In the last week, we’ve seen Alibaba executive Jiang Fan demoted for an (alleged) affair with a major business partner, and Dangdang founder Li Guoqing attempt to seize control of the company by force as part of a very messy and very public divorce.
2020 has been the strangest year anyone living can remember. A localized outbreak that seemingly few expected to turn into a economy-crushing pandemic, an increasing vitriolic war of words between China and the Western world, one of the largest accounting frauds in China tech goes public, and a raft of bad behavior from China’s tech personalities. One does have to wonder just how bad this could all get.
However, there are broader problems and themes that still need to be addressed.
It’s only when the tide goes out that you learn who has been swimming naked.– Warren Buffet
Bottom line: Buffet’s quote was about companies and investors, but the same aphorism holds true for any number of phenomena: when things are bad, bad behavior comes into the light that much easier. Unfortunately, bad behavior and a lack of consequences in tech are nothing new. The origin of this week’s Insights is most certainly in part a victim of availability bias and, as we will see, there really is nothing new under the sun.
The last two weeks saw two examples of bad behavior, one alleged and the other verified-by-video, one with big potential fallout, the other barely registered except for its soap opera-like quality.
Alibaba: Jiang Fan was the definition of an up-and-comer: one of the youngest Alibaba Partners and heir apparent to current CEO Daniel Zhang. It’s a pretty messy story, but here’s a concise summary:
- 2016: Alibaba takes an 8.56% stake in Hangzhou-based influencer agency Ruhnn.
- April 2019: Ruhnn goes public on the NASDAQ, raising $125 million.
- April 17, 2020: A Weibo user whom Chinese media identified as the wife of Jiang Fan posts a warning to Zhang Dayi, Ruhnn’s best performing KOL, not to “mess around” with her husband. Zhang accounted for nearly half of Ruhnn’s sales for almost three years. So far, we have seen no evidence to suggest the affair actually occurred.
- April 20: Jiang Fan calls for a probe into whether the alleged relationship with Zhang affected Alibaba’s dealings with her or Ruhnn, including their Taobao and Tmall operations as well as the investment in 2016.
- April 27: Alibaba announces that they have removed Jiang Fan from its list of Partners and demoted him from senior vice president to vice president. The company’s market cap falls by HKD 50 billion (around $6 million).
Listen to more: After Luckin, fraud will still be a problem
Dangdang: You’d be forgiven for forgetting that Dangdang still existed. We certainly had. The recent break in by co-founder and former CEO is a sharp reminder of the company as well as what a total a-hole Li Guoqing is.
Pure sex without being in an extramarital affair does little harm to one’s wife.– Li Guoqing in reference to accusations of rape against JD founder, Richard Liu
- 1999: Li Guoqing and wife Yu Yu found the company and, like Amazon, start by selling books.
- February 2019: Li announces that he will leave the company, saying: “I believe that after I leave Dangdang and end the husband-and-wife business structure, Yu Yu will lead the company to future success and continue providing high-quality service to our 300 million customers.”
- October 2019: Marital discord between Li and Yu goes public. Li blames Yu for forcing him out, and Yu fires back by accusing Li of stealing RMB 130 million from their joint savings account, having extramarital affairs with men, and domestic abuse.
- April 26, 2020: Li Guoqing, along with six others, storm into Dangdang’s Beijing headquarters in an attempt to take control of the company by taking the company’s official stamps.
Chinese women pick men based on their ability to make money and they don’t care if they are good people. Chinese women’s depravity has led to the nation’s depravity.– Yu Minhong during a speech at an education forum
No matter right or wrong, Lao Yu does not have to apologize to women, because his views just prove that he is a feminist.– Li Guoqing referring to sexist remarks made by New Oriental founder, Yu Minhong
Not too distant headlines
In case you’ve forgotten, these aren’t the only cases of men in China tech behaving badly:
- July 23, 2018: Richard Liu is named as the host of a dinner party in 2015 that was the focus of a rape trial. Guest Xu Longwei was found guilty of seven charges, including raping a woman he met at the party.
- Aug. 31, 2018: Richard Liu is arrested in Minnesota for the alleged rape of a 21-year-old Chinese student who attended a dinner party with Liu.
- Dec. 21, 2018: Charges against Liu are dropped for lack of evidence.
- Dec. 22, 2018: The Paper, the Chinese-language sister site to Sixth Tone, publishes an article with the headline: “Richard Liu’s attorney: Everything that happened was consensual, the girl kept asking for money.” Soon after, online mobs begin to go after the alleged victim.
- April 16, 2019: Liu Jingyao, the alleged victim, files a suit against Richard Liu in Minnesota Civil Court.
Read more: JD readies for life after Richard Liu
- November 2015: Bao Yuming, VP for oil company Jereh Group and independent non-executive director of ZTE, adopts a 14-year-old, identified in media reports as Xingxing. One month later, she tells police, he starts raping her.
- April 9, 2020: After years of Xingxing reporting the crime to the police in both Beijing and Yantai, Yantai police finally announce they are investigating the case after the accusations go public on Weibo.
- April 10, 2020: Jereh, ZTE, and Southwest University, where Bao was a researcher, announce they had severed contracts with him. Bao also announces his resignation from ZTE.
- As of this writing, Bao is still a free man.
Not just China: Lest someone accuse me of being biased against China, I’d like to remind you of the following cases coming from Silicon Valley:
- Justin Caldbeck: On June 23, 2017, The Information reports on allegations made by six women in the tech industry who received unwanted and inappropriate advances from Caldbeck. One day later, Caldbeck issues an apology and announces an indefinite leave of absence.
- Andy Rubin: In 2014, Rubin is accused of coercing a fellow Google employee into performing oral sex on him in 2013. According to the New York Times, Google investigated, found the accusations credible, and asked for his resignation. Rubin resigns and leaves the company with an exit package of $90 million. In 2019, Rubin is sued by his ex-wife for cheating her our of a large portion of his personal wealth through an unfair and devious prenuptial arrangement.
- Dave McClure: On June 30, 2017, McClure is publicly accused of sexual assault and unwanted advances by two women. He makes a public apology in a now deleted Medium post and resigns as CEO of 500Startups. In 2019, McClure founds Practical Venture Capital.
An important reminder: We still don’t, and may never, know if Jiang cheated on his wife nor whether he gave Zhang and her company preferential treatment. Dangdang will probably never regain its leadership in China’s e-commerce industry, but the point here is much larger. As I wrote in 2017:
. . . much of the reason these men were able to get away with it for so long has much to do with the power that they hold and the ability to decide who gets what. Much like incumbents in traditional industries, these leaders acted as gatekeepers: determining who gets what funding, which part in a movie, or what job.
. . .
China has been, and still is, a country rife with unethical and immoral behavior. While the corruption crackdown has certainly gone a long way to stem the tide of some of this behavior, old habits die hard. Not only are those old habits still alive, but since there’s no one talking about it, these unhealthy and damaging behaviors continue unabated and unpunished.
As prominent feminist thinker Leta Hong Fincher has written, things are actually getting worse for women in China. The equality of sexes of previous generations has been slowly but surely eroded as the traditional patriarchy of East Asia makes its resurgence in China.
At its most innocuous, men with money and power like Jiang Fan will continue to have mistresses. At its absolute most evil, men with money and power like Bao will continue to abuse, permanently and irreparably damaging, the nation’s young women and children. And not just in China.