Electric cars

Clarification on fraudster does little to stop Chinese electric carmaker BYD’s shares from taking a hit

PUBLISHED : Monday, 16 July, 2018, 9:43pm
UPDATED : Monday, 16 July, 2018, 9:43pm

Shares of BYD plunged as much as 6.3 per cent even after the Chinese electric carmaker’s clarification that it played no role in illegal dealings by a fraudster who illegally entered into transactions that damaged its reputation.

In a filing to Hong Kong stock exchange on Monday, the Shenzhen-based company said Li Juan and her conspirator Chen Zhenyu were not its employees, directors or senior managers, and the company did not authorise them to conduct business in its name or sign contracts on behalf of it.

It followed a statement published last Thursday on BYD’s website, which said Li and her conspirators had used the name Shanghai Yuhong Culture Communication to provide free advertising and promotion activities, after getting in contact with the carmaker as early as May last year.

In April this year, Li, operating under Yuhong, had offered free and discounted advertising that involved BYD and Arsenal Football Club, the statement added without giving details how the ads worked and BYD’s involvement.

Since late May, BYD said it has been receiving queries from external parties seeking information about Li, who, upon BYD’s investigation, had claimed to be a marketing manager of a company called Shanghai BYD Electric Car.

Li had also used an email address with the domain name “” which is similar to the company’s domain name “”, and signed advertising cooperation deals with multiple parties in BYD’s name using a fake company seal.

BYD said in last week’s statement that it had reported the alleged crime to the Shanghai police and Li was being investigated, adding it had no knowledge of or took part in any way in the crime.

Mainland-based China Business News cited an unnamed manager at an advertising agency which was owed tens of million of yuan in unpaid ad fees by Li’s company as saying that some 30 companies – mostly in Shanghai – were owed at least 1.1 billion yuan in fees.

The manager said that BYD should bear some responsibility on the incident since it had “happily” received several hundred million yuan worth of advertising benefits from Li, and “failed to investigate” her and her company.

BYD said in its stock exchange filing that a clarification and explanation was needed after some “false” media reports were published, which had a negative impact on the company.

But it declined to comment on the accusations raised in the report and the amount owed.

An analyst at a US brokerage covering BYD, who declined to be named because of company policy, said the share price fall was because of some investors’ concerns about BYD’s governance, but whether it was justified depends on the police investigation results.

BYD’s share price rose 0.7 per cent on Thursday when it gave the details on its own website. It closed 5.7 per cent lower on Monday after the negative media report and making the “clarification” exchange filing.