More Executives Vanish in China, Casting Chill Over Business Climate

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SINGAPORE—The list of business executives and political figures who have gone missing in China keeps growing.

SINGAPORE—The list of business executives and political figures who have gone missing in China keeps growing.

Top executives at a video-streaming platform and a pharmaceutical company were the latest to disappear, as an intensifying clampdown by Beijing on alleged corruption and malfeasance shakes business confidence in China, among local and foreign firms alike.

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Top executives at a video-streaming platform and a pharmaceutical company were the latest to disappear, as an intensifying clampdown by Beijing on alleged corruption and malfeasance shakes business confidence in China, among local and foreign firms alike.

Chen Shaojie, chief executive of livestreaming firm DouYu, has been unreachable since October, a person familiar with the matter said. The Nasdaq-listed company declined to comment on Chen’s status but said its “business operations remain normal.” Chinese tech giant Tencent owned a nearly 38% stake in DouYu as of March.

Separately, Shenzhen-listed Shandong Wohua Pharmaceutical said that its chairman, Zhao Bingxian, has been detained and asked to cooperate with an investigation. In a corporate filing dated Monday, Wohua didn’t provide details about the probe but said it wasn’t involved in the matter, and that authorities haven’t notified the firm or sought its assistance.

Neither Chen nor Zhao could be reached for comment. It couldn’t be determined what prompted Chen’s disappearance, which was first reported by a Chinese media outlet, Cover News.

The disappearance followed regulatory scrutiny of DouYu. In May, China’s internet regulator said it was sending a work team to the company to rectify problems that the streaming platform had with “pornographic and crude” content. Since news reports of Chen’s disappearance emerged, DouYu’s share price had dropped by 12% as of market close on Wednesday.

Chen and Zhao joined a growing list of Chinese executives who have vanished or been detained this year, including high-profile investment banker, Fan Bao, who was known for putting together deals that created some of China’s most dominant technology companies. Fan went missing in February and hasn’t reappeared in public. Authorities had detained Fan in connection with a corruption probe targeting a former senior executive at the investment bank he founded, China Renaissance Holdings, The Wall Street Journal previously reported.

The string of disappearances and escalating clampdown by Beijing has sent a chill through China’s business community and contributed to an unusually sustained run of profit outflows from the country. Foreign companies have pulled more than $160 billion in total earnings from China over six quarters through to the end of September, as they confront slowing economic growth and rising geopolitical tensions between Beijing and Washington.

“China prioritizes politics over economics and business, and its leaders have repeatedly said so, but many in the business community chose to ignore it or simply brush it aside as just another example of political talk without practical implications,” said Zhiwu Chen, a professor and chair of finance at the University of Hong Kong’s business school. “Now, they have learned the lessons and some are no longer willing to invest in new business.”

Beijing’s regulatory sweep has also buffeted foreign businesses this year. Authorities raided the Beijing premises of New York-based due-diligence firm Mintz Group and detained five Chinese employees, and questioned staff at U.S. consulting firm Bain’s Shanghai office.

Some employees at foreign firms—including U.S. consulting firm Kroll and Japanese financial firm Nomura Holdings—have also been blocked from leaving mainland China, prompting concerns over the government’s growing use of exit bans on people being investigated or assisting with government probes.

Beijing has sought to mollify the concerns of businesses and investors. In July, Chinese Premier Li Qiang and other senior officials held meetings with top entrepreneurs and business executives, while the Communist Party issued a 31-point plan aimed at shoring up the private sector and boosting business sentiment.

Even so, some business leaders continued to voice unease with what they perceive to be an uncertain political climate.

“Right now, Chinese entrepreneurs are lying low or lying flat. Sentiments are weak,” Fred Hu, founder and chief executive of Chinese private-equity firm Primavera Capital Group, said Wednesday at the Bloomberg New Economy Forum in Singapore.

“This sense of insecurity, in my observation, in the Chinese entrepreneur community, really I’ve never seen this since 1978,” Hu said, referring to the year when Beijing launched market-opening reforms to revitalize an economy ravaged by Mao Zedong’s tumultuous rule.

Analysts said that Beijing will struggle to restore confidence if it doesn’t strengthen its laws to provide greater certainty to the business community and protection from the threat of arbitrary detention. “Without real institutional reforms towards the rule of law, it will be difficult for any meaningful economic recovery to occur or sustain,” said Chen, the professor at the University of Hong Kong.

Business executives aren’t the only ones disappearing. China’s foreign and defense ministers vanished from public view this summer before being removed from their posts, without explanation, just months after they took those jobs—abrupt changes that drew global attention to China’s increasingly opaque governance under Xi.

Concerns over Xi’s regulatory crackdown flared up after Fan went missing. Since then, other Chinese executives, including well-connected entrepreneurs who once rubbed shoulders with the Communist Party elite, have also disappeared or been detained. In September, embattled property giant China Evergrande said its chairman, Hui Ka Yan, had been subjected by authorities to “mandatory measures” while they investigated him for alleged crimes.

On Saturday, the party’s top anticorruption agency announced an investigation against Zhang Hongli, a former executive vice president at the state-owned Industrial and Commercial Bank of China, one of the country’s largest lenders. The Central Commission for Discipline Inspection accused Zhang, who previously worked at Goldman Sachs and Deutsche Bank, of committing “severe violations of discipline and the law,” a phrase authorities often use to describe corruption. Zhang couldn’t be reached for comment.

Newley Purnell and Rebecca Feng in Hong Kong contributed to this article.

Write to Chun Han Wong at chunhan.wong@wsj.com

More Executives Vanish in China, Casting Chill Over Business Climate

More Executives Vanish in China, Casting Chill Over Business Climate

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