Huawei’s China Sales Head Detained in Corruption Probe

China’s Huawei Technologies Co. said that the head of sales for its domestic sales business has been detained in a corruption probe.

The world’s third-largest smartphone maker, said on Wednesday that Chinese police are conducting an investigation, after the China sales head of its smartphone unit was detained on suspicion of accepting bribes.

Police have taken immediate action on Teng Hongfei on “suspicion of taking bribes,” the Shenzhen-based company said in a statement. 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 authorities are investigating the matter, and we defer to their discretion as to what can be disclosed," the company said in e-mailed comments. "We take our business ethics extremely seriously, and have zero tolerance for corrupt behavior." It gave no further comment.

The company didn’t bring up Teng’s replacement, 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.

The arrest is a setback to one of China’s biggest closely-held technology companies, the largest of a group of Chinese smartphone makers that have taken 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.

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