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China tech

China's anti-corruption campaign moves into tech world

World's most valuable startup ByteDance sees second executive detained

Robots perform a dance in Yantai, Shandong province. Nearly all of China's large-scale tech companies have set up Communist party committees inside their organizations. (Xinhua photo)

HONG KONG -- ByteDance, a $75 billion Chinese startup, has turned a second executive over to police in a year as part of the company's anti-bribery campaign, the latest sign that Beijing's crackdown on corruption has deepened into the technology world.

ByteDance revealed last week that an executive it identified as Wang was found to be accepting bribes including luxury cars and several million yuan from a business partner, according to Chinese state-owned media The Paper. The Beijing-based company did not disclose details but said it had fired the executive and cut ties with the business partner.

"ByteDance has a zero-tolerance policy towards corruption," a company spokesman told the Nikkei Asian Review by email.

With an investment of $3 billion from Japan's SoftBank Group, ByteDance last month surpassed ride-hailing service provider Uber Technologies as the most valuable startup in the world. Its artificial intelligence-powered news aggregator app Toutiao has nearly 173 million monthly active users in China, according to industry estimates. TikTok, another short-video sharing app developed by ByteDance, has attracted more than 500 million monthly users.

In May, Chinese authorities reportedly detained Huang Zifeng, the head of ByteDance's popular video-streaming app Huoshan, in what the company said was a bribery probe. ByteDance dismissed two other employees for similar reasons.

ByteDance displays its products at the China International Software Expo in Beijing on June 29. The tech startup says it has a "zero-tolerance policy towards corruption."   © Reuters

ByteDance is not the only Chinese tech company boosting efforts to clean up its operation. Since Chinese President Xi Jinping launched an anti-corruption campaign in 2012, "the crackdown has spread from government agencies into the business community," said Nana Li, a senior research analyst at the Asian Corporate Governance Association in Hong Kong.

Another corporate governance expert who requested anonymity attributed the cleanup to the rising presence of the ruling Communist Party in Chinese internet companies. In 2016, Ren Xianliang, the deputy director of China's central cyberspace affairs commission, publicly called implanting party cells in internet companies "a priority" for his organization's work, and nearly all of China's large-scale tech firms have set up party committees.

"[The party cells] would investigate [corruption], or at least push the company to investigate it," the expert said.

Earlier this month, Yang Weidong, the president of Alibaba Group Holding's video streaming platform Youku, stepped down over allegations of corruption-related crimes.

Meituan Dianping, a Hong Kong-listed company known for its lifestyle app Dianping, has also reported 89 suspects -- including its employees and business partners -- to police since February, as a result of the company's tougher scrutiny over corruption and other wrongdoing. 

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