Victory for Gome founder Wong as chairman quits
Jailed billionaire and founder of Gome Electrical Appliances Holdings Wong Kwong-yu has proved himself to be the final winner in the high-profile battle against chairman Chen Xiao over the control of China's second-largest electronics retailer.
The Hong Kong-listed company released a statement last night announcing the resignation of Chen as board chairman, executive director, member and chairman of the executive committee of the company effective from today.
It also said another senior member of the management, Sun Yiding, would step down as executive director but remain a vice-president of the company.
Zhang Dazhong, a friend of Wong and founder of Beijing Dazhong Electrical Appliances, has been appointed a non-executive director and board chairman of Gome. According to the statement, Chen and Sun quit their posts 'in order to spend more time with their families'.
Their departure comes seven months after Wong, the biggest shareholder of Gome, urged the company's board to hold a special general meeting to vote for five resolutions, including ousting Chen and Sun, appointing two of his representatives to the board and blocking the issuing of new shares.
However, shareholders voted down four of five proposals at the meeting on September 28 and only approved the cancellation of the mandate to issue news shares.
Despite the setback, Wong did not give up his fight to tighten his control of the company, which has made him the richest person on the mainland with a net worth of 43 billion yuan (HK$50.96 billion) in 2008 according to the Hurun Report.
Wong is serving a 14-year jail sentence for bribery, insider trading and illegal business practices.
He reached an understanding with Gome management in November to add his representatives - Zou Xiaochun, Gome's corporate lawyer, and his sister Huang Yanhong - as an executive member and a non-executive member of the board.
Bain Capital, the second largest shareholder in Gome, is believed to have played an important role in the negotiations between the two parties, some analysts said.
'After all Bain did not like to see the uncertainties inside Gome generated from the conflict between Wong and Chen,' said one analyst who declined to give his name.
Some mainland newspapers have reported that Chen Xiao decided to quit as early as last year. He was absent from Gome's annual party last year and had rarely been seen in his Beijing office since last month, said the 21st Century Business Herald.
Another sign Chen was readying to leave was the latest business strategy announced by the home appliance retailer last month, in which it vowed to open as many as 400 shops this year, much more than Chen had outlined in his five-year plan.
Wong expressed dissatisfaction in public towards Chen, saying the number of Gome stores had lagged far behind rival Suning Appliances under Chen's leadership.
Yet Chen said the firm should focus more on the growth of sales in a single store.
An analyst said Chen's resignation would trigger a round of reshuffles in Gome's management, which would affect the company's operations in the short term.
'Zhang Dazhong is not a bad choice as the chairman of the board. He has accumulated a lot of experience in this industry. More importantly, he seems to be a candidate that most people are happy with,' the analyst said.
Zhang, who runs a private investment firm, sold his home appliance stores to Gome for 3.6 billion yuan in 2007. Gome shares fell 1.77 per cent, or 5 HK cents, to HK$2.77 yesterday.
Zhang Dazhong, a friend of Wong Kwong-yu, is the new Gome chairman
In 2008 he sold his own electrical appliances firm, to Gome for, in yuan: 43b yuan