Transsion Holdings, the parent firm of TECNO, Infinix and Itel smartphone brands in Africa has announced that its CFO, Xia Yonghui, was detained on the evening of September 6, 2024, by the local authorities in Dandong City’s Zhen’an District in China.
Xiao Yonghui has been working at Transsion since January 2014. He used to work in Jiangxi Qingjiang Chemical Plant and Ningbo Bird Co., Ltd. Transsion Holdings, with over 40% market share of Africa’s smartphone market said the CFO, who has been at the company for a decade, was detained as part of a broader investigation into the company’s corporate governance, transparency and financial management. Other Transsion executives remain in place, and business operations will continue unaffected.
According to local media reports in China, Transsion Holdings, which also runs Oraimo accessories sub-brand, reported strong revenue growth but there were concerns over cash flow discrepancies raising questions about the company’s internal governance and financial management.
With over a decade as CFO, Xia has been part and parcel of Transsion’s financial growth and was part of its 2019 IPO and has overseen is growth in Africa, South Asia, and the Middle East. Its reported that Xia earned 3.86 million RMB in 2023 and was awarded 80,000 restricted shares at a price significantly below the company’s year-end stock value in the same year. Leading to the ongoing investigation and detention despite the fact that over 12 other CFOs and finance executives in China have resigned or being investigated in early September due to changes in financial reporting requirements.
In 2006, George Zhu Zhaojiang, a Chinese businessman, quietly started Tecno Telecom Limited focused on manufacturing feature phones with a robust research and development center in Shanghai and headquarters in Hong Kong, China. In 2008, Transsion’s journey into the price-sensitive African market began with the introduction of Tecno and iTel brands. From the inaugural Tecno T1, TECNO launched three distinct phone brands, each targeting a different market segment in of customers in Africa.
TECNO was established in 2006 as the most premium brand for young, tech-savvy consumers. iTel was established in 2007 targeting first-time phone buyers while Infinix was established in 2012 as a mid-range brand targeting students and young professionals. Away from smartphones, TECNO established Oraimo in 2013 to focus solely on smartphone accessories such as power banks, chargers, headphones, and speakers while Syinix was established in 2018 as a consumer electronics brand for TV sets, refrigerators, washing machines, air conditioners, and other home appliances.
After-sales service arm Carlcare was established in 2009 to serve the three smartphone brands and now has a presence of over 2,000 service centers in over 50 countries.
Transsion Holdings also runs music streaming service BoomPlay and PalmPay, through Transsnet, its fintech arm. Transsion may be hit hard with this CFO development if not handled carefully, hence an impact over its growth and profitability. The firm has also had a legal dispute with Qualcomm over patent infringement and the growing competition in Africa though from smartphone giants like Xiaomi and Samsung in Africa, South Asia and Latin America might shrink its market dominance, which stands at slightly over 40 % in Africa.
The Supervisory Commission of Zhen’an district in Dandong, Liaoning province notified Transsion about Xiao Yonghui’s detention and investigationon Sept. 6 and is yet to provide any further details.
Xiao and other executives at the firm planned to invest between $1.5 million to $2 million to increase their stakes in the firm over the six months from July 16. Transsion’s net profit shrank 25 percent to $168.8 billion in the second quarter from the previous after revenue fell 1.9 percent to $2.4 billion. Data from market research firm Omdia reports that the company’s second-quarter phone shipments rose 4.1 percent to 25.5 million units from a year earlier.