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Mark O'Neill

Ownership disputes and board troubles plague Huizhong Tianhang's purchase of well-known brand

Who owns Jianlibao, China's most well-known  soft drink brand and the country's most successful football  team?

And did  its former chairman steal more than 600 million yuan from the firm?

On November 16,  Beijing firm Huizhong Tianhang  Investment  signed a contract to buy 91.1 per cent of Jianlibao and sent staff to take it over. However,  the  government of Guangdong's Sanshui city  - a minority shareholder - sent officials to the plant on December 6  to drive out the Huizhong Tianhang  management.

'What the Sanshui government did was illegal and we are doing all we can to get the factory back,' said a spokeswoman for Huizhong Tianhang at its headquarters in Beijing. 'We are going through legal and other routes. We want to go back and resume production. Our employees were forced out of the factory for no reason. We do not know what is going on there now.'

Jianlibao was China's No1  soft drink maker  from 1988 to 1997 and the 'patriotic' alternative to Coke and Pepsi but  bad management and strategic mistakes piled up debt of  hundreds of millions of yuan.

In January 2002, Zhang Hai, then 28,  became chairman and chief executive until August this year. Last month,  Huizhong Tianhang  bought the firm from Mr Zhang and two  shareholders. The Sanshui government suspects Mr Zhang  misused  company funds.

An official of the plant said it was operating normally.  'Who says  Huizhong Tianhang is the owner?'  Asked who the owner was, he said he was not sure. Officials of the Sanshui government declined comment, referring questions to a  spokesman who was unavailable.

Before Huizhong Tianhang came in,  production had been stopped since August and staff had not been paid for at least two months. 'Jianlibao is a famous brand in China and we want to develop it,' the spokeswoman said.

A private firm with interests in pharmaceuticals, cosmetics, property  and tourism, Huizhong Tianhang bought the company - for a rumoured 200 million yuan - after  selling its Min-Nurse brand of cosmetics to French giant L'Oreal.

During Mr Zhang's tenure sales rose  but  debts climbed  too and the board became increasingly uneasy about Mr Zhang's spending.   In August, the board removed him  as chairman and head of the football club but he remained a director until the Huizhong Tianhang takeover.

It has been reported  that Mr Zhang has been under investigation for misuse of company funds since August, citing figures of almost  600 million yuan. Mr Zhang denies the charges.



Investor calls foul after lock-out at soft drink maker/football team