58.com pulled into corporate espionage case in China

07 Mar 2017

China’s two leading used-auto information sites are in the spotlight after a corporate espionage scheme has come to light.

Chejianding, which offers users information on used vehicles, including comprehensive vehicle-service records, brought a legal action against its 58.com-backed rival operator Chaboshi, accusing the company of engaging in unfair business practices. The case will reported ask for damage compensation in the order of RMB 20 million ($2.9 million U.S.).

The accusations against Chaboshi include aggressive and intimidating poaching of Chejianding employees and the planting of an individual – initially named as “Ms. Zhang” and later confirmed to be Ms. Chen Xiaomei – into the Chejianding workforce to acquire “proprietary data, business activities and pricing strategies,” in addition to private and metadata pertaining to Chejianding users.

Chenjianding alleges that this data was then used to launch a “frantic” marketing campaign, targeting existing users of its platform to get them to swap over to Chaboshi.

Ms. Chen, who joined Chejianding as a customer service representative, was just 23 years old when she was recruited to take part in the scheme, and alleges that she was paid RMB 4,000 per month for her participation. She spent a total of eight months as an employee of Chejianding, ending in February 2017.

After being confronted by senior management, Ms. Chen admitted that she was a mole for Chaboshi. Her claims have been backed up by extensive and incriminating WeChat conversations with an unidentified figure from Chaoboshi known only as Mr. Wang, she was also paid via WeChat wallet.

The case is bringing negative press to the doorstep of classifieds giant 58.com. Chaboshi chairman Cong Lin is also vice-chairman of 58.com, and Chaboshi has previously received almost RMB 740,000 in direct investment from 58.com founder and CEO, Yao Jinbo. Furthermore, Ms. Chen was formerly an employee of Ganji.com, which was acquired by 58.com during her time at the company.

58.com responded to the incident by stating that Chaboshi is an independent company, but industry insiders consider it to be nominally part of 58.com’s considerable used-car ecosystem. Chenjianding founder Kan Jinliang is also publicly accusing 58.com of direct involvement in the case, stating that “in the past, 58.com was our client, and we never would have imagined that they could take this action.”

In a legally ill-advised move, on Febr. 14, Cong Lin contacted Kan Jinliang to apologize, admitting that “this isn’t a pretty situation.” The legal case was filed the following day.

Chejianding went live in May 2015, after several years of market research. Chaboshi went online in January 2016.

The case once again brings negative attention to the online used-auto sector  in China, coming just a week after the revelation that Youxin was taking Guazi.com to court over its own alleged, malicious business practices (which we reported on here).

The two cases will both be tried in the Chaoyang People’s Court of Beijing.

Share

Tom Marling

Tom is a PhD candidate in Chinese History at Hong Kong Baptist University, and former PR consultant in Mainland China. He joined the AIM Group in 2016 as a writer/analyst.

Free Download

The complete analysis and insider news for global classifieds.

Download the Free 2016 Global Classified Annual Preview.

Download Now

You have Successfully Subscribed!