Cosmetics firm fights its biggest stakeholder

A conflict that pitted management at the cosmetics firm Shanghai Jahwa United against its major shareholder, Ping An Insurance, has caused concern among mainland equity investors as top executives slug it out.

Ping An, Shanghai Jahwa's largest shareholder, accused Ge Wenyao, the company's chairman and chief executive, of illegal distributions of off-the-book gains, while Ge attacked Ping An for being bossy.

The fight between the management and the owner alarmed the mainland's stock market, as investors cast doubt on the corporate governance of the two companies.

Ping An, through its trust unit, paid 5.1 billion yuan (HK$6.38 billion) in late 2011 to buy out the state-owned Shanghai Jahwa Group, which held 28 per cent of the cosmetics firm.

It was believed that the transaction would hugely benefit Jahwa, one of the country's leading cosmetics and household products maker.

The government stake had meant that it had been forced to operate under directives from local officials.