Dangdang Co-Founder Aims to Take Back Company by Breaking into Offices
Dangdang Co-Founder Li Guoqing is reported to have broken into the corporate head offices to take corporate stamps as an effort to take back his company founded in 1999. According to Chinese media Caixin, an employee from Dangdang confirmed the incident with the media outlet.
SEE ALSO: Dangdang’s Vice President Reveals Company’s Post-Privatization Ownership Structure
Caixin reported that Yu holds a 64.2% stake in Dangdang, while Li holds 27.51%. Yu became CEO of the company in 2019, while Li Guoqing continues to claim 50% of the companies’ assets and controls. Li, together with four other people, broke into Dangdang’s corporate office and stole 47 company seals as a sign to take back control of the company. Li also posted a physical copy of his personal statement in front of the company’s reception desk. The three-page long statement accused Peggy Yu of damaging the company through several decisions and claimed that Mr. Li Guoqing will now take over the company. Ms. Peggy Yu will no longer hold any positions within the company.
Corporate seals are important items to prove the actual control of the company. All Chinese companies must have seals to stamp official documents. Li Guoqing further claimed that documents without corporate seals will not be considered valid.
Video footage of Li Guoqing entering the corporate office were published by Chinese media Jiemian News. The 30-second video shows that there is little resistance from the employees when Li enters the office space and takes the corporate seals.
Following the incident, Li Guoqing spoke to reporters from Beijing News. He claimed that taking back company seals is only the first step. In the upcoming days, he will be announcing a new management team and eventually come back to the company to take over. “I received support from our minor shareholders, and I have more than half of the company’s share,” said Li over the phone via WeChat.
E-commerce China Dangdang Inc. later issued a statement confirming that the incident took place. The company filed police reports and accused Mr. Li of using illegitimate means to hijack the company and announced that the company would not honor any agreements made by Dangdang on Li’s behalf. According to the vice president of Dangdang, Ms. Peggy Yu’s leadership is backed by 100% of the management team.
“Mr. Li Guoqing has not had a role in the company’s operation since 2015. Mr. Li claimed that he hosted a shareholder meeting on April 24, however, all management-level shareholders, including Ms. Peggy Yu, were not aware of the meeting. The outcomes from that meeting are invalid.” The statement from Dangdang Inc. also assured that the company will continue to operate and serve its readers: “The 15-minute drama that happened in our corporate office will not have any impacts on the operation, stabilities, or share transfer rights of the company. Our websites, employees, and management teams will continue to serve our readers as usual.”
Multiple media outlets reported that Dangdang quickly posted a job opportunity for a new public relations professional in the evening following the incident. The candidate will be responsible for handling crisis management. The company later changed the job description and downplayed the importance of handling the ongoing corporate public relations crisis.
Mr. Li Guoqing and the management team of E-commerce China Dangdang Inc. have significant disputes over the ownership of the company. But according to legal experts, Mr. Li’s actions in the corporate offices may face criminal charges.
“No matter the dispute, people cannot use force to solve these issues. No matter if the dispute is among shareholders or power struggles, they should not be like this,” said Mr. Chen Wenming, a member of the lawyer association in China’s Zhejiang Province. “The case also has many unanswered questions. It remains uncertain if the shareholder meeting claimed by Mr. Li is legitimate. There is no proof of its legitimacy.”
“It is unclear whether Mr. Li is enforcing his authority over the company, or committing robbery,” said Mr. Chen. “If the shareholder meeting is deemed to be illegitimate, Mr. Li may be charged with robbery as he has no reasonable grounds to commit the acts of taking corporate seals.”
Mr. Chen’s opinion is shared by several lawyers who spoke to NetEase.
Reports from 36Kr speculate that the radical measures from Li Guoqing were motivated by Dangdang’s downsizing decisions. According to Li Guoqing’s personal video show, Dangdang is planning to terminate more than 100 employees due to the economic struggle caused by the coronavirus pandemic.
“This is the second wave of downsizing from the company since last year. Many of those employees were hired by me when I was with the company. They were recipients of the president recognition awards back in the day,” said Li in his video show on the topic. Yet Li said later in the show that he will not interfere with the decision of downsizing: “Of course, I am just a shareholder. I will not interfere with the decisions made by the president of the company.” This stands contradictory to his statement posted in front of the corporate office, which listed the decision of letting more than 100 employees go as a mistake committed by the current CEO Ms. Peggy Yu.
Dangdang denies the allegation of downsizing: There are no downsizing plans from the company. Only a few individuals who are not suitable will depart from their positions. Information regarding terminating employees is false. Dangdang is planning on suing Mr. Li for libel.
E-commerce China Dangdang Inc., also known as Dangdang, was founded by Li Guoqing and his now-estranged wife Peggy Yu in 1999. In 2010, E-commerce China Dangdang Inc. became a New York Stock Exchange-listed company. Dangdang reversed course in 2016 and returned to be a private company. In 2019, Li Guoqing and Peggy Yu were tangled in a divorce trial following rumors claiming the couple has been separated for more than 22 months. As of today, the trial has not delivered any verdicts. The trial is a key part of determining the company’s ownership rights between the couple who are now in an “irreparable relationship.”