SecProbe.io

<DOCUMENT>
<TYPE>TEXT-EXTRACT
<SEQUENCE>2
<FILENAME>filename2.txt
<TEXT>
 August 19, 2025

Sarah Ying Li
Head of Financial Reporting
NetEase, Inc.
NetEase Building, No. 599 Wangshang Road
Binjiang District, Hangzhou, 310052
People s Republic of China

 Re: NetEase, Inc.
 Form 20-F for the Fiscal Year Ended December 31, 2024
 File No. 000-30666
Dear Sarah Ying Li:

 We have completed our review of your filing. We remind you that the
company and
its management are responsible for the accuracy and adequacy of their
disclosures,
notwithstanding any review, comments, action or absence of action by the staff.

 Sincerely,

 Division of Corporation
Finance
 Office of Technology
cc: Paul W. Boltz, Jr.
</TEXT>
</DOCUMENT>

CORRESP
 1
 filename1.htm

 August 18, 2025

 VIA EDGAR

 Ms. Kathleen Collins

 Ms. Chen Chen

 Division of Corporation Finance

 Office of Technology

 Securities and Exchange Commission

 100 F Street, N.E.

 Washington, D.C. 20549

 RE:
 NetEase, Inc. (the "Company")

 Form 20-F for the Fiscal Year Ended December 31, 2024

 Response dated July 31, 2025

 File No. 000-30666

 Dear Ms. Collins and Ms. Chen,

 This letter sets forth the Company's responses
to the comments contained in the letter dated August 5, 2025 from the staff (the " Staff ") of the Securities and
Exchange Commission (the " Commission ") regarding the Company's annual report on Form 20-F for the fiscal
year ended December 31, 2024 filed with the Commission on April 15, 2025 (the " 2024 Form 20-F ") and
the Company's responses to the Staff's comments regarding the 2024 Form 20-F submitted on July 31, 2025. The Staff's
comments are repeated below in bold and are followed by the Company's responses thereto. All capitalized terms used but not defined
in this letter shall have the meaning ascribed to such terms in the 2024 Form 20-F.

 Form 20-F for the Fiscal Year Ended December 31, 2024

 Item 3. Key Information

 Our Corporate Structure and Contractual Arrangements with the
Variable Interest Entities, page 5

 1. The proposed revisions to the disclosures on page 7, in your response to prior comment 2, appear to limit the risk of government
intervention to situations in which you fail to comply with the applicable regulations, policies, or requirements. Please revise to state,
similar to the disclosures in your December 31, 2022 Form 20-F, that "The PRC government may also intervene with or influence
our operations as it deems appropriate to further regulatory, political and societal goals," and clarify that such intervention
may be at any time .

 Division of Corporation Finance

 Office of Technology

 Securities
and Exchange Commission
August 18, 2025
Page 2

 In response to the Staff's comment, the Company respectfully
proposes to revise the referenced disclosure as shown below in its future Form 20-F filings (with deletions shown as strike-through
and additions underlined), subject to updates and adjustments to be made in connection with any material development of the subject matters
being disclosed. The bold text is added on top of the proposed disclosure in the Company's prior response. Page reference is
made to the 2024 Form 20-F to illustrate the approximate location of the disclosure.

 Page 7:

 The
PRC government may also intervene with or influence our operations as it deems appropriate to further regulatory, political and societal
goals at any time. The PRC government has significant authority in regulating our operations. If we fail to comply with
the applicable regulations, policies or requirements, enforcement actions taken by the PRC government may intervene or influence our operations
at any time. The PRC government has published new policies that affect various industries in recent years, including
industries in which we operate, and we cannot rule out the possibility that it will in the future release regulations or policies
regarding our industry that could adversely affect our business, financial condition and results of operations. Any such action, once
taken by the PRC government, could cause the value of our securities to significantly decline or become worthless and could significantly
limit or completely hinder our ability to offer or continue to offer securities to investors.

 Page 55:

 The
PRC government may also intervene with or influence our operations as it deems appropriate to further regulatory, political and societal
goals at any time. In addition, the PRC government has significant authority in regulating our operations. If we fail to
comply with the applicable regulations, policies or requirements, enforcement actions taken by the PRC government may intervene or influence
our operations at any time. The PRC government has recently published new policies that adversely
affected certain industries, including the industries that our business may relate to our industry and our business ,
and we cannot rule out the possibility that it will in the future further release regulations or policies regarding our industry
that could further adversely affect our business, financial condition and results of operations.

 Risk Factors

 Risks Related to Doing Business in China, page 48

 2. We note your proposed revised disclosures in response to prior comment 2. Please restore the header to the penultimate risk factor
on page 55 to your disclosure as previously provided in the December 31, 2022 Form 20-F to indicate that "Contract
drafting, interpretation and enforcement in China involve significant uncertainty." Also, specifically reference significant
uncertainties within the risk factor. In addition, revise to include a risk factor regarding "Changes in China's political
and economic policies" that could harm your business as previously provided in the December 31, 2022 Form 20-F.

 2

 Division of Corporation Finance

 Office of Technology

 Securities
and Exchange Commission
August 18, 2025
Page 3

 In response to the Staff's comment, the Company respectfully
proposes to revise the referenced disclosure as shown below in its future Form 20-F filings (with deletions shown as strike-through
and additions underlined), subject to updates and adjustments to be made in connection with any material development of the subject matters
being disclosed. Page reference is made to the 2024 Form 20-F to illustrate the approximate location of the disclosure.

 Page 55:

 Contract drafting, interpretation and enforcement in China
involve significant uncertainty.

 We have entered into numerous contracts
governed by PRC law, many of which are material to our business. As compared with contracts in the United States, certain contracts governed
by PRC law may contain less detail and may not be as comprehensive in defining contracting parties' rights and obligations in some
instances. As a result, those contracts are more vulnerable to disputes and legal challenges. In addition, contract interpretation and
enforcement by the court in China is subject to significant uncertainties. Therefore, we cannot assure you that we will not be
subject to disputes under our material contracts, and if such disputes arise, we cannot assure you that we will prevail. Any dispute involving
material contracts, even without merit in plaintiff's regard, may materially and adversely affect our reputation and our business
operations, and may cause the price of our ADSs and/or shares to decline.

 In addition, the Company undertakes to include in its future
Form 20-F filings a risk factor regarding "Changes in China's political and economic policies" that could materially
impact its business as previously provided in its December 31, 2022 Form 20-F, subject to updates and adjustments to be made
in connection with any material development of the subject matters being disclosed.

 * * *

 3

 If you have any additional
questions or comments regarding the 2024 Form 20-F, please contact the undersigned at +65 6980 0628 or paulboltz@oc.netease.com or
the Company's U.S. counsel, Haiping Li of Skadden, Arps, Slate, Meagher & Flom LLP at +852 3740 4835 or haiping.li@skadden.com.

 Sincerely yours,

 NetEase, Inc.

 /s/ Paul W. Boltz, Jr.

 Paul W. Boltz, Jr.

 General Counsel

 cc: Sarah Ying Li, Head of Financial Reporting, NetEase, Inc.

 Haiping Li, Esq., Partner, Skadden,
Arps, Slate, Meagher & Flom LLP

 Lanny Lu, Partner, PricewaterhouseCoopers Zhong Tian LLP

 4

<DOCUMENT>
<TYPE>TEXT-EXTRACT
<SEQUENCE>2
<FILENAME>filename2.txt
<TEXT>
 August 5, 2025

Sarah Ying Li
Head of Financial Reporting
NetEase, Inc.
NetEase Building, No. 599 Wangshang Road
Binjiang District, Hangzhou, 310052
People s Republic of China

 Re: NetEase, Inc.
 Form 20-F for the Fiscal Year Ended December 31, 2024
 Response dated July 31, 2025
 File No. 000-30666
Dear Sarah Ying Li:

 We have reviewed your July 31, 2025 response to our comment letter and
have the
following comments.

 Please respond to this letter within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe a
comment applies to your facts and circumstances, please tell us why in your
response.

 After reviewing your response to this letter, we may have additional
comments.
Unless we note otherwise, any references to prior comments are to comments in
our July 2,
2025 letter.

Form 20-F for the Fiscal Year Ended December 31, 2024
Item 3. Key Information
Our Corporate Structure and Contractual Arrangements with the Variable Interest
Entities,
page 5

1. The proposed revisions to the disclosures on page 7, in your response to
prior
 comment 2, appear to limit the risk of government intervention to
situations in which
 you fail to comply with the applicable regulations, policies, or
requirements. Please
 revise to state, similar to the disclosures in your December 31, 2022
Form 20-F, that
 The PRC government may also intervene with or influence our
operations as it
 deems appropriate to further regulatory, political and societal goals,
 and clarify that
 such intervention may be at any time.
 August 5, 2025
Page 2

Risk Factors
Risks Related to Doing Business in China, page 48

2. We note your proposed revised disclosures in response to prior comment
2. Please
 restore the header to the penultimate risk factor on page 55 to your
disclosure as
 previously provided in the December 31, 2022 Form 20-F to indicate that
"Contract
 drafting, interpretation and enforcement in China involve significant
uncertainty."
 Also, specifically reference significant uncertainties within the risk
factor. In addition,
 revise to include a risk factor regarding Changes in China s
political and economic
 policies that could harm your business as previously provided in the
December 31,
 2022 Form 20-F.
 Please contact Chen Chen at 202-551-7351 or Kathleen Collins at
202-551-3499 if
you have questions regarding comments on the financial statements and related
matters.

 Sincerely,

 Division of
Corporation Finance
 Office of
Technology
cc: Paul W. Boltz, Jr.
</TEXT>
</DOCUMENT>

CORRESP
 1
 filename1.htm

 July 31, 2025

 VIA EDGAR

 Ms. Kathleen Collins

 Ms. Chen Chen

 Division of Corporation Finance

 Office of Technology

 Securities and Exchange Commission

 100 F Street, N.E.

 Washington, D.C. 20549

 RE:
 NetEase, Inc. (the "Company")

 Form 20-F for the Fiscal Year Ended December 31,
 2024

 File No. 000-30666

 Dear Ms. Collins and Ms. Chen,

 This letter sets forth the Company's responses
to the comments contained in the letter dated July 2, 2025 from the staff (the " Staff ") of the Securities and
Exchange Commission (the " Commission ") regarding the Company's annual report on Form 20-F for the fiscal
year ended December 31, 2024 filed with the Commission on April 15, 2025 (the " 2024 Form 20-F "). The
Staff's comments are repeated below in bold and are followed by the Company's responses thereto. All capitalized terms used
but not defined in this letter shall have the meaning ascribed to such terms in the 2024 Form 20-F.

 Form 20-F for the fiscal year ended December 31, 2024

 Introduction, page 1

 1. Your definition of China or the PRC appears to exclude Hong Kong and Macau for purposes of describing the PRC rules, laws, regulation
and regulatory authority or other legal, tax or finance matters. Please revise to remove the exclusion of Hong Kong and Macau from such
definition. Clarify that all the legal and operational risks associated with having operations in the People's Republic of China
(PRC) also apply to operations in Hong Kong and Macau. In this regard, ensure that your disclosure does not narrow risks related to operating
in the PRC to mainland China only. Where appropriate, you may describe PRC law and then explain how law in Hong Kong and Macau differs
from PRC law and describe any risks and consequences to the company associated with those laws.

 Division of Corporation Finance

 Office of Technology

 Securities
and Exchange Commission
July 31, 2025
Page 2

 In response to the Staff's comment, the Company respectfully
proposes to revise the referenced disclosure as shown below in its future Form 20-F filings (with deletions shown as strike-through
and additions underlined), subject to updates and adjustments to be made in connection with any material development of the subject matters
being disclosed. Page reference is made to the 2024 Form 20-F to illustrate the approximate location of the disclosure.

 Page 1:

 · "China" or the "PRC" are to the People's Republic of China; and only in the context of describing
PRC rules, laws, regulations, regulatory authority and other legal, tax or finance matters in this annual report, such terms exclude Taiwan,
Hong Kong and Macau (also referred to as "China mainland" or "Chinese mainland" in this annual report);

 Page 8:

 Summary of Risk Factors

 An investment in our ADSs or ordinary
shares involves significant risks. Below is a summary of material risks we face, organized under relevant headings. All the operational
risks associated with being based in and having operations in China mainland also apply to operations in Hong Kong and Macau . With
respect to the legal risks associated with being based in and having operations in China mainland, the laws, regulations and the discretion
of China mainland governmental authorities discussed in this annual report are expected to apply to China mainland entities and businesses,
rather than While entities or businesses in Hong Kong and Macau , which operate under a different
set of laws from China mainland , our operations there could be exposed to similar legal risks if the laws applicable to China mainland
become applicable to entities and businesses in Hong Kong and Macau in the future . These risks are discussed more fully in Item 3.D.
 "Key Information-Risk Factors."

 In addition, the Company undertakes to thoroughly review
the references of "China" or "PRC" to ensure that the relevant disclosure sufficiently addresses the risks relating
to operating in China to the extent relevant and material.

 Item 3. Key Information, page 5

 2. We note changes you made to your disclosure on pages 7 and 55 relating to legal and operational risks associated with operating
in China and PRC regulations. The Samples Letters to China-Based Companies sought specific disclosure relating to the risk that the PRC
government may intervene or influence your operations at any time, or may exert more control over operations of your business, which could
result in a material change in your operations and/or the value of your securities. It is unclear to us that there have been changes in
the regulatory environment in the PRC since the filing of your December 31, 2022 Form 20-F that would warrant revised disclosure
to mitigate the challenges you face and related disclosures. For additional guidance, refer to the Division of Corporation Finance's
Sample Letter to China-Based Companies, issued December 2021 and July 2023. In future filings, please restore your disclosure.

 2

 Division of Corporation Finance

 Office of Technology

 Securities
and Exchange Commission
July 31, 2025
Page 3

 In response to the Staff's comment, the Company respectfully
proposes to revise the referenced disclosure as shown below in its future Form 20-F filings (with deletions shown as strike-through
and additions underlined), subject to updates and adjustments to be made in connection with any material development of the subject matters
being disclosed. Page reference is made to the 2024 Form 20-F to illustrate the approximate location of the disclosure.

 Page 7:

 The
PRC government has significant authority in regulating our operations. If we fail to comply with the applicable regulations, policies
or requirements, enforcement actions taken by the PRC government may intervene or influence our operations at any time. The
PRC government has published new policies that affect various industries in recent years, including industries in which we operate, and
we cannot rule out the possibility that it will in the future release regulations or policies regarding our industry that could adversely
affect our business, financial condition and results of operations. Any such action, once taken by the PRC government, could cause the
value of our securities to significantly decline or become worthless and could significantly limit or completely hinder our ability to
offer or continue to offer securities to investors.

 Page 55:

 The
PRC government's significant authority in regulating our operations and uncertainties Uncertainties
with respect to the PRC legal system could adversely affect us.

 The PRC legal system is a civil law system
based on written statutes , and . Unlike the common law system, decided legal cases under the civil law system
may be cited for reference but have limited less precedential value. In the late 1970s, the Chinese government
began to promulgate a comprehensive system of laws and regulations governing economic matters. The overall effect of legislation enacted
over the past 50 years has PRC laws and regulations have significantly enhanced the protections afforded to various
forms of foreign investments invested enterprises in China over the past several decades . However,
many of these laws, regulations and legal requirements are relatively recent and may evolve quickly with little advance notice. The
interpretation of many laws, regulations and rules may not always be uniform and enforcement of these laws, regulations and rules are
evolving rapidly, and their interpretation and enforcement involve uncertainties. Since PRC administrative and court authorities
have discretion in interpreting and implementing statutory provisions and contractual terms, it may be difficult to evaluate the outcome
of administrative and court proceedings and the level of legal protection we enjoy. These uncertainties may affect our judgment on the
relevance of legal requirements and our ability to enforce our contractual rights or tort claims. Furthermore, the PRC legal system is
based in part on government policies and China mainland is geographically large and divided into various provinces and municipalities.
As such, different regulations and policies may have different and varying applications and interpretations in different parts of China
mainland, and it is possible that we may not be aware in a timely manner that we have been identified to be in violation of these policies
and rules until sometime after the occurrence of the violation. In addition, any administrative and court proceedings may be protracted,
resulting in substantial costs and diversion of resources and management attention.

 3

 Division of Corporation Finance

 Office of Technology

 Securities
and Exchange Commission
July 31, 2025
Page 4

 In
addition, the PRC government has significant authority in regulating our operations. If we fail to comply with the applicable regulations,
policies or requirements, enforcement actions taken by the PRC government may intervene or influence our operations at any time. The
PRC government has recently published new policies that adversely affected certain industries, including the industries
that our business may relate to our industry and our business , and we cannot rule out the possibility that it
will in the future further release regulations or policies regarding our industry that could further adversely affect our business, financial
condition and results of operations.

 The Company respectfully advises the Staff that the proposed
revisions to the risk factor disclosure, as compared to the Company's annual report on Form 20-F for the year ended December 31,
2022, are intended to reflect the current economic and regulatory conditions in the PRC. The risks relating to doing business in China
have been disclosed under the relevant headings in the 2024 Form 20-F filed on April 15, 2025 in accordance with the Division
of Corporation Finance's Sample Letters to China-Based Companies issued in December 2021 and July 2023. The Company will
continue to monitor developments in the PRC regulatory and economic environment and will update its disclosure as appropriate in future
filings.

 Item 5. Operating and Financial Review and Prospects

 Results of Operations

 Year Ended December 31, 2024 Compared to Year Ended December 31,
2023, page 117

 3. You state the increase in net revenue from online games was attributable to strong performance of certain self-developed titles
and mobile titles and certain licensed titles, which were partially offset by decreased net revenues from live streaming services. Similarly,
you attribute the increase in cost of revenues from your games and related value-added services to an increase in royalty fees for certain
licensed games and staff costs, which was partially offset by a decrease in revenue sharing costs. Where a material change in a line item
is attributed to two or more factors, including any offsetting factors, please revise throughout your results of operations disclosure
to include a quantified discussion of each identified factor. In addition, avoid using terms such as "principally" or "mainly."
Refer to Item 5.A.1 of Form 20-F.

 4

 Division of Corporation Finance

 Office of Technology

 Securities
and Exchange Commission
July 31, 2025
Page 5

 The Company respectfully acknowledges the Staff's comment.
In its future Form 20-F filings, where a material change in a line item is attributed to two or more factors, including any offsetting
factors, the Company will disclose the contribution of each identified factor in quantified terms to the extent reasonably practicable.
The Company will also avoid using terms such as "principally" or "mainly" to the extent reasonably practicable.

 For
the Staff's reference, below is the updated disclosure marked to show proposed revisions against the disclosure in the 2024 Form 20-F
as an example, for illustrative purposes only, of how the Company intends to expand its disclosures in future Form 20-F filings (with
deletions shown as strike-through and additions underlined). Page reference is made to the 2024 Form 20-F to illustrate the
approximate location of the disclosure. The Company will implement similar changes to other line items, where applicable.

 Page 117:

 Games and Related Value-added Services

 Net revenues from games and related value-added
services increased by 2.5% to RMB83.6 billion (US$11.5 billion) in 2024 from RMB81.6 billion in 2023 , with an increase ,
which was principally attributable to in net revenues from online games of RMB4.7 billion (US$640.3 million) driven by the
strong performance of certain self-developed titles, such as Identity V , Naraka: Bladepoint PC and mobile games and certain
licensed titles, which was partially offset by a decrease in decreased net revenues from live
streaming services of RMB2.4 billion (US$323.7 million) . Net revenues from the operation of online games accounted for approximately
96.2% of this segment in 2024, compared to 92.9% in 2023.

 Youdao

 Net revenues from our Youdao segment
increased by 4.4% to RMB5.6 billion (US$770.7 million) in 2024 from RMB5.4 billion in 2023 , with an increase in , which
was mainly due to increased net revenues from its online marketing services of RMB643.1 million (US$88.1 million) , which
was partially offset in part by a decrease in decreased net revenues from its
learning services of RMB400.8 million (US$54.9 million) .

 5

 Division of Corporation Finance

 Office of Technology

 Securities
and Exchange Commission
July 31, 2025
Page 6

 Page 118:

 NetEase Cloud Music

 Net revenues from our NetEase Cloud Music
segment increased by 1.1% to RMB8.0 billion (US$1.1 billion) in 2024 from RMB7.9 billion in 2023 , with an increase in ,
which was mainly attributable to increased net revenues from online music services of RMB1.0 billion (US$137.5 million) as
a result of the growth in sales of membership subscriptions, which was partially offset in part by
 a decrease in decreased net revenues from social entertainment services and others of RMB920.5 million (US$126.1
million) .

 …

 Cost of revenues from our games and related
value-added services increased by 0.8% to RMB26.1 billion (US$3.6 billion) in 2024 from RMB25.9 billion in 2023 . , which
was primarily due to This was driven by increases an increase in royalty fees related to certain licensed
games of RMB1.5 billion (US$203.3 million) and staff costs of RMB1.0 billion (US$131.5 million) , which was partially offset
by a decrease in revenue sharing costs with talent agencies of live streaming performers and other third parties of RMB2.2 billion
(US$304.9 million) .

 4. We note that in your earnings release furnished on February 20, 2025 and in several investor presentations, you separately
discuss the percentage of net revenue generated from online games and mobile games such that it appears discrete financial information
may be available. In addition, we note from your risk factor disclosures that profits from mobile games, even if the games are successful,
are generally lower than profits generated from PC games. Please tell us your consideration to separately quantify revenue from mobile
games and PC games for each period presented in an effort to add context to the revenue mix and its impact on your gross profit margins
for your games and related value-added services segment.

 The Company respectfully advises the Staff that net revenues
from mobile games accounted for 67.0%, 75.2% and 72.7% of net revenues from the operation of online games in 2022, 2023 and 2024, respectively,
with the remaining portion attributable to net revenues from PC games (plus an immaterial amount of net revenues from games offered through
game consoles, a recent development that was disclosed on pages 11 and 15 of the 2024 Form 20-F). Nonetheless, for the reasons
specified below, the Company does not believe that separate quantification of net revenues from mobile games

CORRESP
 1
 filename1.htm

 July 14, 2025

 VIA EDGAR

 Ms. Kathleen Collins

 Ms. Chen Chen

 Division of Corporation Finance

 Office of Technology

 Securities and Exchange Commission

 100 F Street, N.E.

 Washington, D.C. 20549

 RE:   NetEase, Inc.
(the "Company")

 Form 20-F for the Fiscal Year Ended December 31,
2024

 File No. 000-30666

 Dear Ms. Collins and Ms. Chen,

 The Company is in receipt
of the letter from the staff (the " Staff ") of the Securities and Exchange Commission dated July 2, 2025 (the
 " Comment Letter "), pursuant to which the Staff provided comments regarding the Company's Form 20-F for the
fiscal year ended December 31, 2024. The Company respectfully requests an extension to the deadline for responding to the
Comment Letter due to the additional time needed to gather sufficient information and prepare a thorough response. The Company will provide
its response to the Comment Letter via EDGAR as soon as possible, and in any event no later than July 31, 2025.

 Should you have any questions
regarding the request made herein, please do not hesitate to contact the undersigned at +65 6980 0628 or paulboltz@oc.netease.com or the
Company's U.S. counsel, Haiping Li of Skadden, Arps, Slate, Meagher & Flom LLP at +852 3740 4835 or haiping.li@skadden.com.

 Very truly yours,

 /s/ Paul W. Boltz, Jr.

 Paul W. Boltz, Jr.

 General Counsel

 cc: Sarah Ying Li, Head of Financial Reporting, NetEase, Inc.

 Haiping Li, Esq., Partner, Skadden,
Arps, Slate, Meagher & Flom LLP

 Lanny Lu, Partner, PricewaterhouseCoopers
Zhong Tian LLP

<DOCUMENT>
<TYPE>TEXT-EXTRACT
<SEQUENCE>2
<FILENAME>filename2.txt
<TEXT>
 July 2, 2025

Sarah Ying Li
Head of Financial Reporting
NetEase, Inc.
NetEase Building, No. 599 Wangshang Road
Binjiang District, Hangzhou, 310052
People s Republic of China

 Re: NetEase, Inc.
 Form 20-F for the Fiscal Year Ended December 31, 2024
 File No. 000-30666
Dear Sarah Ying Li:

 We have limited our review of your filing to the financial statements
and related
disclosures and have the following comments.

 Please respond to this letter within ten business days by providing the
requested
information or advise us as soon as possible when you will respond. If you do
not believe a
comment applies to your facts and circumstances, please tell us why in your
response.

 After reviewing your response to this letter, we may have additional
comments.

Form 20-F for the fiscal year ended December 31, 2024
Introduction, page 1

1. Your definition of China or the PRC appears to exclude Hong Kong and
Macau for
 purposes of describing the PRC rules, laws, regulation and regulatory
authority or
 other legal, tax or finance matters. Please revise to remove the
exclusion of Hong
 Kong and Macau from such definition. Clarify that all the legal and
operational risks
 associated with having operations in the People s Republic of China
(PRC) also apply
 to operations in Hong Kong and Macau. In this regard, ensure that your
disclosure
 does not narrow risks related to operating in the PRC to mainland China
only. Where
 appropriate, you may describe PRC law and then explain how law in Hong
Kong and
 Macau differs from PRC law and describe any risks and consequences to
the company
 associated with those laws.
 July 2, 2025
Page 2
Item 3. Key Information, page 5

2. We note changes you made to your disclosure on pages 7 and 55 relating
to legal and
 operational risks associated with operating in China and PRC
regulations. The
 Samples Letters to China-Based Companies sought specific disclosure
relating to the
 risk that the PRC government may intervene or influence your operations
at any time,
 or may exert more control over operations of your business, which could
result in a
 material change in your operations and/or the value of your securities.
It is unclear to
 us that there have been changes in the regulatory environment in the PRC
since the
 filing of your December 31, 2022 Form 20-F that would warrant revised
disclosure to
 mitigate the challenges you face and related disclosures. For additional
guidance, refer
 to the Division of Corporation Finance s Sample Letter to China-Based
Companies,
 issued December 2021 and July 2023. In future filings, please restore
your disclosure.
Item 5. Operating and Financial Review and Prospects
Results of Operations
Year Ended December 31, 2024 Compared to Year Ended December 31, 2023, page 117

3. You state the increase in net revenue from online games was attributable
to strong
 performance of certain self-developed titles and mobile titles and
certain licensed
 titles, which were partially offset by decreased net revenues from live
streaming
 services. Similarly, you attribute the increase in cost of revenues from
your games and
 related value-added services to an increase in royalty fees for certain
licensed games
 and staff costs, which was partially offset by a decrease in revenue
sharing costs.
 Where a material change in a line item is attributed to two or more
factors, including
 any offsetting factors, please revise throughout your results of
operations disclosure to
 include a quantified discussion of each identified factor. In addition,
avoid using terms
 such as "principally" or "mainly." Refer to Item 5.A.1 of Form 20-F.
4. We note that in your earnings release furnished on February 20, 2025 and
in several
 investor presentations, you separately discuss the percentage of net
revenue generated
 from online games and mobile games such that it appears discrete
financial
 information may be available. In addition, we note from your risk factor
disclosures
 that profits from mobile games, even if the games are successful, are
generally lower
 than profits generated from PC games. Please tell us your consideration
to separately
 quantify revenue from mobile games and PC games for each period
presented in an
 effort to add context to the revenue mix and its impact on your gross
profit margins
 for your games and related value-added services segment.
E. Critical Accounting Estimates
Estimate of Average Playing Period of Paying Players, page 137

5. We note you generate revenue from the sale of in-game virtual items for
both your
 mobile and PC games, some of which are recognized over the estimated
average
 playing period of the paying players. Please tell us your consideration
to disclose the
 estimated average playing period or range of such period separately for
mobile and
 PC games. To the extent changes in such estimates, if any, significantly
impacted your
 revenue or results of operations, tell us how you considered including a
discussion of
 such change. In your response, provide us with the estimated average
playing period
 for your PC and mobile games for each period presented.
 July 2, 2025
Page 3

Notes to Consolidated Financial Statements
Note 28. Segment Information, page F-44

6. Please revise to discuss how the CODM uses gross profit, which appears
to be the
 segment measure of profit or loss, in assessing segment performance and
deciding
 how to allocate resources. Refer to ASC 280-10-50-29(f) and the example
in 280-10-
 55-54(c).
 In closing, we remind you that the company and its management are
responsible for
the accuracy and adequacy of their disclosures, notwithstanding any review,
comments,
action or absence of action by the staff.

 Please contact Chen Chen at 202-551-7351 or Kathleen Collins at
202-551-3499 with
any questions.

 Sincerely,

 Division of
Corporation Finance
 Office of Technology
cc: Paul W. Boltz, Jr.
</TEXT>
</DOCUMENT>

United States securities and exchange commission logo
April 5, 2024
William Lei Ding
Chief Executive Officer
NetEase, Inc.
NetEase Building
No. 599 Wangshang Road
Binjiang District, Hangzhou, 310052
People’s Republic of China
Re:NetEase, Inc.
Form 20-F for the Fiscal Year Ended December 31, 2022
File No. 000-30666
Dear William Lei Ding:
            We have completed our review of your filing. We remind you that the company and its
management are responsible for the accuracy and adequacy of their disclosures, notwithstanding
any review, comments, action or absence of action by the staff.
Sincerely,
Division of Corporation Finance
Office of Technology

CORRESP
1
filename1.htm

April 4, 2024

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

Office of Technology

100 F Street, NE

Washington, D.C. 20549

Attn: Megan Akst

  Christine Dietz

Re: NetEase, Inc.

Form 20-F for the Fiscal Year Ended December 31,
2022 Filed April 27, 2023

Correspondence from the SEC on March 27, 2024

File No. 000-30666

Dear Ms. Akst and Ms. Dietz,

This letter sets forth the response of NetEase, Inc. (the “Company”)
to the comment that the Company received from the staff (the “Staff”) of the Securities and Exchange Commission in a letter
dated March 27, 2024 in relation to the Company’s response letter dated September 22, 2023 regarding the Company’s
annual report on Form 20-F for the fiscal year ended December 31, 2022. We have included the Staff’s comment in bold,
and the Company’s response is set forth immediately below the comment.

1. We note your September 22, 2023 response to the staff’s questions about your treatment of certain deposit arrangements
“with original maturities of twelve months or fewer” for purposes of Rule 3a-1 under the Investment Company Act of 1940,
as amended (“Company Act”). Please note that, based on your description of such assets, we do not necessarily agree with your
view that the deposit arrangements may be treated as “cash items” for purposes of Rule 3a-1. Please supplement the risk
factor in your June 30, 2023 response regarding the company’s status under the Company Act to reflect the foregoing and provide
us with the proposed disclosures that you will include in future filings.

Response

In
response to the Staff’s comment, the Company proposes to include the following revised risk factor in “Item 3. Key Information—D.
Risk Factors” in its future Form 20-F filings as follows (with changes against the disclosure the Company proposed in its June 30,
2023 response marked with additions underlined and deletions in strikethrough). The
Company confirms that it will reevaluate the content of the risk factor periodically and update the relevant factual disclosures as necessary
based on the Company’s assets and investment securities at the time of any future filing.

Item 3.   Key Information

D.          
Risk Factors

Risks Related to Our Operations Overall

If our company were deemed to be
an “investment company” under the Investment Company Act of 1940, applicable restrictions could make it impractical for us
to continue our business as contemplated and could have a material adverse effect on our business and the price of our ADSs and ordinary
shares.

We
intend to continue to conduct our operations so that our company will not be deemed to be an investment company under the Investment
Company Act of 1940 (the “Investment Company Act”). AnSection 3(a)(1) of the Investment Company Act provides,
in relevant part, that an issuer will generally be deemed to be an “investment company” for purposes of the Investment
Company Act if, absent an applicable exemption: under Section 3(a)(1)(A), it is or holds itself out as being engaged primarily,
or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or, under Section 3(2a)(1)(C),
it is engaged or proposes to engage in the business of investing, reinvesting, owning, holding or trading in securities and it owns or
proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government
securities and cash items) on an unconsolidated basis.

Our Company
is organized as a holding company and we believe that, through our wholly owned subsidiaries, we are engaged primarily in the business
of providing internet-related services and products and not in the business of investing, reinvesting or trading in securities. We also
believe that the primary source of income from each of our businesses is properly characterized as income earned in exchange for the provision
of services and products. Through public statements and statements in our public filings, we currently hold ourselves out as an internet
technology company, and our public statements evidence our intent to continue to act as an internet technology company in the future.
We do not propose to engage primarily in the business of investing, reinvesting or trading in securities.

Additionally, Rule 3a-1
under the Investment Company Act generally provides that an entity will not be deemed to be an “investment company” if: (a) it
does not hold itself out as being engaged primarily, and does not propose to engage primarily, in the business of investing, reinvesting
or trading securities and (b) consolidating the entity’s wholly-owned subsidiaries (within the meaning of the Investment Company
Act), no more than 45% of the value of its assets (exclusive of U.S. government securities and cash items) consists of, and no more than
45% of its net income after taxes (for the past four fiscal quarters combined) is derived from, securities other than U.S. government
securities, securities issued by employees’ securities companies, securities issued by qualifying majority owned subsidiaries of
such entity and securities issued by qualifying companies that are controlled primarily by such entity.

We
are engaged primarily in the business of providing internet-related services and products and not in the business of investing,
reinvesting or trading in securities. Furthermore, our company’s assets and income are of a nature that we believe allows our company
to satisfy the requirements set forth in the 45% test in Rule 3a-1 under the Investment Company Act as described in clause (b) of the
description provided above.

    2

Furthermore,
our company’s assets, consolidated with its wholly-owned subsidiaries (within the meaning of the Investment Company Act), consist
primarily of assets that we believe would not be considered securities for purposes of the Investment Company Act. Therefore,From
time to time and as of December 31, 2023, we believe that, consolidating the Company’s wholly-owned subsidiaries
(within the meaning of the Investment Company Act), no more thanheld assets consisting of a significant amount of Chinese
banking instruments that have the characteristics of and are referred to as time deposits for purposes of US financial reporting. Our
time deposit holdings are of varying maturities, but primarily maturities of less than 12 months, which we hold for a variety of cash
management-related purposes. We consider our time deposits with maturities of less than 12 months as “cash items” for purposes
of Rule 3a-1 under the Investment Company Act, which we believe is the correct treatment of such assets, and, as such, we satisfy
Rule 3a-1’s 45% asset test described above as of December 31, 2023. To our knowledge no court, and neither the SEC nor
the SEC Staff, has taken a definitive position as to the circumstances under which time deposits of the type we hold may or may not be
“cash items” or “investment securities” for purposes of the various definitions of investment company and exclusions
from the definitions under the Investment Company Act. However, we are aware that the SEC Staff may not agree with the treatment of such
time deposits as cash items. If all of our time deposits, regardless of their term, were determined to be investment securities by a court
or the SEC, then we would have held as of December 31, 2023 investment securities exceeding 45% of the value of our total
assets (, exclusive of U.S. government securities and cash items) consists of, and no more than 45%
of our net income after taxes (for the past four fiscal quarters combined) is derived from, securities other than U.S. government securities,
securities issued by employees’ securities companies, securities issued by qualifying majority owned subsidiaries of the Company
and securities issued by qualifying companies that are controlled primarily by the Company. Accordingly, we believe our company satisfies
the requirements set forth in the 45% test in Rule 3a-1 under the Investment Company Act as described in clause (b) of the description
provided above. In addition, we , and the SEC or a court might then determine that we are an investment company under the
provisions of Section 3(a)(1)(C).

We
believe our company is notthat, even if we were determined to be an investment company under Section 3(a)(1)(C),
we are entitled to rely on the exclusion from investment company status afforded by Section 3(b)(1) of the Investment Company
Act because it is primarily engaged in a non-investment company business. . Section 3(b)(1) provides, in
relevant part, that, notwithstanding Section 3(a)(1)(C) of the Investment Company Act, an “issuer primarily engaged, directly
or through . . . wholly-owned . . . subsidiaries, in a business or businesses other than that of investing, reinvesting, owning, holding,
or trading in securities” is not an investment company. We are engaged primarily, and have always since our founding in 1997 been
engaged, through our direct and indirect wholly-owned subsidiaries, including through contracts between our direct and indirect wholly-owned
subsidiaries and the VIEs, in businesses other than investing, reinvesting, or trading in securities (including online games, music streaming,
online intelligent learning services, e-commerce and other internet-related services and products). In addition, (i) our filings
with the SEC, press releases, other public statements, website, and advertising and marketing materials have solely represented the NetEase
group as being engaged in internet-related lines of business and have never emphasized either our investment income or the potential for
significant appreciation from investments or cash management activities as a material factor in our business or future growth, (ii) our
executive officers and directors are substantially involved in our internet-related business activities and none of them devotes significant
time to the management of our cash, short-term or long-term investments, (iii) the overwhelming majority of our income is derived
from our internet-related business activities, and (iv) the nature of our asset base is not a function of investment intent or activity
but rather a result of our generation of cash flow from operations without the need for a corresponding amount of spending on overhead
or capital expenditures for operations. We also do not propose to engage primarily in the business of investing, reinvesting or trading
in securities and monitor our holdings of securities regularly to confirm our continued compliance with the assets and income test described
above.

    3

However,
from time to time we hold and acquire certain securities. We also expect to make investments in other securities from time to time. We
monitor these holdings regularly to confirm our continued compliance with the assets and income test described above.

If,
at any time, we become or are determined to be engaged, or primarily engaged, in the business of investing, reinvesting or trading in
securities, we could become subject to regulationNotwithstanding our view that we are not an investment company given
our ability to rely on Rule 3a-1 under of the Investment Company Act and that, in any event, we fit within the exclusion from the
definition of “investment company” afforded by Section 3(b)(1) of the Investment Company Act, it is possible, in
view of (i) uncertainty regarding the meaning and application of the term “cash items” as it is used in Rule 3a-1
and (ii) the fact that the availability of the exclusion from investment company status afforded by Section 3(b)(1) of
the Investment Company Act is based in part on subjective judgments as to a given issuer’s particular facts and circumstances, that
the SEC, a court, or the SEC Staff would determine or take a position that we are indeed an investment company under the Investment
Company Act. If we were to become subject to the Investment Company Act, any violation of the Investment Company Act could subject us
to material adverse consequences, including potentially significant regulatory penalties and the possibility that certain of our contracts
would be deemed unenforceable. Additionally, as a foreign privatean issuer organized outside the United States,
we would not be eligible to register under the Investment Company Act absent an SEC exemptive order. Accordingly, in order to
fall outside the definition of an investment company, we would either have to obtain exemptive relief from the SEC, modify our contractual
rights or dispose of investments in order to fall outside the definition of an investment company, each of which may have a material
adverse effect on us.certain assets, including shifting some of our cash that is currently maintained in time deposits into
more traditional demand deposits and money market funds, which would more clearly qualify as “cash items.” Additionally,
we may have to forego potential future acquisitions of interests in companies that may be deemed to be investment securities within the
meaning of the Investment Company Act. Finally, failure to avoid being deemed an investment company under the Investment Company Act could
also make us unable to comply with our reporting obligations as a public company in the United States and lead to our being delisted from
Nasdaq Stock Market LLC, which would have a material adverse effect on the liquidity and value of our ADSs and ordinary shares.

*	     *	     *

    4

Should
any member of the Staff have any questions or additional comments regarding the Company’s responses to the Staff’s comment
set forth above, please do not hesitate to contact me at +65 8952 1978 or paulboltz@oc.netease.com or our outside legal
counsel, George B. Raine of Ropes & Gray LLP, at +1 617 951 7556 or george.raine@ropesgray.com.

    Very
    truly yours,

    /s/
    Paul W. Boltz, Jr.

    Paul
    W. Boltz, Jr.

    General
    Counsel

cc:	     George B. Raine, Ropes &
Gray LLP

    5

United States securities and exchange commission logo
March 27, 2024
William Lei Ding
Chief Executive Officer
NetEase, Inc.
NetEase Building
No. 599 Wangshang Road
Binjiang District, Hangzhou, 310052
People’s Republic of China
Re:NetEase, Inc.
Form 20-F for the Fiscal Year Ended December 31, 2022
Response dated September 22, 2023
File No. 000-30666
Dear William Lei Ding:
            We have reviewed your September 22, 2023 response to our comment letter and have the
following comment.
            Please respond to this letter within ten business days by providing the requested
information or advise us as soon as possible when you will respond. If you do not believe a
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this letter, we may have additional comments.
Form 20-F for the Fiscal Year Ended December 31, 2022
General
1.We note your September 22, 2023 response to the staff’s questions about your treatment
of certain deposit arrangements “with original maturities of twelve months or fewer” for
purposes of Rule 3a-1 under the Investment Company Act of 1940, as amended
(“Company Act”). Please note that, based on your description of such assets, we do not
necessarily agree with your view that the deposit arrangements may be treated as “cash
items” for purposes of Rule 3a-1. Please supplement the risk factor in your June 30, 2023
response regarding the company’s status under the Company Act to reflect the foregoing
and provide us with the proposed disclosures that you will include in future filings.

 FirstName LastNameWilliam Lei Ding
 Comapany NameNetEase, Inc.
 March 27, 2024 Page 2
 FirstName LastName
William Lei Ding
NetEase, Inc.
March 27, 2024
Page 2
            Please contact Megan Akst at 202-551-3407 or Christine Dietz at 202-551-3408 if you
have questions regarding comments on the financial statements and related matters.
Sincerely,
Division of Corporation Finance
Office of Technology

CORRESP
1
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CONFIDENTIAL TREATMENT
REQUESTED BY NETEASE, INC.

September 22, 2023

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

Office of Technology

100 F Street, NE

Washington, D.C. 20549

Attn: Megan Akst

  Christine Dietz

Re: NetEase, Inc.

Form 20-F for the Fiscal Year Ended December 31,
2022 Filed April 27, 2023

Correspondence from the SEC on August 25, 2023
and Follow-up to Correspondence from the SEC on June 5, 2023

File No. 000-30666

Dear Ms. Akst and Ms. Dietz,

This letter sets forth the response of NetEase, Inc. (the “Company”)
to the comment (the “Comment”) that the Company received from the staff (the “Staff”) of the Securities and Exchange
Commission in a letter dated August 25, 2023 in relation to the Company’s response letter dated August 4, 2023 (the “Second
Response”) to the Commission’s comment letter dated July 21, 2023 regarding the Company's annual report on Form 20-F
for the fiscal year ended December 31, 2022. We have included the Comment in bold, and the Company’s responses are set forth
immediately below the Comment. Additionally, for ease of reference, we have included the relevant portion of the Second Response in Appendix
A hereto, and the relevant portion of the Company’s response letter dated June 30, 2023 (the “First Response”
and together with the Second Response, the “Prior Responses”) in Appendix B hereto.

Furthermore, in Appendix C hereto we have included certain follow-up
information in response to comment #2 contained in the SEC’s comment letter to the Company dated June 5, 2023 and the Company’s
reply thereto in the First Response.

1. We note your response to prior comment 3 regarding the proposed treatment of certain deposit arrangements “with original
maturities of twelve months or fewer” as “cash” for purposes of Rule 3a-1 under the Investment Company Act of 1940.
Based on the information you have provided to date, we are unable to concur with your position that these arrangements can be treated
as cash items for purposes of Rule 3a-1. In this regard, we note that you have not provided a sufficiently detailed description of
the material terms of the deposit arrangements, together with an analysis regarding why, specifically, such terms establish that the deposit
arrangements may be treated as cash consistent with applicable Commission or staff guidance. Please provide such description and analysis
to the extent that you believe that it would establish that these deposit arrangements are eligible to be treated as cash items under
the rule. Please also clarify whether you still believe the company is eligible to rely on Rule 3a-1 without treating the relevant
deposit arrangements as cash items.

Response

[Redacted – Confidential Treatment Requested]

*          *          *

    1

CONFIDENTIAL TREATMENT REQUESTED BY NETEASE, INC.

Should
any member of the Staff have any questions or additional comments regarding the Company’s responses to the Staff’s Comments
set forth above, please do not hesitate to contact me at +852 92792755 or paulboltz@oc.netease.com or our outside legal
counsel, George B. Raine of Ropes & Gray LLP, at +1 617 951 7556 or george.raine@ropesgray.com.

  Very truly yours,

  /s/ Paul W. Boltz, Jr.

  Paul W. Boltz, Jr.

  International General Counsel

 cc: Charles Yang, Chief Financial Officer of NetEase, Inc.

George B. Raine, Ropes & Gray LLP

    2

CONFIDENTIAL TREATMENT REQUESTED BY NETEASE, INC.

Appendix A

August 4 Response to SEC Comments

General

 2. We note your response to prior comment 6. You state that
the company believes that it satisfies the	exception from the definition of investment company provided in Section 3(b)(1) of
the Investment	Company Act (the “Company Act”), which provides that an issuer is not an “investment company”
within the meaning of the Company Act if it is “primarily engaged, directly or through a wholly-owned subsidiary or subsidiaries,
in a business or businesses other than that of investing, reinvesting, owning, holding, or trading in securities.” Please explain
the basis for this conclusion, including a detailed discussion of the factors outlined in Tonapah Mining Company of Nevada, 26
SEC 426 (1947) and the application of those factors to the company. In your response, please also explain how the company’s variable
interest entities qualify as wholly-owned subsidiaries as defined in Section 2(a)(43) of the	Company Act.

Response

[Redacted – Confidential Treatment Requested]

 3. Your response to prior comment 6, further states that the company qualifies for the exception from Section 3(a)(1)(C)’s
definition of investment company found in Rule 3a-1 under the Company Act. We note the following in connection with your assertions
and supplemental worksheet:

 • Please provide a detailed legal analysis regarding your proposed treatment of certain deposit arrangements “with original
maturities of twelve months or fewer” as “cash” for purposes of Rule 3a-l, discussing any applicable Commission
or staff statements bearing on this issue.

Response

[Redacted – Confidential Treatment Requested]

 • Your 45% test worksheet (“Worksheet”) notes that certain assets are valued at “equity value.” Please confirm
whether the assets on the Worksheet are valued in accordance with Section 2(a)(41) of the Company Act. If not, please update your
analysis to reflect assets valued consistent with Section 2(a)(41) of the Company Act.

Response

The calculations contained in the Prior Response were calculated
in accordance with Section 2(a)(41) of the Company Act. Where market quotations were readily available for an entity’s securities,
market quotations were used in the calculations. Where market quotations for an entity’s securities were not readily available,
the securities were fair valued in good faith and the fair value was used in the calculations.

    A-1

CONFIDENTIAL TREATMENT REQUESTED BY NETEASE, INC.

 • Please provide additional support on your Worksheet for the income test calculation at the company-level to substantiate your assertion
that the company’s securities represented below 45% of the company’s income as of December 31, 2022.

Response

In response to this section of Comment 3, the Company has
added an additional page to the worksheet titled “Group level 45% income test.”

 • We note that your Worksheet lists twelve subsidiaries under the “income test,” but only lists eleven subsidiaries under
the “asset test.” Please explain this discrepancy.

Response

The worksheets for the income test and the asset test list
the same eleven groups of subsidiaries. The reason that the list for the income test has twelve lines while the list for the asset test
has eleven lines is that the asset test for NetEase, Inc. on a semi-consolidated basis in accordance with Rule 3a-l was contained
on its own page in the worksheet in the Prior Response1 and followed by a page that displayed the asset testing
results for eleven groups of the Company’s subsidiaries, also tested in compliance with Rule 3a-l. On the other hand, the income
test page of the worksheet contained both the testing result for NetEase, Inc. on a semi-consolidated basis in accordance
with Rule 3a-l (See line 1) and the testing results for the same eleven groups of the Company’s subsidiaries, also tested
in compliance with Rule 3a-l. Please refer to the updated worksheet included in this response.

Please update your Worksheet and investment company status
analysis to reflect the above comments. Please confirm whether you still believe that the company is eligible to rely on Rule 3a-l
under the Company Act.

Response

As
stated herein, the Company has updated its Worksheet in response to the above comments. The Company continues to believe that it satisfies
the exception from the definition of investment company provided in Section 3(b)(1) of the Company Act and, additionally, that
it qualifies for the exception from Section 3(a)(l)(C)’s definition of investment company found in Rule 3a-l under
the Company Act.

1 The page titled “group level 45% asset test”.

    A-2

CONFIDENTIAL TREATMENT REQUESTED BY NETEASE, INC.

Appendix B

NetEase Response to Comment 6 Filed with
the SEC June 30, 2023

 6. We note your statement that NetEase, Inc. is a holding company with no significant assets other than cash on hand and its
equity interests in its directly and indirectly- owned subsidiaries. Please provide us with a legal analysis of whether you currently
meet the definition of “investment company” under Section 3(a)(1)(C) of the Investment Company Act (the “Company
Act”). Please include in your analysis the relevant calculation(s) under Section 3(a)(1)(C) (including, where required
by the statute, on an unconsolidated basis), identifying each constituent part of the numerator(s) and denominator(s). Your analysis
should identify and explain which assets held by the company are “investment securities” for purposes of Section 3(a)(2) of
the Company Act, and specifically address how you treat the securities issued by your subsidiaries and the contractual relationships between
your subsidiaries and the variable interest entities. Please provide legal support for any substantive determinations and/or characterizations
of assets that are material to your calculations.

Response

The Company respectfully advises the Staff that the Company
is not an investment company as defined in the Company Act. The Company believes that it satisfies the exception from the definition of
investment company provided in Section 3(b)(1) of the Company Act because, within the meaning of the Company Act, it is primarily
engaged through its wholly owned subsidiaries in the business of providing internet-related services and products and therefore not in
the business of investing, reinvesting or trading in securities.

Though the Company is primarily engaged in the business stated
above through its wholly owned subsidiaries the Company’s structure also includes variable interest entities (“VIEs”).
As discussed below, for purposes of Section 3(b)(1) the Company treats the VIEs as wholly owned subsidiaries. Additionally,
a portion of the Company’s subsidiaries are not wholly owned by the Company. While the non-wholly owned companies are also engaged
in the Company’s non-investment company business, they do not comprise a significant portion of the Company’s total assets
or total net revenues. Because of this, the Company treats itself as primarily engaged through its wholly owned subsidiaries in a non-investment
company business.

The VIEs exist in the Company’s structure solely due
to PRC regulatory restrictions on foreign investment in the certain industries. But for such restrictions, the VIEs would be wholly owned
subsidiaries of the Company and, as discussed below, the VIEs are effectively treated as wholly owned subsidiaries of the Company in all
material respects.

Although
the Company, through its wholly owned subsidiaries, does not own 95% or more of each VIE’s outstanding voting securities, the Company
has the ability to exercise, via certain contractual arrangements, the type of substantial control over the VIEs that a parent
company of a wholly owned subsidiary typically could exercise. The contractual arrangements give the Company the power to exert control
over the management and financial and operating policies of each VIE to the extent that such power and control effectually operates as
owning over 95% of each VIE’s outstanding voting securities. The Company also has an exclusive option to purchase all or part of
the equity interests of each VIE at the minimum price possible to the extent permitted by PRC law. These attributes allow the Company
to be considered the primary beneficiary of each VIE for accounting purposes and to consolidate each VIE’s operating results into
the Company’s financial statements under the U.S. GAAP. Therefore, the Company treats the VIEs as if they were wholly owned subsidiaries
for purposes of its financial statements and its Company Act analysis under Section 3(b)(1).

    B-1

CONFIDENTIAL TREATMENT REQUESTED BY NETEASE, INC.

Though the Company treats VIEs as wholly owned subsidiaries
for the purposes of its analysis under Section 3(b)(1), understanding that the VIEs have a more complicated corporate structure,
the Company also monitors its compliance with another exception from the definition of investment company that would allow the Company
to not be an investment company were the Company to treat the VIEs as not being wholly owned subsidiaries. The Company tests the Company’s
and its various subsidiaries’ assets and income for compliance with Rule 3a-1 under the Company Act. The Company respectfully
advises the Staff that in addition to satisfying the requirements of the exclusion from the definition of investment company found in
Section 3(b)(1), the Company also qualifies for the exception from Section 3(a)(l)(C)’s definition of investment company
found in Rule 3a-l under the Company Act.

For the Staff s reference, the Company is submitting, under
a separate cover and on a confidential, supplemental basis, (i) the semi-consolidated 45% test worksheet of the Company and its subsidiaries
and VIEs as of December 31, 2022 (the “Worksheet”) and (ii) a corporate structure chart for the Company as of December 31,
2022. The Worksheet includes a calculation of the value of the securities owned by the Company expressed as a percentage of the value
of its adjusted total assets, calculated in accordance with the 45% test contained in Rule 3a-l under Company Act (the “45%
Test”), as well as separate calculations for each of its majority-owned subsidiaries and their related VIEs. As discussed above,
the Company is the holding company for the Company’s business, which is carried out by various wholly owned subsidiaries, the VIEs,
certain majority owned subsidiaries and the VIEs with contractual arrangements with those majority owned subsidiaries.

The
Rule 3a-l safe harbor is similar to the quantitative test in Section 3(a)(1)(C) but adds companies “controlled primarily”
by the issuer to the list of “good” assets. Further, unlike the test in Section 3(a)(1)(C), the total assets and net
income tests in Rule 3a-l are calculated on a semi-consolidated basis with respect to the issuer and its subsidiaries. For purposes
of its 45% Test, the Company treats the VIEs as companies “controlled primarily” by the Company. Further, as required by Rule 3a-1
the Company consolidates its financial statements with its wholly owned subsidiaries such that the Company treats the assets and
income of the wholly owned subsidiaries as if the assets were held and the income was earned by the Company.

The 45% Test is a bottom-up analysis and requires the 45%
Test calculation be performed for each non-wholly owned entity in the Company’s corporate structure, starting with the majority-owned
subsidiaries and VIEs at the bottom of the corporate structure, and working up to the holding company.

    B-2

CONFIDENTIAL TREATMENT REQUESTED BY NETEASE, INC.

For each majority-owned subsidiary or VIE controlled by
a majority-owned subsidiary that fails the 45% Test or is engaged primarily in the business of investing, reinvesting, or trading in
securities or engaged in the business of issuing face-amount certificates of the installment type (i.e., an investment company), the
Company treats the securities issued by such majority-owned subsidiary or VIE as bad assets (i.e., securities) for purposes of calculating
the 45% Test of the immediate parent entity of such subsidiary or VIE. For each majority-owned subsidiary or VIE that is not an investment
company, the Company treats the securities issued by such subsidiary or VIE as a good asset (i.e., not a security) for purposes of calculating
the 45% Test of the immediate parent entity of such majority- owned subsidiary or VIE.

Due to the nature of the Company’s busin

CORRESP
1
filename1.htm

    September 7, 2023

    VIA EDGAR

    U.S. Securities and Exchange Commission

    Division of Corporation Finance

    Office of Technology

    100 F Street, NE

    Washington, D.C. 20549

    Attn:

    Megan Akst

    Christine Dietz

    Re:

    NetEase, Inc. Form 20-F for the Fiscal Year Ended December 31,
    2022 Filed April 27, 2023

    Correspondences from the SEC on August 25, 2023

    File No. 000-30666

Dear Ms. Akst and Ms. Dietz,

Further to your phone conversation with our counsel, Ropes &
Gray LLP, on September 6, 2023, I am writing to confirm the Company’s request for a ten (10) business day extension
to the deadline for responding to the comments raised by the Staff of the Securities and Exchange Commission’s Division of Corporation
Finance (the “Staff”) in its letter to the Company dated August 25, 2023 (the “Comment Letter”), with respect
to the above referenced public report on Form 20-F and the Company’s response. Therefore, we expect to respond to the Staff’s
Comment Letter by no later than September 22, 2023. We extend our thanks to the Staff for allowing this extension. Should you have
any questions or require additional information, please do not hesitate to contact me at +852-9279-2755 or paulboltz@oc.netease.com or
our outside legal counsel, George B. Raine of Ropes & Gray LLP, at +1 617-951-7556 or george.raine@ropesgray.com.

Sincerely,

    /s/ Paul W. Boltz, Jr.

Paul W. Boltz, Jr.,

International General Counsel

cc: Charles Yang, Chief Financial Officer of NetEase, Inc.

George B. Raine, Ropes & Gray LLP

United States securities and exchange commission logo
August 25, 2023
William Lei Ding
Chief Executive Officer
NetEase, Inc.
NetEase Building
No. 599 Wangshang Road
Binjiang District, Hangzhou, 310052
People’s Republic of China
Re:NetEase, Inc.
Form 20-F for the Fiscal Year Ended December 31, 2022
Filed April 27, 2023
File No. 000-30666
Dear William Lei Ding:
            We have reviewed your August 4, 2023 response to our comment letter and have the
following comments.  In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.
            Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response to these comments, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
July 21, 2023 letter.
Form 20-F for the Fiscal Year Ended December 31, 2022
General
1.We note your response to prior comment 3 regarding the proposed treatment of certain
deposit arrangements “with original maturities of twelve months or fewer” as “cash” for
purposes of Rule 3a-1 under the Investment Company Act of 1940. Based on the
information you have provided to date, we are unable to concur with your position that
these arrangements can be treated as cash items for purposes of Rule 3a-1. In this regard,
we note that you have not provided a sufficiently detailed description of the material terms
of the deposit arrangements, together with an analysis regarding why, specifically, such
terms establish that the deposit arrangements may be treated as cash consistent with

 FirstName LastNameWilliam Lei Ding
 Comapany NameNetEase, Inc.
 August 25, 2023 Page 2
 FirstName LastName
William Lei Ding
NetEase, Inc.
August 25, 2023
Page 2
applicable Commission or staff guidance. Please provide such description and analysis to
the extent that you believe that it would establish that these deposit arrangements are
eligible to be treated as cash items under the rule. Please also clarify whether you still
believe the company is eligible to rely on Rule 3a-1 without treating the relevant deposit
arrangements as cash items.
            You may contact Megan Akst, Senior Staff Accountant, at (202) 551-3407 or Christine
Dietz, Senior Staff Accountant, at (202) 551-3408 if you have any questions.
Sincerely,
Division of Corporation Finance
Office of Technology

CORRESP
1
filename1.htm

THIS CORRESPONDENCE HAS BEEN REDACTED AND IS THE
SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST

August 4, 2023

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

Office of Technology

100 F Street, NE

Washington, D.C. 20549

    Attn:

    Megan Akst

    Christine Dietz

    Re:

    NetEase, Inc.

    Form 20-F for the Fiscal Year Ended December 31, 2022
    Filed April 27, 2023

    Correspondences from the SEC on July 21, 2023

    File No. 000-30666

Dear Ms. Akst and Ms. Dietz,

This letter sets forth the responses of NetEase, Inc. (the “Company”)
to the comments (the “Comments”) that the Company received from the staff (the “Staff”) of the Securities and
Exchange Commission in a letter dated July 21, 2023 in relation to the Company’s response letter dated June 30, 2023
(the “Prior Response”) to the Commission’s comment letter dated June 5, 2023 regarding the Company’s annual
report on Form 20-F for the fiscal year ended December 31, 2022 (the “2022 Annual Report”). We have included the
Comments in bold, and the Company’s responses are set forth immediately below the Comments.

Form 20-F for the Fiscal Year Ended December 31, 2022

Item 5. Operating and Financial Review and Prospects

Factors Affecting our Results of Operations, page 123

 1. We note your response to prior comment 1. Please revise future
filings to quantify and discuss monthly active users for your Cloud Music business for each period presented.

Response

The Company notes the Staff’s comment and will include
information on the number of monthly active users for Cloud Music for each period presented in future annual reports on Form 20-F.

    1

THIS CORRESPONDENCE HAS BEEN REDACTED AND IS THE
SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST

 General

 2. We note your response to prior comment 6. You state that
the company believes that it satisfies the exception from the definition of investment company provided in Section 3(b)(1) of
the Investment Company Act (the “Company Act”), which provides that an issuer is not an “investment company”
within the meaning of the Company Act if it is “primarily engaged,
directly or through a wholly-owned subsidiary or subsidiaries, in a business or businesses other than that of investing, reinvesting,
owning, holding, or trading in securities.” Please explain the basis for this conclusion, including a detailed discussion of the
factors outlined in Tonapah Mining Company of Nevada, 26 SEC 426 (1947) and the application of those factors to the company. In
your response, please also explain how the company’s variable interest entities qualify as wholly-owned subsidiaries as defined
in Section 2(a)(43) of the Company Act.

Response

[Redacted – Confidential Treatment Requested]

 3. Your response to prior comment 6, further states that the
company qualifies for the exception from Section 3(a)(1)(C)’s definition of investment company found in Rule 3a-1 under
the Company Act. We note the following in connection with your assertions and supplemental worksheet:

 · Please provide a detailed legal analysis regarding your proposed
                                            treatment of certain deposit arrangements “with original maturities of twelve months
                                            or fewer” as “cash” for purposes of Rule 3a-1, discussing any applicable
                                            Commission or staff statements bearing on this issue.

Response

[Redacted – Confidential Treatment Requested]

 · Your 45% test worksheet (“Worksheet”) notes that certain
                                            assets are valued at “equity value.” Please confirm whether the assets on the
                                            Worksheet are valued in accordance with Section 2(a)(41) of the Company Act. If not,
                                            please update your analysis to reflect assets valued consistent with Section 2(a)(41)
                                            of the Company Act.

Response

The calculations contained in the Prior Response were calculated
in accordance with Section 2(a)(41) of the Company Act. Where market quotations were readily available for an entity’s securities,
market quotations were used in the calculations. Where market quotations for an entity’s securities were not readily available,
the securities were fair valued in good faith and the fair value was used in the calculations.

 · Please provide additional support on your Worksheet for the income
                                            test calculation at the company-level to substantiate your assertion that the company’s
                                            securities represented below 45% of the company’s income as of December 31, 2022.

Response

In response to this section of Comment 3, the Company has
added an additional page to the worksheet titled “Group level 45% income test.”

    2

THIS CORRESPONDENCE HAS BEEN REDACTED AND IS THE
SUBJECT OF A CONFIDENTIAL TREATMENT REQUEST

 · We note that your Worksheet lists twelve subsidiaries under the
                                            “income test,” but only lists eleven subsidiaries under the “asset test.”
                                            Please explain this discrepancy.

Response

The worksheets for the income test and the asset test list
the same eleven groups of subsidiaries. The reason that the list for the income test has twelve lines while the list for the asset test
has eleven lines is that the asset test for NetEase, Inc. on a semi-consolidated basis in accordance with Rule 3a-1 was contained
on its own page in the worksheet in the Prior Response1
and followed by a page that displayed the asset testing results for eleven groups of the Company’s subsidiaries,
also tested in compliance with Rule 3a-1. On the other hand, the income test page of the worksheet contained both the
testing result for NetEase, Inc. on a semi-consolidated basis in accordance with Rule 3a-1 (See line 1) and the testing
results for the same eleven groups of the Company’s subsidiaries, also tested in compliance with Rule 3a-1. Please refer to
the updated worksheet included in this response.

Please update your Worksheet and investment company
status analysis to reflect the above comments. Please confirm whether you still believe that the company is eligible to rely on Rule 3a-1
under the Company Act.

Response

As stated herein, the Company has updated its Worksheet
in response to the above comments. The Company continues to believe that it satisfies the exception from the definition of investment
company provided in Section 3(b)(1) of the Company Act and, additionally, that it qualifies for the exception from Section 3(a)(1)(C)’s
definition of investment company found in Rule 3a-1 under the Company Act.

*      *      *

Should any member of the Staff have any questions or additional
comments regarding the Company’s responses to the Staff’s Comments set forth above, please do not hesitate to contact me
at +852 9279-2755 or paulboltz@oc.netease.com or our outside legal counsel, George B. Raine of Ropes & Gray LLP, at +1 617 951
7556 or george.raine@ropesgray.com.

    Very truly yours,

    /s/ Paul W. Boltz, Jr.

    Paul W. Boltz, Jr.

    International General Counsel

    cc:
    Charles Yang, Chief Financial Officer of NetEase, Inc.

    George B. Raine, Ropes & Gray LLP

1
The page titled “group level 45% asset test”.

    3

United States securities and exchange commission logo
July 21, 2023
William Lei Ding
Chief Executive Officer
NetEase, Inc.
NetEase Building
No. 599 Wangshang Road
Binjiang District, Hangzhou, 310052
People’s Republic of China
Re:NetEase, Inc.
Form 20-F for the Fiscal Year Ended December 31, 2022
Filed April 27, 2023
File No. 000-30666
Dear William Lei Ding:
            We have reviewed your June 30, 2023 response to our comment letter and have the
following comments.  In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.
            Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response to these comments, we may have additional
comments.  Unless we note otherwise, our references to prior comments are to comments in our
June 5, 2023 letter.
Form 20-F for the Fiscal Year Ended December 31, 2022
Item 5. Operating and Financial Review and Prospects
Factors Affecting our Results of Operations, page 123
1.We note your response to prior comment 1.  Please revise future filings to quantify and
discuss monthly active users for your Cloud Music business for each period presented.

 FirstName LastNameWilliam Lei Ding
 Comapany NameNetEase, Inc.
 July 21, 2023 Page 2
 FirstName LastName
William Lei Ding
NetEase, Inc.
July 21, 2023
Page 2
General
2.We note your response to prior comment 6.  You state that the company believes that it
satisfies the exception from the definition of investment company provided in Section
3(b)(1) of the Investment Company Act (the “Company Act”), which provides that an
issuer is not an “investment company” within the meaning of the Company Act if it is
“primarily engaged, directly or through a wholly-owned subsidiary or subsidiaries, in a
business or businesses other than that of investing, reinvesting, owning, holding, or
trading in securities.”  Please explain the basis for this conclusion, including a detailed
discussion of the factors outlined in Tonapah Mining Company of Nevada, 26 SEC 426
(1947) and the application of those factors to the company.  In your response, please also
explain how the company’s variable interest entities qualify as wholly-owned subsidiaries
as defined in Section 2(a)(43) of the Company Act.
3.Your response to prior comment 6, further states that the company qualifies for the
exception from Section 3(a)(1)(C)’s definition of investment company found in Rule 3a-1
under the Company Act.  We note the following in connection with your assertions and
supplemental worksheet:

•Please provide a detailed legal analysis regarding your proposed treatment of certain
deposit arrangements “with original maturities of twelve months or fewer” as “cash”
for purposes of Rule 3a-1, discussing any applicable Commission or staff statements
bearing on this issue.
•Your 45% test worksheet (“Worksheet”) notes that certain assets are valued at
“equity value.” Please confirm whether the assets on the Worksheet are valued in
accordance with Section 2(a)(41) of the Company Act. If not, please update your
analysis to reflect assets valued consistent with Section 2(a)(41) of the Company Act.
•Please provide additional support on your Worksheet for the income test calculation
at the company-level to substantiate your assertion that the company’s securities
represented below 45% of the company’s income as of December 31, 2022.
•We note that your Worksheet lists twelve subsidiaries under the “income test,” but
only lists eleven subsidiaries under the “asset test.” Please explain this discrepancy.

Please update your Worksheet and investment company status analysis to reflect the
above comments.  Please confirm whether you still believe that the company is eligible to
rely on Rule 3a-1 under the Company Act.
            You may contact Megan Akst, Senior Staff Accountant at (202) 551-3407 or Christine
Dietz, Senior Staff Accountant at (202) 551-3408 if you have any questions.
Sincerely,
Division of Corporation Finance

 FirstName LastNameWilliam Lei Ding
 Comapany NameNetEase, Inc.
 July 21, 2023 Page 3
 FirstName LastName
William Lei Ding
NetEase, Inc.
July 21, 2023
Page 3
Office of Technology

CORRESP
1
filename1.htm

    June 30, 2023

    VIA EDGAR

    U.S. Securities and Exchange Commission

    Division of Corporation Finance

    Office of Technology

    100 F Street, NE

    Washington, D.C. 20549

    Attn:

    Megan Akst

    Christine Dietz

    Kyle Wiley

    Jennifer Thompson

    Re:

    NetEase, Inc.

    Form 20-F for the Fiscal Year Ended December 31,
2022 Filed April 27, 2023

    Correspondences from the SEC on June 5, 2023

    File No. 000-30666

Dear Ms. Akst, Ms. Dietz, Mr. Wiley and
Ms. Thompson,

This letter sets forth the responses of NetEase, Inc. (the “Company”)
to the comments (the “Comments”) that the Company received from the staff (the “Staff”) of the Securities and
Exchange Commission in a letter dated June 5, 2023 (the “Comment Letter”) in relation to the Company’s Form 20-F
for the fiscal year ended December 31, 2022 (the “2022 Annual Report”). We have included the Comments in bold, and the
Company’s responses are set forth immediately below the Comments.

Form 20-F for the Fiscal Year Ended December 31, 2022

Item 5. Operating and Financial Review and Prospects

Factors Affecting our Results of Operations, page 123

1. You indicate that your ability to grow your user base and
drive user engagement and loyalty is a key factor affecting your results of operations. Considering you generate a substantial portion
of your revenue from mobile game users, please tell us your consideration to quantify and discuss daily active users for each period
presented, or explain why you do not consider this to be a key performance measure in analyzing your revenue. Similarly, in light of
the growth in Cloud Music, tell us your consideration to quantify and discuss monthly average users for each period presented. Refer
to SEC Release No. 33-10751.

Response

In response to the Staff’s comment, the Company respectfully
submits that in preparing its disclosure for Item 5 of the 2022 Annual Report, the Company evaluated which information is necessary to
provide readers with an understanding of the Company’s online game business, as required in the instructions to Item 5. As discussed
qualitatively in “Factors Affecting Our Results of Operations” in the 2022 Annual Report, the overall size and growth of the
user bases for the Company’s various services and products is one factor that affects its results of operations. However, the Company
determined that quantitative disclosure regarding players of its online games, such as daily active users or monthly average users, from
period to period does not by itself provide a useful explanation of the Company’s current or future results because there are a
number of additional relevant factors that are not reflected in user numbers, as discussed below.

    1

In particular, the Company
notes that, as disclosed in Item 4 of the 2022 Annual Report, it offers a very large portfolio of games in distinct genres such
as role-playing games, collectible card games, simulation battles, casual party games, battle arena games and massively multi-player online
role-playing games, and the Company’s mobile games generate revenues from sales of in-game virtual items. Such sales are, however,
affected by the specific operational characteristics of the games such as, for example, the types of items which are purchasable (as noted
on page 72 of the 2022 Annual Report, these items include avatars, skills, privileges and other in-game consumables, features and
functionalities), the pricing and popularity of each virtual item, and the amount of gameplay which is available without the purchase
of virtual items and related factors. Moreover, as further explained in Item 5.A “Factors Affecting Our Results of Operations”
in the 2022 Annual Report, the Company’s results of operations are also affected by the level of user engagement, which in the context
of games primarily refers to the total amount of playing time by users and frequency of purchases of virtual items. Additionally, the
revenues generated from games depend to an extent on the proportion of players who are playing games developed in-house by the Company,
games co-developed with third parties or licensed games.

While a large and growing user base is a general indication
of the popularity of the Company’s portfolio of games as a qualitative matter, quantitative disclosure of daily active users or
monthly average users would not take into account the nuances of their purchasing behavior or the other factors mentioned above and could
thus be misleading in that an X% increase in daily active users in Year 1 may not equate to a proportional increase in revenues or net
income in the same or subsequent years. Also, the Company notes the fact that it operates numerous games, the portfolio of games offered
changes from year to year, and the operational characteristics of the different games are too granular to succinctly summarize for readers.
For these reasons, the Company respectfully submits that it does not have a reasonable basis to explain if and to what extent specific
changes in user statistics from year to year may or may not be indicative of past or future financial performance.

To further explain the factors affecting results from the
Company’s online game business discussed above, the Company will revise the following subsection in Item 5.A “Factors Affecting
Our Results of Operations” in its future Form 20-F filings, subject to updates and adjustments to be made in connection with
any material development of the subject matter being disclosed:

Our ability
to grow our user base and drive user engagement and loyalty, as well as the mix of products and services purchased by our users

We
have built a massive and highly engaged user base across our business segments. We generate a substantial part of our revenues through
sales of in-game virtual items and play time, merchandise sales, music streaming, advertising services and tuition fees for online courses.
Our ability to generate these revenues is affected by the size of our user base and the level of their engagement, including, for example,
the amount of time played on our games and the frequency of in-game purchases of virtual items. Our ability to continue to grow our
user base and engagement is driven by various factors, including our ability to offer diverse, attractive and relevant content and services,
deliver differentiated and superior user experiences, improve the community features on our platforms and enhance our brand reputation.
In addition, our results are affected by the mix of products and services purchased by our users. For example, with respect to online
games, our revenues depend in part on the types of virtual items purchased in-game and their pricing, as well as the proportion of players
who are playing games developed in-house by the Company, games co-developed with third parties or licensed games.

    2

The Company further notes that, in contrast to the Company’s
online game services, its Cloud Music business offers a single music subscription platform so the number of monthly average users more
directly correlates with the financial results of that business and can be more readily determined. Such information is also relatively
comparable across the music streaming industry, and thus it is common for participants in this industry such as Cloud Music to disclose
monthly average users (as opposed to the online game industry where it is not customary in the industry to report detailed user statistics).
Cloud Music’s monthly average users can be found on page 81 of the 2022 Annual Report.

Item 16I. Disclosure Regarding
Foreign Jurisdictions that Prevent Inspections, page 194

2. We note your statement that you reviewed your register of members and public filings made by your shareholders, in connection with
your required submission under paragraph (a). Please supplementally describe any additional materials that were reviewed and tell us whether
you relied upon any legal opinions or third party certifications such as affidavits as the basis for your submission. In your response,
please provide a similarly detailed discussion of the materials reviewed and legal opinions or third party certifications relied upon
in connection with the required disclosures under paragraphs (b)(2) and (3).

Response

The Company confirms that it has reviewed the list of holders
of ordinary shares registered on its register of members in the Cayman Islands and its register of members in Hong Kong, as well as the
list of registered holders of American depositary shares of the Company maintained by The Bank of New York Mellon, the depositary bank
for the Company’s American depositary share program. It also reviewed the public filings made by the Company’s ADS holders
and shareholders, including filings on Schedule 13D, Schedule 13G and Form 13F and pursuant to the beneficial ownership notification
requirements of the Hong Kong Securities and Futures Ordinance with respect to the Company’s ordinary shares traded on the Hong
Kong Stock Exchange. In reviewing these lists, the Company noted any shareholders which had an address of record in China mainland or
the Cayman Islands, or whose entity names contained the words “China,” “Cayman Islands” or derivatives thereof
or who appeared to use Chinese words in their names.  For this subset of shareholders, the Company compared the names of these shareholders
to known governmental bodies, agencies and entities that are affiliated with any part of the governments in China mainland or the Cayman
Islands and determined that there were no such affiliations known to us.  The Company also determined that none of these shareholders
held more than 16,123,802 ordinary shares (or 3,224,760 ADSs), which is equivalent to approximately 0.5% of the Company’s outstanding
voting interests. The Company further notes that it reviewed the list of participants holding the Company's ordinary shares in the Central
Clearing and Settlement System (CCASS), a book-entry clearing and settlement system for transactions between participants in securities
listed on the Hong Kong Stock Exchange. CCASS participants are banks and brokerages which normally hold shares on behalf of their clients.
As is typical for shares listed in Hong Kong, the list of CCASS participants holding the Company's ordinary shares included several Chinese
state-owned banks, and the Company believes such participants are acting as custodians holding securities on behalf of their clients.
As a follow-up to the Staff's comment, the Company has requested that its Hong Kong share registrar contact the relevant CCASS participants
to attempt to determine if they are holding the ordinary shares on behalf of investors and will provide an update to the Staff if the
results indicate otherwise (but the Hong Kong share registrar will not be able to confirm the identities of the ultimate beneficial owners
of the ordinary shares through this process). As an additional follow-up to the Staff’s comment, the Company also engaged a third-party
financial services firm to conduct a non-objecting beneficial owner (NOBO) search with respect to the Company’s American depositary
shareholders and found that, of the more than 91,000 shareholders named on such list, two appear to be affiliated with state-owned entities
which together own American depositary shares representing approximately 0.00007% of the Company’s total outstanding ordinary shares.

    3

In addition, the Company asked each of its directors
or officers whether they are a member of the Chinese Communist Party (the “CCP”) or employed by any governmental entity
in China mainland or the Cayman Islands. The Company also asked each of its directors and officers to confirm if they were aware of
any governmental entities in the People’s Republic of China (including Hong Kong and Macau) or
the Cayman Islands which own any ADSs or ordinary shares of the Company, or if they were aware of any governmental entities in the
People’s Republic of China (including Hong Kong and Macau) which have a controlling financial interest with respect to the
Company. All of the Company’s directors and officers responded NO to these questions.

With respect to its consolidated foreign operating entities,
the Company reviewed the list of record and beneficial owners of each such entity and applied the same procedures described in the preceding
paragraph for purposes of paragraphs (b)(2) and (b)(3) of Item 16I on Form 20-F. For its two publicly listed subsidiaries,
Youdao, Inc. and Cloud Music Inc., the Company also reviewed the public filings made by the subsidiaries’ ADS holders and shareholders,
including filings on Schedule 13D, Schedule 13G and Form 13F and pursuant to the beneficial ownership notification requirements of
the Hong Kong Securities and Futures Ordinance. In addition, please note that the Company has majority or complete control over the voting
interests of these consolidated foreign operating entities, which necessarily precludes control by any governmental entity.

The Company did not request
any legal opinions to support its disclosures in Item 16I, paragraph (a) and paragraphs (b)(2) and (b)(3) of the 2022
Annual Report, because these disclosures do not appear to be questions of law, but instead, appear to be factual inquiries.  The
Company inquired of several law firms, and they said that they were not willing to give a legal opinion to support the Company’s
disclosures for Item 16I in paragraph (a), (b)(2) or (b)(3).   The Company also did not request any affidavits to support
the factual determinations, because the factual determinations relate solely to the Company and are not otherwise matters that are within
the knowledge or responsibility of third parties.

    4

3. We note that your disclosure pursuant to Item 16I(b)(2) is provided for “our company or any of such variable interest
entities” and pursuant to Item 16I(b)(3) is provided for “NetEase, Inc. or any variable interest entity.”
We also note that your list of significant subsidiaries and variable interest entities in Exhibit 8.1 appears to indicate that you
have subsidiaries in the PRC and Hong Kong that are not included in your VIEs. Please note that Item 16I(b) requires that you provide
disclosures for yourself and your consolidated foreign operating entities, including variable interest entities or similar structures.

•     With
respect to (b)(2), please supplementally clarify the jurisdictions in which your consolidated foreign operating entities are
organized or incorporated and provide the percentage of your shares or the shares of your consolidated operating entities owned by
governmental entities in each foreign jurisdiction in which you have consolidated operating entities in your supplemental
response.

Response

The Company has consolidated foreign operating entities,
including variable interest entities or similar structures, which are incorporated in the Cayman Islands, the United Kingdom, Canada,
France, Spain, Ireland, Singapore, Japan, the PRC or Hong Kong.

Based on the review conducted by the Company as described
in its response to comment #2 above, no portion of any of the Company’s consolidated foreign operating entities is owned by any
governmental entity in China mainland or the jurisdiction of their organization. The Company notes that almost all of its subsidiaries
are wholly owned but, among the small number of subsidiaries which are not wholly owned, two are publicly listed, Youdao, Inc. and
Cloud Music Inc., and a significant portion of their shares are held by public shareholders meaning that the ultimate beneficial ownership
of those publicly held shares may not be known to us. Having reviewed the public filings made by the ADS holders or shareholders of each
such subsidiary as described above (and taking reference to Youdao, Inc.’s “Submission under Item 16I(a) of Form 20-F
in relation to the Holding Foreign Compa

CORRESP
1
filename1.htm

    June 13,
    2023

    VIA
    EDGAR

    U.S.
    Securities and Exchange Commission

    Division
    of Corporation Finance

    Office
    of Technology

    100 F
    Street, NE

    Washington,
    D.C. 20549

    Attn:
    Megan
    Akst

    Christine
    Dietz

    Kyle
    Wiley

    Jennifer
    Thompson

    Re:
    NetEase, Inc.

    Form 20-F for the Fiscal Year Ended December 31, 2022

    Filed
    April 27, 2023

    Correspondence
    from the SEC on June 5, 2023

    File
No. 000-30666

Dear Ms. Akst, Ms. Dietz, Mr. Wiley and Ms. Thompson,

NetEase, Inc.
(the “Company”) is in receipt of the letter from the staff of the Securities and Exchange Commission dated June 5,
2023 (the “Comment Letter”), pursuant to which the staff provided comments regarding the Company’s Form 20-F for
the fiscal year ended December 31, 2022. As discussed by voicemail on June 12, 2023 between David C. Lee of Gibson, Dunn &
Crutcher LLP and Ms. Akst, the Company respectfully requests an extension until June 30, 2023 to respond to the Comment Letter
in order to provide sufficient time for the Company to prepare the necessary response.

Should you have any questions
regarding the request made herein, please do not hesitate to contact David C. Lee of Gibson, Dunn & Crutcher LLP at +1 (949)
451-3842 or DLee@gibsondunn.com. Thank you very much for your accommodation in this matter.

    Very truly yours,

    /s/ Paul W. Boltz, Jr.

    Paul W. Boltz, Jr.

    International General Counsel

 cc: Charles Yang, Chief Financial Officer of NetEase, Inc.

James J. Moloney, Gibson, Dunn & Crutcher
LLP

David C. Lee, Gibson, Dunn & Crutcher LLP

United States securities and exchange commission logo
June 5, 2023
William Lei Ding
Chief Executive Officer
NetEase, Inc.
NetEase Building
No. 599 Wangshang Road
Binjiang District, Hangzhou, 310052
People’s Republic of China
Re:NetEase, Inc.
Form 20-F for the Fiscal Year Ended December 31, 2022
Filed April 27, 2023
File No. 000-30666
Dear William Lei Ding:
            We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.
            Please respond to these comments within ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comments apply to your facts and circumstances, please tell us why in your response.
            After reviewing your response to these comments, we may have additional comments.
Form 20-F for the Fiscal Year Ended December 31, 2022
Item 5. Operating and Financial Review and Prospects
Factors Affecting our Results of Operations, page 123
1.You indicate that your ability to grow your user base and drive user engagement and
loyalty is a key factor affecting your results of operations.  Considering you generate a
substantial portion of your revenue from mobile game users, please tell us your
consideration to quantify and discuss daily active users for each period presented, or
explain why you do not consider this to be a key performance measure in analyzing your
revenue. Similarly, in light of the growth in Cloud Music, tell us your consideration to
quantify and discuss monthly average users for each period presented. Refer to SEC
Release No. 33-10751.

 FirstName LastNameWilliam Lei Ding
 Comapany NameNetEase, Inc.
 June 5, 2023 Page 2
 FirstName LastNameWilliam Lei Ding
NetEase, Inc.
June 5, 2023
Page 2
Item 16I. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections, page 194
2.We note your statement that you reviewed your register of members and public filings
made by your shareholders, in connection with your required submission under paragraph
(a). Please supplementally describe any additional materials that were reviewed and tell us
whether you relied upon any legal opinions or third party certifications such as affidavits
as the basis for your submission. In your response, please provide a similarly detailed
discussion of the materials reviewed and legal opinions or third party certifications relied
upon in connection with the required disclosures under paragraphs (b)(2) and (3).
3.We note that your disclosure pursuant to Item 16I(b)(2) is provided for “our company or
any of such variable interest entities” and pursuant to Item 16I(b)(3) is provided for
“NetEase, Inc. or any variable interest entity.” We also note that your list of significant
subsidiaries and variable interest entities in Exhibit 8.1 appears to indicate that you have
subsidiaries in the PRC and Hong Kong that are not included in your VIEs. Please note
that Item 16I(b) requires that you provide disclosures for yourself and your consolidated
foreign operating entities, including variable interest entities or similar structures.

•With respect to (b)(2), please supplementally clarify the jurisdictions in which your
consolidated foreign operating entities are organized or incorporated and provide the
percentage of your shares or the shares of your consolidated operating entities owned
by governmental entities in each foreign jurisdiction in which you have consolidated
operating entities in your supplemental response.
•With respect to (b)(3), please provide the required information for you and all of your
consolidated foreign operating entities in your supplemental response.
4.In order to clarify the scope of your review, please supplementally describe the steps you
have taken to confirm that none of the members of your board or the boards of your
consolidated foreign operating entities are officials of the Chinese Communist Party. For
instance, please tell us how the board members’ current or prior memberships on, or
affiliations with, committees of the Chinese Communist Party factored into your
determination. In addition, please tell us whether you have relied upon third party
certifications such as affidavits as the basis for your disclosure.
5.With respect to your disclosure pursuant to Item 16I(b)(5), we note that you have included
language that such disclosure is “to our best knowledge.” Please supplementally confirm
without qualification, if true, that your articles and the articles of your consolidated
foreign operating entities do not contain wording from any charter of the Chinese
Communist Party.
General
6.We note your statement that NetEase, Inc. is a holding company with no significant assets
other than cash on hand and its equity interests in its directly and indirectly-owned
subsidiaries. Please provide us with a legal analysis of whether you currently meet the

 FirstName LastNameWilliam Lei Ding
 Comapany NameNetEase, Inc.
 June 5, 2023 Page 3
 FirstName LastName
William Lei Ding
NetEase, Inc.
June 5, 2023
Page 3
definition of “investment company” under Section 3(a)(1)(C) of the Investment Company
Act (the “Company Act”).  Please include in your analysis the relevant calculation(s)
under Section 3(a)(1)(C) (including, where required by the statute, on an unconsolidated
basis), identifying each constituent part of the numerator(s) and denominator(s).  Your
analysis should identify and explain which assets held by the company are “investment
securities” for purposes of Section 3(a)(2) of the Company Act, and specifically address
how you treat the securities issued by your subsidiaries and the contractual relationships
between your subsidiaries and the variable interest entities.  Please provide legal support
for any substantive determinations and/or characterizations of assets that are material to
your calculations.
7.We note that the amount of revenues generated by the VIEs accounted for 86.4% of
NetEase, Inc.’s total net revenues in 2022, while the total assets of the VIEs (excluding
amounts from other companies in the NetEase group) represented 7.1% of NetEase, Inc.’s
consolidated total assets as of December 31, 2022.  To the extent not addressed in your
response to our request for a comprehensive analysis under Section 3(a)(1)(C), please
provide a supplementary explanation for the significant difference between these two
percentages.
8.Please include a risk factor that: (1) explains in detail why the company believes that it is
not an investment company for purposes of Section 3(a) the Company Act, with reference
to key material facts and characteristics of the business and the specific provisions of the
Company Act relevant to your conclusion; and (2) describes the consequences to the
company and its investors were the Commission or its Staff to determine that the company
is an investment company.
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            You may contact Megan Akst, Senior Staff Accountant at (202) 551-3407 or Christine
Dietz, Senior Staff Accountant at (202) 551-3408 if you have questions regarding comments on
the financial statements and related matters.  Please contact Kyle Wiley at (202) 344-5791 or
Jennifer Thompson at (202) 551-3737 if you have any questions about comments related to your
status as a Commission-Identified Issuer during your most recently completed fiscal year.
Sincerely,
Division of Corporation Finance
Office of Technology

August 12, 2019
Charles Yang
Chief Financial Officer
NetEase, Inc.
Building No. 7, West Zone,
Zhongguancun Software Park (Phase II)
No. 10 Xibeiwang East Road, Haidian District
Beijing 100193, People’s Republic of China
Re:NetEase, Inc.
Form 20-F for the Fiscal Year Ended December 31, 2018
Filed April 26, 2019
File No. 000-30666
Dear Mr. Yang:
            We have completed our review of your filing.  We remind you that the company and its
management are responsible for the accuracy and adequacy of their disclosures, notwithstanding
any review, comments, action or absence of action by the staff.
Sincerely,
Division of Corporation Finance
Office of Consumer Products

CORRESP
1
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Paul Boltz

Direct: +852 2214 3723

PBoltz@gibsondunn.com

Client: 66919-00001

July 19, 2019

VIA EDGAR

Securities and Exchange Commission
 Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Re:                             NetEase, Inc.
 Form 20-F for the Fiscal Year Ended December 31, 2018
 Filed April 26, 2019
 File No. 000-30666

Ladies and Gentlemen:

On behalf of NetEase, Inc. (the “Company”), set forth below is the Company’s response to the comment letter dated July 15, 2019 from the Staff (the “Staff”) of the Securities and Exchange Commission (“SEC”) in connection with the Staff’s review of the Company’s Form 20-F for the fiscal year ended December 31, 2018 (the “2018 Form 20-F”).  The text of the Staff’s comment is set forth in italics below, followed by the Company’s response.

1.                                      We note you reached a settlement agreement with PUBG in March 2019 regarding the complaint alleging copyright and trademark infringement as it relates to your mobile games, Rules of Survival and Knives Out. Please describe to us your accounting for the settlement and period of recognition. Further, tell us what consideration you gave to providing disclosure when describing any known trends or uncertainties with respect to revenues from Knives Out and Rules of Survival pursuant to Item 303(a) of Regulation SK. In this regard we note your disclosure that the growth in net revenues from mobile games mainly resulted from games such as Knives Out which gained popularity over the course of 2018.

The Company respectfully advises the Staff that the settlement was considered a recognized subsequent event and hence was pushed back and recorded as cost of revenues in the fourth quarter of 2018 and a liability in accrued liabilities and other payables as of December 31, 2018.  The amount was not material to the Company’s 2018 consolidated financial statements.

With respect to the second part of the Staff’s comment, the Company advises the Staff that in determining whether to provide disclosure describing known trends or uncertainties, it considered the instructions and guidance in Item 303(a) of Regulation S-K and Section IV of SEC Release 34-48960 in preparing the 2018 Form 20-F.  Based on these instructions and guidance, the Company has identified a number of trends affecting its online games business which are disclosed in the 2018 Form 20-F, including the fact that: the Company’s success in the online game market depends on its ability to anticipate and effectively respond to changing interests and preferences of game players and technological advances in a timely manner, the online game industry in China is transitioning to mobile games, and the Company needs to continually introduce new versions or substantive upgrades of its PC and mobile games on a frequent basis to maintain their popularity (see, for example, pages 3-4 of “Item 3. Key Information — D. Risk Factors” and page 33 of “Item 4. Information on the Company — B. Business Overview — Our Services — Online Games” in the 2018 Form 20-F).

While the results from Knives Out and Rules of Survival may fluctuate from period to period due to the foregoing and other factors as described in the 2018 Form 20-F, the Company advises the Staff that it did not identify any known trends or uncertainties specific to these two games that it believed had occurred or were likely to occur or that it believed would have a material favorable or unfavorable impact on its liquidity, capital resources or results of operations for the period ended December 31, 2018.  The Company notes that the above-referenced litigation and settlement have had no material impact on the operation or performance of Knives Out or Rules of Survival and will not have such an impact in future periods.  Rather, the trends affecting Knives Out and Rules of Survival are largely the same as those affecting its other games, including in particular, as noted on page 33 of the 2018 Form 20-F, that the timing and success of content updates have a strong influence on the popularity and profitability of the Company’s mobile games.  The timing for release of any expansion pack or upgrade is based on multiple factors which are evaluated on an ongoing basis, including the Company’s analysis of market changes, user feedback and testing of such updates, and there have been no material trends with respect to the release of such expansion packs or upgrades for Knives Out or Rules of Survival.

The Company will continue to evaluate material trends on its business, including with respect to its significant games, and will disclose any additional material known trends and uncertainties in future filings, as applicable.

2

If you have any additional questions or comments regarding the 2018 Form 20-F, please call me at +852-2214-3723 or email me at pboltz@gibsondunn.com.

Sincerely,

/s/ Paul W.   Boltz, Jr.

Paul W. Boltz, Jr.

cc:   Mr. Charles Yang, Chief Financial Officer of NetEase, Inc.

3

July 15, 2019
Charles Yang
Chief Financial Officer
NetEase, Inc.
Building No. 7, West Zone,
Zhongguancun Software Park (Phase II)
No. 10 Xibeiwang East Road, Haidian District
Beijing 100193, People’s Republic of China
Re:NetEase, Inc.
Form 20-F for the Fiscal Year Ended December 31, 2018
Filed April 26, 2019
File No. 000-30666
Dear Mr. Yang:
            We have reviewed your filing and have the following comment.  In our comment, we
may ask you to provide us with information so we may better understand your disclosure.
            Please respond to this comment within ten business days by providing the requested
information or advise us as soon as possible when you will respond.  If you do not believe our
comment applies to your facts and circumstances, please tell us why in your response.
            After reviewing your response to this comment, we may have additional comments.
Form 20-F for the Fiscal Year Ended December 31, 2018
Financial Statements
Notes to the consolidated financial statements
20. Commitments and Contingencies
(b) Litigation, page F-34
1.We note you reached a settlement agreement with PUBG in March 2019 regarding the
complaint alleging copyright and trademark infringement as it relates to your mobile
games, Rules of Survival and Knives Out.  Please describe to us your accounting for the
settlement and period of recognition.  Further, tell us what consideration you gave to
providing disclosure when describing any known trends or uncertainties with respect to
revenues from Knives Out and Rules of Survival pursuant to Item 303(a) of Regulation S-
K.  In this regard we note your disclosure that the growth in net revenues from mobile
games mainly resulted from games such as Knives Out which gained popularity over the

 FirstName LastNameCharles Yang
 Comapany NameNetEase, Inc.
 July 15, 2019 Page 2
 FirstName LastName
Charles Yang
NetEase, Inc.
July 15, 2019
Page 2
course of 2018.
            We remind you that the company and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.
            You may contact Tony Watson, Staff Accountant, at (202) 551-3318 or Donna Di
Silvio, Staff Accountant, at (202) 551-3202 if you have questions regarding comments on the
financial statements and related matters.  Please contact Scott Anderegg, Staff Attorney, at 202-
551-3342  or Lilyanna Peyser, Special Counsel, at 202-551-3222 with any other questions.
Sincerely,
Division of Corporation Finance
Office of Consumer Products

October 12 , 2018

William Lei Ding
Chief Executive Officer
NetEase, Inc.
Building No. 7, West Zone,
Zhongguancun Software Park (Phase II)
No. 10 Xibeiwang East Road, Haidian District
Beijing 100193, People’s Republic of China

Re: NetEase, Inc.
 Form 20-F for the Fiscal Year Ended December 31 , 201 7
Filed April 20 , 2018
File No. 0-30666

Dear Mr. Ding :

We have completed our review of your filing.  We remind you that the company and its
management are responsible for the accuracy and adequacy of their disclosures, notwithstanding
any review, comments, action or absence of action by the staff.

Sincerely,

 /s/ William H. Thompson

William H. Thompson
Accounting Branch Chief
Office of Consumer Products

cc:  Charles Yang , Chief Financial Officer

CORRESP
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28 September 2018

Paul Boltz

Partner

Direct: +852 2214 3723

Fax: +852 2214 3710

PBoltz@gibsondunn.com

VIA EDGAR

U.S. Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Attention: William H. Thompson / Ta Tanisha Meadows

Re:

NetEase, Inc.

Form 20-F for Fiscal Year Ended   December 31, 2017

Filed April 20, 2018

File No. 0-30666 (the “2017   Form 20-F”)

Dear Ladies and Gentlemen:

On behalf of NetEase, Inc. (the “Company”), set forth below are the Company’s responses to the comment letter dated September 19, 2018 from the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in connection with the Staff’s review of the Company’s 2017 Form 20-F.  The text of each of the Staff’s comments is set forth in italics below, followed by the Company’s response.

Note 2. Principal Accounting Policies

(l) Intangible Assets, page F-16

1.                                      Please tell us what consideration you gave to providing the disclosures required by ASC 350-30-50-1, ASC 350-30-50-2 and ASC 350-30-50-4.

The Company respectfully advises the Staff that the total balances of intangible assets, including land use right, license right and technology, as of December 31, 2016 and 2017 were approximately RMB842,954,000 and RMB1,413,641,000, representing approximately 1.5% and 2.0% of the Company’s consolidated total assets as of December 31, 2016 and 2017, respectively.  Additionally, the aggregate amortization expenses accounted for less than 2.0% of the Company’s consolidated income before tax for each of the years ended December 31, 2015, 2016 and 2017.

As of December 31, 2016 and 2017, all of the Company’s intangible assets were subject to amortization, and the Company did not have any acquired research and development assets. The Company’s total gross carrying amount of intangible assets acquired through business combination during the years 2015, 2016 and 2017 was minimal. With respect to intangible assets subject to amortization, the Company disclosed certain information specified by ASC 350-30-50-1, ASC 350-30-50-2 and ASC 350-30-50-4 in the 2017 Form 20-F, including:

·                                          the gross carrying amount and accumulated amortization of land use right as well as related amortization expenses in Note 8 on page F-23; and

·                                          the net carrying amount assigned to copyrights, licenses and domain names in Note 10 on page F-25.

Given that the total balances of intangible assets as of December 31, 2016 and 2017 and the aggregate amortization expenses for the years ended December 31, 2015, 2016 and 2017 were not material to the Company’s consolidated financial statements, the Company concluded that disclosure of all the information specified by ASC 350-30-50-1, ASC 350-30-50-2 and ASC 350-30-50-4 was not necessary.

In response to the Staff’s comment, the Company confirms that it will include such disclosures in future filings if such balances or amortization expenses become material to the Company’s consolidated financial statements.

Note 21. Commitments and Contingencies

(b) Litigation, page F-32

2.                                      Please tell us what consideration you gave to disclosing an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made. Please refer to ASC 450-20-50-4.

The Company notes the Staff’s comment and, for the reasons stated below, it determined at the time of the filing of the 2017 Form 20-F that an estimate of the possible loss or range of loss could not be made with respect to the litigation identified in Note 21 of the 2017 Form 20-F (the “PUBG matter”). The Company advises the Staff that it will revise the disclosure in the Litigation note of its future filings to include an estimate of the possible loss or range of loss or a statement that such an estimate cannot be made.

2

Pursuant to ASC 450-20-50-3 and 450-20-50-4, the Company is required to disclose an estimate of the possible loss or range of loss, or state that such an estimate cannot be made, if there is at least a reasonable possibility that a loss or an additional loss may have been incurred or a loss exists in excess of the accrued amounts. Following this guidance, the Company regularly evaluates the status of the legal proceedings in which it is involved to determine whether accruals are appropriate under ASC 450-20-25-2 and whether an estimate of possible loss or range of loss can be made under ASC 450-20-50-4.  As part of its evaluation, the Company analyzes each potentially material contingent liability on a case-by-case basis, taking into account, as appropriate, the nature of the litigation, claim or assessment, the procedural status of the matter, any recent rulings or determinations by courts or other governmental authorities, advice of experts and counsel, any settlement discussions and other developments that may impact the analysis, and with respect to unasserted claims and assessments, the Company’s assessment of the degree of probability that a suit may be filed or a claim or assessment may be asserted and the possibility of an unfavorable outcome. The Company also evaluates new developments and information regularly and re-evaluates its loss contingency disclosures to ensure that they reflect the current information known to the Company.  For each of the Company’s contingent-related matters, the Company determines whether a loss is both probable and reasonably estimable. If both conditions are met, then the amount of the loss that is deemed probable is accrued as a liability. The Company acknowledges that ASC 450-20-50-4(b) may require disclosure of an estimate or range of “reasonably possible” loss over and above any accrued amount.

In the Company’s experience, legal proceedings, investigations and other such matters are inherently unpredictable, and various factors can exacerbate this inherent unpredictability.  Variables which may affect the outcome of, and potential loss from, a particular proceeding or investigation include, among other things, (i) the damages sought, (ii) whether the plaintiffs and defendants operate in different jurisdictions and whether the court in which the action is pursued has valid jurisdiction to hear the action, (iii) the facts on which the contingency is based, (iv) the stage of the proceeding or investigation, including the amount of discovery conducted and the evidence available, (v) the available defences and counterclaims, and (vi) the likelihood of settlement.

With respect to the PUBG matter identified in Note 21 of the 2017 Form 20-F, the Company was unable to estimate a loss or range of loss at the time of the filing of the 2017 Form 20-F due to a number of factors which required judgments about uncertain future events.  These factors included, among others, (i) the plaintiffs in the PUBG matter were seeking compensatory and statutory damages in an unspecified amount, as well as an injunction requiring the Company to remove each version of the games subject to the claims and as-yet unidentified “similarly infringing games” from distribution, (ii) the proceeding was in an early stage, and (iii) the matter was based upon a wide variety of federal and state statutes as well state common law and varying theories of liability.  Accordingly, there was considerable uncertainty regarding the timing or outcome of the PUBG matter, including if there would be any possible loss, penalty or adverse business impact and the extent thereof.  As a result, at the time of the filing of the 2017 Form 20-F, the Company determined that it could not estimate reasonably possible losses in excess of amounts accrued, if any, or a range of loss in connection with the PUBG matter.  In response to the Staff’s comment, the Company will include the relevant statement in its future filings as noted above.

3

Note 22. Dividends, page F-32

3.                                      Please explain to us why the amounts of dividends declared and paid during 2016 and 2017 disclosed in the first paragraph differ from the amounts disclosed in the consolidated statements of cash flows and of shareholders’ equity.

The Company respectfully advises the Staff that, pursuant to the Company’s quarterly dividend policy, the Company typically declares and makes dividend payments in each quarter of the dividends from the net income of the immediately preceding quarter. The amounts of dividends disclosed in the 2016 and 2017 consolidated statements of cash flows and of shareholders’ equity were the amounts declared and paid during 2016 and 2017, respectively, which related to the net profits earned from the fourth quarters of 2015 and 2016 to the third quarters of 2016 and 2017, respectively. The amounts disclosed in Note 22 on page F-32 were dividends declared and related to the net profits earned in the fiscal years 2016 and 2017, while payments for such dividends were made in the second quarter of 2016 to the first quarter of 2017 and the second quarter of 2017 to the first quarter of 2018, respectively.  In light of the Staff’s comment, the Company proposes to revise the referenced disclosure in the Dividend note in its future filings in the following manner:

“The cash dividend declared and paid with respect to related to the net profits of fiscal year 2016 and fiscal year 2017 was RMB2,910.5 million and RMB2,656.0 million (US$408.2 million) in total, respectively.”

***

If you have any additional questions or comments regarding the 2017 Form 20-F, please call me at 011-852-2214-3723 or email me at pboltz@gibsondunn.com.

Very truly yours,

/s/ Paul W. Boltz, Jr.

Paul W. Boltz, Jr.

Gibson, Dunn & Crutcher

cc:

Charles Yang, Chief Financial Officer of NetEase, Inc.

Vincent Cheuk/Aileen Mo, PricewaterhouseCoopers Zhong Tian LLP

4

September 19 , 2018

William Lei Ding
Chief Executive Officer
NetEase, Inc.
Building No. 7, West Zone,
Zhongguancun Software Park (Phase II)
No. 10 Xibeiwang East Road, Haidian District
Beijing 100193, People’s Republic of China

Re: NetEase, Inc.
 Form 20-F for the Fiscal Year Ended December 31 , 201 7
Filed April 20 , 2018
File No. 0-30666

Dear Mr. Ding :

We have limited our review of your filing to the financial statements and related
disclosures and have the following comment s.  In our comment s, we may ask you to provide us
with information so we may better understand your disclosure.

Please respond to th ese comment s within ten business days by providing the requested
information or a dvise us as soon as possible when you will respond.  If  you do not believe our
comment s apply to your facts and circumstances, please tell us why in your response.

After reviewing your response to th ese comment s, we may have additional comments

Note 2.  Principal Accounting Policies

(l) Intangible Assets, page F -16

1. Please tell us what consideration you gave to providing the disclosures required by ASC
350-30-50-1, ASC 350 -30-50-2 and ASC 350 -30-50-4.

Note 21. Commitments and Contingencies

(b) Litigation, page F -32

2. Please tell us what consideration you gave to disclosing an estimate of the possible loss
or range of loss or a statement that such an estimate cannot be made.  Please refer to ASC
450-20-50-4.

William Lei Ding
NetEase, Inc.
September 19 , 2018
Page 2

Note 22.  Dividends, page F -32

3. Please explain to us why the amounts of dividends declared and paid during 2016 and
2017 disclosed in the first paragraph differ from the amounts disclosed in the
consolidated statements of cash flows and of shareholders’ equity.

We remind you that the c ompany and its management are responsible for the accuracy
and adequacy of their disclosures, notwithstanding any review, comments, action or absence of
action by the staff.

You may contact Ta Tanisha Meadows, Staff Accountant  at (202) 551 -3322 if you h ave
questions regarding our comment s or related matters .  Please contact me at (202) 551 -3344 w ith
any other questions.

Sincerely,

 /s/ William H. Thompson

William H. Thompson
Accounting Branch Chief
Office of Consumer Products

cc:  Charles Yang , Chief Financial Officer

CORRESP
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NetEase,Inc.

September 29, 2016

VIA EDGAR AND E-MAIL

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Attention: William H. Thompson / Yolanda Guobadia

Donna Di Silvio / Dean Brazier, Jr. / Lisa Kohl

Re:         NetEase, Inc.

Form 20-F for Fiscal Year Ended December 31, 2015

Filed April 22, 2016

File No. 0-30666 (the “2015 Form 20-F”)

Ladies and Gentlemen:

In connection with the letter from our counsel Ropes & Gray dated September 13, 2016 sent on our behalf and in response to the comment letter dated August 30, 2016 from the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) relating to the Staff’s review of our 2015 Form 20-F, and pursuant to the Staff’s request, we acknowledge that:

·                  we are responsible for the adequacy and accuracy of the disclosure in the filing;

·                  Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and

·                  we may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any additional questions or comments regarding this letter, please contact the undersigned at (86 10) 8255 8163.

Sincerely,

/s/ Onward Choi

Onward Choi

Acting Chief   Financial Officer

NetEase, Inc.

cc:                                Paul W. Boltz, Jr. (Ropes & Gray)

北京市海淀区西北旺东路10号院中关村软件园二期西区7号

Building No.7, West Zone, Zhongguancun Software Park (Phase II), No.10 Xibeiwang East Road,

Haidian District Beijing

ZIP: 100193

TEL: (8610)   82558163

FAX: (8610) 82618163

Mail Stop 3561
September 27 , 2016

William Lei Ding
Chief Executive Officer
NetEase, Inc.
Building No. 7, West Zone
Zhongg uancun Software Park (Phase II)
No. 10 Xibeiwang East Road, Haidian District
Beijing 100193, People’s Republic of China

Re: NetEase, Inc.
 Form 20-F for Fiscal Year Ended December 31,  2015
Filed April 22 , 2016
File No. 0-30666

Dear Mr. Ding:

We have completed our review of your filing.  We remind you that our comments or
changes to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing and the company may not assert staff
comments as a defense in any proceeding initiated by the Com mission or any person under the
federal securities laws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing to be certain that the filing include s the
information the Securities Exchan ge Act of 1934 a nd all applicable rules require.

Sincerely,

 /s/ William H. Thompson

 William  H. Thompson
Accounting Branch Chief
Office of Consumer Products

CORRESP
1
filename1.htm

Paul   W. Boltz, Jr.

T   + 852 3664 6519

F   + 852 3664 6583

paul.boltz@ropesgray.com

CERTAIN PORTIONS OF THIS LETTER HAVE BEEN OMITTED AND FILED SEPARATELY WITH THE STAFF OF THE SECURITIES AND EXCHANGE COMMISSION. CONFIDENTIAL TREATMENT HAS BEEN REQUESTED PURSUANT TO RULE 83 OF THE SECURITIES AND EXCHANGE COMMISSION’S RULES ON INFORMATION AND REQUESTS WITH RESPECT TO THE OMITTED PORTIONS. OMITTED INFORMATION HAS BEEN REPLACED IN THIS LETTER WITH A PLACEHOLDER IDENTIFIED BY THE MARK “[***]”.

September 13, 2016

VIA EDGAR AND E-MAIL

Securities and Exchange Commission

Division of Corporation Finance

100 F Street, N.E.

Washington, D.C. 20549

Attention:                 William H. Thompson / Yolanda Guobadia

Donna Di Silvio / Dean Brazier, Jr. / Lisa Kohl

Re:          NetEase, Inc.

Form 20-F for Fiscal Year Ended December 31, 2015

Filed April 22, 2016

File No. 0-30666 (the “2015 Form 20-F”)

Ladies and Gentlemen:

On behalf of NetEase, Inc. (the “Company”), set forth below is the Company’s response to the comment letter dated August 30, 2016 from the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in connection with the Staff’s review of the Company’s Form 20-F for the fiscal year ended December 31, 2015 (the “Letter”). The text of each of the Staff’s comments is set forth in italics below, followed by the Company’s response.

For reasons of business confidentiality, in a separate letter dated the date hereof, the Company is requesting that certain information not be disclosed in response to any request made under the Freedom of Information Act, 5 U.S.C. §552 or otherwise. Accordingly, pursuant to Rule 83 (17 C.F.R.200.83) adopted under the Freedom of Information Act, and in compliance with the applicable procedures, a complete copy of this letter will be provided only in paper form and not filed electronically as correspondence under the Commission’s EDGAR system. The information for which the Company has requested confidential treatment is highlighted in the letter submitted to the Staff in paper form, and the omitted information is identified by the symbol “[***]” in this letter.

A. Operating Results

Consolidated Results of Operations

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014, page 65

1.                                      Please include a discussion of known trends, demands, commitments, events, or uncertainties that will have or are reasonably likely to have a material impact on your financial condition, operating performance, revenues or income, or result in your liquidity decreasing or increasing in any material way. For example, we note net revenues from the e-mail, e-commerce and others segment increased by 235.7% in 2015 as compared to 2014 attributed to cross-border e-commerce. Please discuss the material trends related to e-commerce. Please provide similar disclosure regarding your advertising services and online games services, including a discussion about the lifecycle of significant games. Refer to Item 303 of Regulation S-K and the Commission’s Guidance Regarding Management’s Discussion and Analysis of Financial Condition and Results of Operations, SEC Release No. 34-48960.

The Company advises the Staff that in determining whether to disclose a known trend, it considered the instructions and guidance in Item 303(a) of Regulation S-K and Section IV of SEC Release 34-48960 in preparing the 2015 Form 20-F. Based on these instructions and guidance, the Company has identified a number of trends affecting its business which are disclosed in the 2015 Form 20-F, including the fact that the online game industry in China is transitioning to mobile games and that the Company expects competition in the game industry to increasingly intensify, the likelihood that certain new businesses such as the Company’s e-commerce businesses may have lower profit margins compared to its online game and advertising businesses and the Company’s expectation that the online advertising market will continue to grow as Internet usage in China increases and as more companies accept the Internet as an effective advertising medium (see pages 6 and 11-12 of “Item 3. Key Information — D. Risk Factors” and page 56 of “Item 5. Operating and Financial review and Prospects — A. Operating Results” in the 2015 Form 20-F).

In addition, as disclosed in “Item 3. Key Information — D. Risk Factors” of the 2015 Form 20-F, the Company’s business is generally dependent on a number of other factors, such as its ability to release new popular PC and mobile games and periodically release expansion packs and upgrades to existing games, introduce new e-commerce services and effectively manage such services and enhance the appeal of its advertising services to advertisers. While the Company’s results fluctuate during any one period and from period to period due to these factors, the Company respectfully advises the Staff that it did not identify any known trends or uncertainties with respect to these factors that it believed had occurred or were likely to occur or that it believed would have a material favorable or unfavorable impact on its liquidity, capital resources or results of operations for the period ended December 31, 2015, other than those already described in the 2015 Form 20-F.

The Company acknowledges the Staff’s specific request for a discussion of the lifecycle of significant games and confirms that it will include such disclosure in future filings as appropriate. The Company respectfully submits that it believes there are no such trends or uncertainties with respect to its significant games which should have been disclosed in the 2015 Form 20-F. To provide further context, as noted above the popularity of the Company’s games depends to a large extent on the launch of expansion packs and upgrades to its games which typically happens intermittently throughout each year. Accordingly, the timing and effectiveness of the expansion packs and upgrades affect the revenue generated from each game in any given period, but any such short-term variability in revenue does not, by itself, connote a material trend of a game’s medium or long-term popularity (i.e., a dip in revenue from a particular game before the introduction of a new expansion pack does not usually mean that the game is nearing the end of its expected lifecycle). Through ongoing expansions and upgrades, the Company has generally been able to extend the overall lifecycle of its significant games, some of which were first launched more than a decade ago. The Company also notes that its mobile games are subject to more frequent expansion packs and upgrades than its PC games. The timing for release of any expansion pack or upgrade is based on multiple factors which are evaluated on an ongoing basis, including the Company’s analysis of market changes, user feedback and testing of such updates. Therefore, the Company believes that there are no material trends with respect to the release of such expansion packs or upgrades which would affect the lifecycle of its significant games.

The Company will continue to evaluate material trends on its business, including the lifecycles of significant games, and will disclose any additional material known trends and uncertainties in future filings, as applicable.

To address comments #1 and #2 of the Staff, however, including its request for greater quantified detail, the Company proposes to expand the disclosure regarding the drivers of its three revenue segments. Specifically, the Company proposes to revise the referenced disclosure under “Item 5. Operating and Financial Review and Prospects — A. Operating Results — Year Ended December 31, 2015 Compared to Year Ended December 31, 2014” in future annual reports on Form 20-F in the following manner (with new disclosure in underlined text):

2

“Year Ended December 31, 2015 Compared to Year Ended December 31, 2014

Net revenues

Total net revenues increased by 94.7% to RMB22,802.9 million (US$3,520.2 million) in 2015 from RMB11,712.8 million in 2014. Net revenues from online games services, advertising services, and e-mail, e-commerce and others constituted 76.0%, 7.8% and 16.2%, respectively, of our total net revenues in 2015. This compares with 79.1%, 11.5% and 9.4%, respectively, in 2014.

Online Games Services

Net revenues from online games services increased by 86.9% to RMB17,314.1 million (US$2,672.8 million) in 2015 from RMB9,266.2 million in 2014. The increase was principally attributable to higher net revenues from mobile games which totaled RMB7,590.7 million (US$1,171.8 million) in 2015 compared to RMB666.2  million in 2014, excluding mobile games licensed from Blizzard Entertainment which are discussed below.  The growth in net revenues from mobile games mainly resulted from the launch of new mobile games which quickly gained popularity, particularly the mobile versions of our self-developed games Fantasy Westward Journey (launched in March 2015) and Westward Journey Online (launched in September 2015), which were two of the highest grossing games in China’s iOS app store in 2015 following their release. The increase also resulted to a lesser extent from increased popularity of other self-developed mobile games such as Battle to the West and licensed mobile games such as Fairy Tales and Kai-ri-sei Million Arthur. Our mobile portfolio now consists of over 80 diverse games, and we expect to continue introducing new mobile games each year in the foreseeable future, which we believe will contribute to future revenue growth in this segment.

NetEase’s self-developed PC-client games, such as Revelation which was released in early 2015, also delivered solid performances in 2015. Total net revenues from self-developed PC-client games increased by 3.2% to RMB7,424.4  million (US$1,146.1 million) in 2015 from RMB7,195.9 million in 2014.

In addition, the increased popularity of online games licensed from Blizzard Entertainment, including Hearthstone: Heroes of Warcraft and Diablo III: Reaper of Souls which were commercially launched in January 2014 and May 2015, respectively, contributed to net revenue growth. Net revenues from games licensed by Blizzard Entertainment increased 63.7% to RMB2,299.0 million (US$354.9 million) in 2015 compared to RMB1,404.1 million in 2014.

Net revenues from mobile games (excluding the mobile game licensed from Blizzard Entertainment), self-developed PC-client games and Blizzard Entertainment licensed games represented 43.8%, 42.9% and 13.3% of total net revenues from online games services in 2015, respectively, compared to 7.2%, 77.7% and 15.1% in 2014, respectively.

3

Advertising Services

Net revenues from advertising services increased by 33.1% to RMB1,789.4 million (US$276.2 million) in 2015 from RMB1,344.8 million in 2014. The increase in advertising services revenue in 2015 was driven by increased market demand, mainly from the automobile, Internet services and telecommunication services sectors, which in turn is mainly due to our introduction of new online content and use of various promotional activities to increase our general brand awareness, both of which increased our site traffic and in turn increased the attractiveness of our advertising services. The greater monetization of our mobile news application also contributed to this increase.

Average net revenue per traditional advertiser (i.e., customers which do not advertise through our search services), which provide the substantial portion of our advertising revenue, increased to approximately RMB1.8 million (US$0.3 million) in 2015 from RMB1.6 million in 2014. The number of traditional advertisers using the NetEase websites increased to 1,002 in 2015 from 784 in 2014 with revenues from our top ten advertisers comprising 28.2% of our total advertising services revenues in 2015 as compared to 28.7% in 2014.

E-mail, E-commerce and Others

Net revenues from the e-mail, e-commerce and others segment increased by 235.7% to RMB3,699.4 million (US$571.1 million) in 2015 from RMB1,101.8 million in 2014. The increase resulted from rapid growth in the popularity among consumers in China of our newly launched e-commerce businesses, namely, our Kaola platform which is a cross-border e-commerce platform that enables users to purchase imported consumer goods through an online platform, and our Duobao platform which is an e-commerce platform that allows users to exchange a virtual currency for products.  Duobao and Kaola were commercially launched in June 2014 and January 2015, respectively, and they represented 72.1% of our total net revenues from the e-mail, e-commerce and others segment in 2015, compared to 3.9% in 2014.”

2.                                      We note the 86.9% increase in net revenues from online game services. Please provide additional detail about factors that contributed to the increase in net revenues. In doing so, please separately quantify the increase in revenues attributable to mobile games and the increase in revenue attributable to the Blizzard Entertainment games. Please refer to Item 5.A of Form 20-F.

Please refer to the response to the Staff’s comment #1 above.

4

Notes to the Consolidated Financial Statements

3. Concentrations and Risks, page F-21

3.                                      We note your disclosure on page 37 that Blizzard agreed to license to Shanghai EaseNet certain online computer games with terms of three years. Further, we note your disclosure on page 65 that net revenues generated from game licensing represented 12.1%, 12.9% and 9.8% of total net revenues in 2015, 2014 and 2013, respectively. In that regard, please tell us what consideration you gave to disclosing the material concentrations of the online games licensed from Blizzard or tell us why you believe the disclosure is not required. In your response please reference ASC 275-10-50-16 through 50-22. In your response please also quantify the net revenues generated from Blizzard online game licensed agreements.

The Company respectfully advises the Staff that it has considered ASC 275-10-50-16 through 50-22 and concluded that the revenue generated from games licensed by Blizzard Entertainment does not present a vulnerability that is required to be disclosed in its financial statement footnotes under ASC 275-10-50. In determining the disclosure requirements on concentrations under ASC 275, the Company considered the following definitions in that standard as guidance: (i) ASC 275-10-50-16 defines vulnerability from concentrations as exposure to a risk of loss that is greater than it would have been had the Company mitigated the risk through diversification which manifests itself based on the nature of the concentration and varies depending on circumstances, (ii) and (iii) ASC 275-10-50-16 goes on to require disclosure only if all of the criteria are met which involves vulnerability due to the risk of a near-term, severe impact. “Near term” signifies a period not to exceed one year from the date of the financial statements. An impact is severe when there is a significant financial disruption on the normal functioning of the entity, a threshold higher than a material effect.

5

Net revenues from games licensed by Blizzard Entertainment represented 10.1%, 12.0% and 9.8% of the Company’s total net revenues in 2015, 2014 and 2013, respectively. As such, the Company acknowledges that its relationship with Blizzard Entertainment is important to its overall business. However, the Company respectfully submits that this relationship does not present a risk of near-term severe impact because such revenue is derived from six separate license agreements with Blizzard Entertainment, each of which was separately negotiated by the parties from time to time over the last approximately eight years and sets forth its own commencement and end dates and its own commercial terms (and the terms of sever

Mail Stop 3561
August 30, 2016

William Lei Ding
Chief Executive Officer
NetEase, Inc.
Building No. 7, West Zone
Zhongg uancun Software Park (Phase II)
No. 10 Xibeiwang East Road, Haidian District
Beijing 100193, People’s Republic of China

Re: NetEase, Inc.
 Form 20-F for Fiscal Year Ended December 31,  2015
Filed April 22 , 2016
File No. 0-30666

Dear Mr. Ding:

We have reviewed your filing an d have the following comments.  In some of our
comments, we may ask you to provide us with information so we may better understand your
disclosure.

Please respond to these comments  within ten busine ss days by providing the requested
information or advis e us as soon as possible when you will r espond.  If you do not believe our
comments apply to your facts and circumstances, please  tell us why in your response.

After reviewing your response to these  comments, we may have  additional comments.

A. Operating Results

Consolidated Results of Operations

Year Ended December 31, 2015 Compared to Year Ended December 31, 2014, page 65

1. Please include a discussion of known trends, demands, commitments, events, or
uncertainties that will have or are reasonably likely to have a material impact on you r
financial condition, operating performance, revenues or income, or result in your liquidity
decreasing or increasing in any material way.  For example, we note net revenues from
the e -mail, e -commerce and others segment increased by 235.7% in 2015 as com pared to
2014 attributed to cross -border e -commerce.  Please discuss the material trends related to
e-commerce.  Please provide similar disclosure regarding your advertising services and
online games services, including a discussion about the lifecycle of significant games.

William Lei Ding
NetEase, Inc.
August 30, 2016
Page 2

 Refer to Item 303 of Regulation S -K and the Commission's Guidance Regarding
Management's Discussion and Analysis of Financial Condition and Results of
Operations, SEC Release No. 34 -48960 .

2. We note the 86.9% increase in net revenues from online game services.   Please provide
additional detail about factors that contributed to the increase in net revenues.   In doing
so, please separately quantify the increase in revenues attributable to mobile games and
the increase in revenue attribut able to the Blizzard Entertainment games.   Please r efer to
Item 5.A of Form 20 -F.

Notes to the Consolidated Financial Statements

3. Concentrations and Risks, page F -21

3. We note your disclosure on page 37 that Blizzard agreed to license to Shanghai Ease Net
certain online computer games with terms of three years.  Further, we note your
disclosure on page 65 that net revenues generated from game licensing represented
12.1%, 12.9% and 9.8% of total net revenues in 2015, 2014 and 2013, respectively.  In
that regard, please tell us what consideration you gave to disclosing the material
concentrations of the online games licensed from Blizzard or tell us why you believe the
disclosure is not required.  In your response please reference ASC 275 -10-50-16 through
50-22.  In your response please also quantify the net revenues generated from Blizzard
online game licensed agreements.

20. Share -based Compensation

(f) Other Option Plan, page F -34

4. Please clarify to us why you did not record compensation expense for options granted in
relation to your other option plans.  In doing so, please describe the vesting terms and
conditions that must be met to achieve the vesting commencement date and explain in
greater detail why achieving such is not probable.  Please also tell us the number of
options granted for tho se plans in 2013, 2014 and 2015.

26. Segment Information

(a) Description of segments , page F -37

5. We note your CODM view and run its business operations based on customer ba se and
homogeneity of products, among other things .  We also note the e-mail, e -commerce and
others segment include a variety of products and services  and the segment net revenues
increased by 235.7% in 2015 as compared to 2014 attributed to e -commerce  cross -border
products as described in the  third paragraph on page 66 .  In that regard, p lease explain to
us what factors you considered in concluding that the products and services in the e -mail,

William Lei Ding
NetEase, Inc.
August 30, 2016
Page 3

 e-commerce and others segment are similar.  Please discuss how you considered
quantitative aspects su ch as margins and growth rates in your analysis.  Refer to ASC
280-10-50-11.

We urge all persons who are responsible for the accuracy and adequacy of the disclosure
in the filing to be certain that the filing includes the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of t he disclosures they have made.

 In responding to our comments, please provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any proceeding initiated by
the Commission or any person under the  federal securities laws of the United States.

You may contact Yolanda Guobadia, Staff Accountant,  at (202) 551 -3562, Donna Di
Silvio, Staff Accountant, at (202) 551 -3202  or me at (202) 551 -3344 if you have questions
regarding comments on the financial  statements and related matters.  Please contact Dean
Brazier, Jr., Staff Attorney,  at (202) 551 -3485 or Lisa Kohl, Legal Branch Chief , at (202) 551 -
3252  with any other questions.

Sincerely,

 /s/ William H. Thompson

 William  H. Thompson
Accounting Branch Chief
Office of Consumer Products

September 5, 2012

Via-Email
Onward Choi
Acting Chief Financial Officer
NetEase, Inc.
26/F, SP Tower D
Tsinghua Science Park Building 8
No. 1 Zhongguancun East Road, Haidian District
Beijing 100084, People’s Republic of China

Re: NetEase, Inc.
 Form 20-F for Fiscal Year Ended December 31, 2011
Filed April 26, 2012
File No. 0-30666

Dear Mr. Choi :

We have completed our review of your filing .  We remind you that our comments or
changes  to disclosure in response to our comments do not foreclose the Commission from taking
any action with respect to the company or the filing and the company may not assert staff
comments as a defense in any proceeding initiated by the Commission or any pers on under the
federal securities laws of the United States.  We urge all persons who are responsible for the
accuracy and adequacy of the disclosure in the filing to be certain that the filing includes the
information the Securities Exchange Act of 1934 and  all applicable rules require.

Sincerely,

 /s/ William H. Thompson

William H. Thompson
Accounting Branch Chief

cc: Paul Boltz
 Ropes & Gray, LLP.

CORRESP
1
filename1.htm

[Letterhead of NetEase, Inc.]

August 27, 2012

Mr. William H. Thompson, Accounting Branch Chief

Mr. Adam Phippen, Staff Accountant

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:

NetEase, Inc. (the “Company”)

Form 20-F for Fiscal   Year Ended December 31, 2011

Filed April 26, 2012

File No. 0-30666   (the “2011 Form 20-F”)

Dear Messrs. Thompson and Phippen:

The Company is providing the following information in response to the comment letter dated August 15, 2012 received by the Company from the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in connection with the Staff’s review of the Company’s Form 20-F for the fiscal year ended December 31, 2011 (the “Letter”).  For your convenience, we have set forth each of your comments below followed by our response to each comment.

Item 5. Operating and Financial Review and Prospects, page 44

A. Operating Results, page 44

1.             Please disclose information that allows investors to evaluate the nature of assets held by, and the operations of, entities apart from your consolidated variable interest entities. The information should be in sufficient detail to convey the assets and operations that are not subject to involvement with your consolidated variable interest entities.

The Company confirms that it will include information on the operations and assets and liabilities of the entities within the Company’s consolidated group which are not variable interest entities, as well as information on the operations and assets and liabilities of its variable interest entities (as currently disclosed in Note 1(a) to the Company’s consolidated financial statements in the 2011 Form 20-F), under Item 5 “Operating and Financial Review and Prospects” in its future Form 20-F filings.

Year Ended December 31, 2011 Compared to Year Ended December 31, 2010, page 54

1

Revenues, page 54

Online Games Services, page 54

2.            Reference is made to the first risk factor discussed on page 5.  Given the importance of a limited number of online games to your business, please tell us your consideration of: (i) disclosing net revenues from each online game named in this risk factor as well as net revenues in total from all other online games for each year presented; and (ii) discussing related trends.  Refer to Item 5 of Form 20-F.

The Company notes that the referenced risk factor was included in the 2011 Form 20-F and the Company’s previous Form 20-F filings in order to provide investors with an understanding that its online game business, as a whole, constituted a significant portion of the Company’s business and that the Company generated a significant amount of its total net revenues from the provision of online game services.  The most popular games for the year were listed to better illustrate the composition of online game services.

In preparing its disclosure for Item 5 of its Form 20-F, the Company evaluated which information is necessary to provide investors with an understanding of the Company’s online game business as a whole, as required in the instructions to Item 5.  In this regard, the Company has determined that a qualitative approach is appropriate, focusing on the key factors affecting the Company’s online game segment.  As noted on pages 5, 54 and elsewhere in the 2011 Form 20-F, these factors include the launch of expansion packs and upgrades to existing games, the launch of new games and the initiation of various marketing and promotional events, and it is a combination of several of these types of events in each financial year which explains the year-on-year changes in net revenue from its online game business.  The Company therefore determined that disclosure of the net revenue of individual games was not necessary to provide an understanding of the financial results of its online game business.  Equally importantly, because the Company periodically introduces new games and new versions of games which substantially upgrade and replace the prior version, year-on-year comparisons of each game are not always available.  For example, the risk factor in the 2011 Form 20-F referenced in the Staff’s comment lists two games which were newly developed and not named in the prior year’s Form 20-F.  As a result, the Company believes that quantitative disclosure would be confusing to investors because it would present a large amount of very granular information for multiple games which may not correspond from year to year.

In addition, the Company notes that disclosure of each game’s net revenue can potentially be misleading as to applicable trends with respect to the games.  For example, expansion packs and upgrades are introduced at irregular intervals throughout each year.  As a result, growth in the net revenue of a particular game in a financial year could be different in comparison to other games in that year — implying an overall trend regarding the popularity of that game — when in fact such variations may simply reflect the point of time in the financial year when expansion packs are launched (and not a material trend of the game’s medium or long-term popularity).  The Company respectfully submits that qualitative disclosure of the trends with respect to specific games which materially affect the Company’s net revenues, such as the discussion on page 54 of the 2011 Form 20-F that the popularity of the games Fantasy Westward Journey and Westward Journey Online II increased in 2011 and that resulted mainly from expansion packs and in-game marketing events, enables investors to understand the overall development of and factors affecting the Company’s online game business without having to include excessive disclosure clarifying net revenue figures on a game-by-game basis.

The Company confirms that it will continue to comply with the disclosure requirements as set forth in Item 5.D of Form 20-F and the Commission Release 33-6835 and make relevant disclosure in its future Form 20-F filings.

2

Consolidated Financial Statements

Management’s Report on Internal Control over Financial Reporting, page F-1

3.            Reference is made to your responses to comment 14 in our letter dated August 8, 2011, comment 4 in our letter dated September 27, 2011, comment 2 in our letter dated October 26, 2011 and comment 1 in our letter dated November 10, 2011.  We would like to get an updated understanding about the background of the people who, as of December 31, 2011, were primarily responsible for preparing and supervising the preparation of your financial statements and evaluating the effectiveness of your internal control over financial reporting and their knowledge of U.S. GAAP and SEC rules and regulations.  Do not identify people by name, but for each new person involved and for each new person that replaced people described in the responses to the comments referred to above, please tell us:

·                                          what role he or she takes in preparing your financial statements and evaluating the effectiveness of your internal control;

·                                          what relevant education and ongoing training he or she has had relating to U.S. GAAP;

·                                          the nature of his or her contractual or other relationship to you;

·                                          whether he or she holds and maintains any professional designations such as Certified Public Accountant (U.S.) or Certified Management Accountant; and

·                                          about his or her professional experience, including experience in preparing and/or auditing financial statements prepared in accordance with U.S. GAAP and evaluating effectiveness of internal control over financial reporting.

If none of your employees hold a license as a Certified Public Accountant in the United States and did not attend U.S. institutions or extended educational programs that provide extensive relevant education relating to U.S. GAAP, please tell us your basis for concluding that your internal control over financial reporting is effective.

The Company respectfully submits that the Company’s acting chief financial officer, former financial controller (until her resignation for personal reasons in July 2011), current financial controller, reporting manager and internal audit manager were, as of December 31, 2011, and continue to be, primarily responsible for preparing and supervising the preparation of its financial statements and evaluating the effectiveness of its internal control over financial reporting.  The background of each of these senior accounting and financial personnel was set forth in the Company’s prior correspondence to the Staff.  The Company notes that the staffing of the Company’s finance department has been relatively stable, and no senior members joined in 2011 other than the current financial controller.

3

In response to the Staff’s query regarding whether any of the Company’s employees holds a license as a Certified Public Accountant in the United States or attended a U.S. institution or extended educational program that provides extensive relevant education relating to U.S. GAAP, the Company confirms that a senior member of its finance department has such education and has passed the U.S. Certified Public Accountant Exam.  Specifically, as mentioned in the Company’s correspondence to the Staff dated September 2, 2011 and November 7 and 23, 2011, the Company’s reporting manager who joined in 2008 holds a Bachelor of Business Administration degree in Finance and Accounting from the University of Wisconsin — Milwaukee, which provided the reporting manager with extensive relevant education relating to U.S. GAAP.  In addition, the reporting manager passed the U.S. Certified Public Accountant Exam and is a regular member of the American Institute of Certified Public Accountants (the “AICPA”), meaning that she meets all of the relevant qualifications for certification as a U.S. Certified Public Accountant (although she has not yet applied for such certification).  The reporting manager has approximately 2,600 hours of U.S. GAAP experience gained while working in the public accounting sector, four years’ experience working as an internal audit manager establishing a company-wide internal control system under the Committee of Sponsoring Organizations of the Treadway Commission (COSO) model, and three years’ experience working as a regional reporting manager of a NASDAQ-listed company.

In addition, in 2011 the reporting manager participated in 60 hours of professional training and e-learning programs to obtain the requisite continuing professional education credits as required by the AICPA.  The reporting manager also continues to subscribe to the AICPA Journal of Accountancy to keep up to date with the latest trends and developments in accounting pronouncements.  The reporting manager is responsible for the preparation of the Company’s consolidated financial statements.

The Company also notes the following:

·                  In 2011, the Company’s acting chief financial officer and current financial controller attended approximately 38.5 and 40 hours, respectively, of training on U.S. GAAP and SEC reporting issues.

·                  The Company’s current financial controller who joined in March 2011 holds a Bachelor of Arts degree in International Accounting-U.S. GAAP stream from the Shanghai University of Finance and Economics.  The Company would like to highlight that such university is the oldest university in China focusing on finance and accounting.  In addition, the current financial controller’s degree and transcript were evaluated by World Education Services, a U.S.-based not-for-profit organization specializing in evaluating international credentials, and it concluded that such degree is equivalent to a bachelor’s degree from a regionally accredited institution in the U.S.  The financial controller has eight years of experience working for KPMG on audit matters, including approximately 1,000 hours as an engagement manager handling U.S. GAAP audits in the three years prior to his joining the Company.

4

·                  In 2011, the Company’s acting chief financial officer, reporting manager, current financial controller, internal audit manager and other members of the finance department regularly reviewed various newsletters and updates published by “Big Four” firms and professional sources to keep up to date with latest developments in U.S. GAAP and other topics in accounting.  In addition, these senior accounting and financial personnel obtain briefings and updates on U.S. GAAP from PricewaterhouseCoopers Zhong Tian CPAs Limited Company (“PwC”) on a regular basis.

·                  As noted in the Company’s prior correspondence with the Staff, the acting chief financial officer holds a Bachelor of Arts degree in Accountancy with honors from the Hong Kong Polytechnic Institute, which was evaluated and concluded by the International Education Research Foundation Inc. to be equivalent in level and purpose to the Bachelor of Arts in Accounting degree awarded by accredited colleges and universities in the U.S.  Moreover, pursuant to the mutual recognition agreement between the Hong Kong Institute of Certified Public Accountants (the “HKICPA”) and the International Qualifications Appraisal Board, the acting chief financial officer, as a member of the HKICPA, has satisfied the education and experience criteria set forth in that agreement for qualification in the U.S. (with the only remaining requirement being the U.S. International Qualification Exam).

Taking into account the qualifications, education, work experience (including extensive experience working for “Big Four” firms on U.S. GAAP related projects) and ongoing training of the Company’s acting chief financial officer, reporting manager, current financial controller, internal audit manager and other members of the finance department and other relevant factors, the Company’s chief executive officer and acting chief financial officer respectfully submit that they had a reasonable basis, using the criteria set forth by the COSO framework, to conclude in the 2011 Form 20-F that, as of December 31, 2011, the Company’s internal control over financial reporting is effective.  The Company further notes that it is not aware of any rules or pronouncements of the Commission, or applicable accounting standards or the COSO framework, which would suggest that such conclusion is inherently unreasonable or unsupportable.  The Company requests that the Staff consider the foregoing and would welcome an opportunity to discuss these points with the Staff at any time.

Notes to the Consolidated Financial Statements, page F-7

Note 1. Organization and Nature of Operations, page F-7

(b) Nature of Operations, page F-10

4.                                      Please disclose the length of term/remaining term and renewal provisions of your principal agreements that provide effective control over the variable interest entities.

The Company acknowledges the Staff’s comment and confirms that it will include the abovementioned disclosure in its future Form 20-F filings.

***

5

As you requested in the Letter, the undersigned, on behalf of the Company, acknowledges that:

·                  the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

·                  staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

·                  the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any additional questions or comments regarding the 2011

August 15, 2012

Via-Email
Onward Choi
Acting Chief Financial Officer
NetEase, Inc.
26/F, SP Tower D
Tsinghua Science Park Building 8
No. 1 Zhongguancun East Road, Haidian District
Beijing 100084, People’s Republic of China

Re: NetEase, Inc.
 Form 20-F for Fiscal Year Ended December 31, 2011
Filed April 26, 2012
File No. 0-30666

Dear Mr. Choi :

We have reviewed your filing and have the following comments.  We have limited our
review to only your financial statements and related disclosures and do not intend to expand our
review to ot her portions of your document .  In some of our comments, we may ask you to
provide us with information so we may better understand your disclosure.

Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advising us when you will provide the requested
response.   If you do not believe our comments apply to your facts and circumstan ces or do not
believe an amendment is appropriate, please tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these  comments, we may have  additional comments.

Item 5. Op erating and Financial Review and Prospects, page 44

A. Operating Results, page 44

1. Please disclose information that allows investors to evaluate the nature of assets held by,
and the operations of, entities apart from your consolidated variable interest e ntities.  The
information should be in sufficient detail to convey the assets and operations that are not
subject to involvement with your consolidated variable interest entities.

Onward Choi
NetEase, Inc.
August 15, 2012
Page 2

 Year Ended December 31, 2011 Compared to Year Ended December 31, 2010,  page 54

Revenues, page 54
Online Games Services, page 54

2. Reference is made to the first risk factor discussed on page 5.  Given the importance of a
limited number of online games to your business, p lease tell us your consideration of: (i)
disclosing net  revenues from each online game  named in this risk factor as well as net
revenues in total from all other online games for each year presented; and (ii) discussing
related trends .  Refer to Item 5 of Form 20 -F.

Consolidated Financial Statements

Manag ement’s Report on Internal Control over Financial Reporting, page F -1

3. Reference is made to your responses to comment 14 in our letter dated August 8, 2011,
comment 4 in our letter dated September 27, 2011, comment 2 in our letter dated October
26, 2011 an d comment 1 in our letter dated November 10, 2011.  We would like to get an
updated understanding about the background of the people who, as of December 31,
2011, were primarily responsible for preparing and supervising the preparation of your
financial st atements and evaluating the effectiveness of your internal control over
financial reporting and their knowledge of U.S. GAAP and SEC rules and
regulations.   Do not identify people by name, but for each new person involved and for
each new person that repla ced people described in the responses to the comments referred
to above, please tell us:

 what role he or she takes in preparing your financial statements and evaluating the
effectiveness of your internal control;

 what relevant education and ongoing tra ining he or she has had relating to U.S.
GAAP;

 the nature of his or her contractual or other relationship to you;

 whether he or she holds and maintains any professional designations such as Certified
Public Accountant (U.S.) or Certified Management Accountant; and

 about his or her professional experience, including experience in preparing and/or
auditing financial statements prepared in accordance with U.S. GAAP and evaluating
effectiveness of internal control over financial reporting.

If none of your employees hold a license as a Certified Public Accountant in the United
States and did not attend U.S. institutions or extended educational programs that provide

Onward Choi
NetEase, Inc.
August 15, 2012
Page 3

 extensive relevant education relating to U.S. GAAP, please tell us your basis for
conclud ing that your internal control over financial reporting is effective.

Notes to the Consolidated Financial Statements, page F -7

Note 1. Organization and Nature of Operations, page F -7
(b) Nature of Operations, page F -10

4. Please disclose the length of term/remaining term and renewal provisions of your
principal agreements that provide effective control over the variable interest entities.

We urge all persons who are responsible for the accuracy and adequacy of the disclo sure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules require.   Since the company and its management are
in possession of all facts relating to a company’s disclo sure, they are responsible for the accuracy
and adequacy of the disclosures they have made.

 In responding to our comments, please provide  a written statement from the company
acknowledging that:

 the company is responsible for the adequacy and accuracy  of the disclosure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

 the company may not assert staff comments as a defense in any p roceeding initiated by
the Commission or any person under the federal securities laws of the United States.

You may contact Adam Phippen, Staff Accountant , at (202) 551 -3336  or me at (202)
551-3344  if you have questions regarding our comments or any other  questions.

Sincerely,

 /s/ William H. Thompson

William H. Thompson
Accounting Branch Chief

cc: Paul Boltz
 Ropes & Gray, LLP.

November 30, 2011
 Via-Email

Onward Choi Acting Chief Financial Officer NetEase.Com, Inc. 26/F, SP Tower D Tsinghua Science Park Building 8 No. 1 Zhongguancun East Road, Haidian District Beijing 100084, People’s Republic of China
Re: NetEase.Com, Inc.
 Form 20-F for Fiscal Year Ended December 31, 2010
Filed June 22, 2011 File No. 0-30666

Dear Mr. Choi:
We have completed our review of your f iling.  We remind you that our comments or
changes to disclosure in res ponse to our comments do not for eclose the Commission from taking
any action with respect to the company or th e filing and the company may not assert staff
comments as a defense in any proceeding ini tiated by the Commission or any person under the
federal securities laws of the United States.  We urge all pers ons who are responsible for the
accuracy and adequacy of the disclosure in the fi ling to be certain that the filing includes the
information the Securities Exchange Act of 1934 and all applicable rules require.

Sincerely,
  /s/ William H. Thompson
William H. Thompson Accounting Branch Chief

CORRESP
1
filename1.htm

[Letterhead of NetEase.com, Inc.]

November 23, 2011

Mr. William H. Thompson

Mr. Adam Phippen

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:                             NetEase.com, Inc. (the “Company”)

Form 20-F for the Fiscal Year Ended December 31, 2010

Filed June 22, 2011

File No. 0-30666 (the “2010 Form 20-F”)

Dear Mr. Thompson and Mr. Phippen:

The Company is providing the following information in response to the comment letter dated November 10, 2011 received by the Company from the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in connection with the Staff’s review of the Company’s Form 20-F for the fiscal year ended December 31, 2010.  For your convenience, we have set forth your comment below followed by our response to such comment.

Form 20-F for Fiscal Year Ended December 31, 2010

Consolidated Financial Statements

Management’s Report on Internal Control over Financial Reporting, page F-1

1.                                      We have considered your responses to comment 14 in our letter dated August 11, 2011, comment 4 in our letter dated September 27, 2011 and comment 7 in our letter dated October 26, 2011. Based on the information you provided, it is not clear to us that your senior accounting and financial personnel have sufficient expertise to prepare financial statements in accordance with U.S. GAAP. In this regard, we note that your Acting Chief Financial Officer does not hold a license as a Certified Public Accountant in U.S. and did not attend U.S. institutions or extended educational programs that would appear to provide enough relevant education relating to U.S. GAAP. In addition, although your Acting Chief Financial Officer and Reporting Manager have prior experience with U.S. GAAP, we do not believe the total level of experience is adequate.  Also, we note that your Reporting Manager is not the final decision maker since your Acting Chief Financial Officer is ultimately responsible for the financial statements.  Accordingly, we

1

believe that your lack of U.S. GAAP experience constitutes a material weakness and thus, your internal control over financial reporting would not be effective.  If you disagree, please provide us with a more in depth analysis of the training and experience of your Acting Chief Financial Officer and Reporting Manager in preparing U.S. GAAP financial statements. Otherwise please state that your internal control over financial reporting is not effective as of December 31, 2010, explain in detail that you have financial accounting and reporting departments with limited knowledge of U.S. GAAP and disclose how you will remedy this material weakness in the future. You should also consider the impact of this material weakness on your conclusion regarding disclosure controls and procedures as of December 31, 2010.

The Company has carefully considered the Staff’s comment and respectfully submits that its senior accounting and financial personnel have sufficient expertise to prepare financial statements in accordance with U.S. GAAP.  The Company would like to highlight the following for the Staff’s consideration:

1.              The Acting Chief Financial Officer, Mr. Onward Choi, is responsible for review and supervision of the Company’s financial statements in accordance with U.S. GAAP.  He holds a Bachelor of Arts degree in accountancy with honors from the Hong Kong Polytechnic Institute.  Although, as the Staff notes, this is not a U.S. educational institution, the Company does not believe that such distinction ipso facto renders his degree a negative factor in the analysis.  On the contrary, the Company believes that Mr. Choi’s degree provides him with a strong foundation in accounting principles which are directly relevant to his ability to supervise the Company’s financial statements as evidenced by the fact that his degree program and transcript were evaluated by the International Education Research Foundation Inc., or IERF, which concluded that his studies are equivalent in level and purpose to the Bachelor of Arts in Accounting degree awarded by accredited colleges and universities in the U.S.  A copy of the equivalency report by the IERF is being provided separately to the Staff on a supplemental basis.

2.              In its comment, the Staff also notes that Mr. Choi does not hold a U.S. CPA license. Mr. Choi is, however, a member of the Hong Kong Institute of Certified Public Accountants, or HKICPA.  The Company wishes to note that the high level of uniformity of the qualification standards in Hong Kong and in the U.S. has been recognized by the HKICPA and the International Qualifications Appraisal Board, or IQAB (which represents the American Institute of CPAs, or AICPA, and National Association of State Boards of Accountancy).  The HKICPA and IQAB have entered into a mutual recognition agreement under which Hong Kong CPAs are able to qualify in the U.S. without going through the usual qualification process.  The mutual recognition agreement states that the HKICPA and IQAB have each reviewed “the education requirements, the examination requirements, the experience requirements, the required body of knowledge and the required standards of professional practice [in each jurisdiction and]… are satisfied that the qualification standards for the CPA Designation in Hong Kong and the United States are substantially equivalent.”  Mr. Choi has satisfied the education and experience criteria set forth in that agreement for qualification in the U.S. (with the only remaining requirement being the U.S. International Qualification Exam).

2

3.              As for Mr. Choi’s professional experience working with and applying U.S. GAAP, the Company wishes to reiterate that Mr. Choi worked for two “Big 4” accounting firms for a total of eight years (reaching the position of senior manager), during which time he devoted approximately 25% of his full working time annually to U.S. GAAP-related matters.  The Company considers 25% to be clearly a material amount of Mr. Choi’s working time, and in the aggregate, it totals approximately 4,160 hours of U.S. GAAP work experience in the public accounting sector.  Although the Company is unaware of any rules or pronouncements by the Commission (or applicable accounting standards) addressing what would be considered a sufficient number of hours working on U.S. GAAP matters, the Company views Mr. Choi’s level of experience to be quite extensive and not indicative of a material weakness.

In addition, Mr. Choi’s experience as an audit senior manager or engagement manager of such “Big 4” accounting firms is highly relevant to the work he has performed and continues to perform for the Company.  Specifically, he led and conducted the U.S. GAAP audit work in accordance with each firm’s audit methodology which was designed in accordance with U.S. GAAS, U.S. GAAP and relevant national standards.  His work included, among other things: identifying significant audit risk areas, preparing the audit plan, reviewing audit working papers, discussing critical accounting issues with the client’s management, analyzing the profit and loss accounts, balance sheet accounts and cash flow statement, each as set forth in the client’s financial statements prepared in accordance with U.S. GAAP, and reviewing the related disclosure in the footnotes to the financial statements, as well as preparing audit issues report to the company’s audit committee.

4.              The Company’s letter to the Staff dated October 13, 2011 outlines a range of U.S. GAAP-related training activities in which Mr. Choi participates, including training courses and conferences as well as subscriptions to the www.cfodirect.pwc.com news service and newsletters such as the CFO Essential, in each case to keep current with and understand the recent developments of accounting pronouncements as well as SEC rules and regulations.  The Company would also like to add two additional points in this regard.  First, the audit committee of the Company’s board of directors, or the Audit Committee, holds in-person meetings on a quarterly basis, a portion of which is devoted to information sharing by the Company’s independent registered public accounting firm, PricewaterhouseCoopers Zhong Tian CPAs Limited Company, or PwC, regarding recent U.S. GAAP and SEC regulatory developments.  Mr. Choi and his staff attend these discussions with PwC and the Audit Committee.  Recent quarterly discussions led by PwC have covered such topics as presentation of comprehensive income, liquidity and capital resources disclosure and XBRL.  Second, as part of his regular work activities, the Acting Chief Financial Officer regularly uses the Comperio system offered by PwC.  Comperio is an online library which provides information on the U.S. GAAP financial reporting and assurance literature, as well as a variety of guidance on various issues prepared by PwC.  The Comperio system helps the Acting Chief Financial Officer keep up-to-date with the  latest developments in U.S. GAAP and provides guidance and conclusions on material accounting issues.  For the avoidance of doubt, the Company confirms for the Staff that Mr. Choi is fluent in English and has no difficulty whatsoever in reading or understanding U.S. GAAP literature or SEC rules and regulations.

3

5.              Based on the telephone discussion between Mr. Phippen and the Company’s outside counsel on November 15, 2011, the Company understands that the Staff’s comment is primarily focused on U.S. GAAP experience gained outside of work performed for the Company.  Nonetheless, given the fact that Mr. Choi has been employed by the Company for more than eight years, the Company respectfully submits that this work experience is important in assessing his current ability to understand and correctly apply U.S. GAAP in the preparation of the Company’s financial statements and would respectfully ask that the Staff take this into consideration.  The Company notes that Mr. Choi provides guidance and conclusions on all material accounting issues relating to the Company’s financial statements and leads the process in making important decisions relating to the Company’s accounting.  Examples of his application of his knowledge of U.S. GAAP to specific issues faced by the Company include determining the appropriate accounting treatment for significant transactions (such as accounting treatment for convertible notes adopting the APB 14-1 (ASC 470-20), issuance of restricted share units under ASC 718 and revenue recognition for item-based games, among others), and assessments including new guidance on presentation of comprehensive income, amendments to the accounting and disclosure requirements for the consolidation of variable interest entities (ASC 810-10), amendments to the disclosure requirements related to recurring and nonrecurring fair value measurements, amendments to goodwill impairment testing, disclosure of supplementary pro forma information for business combinations, updates to existing standards on subsequent event, and non-controlling interests in consolidated financial Statements (FAS 160 or ASC 810).  The Company also asks that the Staff take into consideration that during Mr. Choi’s tenure with the Company, it has not had a restatement of its financial statements, whether unaudited quarterly financial statements or audited annual financial statements, and neither the Company nor PwC has identified any instance of material misstatement in the Company’s annual financial statements.  Furthermore, during his tenure with the Company, neither the Company’s management nor PwC identified any material weakness with respect to the Company’s internal controls over financial reporting.

6.              For the reasons set forth above, the Company submits that the Acting Chief Financial Officer has the appropriate educational background, professional qualifications and practical U.S. GAAP experience for his position as the final decision maker ultimately responsible for the Company’s financial statements.  In addition, the senior finance team has deep U.S. GAAP expertise which supports the Acting Chief Financial Officer’s oversight of the Company’s financial statements and materially contributes to the analysis of U.S. GAAP issues and the preparation of such financial statements.

4

In this regard, the Company would like to correct a typographical error in the  response to comment #14 in the Company’s letter to the Staff dated September 2, 2011, which has bearing on the analysis contained in this letter.  In that prior letter to the Staff, it states that the Company’s former finance controller resigned from the Company in July 2010, when in fact she resigned for personal reasons in July 2011.  Therefore, she was serving as the Company’s financial controller on December 31, 2010.  As noted to the Staff previously, while she was with the Company, the former financial controller was responsible for detailed review of the Company’s consolidated financial statements, including those contained in the 2010 Form 20-F, to assure that the Company’s consolidated financial statements are prepared in accordance with the reporting requirements under U.S. GAAP.  As further background, the former finance controller has a degree in accountancy from the Hong Kong Polytechnic University, a Master of Science in Taxation from Golden Gate University, California and Masters of Business Administration from the University of East Asia.  She is a regular member of the AICPA licensed in the State of Washington and subject to its annual professional education credit requirements.  In addition, she worked for a “Big 4” accounting firm for three years as an audit supervisor and subsequently held a variety of accounting and SEC reporting positions with public companies based in the U.S. for approximately 22 years, including serving as the SEC reporting manager of a leading electronics company, the manager of Sarbanes-Oxley compliance and controls for a global apparel retailer and an internal audit manager in a Fortune 100 energy company.  In light of the foregoing, the Company considers the former financial controller to have a very high level of U.S. GAAP experience.

7.              The Company reiterates that its reporting manager also has significant U.S. GAAP experience, as set forth in the Company’s letter to the Staff dated November 7, 2011.  To summarize, this experience includes: a Bachelor of Business Administration Degree in Finance and Accounting from the University of Wisconsin — Milwaukee, associated membership in the AICPA and fellow membership in the Association of Chartered Certified Accountants, approximately 2,600 hours of U.S. GAAP experience gained while working in the public accounting sector, four years’ experience working as an internal audit manager establishing a company-wide internal control system under the COSO model, and three years’ experience working as a regional reporting manager of a NASDAQ-listed company.  The reporting manager also attends the Audit Committee training sessions and uses the Comperio system described in paragraph 4 above.

The determination as to whether a material weakness in internal control over financial reporting exists necessarily involves the exercise of certain judgment by management.  The Company believes this is particularly the case when assessing the level of U.S. GAAP expertise of particular individuals, which is an inherently subjective analysis given that professional expertise is not readily quantifiable.  In the case of management’s report on internal control over financial reporting contained in the 2010 Form 20-F, management, including the Chief Executive Officer and Acting Chief Financial Officer, supervised the testing and evaluation activities of the Company’s Internal A

November 10, 2011
 Via-Email

Onward Choi Acting Chief Financial Officer NetEase.Com, Inc. 26/F, SP Tower D Tsinghua Science Park Building 8 No. 1 Zhongguancun East Road, Haidian District Beijing 100084, People’s Republic of China
Re: NetEase.Com, Inc.
 Form 20-F for Fiscal Year Ended December 31, 2010
Filed June 22, 2011 Response dated November 7, 2011 File No. 0-30666

Dear Mr. Choi:
 We have reviewed your response dated November 7, 2011 and have the following
additional comment.  In our comment, we may ask you to provide us with information so we
may better understand your disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  If you do not believe our comment applies to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.
 After reviewing any amendment to your filing and the information you provide in
response to this comment, we may have additional comments.               Form 20-F for Fiscal Year Ended December 31, 2010

 Consolidated Financial Statements

 Management’s Report on Internal Cont rol over Financial Reporting, page F-1

 1. We have considered your responses to co mment 14 in our letter dated August 11, 2011,
comment 4 in our letter dated September 27, 2011 and comment 7 in our letter dated
October 26, 2011.  Based on the information you pr ovided, it is not clear to us that your
senior accounting and financial personnel have  sufficient expertise to prepare financial
statements in accordance with U.S. GAAP.  In this regard, we note that your Acting
Chief Financial Officer does not hold a license  as a Certified Pub lic Accountant in the

Onward Choi
NetEase.Com, Inc. November 10, 2011 Page 2

 U.S. and did not attend U.S. institutions or  extended educational programs that would
appear to provide enough relevant educa tion relating to U.S. GAAP.  In addition,
although your Acting Chief Financial Offi cer and Reporting Manager have prior
experience with U.S. GAAP, we do not believe th e total level of experience is adequate.
Also, we note that your Reporting Manager is  not the final decisi on maker since your
Acting Chief Financial Officer is ultimately responsible for the fi nancial statements.
Accordingly, we believe that your lack of U. S. GAAP experience constitutes a material
weakness and thus, your internal control over fi nancial reporting would not be effective.
If you disagree, please provide us with a mo re in depth analysis of the training and
experience of your Acting Chief Financial O fficer and Reporting Manager in preparing
U.S. GAAP financial statements.  Otherwise please state that your internal control over
financial reporting is not effective as of  December 31, 2010, explain in detail that you
have financial accounting and reporting depa rtments with limited knowledge of U.S.
GAAP and disclose how you will remedy this material weakness in the future.  You should also consider the impact of this ma terial weakness on your conclusion regarding
disclosure controls and proce dures as of December 31, 2010.

You may contact Adam Phippe n, Staff Accountant, at ( 202) 551-3336 or me at (202)
551-3344 if you have questions regarding our comment or any other questions.

Sincerely,

 /s/ William H. Thompson
 William H. Thompson Accounting Branch Chief

CORRESP
1
filename1.htm

[Letterhead of NetEase.com, Inc.]

November 7, 2011

Mr. William H. Thompson

Mr. Adam Phippen

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:          NetEase.com, Inc. (the “Company”)

Form 20-F for the Fiscal Year Ended December 31, 2010

Filed June 22, 2011

File No. 0-30666 (the “2010 Form 20-F”)

Dear Mr. Thompson and Mr. Phippen:

The Company is providing the following information in response to the comment letter dated October 26, 2011 received by the Company from the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in connection with the Staff’s review of the Company’s Form 20-F for the fiscal year ended December 31, 2010.  For your convenience, we have set forth each of your comments below followed by our response to each comment.

Form 20-F for Fiscal Year Ended December 31, 2010

Item 5. Operating and Financial Review and Prospects, page 43

B. Liquidity and Capital Resources, page 60

1.             We reviewed your response to comment two in our letter dated September 27, 2011.  In circumstances where a significant amount of consolidated cash, time deposits and short-term investments is held by foreign subsidiaries and VIEs, we believe that disclosure of whether you would need to accrue and pay taxes if repatriated and your intent not to repatriate the funds would be necessary for an understanding of your liquidity even though such disclosure is included in the financial statements.  As such, if the amount of cash and time deposits held by PRC subsidiaries and variable interest entities is significant, please also disclose that you would need to accrue and pay withholding and other taxes if the funds were repatriated and do not intend to repatriate the funds.  Refer to Item 5.B. of Form 20-F.

1

The Staff’s comment is noted, and the Company will include disclosure in Item 5 of its annual report on Form 20-F for the year ending December 31, 2011 regarding the need to accrue and pay withholding or other taxes if funds are repatriated and the Company’s current plans with respect to repatriation of funds.

Consolidated Financial Statements

Management’s Report on Internal Control over Financial Reporting, page F-1

2.             We reviewed your response to comment four in our letter dated September 27, 2011.  Regarding the US GAAP audit engagements in which your Acting Chief Financial Officer participated, please tell us the approximate number of hours spent on these engagements. In addition, as previously requested please elaborate on your Reporting Manager’s knowledge, experience and on-going training in US GAAP and SEC Rules and Regulations provided in your response to comment 14 in our letter dated August 8, 2011. In doing so, please tell us the approximate number of hours spent each year attending training courses focused on US GAAP and SEC Rules.  Please also describe the nature of any US GAAP audit engagements which this individual participated in including the approximate number of hours spent on the engagements, whether they were directly involved in US GAAP issues and if so provide details of those issues.

During the period from 1993 to 2003 when the Company’s Acting Chief Financial Officer worked in the public accounting sector, he spent approximately one-fourth of his working time per year, or approximately 520 hours, on U.S. GAAP related work.  Such number of hours, however, is based on the best estimate of the Acting Chief Financial Officer because he has been working with the Company for the last eight years and he does not have precise information on the hours spent due to the time gap.

The Company’s reporting manager worked in the public accounting sector from 1995 to 1996 with two local accounting firms in Wisconsin, U.S.A., and from 1997 to 2001 with Deloitte Touche Tohmatsu (“Deloitte”) in Hong Kong.  During her service with the two local accounting firms, she built up her knowledge and understanding of U.S. GAAP through working on audit engagements of approximately 2,000 hours for United States state and county governing bodies and colleges (financial and compliance audits pursuant to U.S. Single Audit and Generally Accepted Government Auditing Standards) and private companies which were required to report their financial statements based on U.S. GAAP. Further, during her service with Deloitte, she worked on audit engagements of approximately 600 hours for private companies and subsidiaries of U.S. listed companies which were required to report their financial statements based on U.S. GAAP and, with respect to subsidiaries of U.S. listed companies, relevant Commission rules and regulations for ongoing statutory reporting purposes.  Such audit engagements involved various U.S. GAAP issues including revenue recognition, start-up costs, foreign currency matters, related party disclosures, inventory, investments, discontinued operation and tax computation.

From 2001 to 2005, she worked as an internal audit manager of a leading global information and communications technology solutions provider in China, where she participated in establishing the company’s company-wide internal control system under the COSO model and was responsible for the financial and operation audits of the company’s overseas operations.  In addition, from 2005 to 2008, she worked as a regional reporting manager of a NASDAQ-listed

2

company and was responsible for the preparation of monthly financial statements under U.S. GAAP and relevant Commission rules and regulations, as well as monitoring internal control over financial reporting of the company.  During this three-year period, she also attended a total of approximately 30 hours of training sessions each year provided by the company’s senior reporting manager, who was a former senior audit manager of KPMG, New York, on the latest U.S. reporting standards and internal control requirements.  After joining the Company in 2008, she has subscribed to the American Institute of Certified Public Accountants’ (“AICPA”) Journal of Accountancy and PricewaterhouseCooper’s CFOdirect Network and Comperio to keep up to date with the latest trends and developments in accounting pronouncements, and she spent approximately 20 hours and 60 hours on self-study CPExpress trainings provided by AICPA in 2010 and 2011, respectively.

***

The undersigned, on behalf of the Company, acknowledges that:

·      the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

·      staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filing; and

·      the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United States.

If you have any additional questions or comments regarding the 2010 Form 20-F, please contact the undersigned at (86 10) 8255 8163.

Sincerely,

/s/ Onward Choi

Onward Choi

Acting Chief Financial Officer

NetEase.com, Inc.

3

October 26, 2011
 Via-Email

Onward Choi Acting Chief Financial Officer NetEase.Com, Inc. 26/F, SP Tower D Tsinghua Science Park Building 8 No. 1 Zhongguancun East Road, Haidian District Beijing 100084, People’s Republic of China
Re: NetEase.Com, Inc.
 Form 20-F for Fiscal Year Ended December 31, 2010
Filed June 22, 2011 File No. 0-30666

Dear Mr. Choi:
 We have reviewed your response dated October 13, 2011 and have the following
additional comments.  In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  If you do not believe our comments apply to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these comments, we ma y have additional comments.
            Form 20-F for Fiscal Year Ended December 31, 2010

 Item 5. Operating and Financial Review and Prospects, page 43

 B. Liquidity and Capital Resources, page 60

1. We reviewed your response to comment two in our letter dated September 27, 2011.  In
circumstances where a significant amount of consolidated cash, time deposits and short-
term investments is held by foreign subsidiari es and VIEs, we believe  that disclosure of
whether you would need to accrue and pay ta xes if repatriated a nd your intent not to
repatriate the funds would be necessary fo r an understanding of  your liquidity even
though such disclosure is include d in the financial statements.  As such, if the amount of
cash and time deposits held by PRC subsidia ries and variable interest entities is

Onward Choi
NetEase.Com, Inc. October 26, 2011 Page 2

 significant, please also disclo se that you would need to ac crue and pay withholding and
other taxes if the funds were repatriated and do not intend to repatriate the funds.  Refer
to Item 5.B. of Form 20-F.
 Consolidated Financial Statements

 Management’s Report on Internal Cont rol over Financial Reporting, page F-1

2. We reviewed your response to comment four in our letter dated September 27, 2011.
Regarding the US GAAP audit engagement s in which your Acting Chief Financial
Officer participated, please  tell us the approximate number of hours spent on these
engagements.  In addition, as previously requested please elabor ate on your Reporting
Manager’s knowledge, experi ence and on-going training in US GAAP and SEC Rules
and Regulations provided in your response to  comment 14 in our letter dated August 8,
2011.  In doing so, please tell us the appr oximate number of hours spent each year
attending training courses focused on US GAAP and SEC Rules.  Please  also describe the
nature of any US GAAP audit engagement s which this individual participated in
including the approximate number of hours spen t on the engagements, whether they were
directly involved in US GAAP issues and if  so provide details of those issues.

You may contact Adam Phippe n, Staff Accountant, at ( 202) 551-3336 or me at (202)
551-3344 if you have questions regarding our comments or any other questions.

Sincerely,
    /s/ William H. Thompson
 William H. Thompson Accounting Branch Chief

CORRESP
1
filename1.htm

[Letterhead of NetEase.com, Inc.]

October 13, 2011

Ms. Mara Ransom

Ms. Angie Kim

Mr. William H. Thompson

Mr. Adam Phippen

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:                             NetEase.com, Inc. (the “Company”)

Form 20-F for the Fiscal Year Ended December 31, 2010

Filed June 22, 2011

File No. 0-30666 (the “2010 Form 20-F”)

Dear Ms. Ransom, Ms. Kim, Mr. Thompson and Mr. Phippen:

The Company is providing the following information in response to the comment letter dated September 27, 2011 received by the Company from the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in connection with the Staff’s review of the Company’s Form 20-F for the fiscal year ended December 31, 2010 (the “Letter”).  For your convenience, we have set forth each of your comments below followed by our response to each comment.

Form 20-F for Fiscal Year Ended December 31, 2010

Item 5. Operating and Financial Review and Prospects, page 43

B. Liquidity and Capital Resources, page 60

1.                                      We reviewed your response to comment six in our letter dated August 8, 2011 and understand that you will include additional disclosures in other sections of the document in future filings.  Notwithstanding, please include a discussion of your funding policies and objectives in terms of the manner in which treasury functions are controlled, including how cash is transferred within the corporate structure, and the current currencies in which cash and cash equivalents are held.  Refer to Item 5.B.2 of Form 20- F.

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The Company notes the Staff’s comments and confirms that it will include in Item 5.B of its annual report on Form 20-F for the year ending December 31, 2011 (the “2011 Form 20-F”) a discussion of its funding policies and objectives, including how cash is transferred within the corporate structure and current currencies in which cash and cash equivalents are held.

2.                                      We reviewed your response to comment seven in our letter dated August 8, 2011.  We believe that when significant amounts of consolidated cash and short term investments are permanently invested overseas and are not available to the parent company, discussion about these items on a consolidated basis may not be sufficient to understand a company’s liquidity.  When evaluating and discussing liquidity, a discussion of cash and short term investments on a disaggregated basis may be very relevant and necessary.  As such, please disclose the amount of cash and time deposits held by your PRC subsidiaries and variable interest entities, whether you intend to transfer the funds to your non-PRC entities and whether you would need to accrue and pay withholding and other taxes if funds were transferred to your non-PRC entities.

The Company notes that page F-31 of the 2010 Form 20-F discloses that: (i) the Company would need to accrue and pay withholding tax in the PRC if funds are transferred from its PRC entities to its non-PRC entities with respect to profits accumulated after January 1, 2008 and (ii) except for StormNet IT HK and StormNet (for which withholding tax on retained earnings has been accrued), the Company expects its PRC entities will indefinitely reinvest all post-2007 earnings such that no withholding tax is expected to be incurred.  Accordingly, the Company respectfully submits that the Staff’s request for disclosure on “whether you intend to transfer the funds to your non-PRC entities and whether you would need to accrue and pay withholding and other taxes if funds were transferred to your non-PRC entities” is already addressed in the 2010 Form 20-F.  The Company confirms that it will include the amount of cash and time deposits held by its PRC subsidiaries and variable interest entities in the 2011 Form 20-F.

Item 19. Exhibits, page 91

3.                                      We note your response to comment 12 in our letter dated August 8, 2011 that “the license agreements with Blizzard were made in the ordinary course of the Company’s business and, per section 4(b) of the Form 20-F instructions, would not be required to be filed as exhibits.”  We further note your risk factor disclosure on page 6 of your filing that “Blizzard could terminate the license and joint venture agreements with us, which in either case could harm our operating results and business” and your risk factor disclosure on page 11 that “the operation of the online games licensed from Blizzard is dependent on Shanghai EaseNet, which is owned by William Lei Ding, our Chief Executive Officer, director and major shareholder…The interests of Mr. Ding and the joint venture may differ from ours and those of our shareholders.”  Please explain why your business is not “substantially dependent” on these license agreements with Blizzard or why the contract should not be considered one with a related party.  Please see and explain why Instructions 4(b)(i) and (ii) to Item 19 of Form 20-F do not apply.

Blizzard has entered into two license agreements with Shanghai EaseNet: one for the operation of World of Warcraft and one for the operation of StarCraft II.  As previously noted in

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the Company’s letter to the Staff dated September 2, 2011, Shanghai EaseNet is a controlled variable interest entity which is consolidated in the Company’s financial statements, and William Ding does not receive any benefits in his capacity as the shareholder of Shanghai EaseNet or exercise any personal control over it.  Accordingly, the foregoing license agreements are between Blizzard and an entity within the Company’s consolidated group and are not substantively a contract “to which (A) directors, (B) officers, (C) promoters, (D) voting trustees or (E) security holders… are parties…”  As such, Instruction 4(b)(i) of Form 20-F would not be applicable.

The Company also notes that since 2004, internally developed online games have contributed the substantial majority of the Company’s net profits.  In contrast, in the first half of 2011, Blizzard licensed games contributed approximately 12% of the Company’s net income before tax.  In the near term, the Company expects this percentage to remain relatively stable or could even decline as the Company’s internally developed games have continued to grow in popularity.  Thus, although the Company included the cautionary disclosure cited in the Staff’s comment above to reflect the fact that the Company’s profitability would be affected if the relationship with Blizzard is terminated, the Company does not consider its business to be in any way “substantially dependent” on its license agreements with Blizzard.  The primary focus of the Company’s business has been, and is expected to continue to be, the development and operation of its own internally developed games, and the Company’s success is dependent on its ability to do so effectively, as disclosed in Item 3.D — “Risk Factors — Risks Related to Our Company — If we fail to develop and introduce new online games timely and successfully, we will not be able to compete effectively and our ability to generate revenues will suffer” and elsewhere in the 2010 Form 20-F.

Consolidated Financial Statements

Management’s Report on Internal Control over Financial Reporting, page F-1

4.                                      We reviewed your response to comment 14 in our letter dated August 8, 2011.  Please elaborate on your Chief Financial Officer and Reporting Manager’s knowledge, experience and on-going training in US GAAP and SEC Rules and Regulations.  In doing so, please tell us the approximate number of hours spent each year attending training courses focused on US GAAP and SEC Rules.  Please also describe the nature of any US GAAP audit engagements which these individuals participated in including the approximate number of hours spent on the engagements, whether they were directly involved in US GAAP issues and if so provide details of those issues.

The Company’s Acting Chief Financial Officer worked in the public accounting sector from 1993 to 1998 with KPMG in Hong Kong and from 2000 to 2003 with Ernst & Young in Beijing.  During that period, he built up his knowledge and understanding of U.S. GAAP through serving a wide range of clients which were required to report their financial statements based on U.S. GAAP and relevant SEC rules and regulations, both for ongoing statutory reporting and initial public offering purposes.  In his positions as senior accountant and audit manager during these periods, he engaged in a wide variety of U.S. GAAP related work, including audit review of financial statements prepared in accordance with U.S. GAAP and analyzing various accounting issues under U.S. GAAP such as, for example, issues related to revenue recognition,

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business combinations, income tax, calculation of earnings per share, share-based compensation expense and ASC 810-10. The industries of clients so served included telecommunication, energy, machinery and airline.   After he joined the Company, he was extensively involved in various aspects of the preparation and management of the financial statements prepared in accordance with U.S. GAAP.  In the role of Acting Chief Financial Officer of the Company, he (i) manages the preparation of the Company’s financial statements in accordance with U.S. GAAP and the preparation of the Company’s annual reports on Form 20-F and (ii) manages the maintenance of effective internal control over financial reporting.  In particular, he regularly reviews the Company’s financial statements prepared by the Company’s accounting staff and challenges the accounting staff on their assumptions and conclusions.  As the head of the accounting and finance team, the Acting Chief Financial Officer leads the analysis and discussion and provides guidance and conclusions on all material accounting issues relating to the Company’s financial statements.  As a result, the Acting Chief Financial Officer’s work experience at the Company has provided him with deep knowledge of U.S. GAAP as well as SEC rules and regulations.

The Acting Chief Financial Officer attends training courses and conferences organized by accounting firms and professional organizations to keep up to date with latest developments in U.S. GAAP, other topics in accounting, risk management and Sarbanes-Oxley Act related matters.  In 2010, he attended a half-day seminar named “CFO Essentials Update” organized by PricewaterhouseCoopers (“PwC”) which covered, among other U.S. GAAP issues, FASB developments and new accounting pronouncements that are effective in 2010, recent SEC comment letters, latest PRC tax updates and U.S. Foreign Corrupt Practices Act requirements.  In addition, he subscribes to news from websites such as www.cfodirect.pwc.com to understand the recent developments of accounting pronouncements as well as SEC rules and regulations.  He also regularly receives and reads newsletters from accounting firms to keep his knowledge of U.S. GAAP and SEC rules and regulations current, such as, for example, the CFO Essential, a monthly newsletter published by PwC.  The CFO Essential provides a summary of important capital market events and provides updates on SEC reporting, U.S. GAAP, IFRS and income tax developments that are likely to impact companies listed or planning to be listed in the United States.  Furthermore, the Acting Chief Financial Officer obtains regular briefings on U.S. GAAP and related SEC rules and regulations from the financial controller and reporting manager based on the information they receive while attending seminars and conferences conducted by accounting firms and professional organizations.

The Company’s current financial controller worked in the public accounting sector from 2001 to 2004 with KPMG in Shanghai and from 2006 to 2011 with KPMG in Hangzhou.  He attained the level of senior manager when he left KPMG Hangzhou.  During that period, he acquired solid knowledge of U.S. GAAP through serving clients (either the direct application of U.S. accounting principles or the identification of differences between U.S. and PRC GAAP) in telecommunication and fast consuming goods industries.  During the past three years, he spent approximately 1,000 hours in total as an engagement manager of various U.S. GAAP related projects, including several U.S. GAAP audits of financial statements of private companies which were preparing for a U.S. IPO, SOX 404 attestation projects, as well as integrated audit engagements on several major subsidiaries of a China-based telecommunication operator listed on the New York Stock Exchange.  In addition, from 2004 to 2006, he worked as the deputy

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financial controller of another NASDAQ-listed company, to manage the preparation of financial statements for the quarterly earnings releases and annual report on Form 20-F for the years 2004 and 2005.

When the financial controller was working for KPMG, he spent approximately 40 hours every year to attend various internal training courses and conferences organized by the firm, including annual U.S. GAAP update, ISA versus U.S. GAAS/PCAOB differences update and SOX annual updates.  After he joined the Company in March 2011, he has also subscribed to newsletters from PwC websites to understand the recent developments in accounting pronouncements and SEC regulations and rules. During the past 12 months, in addition to various training programs and seminars related to IFRS and PRC GAAP, he attended a two day course entitled “U.S. GAAP Update”, a half day course entitled “SOX Annual Update” and a one day course entitled “IPO workshop” organized by KPMG, as well as a 1.5 hour webcast course entitled “US GAAP & IFRS Convergence Series: Survey results” and a 1 hour webcast course entitled “US GAAP & IFRS convergence series: Current situation and next steps” organized by PwC.

Notes to the Consolidated Financial Statements, page F-7

Note 2. Principal Accounting Policies, page F-11
 (m) Share-based compensation, page F-14

5.                                      We reviewed your response to comment 21 in our letter dated August 8, 2011.  Reference is made to your statement that you intend to prevent the employee from bearing the risks and rewards that are normally associated with stock ownership.  Please tell us whether you predominately settle RSU awards in cash when the payment date fair value of the shares is greater than and less than the grant date fair value.  Please also tell us your consideration of the guidance in ASC 718-10-25-15.

The Company respectfully submits that it is the Company’s intention to predominately settle RSU awards in shares when the payment date fair value of the shares is greater than the grant date fair value and settle RSU awards in cash when the payment date fair value of the shares is less than the grant date fair value. The Company has a relatively short history of settling RSU awards (with the first settlement occurring during the six month period ended June 30, 2011).  Those RSU awards were predominately settled in shares as their payment date fair value of the shares is greater than their grant date fair value.  However, the Company would predominately settle these RSU awards in cash had their payment date fair value of the shares been less than their grant date fair value in order to prevent the employees from bearing the risks and rewards that are normally associated with stock ownership. As such, the Company determined that it has substantive liabilities and the classification of RSU awards as liabilities reflects the substantive terms of the award and any related arrangement pursuant to the guidance in ASC 718-10-25-15.

***

The undersigned, on behalf of the Company, acknowledges that:

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·                  the Company is responsible for the adequacy and accuracy of the disc

CORRESP
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filename1.htm

[Letterhead of NetEase.com, Inc.]

October 11, 2011

Ms. Mara Ransom

Ms. Angie Kim

Mr. William H. Thompson

Mr. Adam Phippen

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:                             NetEase.com, Inc. (the “Company”)

Form 20-F for the Fiscal Year Ended December 31, 2010

Filed June 22, 2011

File No. 0-30666 (the “2010 Form 20-F”)

Dear Ms. Ransom, Ms. Kim, Mr. Thompson and Mr. Phippen:

In your letter dated September 27, 2011, you requested that we respond to your comments regarding the 2010 Form 20-F within ten business days or tell you when we would provide a response.  The Company is addressing the comments, and we request that the time to respond to your comments be extended by 5 business days to October 18, 2011.

We appreciate your support regarding our request.  Please contact me at (86 10) 8255-8163 or ochoi@corp.netease.com if you have any questions regarding the foregoing.

Sincerely,

/s/ Onward Choi

Onward Choi

Acting Chief   Financial Officer

NetEase.com, Inc.

cc: Paul W.   Boltz, Esq. — Ropes & Gray LLP

September 27, 2011
 Via-Email

Onward Choi Acting Chief Financial Officer NetEase.Com, Inc. 26/F, SP Tower D Tsinghua Science Park Building 8 No. 1 Zhongguancun East Road, Haidian District Beijing 100084, People’s Republic of China
Re: NetEase.Com, Inc.
 Form 20-F for the Fiscal Year Ended December 31, 2010
Filed June 22, 2011 File No. 0-30666

Dear Mr. Choi:
 We have reviewed your response dated September 2, 2011 and have the following
additional comments.  In some of our comments, we may ask you to provide us with information
so we may better understand your disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  If you do not believe our comments apply to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these comments, we ma y have additional comments.
 Form 20-F for Fiscal Year Ended December 31, 2010

 Item 5.  Operating and Financial Review and Prospects, page 43

 B.  Liquidity and Capital Resources, page 60

1. We reviewed your response to comment six in our letter dated August 8, 2011 and
understand that you will include additional disclosures in othe r sections of the document
in future filings.  Notwithstanding, please in clude a discussion of  your funding policies
and objectives in terms of the manner in which treasury functions are controlled,
including how cash is transferred within the corporate structure, and the current
currencies in which cash and cash equivalents are held.  Refer to Item 5.B.2 of Form 20-
F.

Onward Choi
NetEase.Com, Inc. September 27, 2011 Page 2

2. We reviewed your response to comment se ven in our letter dated August 8, 2011.  We
believe that when significant amounts of cons olidated cash and short term investments
are permanently invested overseas and ar e not available to the parent company,
discussion about these items on a consolidated  basis may not be sufficient to understand a
company’s liquidity.  When evaluating and di scussing liquidity, a discussion of cash and
short term investments on a disaggregated basi s may be very relevant and necessary.  As
such, please disclose the amount of cash and time deposits held by your PRC subsidiaries
and variable interest entities, whether you intend to transfer the funds to your non-PRC
entities and whether you would need to accrue and pay with holding and other taxes if
funds were transferred to your non-PRC entities.
 Item 19.  Exhibits, page 91

3. We note your response to comment 12 in our le tter dated August 8, 2011 that “the license
agreements with Blizzard were made in th e ordinary course of the Company’s business
and, per section 4(b) of the Form 20-F instruc tions, would not be required to be filed as
exhibits.”  We further note your risk factor  disclosure on page 6 of your filing that
“Blizzard could terminate the license and jo int venture agreements with us, which in
either case could harm our operating results a nd business” and your risk  factor disclosure
on page 11 that “the operation of the online games licensed from Blizzard is dependent
on Shanghai EaseNet, which is owned by William Lei Ding, our Chief Executive Officer, director and major shareholder…The intere sts of Mr. Ding and the joint venture may
differ from ours and those of our shareholders .”  Please explain why your business is not
“substantially dependent” on thes e license agreements with B lizzard or why the contract
should not be considered one with a rela ted party.  Please see and explain why
Instructions 4(b)(i) and (ii) to Item 19 of Form 20-F do not apply.
 Consolidated Financial Statements

 Management’s Report on Internal Cont rol over Financial Reporting, page F-1

4. We reviewed your response to comment 14 in our letter dated August 8, 2011.  Please
elaborate on your Chief Financial O fficer and Reporting Manager’s knowledge,
experience and on-going training in US GAAP and SEC Rules and Regulations.  In doing
so, please tell us the approxima te number of hours spent eac h year attending training
courses focused on US GAAP and SEC Rules.  Please also describe the nature of any US
GAAP audit engagements which these indivi duals participated in including the
approximate number of hours spent on the e ngagements, whether they were directly
involved in US GAAP issues and if so  provide details of those issues.

Onward Choi
NetEase.Com, Inc. September 27, 2011 Page 3

 Notes to the Consolidated Fi nancial Statements, page F-7

 Note 2.  Principal Accounting Policies, page F-11

(m)  Share-based compensation, page F-14

5. We reviewed your response to comment 21 in  our letter dated August 8, 2011.  Reference
is made to your statement that you intend to prevent the employee from bearing the risks
and rewards that are normally associated with  stock ownership.  Pl ease tell us whether
you predominately settle RSU awards in cash when the payment date fair value of the
shares is greater than and less than the grant date fair valu e.  Please also tell us your
consideration of the guidance in ASC 718-10-25-15.    You may contact Adam Phippe n, Staff Accountant, at ( 202) 551-3336 or me at (202)
551-3344 if you have questions regarding comments  on the financial statements and related
matters.  Please contact Angi e Kim, Staff Attorney, at (202) 551-3535 or Mara Ransom,
Assistant Director, at (202) 551- 3264 if you have questions regard ing any other comments.

Sincerely,
    /s/ William H. Thompson

William H. Thompson
Accounting Branch Chief

CORRESP
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filename1.htm

[Letterhead of NetEase.com, Inc.]

September 2, 2011

Ms. Mara Ransom

Ms. Angie Kim

Mr. William Thompson

Mr. James Allegretto

Mr. Adam Phippen

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:

NetEase.com, Inc.   (the “Company”)

Form 20-F for the   Fiscal Year Ended December 31, 2010

Filed June 22, 2011

File No. 0-30666   (the “2010 Form 20-F”)

Dear Ms. Ransom, Ms. Kim, Mr. Thompson, Mr. Allegretto and Mr. Phippen:

The Company is providing the following information in response to the comment letter dated August 8, 2011 received by the Company from the Staff (the “Staff”) of the Securities and Exchange Commission (the “Commission”) in connection with the Staff’s review of the Company’s Form 20-F for the fiscal year ended December 31, 2010 (the “Letter”).  For your convenience, we have set forth each of your comments below followed by our response to each comment.

Item. 4 Information on the Company, page 23

A. History and Development of the Company, page 23

1.                                      Please discuss your material commitments for capital expenditures currently in progress, if any, and the source of funds needed to fulfill such commitments.  As applicable, please provide us with your proposed disclosure.  Please see Item 4.A.6. of Form 20-F.

The Company’s commitments for capital expenditures for the year ending December 31, 2011 are RMB6.9 million, as set forth in Item 5.F of the 2010 Form 20F.  As such commitments represent less than 1% of the Company’s total cash and cash equivalents as shown on the Company’s audited consolidated balance sheet as of December 31, 2010, the Company does not consider the commitments currently in progress to be material.  The Company confirms that it will include an appropriate negative statement in its annual report on Form 20-F for the year

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ending December 31, 2011 (the “2011 Form 20-F”) if it has no material commitments for capital expenditures currently in progress or expected at the time such form is filed (or alternately will include a discussion if material commitments exist at that time).

B. Business Overview, page 24

Our Organizational Structure, page 25

2.                                      We note the diagram you provide on page 27 depicting the group structure of your principal subsidiaries and affiliated companies.  Please ensure that the disclosure accompanying this diagram explains the role each of those entities plays in your overall business plan.  Please also provide us with your proposed disclosure.

The Company notes the Staff’s comment and proposes to include a diagram and accompanying explanations substantially in the form attached to this letter as Annex A in the 2011 Form 20-F.

Item 5. Operating and Financial Review and Prospects, page 43

A. Operating Results, page 43

Our Corporate Structure, page 43

3.                                      Please tell us your consideration of disclosing the nature and significant provisions of the contractual agreements between you and your subsidiaries and the consolidated variable interest entities, including how net income is attributed to non-controlling interest, how contract terms grant power to direct significant activities and the right to economic returns, the risks in enforceability of the contracts and nonperformance by the variable interest entities and the potential impact of those risks, including the potential for deconsolidation.

The Staff’s comment is acknowledged.  The Company notes that Item 7.B of the 2010 Form 20-F contains certain disclosure regarding the contractual agreements between the Company and its subsidiaries and consolidated variable interest entities, or VIEs, and Item 3.D contains disclosure regarding the risks associated with the VIE arrangements and potential impact of those risks (See Item 3.D — “Risk Factors — Risks Related to our Company — “We do not own Guangzhou NetEase Computer System Co., Ltd., or Guangzhou NetEase, Beijing Guangyitong Advertising Co., Ltd., or Guangyitong Advertising, Beijing NetEase Youdao Computer System Co., Ltd., or Youdao Computer, Wangyibao Co. Ltd., or Wangyibao, or Shanghai EaseNet, and if they or their ultimate shareholders violate our contractual arrangements with them, our business could be disrupted, our reputation may be harmed and we may have to resort to litigation to enforce our rights, which may be time consuming and expensive.”; “— Because our contractual arrangements with Guangzhou NetEase, Guangyitong Advertising, Youdao Computer, Wangyibao and their ultimate shareholders do not detail the parties’ rights and obligations, our remedies for a breach of these arrangements are limited.”; “— A majority of the share capital of Guangzhou NetEase and Guangyitong Advertising, Youdao Computer and the entire share capital of Shanghai EaseNet is held by our major shareholder, who may cause these agreements to be amended in a manner that is adverse to us.”; “— We may not be able to

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conduct our operations without the services provided by Guangzhou NetEase, Guangyitong Advertising, Youdao Computer, Wangyibao and Shanghai EaseNet.”; and “— The Chinese government restricts the ability for foreign investors to invest in and operate in the telecommunications and online gaming businesses.”).  To address the Staff’s comment, as well as comments #4 and #19 below, the Company proposes to include additional disclosure in Note 1(b) to the Company’s consolidated financial statements in the 2011 Form 20-F to summarize issues related to its VIE arrangements.

The Company also supplementally notes that the Company’s net income attributable to non-controlling interest has been and is expected to remain insignificant (in 2010, net loss attributable to non-controlling interests was RMB3.7 million, while net income was RMB2,232.0 million for the same period).  As such, the Company respectfully submits that disclosure on that particular item is unnecessary.

4.                                      Please disclose information that allows investors to evaluate the nature of assets held by, and the operations of, entities apart from your consolidated variable interest entities.  The information should be in sufficient detail to convey the assets and operations that are not subject to involvement with your consolidated variable interest entities.

Please see the response to comment #3 above and comment #19 below regarding the inclusion of additional disclosure on the VIEs in Note 1(b) to the Company’s consolidated financial statements in the 2011 Form 20-F, including disclosure which explains that the Company conducts substantially all of its business through its VIEs, with certain of its directly owned subsidiaries providing technical consulting and related services to the VIEs.  In addition, the Company notes that page F-8 of the 2010 Form 20-F provides quantitative and qualitative information on the total assets and liabilities of the Company’s consolidated VIEs and their subsidiaries and the business activities of each VIE are disclosed in the 2010 Form 20-F, including on page 6 (Shanghai EaseNet) and page 11 (Guangzhou NetEase, Guangyitong Advertising, Youdao Computer and Wangyibao).

Year Ended December 31, 2010 Compared to Year Ended December 31, 2009, page 52

Gross Profit, page 54

5.                                      We note your statement on page 55 that “[t]he decrease in gross profit margin for online game services in 2010 was mainly due to the increased cost of revenues which outpaced the increase in net revenues, and this was in line with [y]our expectation.”  Please enhance your disclosure of these “expectations” with a view to providing investors an outlook on the anticipated trend(s) for your gross profit margins (i.e. whether you expect this decrease to continue and if so, why) and provide us with your proposed disclosure.  Please see Item 5.D of Form 20-F.  We reissue comment one in our letter dated September 22, 2009 as it pertains to this point.

The Company confirms that it will include disclosure in the 2011 Form 20-F regarding any known trends or expectations regarding its gross profit margins.  As disclosed in the 2010 Form 20-F and the prior year’s Form 20-F, gross profit margins decreased in 2009 due in large part to the partial year effect of royalties and other payments related to the re-launch of World of

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Warcraft in September 2009 and decreased further in 2010 due to the full-year effects of such payments.  At the present time, the Company is not aware of similar trends which might significantly affect gross profit margins in future periods, although market competition, popularity of games and other factors discussed in Item 3.D — “Risk Factors” could nonetheless cause additional fluctuations in margins.  The Company will update future disclosure accordingly.

B. Liquidity and Capital Resources, page 60

6.                                      Please disclose how cash is transferred to your PRC subsidiaries and variable interest entities, and conversely, how earnings and cash are transferred from your PRC subsidiaries and variable interest entities to offshore companies.  In addition, please disclose restrictions that impact ability to transfer cash within the corporate structure.

The Company has historically transferred funds from non-PRC entities to its PRC entities infrequently, and such transfers have usually involved loans to the shareholders of newly formed VIEs so that they could contribute the loan proceeds to the VIEs to fund their registered capital requirements.  Currently, there are certain requirements for loans and contributions to PRC entities.  For example, loans by a non-PRC entity to its PRC subsidiaries cannot exceed statutory limits and must be registered with the State Administration of Foreign Exchange, or SAFE, or its local branches, and loans by a non-PRC entity to a VIE must be approved by the National Development and Reform Commission (other than short-term loans) and must also be registered with SAFE or its local branches.  In addition, capital contributions to PRC subsidiaries, whether existing or newly established, must be approved by the PRC Ministry of Commerce or its local counterparts.

With respect to cash transfers from PRC subsidiaries and VIEs to non-PRC entities within the Company’s consolidated group, conversion of the Renminbi into foreign exchange for current account items, including the distribution of dividends, interest and trade and service-related transactions, is permissible.  As a result, the Company’s subsidiaries and VIEs may purchase foreign exchange for the payment of dividends to the Company and of license, content or other royalties, fees and expenses to offshore licensors and content partners, for example.  In practice, the Company’s PRC subsidiaries collect the substantial portion of the profits of the VIEs in the form of technical consulting and related service fees pursuant to contracts with the VIEs.  In turn, such subsidiaries can exchange such amounts for foreign currency and pay them to their non-PRC parent companies in the form of dividends.  One restriction to the foregoing, however, is that Chinese law permits payment of dividends only out of net income as determined in accordance with Chinese accounting standards and regulations.  Under such law, NetEase Beijing, Guangzhou Interactive, Boguan, Guangzhou Information and NetEase Hangzhou are required to set aside a portion of their net income each year to fund certain reserve funds, except in cases where a company’s cumulative appropriations have already reached the statutory limit of 50% of that company’s registered capital.  These reserves are not distributable as cash dividends.  In addition, capital account transactions, which include foreign direct investment and loans, must be approved by SAFE.  Information on the conversion of current account and capital account items, as well as the reserve fund requirements, is disclosed on pages 17, 18, 19, 81 and 82 of the 2010 Form 20-F.

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The Company will include a consolidated summary of the foregoing in Item 3.D — “Risk Factors” and Item 10.D — “Exchange Controls” in the 2011 Form 20-F, with any updates as appropriate.  Except as described above, the Company is not currently subject to any material restrictions that impact its ability to transfer cash within its corporate structure.

7.                                      Please disclose the amount of cash and time deposits held by your PRC subsidiaries and variable interest entities, whether you intend to transfer the funds to your non-PRC entities and whether you would need to accrue and pay withholding and other taxes if funds were transferred to your non-PRC entities.

The Company notes that disclosure regarding withholding taxes and accruals can be found on page F-31 of the 2010 Form 20-F.  As disclosed on page F-31, the Company has accrued withholding tax on retained earnings held by StormNet IT HK and StormNet IT SH that it does not expect to permanently reinvest.  Such accrual totaled RMB1.5 million as at December 31, 2010 and was not disclosed in the 2010 Form 20-F because it is immaterial in amount.  For all other entities, the Company expects that its PRC entities in China will indefinitely reinvest all post-2007 earnings such that no withholding tax is expected to be incurred, as disclosed on page F-31.  Accordingly, the Company did not record any provision for withholding tax on the retained earnings of its other entities in China for all post-2007 periods presented.

The Company also submits that, as noted in response to comment #6 above, the regulatory requirements for transfers of funds into and out of China are disclosed in the 2010 Form 20-F, with certain additional disclosure to be included in the 2011 Form 20-F regarding loans and contributions into China (which the Company has historically done infrequently).  To date, the Company has not experienced any significant difficulties moving funds into or out of China for its business operations.  Accordingly, when considering the ability of the Company to make transfers of funds out of China, the Company believes that the relevant disclosure is the amount of restricted net assets, which is discussed on page F-42 of the 2010 Form 20-F, rather than the amount of cash and time deposits held in China.  The Company plans to include a discussion of its restricted net assets in Item 5.B of the 2011 Form 20-F.

Item 6. Directors, Senior Management and Employees, page 66

B. Compensation, page 67

Director Compensation, page 67

8.                                      Please provide the details of your directors’ service contracts with the company or any of your subsidiaries providing for benefits upon termination of employment, or an appropriate negative statement.  Please provide us with your proposed disclosure.  Please see Item 6.C.2 of Form 20-F.  We reissue comment three in our letter dated September 22, 2009 as it pertains to this point.

The Company notes the Staff’s comment and plans to include in the 2011 Form 20-F the following statement: “We do not have service contracts with any of our directors which provide for benefits upon termination.”

5

E. Share Ownership, page 72

9.                                      As appropriate, please disclose any significant change in the percentage ownership held by any major shareholders during the past three years and provide us with your proposed disclosure.  Please see Item 7.A.1.b of Form 20-F or tell us why you believe this is unnecessary.

The Company respectfully submits that its principal major shareholder from the time of the Company’s initial public offering in 2000 to the present time has been William Lei Ding, the Company’s founder, chief executive officer and a director.  There has been no significant change in his percentage ownership during the past three y

CORRESP
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[Letterhead of NetEase.com, Inc.]

August 12, 2011

Ms. Mara Ransom

Ms. Angie Kim

Mr. William Thompson

Mr. James Allegretto

Mr. Adam Phippen

Division of Corporation Finance

Securities and Exchange Commission

100 F Street, N.E.

Washington, D.C. 20549

Re:          NetEase.com, Inc. (the “Company”)

Form 20-F for the Fiscal Year Ended December 31, 2010

Filed June 22, 2011

File No. 0-30666 (the “2010 Form 20-F”)

Dear Ms. Ransom, Ms. Kim, Mr. Thompson, Mr. Allegretto and Mr. Phippen:

In your letter dated August 8, 2011, you requested that we respond to your comments regarding the 2010 Form 20-F within ten business days or tell you when we would provide a response.  As discussed, the Company is addressing the comments, and we request that the time to respond to your comments be extended by ten business days to September 2, 2011.

We appreciate your support regarding our request. Please contact me at (86 10) 8255-8233 or ochoi@corp.netease.com if you have any questions regarding the foregoing.

Sincerely,

/s/ Onward Choi

Onward Choi

Acting Chief   Financial Officer

NetEase.com, Inc.

cc:  Paul W. Boltz, Esq. — Ropes & Gray LLP

August 8, 2011
 Via-Email

Onward Choi Acting Chief Financial Officer NetEase.Com, Inc. 26/F, SP Tower D Tsinghua Science Park Building 8 No. 1 Zhongguancun East Road, Haidian District Beijing 100084, People’s Republic of China
Re: NetEase.Com, Inc.
 Form 20-F for the Fiscal Year Ended December 31, 2010
Filed June 22, 2011 File No. 0-30666

Dear Mr. Choi:
 We have reviewed your filing and have the following comments.  In some of our
comments, we may ask you to provide us with  information so we may better understand your
disclosure.
 Please respond to this letter within ten business days by amending your filing, by
providing the requested information, or by advi sing us when you will provide the requested
response.  If you do not believe our comments apply to your fact s and circumstances or do not
believe an amendment is appropriate, pl ease tell us why in your response.

After reviewing any amendment to your filing and the information you provide in
response to these comments, we ma y have additional comments.
 Item. 4  Information on the Company, page 23

 A.  History and Developmen t of the Company, page 23

1. Please discuss your material commitments for capital expenditures currently in progress,
if any, and the source of funds needed to fulfill such commitments.  As applicable, please provide us with your proposed disclosure.  Please see Item 4.A.6. of Form 20-F.

Mr. Onward Choi NetEase.Com, Inc.  August 8, 2011 Page 2

 B.  Business Overview, page 24

 Our Organizational Structure, page 25

2. We note the diagram you provide on page 27 depicting the group structure of your
principal subsidiaries and affiliated compan ies.  Please ensure that the disclosure
accompanying this diagram explains the role each  of those entities plays in your overall
business plan.  Please also provide us  with your proposed disclosure.
 Item 5.  Operating and Financial Review and Prospects, page 43

 A.  Operating Results, page 43

 Our Corporate Structure, page 43

3. Please tell us your considerati on of disclosing the nature a nd significant provisions of the
contractual agreements between  you and your subsidiaries an d the consolidated variable
interest entities, including how  net income is attributed to  non-controlling interest, how
contract terms grant power to direct signi ficant activitie s and the right to economic
returns, the risks in enforceability of th e contracts and nonperformance by the variable
interest entities and the potential impact of those risks, includ ing the potential for
deconsolidation.

4. Please disclose information that allows investor s to evaluate the nature of assets held by,
and the operations of, entities ap art from your consolidated variab le interest entities.  The
information should be in sufficient detail to convey the assets and operations that are not
subject to involvement with your consolid ated variable inte rest entities.
 Year Ended December 31, 2010 Compared to Year Ended December 31, 2009, page 52

 Gross Profit, page 54

5. We note your statement on page 55 that “[t]he  decrease in gross pr ofit margin for online
game services in 2010 was mainly due to th e increased cost of revenues which outpaced
the increase in net revenues, and this was in line with [y]our expectation.”  Please
enhance your disclosure of th ese “expectations” with a view  to providing investors an
outlook on the anticipated trend(s) for your gr oss profit margins (i.e . whether you expect
this decrease to continue and if so, why) a nd provide us with your proposed disclosure.
Please see Item 5.D of Form 20-F.  We reissue comment one in our letter dated
September 22, 2009 as it pert ains to this point.

Mr. Onward Choi NetEase.Com, Inc.  August 8, 2011 Page 3

 B.  Liquidity and Capital Resources, page 60

6. Please disclose how cash is transferred to your  PRC subsidiaries and variable interest
entities, and conversely, how earnings a nd cash are transferred from your PRC
subsidiaries and variable in terest entities to offshore co mpanies.  In addition, please
disclose restrictions that impact ability to tr ansfer cash within the corporate structure.

7. Please disclose the amount of cash and time de posits held by your PRC subsidiaries and
variable interest en tities, whether you in tend to transfer the funds to your non-PRC
entities and whether you would need to accrue and pay with holding and other taxes if
funds were transferred to your non-PRC entities.
 Item 6.  Directors, Senior Ma nagement and Employees, page 66

 B.  Compensation, page 67

 Director Compensation, page 67

8. Please provide the details of your directors’ se rvice contracts with th e company or any of
your subsidiaries providing for benefits upon termination of employment, or an
appropriate negative statement.  Please provide  us with your proposed disclosure.  Please
see Item 6.C.2 of Form 20-F.  We reissue comment three in our letter dated September
22, 2009 as it pertains to this point.
 E.  Share Ownership, page 72

9. As appropriate, please disclose any significant change in the percen tage ownership held
by any major shareholders during the past th ree years and provide us with your proposed
disclosure.  Please see Item 7.A.1.b of Form 20-F or tell us why you believe this is
unnecessary.
 Item 7.   Major Shareholders and Related Party Transactions, page 74

 B.  Related Party Tr ansactions, page 74

10. We note your disclosure on page 11 that “the  operation of the online games licensed from
Blizzard is dependent on Shanghai EaseNe t, which is owned by William Lei Ding, our
Chief Executive Officer, director and ma jor shareholder, and has contractual
arrangements with us and with the joint ve nture established between Blizzard and us.”
Please revise the penultimate paragraph on pa ge 76 to state William Lei Ding’s role as
owner of Shanghai EaseNet as we ll as the nature and extent of  these transactions.  Please
provide us with your proposed disclosure.  Please see Item 7.B. of Form 20-F.

Mr. Onward Choi NetEase.Com, Inc.  August 8, 2011 Page 4

 Item 9.  The Offer and Listing, page 77

11. Please provide the information called for by It em 9.A.4 of Form 20-F with respect to the
other market(s) on which your ordinary shares are traded.  In your  proposed disclosure,
please also state the other exchange(s) on whic h your ordinary shares  are listed.   For
example, it appears that your ADRs are traded  on the Singapore Exchange.  Please see
Item 9.C of Form 20-F.
 Item 19.  Exhibits, page 91

12. We note your disclosure on pages 30 and 63 di scussing your game licensing agreements
with Blizzard and the amounts you have guara nteed under these license agreements.  We
further note your disclosure on pages 52 a nd 53 that total net revenues increased by
46.6% to US$834.5 million in 2010, that of this amount US$735.5 million was
attributable to net revenues from online game services and that the latter was “principally
attributable” to, among other thi ngs, “inclusion of the first full  year operation of World of
Warcraft, a game licensed from Blizzard Entert ainment.”  In future filings, please file
these agreements as an exhibit or tell us why you believe this is unnecessary.  Please see
Instruction 4(b)(ii) to It em 19 of Form 20-F.

Consolidated Financial Statements
 Management’s Report on Internal Cont rol over Financial Reporting, page F-1

13. We note that you conduct substantially all of your  operations outside of the United States.
In order to enhance our unders tanding of how you prepare y our financial statements and
assess your internal control over financial reporting, we ask that you provide us with
following information:

 In connection with your process to dete rmine whether your in ternal control over
financial reporting was effective, please describe whether and how you
considered controls to addr ess financial reporting risks that are relevant to all
locations where you have operations.

 If you have an internal aud it function, please describe it a nd explain how, if at all,
that function impacted your evaluation of your internal control over financial
reporting.

 If you maintain your books and records in accordance with U.S. GAAP, describe
the controls you maintain to ensure that the activities you conduct and the
transactions you consummate are recorded in accordance with U.S. GAAP.

 If you do not maintain your books and records in accordance with U.S. GAAP,
tell us what basis of accounting you us e and describe the process you go through

Mr. Onward Choi NetEase.Com, Inc.  August 8, 2011 Page 5

 to convert your books and records to U.S.  GAAP for SEC reporting.  Describe the
controls you maintain to ensure that you have made all necessary and appropriate adjustments in your conversi ons and disclosures.

14. We would like to understand more about the background of the people who are primarily
responsible for preparing and s upervising the preparation of your financial statements and
evaluating the effectiveness of your internal control over financial reporting and their
knowledge of U.S. GAAP and SEC rules and regulations.  Do not identify people by
name, but for each person, please tell us:
 what role he or she takes in preparing your financial statements and evaluating the
effectiveness of your internal control;

 what relevant education and ongoing traini ng he or she has had relating to U.S.
GAAP;

 the nature of his or her contract ual or other relationship to you;

 whether he or she holds and maintains any professional designations such as
Certified Public Accounta nt (U.S.) or Certified Management Accountant; and

 about his or her professional experience, including experience in preparing and/or
auditing financial statements prepared  in accordance with U.S. GAAP and
evaluating effectiveness of internal control over financial reporting.

15. If you retain an accounting firm or other sim ilar organization to prepare your financial
statements or evaluate your internal cont rol over financial repor ting, please tell us:

 the name and address of the acc ounting firm or organization;

 the qualifications of their employees who perform the services for your company;

 how and why they are qualified to prepar e your financial statements or evaluate
your internal control over financial reporting;

 how many hours they spent last year performing these services for you; and

 the total amount of fees you paid to each accounting firm or organization in
connection with the preparation of your financial statements and in connection
with the evaluation of internal control over financial reporting for the most recent
fiscal year end.

16. If you retain individuals who are not your employees and are not employed by an
accounting firm or other similar organization to prepare your financial statements or

Mr. Onward Choi NetEase.Com, Inc.  August 8, 2011 Page 6

 evaluate your internal contro l over financial reporting, do not provide us with their
names, but please tell us:
 why you believe they are qualified to pr epare your financial statements or
evaluate your internal contro l over financial reporting;

 how many hours they spent last year performing these services for you; and

 the total amount of fees you paid to each individual in connection with the
preparation of your financial statements and in connection with the evaluation of
internal control over financial reporting for the most recent fiscal year end.

17. We note that you identify Mr. Joseph Tong, a member of your audit committee, as a
financial expert.  Please describe the financia l expert’s qualifications , including the extent
of the financial expert’s knowledge of U.S. GAAP and internal control over financial
reporting.

Notes to the Consolidated Fi nancial Statements, page F-7

18. Please tell us your considerat ion of disclosing whether valu e added taxes are presented on
a gross basis (included in revenues and costs)  or a net basis (excluded from revenues).
For any such taxes that are re ported on a gross basis, please disclose the amounts of those
taxes for each period for which an income statement is presented if those amounts are
significant.  Refer to ASC 605-45-50-3 and 605-45-50-4.  Please also tell us your
consideration of disclosing how value added taxes receivable from customers is presented
on balance sheet and your consideration of  quantifying such amounts recorded in
accounts receivable.
 Note 1.  Organization and Natu re of Operations, page F-7

 (a)  The Group, page F-7

19. We note your disclosure in the first paragr aph that you have eight variable interest
entities (“VIEs”) for which you are the primar y beneficiary.  Please identify the variable
interest entities and provide disclosures that give financial statement users an
understanding of the significan t judgments and assumptions made in determining whether
to consolidate the VIEs, the nature of risks associated with your involvement with the
VIEs including the financing of the VIEs  and how your involvement with the VIEs
affects your financial performance and cash flows.  Refer to ASC 810-10-50-2AA.

20. We note that HZ Leihuo and SH EaseNet, and its joint venture enti ties, are not included
in the organization chart on page 27.  Please advise.

Mr. Onward Choi NetEase.Com, Inc.  August 8, 2011 Page 7

 Note 2.  Principal Accounting Policies, page F-11

 (m)  Share-based compensation, page F-14

21. We note that RSU’s to be settled in either stock or cash at your di scretion are accounted
for as liability awards until the date when se ttlement in stock or cash is determined.
Please tell us the facts and circumstances that support your accoun ting policies for these
awards including the initial li ability classification and subseq uent equity classification, if
applicable.  In doing so, please describe to us the terms of the awards that drive the
classifications and your application of  the guidance in ASC 718-10-25-15.
 Note 10.  Taxation, page F-26

 (d)  Withholding income tax, page F-31

22. Please disclose the amount of unrecognized defe rred tax liabilities rela ted to withholding
income taxes that are indefinitely reinvested earnings or a statement that determination is
not practicable.  Please also te ll us and clarify your disclosure here or under Note 10(a) to
discuss whether any of the Group’s non-PRC companies are taxed on dividends from the
Group’s PRC companies.  Refe r to ASC 740-30-50-2c.

Note 23.  Restricted Net Assets, page F-42
23. We note your disclosure that relevant PRC laws and regulations permit PRC companies
to pay dividends only out of their retained ea rnings, if any, as determined in accordance
with PRC accounting standards and regulations .  Please tell us your  consideration of
describing any other significan t restrictions on the payment of dividends, indicating their
sources and pertinent provisions.  In addi tion, please tell us your consideration of
disclosing the amount of retained earnings or net income restrict ed or free of restrictions.
Refer to Rule 4-08(e)(1) of Regulation S-X.

We urge all persons who are responsible for th e accuracy and adequacy of the disclosure
in the filing to be certain that the filing include s the information the Securities Exchange Act of
1934 and all applicable Exchange Act rules requir e.  Since the company and its management are
in possession of all facts relating to a company’s disclosure, they are responsible for the accuracy
and adequacy of the disclosures they have made.
 In responding to our comments, please provi de a written statement from the company
acknowledging that:
 the company is responsible for the adequacy an d accuracy of the disclo sure in the filing;

 staff comments or changes to disclosure in response to staff comments do not foreclose
the Commission from taking any action with respect to the filing; and

Mr. Onward Choi NetEase.Com, Inc.  August 8, 2011 Page 8

 the company may not assert staff comments as  a defense in any pr

Mail Stop 3561                  October 5, 2009   Onward Choi, Acting Chief Financial Officer NetEase.com, Inc. 26/F, SP Tower D Tsinghua Science Park Building 8 No. 1 Zhongguancun East Road, Haidian District Beijing 100084 PEOPLE’S REPUBLIC OF CHINA
Re: NetEase.com, Inc.
Annual Report on Form 20-F for the Year Ended December 31, 2008  Filed June 30, 2009 File No. 0-30666

Dear Mr. Choi:
We have completed our review of your  annual report on Form 20-F and related
filings, and we have no further comments at this time.

        S i n c e r e l y ,             H. Christopher Owings         A s s i s t a n t  D i r e c t o r    cc: Paul W. Boltz, Jr., Esq.  Ropes & Gray  Via Facsimile

CORRESP
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Correspondence

 [Letterhead of NetEase.com, Inc.]

 September 30, 2009

 Mr. H. Christopher
Owings, Assistant Director

 Mr. John Fieldsend, Attorney-Adviser

 Division of Corporation Finance

 Securities and Exchange Commission

 100 F Street, NE

 Washington, D.C. 20549

Re:

NetEase.com, Inc. (the “Company”)

Annual Report on Form 20-F for the Year Ended December 31, 2008

Filed June 30, 2009

File No. 0-30666 (the “2008 Form 20-F”)

 Dear Mr. Owings and Mr. Fieldsend:

 The Company is providing the following information in response to the comment letter dated September 22, 2009 received by the Company
from the Staff of the Securities and Exchange Commission in connection with the Staff’s review of the Company’s Annual Report on Form 20-F for the year ended December 31, 2008 (the “Letter”). For your convenience, we
have set forth each of your comments below followed by our response to each comment.

 Item 5. Operating and Financial Review and
Prospects, page 53

 D. Trend Information, page 79

1.
Please expand your discussion in this subsection of your known material trends, demands, commitments, events, or uncertainties that will have, or are reasonably
likely to have, a material impact on your financial condition, operating performance, revenues, or income, or result in your liquidity decreasing or increasing in any material way. See Item 5.D of Form 20-F and SEC Release No. 33-6835. As
examples only, and not an exhaustive list of the revisions you should make in future filings, please address the following:

•

 You state that there has been increasing demand by online gamers for new and unique online games and increasing competition in this area. Also, you
state that you believe that these trends will force you to devote additional resources to developing and launching additional games, updating existing games at a faster rate than in the past, and licensing games from third parties. Further, you
state that you have been devoting additional resources to developing or licensing 3D games in response to this trend. Please describe any other ways that you have been devoting additional resources to

 1

developing and launching games, updating existing games at a faster rate, and licensing games from third parties, and please discuss how these actions have impacted you and will impact you in
future periods.

•

 You state that your online games business may be adversely affected if the Chinese government takes additional steps to slow the growth in this
market because you may not be able to adequately respond to possible regulatory changes. Please discuss the possible additional regulations that may be taken by the Chinese government, how these actions would affect you, and why you may not be able
to respond adequately to these changes.

•

 You state that you expect that your fixed costs in connection with your Internet portal business will increase without a corresponding increase in
revenue because the ongoing increase in the number of users for your free-email service and increasing bandwidth fees. Please discuss how these increasing costs will affect you in future periods and how you will respond to this trend.

•

 In the second paragraph under the heading, “C. Research and Development,” on page 79, you state that you plan to continue to expand your
technologies, products and services, and registered user base through diverse online community products and services, and you state that you will continually improve and enhance your existing services to respond to rapidly evolving competitive and
technological conditions. Please discuss these rapidly evolving competitive and technological conditions, how they will impact you in future periods, and how you plan to expand your technologies, products and services, and registered user base to
improve and enhance your existing services in response to these evolving conditions.

 The Staff’s
comment is duly noted. The Company intends to comply with the disclosure requirements as set forth in Item 5.D of Form 20-F and SEC Release 33-6835 with respect to known material trends, demands, commitments, events or uncertainties that will
have, or are reasonably expected to have, a material impact on the Company’s financial condition, operating performance, revenues, or income, or result in its liquidity decreasing or increasing in any material way.

 In response to the examples you pointed out, the Company respectfully provides the Staff with the following supplemental information:

•

 To address the trends of increasing demand by online gamers for new and unique online games and increasing competition in this area, the Company has
primarily focused on two areas in the last several years. First, it has continuously increased the headcount and salary and bonus levels of its research and development team, which focuses on the development of new games, as well as expansion packs
for existing games and in-game items to purchase. Between 2002, when the Company initiated its online games business, and 2005, the Company commercially launched a total of two in-house developed

 2

games, while between 2006 and 2008, it commercially launched or commenced testing of four in-house developed games. Moreover, the Company currently provides expansion packs for its games
approximately once every 12 months and may increase that frequency for certain games in the future, although it has no specific plans in this regard.

 Over the same period, the Company has also significantly increased the headcount and salary and bonus levels of its game operations and support team to ensure the games operate properly and users receive
the highest level of customer support. The increase in the cost of the game operations and support team caused, in part, the Company’s cost of revenues for online games to grow at a faster pace than revenue from online games in the three years
ended December 31, 2008, which contributed in part to the slight decline in gross profit margins for online games from 90.2% in 2006 to 90.0% in 2007 and 89.8% in 2008. The Company’s research and development expenses also increased at a
faster pace than the increase in revenue from online games in 2007 compared to 2006, though that trend reversed in 2008 as the Company achieved enhanced economies of scale in its online games. The Company expects that for the foreseeable future, it
will continue to expand its game operations and support and research and development staff and will also likely need to increase their salary and bonus levels to retain the best personnel.

 The second step taken by the Company has been an increased emphasis on licensing games from third parties, including the licensing
arrangements entered into with Blizzard Entertainment, Inc., as described in the 2008 Form 20-F. As noted in the response to comment 5 below, the Company has regularly entered into various types of licensing agreements, including for online games
and game technologies, but it expects that it will devote an increasing amount of resources for licensed games in future periods. Licensing games can involve significant costs, including upfront license fees and ongoing royalty and other contractual
obligations. For example, the second table in Item 5.F of the 2008 Form 20-F sets forth commitments of the Company, based on the assumptions stated in the footnote to that table, in connection with the license agreement with Blizzard
Entertainment, Inc. for StarCraft II. The Company expects to incur additional costs in connection with its license of World of Warcraft and any other license agreements into which it may enter. In addition, the Company’s management and staff
have been devoting, and are likely to continue for the foreseeable future to devote, an increasing amount of time to the negotiation of license agreements and operation of licensed games, although the Company has no basis to quantify the exact costs
of such time commitments across the Company’s operations. If any games which the Company licenses are not as profitable as projected by management, the Company’s financial results will be adversely affected.

 As discussed below, the Company also plans to continue its promotion of free services and improved internet portal content, as well as
increase its marketing spending and collection of market information, to address trends in the market.

 3

•

 Regarding possible effects on the Company’s business resulting from changes in government regulation by the Chinese authorities, the Company notes
that the Chinese media periodically reports that the government may take actions to limit online game usage. At this time, the Company is not aware, however, of any new official government announcements or legislative or administrative actions in
this regard. Therefore, the Company cannot currently determine what actions, if any, the Chinese government might take or how they would affect its business. The Company continuously monitors the regulatory environment for online games and will
update its disclosure as appropriate.

•

 The Company believes that its two primary revenue segments, online games and advertising services, depend in part on achieving a high level of traffic
on the Company’s internet portals as such traffic is a key component of the Company’s overall brand building and enables the Company to promote its services and advertisers to a large portion of the internet user market in China. To
maintain and enhance this traffic, the Company offers, among other things, a range of free services on its portals, including free email, which incur significant bandwidth and server custody fees. The level of bandwidth and server custody fees
depends on the total usage and the fee levels charged by network providers and server custodians, which is a function of available capacity and market demand and fluctuates over time.

 In any given period, the cost of the free services may not directly correlate with increased revenue due to a variety of factors, including
as a result of increased bandwidth fee levels and/or the failure of users of free services to purchase fee-based services such as online game playing time or the Company’s VIP subscription email service. The effect of bandwidth and server
custody fees on gross margins in future periods will depend on the level of such fees and the degree to which they contribute to increased revenues from online games and advertising services. The Company expects that due to the ongoing rapid growth
in popularity of its free services, in particular its free email which the Company believes is the most popular free email service in China, it may experience additional periods in the near-term where the fixed costs of such services will increase
without a corresponding increase in revenue. For the strategic reasons stated above, the Company intends to continue promoting these services for the foreseeable future. It may, however, reevaluate this strategy if free services do not generate the
long-term benefits which management expects and gross margins are materially adversely affected.

•

 When the Company commenced its online game business in 2002, there were few domestic developers and operators of online games, and international game
developers devoted limited resources to the Chinese market. Since that time, there has been a major increase in the number of domestic online game companies, many of which have raised significant amounts of cash through overseas offerings and
listings. In addition, many major international game developers have increased their

 4

focus on the China market, typically by licensing their games to local game operators which increases competition for licensing opportunities among the domestic game companies. This heightened
competition has resulted in a continuous increase in the number of sophisticated online games being offered in China and the level of sales and marketing activities and customer support offered by game companies to maintain interest in the games
among internet users. The rise in the number of domestic game companies, and in many cases their cash resources, has also led to further competition for game designers and other technical staff and caused an increase in salary levels in the industry
in recent years.

 Online game technology is also subject to rapid change. For example, as disclosed in
Item 3.D “Risk Factors – Risks Related to our Company – If we fail to develop and introduce new online games timely and successfully, we will not be able to compete effectively and our ability to generate revenues will
suffer.” and Item 5.D “Trend Information,” the online game industry in China has been transitioning from 2D games to 3D games. Moreover, as discussed in Item 3.D “Risk Factors – Risks Related to our Company –
Substantially all of our online game revenues have been generated by games that use the pay-to-play revenue model, and we may be unable to effectively address ongoing or future market trends regarding new revenue models for online games in
China,” the Company has generated substantially all of its online game revenue by charging for playing time, while many of its competitors have developed games that can be played for free and charge for the purchase of in-game items, such as
special weapons or powers. Among companies offering item-based games, there is strong competition to offer a steady supply of interesting and creative in-game items that appeal to users.

 In response to these ongoing trends in competition and technologies in the industry, the Company plans to continue:

•

 expanding its research and development team. This team focuses in particular on the development of item-based and 2.5D or 3D games (including Heroes of
Tang Dynasty and Tianxia II which are both in testing phases), launching expansion packs for the Company’s existing games, and constantly updating and improving its selection of in-game items for sale. Furthermore, as the research and
development team expands, the Company’s management regularly reviews whether the team’s internal organization and procedures are optimized to ensure a high level of efficiency.

•

 expanding its game operations and support team to ensure users enjoy the best possible game playing experience.

 5

•

 increasing marketing spending to promote its online games, through both online and offline marketing activities.

•

 promoting free services and offering improved content on the Company’s internet portals to increase user traffic, which benefits the
Company’s online game and advertising segments, as discussed above.

•

 licensing games from third party game developers to diversify its product range.

•

 gathering information from online game players about their usage habits and game preferences through online forums, bulletin boards and other methods
in order to identify new or changing trends as they emerge.

 Each of the foregoing measures is expected to
contribute to an increase in the Company’s expenses. In particular, the Company expects that its research and development and sales and marketing expenses will increase for the foreseeable future and affect its results of operations. The
Company cannot predict the overall effect of these increased costs on its profit margins.

 Item 6. Directors, Senior Management and
Employees, page 84

 B. Compensation, page 86

2.
In future filings, please disclose the compensation paid and benefits in kind granted to the members of your administrative, supervisory, or management bodies on an
individual basis or confirm for us that individual disclosure is not required in your home country and is not otherwise publicly disclosed. See Item 6.B.1 of Form 20-F. Also, in footnote (1) to your table, you state that the compensation
under the Bonus column represents fixed and discretionary bonuses. Therefore, tell us whether these bonuses were awarded as part of a bonus or profit-sharing plan and, if so, please provid

Mail Stop 4561

      August 27, 2007

VIA U.S. MAIL AND FAX (8610) 82618163

Onward Choi
Acting Chief Financial Officer
SP Tower D
26th Floor
Tsinghua Science Park Building 8
No.1 Zhongguancun East Road
Haidian District Beijing 100084
People's Republic of China

Re: NetEase.com, Inc.
Form 20-F for Fiscal Year Ended
  December 31, 2006
  Filed June 26, 2007
  File No. 000-30666

Dear Mr. Choi:

We have completed our review of your Form 20-F and related filings and do not,
at this time, have any further comments.

        S i n c e r e l y ,

Kevin Woody
Branch Chief

CORRESP
1
filename1.htm

Correspondence Letter

 [NetEase Letterhead]

 August 16, 2007

 Mr. Kevin Woody, Branch Chief

 Ms. Jennifer Monick, Staff Accountant

 Securities and Exchange Commission

 Division of Corporation Finance

 Washington, D.C. 20549

Re:
NetEase.com, Inc. (the “Company”)

 Form 20-F for
the Fiscal Year Ended December 31, 2006

 File No. 000-30666

 Dear Mr. Woody and Ms. Monick:

 Reference is made to (i) the comment letter dated
July 17, 2007 (the “Letter”) from the Staff of the Securities and Exchange Commission (the “Commission”) in connection with the Staff’s review of the Company’s Annual Report on Form 20-F for the fiscal year ended
December 31, 2006, (ii) the letter dated August 3, 2007 (the “Response Letter”) in response to the Letter and (iii) the email dated August 14, 2007 from Ms. Monick to our legal counsel, Morrison &
Foerster, confirming the Staff’s receipt of the Response Letter. The Company hereby acknowledges that:

•

 the Company is responsible for the adequacy and accuracy of the disclosure in the filings;

•

 staff comments or changes to disclosure in response to staff comments do not foreclose the Commission from taking any action with respect to the filings; and

•

 the Company may not assert staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United
States.

 Should any member of the Staff have any question with respect to the foregoing, please do not hesitate to
contact the undersigned directly at (86-10) 8255-8233.

Sincerely,

 /s/ Onward Choi

Onward Choi

Acting Chief Financial Officer

CORRESP
1
filename1.htm

SEC LETTER

 EDINBURGH TOWER, 41/F

 THE LANDMARK

 15 QUEEN’S ROAD CENTRAL

 HONG KONG

 TELEPHONE: +852 2585 0888

 FACSIMILE: +852 2585 0800

 MORRISON & FOERSTER

 NEW YORK, SAN
FRANCISCO,

 LOS ANGELES, PALO ALTO,

 SAN DIEGO, WASHINGTON, D.C.

 TOKYO, LONDON, BEIJING,

 SHANGHAI, HONG KONG,

 SINGAPORE, BRUSSELS

Writer’s Direct Contact

852 2585.0856

PBoltz@mofo.com

 August 3, 2007

 Mr. Kevin Woody, Branch Chief

 Ms. Jennifer Monick, Staff Accountant

 Securities and Exchange Commission

 Division of Corporation Finance

 Washington, D.C. 20549

Re:
NetEase.com, Inc.

 Form 20-F for the Fiscal Year Ended
December 31, 2006

 File No. 000-30666

 Dear Mr. Woody and Ms. Monick:

 On behalf of NetEase.com, Inc., a Cayman Islands corporation (the “Company”), we are providing
to you this letter in response to the comment letter, dated July 17, 2007, from the Staff of the Commission (the “Letter”) in connection with the Staff’s review of the Company’s Annual Report on Form 20-F for the fiscal year
ended December 31, 2006 (the “2006 20-F”). For your convenience, we have set forth each of your comments below followed by the Company’s response to each comment.

 Item 5. Operating and Financial Review and Prospects

 F. Tabular Disclosure of Contractual
Obligations, page 78

 1. It does not appear that you have included your long-term payables and your zero coupon convertible subordinated notes in
your tabular disclosure of contractual obligations. Please explain to us why you have omitted these obligations. Please refer to the instruction to Item 5F of Form 20-F.

 The Company respectfully submits that the long-term payables and zero coupon convertible subordinated notes were disclosed on the Company’s balance sheet and that the information required by Item 5F of Form
20-F has been provided to investors. However, the Company acknowledges the Staff’s comment and confirms that, to the extent these obligations are outstanding, it will include them in the tabular disclosure of contractual obligations in its
future Form 20-F filings.

 PARTNERS: PAUL BOLTZ, TIEN-YO CHAO, MARCIA ELLIS, PAUL MCKENZIE*, GORDON MILNER, VENANTIUS TAN

 CONSULTANTS: SCOTT JALOWAYSKI (ADMITTED IN NEW YORK), J. EDWARD LI (ADMITTED IN NEW YORK),

 XIAOHU MA (ADMITTED IN THE PEOPLE’S REPUBLIC OF CHINA), NIGEL STAMP (ADMITTED IN ENGLAND & WALES )

 * NOT RESIDENT IN HONG KONG

 Mr. Kevin Woody

 Ms. Jennifer Monick

 Securities and Exchange Commission

 August 3, 2007

 Page Two

 Financial
Statements

 Consolidated Statements of Operations and Comprehensive Income, page F-5

 2. Please tell us why you have presented business taxes as a reduction to revenues to determine net revenues. Please cite authoritative literature relied upon to
justify current presentation.

 In response to the Staff’s comment, the Company respectfully advises the Staff that the Company has considered EITF
Issue 06-3, EITF Issue 99-19, EITF Issue 01-14, and SEC Rule 05-3 of Regulation S-X when determining its current presentation of business taxes.

 In
accordance with EITF Issue 06-3, How Taxes from Customers and Remitted to Government Authorities Should be Presented in the Income Statement (That is, Gross versus Net Presentation), the Task Force concluded that presentation of taxes on either a
gross or a net basis as an accounting policy decision is permitted.

 Prior to the release of EITF 06-3, the Company also referred to EITF Issue 99-19 and
EITF Issue 01-14 for its accounting treatment. The Company focused on the primary obligor criterion as the criteria in determining how to present such taxes on the income statement. In China, business taxes are imposed by the government on the
revenues reported by the selling entities with rates varied among industries. The Company’s current business tax rates in general range between 3% to 8.5% with respect to its various revenue types. Business tax is a tax based on revenue
collected from customers and reduces revenue earned. Therefore, the Company considered that this amount should be deducted from revenue rather than be treated as a cost of sales. The Company further believes that presenting business tax as a
reduction from revenue to determine net revenues will provide readers of its financials a clear understanding of revenues and the changes over time in the Company’s business with no distortion resulting from any business tax changes or
adjustments. The current presentation adopts the approach under SEC Rule 05-3 of Regulation S-X which requires that the amount of excise taxes paid must be disclosed on the face of the income statement, if excise taxes are greater than 1 percent of
revenues.

 Notes to the Consolidated Financial Statements

 Note 5. Prepayments and Other Current Assets, page F-21

 3. We note you have employee advances and staff
loan receivables outstanding as of December 31, 2006. Please tell us from whom these amounts are due and whether any of these amounts are due from executive officers. If any amounts are due from executive

 Mr. Kevin Woody

 Ms. Jennifer Monick

 Securities and Exchange Commission

 August 3, 2007

 Page Three

 officers, please
tell us how you have complied with section 402 of the Sarbanes-Oxley Act.

 Included in Prepayments and Other Current Assets as at December 31, 2006
were employee advances and staff loan receivables totaling RMB4.8 million. The amounts are due from employees, except RMB374,614 are receivables due from two executive officers of the Company.

 Out of the total due from executive officers, RMB150,129 was due from William Ding, the Company’s Chief Executive Officer. The entire amount owed by Mr. Ding
represented advances of reimbursable travel expenses incurred by him while performing his duties as chief executive officer of the Company. In accordance with the Company’s standard administrative procedures, the advances are cleared when
Mr. Ding provides the Company with the issued invoices or receipts for the related business travel activities.

 In addition, out of the total due from
executive officers, RMB224,485 was due from Michael Tong, the Company’s Co-Chief Operating Officer. The amount owed by Mr. Tong included RMB46,562 for reimbursable travel expenses which, similar to the advances made to Mr. Ding, were
incurred by him while performing his duties as co-chief operating officer of the Company. The remaining amount of RMB177,923 represented the payment of tax by the Company on his behalf to the Chinese tax authorities as a result of his change in tax
status to a ‘resident’ for Chinese tax purposes which occurred around October 2006 (arising because Mr. Tong had resided in China for more than 183 days in 2006). The amount of additional tax resulting from this change in tax status
became immediately due with respect to his January to September 2006 payroll. Mr. Tong repaid such amount via payroll deductions, and the entire amount was repaid after year end.

 The Company determined that the foregoing advances to Messrs. Ding and Tong were not “personal loans” within the meaning of Section 402 of the Sarbanes-Oxley Act because the primary purpose of the
advances, from the perspective of the Company, was to advance the business of the Company (and not merely benefiting such officers in their personal capacity). Specifically, as noted above, the advances for travel expenses were all directly related
to trips undertaken in furtherance of the Company’s business and were settled with the Company upon receipt of appropriate documentation in accordance with the Company’s policies and procedures. In addition, with respect to the tax payment
for Mr. Tong, the Company normally deducts taxes from employees’ payroll as the taxes are incurred. However, in the case of Mr. Tong in 2006, the Company had requested Mr. Tong to stay in China for a longer time than was
originally expected due to certain business needs of the Company. This resulted in Mr. Tong’s unexpected

 Mr. Kevin Woody

 Ms. Jennifer Monick

 Securities and Exchange Commission

 August 3, 2007

 Page Four

 change in status to a
resident which triggered additional tax obligations. Because Mr. Tong’s extended service in China was at the request of the Company and in furtherance of the Company’s business, as a matter of tax administration by the Company’s
Human Resources Department with the relevant PRC tax authority, the Company proceeded to initially pay the additional tax and deduct such amount from Mr. Tong’s future payroll amounts.

 Note 15. Stock-based Compensation, page F-31

 4. It does
not appear that you have provided all the required disclosures in accordance with SFAS 123(R). Please explain to us how you have complied with the disclosure requirements of paragraphs 64 and A240-A241 of SFAS 123(R).

 In response to the Staff’s comment, the Company has attached as Exhibit 1 hereto a table describing how its disclosures have complied with the disclosure
requirements of paragraphs 64 and A240-A241 of SFAS 123(R). The Company acknowledges that the following four disclosures should have been included in the financial statements:

 a. The total intrinsic value of options exercised during 2006 was approximately US$28.8 million.

 b. The aggregate
intrinsic value of options fully vested and expected to vest, and the aggregate intrinsic value of options exercisable as of December 31, 2006 was US$53.2 million and US$7.6 million, respectively. The intrinsic value is calculated as the
difference between the Company’s closing stock price of US$18.69 per ADS, or US$0.7476 per share, as of December 31, 2006 and the exercise price of the underlying options as of that date.

 c. The weighted-average remaining contractual term of options exercisable was 2.57 years.

 d. It is the Company’s policy to issue new shares upon share option exercise.

 The Company respectfully submits that
the Company had properly disclosed the respective weighted average exercise prices of the share options expected to vest and fully vested under Note 15(d), and therefore a reader of the Company’s financial statements would be able to determine
the intrinsic value by comparing the Company’s market share price to the respective weighted average exercise prices disclosed under Note 15(d). The weighted average remaining contractual life of outstanding options was disclosed under Note

 Mr. Kevin Woody

 Ms. Jennifer Monick

 Securities and Exchange Commission

 August 3, 2007

 Page Five

 15(d), which also
included exercisable options. In addition, the Company’s policy of issuing new shares to satisfy share option exercises is evident from reading the statement of shareholders’ equity.

 The Company acknowledges the Staff’s comment, however, and confirms it will duly include the abovementioned disclosures in its future Form 20-F filing.

Exhibits 12.1 and 12.2

 5. We note your certifications
do not comply with the content of the certifications required under Exchange Act Rules 13a-14(a) and 15d-l4(a). Specifically, we note you have included the title of the certifying individual at the beginning of the certification and you have
replaced the word “report” with “annual report’ in paragraph 2. Please revise your certifications in future filings to comply with the Exchange Act Rules.

 The Staff’s comment is noted, and the Company will ensure that future certifications are prepared in accordance with the Exchange Act rules.

 *      *      *

 As requested by the
Staff, the Company acknowledges that:

•

 the Company is responsible for the adequacy and accuracy of the disclosure in the filing;

•

 Staff comments or changes to disclosure in response to Staff comments do not foreclose the Commission from taking any action with respect to the filing; and

•

 the Company may not assert Staff comments as a defense in any proceeding initiated by the Commission or any person under the federal securities laws of the United
States.

 Mr. Kevin Woody

 Ms. Jennifer Monick

 Securities and Exchange Commission

 August 3, 2007

 Page Six

 Should any member of
the Staff have any question with respect to the foregoing responses, please do not hesitate to contact the undersigned directly at 852-2585-0856.

 Best
regards,

 /s/ Paul Boltz

Paul Boltz

cc:
Onward Choi — NetEase.com, Inc.

 Vincent Cheuk
— PricewaterhouseCoopers Zhong Tian CPAs Limited Company

 Exhibit 1

 NetEase

 Completeness check for disclosure requirements under A240-242 under 123R.

 MINIMUM DISCLOSURE REQUIREMENTS AND ILLUSTRATIVE DISCLOSURES

 Disclosed in footnotes of financial statements
(Y/N)

A240. The minimum information needed to achieve the disclosure objectives in paragraph 64 of this Statement is set forth below. To achieve those objectives, an entity should disclose the
following information:136

a. A description of the share-based payment arrangement(s), including the general terms of awards under the arrangement(s), such as the requisite service period(s) and any other substantive
conditions (including those related to vesting), the maximum contractual term of equity (or liability) share options or similar instruments, and the number of shares authorized for awards of equity share options or other equity instruments. An
entity shall disclose the method it uses for measuring compensation cost from share-based payment arrangements with employees.

 Yes

 15(e)

b. For the most recent year for which an income statement is provided: (1) The number and weighted-average exercise prices (or conversion ratios) for each of the following groups of share
options (or share units): (a) those outstanding at the beginning of the year, (b) those outstanding at the end of the year, (c) those exercisable or convertible at the end of the year, and those (d) granted, (e) exercised or
converted, (f) forfeited, or (g) expired during the year.

 Yes

 15(d)

(2) The number and weighted-average grant-date fair value (or calculated value for a nonpublic entity that uses that method or intrinsic value for awards measured pursuant to paragraphs 24 and
25 of this Statement) of equity instruments not specified in paragraph A240(b)(1) (for example, shares of nonvested stock), for each of the following groups of equity instruments: (a) those nonvested at the beginning of the year, (b) those
nonvested at the end of the year, and those (c) granted, (d) vested, or (e) forfeited during the year.

Not applicable

c. For each year for which an income statement is provided: (1) The weighted-average grant-date fair value (or calculated value for a nonpublic entity that uses that method or intrinsic
value for awards measured at that value pursuant to paragraphs 24 and 25 of this Statement) of equity options or other equity instruments granted during the year.

 Yes

 see 15(c)

(2) The total intrinsic value of options exercised (or share units converted), share-based liabilities paid, and the total fair value of shares vested during the year.

No

 1 of 4

 Exhibit 1

 NetEase

 Completeness check for disclosure requirements under A240-242 under 123R.

 MINIMUM DISCLOSURE REQUIREMENTS AND ILLUSTRATIVE DISCLOSURES

 Disclosed in footnotes of financial statements
(Y/N)

d. For fully vested share options (or share units) and share options expected to vest at the date of the latest statement of financial position:

Partially disclosed in 15 (d)

(1) The number, weighted-average exercise price (or conversion ratio), aggregate

)

intrinsic value, and weighted-average remaining contractual term of options (or

)

share units) outstanding.

)

(2) The number, weighted-average exercise price (or conversion ratio), aggregate

)

intrinsic value (except for nonpublic entities), and weighted-average

)

remaining contractual term of options (or share units) currently exercisable (or

)

convertible).

)

e. For each year for which an income statement is presented:137

(1) A description of the method used during the year to estimate the fair value (or

Yes

calculated va

Mail Stop 4561

      July 17, 2007

VIA U.S. MAIL AND FAX (8610) 82618163

Onward Choi
Acting Chief Financial Officer
SP Tower D
26th Floor
Tsinghua Science Park Building 8
No.1 Zhongguancun East Road
Haidian District Beijing 100084
People's Republic of China

Re: NetEase.com, Inc.
Form 20-F for Fiscal Year Ended
  December 31, 2006
  Filed June 26, 2007
  File No. 000-30666

Dear Mr. Choi:

We have reviewed your filing and have the following comments.  In our
comments, we may ask you to provide us w ith information so we may better understand
your disclosure.  After reviewing this inform ation, we may raise additional comments.

 Please understand that the purpose of our re view process is to assist you in your
compliance with the applicable disclosure requirements and to enhance the overall
disclosure in your filing.  We look forward to  working with you in these respects.  We
welcome any questions you may have about our comments or on any other aspect of our review.  Feel free to call us at the telephone numbers listed at the end of this letter.

Onward Choi
NetEase.com, Inc.
July 17, 2007 Page 2
Form 20-F for the year ended December 31, 2006

Item 5. Operating and Financial Review and Prospects

F. Tabular Disclosure of C ontractual Obligations, page 78

1. It does not appear that y ou have included your long-term payables and your zero
coupon convertible subordinated notes in your tabular disclosure of contractual obligations.  Please explain to us why you have omitted these obligations.  Please refer to the instruction to  Item 5F of Form 20-F.

Financial Statements

Consolidated Statements of Operations and Comprehensive Income, page F-5

2. Please tell us why you have presented busin ess taxes as a reduction to revenues to
determine net revenues.  Please cite au thoritative literature relied upon to justify
current presentation.

Notes to the Consolidated Financial Statements

Note 5. Prepayments and Other Current Assets, page F-21

3. We note you have employee advances and st aff loan receivables outstanding as of
December 31, 2006.  Please tell us from whom these amounts are due and whether any of these amounts are due from executive officers.  If any amounts are due from executive officers, please tell us how you have complied with section
402 of the Sarbanes-Oxley Act.

Note 15. Stock-based Compensation, page F-31

4. It does not appear that you have provided all the required disclosures in accordance with SFAS 123(R).  Please explain to us how you have complied with the disclosure requirements of paragr aphs 64 and A240-A 241 of SFAS 123(R).

Exhibits 12.1 and 12.2

5. We note your certifications do not comply w ith the content of the certifications
required under Exchange Act Rules 13a- 14(a) and 15d-14(a).  Specifically, we
note you have included the titl e of the certifying individu al at the beginning of the
certification and you have replaced the wo rd “report” with “annual report” in
paragraph 2.  Please revise your certificati ons in future filings to comply with the
Exchange Act Rules.
*    *    *    *

Onward Choi
NetEase.com, Inc.
July 17, 2007 Page 3
Please respond to this comment within 10 business days or tell us when you will
provide us with a response.  Please f ile your response letter on EDGAR.  Please
understand that we may have additional comm ents after reviewing your response to our
comments.

 We urge all persons who are responsible for the accuracy and adequacy of the disclosure in the filings reviewed by the staff to be certain that they have provided all information investors require for an info rmed decision.  Since the company and its
management are in possession of all facts re lating to a company’s disclosure, they are
responsible for the accuracy and adequacy of the disclosures they have made.

 In connection with responding to our comments, please provide, in writing, a statement from the company acknowledging that:

• the company is responsible for the adequacy  and accuracy of the disclosure in the
filings;

• staff comments or changes to disclosure  in response to staff comments do not
foreclose the Commission from taking any action with respect to the filings; and

• the company may not assert staff comme nts as a defense in any proceeding
initiated by the Commission or any person under the federal secu rities laws of the
United States.

In addition, please be advise d that the Division of Enfo rcement has access to all
information you provide to the staff of the Divi sion of Corporation Fi nance in our review
of your filings or in response to our comments on your filings.

You may contact Jennifer Monick, Sta ff Accountant at (202) 551-3295, or the
undersigned at (202) 551-3629 if you have questions.

        S i n c e r e l y ,

Kevin Woody
Branch Chief