---
title: "COFCO Packaging Chairman Zhang Xin: Starting March This Year, We Won't Make a Single Can for JDB!"
description: "At a mid-year results meeting in Hong Kong, COFCO Packaging Chairman Zhang Xin announced that the company had stopped supplying cans to JDB from March this year, following a dispute over an equity investment. The move comes amid ongoing arbitration between the two companies and JDB's denial of financial data disclosed by Zhonghong Holdings."
author: "New Distribution"
publisher: "New Distribution"
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published: "2018-08-30"
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# COFCO Packaging Chairman Zhang Xin: Starting March This Year, We Won't Make a Single Can for JDB!

> At a mid-year results meeting in Hong Kong, COFCO Packaging Chairman Zhang Xin announced that the company had stopped supplying cans to JDB from March this year, following a dispute over an equity investment. The move comes amid ongoing arbitration between the two companies and JDB's denial of financial data disclosed by Zhonghong Holdings.

**"Starting March this year, we won't make a single can for JDB."**
This was stated by Zhang Xin, Chairman of COFCO Packaging, at the mid-year results meeting held in Hong Kong yesterday morning.
The herbal tea giant JDB may be in hot water recently.
The company, which started with herbal tea beverages, has been engaged in a war of words with Zhonghong Holdings over the past few days, with the truth of the matter still unclear. **Today, according to relevant media reports, since March this year, JDB has been "suspended from can supply" by COFCO Packaging.**
**"Suspension of Can Supply"**
In its 2018 interim results announcement released the day before yesterday, COFCO Packaging mentioned that due to the failure of other related partners in the Qingyuan JDB equity project to fulfill their capital increase obligations as agreed, it adjusted its order structure in a timely manner and **suspended the supply of two-piece cans to the JDB Group from the second quarter of 2018.**
This means that as COFCO Packaging and JDB enter arbitration, their cooperation has reached a deadlock.
△ COFCO Packaging held its 2018 interim results meeting in Hong Kong
"Starting March this year, we won't make a single can for JDB," said Zhang Xin, Chairman of COFCO Packaging, at the mid-year results meeting in Hong Kong this morning.
According to information obtained from informed sources, the company revealed in its meeting materials that in the first half of 2018, it completed the supply of two-piece cans to Qingyuan JDB with a value of approximately RMB 220 million, with the capital contribution in kind pending confirmation. As of the first half of 2018, COFCO Packaging had completed a cash capital contribution of RMB 877 million to Qingyuan JDB.
COFCO Packaging is the second-largest shareholder of Qingyuan JDB, a core enterprise under JDB. Last year, the company increased its capital in Qingyuan JDB by RMB 2 billion, thereby holding a 30.58% stake. On July 6 this year, COFCO Packaging formally filed for arbitration with the Hong Kong International Arbitration Centre against three companies, including Wanglaoji Co., Ltd. (Note: This refers to the Wanglaoji company under JDB registered in Hong Kong, not the Wanglaoji under Guangzhou Pharmaceutical Group), requiring the relevant companies to fulfill their capital increase obligations as agreed and compensate for the losses suffered.
The largest consumer packaging group in China stated in its announcement at the time that the company had not fulfilled its commitment to inject the JDB trademark as a capital contribution in kind to Qingyuan JDB Herbal Tea as per the capital increase agreement.
In simple terms, COFCO Packaging provided real money, but Hong Kong JDB had not yet provided the JDB trademark valued at RMB 3 billion as agreed.
**Arbitration Progress?**
**Currently, JDB and COFCO Packaging are in the preliminary stage of arbitration.**
"The relevant process is proceeding according to legal procedures," COFCO Packaging stated in its financial report. Considering the lawyer's advice and that the arbitration is in its preliminary stage, it has not yet recognized dividend interests in the interim financial statements, nor has it made provisions for the arbitration. It will inform shareholders of the progress of the arbitration in the future.
From informed sources, at today's results meeting, COFCO Packaging listed "closely following the JDB arbitration process to ensure the safety of investment and returns" as one of its key matters and included it in its work objectives for the second half of the year.
Zhang Ye, General Manager of COFCO Packaging, stated that the overall progress of the arbitration with JDB is very smooth, and "we are very confident."
**"We have seized JDB's core assets (Note: brand and concentrate), and we believe that JDB's repayment of our full investment and return on investment is sufficient."** Zhang Xin, Chairman of COFCO Packaging, said at the meeting that the joint venture project launched last year solved JDB's operational funding difficulties, and at the time, COFCO Packaging, in order to prevent potential risks, "conducted thorough due diligence before investing in Qingyuan JDB."
On the other hand, while arbitration is ongoing, COFCO Packaging has also signaled the possibility of reaching a settlement. From informed sources, the company's executives stated at today's results meeting that there are some differences with JDB, but a settlement is "still possible."
"A settlement must meet certain conditions, that is, it must be considered only if it protects the interests of shareholders and is the optimal plan for the company," the executives said at the meeting. Currently, some settlement plans are being communicated with JDB, but they did not disclose details.
**Deep in the Mire**
A few days ago, JDB was reported by relevant media to be facing supply shortages during the peak season, and the day before yesterday, a statement from JDB sparked heated discussion in the industry.
Zhonghong Holdings announced last night that its controlling shareholder had signed a "Debt Restructuring and Operation Trusteeship Agreement" with JDB and Yinyi Capital, and also disclosed JDB's performance over the past few years, showing a loss of RMB 582 million in 2017. However, overnight, JDB issued a statement directly refuting Zhonghong Holdings, saying it was unaware of the agreement and that the disclosed JDB performance was seriously inconsistent with the actual situation.
The promised debt restructuring turned out to be a false alarm overnight.
On the evening of August 27, Zhonghong Holdings, a real estate company in debt crisis, issued an announcement stating that its controlling shareholder had signed the "Debt Restructuring and Operation Trusteeship Agreement" with JDB and Yinyi Capital, and also disclosed JDB's performance.
**△ Zhonghong Holdings disclosed JDB's performance**
According to the announcement, JDB's unaudited main business revenue for 2015-2017 was RMB 10.04 billion, RMB 10.63 billion, and RMB 7.002 billion, respectively; net profits were -RMB 189 million, RMB 1.48 billion, and -RMB 582 million, respectively; and liabilities were RMB 7.81 billion, RMB 8.76 billion, and RMB 13.17 billion, respectively. It is evident that in 2017, JDB's revenue and net profit declined significantly, with a loss of RMB 582 million.
It is worth noting that this is quite different from the previously reported sales figures of approximately RMB 25 billion, RMB 24 billion, and RMB 15 billion for JDB from 2015 to 2017.
On the morning of August 28, JDB issued a statement saying that the operating conditions and financial data of the JDB Group described in Zhonghong Holdings' announcement were seriously inconsistent with the actual situation, and it would pursue legal liability. However, in this statement, JDB did not disclose its "true" performance.
In addition, although Zhonghong Holdings' announcement provided a detailed introduction to the cooperation method with JDB and Yinyi Capital, it was denied by JDB.
In its statement, JDB said it had never participated in the signing of the "Operation Trusteeship and Debt Restructuring Agreement" by Zhonghong Holdings Co., Ltd., Zhonghong Zhuoye Group Co., Ltd., and Shenzhen Qianhai Yinyi Capital Co., Ltd., and was completely unaware of the content of the agreement.
Furthermore, JDB also stated that it had never issued any authorization to Huang Weiqing, and JDB would investigate the matter through legal procedures and pursue the legal liability of the relevant parties.
As of the time of writing, Zhonghong Holdings had not yet issued an announcement in response to JDB's statement and was temporarily suspended from trading on August 28.
We will continue to pay attention to the follow-up progress of the matter.
This article is compiled from Xiaoshidai and Green Squirrel.
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