Two Former miHoYo Employees Arrested for Bribery as Case Amounts Reach the Criminal Law’s Harshest Sentencing Tier#

Hi everyone, Zhanlan Yingren here. As a veteran of Chinese online games going all the way back to Stone Age, I have watched plenty of big-company stories unfold in recent years — the glory of breakout hits on top, and the ugliness of internal corruption being dragged into the light. Today’s topic was debated inside our editorial office for a long time, because it tears open a subject the games industry rarely puts on the table: of all the money big companies make, how much is being quietly siphoned away through the cracks of the supply chain.

miHoYo recently published an anti-corruption notice with unusually hard content: Sun, a former employee of the internationalization team, and Cheng, a former employee of the merchandise team, have been arrested by public security authorities and transferred to the procuratorate for review and prosecution over long-term acceptance of supplier bribes and kickbacks. Cheng’s conduct is the more alarming of the two — he systematically demanded kickbacks from multiple suppliers over a long period, and the amount involved far exceeds the statutory threshold for “especially huge amounts” under the Criminal Law’s provisions on the crime of accepting bribes, placing him in that offense’s harshest sentencing tier. The responsible personnel at the suppliers suspected of offering the bribes are under formal investigation, and the suppliers involved have been added to the Fraud-Involved Supplier Blacklist, with cooperation permanently terminated.

This is not miHoYo’s first housecleaning, but the sentencing weight and the force of the wording in this notice deserve a careful read from everyone operating anywhere along the game supply chain. In this article, I want to take the perspective of the Chinese developer ecosystem, pull the case apart piece by piece, and talk about procurement, kickbacks, supplier management, and that “sentencing red line” most people could never locate on a map.

1. What the Notice Says: Two Cases, Two Different Natures#

First, lay the key facts from the notice flat: this is really two different bribery pathways, with slightly different natures. Here is the core picture in one table.

Two concepts need separating here, and they are exactly what most people confuse:

1. The difference between “accepting” and “demanding”. Sun was mostly “accepting, passively or relatively actively,” while Cheng was “actively going to multiple suppliers and asking.” In law, demanding bribes usually carries heavier subjective culpability than accepting them, because the party holding the resources actively demanding tends to come with pressure and coercion toward suppliers.
2. “Especially huge amounts” is the sentencing watershed. Under China’s Criminal Law and the relevant judicial interpretations, penalties for accepting bribes come in three tiers, and an enormous line separates “huge amounts” from “especially huge amounts.” The amount in Cheng’s case has crossed the threshold for “especially huge amounts,” which means what he faces is no longer ordinary corruption sentencing but the heaviest punishment range available within this offense.

Why does the notice go out of its way to point out that the case “reaches the harshest sentencing tier”? Because it is sending a signal to everyone who might be tempted: at amounts this size, no “industry unwritten rule” can shield you — this is a serious criminal offense, plain and simple.

2. The Sentencing Red Line for Commercial Bribery: How Much Exactly Is “Especially Huge”#

Most people hold only a vague impression of the three bribery sentencing tiers — steal more, serve longer. But the judicial interpretations are actually specific about the numbers. This part is static legal text, yet set against merchandise, marketing and publishing budgets in the games business that routinely run into the tens or hundreds of millions, the red line means something entirely different.

2.1 The three sentencing tiers for accepting bribes#

Under Article 385 of the Criminal Law and the relevant judicial interpretations, the sentencing tiers are:

The table makes one thing obvious: the threshold for “especially huge amounts” is 3 million yuan. On its own that does not sound like a fortune, but put it in a real context and it reads completely differently — remember, Cheng alone, over many years, continuously demanded kickbacks from multiple suppliers, and accumulating past the 3-million mark effectively means that behind nearly every merchandise procurement order, every licensing deal, and every marketing buy, there was a layer of “rebate.”

2.2 Why this kind of amount snowballs so easily in the games business#

A game company’s merchandise supply chain and internationalization business are high-incidence territory for exactly this kind of kickback, for three reasons:

• High purchase frequency, large per-order amounts: merchandise runs, figure manufacturing, expo builds, channel partnerships — single orders can reach hundreds of thousands or millions, the base is big enough that even skimming a few points adds up alarmingly fast.
• Suppliers are heavily dependent on big clients: anyone doing business at miHoYo’s scale is already a fairly top-tier supplier, and once they latch onto a client like that they will not let go; facing a kickback demand they usually choose to “pay to make it go away,” until a deformed survival dependency takes hold.
• Many middle stages, hard to verify: from project initiation, price comparison and vendor selection through acceptance and settlement, the process is long and the gray zones plentiful; the moment internal oversight relaxes, kickbacks flow straight through the gaps.

That also explains how Cheng managed to keep it up “long-term and systematically” — it is not that nobody noticed, but the benefit transfer was so entangled that suppliers, handlers and the acceptance stage were strung into one interest chain that is very hard to break at a single point.

Zhanlan Yingren’s summary: 3 million yuan is a rounding error in a top game company’s annual budget, but it is the watershed of a serious criminal offense. This is not a question of “earning a bit extra”; it is a question of “going in with no guarantee of coming out.”

3. From miHoYo to the Whole Industry: Chinese Big Publishers’ Recent Anti-Corruption Moves#

This miHoYo notice is not an isolated event. Stretch the timeline out and you find that China’s leading game companies have been moving frequently on anti-corruption and compliance over the past two years; nearly every one of them has built its own “sunshine pact” and whistleblower mechanisms. Put together, these measures form an industry-wide “anti-corruption storm.”

3.1 A rundown of leading companies’ anti-corruption moves#

3.2 The shared logic behind these moves#

Look closely at what these companies are doing and the core thinking is highly consistent, resting on three pillars:

1. Front-load the “public commitment”: stop waiting for corruption to happen before dealing with it — write integrity requirements into every single contract with suppliers, so kickbacks lack room to exist at the source.
2. Make reporting channels real: build internal anonymous reporting mechanisms so frontline employees and non-compliant suppliers have an exit to puncture the windowpane — this is often the single most effective way systemic corruption gets discovered.
3. Publicize the outcomes: like miHoYo did — publishing arrests, prosecution referrals and supplier blacklists in the open to create deterrence. Publicity is itself a governance tool; it tells everyone that this money, once taken, must be paid back.

For developers, anti-corruption is not just “moral cleaning” — it is hard-nosed business loss control. A supply chain eroded by kickbacks for years runs inflated procurement costs and declining supplier quality, bad money drives out good, and the product itself takes the damage. For a game company whose life depends on reputation and content quality, that costs far more than a few million in kickbacks.

4. A Warning on Supplier Management: Don’t Be the One Who Got Coerced#

This case has another often-ignored angle — the suppliers. For Cheng to demand kickbacks over the long term, suppliers must have cooperated in the transfer of benefits. And the notice states explicitly that the responsible personnel at the involved suppliers are under investigation for suspected bribery, and the suppliers involved are permanently blacklisted. This is a direct strike at the “offering” side of the supply chain ecosystem.

4.1 The two situations suppliers face#

From a supplier’s perspective, facing kickback demands from a big client, there are two typical situations:

Many people assume “being forced to bribe” gets you off the hook, but in law, offering and accepting bribes are reciprocal offenses: once the act of offering is committed, criminal liability follows regardless of whether you went along willingly. That is the underlying logic of the investigation opened on the supplier personnel in this notice.

4.2 Three takeaways for supply chain companies#

• Keep evidence, hold the line: the moment a kickback is demanded, preserve communications and transaction records and report to the vendor’s risk control / integrity department instead of silently complying — the vendor is precisely the party most eager to root out its internal termites right now.
• Read integrity clauses down to the bone: when signing a partner integrity agreement, don’t treat it as a formality; it is the evidence that will protect you later.
• Don’t treat “pay-to-play kickbacks” as competitiveness: orders won with money can be wiped out by a single anti-corruption sweep; in the long run you are betting the whole company’s life on one contract.

A personal note from Zhanlan Yingren: I have played Chinese online games for many years and watched plenty of companies raise their towers and feast their guests — and watched towers fall too. What lasts has never been prosperity piled out of gray zones, but products done well and rules held firm. That goes for suppliers, and for developers alike.

5. How Do These Kickbacks Actually “Operate” Inside a Game Company?#

Having covered the law and the industry, I want to break down how a case like Cheng’s actually “works” from a business-operations angle. Most people’s understanding of “supplier kickbacks” stops at the words “handing over money,” but the real playbook is far more elaborate, and it usually hides inside business processes that look perfectly normal.

5.1 Common tricks of the merchandise business#

Cheng worked on the merchandise team, and that is exactly the breeding ground for kickbacks. Merchandise goes from design through sampling, molding, factory manufacturing, quality inspection, warehousing and distribution, and every link is a potential entry point for benefit transfer:

Every row in this table, taken alone, looks like a “normal business decision”; the moment a kickback is attached underneath, the decision flips from “good for the product” to “good for me.” Cheng managed to demand from multiple suppliers over the long term precisely by operating repeatedly inside these seemingly reasonable stages, turning every commercial cooperation into a “commission.”

5.2 Why the internationalization team is also high-risk territory#

Sun’s internationalization team has its own special risk soil. Overseas business involves overseas publishing, localization, third-party platform cooperation, overseas expos and cross-border logistics — many intermediaries, long settlement cycles, complicated multi-currency transactions, and natural information asymmetry. Overseas suppliers are also unfamiliar with a Chinese company’s internal processes and often deal directly with one handler, making them easier to bind through “personal relationships.”

This also explains from the side why leading companies have been pushing “sunshine procurement” so hard these past two years — the deeper you go overseas, the more expensive an internal-control gap becomes. For a company trying to stand firm abroad, supply chain transparency and integrity are practically a required foundation course.

6. How the Case “Came to Light”: The Chain From Internal Anti-Corruption to Criminal Procedure#

Many people wonder how long-running, systematic kickbacks get caught in the first place. Judging from what the notice reveals and standard industry practice, the chain looks roughly like this:

1. Lead discovery: possibly from internal audits, anonymous reports, a supplier flipping, or anomalies exposed in cooperation processes (for example, procurement prices running high for extended periods, or multiple orders concentrating on otherwise unconnected suppliers).
2. Internal verification: risk-control staff pull contracts, payment records and communications, typically freezing related projects and suspending the personnel involved first, to prevent collusion and evidence destruction.
3. Referral to police: once criminal conduct is confirmed, the company files a report with public security organs and the case enters the judicial process.
4. Investigation and arrest: police open an investigation, criminally detain suspects meeting arrest conditions, petition for formal arrest, and secure the chain of evidence.
5. Transfer for review and prosecution: when the investigation concludes, the case moves to the procuratorate for review and prosecution, where sentencing circumstances get formally assessed — which is exactly what the phrase “transferred for review and prosecution” in the notice means.

Within this chain, “transfer for review and prosecution” is a landmark node: it means the investigation phase is complete, the case has entered the statutory prosecution-review procedure, and the suspects’ criminal facts are essentially established — what follows is fitting sentencing circumstances like “especially huge amounts” into the legal framework item by item. The reason Cheng was singled out as “reaching the harshest sentencing tier” is that at this stage the procuratorate has already made a preliminary assessment of the magnitude of the amounts involved.

Zhanlan Yingren’s observation: in cases like this, what truly breaks a suspect is rarely one large transaction — it is fund flows, chat logs and bank records being pieced together, entry by entry, into a closed loop. Corruption does not fear being seen once; it fears having the entire process seen through.

7. The “Fraud-Involved Supplier Blacklist”: What Permanent Blacklisting Means#

One more move in this notice deserves its own section — the involved suppliers were added to the Fraud-Involved Supplier Blacklist with permanent termination of cooperation. Those words carry far more weight than most people imagine.

7.1 The blacklist’s destructive power#

“Permanent termination of cooperation” is not just “we won’t do this deal”; for a supplier it is close to pulling the rug out from under the entire business:

For a supplier living off orders from top-tier clients, losing a mega-client like miHoYo usually means the revenue structure collapses overnight. That is why I warned suppliers earlier: “don’t win orders with money” — because when that kind of order blows up, what you lose is not one contract but the whole lifeline.

7.2 Blacklists are becoming a standard industry move#

More telling still, institutions like the “fraud-involved supplier blacklist” have evolved over the past two years from one company’s internal weapon into a common governance tool across the industry. More and more leading companies introduce integrity checks at the supplier admission stage and write into contracts: once benefit transfer is verified, immediate blacklisting and never doing business again. “Bribe once, out forever” is quietly becoming the supply chain’s new unwritten rule — except this time, the old unwritten rule of “bribe to win orders” has been replaced by a new one: “cleanliness is the price of survival.”

8. Behind the Anti-Corruption Storm: A Footnote to an Industry Growing Up#

With the case covered, let me pull the camera back. Set against more than a decade of the Chinese games industry, this incident is a rather symbolic footnote.

In the wild-growth years of Chinese online games, the channel, operations and business development stages hid plenty of “off the books” operations that the industry tacitly accepted and nobody pressed — many treated them as “industry convention.” But as Chinese games rose globally, the leading companies grew big enough to move international supply chains, and if internal governance fails to keep pace with commercial scale, trouble is guaranteed.

This anti-corruption storm is precisely evidence that Chinese developers are going through a coming-of-age ritual, from rough to regulated:

• Scale forces governance: the bigger the operation, the more expensive an internal-control gap becomes; corruption is no longer “losing a bit of money” but a direct hit to product quality, brand reputation and overseas standing.
• Compliance becomes a competitive edge: in an era of going global and competing with international giants, a company with clean internals and transparent processes tends to be more trusted when negotiating deals and building supply chains.
• Public handling becomes the norm: publishing anti-corruption outcomes in the open, as miHoYo did, is shifting from “don’t air dirty laundry” to a new normal of making an example.

For ordinary players, these are just paragraphs in a news notice; for the industry as a whole, every handling like this pushes Chinese games onto a healthier, more sustainable track.

9. Closing Thoughts: Rules Are the Deepest Moat#

I am a sentimental person, and my years playing Chinese online games have shown me no end of upheaval. In the early business jungles of the big companies, “benefit transfer” was nearly a tolerated presence — everyone knew, everyone looked the other way. But facts have proven that prosperity stacked from gray-zone operations never lasts.

What this miHoYo notice makes me feel is that the truly reassuring thing is not how hot any one game is, but that this industry has finally started taking the word “rules” seriously. When a project with a budget in the hundreds of millions dares to send the corrupt to a detention house and permanently blacklist the suppliers who bribed them — that is what a mature industry looks like.

Money can be earned, but earned in the clear; partnerships can exist, but built on transparency. This concerns not just one company’s survival, but whether the entire Chinese game ecosystem can keep walking forward. As an old player, I am glad to see it happen.

——Zhanlan Yingren, NTGame Editor