Click 'Read Original' for details. On July 6, COFCO Packaging revealed plans for arbitration against JDB, and on the evening of July 8, ORG, known for packaging for Red Bull, suddenly issued a notice urging JDB to fulfill its obligations as per the agreement. After being publicly called out by two major players in succession, what exactly is happening with JDB?

High-profile partnership with COFCO Packaging last October now on the brink of collapse

In an announcement on the evening of the 6th, COFCO Packaging stated that its subsidiary, COFCO Packaging Investment, had filed an arbitration application with the Hong Kong International Arbitration Centre (HKIAC) on the 6th against Wanglaoji Company (note: this refers to the Wanglaoji company under JDB Group registered in Hong Kong, not the Wanglaoji under Guangzhou Pharmaceutical Group), Zhishou Co., Ltd., a shareholder of Qingyuan JDB Herbal, and Qingyuan JDB Herbal itself. The reason for arbitration, according to COFCO Packaging, is that Wanglaoji Company failed to fulfill its commitment to inject the trademark as in-kind capital contribution into Qingyuan JDB Herbal as per the capital increase agreement.

According to the HKIAC's official website, arbitration procedures are flexible, allowing parties to obtain final, binding, and enforceable awards through efficient, confidential, and fair processes. The center notes that arbitration typically takes an average of 16.2 months and costs over $110,000 on average.

This move signifies a sudden shift from the initial 'marriage' to a tense standoff.

Last October, COFCO Packaging announced a 2 billion RMB capital increase in Qingyuan JDB, acquiring a 30.58% stake, officially entering JDB. JDB contributed its core asset: the trademark. According to the capital increase agreement, COFCO Packaging would hold approximately 30.58% of Qingyuan JDB, while Wanglaoji Company under JDB Group (holding the relevant JDB trademarks, injecting them at a valuation of 3 billion RMB) and Zhishou (wholly owning Qingyuan JDB equity, injecting it) would hold 45.87% and 23.55% respectively. Now, Wanglaoji Company (Hong Kong JDB) has failed to inject the trademark into Qingyuan JDB Herbal as per the agreement, leading COFCO to initiate arbitration.

Agreement signed in April, but investment turns into a burden

In its announcement, ORG mentioned that JDB failed to fulfill 'preliminary matters' on time:

As of now, JDB China and Qingyuan JDB have not fulfilled the preliminary matters as agreed in the Letter of Intent. The company will actively take measures to urge the other party to execute as per the terms. This matter may require extensive negotiations, due diligence, and final agreement discussions among many parties, and there is a certain degree of uncertainty.

From the announcement, ORG has the right to convert its debt of 503,265,300 RMB into equity in JDB's proposed listing entity or part of Qingyuan JDB:

According to the Letter of Intent, ORG has the right to convert its claims against JDB China and its affiliates (collectively 'JDB Group') amounting to RMB 503,265,300, plus accrued interest at an annual rate of 6% up to the conversion date, into equity in the restructured proposed listing entity or part of Qingyuan JDB. The company has the right to choose the final investee entity.

This announcement 'accidentally' confirmed ORG's intention to invest in JDB.

Since ORG is itself a shareholder of COFCO Packaging with a 22.93% stake, although it did not specify what 'preliminary matters' JDB failed to fulfill, it is clearly related to COFCO Packaging's earlier investment in JDB.

The announcement was triggered by JDB's failure to honor the conversion agreements signed with COFCO Packaging and ORG. In simple terms, COFCO provided real money, but Hong Kong JDB has not yet provided the JDB trademark valued at 3 billion RMB as planned.

JDB may face changes

JDB's trademark is the core asset of the brand, and the JDB brand and herbal tea concentrate are considered the core assets of JDB Company—these are the two most important aspects COFCO Packaging considered when evaluating JDB's value.

Qingyuan JDB Herbal is mainly engaged in research, development, production, processing, and sales of fruit and vegetable beverages, tea drinks, herbal tea, etc. It is the exclusive supplier of concentrate for 'JDB' and 'JDB' brand beverages within the JDB Group. The concentrate is JDB's 'core technology.' In February, Qingyuan officials visited Shenzhen and Hong Kong to meet with companies. General Manager Qi Zhenkuan called Qingyuan JDB Herbal Plant Technology Co., Ltd. the 'heart' of the entire JDB operation.

It is unclear whether JDB's future plans for the 'heart' have changed. But it is certain that JDB now has more options.

1 Hong Kong JDB invests 3 billion in Changde plant, founder publicly supports

On June 15, the same day JDB President Li Chunlin announced the return of the red-can JDB, Chen Hongdao, founder of JDB's parent company Hongdao Group, who rarely appears publicly, made a public appearance in Hong Kong to support the signing ceremony for the JDB Changde Industrial Park project, a 3 billion RMB investment by Hong Kong JDB Group Co., Ltd.

It is reported that the Changde Industrial Park is JDB's 14th factory in China, with a total investment of 3 billion RMB. The first phase investment is 1 billion RMB, with construction starting within the year, and an international production base for herbal tea and beverages to be completed within three years. Once fully operational, it is expected to achieve an annual output value of 5 billion RMB and annual taxes exceeding 300 million RMB. This is definitely a significant move for JDB.

2 Supreme Court re-hears red-can case, packaging ownership may change

After four months of deliberation, on June 21, the Supreme People's Court formally accepted Guangzhou Pharmaceutical Group's retrial application for the red-can packaging and decoration case, meaning the ownership of the red can is again in question. If the Supreme Court's previous recognition of 'shared use of the red can' was limited to the packaging during the dispute period, JDB's risky relaunch of the red can could face unpredictable outcomes.

Meanwhile, our multi-source investigation reveals that currently only a few distributors are operating the red-can JDB in the market. Most distributors will only officially stock the red-can JDB with their next shipment. This suggests that JDB will not fully distribute until at least July or August. Once the peak sales season passes, it could impact sales of the relaunched red-can JDB.

Undeniably, COFCO's entry, both in terms of capital and brand endorsement, has had a positive impact on JDB. There must be multiple reasons for JDB's actions, possibly feeling the terms previously signed with COFCO were not suitable, or obtaining loans from local banks to supplement its capital chain, but we do not know yet.

As JDB takes center stage in this 'drama,' the direction of the plot is undoubtedly a focus of industry attention and speculation. But undoubtedly, we all hope that JDB, having weathered many storms, can truly board the smooth 'second venture' express train and gallop forward again!

This article is compiled and edited by New Distribution. -END-