---
title: "Still Selling in January! A Roundup of FMCG Companies That Sold Off Assets on the Same Day"
description: "In January 2017, several major FMCG companies in China made headlines by selling off assets. Tibet Water Resources sold nearly 30% of its shares, changing its controlling shareholder, while Black牛 Food divested its food business for 513 million yuan, and COFCO sold Wugu Daochang, a struggling instant noodle brand, as part of its ongoing restructuring."
author: "New Distribution"
publisher: "New Distribution"
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published: "2017-01-14"
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# Still Selling in January! A Roundup of FMCG Companies That Sold Off Assets on the Same Day

> In January 2017, several major FMCG companies in China made headlines by selling off assets. Tibet Water Resources sold nearly 30% of its shares, changing its controlling shareholder, while Black牛 Food divested its food business for 513 million yuan, and COFCO sold Wugu Daochang, a struggling instant noodle brand, as part of its ongoing restructuring.

**5100 Glacier Mineral Water Changes Hands**
> **1. Nearly 30% of Shares Sold in Two Days, Controlling Shareholder Changes**
On January 11, 2017, Tibet Water Resources announced on the Hong Kong Stock Exchange that its controlling shareholder, Tibet Water Resources Co., Ltd., had signed an agreement with Horgos Tianshan No.1 Industrial Investment Fund (Limited Partnership) to sell 462,400,740 shares at HK$3.50 per share, representing 18% of the total issued share capital, for a total of nearly HK$1.62 billion.
Previously, "Tibet 5100" was known to the public for providing free water on high-speed trains. The last major news was in July 2015, when 5100 products were no longer distributed free to passengers on bullet trains, with stations and trains providing drinking water instead.
In fact, on January 10, Tibet Water Resources had just disclosed another transaction: the parent company of 5100 Tibet Glacier Mineral Water disclosed that it had signed agreements with three independent investors to sell 46,888,300 shares, 90 million shares, and 120 million shares, representing 1.83%, 3.50%, and 4.67% of the total issued share capital, respectively.
This means that after all the above transactions are completed, Horgos Tianshan No.1, holding 18% of Tibet Water Resources' shares, will become the company's single largest shareholder.
> **2. Launching New Products**
In 2016, Tibet Water Resources launched "Gesang Spring," a mid-priced bottled water product, to "further enhance the product line and target a larger consumer base."
To further develop the retail market for Gesang Spring, the company also partnered with strategic partners such as CNPC Group and "Zhongshang Huimin."
In the first half of 2016, the company also reached a new cooperation agreement with China Railway Express, which would also distribute Gesang Spring products. This cooperation marked the beginning of a new round of cooperation between the company and China Railway Express. Previously, with the expiration of the procurement contract between Tibet Water Resources and China Railway Express at the end of June 2015, the business of giving away mineral water on bullet trains had come to a temporary halt.
Additionally, in the first half of 2016, Tibet Water Resources signed cooperation agreements with strategic partners such as Country Garden and Hainan Airlines.
According to reports, in the second half of 2016, the company would continue to maintain close cooperation with distributors, invest more resources in expanding third-party retail networks across the country, including supermarkets, hotels, high-end restaurants, nightclubs and bars, as well as golf clubs, private clubs, cinemas, airport specialty stores, and tourist attractions. It also intended to gradually expand overseas markets by taking advantage of the opportunity to sell the high-end version of 5100 Glacier Water to the Hong Kong market.
Tibet also signaled its intention to continue developing mineral water. Recently, Jiang Jie, member of the Standing Committee of the Tibet Autonomous Region Party Committee, executive vice chairman of the autonomous region, and head of the leading group for the development of the natural drinking water industry, pointed out at a meeting that the Party Committee and government of the autonomous region are seriously implementing General Secretary Xi Jinping's instruction that "Tibet should accelerate the development of industries with special advantages" and the deployment of the Ninth Party Congress to build a "national important supply base for natural drinking water," making every effort to create the "Tibet Good Water" brand and accelerate the development of the natural drinking water industry.
> **3. Who Is the New Major Shareholder?**
It is reported that Horgos Tianshan No.1 is managed by Xinjiang Tianshan Industrial Investment Fund Management Co., Ltd. as the executive partner; it is a special industrial investment fund focused on cross-border mergers and acquisitions, jointly funded by Xinjiang Financial Investment Co., Ltd., Shenwan Hongyuan Group Co., Ltd., and other limited partners.
According to a source from Xinjiang Tianshan Industrial Investment Fund Management Co., Ltd., this is a strategically significant investment project by the Tianshan Industrial Investment Fund to respond to the national Western Development Strategy and support the economic development of Tibet and Xinjiang. The source said that Tianshan Investment Fund is handling the subsequent government approval procedures in accordance with laws and regulations. After completing all transaction procedures, as the major shareholder of the listed company, it will leverage its advantages as a state-owned mixed-ownership industrial investment fund, fully allocate various resources, support the existing management team of the listed company, deeply explore the unique glacier mineral water resources in Tibet, expand the market share of ethnic high-end mineral water products, and work with all parties to enhance the competitiveness of ethnic brands in Tibet, making due contributions to the economic development of the country and border regions.

**Black牛 Divests Food and Beverage Business**
> **1. Finally Saying Goodbye: Black牛 Food Sells Food Assets for 513 Million Yuan**
After several attempts in the capital market, Black牛 Food, a food manufacturer once known across the country, finally gave up its food business. For 513 million yuan, Black牛 sold its former core business—food assets—completely severing ties with the word "food."
On January 11, 2017, Black牛 Food announced that all food business assets had been transferred, and the acquirer, Shenzhen Black牛 Capital Management Co., Ltd. (hereinafter referred to as Black牛 Capital), had paid 70% of the transaction consideration, with the remaining 30% to be paid within 5 working days after the transfer.
According to the asset sale plan disclosed by Black牛 Food in July 2016, it sold 100% equity of Shantou Black牛, 100% equity of Jieyang Black牛, 100% equity of Anhui Black牛, 100% equity of Guangzhou Black牛, and 100% equity of Black牛 Marketing to Black牛 Capital for a consideration of 513 million yuan.
> **2. Food and Beverage Industry Hard to Survive; Will It Transform into IT Services?**
The Shenzhen Stock Exchange had issued an inquiry in July 2016, questioning Black牛 Food's ability to continue operations after selling assets. Black牛 Food replied that on June 1, 2016, it had established Yungu (Gu'an) Technology Co., Ltd. and Bazhou Yungu Electronic Technology Co., Ltd. to carry out software and information technology services.
The business transformation is closely related to the new major shareholder. Industrial and commercial data shows that Black牛 Food, originally from Shantou, Guangdong, registered Yungu (Gu'an) Technology Co., Ltd. and Bazhou Yungu Electronic Technology Co., Ltd. in Langfang, Hebei. Langfang, Hebei, is the "base" of China Fortune Land Development (CFLD).
In September 2016, Black牛 Food completed a 18 billion yuan private placement to develop the OLED panel industry, with two new production lines to be located in the industrial park built by CFLD.
Black牛 Food stated that after the asset sale, divesting the food and beverage business aligns with the listed company's strategic direction of optimizing its business structure and focusing on developing software and information technology services, which is conducive to improving the asset quality and profitability of the listed company.
As for personnel arrangements, Black牛 Food responded to Caixin reporters that on December 8, 2015, Black牛 Food planned to transfer all its assets and related debts, claims, and labor to a newly established wholly-owned subsidiary, "Shantou Black牛 Industrial Co., Ltd." Therefore, after the sale, the original food business personnel were also divested from the listed company.
In fact, CFLD was active in the capital market in 2016. In addition to acquiring Black牛 Food, Lhasa Zhihe Technology Development Co., Ltd. and Lhasa Zhihe Enterprise Management Co., Ltd., which are under the same parent as Tibet Zhihe, acquired Yulong Co., Ltd. (601028.SH) and ST Hongsheng (600817.SH) in a similar manner. The market predicts that these two companies may adopt the same approach as Black牛 Food to divest assets and become financing channels for CFLD.
> **3. Why Can't "Black牛" Be "Bullish" Anymore?**
Black牛 Food was established in 1998. Its main business was the research, development, production, and sale of soy and grain nutritional drinks. Main products included soy milk powder, soy milk powder, sesame paste, walnut powder, and other solid nutritional instant drinks, as well as walnut milk, peanut milk, and other lactic acid bacteria drinks.
However, in recent years, Black牛 Food's food business performance declined steadily. The company attempted transformation but failed.
In 2014, Black牛 made a high-profile entry into the cocktail industry, but a year later, it sold all its pre-mixed wine production lines. In July 2015, Black牛 Food announced plans to acquire assets in the big health industry, but terminated the acquisition a month later. In September of the same year, Black牛 suspended trading to plan the acquisition of Xinjiang Yazhong Logistics Business Network Co., Ltd., but the acquisition plan failed again.
According to annual report data, in 2015, Black牛 Food lost 642 million yuan, a year-on-year decline of 5324.32%. Revenue from its main business almost all declined, with liquid milk revenue down 21.13%, and soy milk powder, oatmeal, and walnut powder revenue down more than 30%.
The sudden halt of Black牛 Food is undoubtedly shocking. After all, in many people's memories, Black牛 was once a hot soy milk brand in China. But due to its inability to adapt to market changes and multiple failed transformations, despite its lofty status, Black牛 has fallen to where it is today. While lamenting the fierce competition in the FMCG industry, we must also reflect that in times of major market changes, even small transformations require caution and more caution.

**COFCO Completely Sells Wugu Daochang**
> **1. Wugu Daochang Sold for the Second Time**
After the new chairman Zhao Shuanglian took office, the central enterprise giant COFCO Group is accelerating the divestiture of loss-making assets.
In 2006, Wugu Daochang's sales exceeded 1 billion yuan, and at its peak, annual sales approached 2 billion yuan. However, due to factors such as a broken capital chain, Wugu Daochang went bankrupt and restructured in 2008, and was subsequently taken over by COFCO for 109 million yuan. This is the second time Wugu Daochang has been sold.
> **2. The Rise and Fall of Wugu Daochang**
Wugu Daochang was once a well-known brand nationwide, with a monthly output value of up to 60 million yuan. From its investment and establishment in 2004 to becoming a household name in 2006, and then being acquired by COFCO Group in 2009, it has been a topic of discussion. Now, more than seven years later, Wugu Daochang is facing another turning point in its fate.
The Wugu noodle series uses non-fried "hot air drying" technology, retaining the nutrition of five grains, and emphasizes health elements such as 0 added preservatives and 0 added artificial colors. At its peak, annual sales reached about 2 billion yuan. However, after 2007, Wugu Daochang began to incur losses and was unable to escape its difficulties. In 2009, with no way to continue, Wugu Daochang was officially "sold" to COFCO for 109 million yuan. But even with COFCO as a solid backing, Wugu Daochang failed to benefit from the shade of a big tree and continued to suffer losses.
According to its 2015 annual report, the company's revenue was approximately 126 million yuan, operating profit was approximately -151 million yuan, and net profit was approximately -193 million yuan. In 2016, as of September, the company's operating profit was -51.935 billion yuan, and net profit was -50.406 billion yuan. Under such circumstances, it is no wonder that COFCO sold it.
> **3. Why Did Wugu Daochang Continue to Lose Money?**
In 2005, with overwhelming advertising, the concept of non-fried instant noodles from Wugu Daochang swept the nation. After achieving success, Wugu Daochang embarked on a path of rapid expansion. To increase production capacity, bases in Jilin, Jiangxi, Sichuan, Guangdong, and other places were completed and put into operation. Wugu Daochang also invested 1.8 billion yuan to expand 38 production lines nationwide.
The adverse effects of rapid expansion soon became apparent. The concentrated use of various expenses such as advertising costs, raw material costs, and production base construction costs left Wugu Daochang in a financial predicament in 2007. As sales expanded, various costs rose, and problems in management, sales, and marketing frequently occurred, making Wugu Daochang's capital chain increasingly tight.
Cash-strapped Wugu Daochang began to occupy upstream and downstream funds, failing to pay suppliers on time and defaulting on advertising fees. The shortage of funds in turn affected supply... Even in key markets such as Beijing and Shanghai, stockouts occurred.
If the shortage of capital chain was the direct cause of Wugu Daochang's losses, the fundamental reason lies in the product itself. Although it had a strong selling point in health concepts, instant noodles are not like cooking oil and rice, which are necessities. Consumers do not particularly value fried versus non-fried, especially since the instant noodle user base is mainly young people, who prioritize taste over health. Non-fried instant noodles do not soften easily in hot water, and the taste is not as delicious as fried ones. Poor taste has always been a point of criticism for Wugu Daochang.
Moreover, compared to other instant noodles, non-fried instant noodles have a complicated production process and higher costs. Currently, instant noodle users are mainly low- and mid-end consumers. Not to mention in the early years, even now, high-end instant noodles from Master Kong and Uni-President still sell poorly. With high pricing and no prominent core selling point, as consumers' novelty faded, sales of Wugu Daochang began to decline gradually.
> **4. COFCO Continues to Slim Down**
In addition to Wugu Daochang, COFCO also published two transfer pre-disclosure notices on the Beijing Equity Exchange almost simultaneously, namely 100% equity of Rongcheng COFCO Peanut Food Co., Ltd. and a claim of 31,936,564.79 yuan, and 100% equity of Rizhao COFCO Dongsheng Food Co., Ltd. and a claim of 10,998,459.37 yuan. Both companies are also loss-making.
COFCO's slimming actions are consistent with the SASAC's repeated urging for central enterprises to "slim down," and are also related to COFCO's recent strategic shift. In January 2016, COFCO Chairman Ning Gaoning was transferred to Sinochem Group, and Zhao Shuanglian, former chairman of China Grain Reserves Corporation, became COFCO's chairman, initiating a slimming campaign. In July 2016, COFCO announced that it would restructure, integrate, and eliminate 100 enterprises within three years, reducing legal entities by 20%.
In August last year, China Foods, a subsidiary of COFCO Group, announced that it would list for sale its equity in 10 Coca-Cola bottling plants in China. At the same time, China Foods transferred 55% equity of COFCO Jun Ding Winery Co., Ltd. and Shandong COFCO Jun Ding Wine Co., Ltd. at a minimum auction price of 1 yuan each on the Beijing Equity Exchange on April 15. In addition, COFCO sold Ginde chocolate to Fujian-based Good Neighbor Co., Ltd.

In the consumer winter, there are many abandoned children. It must be admitted that the "abandoned pieces" in the FMCG industry are increasing...
Almost simultaneously, the heavyweight players in China's FMCG market on the frustrated list finally decided to stop the bleeding. No matter how much effort was spent to acquire these brands, or how much patience was consumed later from injecting huge capital to replacing front-line leaders, when the overall market enters a cold winter, the parent group is already struggling to maintain market share. Since they cannot be supported, it is better to sell them off!
The economic situation is unpredictable and sluggish, consumer demand changes rapidly. 2016 was a "turbulent year" for the FMCG industry, with pessimistic tones often heard. In 2017, what major changes will the FMCG industry see? Let's wait and see!

**This article is compiled and published by New Distribution**
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