Bloomberg News

China Police Detain Reporter After Stories on Zoomlion Heavy (1)

October 23, 2013

Zoomlion plant in Changsha

The Zoomlion Heavy Industry Science & Technology Development Co. logo is displayed at the company's plant in Changsha, Hunan Province, China. A Zoomlion media official said the maker of construction equipment had filed a complaint against Chen with local police last week. Photographer: Nelson Ching/Bloomberg

Chinese police detained a reporter who wrote stories questioning the finances of Zoomlion Heavy Industry Science and Technology Co., prompting his newspaper to publish a front-page appeal for his release.

Chen Yongzhou was held on Oct. 18, Guangzhou-based Xinkuaibao, which translates to New Express, said in the report published with the headline “Please Release Him.” Police in the southern city of Changsha, where Zoomlion (1157) is based, said on the department’s microblog that a Xinkuaibao reporter surnamed Chen was detained after accusations he damaged the commercial reputation of a company that wasn’t identified.

The detention follows the arrest of Xinkuaibao reporter Liu Hu as China’s government seeks to expand a crackdown on the flow of what it calls online rumors and false news. Zoomlion shares slumped 5.9 percent in Hong Kong, the most since June 20, as the report renewed attention to questions over its sales.

There needs to be evidence of a deliberate attack as well as damage to the reputation for someone to be convicted of damaging a company’s reputation, said Xu Jinglong, a partner at Beijing-based Zhong Lun Law Firm.

Press Freedom

“Police should be cautious when it takes action across different jurisdictions,” said Xu. “It is important to protect the freedom of the press.”

One of the 15 stories Chen wrote about Zoomlion, published on May 27, accused the company of improperly accounting for sales, forcing Zoomlion to halt trading of its shares in Hong Kong and Shenzhen. The company has denied it falsified sales.

Zoomlion had filed a complaint against Chen with local police last week, said a media official for the construction-equipment maker who asked not to be identified because of the company’s rules.

The company’s stock closed at HK$6.82 in Hong Kong. The Shenzhen-traded shares fell 2.9 percent to 5.61 yuan.

Zoomlion was also forced to halt its shares in January after Ming Pao Daily published a story questioning its sales. The Hong Kong-based newspaper said it received an unsigned letter with the accusations, which Zoomlion denied and called “false, groundless and misleading.”

Zoomlion posted a 48 percent drop in profit to 2.92 billion yuan ($480 million) in the six months ended June as China’s slowing economic growth damped demand at the nation’s second-largest construction equipment maker.

Liu, the other Xinkuaibao reporter, was held on Aug. 24 and the Beijing People’s Procuratorate approved his arrest on Sept. 30, his lawyer said on Oct. 10. He was accused of fabricating rumors after he made online accusations of wrongdoing against a former senior official in Chongqing city, according to the official Xinhua News Agency.

To contact Bloomberg News staff for this story: Jasmine Wang in Hong Kong at jwang513@bloomberg.net

To contact the editor responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net


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