Click to read the original article for details. Since 2014, Heizhima (000716, SZ) has been 'generously' making large advance payments to 'independent third-party' advertising companies each year, despite its own modest profits. The investigation found that at least two of these 'third-party' advertising companies are not truly 'independent' but have close ties to the Heizhima group. One of these companies' historical major shareholder and legal representative is still holding a position within the Heizhima group. 'When I was a child, hearing the hawking of sesame paste, I could no longer sit still.' Many post-80s and even post-90s generations are deeply impressed by this classic advertisement for Southern Black Sesame Paste. After decades of development, Southern Black Sesame Paste has become the 'No.1 brand in Chinese paste products,' enjoying great glory. In recent years, to promote new products, Heizhima's advertisements have frequently appeared in major media. However, a reporter from Daily Economic News found that since 2014, Heizhima has been 'generously' making large advance payments to 'independent third-party' advertising companies each year, despite its own modest profits. These advertising companies share two notable characteristics: First, their registered capital is low, with some as low as 100,000 yuan; Second, they receive large orders from Heizhima shortly after their establishment. What magic do these advertising companies possess to gain such trust from Heizhima? After extensive investigation, the reporter found that at least two of these 'third-party' advertising companies are not truly 'independent' but have close ties to the Heizhima group. One of these companies' historical major shareholder and legal representative is still holding a position within the Heizhima group. In response, lawyer Song Yixin from Shanghai Hanlian Law Firm told the Daily Economic News reporter that if Heizhima concealed the fact that the legal representative and major shareholder of the partner were holding relevant positions within the listed company's system at the time, it constitutes 'concealment of related-party transactions.' Lawyer Wang Zhibin from Shanghai Minglun Law Firm told reporters that the determination of related-party relationships mainly follows the principle of substance over form. Although the legal representative of the advertising partner is an executive of a related company of the listed company rather than an executive of the listed company itself, as long as there is evidence that the listed company has substantive influence over the advertising partner, the related-party relationship may also be established. In June 2019, the headquarters building of Heizhima—Southern Food Building—has the sign of Heiwulei Group on its side. Nanning Shengdai: The Hidden Identity of the Advertising Partner In 2014, an advertising agency named Nanning Shengdai Advertising Co., Ltd. (hereinafter referred to as Nanning Shengdai) appeared in the list of 'Top Five Prepayments by Prepaid Object at Year-End Balance' in Heizhima's annual report for that year. The listed company had a prepayment balance of 42 million yuan to this company, with a prepayment period of less than one year. In 2015, Nanning Shengdai appeared for the second time in Heizhima's annual report, with a prepayment balance of 21.5 million yuan, also within one year. In the annual report, Heizhima stated that Nanning Shengdai was its advertising agency and a 'non-related party customer,' and the reason for the prepayment was to pay advertising fees in advance according to industry practice. Industrial and commercial data shows that Nanning Shengdai was established in May 2014 with a registered capital of only 100,000 yuan. That is, Heizhima signed a large advertising cooperation order with Nanning Shengdai in the year of its establishment, with the total cooperation amount for 2014 and 2015 reaching at least 63.5 million yuan. During the years of cooperation between Nanning Shengdai and Heizhima (2014 and 2015), a key figure appeared in the industrial and commercial information of Nanning Shengdai. After this key figure withdrew in 2015, Nanning Shengdai never appeared again in Heizhima's annual reports. This key figure was confirmed to be Gu Yuming, the current deputy general manager of Nanning Rongzhou Cultural Communication Co., Ltd. (hereinafter referred to as Rongzhou Culture). Rongzhou Culture's registered address and actual business location are both on the second floor of Heizhima's headquarters building—Southern Food Building. From 2014 to 2017, the controlling stake of Rongzhou Culture was transferred several times among Guangxi Rongxian Longrun Commercial Operation Management Co., Ltd. (hereinafter referred to as Longrun Commercial, cancelled, a holding company under the same actual controller as Heizhima), Wang Junhua (a current shareholder of Heizhima), and Guangxi Heiwulei Food Group Co., Ltd. (hereinafter referred to as Heiwulei Group), the controlling shareholder of Heizhima. According to Sohu Focus, the current deputy general manager of Nanning Rongzhou Cultural Communication Co., Ltd. is Gu Yuming. The Daily Economic News reporter also confirmed Gu Yuming's position from employees of Rongzhou Culture. Based on the above information, before serving as deputy general manager of Rongzhou Culture, Gu Yuming was the general manager of Guangxi Southern Advertising Company. According to industrial and commercial information, Guangxi Southern Advertising Co., Ltd. is a holding company of Heiwulei Group, the controlling shareholder of Heizhima. So how long has Gu Yuming been working within the Heizhima system? In response to this question, one Heizhima employee told the reporter, 'He (Gu Yuming) has been here for quite a long time,' while another employee gave a more specific time: '(Gu Yuming) has worked here for over ten years, maybe even twenty years.' According to the National Enterprise Credit Information Publicity System, when Nanning Shengdai was established in June 2014, Gu Yuming served as its legal representative and also as a senior executive. In May 2015, Gu Yuming withdrew from the shareholder and senior executive list of Nanning Shengdai. Through Tianyancha's disclosure of Gu Yuming's related companies, it is not difficult to see his close ties with the Heizhima group. For example, Gu Yuming served as the legal representative of Beijing Geluobao Technology Trade Co., Ltd. (cancelled), whose supervisor was Li Hanrong, the actual controller of Heizhima. Gu Yuming served as the general manager of Guangxi Gangning Lianchuang Technology Development Co., Ltd. (revoked), whose chairman and vice chairman were Wei Qingwen (legal representative of Heizhima) and Li Hanchao (actual controller), respectively. Gu Yuming served as the legal representative and shareholder of Guangxi Gaosu Internet Co., Ltd. (revoked), whose major shareholder, Yulin Gangbo Food Co., Ltd. (revoked), had several senior executives overlapping with Heizhima. For example, the vice chairman and director of that company were Li Hanchao and Li Hanrong, actual controllers of Heizhima, and director Wei Qingwen was the current legal representative of Heizhima. It is worth mentioning that the legal representative of Yulin Gangbo Food Co., Ltd. (revoked) was Li Wenquan. The reporter learned from two cross-sources (media reports and company employees) that the current colleague of Gu Yuming and general manager of Rongzhou Culture is also named Li Wenquan. In November 2004, in the acquisition of 4.66% of Guangxi Sizhuang's shares initiated by Guangxi Southern Investment Co., Ltd., the acquisition document disclosed information on the directors, supervisors, and senior executives of Heiwulei Group. At that time, the information showed that Wei Qingwen was the chairman of the board of Heiwulei Group, Li Hanchao was a director and president, and one director was named Gu Yuming. Recently, a reporter from Daily Economic News visited the registered address of Nanning Shengdai: Room E3102, Building E, Huidong International, No. 16 Jinpu Road, Qingxiu District, Nanning. However, surprisingly, the reporter did not find the operating entity of Nanning Shengdai at the above registered address. In Building E of Huidong International, the company signs listed downstairs did not include Nanning Shengdai. The reporter then went to the floor corresponding to E3102 and found that the entire floor was occupied by a company engaged in biotechnology business, which had no relationship with Nanning Shengdai. An employee of the biotechnology company told the reporter that their company had rented the entire 31st floor and confirmed that no other company operated on that floor. Registered address of Nanning Shengdai: Room E3102, Building E, Huidong International, No. 16 Jinpu Road, Qingxiu District, Nanning. The company directory downstairs in Building E does not include Nanning Shengdai. The reporter called the phone number disclosed in Nanning Shengdai's industrial and commercial information. A person claiming to be a staff member of Nanning Shengdai said they were still 'near Huidong.' The reporter then found the property management office of Huidong International. After checking the property fee payment records, the staff confirmed to the reporter that the entire floor corresponding to E3102 was indeed occupied by the biotechnology company, not Nanning Shengdai. At the same time, the property management staff said they had never heard of Nanning Shengdai. 'Companies operating in Huidong International must pay property fees regularly, and we have impressions of those who come to pay,' said the property management staff. Is Nanning Shengdai still in operation now? The reporter later interviewed the aforementioned staff member of Nanning Shengdai again, who said that Nanning Shengdai was 'preparing to cease operations.' So, during the cooperation period between Nanning Shengdai and Heizhima, why did Heizhima keep silent about the true identity of Gu Yuming, the legal representative and shareholder of Nanning Shengdai at the time, and classify Nanning Shengdai as a 'non-related party'? The Daily Economic News reporter interviewed Heizhima on related issues, but received no reply by the time of publication. Shenzhen Tongxing Tonglu: The Secret Behind the True Identity Shenzhen Tongxing Tonglu Advertising Co., Ltd. (hereinafter referred to as Tongxing Tonglu) has been a stable advertising agency for Heizhima since 2014. Tongxing Tonglu was established in August 2014. By the end of that year, Heizhima had a prepayment balance of 41 million yuan to it, and since then, Tongxing Tonglu has consistently ranked first in Heizhima's 'Top Five Prepayments at Year-End Balance' list. The Daily Economic News reporter checked Tongxing Tonglu's official website and saw that since its establishment, although Tongxing Tonglu has also served other clients, only Heizhima has been its sole stable client. Heizhima's title sponsorship of Zhejiang TV's 'Journey to the West Adventures' in 2015 was executed through Tongxing Tonglu. In addition, Tongxing Tonglu also helped Heizhima with services such as sponsoring 'Reduce My Life' to promote the 'Heihei' series products, and sponsoring 'Twenty-Four Hours' and 'Ace vs Ace.' In 2014 alone, the little-known Tongxing Tonglu gained Heizhima's favor upon its establishment, received substantial funds, and subsequently executed the title sponsorship of 'Journey to the West Adventures,' which involved hundreds of millions of yuan in capital costs for the listed company. The current legal representative and controlling shareholder of Tongxing Tonglu is Li He, and the general manager is Yang Guo. The Daily Economic News reporter checked the National Enterprise Credit Information Publicity System records and found that when Tongxing Tonglu was established in August 2014, Yang Guo's capital contribution ratio was 42%. Subsequently, his shareholding underwent several changes and was finally fully transferred to Li He in May 2016. According to information disclosed by Qichacha, Yang Guo currently serves as the general manager of Tongxing Tonglu and also as the legal representative of Shenzhen Juli Tongxing Trading Co., Ltd. (hereinafter referred to as Juli Tongxing). The Daily Economic News reporter visited the registered address of Tongxing Tonglu: Room 2101, Building A, Tian'an Digital Times Building, No. 6 Tairan 4th Road, Shatou Street, Futian District, Shenzhen, and found that the address also had signs for two companies: one was 'Tongxing Tonglu Media,' and the other was Juli Tongxing, whose legal representative is Yang Guo, the general manager of Tongxing Tonglu. What is the real relationship between Juli Tongxing and Tongxing Tonglu? Tongxing Tonglu and Juli Tongxing share the same office. The reporter checked Juli Tongxing's industrial and commercial information and found that it was established in August 2017, with the same registered address as Tongxing Tonglu. Its senior executives are only two: Yang Guo (executive director) and Zhao Xiaoguang (supervisor). The two companies are in the same room; what is their relationship? Are they one operating entity using two different registered names? This is currently unknown. Subsequently, the reporter contacted internal personnel of Tongxing Tonglu under the pretext of discussing advertising cooperation, and they admitted that 'Yang Guo and Zhao Xiaoguang are both our (Tongxing Tonglu's) colleagues.' After further investigation, the true identity of Zhao Xiaoguang gradually emerged: multiple pieces of information pointed to Zhao Xiaoguang's close relationship with Heizhima. According to information disclosed by Qichacha, Zhao Xiaoguang is currently a shareholder (30% stake) and supervisor of Guangxi Rongxian Tengda Trading Co., Ltd. (hereinafter referred to as Rongxian Tengda), and also a supervisor of Nanchang Dexu Trading Co., Ltd. (hereinafter referred to as Dexu Trading). Coincidentally, the registered address of Rongxian Tengda is No. 299 Chengxi Road, Rongzhou Town, Rongxian, which is actually the registered address of Heizhima's parent company, Guangxi Heiwulei Food Group Co., Ltd. The reporter also found that many companies registered at this address are wholly-owned subsidiaries or sub-subsidiaries of Heizhima. Heizhima's 2016 annual report disclosed that the listed company and Rongxian Tengda jointly invested in Huagai Industrial Investment (Shenzhen) Enterprise (Limited Partnership). It is worth noting that Zhao Xiaoguang's partner, Liang Zhujian, the legal representative and major shareholder of Rongxian Tengda, also has connections with Heizhima: Liang Zhujian once served as a senior executive of Guangxi Rongxian Longrun Commercial Operation Management Co., Ltd. (cancelled), which, after equity penetration, is controlled by an enterprise under the same actual controller as Heizhima. As for Dexu Trading, where Zhao Xiaoguang serves as supervisor, another company at its registered address is Jiangxi Xiaohei Xiaomi Food Co., Ltd., a wholly-owned subsidiary of Heizhima. The information linking Zhao Xiaoguang to Heizhima goes far beyond the above. The National Enterprise Credit Information Publicity System shows that from July 2014 to June 2017, Zhao Xiaoguang was the sole investor and senior executive of Nanning Chuangwei Trading Co., Ltd. (hereinafter referred to as Chuangwei Trading). Currently, the legal representative and sole shareholder of Chuangwei Trading is Zhang Jin, who serves as 'manager' at Guangxi Rongxian Yanhai Real Estate Development Co., Ltd., where Li Hanchao, the actual controller of Heizhima, serves as legal representative. The reporter found a mobile phone number in Tianyancha's disclosure of Chuangwei Trading's industrial and commercial data. After searching, it was found that the WeChat name corresponding to this number was 'Xiaoguang,' and the Alipay verification name was 'Zhao Xiaoguang,' with the corresponding address being Shenzhen. The reporter called the number under the pretext of seeking advertising cooperation, and the person on the other end said he was Zhao Xiaoguang, working at 'Shenzhen Tongxing Tonglu Advertising Company.' At the same time, the email and phone number in the registration information of Chuangwei Trading are the same as those of Nanning Rongzhou Cultural Communication Co., Ltd. (hereinafter referred to as Nanning Rongzhou). According to Heizhima's 2018 annual report, Nanning Rongzhou is an 'enterprise controlled by the same actual controller' as Heizhima. 'Never Be Too Poor to Afford Advertising' In 2018, Heizhima's net profit dropped significantly year-on-year. Although annual operating revenue was 3.964 billion yuan, net profit attributable to shareholders was only 59.913 million yuan, a year-on-year decrease of 46.06%. In its annual report, Heizhima stated that the significant decline in net profit was due to the impact of the tax evasion incident involving Fan Bingbing, the spokesperson for the Heihei light-fat series, which led to lower-than-expected sales of new products, as well as trade frictions affecting the company's export business. Although Heizhima believed that the decline in net profit was caused by one-off events, it could not hide the fact that the listed company's liquidity risk increased in 2018. In 2018, Heizhima announced that it would permanently supplement working capital with 151 million yuan of surplus raised funds. In early 2019, the company applied for a working capital loan of no more than 200 million yuan from banks, and also applied for large credit lines from banks multiple times. In addition, the 2018 annual report disclosed that the buildings, land use rights, accounts receivable, etc., of several subsidiaries of Heizhima were restricted because they were used as collateral for bank loans. Against this backdrop, at the end of 2018, Heizhima's prepayment balance to Tongxing Tonglu reached 163 million yuan (with aging within 1 year, 1-2 years, and 2-3 years), ranking first in prepayment balances that year. Similarly, in 2016, when net profit fell sharply, Tongxing Tonglu still ranked first with a prepayment balance of 94.8205 million yuan (within 1 year), and Jiangxi Mailuo Cultural Communication Co., Ltd. (hereinafter referred to as Mailuo Culture) ranked second with a prepayment balance of 38 million yuan (within 1 year). At the end of 2014, Heizhima's prepayment balances to Nanning Shengdai and Tongxing Tonglu totaled 83 million yuan (all within 1 year). At the end of 2015, the total prepayment balances to Tongxing Tonglu and Nanning Shengdai were 86.0994 million yuan (all within 1 year). At the end of 2017, the prepayment balance to Tongxing Tonglu was 112 million yuan (within 1 year and 1-2 years). In addition to the generous cooperation prepayments, Heizhima's 'deep love' for the three advertising partners (Nanning Shengdai, Tongxing Tonglu, and Mailuo Culture) is also reflected in the fact that all three advertising partners received huge advertising orders from Heizhima shortly after their establishment. The Daily Economic News reporter noted that at the end of 2016, Heizhima's prepayment balance to Mailuo Culture was 38 million yuan. Mailuo Culture was established in December 2015 and has now been cancelled. That is, as soon as Mailuo Culture was established, Heizhima prepaid large amounts of funds to it. The major shareholder and legal representative of Mailuo Culture is named Liu Ying. The reporter could not find information about Liu Ying through public sources. However, the reporter noticed that Shenzhen Quanjiafu Children's Amusement Park Co., Ltd., where Yang Guo, the general manager of Tongxing Tonglu, serves as legal representative and major shareholder, has another shareholder also named 'Liu Ying,' but the reporter cannot confirm whether the two 'Liu Yings' are the same person. Regarding the questions raised in the article—the true identities of Gu Yuming and Zhao Xiaoguang, and the real relationship between the three advertising suppliers and Heizhima—the reporter first interviewed the listed company's securities department by email on June 20, but received no reply. On July 10, the reporter called the securities department again to inquire about the progress of the reply. A relevant staff member confirmed that the company had received the interview email, saying, 'The outline has been given to the board secretary, but the board secretary has not replied yet,' the staff member said. Heavy investment in advertising partners may not ultimately satisfy the listed company. For example, when net profit fell off a cliff in 2016, Heizhima attributed one of the main reasons to the title sponsorship of a reality show on Zhejiang TV. In its 2016 performance forecast, Heizhima stated that in the fourth quarter of 2015, the company cooperated with Zhejiang TV to sponsor the 'Journey to the West Adventures' program, and simultaneously customized more than 200 million yuan of commemorative series products for the show, which were shipped to the market from the end of 2015 to the first quarter of 2016. However, due to the ratings of 'Journey to the West Adventures' not meeting expectations, the sales of the specially customized commemorative products were poor, and by the end of September 2016, there was still a large inventory in the market. At that time, it was estimated that the failure of the series promotion plan reduced Heizhima's net profit by about 100 million yuan that year. In 2018, when net profit declined significantly again, Heizhima said it was because the sales of its key promoted 'Heihei' light-fat beverage fell far short of its operating targets. This time, Heizhima attributed one of the reasons for poor sales to spokesperson Fan Bingbing, who was involved in the 'tax evasion' incident. The listed company stated, 'During the reporting period, the company's key promoted beverage products such as Heihei light-fat drinks were significantly adversely affected by the tax-related incident of the product spokesperson. The company's product image was subsequently damaged. The company had no choice but to stop the endorsement promotion proposal and adjust its sales strategy and business plan, resulting in the series of products far failing to achieve annual operating targets, thus incurring significant losses.' (Guo Rongcun, a reporter from NBD, also contributed to this article.) Source: Daily Economic News (ID: nbdnews)