More assets frozen for the man who was once a top gaming tycoon in China

PHOTO: Weibo

Video gaming tycoon and technology entrepreneur Shi Yuzhu is facing more financial trouble after a Beijing court froze another 85.08 million yuan (S$18 million) in shares across four companies, doubling the amount of equity he is forbidden from withdrawing or transferring.

The shares have been frozen for a period of three years by the Beijing Fourth Intermediate People’s Court, according to the latest information from Tianyancha, a Chinese business registration and trademark platform.

Among the four companies, two are related to Giant Network Group, the video game company founded by Shi. The frozen assets include 2.78 million yuan in Zhuhai Giant Hi-tech Group shares and another one million yuan in shares from Ningxia Giant Investment.

Few details are available about why the assets have been frozen, but Shi is involved in lawsuits over his role as a guarantor of company debts. It adds to the bad news that Shi, whose Giant Network was once a bigger name in gaming than Tencent Holdings or NetEase, has faced over a year of crackdowns from Beijing on the tech sector.

Giant Network did not respond to a request for comment on Thursday (Dec 30).

After the first equity freeze in August, Giant Network said that case was not directly related to the company. Shi made a personal guarantee for the plaintiff in the case, which filed the lawsuit because of an impact on “subsequent business development”, the company said in a statement at the time.

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The first equity freeze also involved 85.08 million yuan in shares, bringing the total in frozen assets to more than 170 million yuan.

“When doing a favour for a friend, help more on life and less on career,” the billionaire wrote on China’s microblogging platform Weibo that month.

In another case involving guarantee issues, Shi was sued with actress Zhao Wei — who was previously sued by investors and this year was scrubbed from China’s internet — along with her husband. The lawsuit was filed by creditor China Minsheng Trust, which alleged that Shi and Zhao failed to perform their obligations as guarantors.

The entrepreneur, who ranks number 421 on the Forbes Billionaires list with a net worth of US$3.8 billion, has also faced challenges in other areas this year.

Giant Network has seen a sharp decline in revenue amid Beijing’s crackdown on the video game industry, which added to downward pressure on Chinese stocks as part of a broader crackdown on the tech sector. Revenue was down 10.57 per cent year on year in the first three quarters. Its stock price is down 37 per cent for the year.

Giant Network was a dominant video game company in the early 2000s, and it was an early adopter of loot boxes, now a staple of mobile games and a huge source of revenue in the industry. This led it to eventually take a stake in Israel-based Playtika, a developer of gambling-related mobile games, leading a consortium of Chinese investors in 2016.

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That company, which is indirectly controlled by Shi’s Giant Investment, also launched a US IPO in the US in January, after three failed attempts to list in China. Shares closed at US$16.94 on the Nasdaq on Wednesday, roughly half their peak in February.

Shi himself plays an active role in China’s business community. He was a member of Taishan Club, a Skull and Bones-style private club formed by some of China’s richest entrepreneurs, many from the tech sector. Lenovo’s Liu Chuanzhi, Baidu CEO Robin Li Yanhong, and Alibaba Group Holding co-founder Jack Ma were all reported to have been members at one point. Alibaba owns the South China Morning Post.

The exclusive club with about 20 members, which required millions of yuan in annual fees, disbanded amid pressure from Beijing on entrepreneurs this year to align their priorities with those of the central government.

Stone Group’s Duan Yongji, another Tianshan member, was rumoured to have helped Shi through an earlier financial crunch in 1997, after cash dried up from plans to build a 70-storey skyscraper.

READ ALSO: Taiwanese actors Zhang Ting, Lin Ruiyang caught in alleged pyramid scheme as China regulator freezes $127 million assets

This article was first published in South China Morning Post.

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