INTERNET: CEO’s Love Antics Tarnish JD.com
Bottom line: JD.com CEO Richard Liu needs to behave more professionally in his business and personally lives, or risk seeing the reputation of his company suffer.
China’s high-tech world is filled with colorful personalities, but few have managed to capture the public’s imagination like JD.com (Nasdaq: JD) founder Richard Liu, or Liu Qiangdong, whose love life has been the source of major headlines this week. I personally find such this kind of chatter entertaining but don’t usually write about it, because it’s not really related to the companies these executives represent. But in this case Liu’s antics are an increasing embarrassment to JD.com, and don’t seem fitting for an e-commerce giant that generated nearly $5 billion in revenue in its latest reporting quarter and has a market value of $34 billion.
The relatively youthful Liu, who turned 40 last year, is one of China’s richest men and one of its most eligible bachelors. But for the last few years his name has been closely tied to the even younger Zhang Zetian, dubbed by netizens as as Naicha Meiemei, or “Milk Tea Sister”. The pair were often seen together but never commented on their relationship, until Liu finally admitted on his microblog last year that they were a couple. (previous post)
Now in the latest twist to their saga, media have been buzzing with a number of rumors over the past few days saying the pair have broken up, with at least some blaming business elements for the split. JD has denied some of the rumors, including one that Liu gave his girlfriend a 30 million yuan ($4.8 million) “hush money” payout to end the relationship. The latest reports say the pair are actually still together, though Liu is reportedly unhappy about his girlfriend’s overexposure in the media as she pursues her own career interests. (Chinese article)
I’ll focus mostly on the business side of the story, which centers on one of the rumors that says the driving factor behind the split was related to China’s 2-year-old anti-corruption crackdown led by President Xi Jinping. That campaign has netted hundreds of officials from both the government and major state-run firms, who have been accused of accepting bribes and other financial misdeeds. The campaign has picked up momentum over the last year, and barely a day goes by now without media reports about new probes of top local or even national officials.
The danger of being closely associated with someone under investigation for corruption has become a very real risk for anyone doing business in China, which sportswear retailer Anta (HKEx: 2020) learned just last month. In that particular case, Anta’s Hong Kong-listed shares plunged 16 percent in December after rumors circulated that its Chairman Ding Shizhong was a close associate of a government official being investigated for corruption. (previous post)
One of the rumors swirling around Liu’s rumored break-up said that Zhang’s father was reportedly caught up in a similar anti-corruption investigation, and that Liu initiated the split to distance himself from the matter. We haven’t seen any comments on that element of the story, though such a move certainly wouldn’t be surprising in the current climate where being connected to a probe can be disastrous for a business owner. The whole affair hasn’t had much impact on JD’s New York-listed stock, which was unchanged in the first 2 trading days of the week.
More broadly speaking, this kind of gossip and general unprofessional behavior has become somewhat commonplace for Liu. It was probably one of the reasons he disappeared for nearly a year in the run-up to his company’s 2014 IPO, reportedly to take a management course in the US. Regardless of the reality in that instance or this latest one with Zhang Zetian, Liu really needs to grow up a bit and act more professionally in both his work and love lives, or risk seeing his company’s reputation take a beating for his schoolboy ways.
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