Beijing police sent ripples across Asia’s business world in late November with the annoucement that Huang Guangyu, founder and chairman of Gome Electrical Appliances and one of China’s wealthiest individuals, was under investigation for "economic crimes." State media reported these alleged crimes involve share manipulation, although the authorities have given no formal reason. In the weeks following his detention, Gome has taken strides to distance itself from its founder.
The son of a peasant in Guangdong province, Huang dropped out of school at age 16 and left for Beijing with his brother and a bag of electronics. Over the next 20 years, the apocryphal bag of radios and batteries grew into a Hong Kong-listed electronics retailing empire. Along the way, Huang’s personal wealth ballooned. In October, the 39-year-old was named by the Hurun Rich List as China’s wealthiest individual, with a fortune of US$6.3 billion. Huang has held top spot for three of the past five years.
Gome’s CEO, Chen Xiao, has replaced Huang as chairman, and the company’s shares have been suspended from trading. As of late December, Gome was reportedly mulling the sale of a strategic stake to overseas buyers. At the time of writing, the company remains unconnected to the police probe, though CFO Zhou Yafei is also under investigation and has vacated his post.
This was not the first time Huang has faced allegations of wrongdoing. In 2006 he was accused of securing loans illegally, though he was reportedly cleared of those charges.
Should Huang be convicted he would head a list of tycoons who have recently run afoul of the law. Zhang Wenzhong, founder of Wumart Stores, was jailed in October for 18 years for bribery. Zhang Rongkun, the former chairman of Fuxi Investment, was implicated in the Shanghai pension fund scandal and was sentenced to 19 years in April 2008.