Attica! Attica!

Almost everyone was stunned when they found out that Luo Li, a founder of Qidian, was jailed for possible embezzlement. Things hasn’t been well for Qidian, a leading Internet literature site owned by Shanda. Mr. Luo and other members of Qidian’s founding class and management recently engineered an exodus to Tencent, where they plan to practice their former trade and take on Shanda’s Cloudary, where they used to work.

Accusations have been made regarding Qidian’s former management of siphoning precious recources from their former employers, so it’s no wonder Shanda, a notoriously tough and ruthless competitor, would hit back somehow at what they regard as betrayal. However, almost no one would expect possible jail time would be involved.

Using judicial system as a weapon during corporate conflict is surely one of the most unique Chinese characteristics. In other countries, things often come to a head, but they rarely end up in jail sentences. In China, however, things are often done differently. Even though China is “a nation of laws”, these laws are often murky and serve as another tool for knockdown. In addition, Chinese business conditions are as such that most businesses cut corners one ways or another. That means, when push comes to shove, almost anyone can be jailed, and often for the most trivial matters.

The most dramatic and the most ancient story of this genre involves Lenovo, now the world’s biggest PC maker, and a fundamentally company from the upstart firm Sun Hongbin joined in 1988. Mr. Sun, now a huge player in the Chinese real estate market, made an immediate impression on Liu Chuanzhi, Lenovo’s legendary founder with his uncanny ability to sell computers. Things quickly soured, however, and Mr. Sun was convicted of embezzling $25,000 in 1992.

In the end, things worked well for both, Mr. Liu went to expand Lenovo, while Mr. Sun, after being released after spending almost 2 years in prison, was staked by no other than Mr. Liu for $60,000, and went on to become a real estate mogul in his own right.

While no one is certain of the origin of the conflict, most believe that the dispute between Mr. Liu and Mr. Sun is economic in nature. While money is the root of all evil, others, however, have been jailed for different reasons.

Yu Huafeng, currently leading Benlai, a food and beverage e-commerce start-up, was once convicted of embezzling less than $20,000 from South Metropolitan Daily, a best selling newspaper where he served as the General Manager. Many believed this conviction to be politically motivated and served as retribution for South Metropolitan Daily’s defiant report regarding the death of Chinese college student, SARS, as well as other sensitive subjects. Mr. Yu, released after serving 4 years for a 12 year sentence, went on to work at Chinese internet giants Netease and Alibaba.

The Qidian case, though, does not seem to involve anything other than a squabble over cash. In fact, the case it most resembles is the jailing of Liu Ren, the founder of DoNews, a renowned tech news site. In his former life, Mr. Liu was an influential Internet reporter and was “best bud” with many Chinese internet giants in their younger and more vulnerable years, including Robin Li of Baidu, William Ding of Netease, Lei Jun of Xiaomi, and of course, Zhou Hongyi of 360.

In 2008, Mr. Liu launched a series of vicious attacks on 360. Mr. Zhou asked for truce and offered to pay more than $10,000 as “PR payment”. When Mr. Liu went to pick up the money, he was ambushed by the police and eventually convicted of blackmailing, for which he served 3 years.

According to these precedents, things do not look optimistic for Mr. Luo. If there is any solace in this dreadful matter for Mr. Luo, it surely is this: he won’t be the first one nor the last one to be jailed in China as a result of corporate retribution.

image credit: pbs.org