CFO of Africa's largest smartphone maker detained, under investigation in China
Xia has been key to financial growth for over a decade; under his stewardship, the firm IPO'd in 2019 and expanded across Africa and other emerging markets
Transsion Holdings, Africa's largest smartphone maker, said its Chief Financial Officer, Xia Yonghui, was detained by authorities in Dandong, northeast China.
The Shenzhen-based firm, which holds over 40% of Africa's smartphone market, stated Xia’s detention would not impact its ops. But it raises questions about Transsion’s internal governance.
Transsion shares dropped nearly 8% post-reveal, painting a picture of market concerns about the stability of its leadership. Xia, who has served as CFO for a decade, has been key to financial growth, steering it through its 2019 IPO and expanding dominance across Africa and other emerging markets.
The company reported revenue growth of 38% in the first half of 2024, but its cash flow situation remains troubling. While it posted a net profit of 28.52 billion RMB, negative operating cash flow of $1.9 billion (13.92 billion RMB) elicited separate concerns about its liquidity.
Xia's detention is part of a larger wave of investigations targeting financial executives in China. At least a dozen other CFOs have recently come under scrutiny. Lack of transparency on the case has contributed to investor anxiety, exacerbated by the ongoing legal challenges facing Transsion.
Meanwhile, the company is embroiled in high-stakes lawsuits with Qualcomm and other major technology companies over patent violations. Qualcomm's lawsuit, alongside others from firms like Philips and Nokia, threatens to disrupt its sales in key markets, mostly India.
Although the phone maker expanded beyond Africa into South Asia, Latin America, and Eastern Europe, it faces increasing competition from Chinese rivals like Xiaomi and Oppo.
In Africa, where it once held a commanding 46% market share, its share has slightly reduced to 42%. Dominance in the low-cost smartphone segment has been its strength. However, the financial strain and potential legal costs from patent disputes make it harder to maintain a competitive edge.
Transsion, valued for producing affordable phones tailored to Africa, has yet to comment on the specifics of Xia’s detention. Leadership will have no other option than to act quickly to reassure investors and address internal and external challenges that threaten its future.
