CEO in China Rages Online

By OWEN FLETCHER

E-Commerce China Dangdang Inc. Chief Executive Guoqing Li lost his temper Sunday on China's biggest Twitter-like microblogging service, accusing Morgan Stanley of undervaluing his company's initial public offering and exchanging off-color insults with a user who claimed to work for the financial services firm.

Mr. Li made the remarks on microblogging service Sina Weibo to a user going by the name Mishi De Weiyi, whose profile listed Morgan Stanley as her employer.

"I am here openly criticizing investment banks, criticizing Morgan Stanley, what, Morgan Stanley can't be criticized? Not be cursed? You foreigners' flunky!" he said to the user.

Dangdang, often likened to Amazon.com, is an online bookseller looking to expand its product range to fuel growth. It sold $272 million of shares in its IPO, including more than $56 million sold by Mr. Li and other existing shareholders, before listing on the New York Stock Exchange on Dec. 8. Morgan Stanley was a lead underwriter. Dangdang's American depositary shares recently traded at $33.86, versus their IPO price of $16.00.

"I regret not giving the job to Goldman Sachs," Mr. Li—who co-founded Dangdang with his wife, Peggy Yu—said in his Sunday tirade.

Mr. Li's remarks included made-up "rock-and-roll song lyrics," as he called them, that managed to mix talk of the IPO silent period with highly profane mother insults. Mr. Li's microblogging opponent, Mishi De Weiyi, was at least as vicious and foul-mouthed, using crude terms to suggest Li's father shouldn't have conceived him and saying he has an "IQ so low you don't even understand the basic principles of being human."

Morgan Stanley, after a preliminary investigation, said it doesn't believe any of its employees actually wrote the blog posts, a company spokesman said. "These comments are offensive, highly unprofessional and do not reflect industry practices. We condemn such behavior that can risk damaging a company's brand and reputation," he said. Morgan Stanley declined to comment on Mr. Li's allegations of undervaluing its shares.

Dangdang said in a statement Mr. Li's remarks were his own, and that they also serve as a warning to other companies seeking a U.S. listing.

Mr. Li said on his microblog Monday he was writing a report to Dangdang's board about his comments.

Mr. Li was more positive on the role of Credit Suisse, the other lead underwriter on its IPO. "Credit Suisse was not bad. Whenever price-setting was mentioned, they led the way in support," Mr. Li said. But the company ultimately followed Morgan Stanley's lead on the pricing, Mr. Li said.

A Credit Suisse spokesman declined to comment.

Company executives writing online posts have stirred controversy in other countries, too. In 2005, someone using the name "Rahodeb" went online to a Yahoo stock-market forum and speculated that Wild Oats Markets, a natural-foods grocer, eventually would be sold after sliding into bankruptcy, or when its stock fell to from $8 to below $5. Those and other posts turned out to belong to John Mackey, co-founder and CEO of Whole Foods Market, which agreed to buy Wild Oats in 2007.

But the Chinese Internet has a particular reputation for heated online discussions. In 2008, posters in online forums and chat rooms lashed out at Wang Shi, chairman of real-estate developer China Vanke, for what they claimed was a "stingy" donation by his company to relief efforts for a major earthquake in Sichuan province. One online poster wished for him to be drowned in the spit of all those who despise him.

Dangdang appears to be hoping for a silver lining in the controversy, using its official statement on the matter to try to redirect Internet users' attention. It concluded: "Whether or not you like Guoqing Li's comments, you are sincerely welcome to come to Dangdang to shop."

Copyright 2011 Dow Jones & Company, Inc. All Rights Reserved

This copy is for your personal, non-commercial use only. Distribution and use of this material are governed by our Subscriber Agreement and by copyright law. For non-personal use or to order multiple copies, please contact Dow Jones Reprints at 1-800-843-0008 or visit

www.djreprints.com