Arm China Says Its Ousted CEO Wu is Refusing To Pack Up

Arm China said on Thursday its former CEO Allen Wu was refusing to relinquish his role despite being fired last week and that it would overhaul its communication system to protect against its misuse by Wu and his supporters. From a report: Wu, Arm China and its British parent Arm Ltd have been embroiled in a two-year-long dispute and the latest development shows a resolution is not imminent. At stake is a stock market listing for Arm Ltd, the chip designer that is owned by Japanese technology conglomerate SoftBank Group Corp. Arm announced on April 29 that Wu was ousted as Arm China's CEO and was replaced by two new Co-CEOs. He was also removed as its legal representative. Wu's ouster was opposed by some staff at the unit. Arm China, a Shanghai-based joint venture between the British company and Chinese private equity firm Hopu Investment, first tried to oust Wu in 2020, citing "conflicts of interest."

Maybe other companies will take notice.

[waspleg]

Doing business in China with the CCP is just giving away your IP and facilities. You know, in addition to supporting genocide, organ harvesting, starving people to death because 0-CV19-can't-lose-FACE-Pooh-Policy among many other evils (belt and road debt slavery comes to mind).

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[Anonymous Coward]

Doing business in China with the CCP is just giving away your IP and facilities. You know, in addition to supporting genocide, organ harvesting, starving people to death because 0-CV19-can't-lose-FACE-Pooh-Policy among many other evils (belt and road debt slavery comes to mind).

All of that was true 25 years ago. And yet, every company in the US. and Europe shut down their factories so they could move everything to China and profit from slave labor.

A little bit of IP theft is just the cost of doing business and workers who are tortured and starving happens far away from the CEOs office. Out of sight, out of mind.

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[Opportunist]

Because cheap manufacturing. But by now, other countries are even cheaper AND by no means any less reliable.

If anything, this shows just how reliable China really is.

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[hey!]

Specifically cheap and relatively educated labor. The Chinese labor force peaked in 2015 at 801 million workers. Labor supply in China is further complicated because internal migration is regulated, which has lead to an illegal *internal* immigration problem.

Re:Maybe other companies will take notice.

[Whateverthisis]

To be blunt, China also is one of the largest growing markets to operate in, and China generally prefers Chinese companies to sell to Chinese consumers. So many companies, attempting to operate in a 1.4B population market of which their consumer market is around 500M and growing by 10s of millions of people per year, are required to make a WOFE (wholly owned foreign entity) which is a hard route, or a joint venture which is not but opens you up to this.

it's not as simple as "they want cheap labor"; that was true 25 years ago. Now if you want to sell in the Chinese market, you need to build in China.

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[jabuzz]

What the "west" should do is make the same true if a Chinese company wants to sell in the west. So Huawei for example wants to sell in the EU or USA, then it has to setup a WOFE in the EU and/or USA. If Trump wanted to be smart about China this is what he should have done. Then make an offer to China that this requirement will only be relaxed when China removes the requirement too and allows any US company that had to setup a WOFE the option to buy out the enforced Chinese partners.

What's good for the goos

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[WarlockD]

That's the sad part of living in a democracy. Especially one that takes the value of corporations on par with its voting citizens. You can't say that to a company, foreign or domestic, while also allowing other "US Owned" company's to have tax havens off country. Hell, Trump is quite possibly the worst conflict of interest here, there would be no way he would reign in tax dodging cooperation's when his own is doing the same.

If he both publicly stated support to remove such tax havens AND moved his own as

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[Whateverthisis]

Good point, but it's not that simple.

The issue is China doesn't legally require you to build in China. There are no hard rules there. However, need a building permit? A seller's license? Pay local taxes? Hire local talent? Clear virtually any government hurdle? Want to file a patent to protect your IP in China? Want to sue someone to enforce your patent? Generally that means you're dealing with a government bureaucract, which means you're dealing with the CCP. China as a culture is very relati

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[sjames]

They chose to lie down with dogs, now they're wondering why they have fleas.

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[tlhIngan]

Doing business in China with the CCP is just giving away your IP and facilities. You know, in addition to supporting genocide, organ harvesting, starving people to death because 0-CV19-can't-lose-FACE-Pooh-Policy among many other evils (belt and road debt slavery comes to mind).

While you're 100% correct, the problem with ARM China is NOT from the CCP (for once).

It's due to business practices that date back before communism was even a thing.

Half as Intersting did a good overview of the problem [youtube.com]. Basically it

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[swep]

Well your video indicates that it is a CCP problem given that the process for reclaiming the stamp is too slow. This is definitively corruption and CCP-involvement. Obviously the CCP has no intention of letting ARM go.

take away his paycheck like Milton Waddams

[Joe_Dragon]

take away his paycheck like Milton Waddams and things will work out

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[algaeman]

His paycheck comes from Arm China, the company that he controls. The place that he is burning down is in London, and he can play the radio at whatever f*cking volume he wants, since the CCP is quite happy with his behavior. How you gonna "fix the problem", Bob?

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[freeze128]

Then he will just set the building on fire.

Wow. Never saw that coming.

[mmell]

Let's simplify the equation: China has always had the resources, except for the knowledge resources needed to take another whack at that "Great Leap Forward!" idiocy. They appear to have learned from past mistakes. They do not respect any institutions or customs beyond their own, and now that we have given them sufficient knowledge (in their estimation), our presence need no longer be tolerated.

They may never sell an IC in the US consumer market, but they'll make a fortune supplying their buddies - guys like Russia and North Korea, for example. Can we at least fix the stable door, now that the horses have left?

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[Opportunist]

This "great leap forward" seems to be done facing a cliff, though.

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[WarlockD]

Quite right. This will do more to scare other forgen companies coming in and even have existing companies leaving. Even if they try to get in for that sweet China consumer market they will be more conservative about it.

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[evil_aaronm]

What "mistakes"? If you were to check the official CCP history, I'll bet you'll see that it's been a non-stop string of perfection since day 1. Amazing, eh?

Seems like a unique situation

[Turkinolith]

At other companies if they fire you they have security haul your ass out. Why can't they do the same here?

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[HiThere]

The summary indicated that some of the employees rejected his firing. Perhaps that included the security folks.

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[suss]

This may require a Mongolian army to tear down the wall.

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[Xylantiel]

This doesn't really seem all that unique to me. We often hear of startup CEOs being removed and having disgruntled senior employees "follow them to the new company they are creating" and misuse of company resources etc etc. This is just all overloaded with people saying that this or that is different because it is the Chinese company branch so China bad blah blah blah. I'm sure there are plenty of similar situations with other companies and other nations where things end up in a messy situation.

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[Revek]

Yeah, no. You know nothing of the situation and just how china centric it is.

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[sjames]

This went a lot further. Imagine the founding CEO maintaining that he still has the power to sign legal documents for the old company and takes steps to try to enforce that. Imagine if he continues to send out press releases for the old company (billed to the old company). He continues showing up for business meetings claiming to represent the old company.

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[Coren22]

Also, he has all that authority by law still, because he has possession of the company's chop, which is the legal signature for the company.

https://www.china-briefing.com... [china-briefing.com]

He legally "owns" the company, he can't be removed, as the chop is required for that, and a new chop can't be created, as that requires the previous chop to be either declared lost (he has it, it isn't lost), or uses the old chop to approve the new one.

If I were ARM, I would cut all ties with the company, then persue any sales of their p

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[Xylantiel]

And how is this different than a CEO outside of china re-engineering a company structure so that he owns the company and can't be removed? Again, only the details seem unique to China, not the general problem of a multinational losing control of their subsidiary in a particular nation because they weren't paying enough attention to how it was legally controlled. Even other posts here say there is no normal reason he should have the chop, it is supposed to be held in escrow basically specifically to preven

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[Coren22]

In the US, the board can vote out a CEO, and ultimately, the board is made up of members elected by the stockholders. This couldn't happen in the US, as the CEO isn't the "owner" and can't subvert the company from the stockholders as has been done here.

I agree with your assessment of where ARM went wrong, that article actually details that the chop should be in the hands of a law firm, and not the CEO. I am not sure how he ended up with the chop, but China not working with the company stockholders to reso

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[timeOday]

Global HQ has lost effective control of the Chinese subsidiary, and the government in China is not all that eager to to take sides against it. And the World Trade Organization can't exactly drop in paratroopers to invade China and force compliance with the norms of international business governance.

Unique

[JBMcB]

Rosco posted a very interesting Youtube video above that explains what is happening.

tl;dw version:

In China, companies have an official "seal" made. High-level corporate documents must have be physically stamped with this seal to be legally valid. So documents like stock offerings, real estate purchases, and high level employment changes.

Usually a third party holds this seal in escrow, like a corporate law firm, and, when needed, the CEO or other corporate officer would visit the law office, stamp whatever d

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[evil_aaronm]

Honest question: Couldn't they just make a second, overriding stamp, and then declare the first one null and void? I mean, with the stamp as a physical entity, sure, it's unlikely, but what if it got lost or damaged? There must be some recourse.

And, obviously, Arm (UK) should've got possession of the stamp before they gave any inkling of what was going to go down in terms of personnel.

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[JBMcB]

Couldn't they just make a second, overriding stamp, and then declare the first one null and void? I mean, with the stamp as a physical entity, sure, it's unlikely, but what if it got lost or damaged? There must be some recourse.

The recourse is a court case, which is also a byzantine process. The problem is, for a company to file an official court action, guess what all the court paperwork needs?

As I said, usually a third party keeps the seal. I'm guessing the CEO swiped it when he had an idea that he was on the way out.

Keep in mind this system was not designed with publicly owned companies in mind. It was created when the emperor would hand-pick people to run companies, then re-instituted when the CCP would hand-pick CEOs. If the

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[thegarbz]

At other companies if they fire you they have security haul your ass out.
Why can't they do the same here?

The problem lies in some archaic rules of how Chinese companies have to operate. One person has a company seal and that person has absolute authority over certain matters, including matters of personnel changes. Normally this would be the company owner but the curious case here is one of foreign ownership disagreeing with the Chinese person who has the authority of the seal.

This is effectively ARM trying to tell the only person who has the legal authority to fire people in China to fire himself. He said no,

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[thegarbz]

Hey mods, instead of modding down why not come in and post a correction to what I said, or are you just a member of a worthless Chinese trollfarm?

This is directly relevant and of interest

[Rosco P. Coltrane]

https://www.youtube.com/watch?... [youtube.com]

His fate...

[Excelcia]

...is sealed now!

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[freeze128]

I wonder if there is anyone that he knows that would lift the seal from him for a modest fee. Do you think maybe his housekeeper is paid more than ARM can offer to have her rifle through his pockets while he is in the bath?

Alternatively, do you think there are people in China that are capable of duplicating the stamp, so that the proper paperwork can be filed, and the original stamp taken from him? As I recall from another article, you can get these stamps at any corner store. Do you think the quality of t

He who had the company stamp controls the company

[Revek]

All of this is due to some outdated and backwards chinese rule about a stamp/seal that needs to be on his walking papers. Wu has the stamp.

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[phantomfive]

It's not an outdated and backwards rule. It's intentionally that way.

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[OfMiceAndMenus]

It is extremely outdated that an entire chip manufacturer division can be held hostage because one guy who has the approval stamp doesn't want to go.

Whether it was intentional or not doesn't make it any less ass-backward or outdated. This guy is going to accidentally shoot himself twice in the back of the head and the world will move on.

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[CODiNE]

How is that different from an IT admin holding the domain admin password locking everyone else out? Or the person registered as the agent of the company in the paperwork having sole legal authority? There's plenty of situations where a single person holds they keys, they could've planned for this just like any of the others. I'm sitting here setting up an LLC and guess what I have to choose agents who can sign on behalf. I'd better not screw it up.

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[Revek]

In those situation there is a quick way to fix it. The person with the passwords goes to jail or gives up the passwords. The person whose name on the paper work gets overruled by a court. None of those were options for the ARM board.

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[OfMiceAndMenus]

If your IT department has *one* admin who is the only person with access to the domain admin credentials, and there's no option to revoke it and retrieve or reset it for another user, your IT department is hot garbage.

There are a MULTITUDE of systems, programs, policies and procedures out there that would avoid this problem entirely, and if you haven't implemented one of them your IT department is a ticking time bomb of failure.

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[Iamthecheese]

That rule is just the excuse CCP happens to be using. If Wu were to piss them off the chop would immediately become irrelevant.

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[misnohmer]

It seems hard to believe that this rule has no way to deal with a lost or stolen seal (i.e. a way to get a new seal without having access to the old one)? Imagine if Putin paid some criminals to steal a bunch of Chinese company seals from large companies, he then declares himself the ruler and CEO by using the seals. You think China would just agree that Putin now controls their companies forever, or would they have to start WW3 to get the seals back before being able to remove him?

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[thegarbz]

It seems hard to believe that this rule has no way to deal with a lost or stolen seal

The rule does have a way to deal with a lost or stolen seal. But the seal is neither lost nor stolen, it's in the possession of the person entrusted with it and he's used it actively to fend off ARM's attempts at ousting him.

Ever tried to convince the king he suddenly has no authority? You'll very quickly end up with this Monty Python skit: https://www.youtube.com/watch?... [youtube.com]

Re: He who had the company stamp controls the comp

[misnohmer]

If he has been fired by the shareholders (owners of the company), he is no longer authorized to have the seal. If he didn't return it, it's stolen property. If you get fired from a job, just because you happen to have all the source tree cloned on a USB stick, it doesn't give you any rights to it.

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[Gibgezr]

Except, according to Chinese law, he can't be fired without paperwork stamped with the seal. So, according to the Chinese, he has not officially been fired.

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[misnohmer]

If that was true, anyone who holds the seal, whether CEO, a lawyer, or the notary who has been temporarily authorized to use the seal has unlimited powers, including granting themselves dictatorship of the company. They can be bought by foreign leaders for peanuts to sell the seal and therefore company for a fraction of its value. Say Putin finds whoever holds the Huawei seal pay them $500M dollars (lots of money for one person) to make him the CEO and seal owner, then issues himself lots of shares diluting

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[Gibgezr]

There are checks and balances, but they mostly rely on the seal being in the hands of, for example, a lawyer and not the CEO. For whatever reason, Arm didn't follow normal procedure, and once Wu got control of the seal without any protections, it was Game Over.
Putin can't do this with the CEO of Huawei, because they weren't stupid enough to let the CEO keep the seal.

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[freeze128]

They could transfer him to the mailroom...