China Legal System Takes Bite Out of Tencent’s Qihoo Lawsuit 中国法律体系让奇虎在与腾讯的官司中免受重大损失

By newsdoug on April 26, 2011

UPDATE: Just a day after I wrote this, Chinese media are reporting that Tencent was just awarded a paltry 400,000 yuan in this case. (Chinese article) It seems the Chinese courts are as fast as they are ineffective!

I previously advised investors to avoid the March IPO by security software maker Qihoo 360 (NYSE: QIHU), saying the company and its founder Zhou Hongwei were lightning rods for lawsuits, attracting such unwanted attention from the likes of Tencent (HKEx: 700), Baidu (Nasdaq: BIDU) and Alibaba Group. (previous post) Well, I may have to modify my advice, after seeing Tencent’s recently filed lawsuit stemming from a high profile spat last year in which Qihoo effectively hijacked one of Tencent’s most popular programs. According to Chinese media, Tencent’s recently filed suit is asking for ridiculously small damages of 4 million yuan, or about $600,000, and for a Qihoo apology. (Chinese article) Presumably Tencent is asking for such a paltry amount because that’s the most it believes it can get under China’s impotent legal system. If that’s the case, which it seems to be, then Qihoo may have more to fear from negative publicity than from any real monetary threat even if it loses all the lawsuits against it. Investors seem to realize this too, with Qihoo’s stock jumping 25 percent in just the last two weeks after an initial post-IPO sell-off.

Bottom line: Qihoo remains a dangerous bet due to its reputation for questionable business practices, but faces little monetary danger from lawsuits against it in Chinese courts.

更新：我登了这篇文章后，在过一天中国媒体报道了法院在这个案子上判定奇虎要赔偿腾讯40万元。（中文报道）看来中国法院的速度与他的无效率是差不多的！

我以前建议过投资者回避奇虎360<QIHU.N>在3月份的IPO，因为这家公司和其创始人周鸿祎招惹了腾讯<0700.HK>、百度<BIDU.O>和阿里巴巴等公司，会扯上官司。现在，在看到腾讯近期就去年“3Q大战”提起的诉讼，我可能要修正我的建议。从中国媒体得知，腾讯提出的赔偿数额出奇地少，只有400万人民币，并要求奇虎道歉。腾讯胃口这麽小的原因可能是，他们知道在中国现行的法律体系下，最多只能得到这麽多。如果是这样，那麽即使奇虎输了所有的官司，他们要担心的不过是负面公众形象，并不用太担心金钱损失。投资者可能也意识到了这一点。奇虎仅最近两周股价就已上涨25%。

一句话：考虑到奇虎一直以来与问题经营瓜葛不断的声誉，奇虎依然是比较危险的投资目标，但奇虎在中国的官司不会让其蒙受太多金钱损失。