(Bloomberg) -- Airbnb Inc.’s precarious situation in China became more complicated last week after the company discovered allegations of a romantic relationship between the top local executive and an underling. The ethical quandary contributed to growing rift and a power struggle with executives in San Francisco that led to the China chief’s exit after just four months.
The home-rental company determined Hong Ge, the former China head, violated its code of conduct by dating a female employee, said two people with knowledge of the matter. The relationship was whispered about in the Beijing office and created a distraction, said the people, who asked not to be identified discussing personnel matters. Ge told colleagues he was leaving for another job.
Even before the misconduct allegation, Ge’s ties to executives in San Francisco had been fraying since he took over the China business in June. Ge was dissatisfied about a lack of autonomy and business challenges that headquarters weren’t equipped to solve, people familiar with the matter said.
“It’s a very tough decision for me to leave behind all of what we have built together. But hey, it’s a small world. I will still be in the internet industry,” Ge wrote to staff. “I’m sure our paths will cross again in the future.”
Airbnb had searched unsuccessfully since 2015 to recruit a business chief for China. Ge, a former software engineer at Facebook and Google, was promoted from within in June. The company faces mounting competition in a country it has long regarded as vital to creating a global travel business and justifying a $31 billion private valuation. This summer Airbnb said it was ramping up investment in China and would quadruple the engineering team to more than 100 in Beijing over the coming year. The company, which counts China’s sovereign wealth fund among its investors, is battling domestic market leaders Xiaozhu and Tujia.
Airbnb appointed co-founder Nathan Blecharczyk as China chairman last week. In an email to employees, Chief Executive Officer Brian Chesky echoed Ge’s reason for leaving, saying he was “stepping down to pursue opportunities outside of Airbnb.”
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