---
title: "Chen Sheng Responds to Huiyuan Joint Venture: Not a 'Sellout' but Complementary Upstream and Downstream Integration"
description: "Huiyuan Juice, once the 'king of fruit juice,' faces continuous losses, a shrinking stock price, delayed annual reports, and departing executives. Recently, the company announced a framework agreement to form a joint venture with Tiandi No.1 and Guangzhou Hezhi Investment, aiming to improve its cash position and alleviate debt pressures."
author: "叶碧华 陈晓琪"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2019-05-02"
language: "en"
canonical: "https://xinjignxiao.com/en/articles/chen-sheng-responds-to-huiyuan-joint-venture-not-a-sellout-but-complemen-2067270b/"
markdown: "https://xinjignxiao.com/en/articles/chen-sheng-responds-to-huiyuan-joint-venture-not-a-sellout-but-complemen-2067270b.md"
original_source: "https://mp.weixin.qq.com/s/7F_XSodJJBmGIPulpGnJRg"
translation: "https://xinjignxiao.com/zh/articles/%E9%99%88%E7%94%9F%E5%9B%9E%E5%BA%94%E4%B8%8E%E6%B1%87%E6%BA%90%E5%90%88%E8%B5%84-%E4%B8%8D%E6%98%AF-%E5%8D%96%E8%BA%AB-%E6%98%AF%E4%B8%8A%E4%B8%8B%E6%B8%B8%E4%BA%92%E8%A1%A5-2067270b.md"
attribution: "New Distribution — https://xinjignxiao.com/en/articles/chen-sheng-responds-to-huiyuan-joint-venture-not-a-sellout-but-complemen-2067270b/"
usage_policy: "https://xinjignxiao.com/ai-policy.txt"
---

# Chen Sheng Responds to Huiyuan Joint Venture: Not a 'Sellout' but Complementary Upstream and Downstream Integration

> Huiyuan Juice, once the 'king of fruit juice,' faces continuous losses, a shrinking stock price, delayed annual reports, and departing executives. Recently, the company announced a framework agreement to form a joint venture with Tiandi No.1 and Guangzhou Hezhi Investment, aiming to improve its cash position and alleviate debt pressures.

**Continuous losses, a sharply shrinking stock price, repeatedly delayed annual reports, and a stream of departing executives... What exactly is happening to Huiyuan, the former 'king of fruit juice'?**
Recently, Huiyuan Juice (01886.HK), which has been suspended from trading for a long time, released an 'Inside Information on Cooperation Framework Agreement,' disclosing that the company and its wholly-owned subsidiary, Beijing Huiyuan Food & Beverage Co., Ltd., signed a cooperation framework agreement on April 26 with Tiandi No.1 Beverage Co., Ltd. and Guangzhou Hezhi Investment Management Co., Ltd. to establish a joint venture.
In March of last year, Huiyuan admitted in an announcement that, without board approval, without signing an agreement, and without external disclosure, the company had improperly lent 4.275 billion yuan to Beijing Huiyuan Beverage Group Co., Ltd., controlled by Zhu Xinli, marking the beginning of a long suspension period.
Earlier this year, Huiyuan confirmed in an announcement that it was facing a default on a convertible bond of HK$1.02 billion. Throughout 2019, Huiyuan Juice had a total of four bonds maturing, amounting to approximately 3 billion yuan, putting immense pressure on its finances. If it failed to meet the resumption conditions set by the Hong Kong Stock Exchange by January 31, 2020, Huiyuan Juice would face the risk of delisting.
According to the cooperation framework agreement, Tiandi No.1 and others will contribute 3.6 billion yuan in cash to the joint venture, holding a 60% stake, while Huiyuan Juice will contribute assets, holding a 40% stake.
On the 29th, Zhu Danpeng, a Chinese food industry analyst, said in an interview with 21st Century Business Herald that Huiyuan's long-standing integrated development model across primary, secondary, and tertiary industries has led to heavy assets, which is a significant reason for its high debt ratio. According to Huiyuan Juice's last published financial report, as of the first half of 2017, the company's total liabilities exceeded 11.5 billion yuan, with a debt ratio of 52.23%.
Can Tiandi No.1's entry help Huiyuan Juice turn the corner? How will the former 'king of fruit juice' return to the stage? A representative from Tiandi No.1 told our reporter that the details of the cooperation are still being discussed and will be announced once finalized.
**The Downhill Path of the 'King of Fruit Juice'**
Going back to 1992, when the reform and opening-up breeze swept across China, Zhu Xinli, then deputy director of the Foreign Economic Relations and Trade Commission of Yiyuan County, Shandong Province, resolutely decided to resign and start his own business, founding Zibo Huiyuan Food & Beverage Co., Ltd. in Shandong, the predecessor of Huiyuan Juice.
In 1993, Huiyuan signed a $5 million contract for concentrated juice exports at a German food expo, earning its first pot of gold and successfully opening up the market. However, Zhu Xinli was not satisfied with this initial success. He then led more than thirty employees to establish Beijing Huiyuan Food & Beverage Co., Ltd. in Beijing.
Subsequently, under the banner of filling the gap in the domestic concentrated juice market, Zhu Xinli expanded rapidly, investing heavily in factories across the country and initially completing the overall layout of the juice industry. In 2007, Huiyuan Juice was successfully listed on the Hong Kong Stock Exchange, with its stock price soaring 66% on the first day of listing.
Soon, beverage giant Coca-Cola extended an olive branch to Zhu Xinli. On September 3, 2008, Coca-Cola and its wholly-owned subsidiary Altantic Industries jointly announced that they would acquire all issued shares of Huiyuan Juice and all outstanding convertible bonds for a total price of HK$17.92 billion. This was Coca-Cola's largest acquisition in China at the time and its largest outside the United States in its history, causing a huge stir in the industry.
Believing everything was going smoothly, Zhu Xinli essentially halted new product development at Huiyuan and instead signed multiple large fruit projects in China, investing over 2 billion yuan in total, to achieve the company's transformation and upgrading upstream.
However, just as everyone thought the acquisition would be completed smoothly, an unexpected turn occurred. On March 18, 2009, the Ministry of Commerce announced that, according to the Anti-Monopoly Law, the Coca-Cola acquisition would have an adverse impact on competition and was vetoed. Not only did Huiyuan Juice miss the chance to 'ride the coattails' of Coca-Cola to go global, but its stock price also fell sharply.
**After the regretful missed opportunity with Coca-Cola, under the pressure of listed company performance, Zhu Xinli had to return to the downstream juice industry, increasing investment in products, marketing, and sales in an attempt to regain market share.** In 2009, Huiyuan Juice launched new products such as 'Ningmeng Me' and 'Guozhi Guole,' low-concentration juices and carbonated beverages. Unfortunately, the innovation of new products did not stimulate market consumption; instead, due to high R&D and sales expenses, the company suffered a loss of approximately 72.24 million yuan in the first half of 2010.
Subsequently, in 2011 and 2014, Huiyuan acquired the iced tea brand 'Xurisheng' for 12.01 million yuan and the oolong tea-focused 'Suntory' China for 118 million yuan, respectively. However, due to Huiyuan's later refocusing on the juice business and suspension of tea beverage production, 'Xurisheng' was discontinued just one year after the acquisition. 'Suntory' also clashed with Huiyuan over differing business philosophies, severely impacting market performance.
Furthermore, Zhu Xinli had previously expanded Huiyuan's 'big agriculture dream' across the country. For example, the green industrial park in Zhongxiang, Hubei, involved an investment of up to 14.2 billion yuan. However, since many projects were still in early development stages with long payback periods, they adversely affected the company's cash flow.
Having missed the Coca-Cola deal and made a series of strategic errors, Huiyuan fell into a severe debt crisis, and Zhu Xinli began a long road of borrowing left and right to plug the holes. Starting in 2014, Huiyuan began to incur losses, which expanded to 229 million yuan in 2015.
**Tiandi No.1 Enters the Game**
Ten years later, the former 'king of fruit juice' had to lower its profile and form a joint venture with a New Third Board company based in the southern corner. Only Zhu Xinli probably knows the bitterness of this. However, Chen Sheng, who also left a government post to start a business, has a similar background to Zhu Xinli, and the two have had a supply relationship before, so they may have more in common.
According to public information, Tiandi No.1 Beverage Co., Ltd. (832898) is a joint-stock enterprise that integrates R&D, production, and sales of vinegar beverages and other drinks. In 2018, it achieved revenue of 2.117 billion yuan and net profit of 340 million yuan.
In multiple face-to-face exchanges with Chen Sheng, our reporter strongly felt his intelligence, quick thinking, and pragmatic style. Besides accurately positioning vinegar beverages, Chen Sheng also has agricultural businesses such as native pigs and native chickens, spanning from breeding to terminal retail. However, over the years, beverages have remained the largest contributor to revenue and profit for the entire Guangdong Yihao Food Group, with very stable development.
'Tiandi No.1 sells well in the south, especially in Guangdong, but lacks national channels, while Huiyuan Juice excels in national channels, especially in the north. After establishing the joint venture, both parties can share advantages,' Zhu Danpeng said. **Tiandi No.1 has a need to expand northward, and Huiyuan Juice has a need to expand southward. The two have extended their relationship from a simple raw material procurement to tertiary industry cooperation, upgrading from strategic partners to shareholders, making the cooperation closer.**
Although compared to the HK$17.92 billion price offered by Coca-Cola eleven years ago, the cost paid by Tiandi No.1 and others this time has shrunk by nearly five-sixths, Zhu Xinli can at least have a chance to 'catch his breath.' Huiyuan Juice also stated in the announcement that through cooperation with Tiandi No.1, the company's cash position will improve and will ease its debt situation.
'From an industry perspective, the two parties are already tightly bound. On the consumer side, whether Tiandi No.1 and Huiyuan products can form a new combination in the future, and whether Tiandi No.1 can help Huiyuan break the deadlock of consecutive losses, will depend on how the two parties specifically operate the Huiyuan brand in the future,' Zhu Danpeng said.
Source: 21st Century Business Herald
Tips will be paid 400-2000 yuan once adopted.
**China FMCG + Internet Professional New Media**
**Committed to FMCG manufacturers' transformation and upgrading and channel digital solutions**


---

## Copyright and AI use

This article is sourced from New Distribution. Search, quotation, summarization, and model training are permitted, but every use must credit New Distribution and retain the canonical source URL.

Contact: zhaobo258@gmail.com · +86 158 5481 7671