- Gong Hongjia and company general manager Hu Yangzhong are being investigated by the China Securities Regulatory Commission
Hikvision Digital Technology, the world's largest supplier of video surveillance systems, saw its shares fall sharply on Thursday after China's securities watchdog started an investigation on its billionaire vice-chairman, Gong Hongjia, for alleged breach of disclosure rules.
Gong, Hikvision's biggest individual shareholder, and general manager Hu Yangzhong were cooperating with the investigation opened by the China Securities Regulatory Commission, according to the company's filing to the Shenzhen Stock Exchange on Wednesday.
The regulatory action may put further pressure on Hikvision, which is weathering the Trump administration's recent decision to add the company and several other Chinese technology firms on Washington's trade blacklist. That move restricts Hikvision's access to American hi-tech components, including high-end semiconductors, amid the protracted tech and trade war between the US and China.
The Chinese securities watchdog's investigation "only involves" the two named Hikvision board members, not the Hangzhou-based company, according to a spokeswoman's text message in response to inquiries.
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The securities watchdog's investigation was over a new performance bonus plan for Hikvision employees that had not been declared to authorities, according to two people familiar with the matter. The company's spokeswoman declined to comment on the plan.
Hikvision's shares on Thursday fell as much as 4.5 per cent, the steepest drop since October 10, two days after the US government put the company on its so-called Entity List. The firm's share price closed 2.46 per cent down to 33.37 yuan (US$4.75).
Company vice-chairman Gong, born in eastern China's Zhejiang province in 1965, was a graduate of Huazhong University of Science and Technology in Hubei, a landlocked province in central China. He made his name as an angel investor to innovative start-ups in China and became a billionaire, thanks to personal bets on Hikvision and the country's top radio maker Tecsun Radio. Gong, who later moved to Hong Kong, holds a 13.4 per cent stake in Hikvision.
General manager Hu, by comparison, has a less than 2 per cent stake in Hikvision. He was ranked by Forbes as China's 265th wealthiest person, with a net worth of US$1.5 billion.
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Hikvision has warned that it may lose customers and miss out on business opportunities after being blacklisted by Washington over human rights and security issues. Its trade ban came as China and the US sought to engage in a new round of trade talks.
Founded in the wake of the September 11 terrorist attacks, Hikvision has grown to become a global industry leader in surveillance cameras amid surging demand for security equipment around the world and in its home market's own state-directed efforts to build an "omniscient" surveillance network by 2020.
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