This article was published on September 4, 2012

Citron founder: Condemnation from Chinese business leaders is ‘personal Jihad’

Citron founder: Condemnation from Chinese business leaders is ‘personal Jihad’
Josh Ong
Story by

Josh Ong

Josh Ong is the US Editor at The Next Web. He previously worked as TNW's China Editor and LA Reporter. Follow him on Twitter or email him a Josh Ong is the US Editor at The Next Web. He previously worked as TNW's China Editor and LA Reporter. Follow him on Twitter or email him at [email protected].

Innovation Works founder Kai-Fu Lee has been involved in a public war of words with Andrew Left, the founder of Citron Research, an investment analysis website with a history of shorting Chinese companies. Lee’s side of the dispute just gained some powerful allies, as 60 prominent Chinese investors, executives and entrepreneurs have banded together with him to denounce Citron.

However, Left has defended himself by suggesting there is an agenda and a “personal Jihad” behind the move.

The executives published an open letter (via Sina Tech) that condemns Citron, alleging that the company “boldly [tells] lies” and accusing Left of having a “long record of fraud deceit and unlawful behavior.” The letter appears on a website that the group created,, in order to refute the firm’s work.

Noteworthy members of the group include angel investor Charles Xue, Kleiner Perkins partner Zhou Wei, CEO Richard Liu, Sogou CEO Wang Xiaochuan, Qihoo 360 CEO Zhou Hongyi and iResearch CEO Henry Yang.

The business leaders noted that some short sellers of Chinese companies have helped “cleanse the environment” when their reports were accurate, but they challenged Citron and others for “targeting legitimate companies”. The letter read:

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We are investment professionals and company founders/executives in China.  We strongly believe there is a huge pool of legitimate, exciting, and valuable companies in China.  Citron and other short sellers’ recent efforts to slam legitimate companies and deceive investors are despicable.  We are joining together to expose and condemn the deception and ignorance of Citron and other short sellers like them.

The dispute stems from an August report by Citron that put forth Sohu as a better investment option than Qihoo 360, which the firm has long suspected of fraud. Qihoo recently launched a search engine and has been in a competitive battle with market leader Baidu.

For his part, Left told TNW that he suspected the executives of having a “personal Jihad” against him. “They accuse me of things that are outlandish on there,” he said.

Left also said that he’s gotten positive feedback from Chinese citizens for his efforts. “Since I started this thing a week ago, the feedback I’ve been getting from China has been so positive toward me. They see me trying to break down corruption and they say, ‘Good for you.'”

He also dismissed the accusation that he doesn’t know enough about China to cover its stocks.

“I’ve never been to Cupertino, Calif., but I can still buy Apple. These companies are listed in the US. If they want me to mind my own business, then list in Shanghai,” he said, adding that it’s ironic that Chinese companies would seek US investors on the New York Stock Exchange but “get mad when the short sellers come along.”

When asked about his own interest in the stocks, Left said he has many positions, but he did note that it’s public knowledge that he is “involved” in both Qihoo and Sohu.

“I think Sohu is an honest company. If people want to demonize the stock because I own it, then I feel sorry for Sohu,” he said.

TNW has also contacted Innovation Works to get Lee’s side of the story and will update if he responds.

Update: Left has called attention to Qihoo 360’s role as an investor in the Innovation Works fund, noting that Lee doesn’t disclose this conflict of interest in his posts about Citron. He also suggests that Lee, who formerly served as the head of Google China, may have a bone to pick with Sohu because the company caught Google in the act of using Sogou Pinyin’s database under his watch.

Image via Flickr / keso

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