Jenny Chan 陳詠欣
Jul 16, 2018

Arsenal and 30 agencies ensnared in alleged BYD fraudulent misrepresentation case

More than 30 domestic ad agencies are crying foul after Chinese electric-car brand BYD indirectly absolved itself of payment obligations for RMB1.1 billion worth of ad production fees.

Arsenal and 30 agencies ensnared in alleged BYD fraudulent misrepresentation case

More than 30 domestic agencies are crying foul after Chinese electric-car brand BYD (比亚迪) absolved itself of payment obligations for RMB1.1 billion (US$164 million) worth of advertising production and roadshow fees last week. The automaker claimed these agencies have been dealing with a fake employee from an "illegal" entity carrying out marketing activities on behalf of BYD by "forging" the company’s seal, in a filing to the Hong Kong stock exchange.

BYD made statements on its website (English) and Weibo account (Mandarin), naming a "criminal suspect" Liki Li (李娟) who managed to engineer a potentially sham sponsorship deal with football club Arsenal in April 2018, and has since been detained by the Chinese public security bureau.

Li's purported crimes comprised renting an office in Shanghai's Pudong district and declaring it as a branch of the Shenzhen-based BYD. At the same time, bafflingly, Li allegedly posed as the head of another agency Yuhong Communications (雨鸿文化传播) and pushed BYD for business by providing 'free' work.

"Hereby we reiterate that BYD was never involved in and is not responsible for any fraud issues," read one statement. "Please make sure to report to the authority responsible whenever you find yourself a victim."

The 30+ agencies suffering in this legal quagmire certainly see themselves as victims, with many raising objections to how BYD, backed by Warren Buffett, is handling the case so irresponsibly. The exposé party was begun by Jingzhi PR (竞智广告) three days ago, posting an ugly narrative on its WeChat account of how three years of creative design and test-drive execution for BYD was suddenly invalidated in this about-turn.

Jingzhi took issue with BYD feigning ignorance of the existence of Liki Li, supposedly representing Shanghai BYD Electric Vehicle Co Ltd as general manager of the East China regional marketing department (see photo of her namecards above).

"Your legal and finance people are really talented!", wrote Jingzhi sarcastically. "There was such a large quantity of marketing activities held throughout the country from East China, North China, Northeast China, to Inner Mongolia, and over three years, not three months. Does your company really not know what's happening under your nose?"

Another affected agency Soyi Group (搜易传媒), with RMB30 million of fees at stake, gave Campaign China a copy of a three-tab spreadsheet listing various campaigns for the past three years that are still in arrears, allegedly compiled by Li before her arrest.

List of marketing activities and projects in 2018 still in arrears

For such large amounts, approval from BYD headquarters, regional management heads, as well as car dealerships is typically needed, with plenty of signed paper documents and email chains copying other staffers. Li, the alleged impersonator, has been using the mailbox domain name, which is similar to BYD's domain, for official correspondence. The embroiled agencies insist this still represents a power of attorney.

Two emailing patterns, in fact, are evident in some past emails obtained by Campaign in which Li either uses the misleading "[email protected]" or her personal QQ email address "[email protected]" for correspondence. In fact, Li's QQ account seemed to be frequently included in official BYD email chains between marketing and procurement staff (see example below discussing preparations for a Nanjing auto show in May 2018).

An email chain where Liki Li's QQ email address is always copied in official BYD correspondence

This is a loophole in BYD's assertion of not knowing Li had been using the brand's name to conduct business, pointed out agencies who spoke to Campaign and local media over the weekend.

Below is another email chain showing how Li used the mailbox domain to confirm the Arsenal deal on 16 April with HOOH Advertising (上海霜阳文化传播), another affected agency in Shanghai reportedly owed RMB80 million by BYD.

An email chain where Liki Li used an BYD mailbox domain to confirm the Arsenal deal

Arsenal also issued its own statement saying its agreement with BYD slated as its global car and bus partner, formalised at the Emirates Stadium on 8 May by chief commercial officer Vinai Venkatesham, is being investigated and that the UK soccer club "will make no further comments on this matter".

"For all of us agencies, this incident has caused us unbearable losses. Our only appeal is that BYD can face up to the situation and deal with it, instead of perfunctory, avoidant, distortive or negating actions. Liki Li is just a marionette," contended Alan Wang, VP of HOOH Advertising.

Campaign has reached out to Sherry Li, BYD's general manager for global branding and PR, for more clarity and will update this story accordingly.


Campaign China

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