Alibaba fires manager after sexual assault case rocks industry

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 exposed “problems” with the culture at China’s e-commerce leader.

Li Yonghe, appointed just last month to lead a newly created division overseeing much of Alibaba’s nonretail 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, which involved an external client and several executives during a night of heavy drinking in the country’s northeast, has blown the lid off 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.

“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, who signed off on the memo “before dawn.”

“This incident is a humiliation for all Aliren (Alibaba employees). We must rebuild, and we must change.”

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 is 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 current broad campaign against online 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.

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 was detained after a university student accused him of pressuring young women into sex.

“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.”

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. She said 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 released a statement on its official WeChat account, saying the company will fully cooperate with police on a suspected assault case.

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.

“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.”