JD.com Chairman Richard Liu Arrested in U.S. in Sexual Misconduct Case


The billionaire founder of JD.com, one of China’s largest and most successful online retailers, was arrested Friday in Minnesota for alleged sexual misconduct before being released a day later, police records show.

In a statement posted Sunday afternoon on the Chinese social media platform Weibo, JD.com said the executive, Liu Qiangdong — who goes by Richard Liu in the English speaking world — had been falsely accused. “During a business trip to the United States, Mr. Liu was questioned by police in Minnesota in relation to an unsubstantiated accusation,” the company said. “The local police quickly determined there was no substance to the claim against Mr. Liu, and he was subsequently able to resume his business activities as originally planned.”

Police in Minneapolis said they were treating the case as an active investigation.

The matter is an another unwelcome bit of publicity for a company that symbolizes the business potential of China’s rising middle class. The accusation could also be a test of JD.com’s stability, as well as the ability of a Chinese technology company to rebound from the problems of its leaders. China’s most powerful technology companies are still tightly controlled by their founders, so the fortunes of businesses worth tens or even hundreds of billions of dollars are closely intertwined with the fates of a small number of executives.

JD.com, whose shares trade in the United States, has prospered by catering to the increasing sophistication of Chinese shoppers. Big global brands such as Nike, Prada and Levi’s use JD.com’s sales platform to reach the country’s burgeoning middle class, and the company is closely watched as an indicator of consumer confidence.

According to the jail roster for the Hennepin County Sheriff’s office, Mr. Liu was taken into custody by the Minneapolis police late Friday on suspicion of criminal sexual conduct and then freed Saturday afternoon without bail. In Minnesota, the term “criminal sexual conduct” covers a range of nonconsensual sexual contact.

A spokesman for the Minneapolis Police Department said Mr. Liu was released “pending formal complaint.” Spokesman John Elder said the police could have held Mr. Liu in custody through Tuesday, but did not feel that was necessary while they conducted their investigation.

The police will, after the investigation, recommend to prosecutors whether Mr. Liu should be charged with a misdemeanor or felony or face no charges, at which point the case would be closed.

The company said that Mr. Liu’s trip would continue as planned, but a spokeswoman declined to comment further. When asked when Mr. Liu would return to China, the spokeswoman said she did not have that information. Mr. Liu didn’t respond to a request for comment.

The arrest comes shortly after Mr. Liu was in the spotlight for another incident involving sexual misconduct. He tried to distance himself from a sexual assault that was said to have taken place after a 2015 party at his penthouse in Australia. A guest at the party, Longwei Xu, was found guilty this July of seven charges, including having sex with his accuser without her consent.

Mr. Liu has not been charged with a crime or accused of any wrongdoing in that case. But he tried to get an Australian court to prevent the release of his name in connection with the case by citing potential damage to his marriage and business, court documents show. In July, a judge in Australia rejected his request for a suppression order.

JD.com is a heavyweight in China’s technology scene, and Mr. Liu, its chairman and chief executive since its 2004 founding, is one of its leading lights. Legal troubles for Mr. Liu could darken perceptions overall of JD.com, whose shares trade on the Nasdaq stock market in New York and have a market value of around $50 billion.

The company competes with Alibaba, the country’s largest e-commerce provider, for the attention of China’s increasingly affluent middle class, and says it has more than 300 million customers. It specializes in electronics such as smartphones and appliances.

Alibaba and JD.com are both trying to lure high-end global brands to open virtual stores on their sales platforms. Alibaba says it has more than 570 million customers across its Chinese marketplaces.

Whereas Alibaba operates platforms on which outside merchants sell their wares to consumers, JD.com’s business model is more like Amazon’s. It typically buys products from manufacturers and stores them in its own warehouses. JD.com has also invested in its own logistics network, which the company says helps provide quicker, more reliable delivery than Alibaba can offer. The company’s major shareholders include Google and the Chinese internet conglomerate Tencent.

For many companies with shops on the platform, JD.com offers a way into an exciting market. China’s dramatic economic rise has meant that hundreds of millions of Chinese consumers are no longer content with shoddily made goods, and are ready to pay more for quality.

But as the economy has shown signs of a slowdown in recent months, JD.com has suffered too. Last month it reported disappointing financial results, citing increasing competition.

China’s technology scene is young — many of its most influential companies were founded only in the past two decades — and company founders like Mr. Liu tend to retain outsize influence on their businesses, even as they grow large and list on public stock exchanges. Founders control voting rights and have ultimate say in matters large and small. Their personalities seep into the corporate culture.

Mr. Liu was born in a poor part of Jiangsu Province in eastern China in the 1970s. When he earned a place at the prestigious Renmin University in Beijing, other people in the village scraped together cash and boiled eggs to sustain him in the capital.

In the past, Mr. Liu has spent one day a year wearing JD.com’s red uniform, riding an electric bike and making home deliveries. He likes to say that as the son of a poor family, he wants to treat his employees with fairness and respect.

By Raymond Zhong and Li Yuan


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