Doug Young

Corporate China | Momo fingers NetEase, Xiaomi's copycat defense

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Tang Yan (centre, front), founder and CEO of mobile social networking platform Momo Inc. at the ceremony of ringing the opening bell at the NASDAQ in New York. Photo: Xinhua

Doug Young

Published: 4:30pm, 15 Dec 2014Updated: 4:29pm, 15 Dec 2014

Two scandals in China's tech world were hot topics in the microblogging realm this past week, drawing heated discussion on allegations of copycatting and other unethical business behavior at smartphone sensation Xiaomi and newly listed social networking app maker Momo (Nasdaq: MOMO). The debate reflected the wide range of views on the many dubious business practices like intellectual property theft and violation of business contracts that are a regular feature in China's corporate business landscape.

In less controversial chatter, computing giant Lenovo (0992.HK) was also tooting its own horn loud and clear as it celebrated the 10th anniversary of its landmark purchase of IBM's (NYSE: IBM) PC business. As a long-time China tech writer it was hard for me to believe that historic deal is already a decade in the past, and it certainly kicked off a drive that would propel Lenovo to become the world's biggest PC brand.

Let's start with Momo, which has been all over the tech headlines after a surprise attack on the company by online game giant NetEase (Nasdaq: NTES) on the eve of its New York IPO. NetEase accused its former employee Tang Yan of stealing company resources and violating a non-compete clause in his employment contract when he left in 2011 to set up his then-new firm, Momo.

No criminal charges were ever apparently filed in the case, though NetEase pointed out that Tang was briefly detained by police at the time. The revelations rippled throughout the Chinese media, and forced Momo to issue a clarifying statement just as it was getting ready to make its $200 million (HK$1.55 billion) IPO in New York.

A highly provocative photo that nicely summed up Tang's sentiment on the matter came in a microblog repost from Arthur Duan, a vice president at online classified ad site 58.com (NYSE: WUBA). That photo shows Tang and another tech executive Zhang Ying together at the Nasdaq offices, giving the finger to the camera. The implication is obviously aimed at NetEase for spoiling Momo's coming out party, though Zhang later issued his own explanation for the pose on his own microblog.

Debate on the topic among other executives was surprisingly critical of NetEase and its founder Ding Lei. Lin Wenqin, a vice president at e-commerce giant JD.com (Nasdaq: JD), was representative of the sentiment, wondering why Ding harbored such deep resentment towards Tang. Few people came to NetEase's defense, though several people did point out that NetEase has produced many of China's Internet entrepreneurs.