The recent row between jailed ex-chairman Huang Guangyu of Gome Electrical Appliances Holding Ltd and its current chairman, Chen Xiao, over control of the retail empire might push the foreign institutional investors and China's professional managers in a corner.

Entrepreneurship experts claimed that the relationship between Chinese entrepreneurs and foreign institutional investors might be affected. Chinese entrepreneurs, who used to follow foreign investors for leapfrog growth opportunities, are now becoming more cautious. They are afraid to be the next Huang, who has lost his participation to Gome's decision-makings.

Huang's family commented on the involvement of institutional investors, saying, "We do not think it is bad to include foreign investors in a company. However, we should be treated fairly as the largest shareholder."

"Many people are looking at Bain (the US private equity firm). We do not think it appropriate for Bain to support Chen Xiao, a manager who intentionally tried to alienate a major shareholder," a spokesperson for Huang's family told chinadaily.com.cn.

One of focuses of the current battle might be on the US private equity firm Bain Capital LLC, which has decided to turn its HK$1.8 billion ($231.8 million) seven-year convertible bonds to equity stakes. It would own 9.8 percent of Gome's shares after that.

In a recent announcement by the funding shareholders of Gome, they said that if it were to happen, Bain's interests would seem to be more aligned with that of ordinary shareholders, although Bain would still be able to exercise a disproportionate influence on management, given its representation on the board of directors.

In this regard, the founding shareholders would welcome the opportunity to work with Bain, whom they see as bringing to Gome valuable expertise and experience.

And they will continue to work with other stakeholders in Gome who are committed to taking Gome forward to the next stages of its development.

The battle might also threaten the relationship between Chinese entrepreneurs and the executives or managers they employed, since some entrepreneurs have claimed that they are trying to find out the Chen Xiao in their companies.

"Chen Xiao is obviously not the right person to act as any shareholders' agent. His behavior is dangerous to all shareholders, not just limited to Huang, and harms the reputation of all professional managers in China," Zou Xiaochun, the director candidate appointed by Huang Guangyu, told a reporter. "But we still have confidence in the management team's integrity, except for Chen."

David Pilling and Jamil Anderlini wrote for the UK-based Financial Times that the battle stirred up nationalist sentiments against foreign investors who attempt to take over Chinese companies.

A recent survey by Qq.com, one of China's popular Internet portals, showed that more than 879,000 Internet users, or 77.24 percent of the total voters, supported Huang Guangyu in his battle over Chen Xiao, Gome's board chairman, who is backed by Gome executives and Bain Capital.

The Huang's family declined to comment on the survey or its findings. "I hope that all of Gome's customers keep doing businesses with the company. We have the confidence to win out in the poll," the family spokesperson said.

Huang Guangyu, who is the founder and current largest shareholder with 35.98 percent of Gome's shares, has said that the company has lagged behind its major competitors in terms of the growth of store network coverage, scale of operation and profitability.

The funding shareholders of Gome have called for all Gome shareholders to support their requirements, including the removal of Chairman Chen Xiao and three directors appointed by Bain. A vote is expected at a special general meeting on Sept 28.