State-owned capital takes over, Beingmate's restructuring still faces challenges

Ask AI · How can state-owned assets resolve Beingmate’s debt crisis?

“China’s No. 1 milk powder” Beingmate has made new progress in its reorganization. On March 18, Beingmate announced that Jinhua Zhenhe Enterprise Management Partnership (Limited Partnership) (hereinafter “Jinhua Zhenhe”) has been confirmed as the controlling shareholder and restructuring investor of Xiaobei Damei Holdings. The actual controller of Jinhua Zhenhe is the Jinhua Municipal State-owned Assets Supervision and Administration Commission. If the subsequent reorganization is successful, Beingmate’s actual control will change to the Jinhua SASAC, which also means founder Xie Hong may step down. Even after successful reorganization, Beingmate still faces significant challenges.

Over 800 million yuan in investment funds

According to the announcement, Jinhua Zhenhe will invest by paying restructuring funds to acquire all shares of Xiaobei Damei Holdings.

Based on the approved restructuring plan (draft) by the creditors’ meeting, Jinhua Zhenhe should pay 856 million yuan in restructuring investment funds. To ensure the success of the reorganization, a smooth transfer of control, and sustainable development of Beingmate, Jinhua Zhenhe also agrees to provide an additional 30 million yuan to help the actual controller and related parties resolve related guarantee debts.

However, Beingmate also issued a risk warning that the success of Xiaobei Damei Holdings’ reorganization remains uncertain. The progress of the reorganization may lead to changes in company control. If Xiaobei Damei Holdings’ reorganization succeeds later, control of the company will change, and the actual controller will be Jinhua SASAC. The 12.28% stake (132.6 million shares) held by Xiaobei Damei Holdings will be fully transferred.

It is noteworthy that as of March 4, the end of registration for reorganization investors, only Jinhua Zhenhe had registered. According to the recruitment announcement, “if only one interested investor registers and submits a legal and valid reorganization investment plan, they will automatically become the reorganization investor.” Tianyancha shows that Jinhua Zhenhe was established on February 13, 2026, with a registered capital of 8.8 billion yuan.

Regarding whether this reorganization will affect the business, Beingmate responded to Beijing Business Daily on March 19, stating, “Beingmate has independent and complete business operations and autonomous management capabilities. In terms of business, personnel, assets, institutions, and finances, it is independent from Xiaobei Damei Holdings. The company’s production and operation are normal, and the above matters will not have a substantial impact on the company’s daily operations. The management team will continue to focus on business management to ensure stable operation.”

Resolving the debt crisis

Since 2023, Xiaobei Damei Holdings’ high debt has become the biggest obstacle to its operation. The announcement shows that as of March 18, 2026, Xiaobei Damei Holdings held about 132.6 million shares of Beingmate, accounting for 12.28% of the total share capital. Among them, about 131.1 million shares were pledged or frozen, accounting for 98.85% of its holdings. A high proportion of Xiaobei Damei Holdings’ shares are pledged, judicially frozen, or pending freezing.

Shen Meng, Executive Director of Xiang Song Capital, told Beijing Business Daily, “The purpose of reorganization investment is to resolve the pledged or frozen situation, or because of defaults caused by pledges or freezes, leading to reorganization and the introduction of investors.”

On July 16, 2025, Xiaobei Damei Holdings applied for pre-reorganization with the Jinhua Intermediate People’s Court, citing liquidity tension, inability to repay maturing debts, and obvious lack of repayment capacity but still possessing reorganization value, supported by relevant evidence.

According to the previous disclosure of recruitment conditions by Xiaobei Damei Holdings, it is clear that they have an urgent need for funds: interested investors and their controllers must have the financial strength corresponding to this reorganization investment, be able to provide relevant credit or other performance capacity proof, and ensure legal and compliant sources of funds. Regarding the reorganization bid, Xiaobei Damei Holdings also proposed that the reorganization consideration will be the final price determined after the bidding process, and all of it will be used to pay bankruptcy costs, common benefit debts, and various claims; interested investors should fully pay the reorganization consideration within 45 days from the court’s approval of the reorganization plan (draft).

Founder or once again stepping down

As the reorganization progresses, Beingmate will see the entry of Jinhua SASAC, and the founder may completely exit.

Senior dairy industry analyst Song Liang told Beijing Business Daily, “For Xie Hong, although control is lost, at least the debt problem can be solved, credit crises alleviated, and he may retain some positions, which is a decent ending.”

Beingmate was built by Xie Hong himself. According to its official website, Xie Hong was born in 1965 into a teacher’s family. At age 15, he entered the former Hangzhou Business College (now Zhejiang Gongshang University) to study food hygiene, and was once the youngest teacher at the college. In 1992, Xie Hong resigned from his university position and founded Beingmate. In 1991, he successfully developed China’s first infant formula food that matched the physiological characteristics of Chinese infants—Beingmate infant quick-cook nutritional rice flour. In 2011, Beingmate was listed on the Shenzhen Stock Exchange, becoming “China’s No. 1 milk powder stock.”

After Going Public, Xie Hong gradually withdrew from the company. However, Beingmate’s peak did not last long. From 2014 to 2018, revenue declined for five consecutive years, halving from the 2013 peak of 6.117 billion yuan to 2.491 billion yuan in 2018; in 2016–2017, it suffered two consecutive years of heavy losses, totaling over 1.8 billion yuan, and faced delisting. In 2018, after Xie Hong’s return, he carried out internal reforms and gradually led Beingmate out of the trough.

Looking at Beingmate’s recent performance, there is a trend of stabilization and recovery. From 2022 to 2024, Beingmate’s revenue was approximately 2.509 billion, 2.528 billion, and 2.773 billion yuan respectively, with net profits attributable to parent company of about -176 million, 47.45 million, and 103 million yuan. In the first three quarters of 2025, revenue decreased by 2.59% year-on-year to 2.033 billion yuan, while net profit increased by 48.07% year-on-year to 106 million yuan.

Whether state-owned assets’ entry is beneficial for Beingmate remains uncertain. Shen Meng believes, “State involvement can boost investor confidence in the secondary market, but the low shareholding ratio still leaves some uncertainty.”

Jinhua Zhenhe is optimistic about the reorganization. According to their previous submitted “Reorganization Investment Plan,” the new company after successful reorganization will maintain steady growth, implement modern corporate management systems, introduce advanced management and operational concepts, ensure stable operation of Xiaobei Damei Holdings and Beingmate Co., Ltd., continue to support legal and compliant employee stock ownership plans, optimize asset and debt structures, and maintain core asset value.

At present, Beingmate’s control will remain stable for a period after reorganization. The announcement states that Jinhua Zhenhe confirms and commits that, after the reorganization, Xiaobei Damei Holdings and its actual control will not transfer or entrust others to manage their directly or indirectly held shares of Beingmate within 36 months from the date of obtaining shares according to the reorganization plan.

Beijing Business Daily reporter Kong Wenxie