Dispute between Chinese executives and Citron goes sour as lawyers get involved

The public argument between a group of Chinese executives led by Kai-Fu Lee, the former head of Google China and founder of Innovation Works, and Andrew Left of Citron Research, an investment firm known for shorting Chinese companies, has escalated after both sides got their lawyers involved.

The spat originally surrounded a report by Citron that downplayed Qihoo 360, a new entrant into the Chinese search engine field, as an investment and instead put forth Sohu as a better alternative. Lee subsequently called out Left, accusing him of “ignorance and deception” when it comes to Chinese companies. Lee also brought on the support of 60 prominent executives and investors who also decried Citron’s tactics.

For his part, Left responded by speculating that the argument, which has given rise to an anti-Citron website, is part of a “personal Jihad” against him. Left then took further action on Thursday by having his lawyer send a letter to the Chinese businessmen demanding an apology and retraction and threatening a lawsuit if they failed to do so. The letter claimed Lee and his cohort have made libelous claims about Citron that have damaged its reputation.

The Dacheng law firm, on behalf of Lee and his clients, has since published a response to Left’s threat, denying the libel charge and demanding its own apology from Citron to “our clients, Citron’s readers and the general public.”

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A separate dispute between the two sides is also heating up. Last month, Left put out an open call to Lee and others for proof of Qihoo’s average revenue per user (ARPU) for its games, as he believes the number to be inflated. The analyst offered to donate RMB100,000 ($15,800) to the charity of choice of the individual who provided proof. On Thursday, nine Chinese game companies issued alleged proof of Qihoo’s ARPU. Left told TNW in an email that he is currently working on a response.

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