Huang Guangyu: Gome Founder's Fall from Grace

  
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Please note:

This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.

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Case Details:

Price:
Case Code : BENV023 For delivery in electronic format: Rs. 500;
For delivery through courier (within India): Rs. 400 + Rs. 25 for Shipping & Handling Charges

Themes

Corporate Scams
Case Length : 15 Pages
Period : 1997-2010
Pub Date : 2012
Teaching Note : Not Available
Organization : Gome Electrical Appliances and Holdings Ltd.
Industry : Electronics Retail
Countries : China

Abstract:

The case discusses the rise and fall of Huang Guangyu, one of the richest persons in China. In 1987, Guangyu, along with his brother, founded Gome, an electronics retailer. The company expanded rapidly, coinciding with the economic boom in the country. It was listed on the Hong Kong Stock Exchange in 2004 and Guangyu featured on the list of the richest people in China. However, from 2006, Chinese authorities started questioning the activities of Guangyu and his brother. In 2008, Guangyu was arrested and prosecuted for insider trading, bribery, and illegal business dealings. In 2010, he was sentenced to 14 years in prison.

The case examines in detail the incorporation and expansion of Gome, how it became the top electronics retailer in China, making Guangyu one of the richest persons in China, and Guangyu's subsequent fall.

Issues:

» Examine the reasons for the initial success of Gome

» Understand the business environment in China that fueled the growth of the company

» Critically evaluate the factors that led to the fall of Guangyu

» Evaluate the role played by the government in the success / failure of a business entity

Contents:

  Page No.
A Mighty Fall 1
The Beginning 2
Gome's Rise to the Top... 3
Fuels Guangyu's Growth 4
...But Problems Follow 5
Leading to the Fall 7
Aftermath 8
Exhibits 10

Keywords:

Gome, Huang Guangyu, Hurun China Rich List, bribery, backdoor listing, China Paradise Electronics Retail, Dazhong Electrical Appliances, Securities Regulatory Commission, Central Commission for Discipline Inspection, Yongle, Shandong Jintai Group, regulatory environment, Sanlian Commercial Co, Beijing Centergate Technologies

A Mighty Fall - Next Page>>

 

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