Dangdang Heir Sues Parents To Validate His Shareholdings
The 22-year-old son of Li Guoqing, the co-founder with his wife of the once-popular e-commerce platform Dangdang, has sued his parents, requesting the validation of an entrusted shareholding agreement he holds with them.
In response, Li posted on his Weibo social media account an emotional and lengthy statement saying he supported his son – whose name was not known – in protecting his legal rights and expressed pride in the youth's decision, yet Li then questioned the son's "gathering of evidence." He also bemoaned that the lawyer handling the case was retained with the help of the son's mother and Li's estranged wife, Yu Yu, who currently helms Dangdang and holds most of the company's shares.
The terms of the entrusted shareholder agreement, one where registered shareholders hold the shares of a different shareholder for a specified period of time, assuming the liabilities and the rights of the shareholder, were not made clear in Li's statement.
The co-founding couple's very public divorce proceedings have been ongoing for more than one year. Li currently holds only 22.38% of Dangdang's shares, placing him as a minority shareholder, while Yu Yu holds 52.23% and their son holds 18.65%. The management team holds an additional 6.74% of Dangdang's shares, according to Dangdang in a July 16 statement.
Li was apprehended by the police last month for illegal entry into Dangdang's corporate offices and the theft of the company seal. After being released, he vowed to take back his throne and restore the enterprise to sustainable growth. The company was delisted from Nasdaq in 2016 and returned to being a private holding company at a market value of US$536 million, but has continued to fall behind e-commerce sites including Alibaba and JD.com.
Suzhou Company Latest Target Of Fraud Investigators
Following the financial fraud scandal that saw Luckin Coffee admitting to $300 million in fabricated transactions, the China Securities Regulatory Commission (CSRC) has stepped up its investigations to crack down on other cases of financial fraud, and is now focusing on Suzhou Victory Precision Manufacture Co.
Suzhou Victory, a listed company, received a notice from the CSRC last Friday regarding an investigation into the company's disclosures of information. The notice didn't reveal details of the investigation.
A source asserted that the metal fabrication company had perpetrated financial fraud during its merger with Suzhou TouchTek, a company that produces and globally distributes computer display screen tempered glass, mobile phone displays and similar products, China Business Network reported.
Suzhou TouchTek was acquired in 2015 but suspended operations in 2019, with an accumulated loss of RMB890 million ($127.79 million) from 2016 through 2018. During that time, Suzhou Victory Precision Manufacture claimed to make profits of RMB50 million per year.
Suzhou Victory Precision Manufacture Co. had announced in April that it would amend all its fiscal reports from 2016 to 2018.
Analysts said that one of the main causes for financial frauds in China may lie in the low cost of penalties charged by regulators for company violators. Violations often result in administrative penalties of a warning and a fine under RMB1 million. The new Securities Law, which came into effect this March, features a registration-based IPO system and more stringent penalties for malpractice domestically and abroad.
Dengue Fever Outbreak Strikes Shanghai
Shanghai has reported nine cases of dengue fever, with the Shanghai Center for Disease Control and Prevention (SCDCP) saying that all four distinct types of dengue were represented in the nine cases – something it was at a loss to explain.
The infections included two DENY-1 types of dengue, three DENV-2 types, two DENV-3 and two DENY-4, none of which was transmitted locally, according to the SCDCP. Dengue is commonly found only in equatorial regions. The SCDCP did not say if the people infected were local residents or foreigners.
While up to 90% of people infected with dengue fever show only mild symptoms, the mortality rate can reach 50% in cases of severe illness.
Caused by the dengue virus, which is spread from person-to-person through mosquitoes, dengue fever can lead to a wide spectrum of clinical conditions, from dengue fever and dengue hemorrhagic fever to dengue shock syndrome, characterized by tiny spots or larger patches of blood under the skin, a condition that can prove fatal.
There are no effective drugs against dengue fever. The U.S. Food and Drug Administration last year approved the first vaccine, Dengvaxia, that can only be used in individuals aged 9 to 16. But it was criticized for increasing the risk of severe infection in some people. China is the early stage of developing its own vaccines against the dengue fever.
Trade In Services Sector Plunges
Imports and exports of China's services sector amounted to roughly RMB2.2 trillion ($315 billion) in the first half of the year, representing a sharp decline of 14.7% year-on-year, largely due to the drastic plunge in the travel industry. Export services in the travel sector dropped by 45%, while travel industry import services dropped by 42.6%, according to the Commerce Ministry.
Digital services and other knowledge-intensive trades saw increases. Imports and exports in knowledge-intensive service trades rose to RMB974.43 billion, an increase of 9.3% year-on-year, accounting for 43.7% of total imports and exports in services trade. Export services in intellectual copyrights, insurance, telecommunication and information rose 37.2%, 18.7% and 15.2% respectively.
The COVID-19 pandemic had little impact upon knowledge-intensive services trade, said the Commerce Ministry spokesman. The gaming and animation industries, which include trade in digital content and music, also saw unexpected growth.
Sogou Reports Q2 Revenue Growth
Sogou Inc., a leading Chinese web search technology company, said in its unaudited fiscal report released Monday that its revenues reached over RMB1.8 billion ($258.37million) in the second quarter.
Sogou said its active user base increased by 6% in the second quarter to 484 million people, and that its AI voice recorder ranked as the top seller on multiple e-commerce platforms during China's June 18 shopping festival. Sogou focuses on developing AI input technology with various services including voice input, translation and optical character recognition.
The Sogou board last month received a non-binding proposal from its single biggest shareholder, Tencent Holdings, presenting its intention to buy Sogou ADS's shares at the price of US$9.
In response to the proposal, Sogou said that they appreciated Tencent's recognition of its innovation and technical strength and that it would hire an independent committee to discuss the proposal in order to ensure the acquisition would benefit its shareholders.
