Ping An, Jahwa end dispute as chairman Ge Wenyao stays in job
Insurer had accused Ge Wenyao, also the firm's chief executive, of making illicit gains
The high-profile fight between Shanghai Jahwa United's management and its major shareholder, Ping An Insurance, ended happily yesterday, with a mouthpiece of the Chinese communist party calling on both sides to give priority to investors' interests.
Ge Wenyao, chairman and chief executive of the mainland's leading cosmetics and household products maker, told a shareholders' meeting that he would keep his posts at the listed firm and hoped to focus on doing business while avoiding unnecessary internal friction.
"I will probably stay in the job for another two to three years," he said. "The major shareholder has put the general interest above everything else."
There was speculation that Ge, who has long been credited with developing Jahwa into a consumer product giant, would be expelled at the meeting after he was accused by Ping An of pocketing illicit gains.
Ge criticised Ping An for being unwilling to consider the growth of the company over the long term.
The conflict caused concern among mainland equity investors who had already been fretting about a worsening of listed firms' corporate governance.
Last weekend, Ge was fired as chairman of Shanghai Jahwa Group.
Ping An had bought state-owned Jahwa Group in a deal valued at 5.1 billion yuan in November 2011. After the acquisition, Ping An became the controlling shareholder of Jahwa's Shanghai-listed unit.
The transaction was believed to benefit Jahwa United's future growth as the end of state ownership would allow it to pursue its domestic and global expansion plans.
However, the management under Ge and Ping An had differences over the company's operations and growth plans, according to a source close to Jahwa.
Ge thought he was supposed to take control of Jahwa despite the ownership change, while Ping An was eager to wield its own influence in the company, according to the source.
"It's not about corruption. Ping An's accusations aimed to get Ge out," said the source.
Ge has worked for Jahwa for 28 years and has been a strong advocate over the years of rolling back the involvement of the state in the cosmetics maker.
He had taken it for granted that any new owner would fully respect his decisions about company operations and business strategies, according to the source.
Ge denied the wrongdoings, and representatives of Ping An did not raise the issue of illicit gains yesterday.
Thousands of retail investors fell victim to the dispute, with the A shares of Jahwa tumbling 5.3 per cent on Monday and then by the daily limit of 10 per cent on Wednesday.
Trading of Jahwa's shares was suspended on Tuesday. They rose 3.3 per cent yesterday, regaining some of their losses.
People's Daily said in a commentary yesterday that the fight was the result of differences over the running of the business. It called on both sides to protect the interests of retail investors.
The newspaper said the fighting had caused a loss of 4.9 billion yuan in Jahwa's market capitalisation, hurting small investors who had bought the stock.
Mainland authorities are cautious about stock prices, as any major fall in the A-share market would cause investors to suffer losses. There is concern a further downturn could trigger social unrest.