technology

Huawei's China Consumer Sales Head Detained in Corruption Probe

  • Police have detained executive on suspicion of graft
  • Company didn’t specify the charges against the executive

Attendees during a Huawei Technologies Co Ltd. launch.

Photographer: Chris Ratcliffe/Bloomberg

Huawei Technologies Co., China’s biggest maker of smartphones, said the head of sales for its domestic consumer business has been detained in a corruption investigation.

Police have taken immediate action on Teng Hongfei on “suspicion of taking bribes,” the Shenzhen-based company said in a statement Wednesday. Teng ran Chinese consumer sales for the company, which over the past year rose to No. 1 in smartphones at home and No. 3 globally to become a major rival to Apple Inc. and Samsung Electronics Co.

The arrest is a blow to one of China’s biggest closely-held technology companies, the largest of a coterie of Chinese smartphone makers that have grabbed global market share via affordable phones with premium specifications. It debuted its Mate 10 right around the time Apple took the lid off the iPhone X. The company, which says it’s controlled by employees, was founded by former army engineer Ren Zhengfei and is considered to have strong government relations.

“The authorities are investigating the matter, and we defer to their discretion as to what can be disclosed,” Huawei said. “We take our business ethics extremely seriously, and have zero tolerance for corrupt behavior.”

The company has targeted corruption within its ranks in the past. In 2015, Ren told the World Economic Forum in Davos that Huawei needed to step up internal policing after forgiving more than 4,000 workers -- including senior executives -- for involvement in graft and fraudulent business practices.

The company made no mention of a replacement for Teng, who heads domestic sales for one of Huawei’s fastest-growing arms. The consumer division, comprising mainly smartphones, reported a 36 percent rise in revenue to 105.4 billion yuan ($16 billion) during the first six months. The unit had targeted 25 percent growth in consumer revenue to $33 billion in 2017, down from about 42 percent in 2016. It also sells smartwatches, tablets and accessories from earbuds to cameras.

Yicai reported on Teng’s detention earlier.

— With assistance by Yuan Gao

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