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Gome may be hit hard by leadership battle

08-20-2010 09:05 BJT

Ten days after Gome's latest dispute became public, the market value of the Hong Kong-listed company has shrunk by several billion Hong Kong dollars. Investors are cautious, and experts say the battle may be harmful for the company's development.

The dispute started on August 4th when Huang Guangyu sent a letter to the company's board, calling for a provisional shareholder meeting. Huang said he wanted shareholders to consider a number of proposals, including a motion to strip Chen Xiao of his position as Gome executive director and chairman of the board.

But Chen struck back, winning support from the rest of the Gome board for a resolution to sue Huang.

Ye Tan, Business Commentator said "Gome is currently embroiled in a power struggle. So both sides are taking harsh moves and using harsh words. Looking at the bigger picture, I think it's a good thing. Firstly it suggests shareholders' interests have been maintained. Secondly, it is a success in Chinese corporation management. Although Huang Guangyu is in jail, the company he founded is still operating and he is the major shareholder. I think it is a success in Chinese corporation history."

But the analyst also warns that if the battle lasts many years, Gome will be eventually hit badly.

Editor:Xiong Qu |Source: CNTV.CN

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