DangDang CEO Li Guoqing opens trade at the New York Stock Exchange - December 9th 2010

DangDang, “the Chinese Amazon” (though without Amazon-style market share), listed on the New York Stock Exchange to great fanfare on December 9th, 2010.

Just over a month later, DangDang CEO Li Guoqing exploded at Morgan Stanley and Credit Suisse in a profanity-laced tirade (click here for sanitized reports), blaming them for a botched IPO that severely undervalued the firm. From Li Guoqing’s Sina Weibo:

@当当网李国庆:摇滚歌词,虚构:为做俺们生意,你们Y给出估值10-60亿,一到香港写招股书,总看韩朝开火,只写7,8亿,别TMD演戏。我大发了脾气。老婆享受辉煌路演,忘了你们为啥窃窃私喜。王八蛋们明知次日开盘就会20亿;还定价16,也就11亿。次日开盘,CFO被股价吓的尿急,我说忍了这口气,过了静默期我再操你妈了逼 。

“Lyrics for a rock song: You (Morgan Stanley) gave out a valuation of 1-6 billion, but in Hong Kong the opening statements stated only 0.78 billion, stop fucking acting. You f**kers knew first day of launch that valuation would be 2 billion, but you still priced USD 16 per share, which comes to 1.1 billion. My CFO was in panic mode, I held back a breath and silently cursed you motherf**kers.”

Li’s statement shocked thousands of Weibo users and spread like wildfire.

Next, two Sina Weibo accounts claiming to be employees of Morgan Stanley fired back at Li in personal attacks of the most severe degree. Morgan Stanley has launched a preliminary investigation and does not believe that the responses are actually from its employees. Nonetheless, the virulent defense by Morgan Stanley “employees” also exploded on the Chinese Weibo-sphere, a PR disaster for both firms.

What’s more, an infuriated Li actually responded to these “employees” in a series of over 50 weibos (full transcript in Chinese). Update: full transcript in English

A response by @迷失的唯怡 openly questioned Li Guoqing’s intelligence, refuting Li’s assertion that Morgan Stanley made undue return on investment via DangDang’s IPO. The Weibos insult Li’s family, his parents, and his “well-connected” wife:


“Our investment firm didn’t charge you a fucking single extra cent, go home and work that out with your broken-gong brain [shit for brain]. Do you know what you are? You are a beggar! For the last ten years have you lived a day without being chased after by debt collectors? How many of your debts did your wife repay? You really think Morgan Stanley and Credit Suisse believed in you? If not for Yuyu [Li's wife], you would be left on the streets of Beijing as a piece of shit.” – @迷失的唯怡


“‘If Morgan Stanley is bad’, then why the hell did you come to us with your wife crying about how poor you were? Big joke. ‘Goldman Sachs is good’, then go to Goldman Sachs–how come I remember you two [Li and his wife] were rejected by them two years ago, if I recall correctly.” - @露西娅天气

“A Literary Hobby”

This afternoon, in a sober response, Li posted this in his Weibo.

1. Li Guoqing’s “Rock Song Lyrics” are purely fictional, his own literary hobby.

2. Offensive use of language was wrong, and the “lyrics” were not targeted at specific industry or firm.

3. The “lyrics” do not reflect negativity towards a certain industry.

4. Li Guoqing’s response to 2-3 users are offensive, but did not use any actual offensive words (i.e. swear words).

5. Li Guoqing’s “lyrics” were written to comfort his own pains and to warn follow companies planning to list in the U.S.

6. Weibo is open media, all are welcome to comment, but please refrain from using offensive words. DangDang agrees with entrepreneurs being active in Weibo, but please keep it clean.

7. Whether you like Li Guoqing’s statements or not, DangDang sincerely welcomes you all.

In their own preliminary statement, Morgan Stanley said that the two involved employees were in fact not from their firm. I checked the account of one of them; many of her followers are certainly from Morgan Stanley and she’s well educated in the investment business. There are still doubts as to their true identities.

In the meantime, I presume Li is looking for a new hobby.

Lessons Learned

  1. 2011 promises many more US IPOs for Chinese internet companies. Firms should carefully select a bank; banks should take PR precautions.
  2. Valuation – how much is a hot Chinese internet company worth? Recently there has been talks of Sina spinning off Sina Weibo, readying it for an IPO. According to Innovation Works founder Li Kaifu, Weibo’s valuation should be placed at USD 1 billion, even though Weibo has barely has any revenue. How well can bankers (or anyone) understand the Chinese internet to present a proper valuation? The one trait that all Chinese IPOs share is extreme volatility.
  3. Founders should be kept under tighter restraints on social media, especially when many companies policies are designed to regulate employees’ internet behavior. The same should be no less true for the boss.
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  • http://www.kailukoff.com Kai Lukoff

    I assume any US CEO would be forced to resign after such an insane lapse of judgment. Let’s see what happens with DangDang CEO Li.

    • Quasar

      That will not happen in China~ or on Chinese CEO

  • guest

    also how morgan stanley treats his employee.

  • Anonymous

    My pity today is reserved neither for the bank nor the executive, but for Li’s wife, the hardworking people at Dangdang whose work has been undermined by an apparently infantile CEO, and the PR people inside and outside of Dangdang who are having to contend with this unnecessary nightmare.

  • http://markenglehartevans.com Mark Englehart Evans

    Great coverage. This is quite a tempest.

  • Will Ashworth

    It’s refreshing candor for sure. Take out the swearing and it’s much ado about nothing. I wish CEOs were this honest. Unfortunately, they’re too busy making 300 times the average worker.

  • kiers

    what’s so infantile about the CEO? his concern is relevant and pointed!

    Here we have a member of the “communist” country elite acting out freely, and the “stiffs” (presumably) of the wasp school of capitalism and “home of the free” are “censoring” this outburst? O the irony.

    I say let er rip. the point is kinda valid.

  • http://twitter.com/alexlobov Alexander Lobov

    Good question actually. I’ve been trying to figure out how the company is listed in the US. I’m pretty sure it’s Level 3 Depository Receipts, which means that a fiduciary duty exists between shareholders and board… which in turn means that the board could sack the CEO as with any public company in the US. But a lot would depend on the makeup of the shareholders. Western investors obviously would not be comfortable with this sort of thing. And the stock price has dropped around 10% since news broke so there’d be grounds for some action there.

  • Guest

    yeah, ‘I’m CEO, Bitch!’

  • http://twitter.com/21tigermike Michael A. Robson

    Sounds like a brilliant guy. Bush league.