Ping An’s investment in Chinese cosmetics company Jahwa turns sour; public is keen to know what went wrong with to the seemingly perfect investment
May 16, 2013 Leave a comment
Ping An’s investment in Jahwa turns sour
Staff Reporter
2013-05-16
After Ge Wenyao stepped down as chairman of Shanghai Jahwa United, a listed Chinese cosmetics company, the public is keen to know what went wrong with to the seemingly perfect investment made by the Ping An Trust, a strategic investor that was introduced into the business by Ge himself.On May 13, Jahwa’s share price slumped by over 8% on the local bourse before rebounding to close down 5.3% on the day.
A day earlier, Ge wrote on his Weibo microblog that the company’s name is the only thing Jahwa had left after Ping An came into the picture, and all the company can do is sell its assets.
“The organization structure of a listed company has prevented them from doing whatever they want. Currently the operations (of Jahwa) are normal, and employees are not affected,” he wrote.
Soon after Ge’s statement, Jahwa confirmed that Ge had stepped down from his post as chairman. Hours later, Ping An also confirmed Ge had been relieved of his posts as chairman and general manager of the Jahwa group.
This has led many to ask why Ping An would remove Ge, who was a key figure in bringing the two companies together.
According to cnstock, the online website of the China Securities Journal, the Ping An Trust had confirmed on May 11 that Jahwa’s board had designated Zhang Liqing, a sitting board member and also deputy general manager of the Ping An Trust, to replace Ge as chairman.
Ping An Trust also said that it had been informed by some whistleblowers within Jahwa that some managers had been involved in embezzling company funds and interfering with the benefits of retired employees since March.
Market sources believe that Jahwa’s planned Seagull Watch investment project, which Ping An had opposed, was the root cause of quarrels between the two company’s management teams.
As an investor, Ping An cared only about projects and business risks, market analysts said, noting that because it had little knowledge of the sophisticated mechanical industry, it would not risk investing in a business that needed long-term funds and had limited output.
Ping An beat its competitor, HNA Retailing, in bidding for Jahwa in November 2011 with an offer of 5.1 billion yuan (US$831 million), with Ge’s full support.
Critics have said Ge was wrong when he claimed Ping An was not a short-run investor, but one which would hold Jahwa stocks for the long-term and invest in the enterprise’s development. Ge failed to see that Ping An was primarily interested in profiting from selling or using the company’s assets, the critics added.
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