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Alibaba Fires Manager As Sexual Assault Case Rocks China

From Bloomberg

(Bloomberg) — Alibaba Group Holding Ltd. has fired a manager accused of rape, moving to contain the fallout after an employee’s account of her ordeal went viral on social media and ignited fierce debate about rampant sexism across China’s tech industry.

The Chinese internet giant didn’t identify the manager. Li Yonghe, appointed just last month to lead a newly created division overseeing much of Alibaba’s non-retail businesses from food delivery to travel, has resigned alongside his human resources chief for mishandling the incident. The sexual assault allegations, first reported by the employee on Aug. 2, have unearthed systemic challenges with the company’s mechanisms, Chief Executive Officer Daniel Zhang said in an internal memo seen by Bloomberg News.

The incident involved an external client and several executives during a night of heavy drinking in the country’s northeast. It highlighted pervasive mistreatment of female workers across companies in China, where the #MeToo movement has thus far failed to take off as widely as in Silicon Valley or elsewhere. Zhang, in a lengthy pre-dawn memo, described an outpouring of emotions on Alibaba’s intranet and vowed to step up protections for women across the company while addressing its failure to act.

On Monday, one of the top trending items with more than 800 million views on the Twitter-like Weibo service — which is backed by Alibaba — was an online declaration about 6,000 employees banding together to protest and overhaul “systemic inadequacies and a lack of protection for female employees.” Alibaba’s shares fell more than 4% in Hong Kong.

“Behind everyone’s deep concern about the incident was not just sympathy and care for the traumatized colleague but also tremendous sadness for the challenges in Alibaba’s culture,” wrote Zhang. The CEO issued an impassioned plea to “Aliren,” or Alibaba’s people, in his memo. “This incident is a humiliation for all Aliren. We must rebuild, and we must change.”

Read more: Sexist Job Ads Show Discrimination Rife at China Tech Giants

It’s unclear how Li’s departure will affect Alibaba’s business — the so-called local services division was one of the corporation’s fastest-growing arms, tasked with competing with other on-demand giants like Meituan in nascent arenas such as groceries. Many of the comments over the weekend centered on Alibaba’s failure to act until the allegations went public. The scandal engulfed Alibaba just as it’s trying to move past a bruising months-long investigation by antitrust regulators into monopolistic behavior such as forced exclusivity, which helped kick off Beijing’s campaign against industries from ride-hailing to fintech and education.

Alibaba has become the highest-profile symbol of abuses regarded as prevalent throughout Chinese businesses and at tech firms, rooted in a hard-charging environment that often prioritizes profit and achievement over culture. The #MeToo movement first came to prominence there in 2018 when allegations against a professor at a Beijing university were published on social media. Since then, a number of allegations have been made against academics, environmentalists and journalists.

President Xi Jinping’s pledge to fight against workplace discrimination amid a shrinking workforce, even as the country cracks down on feminist activists and scrubs the web of sensitive #Metoo content. China bans job discrimination based on gender and stipulates the importance of equal opportunity. Yet a lack of enforcement means there’s few repercussions to discriminatory practices.

In one of the highest-profile incidents so far, JD.com Inc. founder Richard Liu was arrested in the U.S. in 2018 and accused of raping a 21-year-old female Chinese undergraduate, though prosecutors there subsequently decided not to press charges against the billionaire. More recently, former Korean boy band member Kris Wu has been detained after a university student accused him of pressuring young women into sex.

”Even if this doesn’t lead to serious consequences for Alibaba, I think people are learning from this kind of protesting experience,” said Pocket Sun, co-founder of SoGal Ventures, which invests in female entrepreneurs. “If this is not the real turning point, then the next one might be, or the one after the next might be, because people get less tolerant over time.”

Read more: Police Release Files on China Billionaire’s Alleged Rape Case

But the country’s largest corporations have thus far been largely shielded from the upheaval of the #MeToo movement in the West, in part because of a lack of recourse for reporting incidents and longstanding sexist norms. Businesses also have tended to deal with gender discrimination away from the public spotlight. From hazing rituals during which women simulate sex acts to forced drinking and job ads that use women as bait to lure male workers, sexism remains endemic particularly in the tech industry.

Alibaba will now work with police on their investigation, based on an account the female employee posted online after she first reported the incident internally. The employee’s story only emerged after she began handing out flyers in the company cafeteria last week, hoping to be heard, a person familiar with the matter said. According to the woman, her boss came into her hotel room and raped her when she was inebriated after a night of drinking with clients in the city of Jinan.

The accused has confessed he performed intimate acts with the female employee and law enforcement officials will determine whether he broke the law, according to the memo. Separately, Jinan Hualian Supermarket — whose employee was allegedly present at the dinner — released a statement on its official WeChat account, saying the company will fully cooperate with police on a suspected assault case.

“I expect the biggest impact to be recruitment and talent management,” said Michael Norris, an analyst with Shanghai-based consultancy AgencyChina. “Alibaba’s growth required a strong talent pipeline across various business units. This incident may dissuade promising female graduates and highly-qualified female managers from joining Alibaba.”

What Bloomberg Intelligence Says

Alibaba may promote greater delegation among its managers to more effectively empower employees as it seeks to set new standards for behavior. The swift departure of employees who were involved or handled a sexual assault case raises the likelihood that Alibaba’s burgeoning workforce, which more than doubled in the year to March 31, will need to abide by stricter codes of ethics.

– Catherine Lim and Tiffany Tam, analysts

Click here for the research.

Read more: How an Online Scandal Put Jack Ma’s Media World in the Spotlight

Alibaba will conduct a company-wide training program on employee rights protection, including anti-sexual harassment, Zhang said. It will also establish a reporting channel and speed up the formation of a code of action to address such issues. Chief People Officer Judy Tong will be given a demerit in her records. The human resources department “did not pay enough attention and care” and “lacked empathy,” Zhang said.

This wasn’t Alibaba’s first brush with public scandal. In 2020, the wife of Jiang Fan — then the youngest partner at the e-commerce giant — took to the Twitter-like Weibo to warn another woman, a prominent social media influencer, not to “mess” with her husband. It escalated quickly into the firm’s worst public relations debacle at the time, igniting a frenzy of online speculation about whether Jiang and the internet star were having an affair, and if that swayed Alibaba’s business decisions or investments. The executive was ultimately demoted.

The incident however drew scrutiny from Beijing, particularly over the way individual posts and trending topics about the scandal vanished from Weibo, according to an article published by the online arm of People’s Daily. That shone a spotlight on Alibaba’s extensive media empire and the influence it wields in the public arena, Bloomberg News has reported. It lent impetus to an already wide-ranging campaign to rein in the power that Ma and other technology moguls wield over commerce, data and fintech in Asia’s largest economy.

“We must use this opportunity to reflect and rebuild our thinking and actions fully,” Zhang wrote. “Change is only possible if everyone takes individual action, but it must start at the top. It starts with me. Please wait and watch.”

(Updates with employee petition and share action from the third paragraph)

More stories like this are available on bloomberg.com

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