JD.com CEO Arrested for Sexual Misconduct

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Richard Liu, founder and CEO of Chinese e-commerce company JD.com, was arrested in Minneapolis for sexual misconduct. Because of his high profile and billionaire status, Liu’s arrest was the most popular topic of conversation on social media in China last week.

Two people describe a case involving a student at the University of Minnesota, part of a joint doctoral program in business administration with Tsinghua University. Liu was released without bail and has returned to China. He denies any wrongdoing, and JD.com posted a statement in Chinese, translated by a student:

Sunday, Sep. 2, 2018

We have noticed that there are rumors and false accusations about Mr. Qiangdong Liu on Weibo (Chinese social media site, similar to Twitter) recently. We hereby declare as follows: Liu was falsely accused while in the US on a business trip, but the police investigators found no misconduct and that he would continue his journey as planned. The company will take necessary legal action against false reporting or rumors.

Monday, Sep. 3, 2018

So far as we know, Mr. Liu was arrested on Aug. 31, 2018 in Minneapolis for investigation. He was released from custody shortly. There was no accusation or bail required for the release. Mr. Liu has returned to China and will resume his business activities as originally planned.

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In addition to the stock price drop and embarrassment this causes Liu and JD.com, the company may have a governance problem. Liu is required to attend board meetings in person (although he may be able to join via video or telephone). Without him, as an 80% voting rights owner, the board may be unable to make decisions for the business.

A New York Times article focuses on China’s fascination with self-made billionaires as celebrities. Online discussions featured photos of Jack Ma laughing at Liu’s trouble.

Liu image source.

Discussion:

  • I don’t see a statement or press release from Liu or from the company in English. Should Liu or the company publish something at this point on the website? Why or why not?

  • What should the company do now to manage through this crisis?

  • How does the Chinese reaction compare to situations in the United States? Can you think of a similar situation when Americans were fascinated by a leader’s hardship?