Rebecca and all the people who care about this isse, If you probe into investment and commercial competitive relations between Sequoia capital (Mr. Fan Zhang whom Sara censured in her original post), google, Yahoo ( Yahoo China’s CEO Mr. Jack Ma, co-hosts Tech Ticker on Yahoo! Finance Ms. Sarah Lacy), Qihoo ( chairman of Chinese search engine company Zhou Hongyi) and if you learned about some personal longstanding drudge between Jack Ma and Zhou Hongyi, it’s not difficult for you to realize ultimately that Sara Lacy is a blinded-by-greed and inglorious rumormonger and her original censure on Mr. Fan Zhang is complete blasphemy to journalist’s code of ethics.

Sarah, I have to say your original post is really a shame.

i live in beijing. i find it sadly ironic that techcrunch publishes sensitive content, then removes that sensitive content and reposts it without acknowledging the changes, and then tries to stifle any discussion of the changes.

my oft-deleted comment from techcrunch:
I find it disturbing that this article has been reposted almost 48 hours after disappearing from TechCrunch within hours of its original publication. The only change appears to be the deletion of a sentence repeating libelous innuendo about a former Sequoia China partner. There is no mention of that specific change, just an “Update: I’ve updated this story based on conversations with additional sources.” If your lawyers are limiting you to saying only this then find a clever way to tell your readers. Don’t just hope no one notices.

There is no shortage of dirty doings in the investment business in China, but TechCrunch, as a publication with a massive audience, tremendous market power and aspirations to reputability, should know that you do not print allegations of criminal behavior based on rumors and hearsay. And you especially do not write those things without at least trying to contact the person about whom you are making these allegations.

Yes, you read that correctly. The author, an established reporter, never bothered to contact the former Sequoia partner in question before she wrote that he was dirty. He is very easy to find and at a dinner in Beijing last week at least three of the attendees have his number in our mobiles and could have given Ms. Lacy his phone number. But she wasn’t even trying to contact him. Again, that is not how credible journalists practice their craft.

In a tweet over the weekend @sarahcuda wrote “pretty surprised people who were *silent* in room when ppl said things about sequoia china are publicly calling me out for being unfair. ok.” http://twitter....uses/1819511453

As Ms. Lacy knows, I was one of the 8-9 people at the dinner in Beijing on Thursday night. She is the one who mentioned that Michael Moritz was in Beijing and that big changes were coming to Sequoia China. That comment spurred a discussion about Sequoia China among the party. Neither I nor any of the attendees with whom I have spoken remember any specific discussions about the partner in question, and especially nothing negative. In fact, she was told of Neil Shen’s reputation for being smart but very difficult to deal with, and of a BBS posting that circulated on the Chinese web a couple of years alleging all sorts of sketchy dealings between Shen and former Yahoo China head Zhou Hongyi.

We also discussed that the Sequoia China portfolio appears to have some companies in trouble, and the fact that their only public exit to date has been Asia Media, a company recently delisted in Tokyo for financial irregularities. Curiously, she addressed no questions about the partner in question to the dinner party. This group included several VCs, entrepreneurs and other people who have some knowledge about the topic of her article. After publication several of us were surprised that these allegations seemingly came out of left field.

So I don’t who she is calling silent or otherwise in her snarky way is inferring is a hypocrite. I didn’t follow the party to the Chocolate Club, so perhaps there were further conversations or moments of “silence” on this topic of which I am not aware.

TechCrunch should be better than this. Ms Lacy seems like a perfectly nice person, but this article is so poorly reported and unprofessionally written, and about such a serious issue (accusing a respected investor of being a criminal), that readers should wonder what kind of editorial standards are in place.

Full disclosure: I am acquainted with the former Sequoia partner but would not consider him a friend; he is good friends with a very good friend. More importantly, I don’t like bad journalism and believe very strongly that influential media organizations especially should not abuse their power and trust with sloppy work.

One more nitpick, I believe your fact checkers got the date of the Sequoia China partner’s departure wrong. My understanding is that he left at the end of 2008, not in February 2009.

For example, at a 100+ Mil fund affiliated with a well known fortune100 company, there are three white GP who collectively did only one deal in the past three years, but cheated their LP/Chinese partners millions of dollars in fees and future earning by charging multimillion dollars per year “housing-car-hardship allowances”, “professional service fees”, and five star VIP travel accommodations all over the world! These are the audited financial facts. When you get into personal level, that’s where the adventure starts! – We will leave that to the tabloid journalists.

“Sarah Lacy is an award winning journalist and author of the upcoming book, “Once You’re Lucky, Twice You’re Good: The Rebirth of Silicon Valley and the Rise of Web 2.0″ (Gotham Books, May 2008). Lacy has been a reporter in Silicon Valley for nearly a decade, covering everything from the tiniest startups to the largest public companies. She writes a biweekly column for BusinessWeek.com called “Valley Girl” and is co-host of Yahoo! Finance’s Tech Ticker. She lives in San Francisco.”

What followed was gossip at best, slander at worst. This re-post removed the language but should begin with an apology to Zhang Fan and Techcrunch readers for failing to uphold a better standard.

This was bad for all parties involved (and professional bloggers in general) and I can understand not wanting to draw attention to it immediately since it would only further hurt the the subjects of the story. Very soon, however, Techcrunch needs to address this – and do better than rewrite stories without explanation.

And an appropriate next assignment for Sarah might be the importance of face and guangxi in China.

You miss the real story:
The innovation of underground social networks instantly translating movies, of advanced P2P networks for streaming video long before joost, of working around a fragmented network system or creating marketing websites that work; and the immense innovation in combining offline and online marketing and events. That’s just the start.

Take ctrip.com, the travel site mentioned above. Online travel? Sure…except it does most of its business through a call center, most of its advertising through pamphlets at train stations and its “CDN” are a bunch of people on bicycles. The internet makes it work, but not like in the U.S…

Similarly, one can scoff at the corruption or graft; but that again misses the point. The innovation is in working in a different set of rules and constraints.

The process of innovation is the same. The parameters are fundamentally different. That’s what the failed foreign ventures miss.

I’ve been lucky enough to spend three years living in Beijing working with a fantastic team creating innovative online products. Everyone is devoted to using new technologies to make the world a better place. Most importantly, everyone has the patience to really understand the underlying cultural differences that make this world an interesting place.

I know that journalism works well with “analogies” or “gotcha’s”…but this is exactly what is causing such misunderstandings and hindrance to progress in the first place. With thousands of years of a different history there isn’t analogies between China and the West. There is, however, the shared human emotions and reasonings enacted through a different vantage point.

That’s the story.

Answer: Catastrophic misallocation of capital.

If that’s not the case, then they are falsifying numbers big time. Their stimulus is still not a factor as it hasn’t hit the economy yet (and it’s not big enough to make up the difference anyway).

China’s in big trouble dudes.