Scenario, Forecast [Member]
Subsequent Event [Line Items]
Amount of cash dividends to be paid	¥ 64,900	$ 9,500
Subsequent Event [Member]
Subsequent Event [Line Items]
Dividend declared per ordinary share | (per share)				$ 0.16	¥ 1.10