Gome Electrical Appliance Holdings Tuesday announced Chairman Chen Xiao has resigned, ending speculation that Chen might step down because of his long-time conflict with GOME's jailed founder Huang Guangyu.

Zhang Dazhong, 63, the founder of Beijing Dazhong Electrical Appliances Co, will take over as chairman and non-executive director, China's second-biggest home appliance retailer said in a statement.

Chen, 52, will resign with effect from today "in order to spend more time with his family," the statement said.

Executive Director Sun Yiding has also stepped down, GOME said in the Hong Kong stock exchange filing.

The resignations of Sun and Chen mean that Huang, who was jailed in May for 14 years after being convicted of illegal business dealings, insider trading and bribery, has his demands made in August to maintain control over the retailer giant.

GOME fell 1.8 percent yesterday to HK$2.77 (US$0.13) after dropping 4.8 percent on Tuesday. Hong Kong's Hang Seng Index added 0.4 percent yesterday.

Zhang does not hold any other position with the company, and he has no relationships with any director, senior management or substantial or controlling shareholder, the statement said.

Zhang's Beijing Dazhong Electrical Appliances was acquired by GOME in 2007.

"The appointment of Zhang is an effort to avoid accusation of family control and justify the board's aim to seek foreign investors," Lu Pingbo, economic commentator and chief-editor of China Times, wrote on his micro-blog.

Analysts said that Chen's resignation would see a shift in GOME's strategy from pursuing store profitability to expansion.

"GOME's decision to add 480 stores to its existing 1,400 this year was different from Chen's business strategy," Guangzhou Daily said before GOME's announcement, citing unidentified source close to the issue. "That reflects the will of large shareholders."

Chen took charge of GOME in 2008 when Huang was detained by authorities, and closed 189 stores in 2009. Sales at GOME recovered to a record high of 13 billion yuan (US$1.98 billion) in the second quarter of 2010 from 9.5 billion yuan in the fourth quarter of 2008, after the retailer improved its sales network. Sales dipped to 12.3 billion yuan in the third quarter of 2010.

Although behind bars, Huang, GOME's largest shareholder, initiated a battle with the directors last June.

It escalated when Huang demanded last August the ouster of Chen as chairman and sought to overturn authorization for the board to issue up to 20 percent in new shares, which would dilute his holding.

Huang and the board reconciled last December when the board appointed his two representatives to the board - Zou Xiaochun, Huang's lawyer, was appointed as executive director while Huang Yanhong, sister of Huang Guangyu, was named non-executive director.

Last week a court in Hong Kong unfroze assets of Du Juan, wife of Huang. However, Huang's assets are still frozen.