A slip of the tongue costs Baidu billions

The search engine operator’s market value shrank by more than HK$6 billion after its head of communications drew public outrage over comments on China’s ‘996’ work culture

Key Takeaways:

  • Baidu’s shares fell in both Hong Kong and New York, wiping out about HK$6 billion yuan in market value, after a senior executive’s remarks on her tough work philosophy
  • The case underscores the importance of public opinion for Chinese companies, and how online criticism can lead to big headaches

By Li Shih Ta

She may have been accustomed to diffusing public relations crises as part of her job as head of communications at Chinese search engine giant Baidu Inc. (9888.HK; BIDU.US). But former vice president Qu Jing learned the hard way about the damage that can come with such events in a recent crisis of her own making.

The story of Qu’s controversy began early this month when she put aside her normally behind-the-scenes persona and began posting short videos on social media publicizing her tough management style and image as a strong businesswoman. She dismissed employee complaints about excessive work, chiding them with words like “I am not your mother-in-law, I am not your mother” and “I am only in an employment relationship with my employees, so why should I care about their families?”

In one video, she criticized a subordinate who complained that Qu had sent messages to her work group late at night, causing her children to cry after being awakened by her phone’s loud beeping sound. Qu commented bluntly: “Does that have anything to do with me?”

The posting of her videos during China’s long Labor Day Holiday starting May 1 drew more public outcry on the internet than it might have otherwise. Some called her “cold-blooded and unsympathetic,” while others said her comments revealed the true colors of Baidu, one of China’s leading internet companies. Some even likened Qu, as Baidu’s head of communications, to “a fire chief-turned-arsonist”.

The online outrage quickly spilled over to the company’s U.S.- and Hong Kong-listed stock, as investors feared both backlash from the public and potentially even the government. Its stock dropped 2.17% in a single day in Hong Kong, wiping out HK$6 billion ($769 million) in market value. The ticker then closed down by 2.47% the same day in New York.

Public opinion minefield

China is somewhat different from Western markets in the huge effect that public opinion can exert on company stock prices, even in instances that don’t necessarily involve the company’s actual business.

After beverage giant Wahaha’s founder Zong Qinghou passed away this March, rival Nongfu Spring came under fire from nationalists who called its founder too profit-oriented, unlike the more patriotic and down-to-earth Zong. As the outrage grew, Nongfu’s shares plummeted for three days, wiping out HK$32 billion in market value. 

In another instance, shares of STAR CM (6698.HK) plunged 47% over two days after the company came under fire for alleged unfair treatment and the subsequent death of singer Coco Lee last August related to criticism she made over the company’s “The Voice of China” reality talent show. German auto giant BMW (BMW.DE) also saw its shares fall 4.3%, wiping out 3 billion euros in market value, after being criticized for serving ice cream only to foreigners at China’s top auto show last year.

All this shows that negative public opinion can blow up suddenly and unpredictably for a wide number of reasons, making it hard for many companies to actively avoid.

996 work culture

The Baidu incident also bled over into official Chinese media. The Youth Daily criticized the company for its cold “wolf culture” in a commentary, calling it a temporary result of China’s recent emphasis on market economics. It said the public outcry was “a backlash of humanity against the wolf culture,” referring to the famous ‘996’ culture at many tech companies where employees are expected to work from 9 a.m. to 9 p.m., six days a week.

This isn’t the first time the ‘996’ culture has come under fire. In 2019 Alibaba (BABA.US; 9988.HK) founder Jack Ma’s praise of 996 as a “great blessing” sparked similar outrage. So, in that regard, Qu’s comments really just re-directed a spotlight on an old reality plaguing workplaces in large Chinese tech companies.

Many young Chinese born in the 1980s and 1990s accept 996 as part of the price of getting ahead. But those born after 2000, less burdened by their families and more focused on their own work satisfaction, have started demanding clearer boundaries between life and work. They are more likely to refuse to work overtime, and to keep their distance from the “wolf culture.”

Whether or not the younger generation can wean China off its harsh workplace culture remains to be seen. But the Baidu case shows such practices are increasingly unpopular, and tolerance for such direct and public views like Qu’s is dwindling.

Earlier PR fiasco

The Qu incident wasn’t Baidu’s first public relations fiasco, and undoubtedly won’t be the last. The company faced even more scathing criticism back in 2016 for a case involving one of its business practices, in this case not clearly disclosing which of its search results were paid and which were organic.

In that instance, Wei Zexi, a 22-year-old university student suffering from synovial sarcoma, found a treatment for his cancer at a Beijing military-affiliated hospital using Baidu search results. It was only later that he realized the treatment was unapproved and ineffective, but only after he spent nearly 200,000 yuan in medical fees. He ultimately died from the cancer not long afterwards.

Wei’s death triggered an even bigger backlash for Baidu, since the result that attracted Wei’s attention was a paid advertisement that wasn’t clearly labeled that way. Baidu was eventually asked to take rectification measures by China’s cybersecurity regulator. Qu’s controversial remarks may have caused many to remember the Wei Zexi incident nearly a decade ago. This time Baidu may have paid a lower cost, accepting Qu’s resignation as its head of communications. 

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