bodyType

customContents

entityId

entityUuid

articlePageQuery

filter

article

articleBaseAdvertisingInfoArticle

articleListArticle

articleSeoArticle

hooksArticleAcknowledgementGateOverlayArticle

hooksTrackPageViewArticle

hooksContentInterestArticle

articleLinkingDataContent

hooksAmpRedirectArticle

articleSchemaContent

liveArticle

advertZone

sentiment

contentLock

topics

types

sections

paywallTypes

createdDate

publishedDate

sponsorType

urlAlias

moreOnThisArticles

commentCount

authorLocations

authors

corrections

displaySlideShow

multimediaEmbed

printHeadline

seriesContainer

articleSpeeches

socialHeadline

headline

images

flag

firstTopic

glossary

flattenTypeIds

image

relatedLinks

relatedNewsletters

__typename

sponsor

pdfFiles

seriesReverseOrder

series

disableOffPlatformContent

published

updatedDate

summary

subHeadline

body

keywords

readingTime

customTimezone

liveContents

SCMP Reporter

Stock price manipulation case hangs over tycoon
'If I don't create a storm in the market, others will'  was Wong Kwong-yu's classic explanation to his aggressive price-cutting tactics in July 2004.
As much as he is known for creating storms, the  founder and chairman of the mainland's largest chain of consumer electronics stores, Gome Electrical Appliances Holding, is also known equally for competently weathering and overcoming them with ease.
Yet, no one is sure if this self-made billionaire would be able to ride out unscathed the current and most lethal one to date - allegations of manipulating stock prices.
Mr Wong, one of the nation's richest men and reportedly being detained by Beijing authorities, aroused market interest by bringing cheap home appliances to the mainland consumer in the early 1990s at a time when living standards had greatly improved after a decade of reforms.
His reputation was further stamped by his willingness to undercut rivals and suppliers when market competition stiffened and his timely tapping of the capital market for funds to expand.
His company grew into one famed for employing shock tactics whenever it entered a new market.
A case in point was selling rice cookers for as little as 9 yuan (HK$10.20) each. The gimmick created a buyer stampede and huge publicity. Gome also set a record of selling 10 million yuan worth of goods on the first day of business at its Foshan store in 2004.
Small wonder that his competitors and suppliers, big and small, domestic and foreign, grew to not only fear but also admire him.
Although he maintains a low profile, Mr Wong never lacks publicity as his rags-to-riches tale and business philosophy have been fodder for book publishers  and available almost everywhere on the mainland.
He is also a familiar name on the rich list. He topped the latest Hurun China annual rich list released last month with US$6.3 billion in assets and has secured the top position in the list three times in the past five years. According to Forbes Asia, Mr Wong was worth US$2.7 billion after selling US$300 million of shares this year.
As a guest in the mainland version of the US reality television show, The Apprentice, Mr Wong spoke little but when he did with his few cutting comments, he won enthusiastic applause from participants who dreamed of being as successful an entrepreneur as he is.
Born in a poor village in Shantou in Guangdong,  Mr Wong embarked on his 21-year journey to fame and fortune at 18. After quitting  school at 16, he followed his elder brother, Wong Chung-yam, to Inner Mongolia where he learned the basic skills of trading. However, he soon envisaged that Beijing rather than Inner Mongolia was the  place for him.
A  year later, he moved to the capital city and took over an apparel retail shop named Gome with 30,000 yuan he earned in Inner Mongolia.
He then decided to sell electrical appliances, beginning to dream of having five to six stores in major cities, the first step to expanding his empire.
Now, Gome Electrical,  the group's Hong Kong-listed arm, alone has 847 stores around the nation, excluding those owned by the group and yet to be injected into the listed firm.
By comparison, its closest rival, Shenzhen-listed Suning Appliance, had 784 stores in 173 cities on the mainland at the end of September.
As he moved to grab business opportunities, Mr Wong knew he would have to tap the capital market to fund expansion. He made his name in the capital market through several acquisitions and share placements.
For all the success, however, concerns and rumours on how he made his first million yuan continue to dog him. In 2006, it was reported that Mr Wong and his brother obtained illegal loans amounting to 1.3 billion yuan given by the Beijing branch of the Bank of China, but the company denied the reports.
Since last Friday, there have been  text messages and media reports that Mr Wong has been detained over alleged economic crimes. Some said Mr Wong was involved in illegally manipulating shares of a Shanghai-listed firm controlled by his elder brother, while some reported he had been involved with tax evasion or the illegal bank loan.
'The explosive news will hit Gome hard,' said an analyst.
The allegations could not have come at a worse time for Gome and Mr Wong, long hailed a success story of the mainland's economic reform and opening-up policy that will mark its 30th anniversary next month.
Although unconfirmed, the scandal adds to the list of businessmen who have fallen from grace as a result of their connection with corrupt officials as the nation's rapid transition to a market economy has opened up regulatory loopholes for graft.
Zhang Wenzhong, the founder of Hong Kong-listed Wumart Stores, a mainland retail giant, was sentenced to 18 years in jail after being convicted of misappropriation, bribery and fraud last month.
The 46-year-old has been detained for about two years by mainland authorities after resigning as the company's chairman as he was implicated in the investigation into the activities of disgraced former Beijing deputy mayor Liu Zhihua.
Since September 2006, trading in Wumart shares has been suspended for more than six months.
Gome shares were suspended from trading yesterday and the company said it was trying to verify reports that its chairman had been detained as part of a probe into share price manipulation.
'Had the company not suspended trading, its stock would definitely experience a sell-off. The only thing we are not sure is how far it  would plunge,' said the analyst.
Investors will be closely watching how Mr Wong and Gome overcome this current storm.
Cooking up a storm
Gome created a stir when it sold  rice cookers for as little as, in yuan: yuan9



Gome boss caught in his fiercest storm