Dutch dairy giant buys remaining stake in joint venture with embattled China Huishan
Friesland Campina said it had bought the remaining 50 per cent of China Huishan Dairy Investments (Hong Kong) for around US$2 million
Friesland Campina, the dairy giant behind the popular Dutch Lady brand sold in China, said it had acquired the remaining stake in its joint venture with Huishan, officially ending its partnership with the embattled Chinese dairy company.
The Dutch firm bought a 1.1 per cent stake in China Huishan Dairy Holdings in 2015, when the latter was in its prime. Huishan at that time was one of the biggest taxpayers in the rust belt province of Liaoning, employing more than 40,000 workers.
The acquisition marked the establishment of the Friesland Huishan Dairy joint venture, which oversees the production and marketing of Dutch Lady, which was launched in China in 2016 and sold to central and eastern provinces including Hunan and Sichuan.
Sales of Dutch Lady products were “beyond expectations”, and Friesland Campina’s business in China achieved “double-digit” growth, according to then chief executive officer Roelof Joosten.
But things went sour quickly when the short-seller Muddy Waters raised concerns about Huishan’s “inflated earnings” in a report published in December 2016, in which it said that the company was worth “close to zero”.
Three months later, on March 24, 2017, Huishan’s shares plunged 85 per cent in just 90 minutes, before trading was suspended.
In November Huishan instructed lawyers to prepare for its provisional liquidation after estimating its debt at as much as 10.5 billion yuan (US$1.58 billion) as of March 2017, leaving many of the company’s business partners and lenders vulnerable, including big names such as HSBC and Bank of China.