Shang­hai Jahwa re­places boss again

China Daily (USA) - - BUSINESS - By SHI JING in Shang­hai shi­jing@chi­nadaily.com.cn

A lead­ing com­pany with fa­mous con­sumer brands, Shang­hai Jahwa United Co Ltd said it had re­placed its top leader for the sec­ond time in only three years.

The com­pany an­nounced late Fri­day night that Xie Wen­jian, the com­pany’s chair­man and chief ex­ec­u­tive of­fi­cer since 2013, had re­signed from all his po­si­tions “due to per­sonal rea­sons”. Liu Dong, cur­rently vice pres­i­dent of Ping An Trust Co Ltd, will be­come Jahwa’s new chair­man. Zhang Dong­fang, for­merly CEO of Vinda In­ter­na­tional Hold­ings Ltd, has been ap­pointed as the new CEO.

Jahwa’s share price fell 0.84 per­cent to close at 28.33 yuan ($4.1) on Mon­day.

Although the com­pany’s an­nounce­ment at­trib­uted Xie’s res­ig­na­tion to per­sonal rea­sons, in­dus­try an­a­lysts pointed out that its re­cent sales de­cline is closely re­lated to changes in se­nior staff.

Pub­lic ac­counts show that Shang­hai Jahwa made a to­tal op­er­at­ing in­come of 4.28 bil­lion yuan in the first three quar­ters of this year, down 7.14 per­cent. Net profit slumped 45.17 per­cent to 433 mil­lion yuan.

Xie boasted at the begin­ning of his ten­ure that Jahwa’s sales in­come would ex­ceed 12 bil­lion yuan by the end of 2018, which im­plied that the com­pany would grow by a min­i­mum of 23 per­cent every year. How­ever, the sales growth rate dur­ing the three fis­cal years from 2013 to 2015 was only 11.74 per­cent, 19.38 per­cent and 9.58 per­cent re­spec­tively, which means that the 12-bil­lion-yuan tar­get is now un­reach­able.

The 118-year-old com­pany has been a well-es­tab­lished brand among Chi­nese house­holds for its sig­na­ture prod­uct, Six Gods Flo­ral Wa­ter. Its Her­borist brand was the first Chi­nese do­mes­tic skin care prod­uct to en­ter over­seas mar­kets in 2008. Jahwa be­came a role model for State-owned en­ter­prise re­form in 2011 by in­tro­duc­ing a ma­jor in­vestor, Ping An Trust.

Fre­quent changes in the top man­age­ment team have been re­garded as one ma­jor rea­son of Jahwa’s sales de­cline. Ge Wenyao, who had served the com­pany for nearly three decades, had to re­sign from the chair­man po­si­tion in 2013 due to dis­sent from Ping An Trust.

Iron­i­cally, Ge wrote in his per­sonal Weibo ac­count in late Oc­to­ber that Ping An chose the wrong per­son to be his suc­ces­sor. On Mon­day, he urged Ping An and ad­min­is­tra­tive bod­ies to con­duct an au­dit and in­ves­ti­gate on Xie.

The re­cent sales de­cline can also be at­trib­uted to the in­creased cost in the ex­pan­sion of dis­tri­bu­tion chan­nels, brand build­ing, new­prod­uct re­search and in­vest­ment, as well as the re­cruit­ment of more staff, ac­cord­ing to Wang Lip­ing, se­nior an­a­lyst with Shen­wan Hongyuan Se­cu­ri­ties.

0.84 per­cent

the de­cline of Shang­hai Jahwa United Co Ltd’s share price on Mon­day

FILE PHOTO

Cus­tomers walk by cos­met­ics prod­ucts from Shang­hai Jahwa United Co Ltd at an in­dus­try fair in Fuzhou, Fu­jian prov­ince.

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