---
title: "26 Days After Yuan Renguo's Fall: Confidants Toppled, Moutai in Blending Controversy, 2,000 Tons Rushed to Stabilize Market"
description: "Yuan Renguo's downfall was like the first domino falling, triggering a cascade of public opinion disputes, personnel upheaval, business strategy adjustments, and market value fluctuations within just 26 days, putting Moutai on a roller-coaster ride. Since May 22, when former Moutai chairman Yuan Renguo was expelled from the Party and public office, the company has faced a series of challenges, including a lawsuit over false labeling, the dismissal of a close associate, and a pledge to release 2,000 tons of baijiu in 19 days to stabilize the market."
author: "财天作者"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2019-06-19"
language: "en"
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# 26 Days After Yuan Renguo's Fall: Confidants Toppled, Moutai in Blending Controversy, 2,000 Tons Rushed to Stabilize Market

> Yuan Renguo's downfall was like the first domino falling, triggering a cascade of public opinion disputes, personnel upheaval, business strategy adjustments, and market value fluctuations within just 26 days, putting Moutai on a roller-coaster ride. Since May 22, when former Moutai chairman Yuan Renguo was expelled from the Party and public office, the company has faced a series of challenges, including a lawsuit over false labeling, the dismissal of a close associate, and a pledge to release 2,000 tons of baijiu in 19 days to stabilize the market.

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This article is republished with permission from Finance World Weekly (ID: cjtxzk).
Yuan Renguo's downfall was like the first domino falling, and the ensuing public opinion disputes, personnel upheaval, business strategy adjustments, and market value fluctuations have all been reshuffled in these short 26 days, putting Moutai on a roller-coaster ride.
It has been 26 days since May 22, when former Moutai chairman Yuan Renguo was expelled from the Party and public office.
The 63-year-old Yuan Renguo's life has been closely tied to Moutai. Having worked at Moutai for 43 years, he helped the company through difficult times and single-handedly built its current status. The distillery also had its moments of glory under Yuan.
**Regarding Yuan Renguo's expulsion, the Guizhou Provincial Commission for Discipline Inspection and Supervisory Commission reported that he engaged in power-for-power, power-for-money, power-for-sex, and money-for-sex transactions, and practiced "family-style corruption," deciding to expel him from the Party and public office and refer him to judicial authorities for legal handling.**
With the fall of this core figure, Yuan Renguo's problems were again brought to light as a warning to the public. On June 14, a provincial warning education conference reported that "the problems involved in Yuan Renguo's case are quite serious, the lessons are extremely profound, and they have severely damaged Moutai's image." The next day, Moutai Group announced it would rectify the issues and completely eliminate the adverse effects of the "Yuan case," emphasizing that Moutai must not become a large-scale "hunting ground" or a "disaster area" for corruption.
Yuan Renguo's downfall was like the first domino falling, **and the ensuing public opinion disputes, personnel upheaval, business strategy adjustments, and market value fluctuations have all been reshuffled in these short 26 days, putting Moutai on a roller-coaster ride.**
**Li Baofang Leads "Public Relations" Efforts, Sending Positive Signals**
**For Moutai, Yuan Renguo's fall not only marked the end of an era but also signaled the beginning of a difficult and painful adjustment period.**
On the sixth day after Yuan Renguo's expulsion, Moutai was sued by a consumer for alleged false advertising and inaccurate labeling, with the consumer demanding "refund and triple compensation." On May 28, the Chengdu High-tech Industrial Development Zone People's Court accepted the case. The 50-year aged liquor was blended with 30-year aged Moutai, triggering a crisis for the Moutai brand.
This was followed by the downfall of senior executives close to Yuan Renguo. On June 1, the Discipline Inspection Commission of China Kweichow Moutai Distillery (Group) Co., Ltd. issued a notice on Moutai's official WeChat account, deciding to expel Nie Yong, former director, chairman, and legal representative of Kweichow Moutai Group E-commerce Co., Ltd., from the Party and terminate his labor contract. Earlier, on November 22, 2018, Nie Yong had been subject to disciplinary review and supervisory investigation for serious disciplinary and legal violations.
**With Yuan's downfall, Moutai's negative news came one after another.** At the same time, Moutai Group continuously released positive and proactive signals to the outside world, attempting to divert public attention.
Starting from June 3, Li Baofang led senior company executives on intensive media visits in Beijing, with the first stop at People's Daily, followed by Xinhua News Agency, China News Service, NetEase, and Phoenix within three days. Previously, Li Baofang had met with top executives from CCTV, Sina, and Sohu at the group headquarters.
The personnel upheaval and negative impacts did not overwhelm Moutai, as the annual Moutai Group Dragon Boat Festival wheat sacrifice ceremony was held as scheduled. Several senior executives, including Moutai Group Vice General Manager Zhang Deqin, Moutai Liquor Co., Ltd. Vice General Managers Zhang Jiaqi and Wan Bo, and Group and Company Assistant General Managers Peng Yun, Zhong Huaili, and Yang Zongjie, attended the ceremony.
**On June 12, Moutai Group Chairman Li Baofang announced at a corporate brand event that the "National Liquor Moutai" trademark would be discontinued by June 30.** It is understood that since October 2018, Moutai has not used the "National Liquor Moutai" trademark. On August 13, 2018, Moutai applied to the Beijing Intellectual Property Court to withdraw its lawsuit against the National Trademark Review and Adjudication Board and expressed apologies to the board and relevant parties.
After the "National Liquor Moutai" trademark incident, Moutai announced the discontinuation of the trademark eight months after actually stopping its use, which was interpreted by outsiders as a public relations strategy to create topics and divert public attention. **Moutai's public relations approach has always been to drive the big brand with big PR, especially during sensitive periods, as Moutai continues to solidify its brand position.**
**2,000 Tons of Liquor Released in 19 Days, Market Boosted and Stock Price Recovering**
**At the end of 2018, Li Baofang had already anticipated that 2019 would be difficult.** At the Moutai national distributor conference held at the end of 2018, he said, "2019 will become the 'year of breakthrough' for the company to further rationalize and improve the marketing system."
After experiencing anti-corruption campaigns and the cleanup of distributors, Moutai's next step is to vigorously rectify the market environment at the market level to ensure price stability. Especially after Yuan's fall, the significance of a stable and optimistic market is particularly important for Moutai.
**Li Baofang has repeatedly emphasized at forums and conferences that Moutai liquor prices will not be adjusted.** On June 12, he stated that this year's Moutai liquor release volume is approximately 30,000 tons, with 12,000 tons already released, and the release volume from the beginning of the year to the end of June must ensure 14,000 tons. This means that from that day to the end of June, within 19 days, Moutai will release 2,000 tons of Moutai liquor to the market.
The day before Li Baofang made this commitment, Moutai Mall announced that the 53-degree Feitian Moutai priced at 1,499 yuan would accept reservations starting June 10, with purchases available from 10:00 on June 12.
**Moutai prices have been hyped higher and higher, even reaching over 2,000 yuan per bottle.** For a market where Feitian Moutai has been in short supply for a long time, accepting reservations at this moment, coupled with Li Baofang's commitment to the market, is undoubtedly a relief. This also caused a stir among distributors, as many distributors in various regions have faced Moutai shortages for more than a month.
On June 16, Kweichow Moutai Group held a warning education conference. Group Chairman and General Manager Li Baofang stated that the company would continue to consolidate and expand the results of special rectification, actively cooperate with case investigations, continue to clean up illegal Moutai liquor business rights, and prevent and eliminate new marketing "chaos." Preliminary considerations include formulating strict procedural management measures and integrity-related prohibitive systems for three key systems: supply procurement, engineering projects, and market sales. The meeting reported on disciplinary and legal violation cases involving Nie Yong and others, and read out the group company's "Provisions on Prohibiting Company Employees from Using Moutai Liquor for Personal Gain."
**Moutai's stock price has been falling since the establishment of the group's marketing company.** On the morning of May 5, Kweichow Moutai Group Marketing Co., Ltd. was officially established and unveiled, with some investors suspecting possible interest transfer. The Shanghai Stock Exchange required the company to provide an explanation and issued regulatory requirements regarding media reports.
After this incident, Kweichow Moutai's stock price fell from a high of 990 yuan, and in three trading days, its market value evaporated by 110 billion yuan. According to statistics, from April 1 to May 22, northbound capital flowed out of the stock by approximately 13.1 billion yuan in total. Yuan Renguo's fall had limited impact on the stock price, with the lowest point of Kweichow Moutai's stock price being 862.13 yuan on June 6.
**Farewell to Yuan Renguo, Hello Li Baofang**
In 2019, Yuan Renguo's fall marked the end of an era. Looking back 21 years, when the 42-year-old Yuan Renguo became the general manager of Kweichow Moutai Liquor Co., Ltd. and officially took the helm of Moutai, an era was just beginning.
At the age of 18, Yuan Renguo started working at the Moutai distillery as a worker, carrying distiller's grains. He worked his way up through supply and marketing, publicity, factory office director, workshop director and party branch secretary, assistant to the factory director, and deputy general manager, until 1998, when at 42, he became the head of Moutai, taking on the role at a critical moment.
**At that time, Moutai was at its most dangerous moment: the Asian financial crisis broke out, and the fake liquor case in Shanxi Province shocked the country. Market demand for Moutai liquor plummeted, and the once bustling Moutai distillery suddenly became deserted. In 1998, the sales target for Moutai liquor was 2,000 tons, but by July, only 700 tons had been sold.**
After Yuan Renguo took office, he recruited marketing personnel from the entire factory and personally led 17 salespeople to the front lines of sales nationwide, even cooking meals himself to entertain leaders of sugar, tobacco, and liquor companies across the country. From then on, a national sales network consisting of 600 regional distributors and 600 exclusive stores, led by Qiao Hong, the general manager of Moutai Liquor and the third-ranking figure in the group, was established.
Since then, Moutai's fortunes turned, and demand exceeded supply. The price rose from 200 yuan per bottle in 2000 to 2,000 yuan per bottle in 2011, a tenfold increase in ten years.
The next highlight was when Yuan Renguo led Moutai to surpass Wuliangye and claim the throne of China's white liquor king. For a long time, the Chinese white liquor market was monopolized by Wuliangye. In 2001, when Kweichow Moutai was listed, its market value was 9.253 billion yuan. In comparison, Wuliangye's market value was twice that, reaching 19.364 billion yuan.
**But starting from 2005, Kweichow Moutai's net profit exceeded Wuliangye for the first time, and it gradually climbed to the top, becoming a legend in China's white liquor industry. It was also called the "stock god" in the stock market,** with a total market value firmly above one trillion yuan. This was inseparable from Yuan Renguo's strengthening of the Moutai brand concept. Using "Feitian Moutai" as the main brand, along with a few sub-brands, to counter Wuliangye's 124 series products, Moutai quickly became mainstream in a fragmented market and the first choice for state banquets.
Moutai liquor prices were hyped higher and higher, and official consumption was the main engine for Kweichow Moutai's performance growth. But as anti-corruption entered a new phase, Yuan Renguo's fall marked the end of vanity-driven price inflation and materialistic revelry. Moutai liquor should also return to the value and price that the Chishui River deserves.
**Li Baofang, born in 1958, took on the role of chairman on the eve of his retirement, undoubtedly assuming responsibility at a critical moment.** He is a standard parachuted executive, having neither served in Renhuai County nor familiar with Moutai's production line. Previously, a senior Moutai Group executive told Finance World Weekly that Li Baofang is very serious, rarely smiles, has a bureaucratic tone but dares to speak, and often gives impromptu speeches at internal meetings.
This successor to Yuan Renguo is still decisive. He is implementing bold reforms, standardizing the marketing team, controlling prices, and distancing from distributors to ensure the market maintains optimistic expectations for Moutai.
Whether the Moutai distillery will usher in the era of Li Baofang remains to be seen. With a series of business strategy changes, the stock price has rebounded somewhat. As of the close on June 14, Moutai's stock price was 913 yuan per share, with a market value of 1.15 trillion yuan.
(Zhang Zexiang also contributed to this article.)


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