After the debt was transferred back to the old company, the new Zhigao, holding high-quality assets, staged a classic escape tactic.

By / Liu Gongchang

On February 12, 2026, the People’s Court of Nanhai District, Foshan, ruled to accept the bankruptcy liquidation case of Guangdong Zhigao Air Conditioner Co., Ltd., marking that this air-conditioner giant—an old-school powerhouse that has been rooted in South China for more than 20 years—has officially stepped into the judicial bankruptcy process.

Let’s look at the scale of its liabilities: the company has self-reported liabilities of RMB 3.2 billion, and there are also over RMB 3 billion in claims that have not been enforced. In addition, there are more than 100 unresolved cases within the province.

As for disposables assets: according to publicly available information, Guangdong Zhigao Air Conditioner Co., Ltd.’s registered capital is RMB 99,614 million. Its current core assets mainly include 3 pieces of real estate in Lishui Town, Nanhai District, Foshan, totaling 82,300 square meters, as well as 690 trademarks and 271 patents. According to the court announcement, these assets will be disposed of by the administrator in accordance with law to repay debts, but their valuation is far from sufficient to cover the liabilities.

The applicant for this bankruptcy liquidation is Shanghai Lixian Enterprise Management Co., Ltd. The court has designated JunHe Law Offices (Shanghai) and Foshan Zhishun Enterprise Liquidation Services Co., Ltd. to serve jointly as the administrators.

It is especially important to note that what is being liquidated in bankruptcy is the old entity, “Guangdong Zhigao Air Conditioner Co., Ltd.,” which mainly bears historical debts. Meanwhile, Zhigao Air Conditioner’s core businesses such as its brand, R&D, manufacturing, and sales were carved out in 2021 into the new entity “Guangdong Zhigao Geow Technology Co., Ltd.” and have continued to operate normally.

Therefore, the original parent company is indeed completely insolvent, but the Zhigao brand has not disappeared; instead, it has achieved a separation of business and debts through judicial restructuring. So why did Zhigao Air Conditioner do this?

Standing out from the price war

When Zhigao Air Conditioner went into production in 1994, the industry was in the midst of a price war.

Facing the price war from Kelon, which was enjoying a strong run of momentum, Li Xinghao’s strategy was simple and brutal—lower than the competitor, even if it meant selling at a loss. To stay alive, he could ride a bicycle for two hours to Guangzhou to resell parts. This survival instinct of “go wherever the money is” allowed him to tear open a crack under the squeeze from the big players. Li Xinghao priced split air conditioners at RMB 2,980 per unit—about 20% cheaper than the mainstream brands at the time—indeed even below cost—rapidly winning user attention and boosting sales through the approach of “selling at a loss to buy buzz.”

In addition to the price war, in terms of sales strategy, it focused on sinking into lower-tier markets: it actively avoided direct confrontation with first- and second-tier cities and big players, targeting third- and fourth-tier cities as well as rural markets, building a “two-kilometer industrial value chain.” To break out of being constrained, Li Xinghao extended upstream and established dozens of supporting factories. A supply chain spanning two kilometers greatly reduced costs, which was the core of his “vertical integration” strategy.

It primarily targeted county- and township-level markets: rural and township markets that big brands looked down on and where rules were also not well established were Zhigao’s land of opportunity. It won a reputation among the most “practical” consumers with an extremely bold promise like “free lifetime replacement of spare parts.” These regions were price-sensitive and had low brand loyalty, so Zhigao’s high value-for-money products quickly won over township dealers and consumers. This business intuition that grew out of the soil made him believe that “marketing is most important—you sell before the product is even fully made.” This straightforward pragmatism was the weapon Zhigao used in its early stages to capture territory.

Binding channel interests: sign long-term, even “lifelong partnership” agreements with core distributors, offering generous profit margins and stable supply, building a solid sales network, and forming a market penetration path of “rural areas surrounding the cities.”

Leveraging policy dividends: in 2009, Zhigao seized the policy window of the national “home appliances going to the countryside” and energy-saving subsidies, launching energy-efficient, durable, low-price air conditioners specifically designed for rural areas, further amplifying its price advantage and driving a surge in sales.

At this time, although Zhigao had low prices, Li Xinghao did not completely sacrifice quality or service. Leveraging the technical foundation accumulated from years of repair experience, when he was running the “Xinglong Refrigeration Repair Center” earlier on, he had already mastered repair technologies for core components such as compressors, and had a deep understanding of air-conditioner structure and costs, helping control manufacturing costs.

In 1996, when the Taiwan-invested partners withdrew funding, Zhigao was on the brink of bankruptcy. With nothing but the personal credibility he had accumulated over many years, Li Xinghao gave suppliers an “IOU” worth RMB 80 million—yet it somehow circulated among suppliers, keeping the company alive. This kind of credit with a “gangster” flavor was his most precious intangible asset as a farmer-entrepreneur.

With this low-price + channel + policy combination, during China’s most golden expansion era in the home appliance industry—when household appliance demand surged due to advancing urbanization—along with the later policy wind of home appliances going to the countryside and energy-saving subsidies, Zhigao truly benefited greatly. It surged forward with great momentum.

Source of image: Zhigao Air Conditioner

In 2004, Zhigao’s annual sales volume surpassed 2.8 million units, placing it among the top five in the industry. Its export network covered more than 200 countries and regions. In 2007, its market share reached No. 4 nationwide, firmly securing its position in the second-tier leadership group. In 2009, Zhigao Holding successfully listed on the Hong Kong Stock Exchange’s Main Board. That year, revenue nearly reached RMB 10 billion, and its export volume ranked second in the industry. Meanwhile, with a 7.6% market share, it ranked No. 4 nationwide, just behind Gree, Midea, and Haier—solidly holding the seats of the “four little dragons of air conditioners.”

In 2010, Zhigao’s sales volume surpassed Haier and rose to the industry’s third position. At that time, Zhigao finally reached its peak.

Don’t buy R&D equipment from outside to cut costs and get forced out

In 2011, Zhigao suffered its first post-listing loss, becoming the only loss-making company among the mainstream air-conditioner brands that year—this also became a key turning point in Zhigao’s decline from prosperity to deterioration.

When companies grow big and the industry shifts from barbaric expansion to refined cultivation, the “ruffian spirit” on Li Xinghao that once helped him succeed began to reveal its limitations. Do whatever seems to make money based on instinct, quickly switch from popsicles and scrap cloth to air conditioners. Then came strategic wavering: while the main business was not yet stable, attention was diverted to finance, media, and real estate, causing the core focus to drift. Ultimately, Zhigao became the only loss-making company in the golden decade.

In early 2012, he handed over management control to Zheng Zuyi, who had a technical background, while he turned and plunged into the capital boom—investing in construction and decoration enterprises, taking stakes in private banks, and setting up media and education initiatives, crossing into multiple sectors everywhere.

Behind Li Xinghao’s “neglecting his duties” was Zhigao’s long-standing underestimation of technical R&D. The air-conditioner industry is inherently technology-intensive: core technologies and quality control are the foundation for survival. Yet Zhigao has consistently prioritized marketing over R&D.

In 2012, Zhigao’s R&D expenses decreased year over year by 6.3% to RMB 77 million. In 2013, although it increased to RMB 85 million, it was still less than 1% of sales revenue. In the same period, Gree and Midea’s R&D investment ratios were both above 3.6%. During the critical period of industry technology upgrades, Zhigao chose a “low-cost volume” route. Its R&D investment remained below 1% for the long term; from 2012 to 2018, the average annual R&D expenses were under RMB 100 million. In the same period, Gree’s R&D investment exceeded RMB 5 billion per year, and Midea’s exceeded RMB 4 billion per year.

Core technologies and compressor dependence on outsourcing, together with severe underinvestment in R&D, directly led to serious product homogenization at Zhigao and a decline in quality control. The failure rate found in sampling inspections was 3 times the industry average.

On the Black Cat Complaint platform, the number of complaints about Zhigao exceeded 1,000. “Not cooling, not heating, and postponing responsibility in after-sales service” were the norm, and there were even multiple severe incidents where the air conditioner self-ignited and caused fires.

In 2012, in Hunan Dong’an, a user’s home caught fire when the indoor unit of a Zhigao air conditioner ignited. Household appliances and furniture were all burned, yet the manufacturer only agreed to compensate with a single new air conditioner. In 2019, another incident was reported by a netizen: Zhigao’s air conditioner self-ignited and caused a house to burn, with losses exceeding RMB 300,000. The collapse of product capability across the board gradually made Zhigao lose consumers’ trust.

Its backward channels left Zhigao even further behind during industry changes. It stuck to offline channels: after 2015, the penetration rate of e-commerce exceeded 40%, yet Zhigao still relied on the traditional inventory-stocking model of distributors; channel turnover efficiency was 35% lower than the industry average.

Meanwhile, while Haier and Midea had already rolled out models of “factory direct supply to retailers,” Zhigao—because channel interests were tightly bound—refused to transform. Its online market share remained below 3% for a long time. By the time it finally reacted and wanted to push online efforts, the market had already been carved up by leading brands and new players like Xiaomi. In addition, offline channels continued to be squeezed by the descending networks of leading brands, leaving Zhigao’s channel system to collapse completely from both sides.

When Gree launched its self-developed variable-frequency compressors, Midea deployed intelligent IoT platforms, and Haier built a fluorine-free low-carbon industrial chain, Zhigao still relied on outsourced core components. Its energy efficiency lagged behind, its noise was high, and its failure rate was more than 20% higher than the industry average.

After the implementation of the “strictest-ever” new energy efficiency standards (GB21455-2019) in 2019, a large number of Zhigao’s third-tier energy-efficiency products were forcibly phased out. This led to inventory backlogs and channel paralysis, and the technology gap directly resulted in the market clearing out.

Don’t let Cheng Long become the scapegoat for losses?

Zhigao fell into a vicious cycle of “bleeding from the main business while suffering losses in the side business.” Gree, Midea, and Haier achieved growth against the trend through a “technology + channels + brand” three-wheel drive. In 2019, their combined share in China’s air-conditioner market exceeded 70%, while Zhigao’s offline share dropped to 0.03%, effectively pushing it to the margins.

Even more, the chaotic family-style management became Zhigao’s “fatal wound.” The “ruffian spirit” helped break through in the early days of entrepreneurship, but once the company grew big, this management model lacking institutional checks and balances became a shovel for burying the company. Family members controlled core positions; professional managers were essentially a formality. The supply chain, finance, and internal controls all fell out of control.

In 2019, Zhang Ping, Zhigao Air Conditioner’s executive president, choked up during a public event while reflecting, saying: “The organizational atmosphere is polluted and filthy; management teams misuse authority with violations that never stop; talent pipelines are broken with successors not ready; and project investment is too rash.” These remarks laid bare the internal management chaos at Zhigao. ①

With R&D “lying flat,” channels collapsing, and management chaos, Zhigao’s performance kept sliding. In 2014, 2015, 2018, and 2019, Zhigao alternated losses; in 2019, it even recorded a massive loss of RMB 1.408 billion. By the first half of 2020, things were even worse: the entire group’s revenue was only RMB 634 million, but losses were RMB 722 million. Cash flow was completely unable to hold. When there were problems in finance, they soon spread to the legal side.

In September 2020, the No. 2 Intermediate People’s Court in Chongqing issued a restriction on consumption order directly—because Zhigao owed around RMB 39.6 million. Not only was the company targeted, but Li Xinghao, as the legal representative, was also listed on the list of persons subject to enforcement-related dishonesty.

The capital markets also didn’t give any further chances.

In March 2022, the Hong Kong Exchange’s上市复核委员会 (Listing Review Committee) directly ruled: cancel Zhigao’s listing status. On April 4, the company was formally delisted—this completely shut the door on capital markets for Zhigao.

Data from 2023 shows Zhigao Air Conditioner’s online market share was only 0.2%, and offline it was less than 0.03%. Its market ranking fell to after 20th place, meaning it completely exited the mainstream market.

In 2023, founder Li Xinghao was controlled by public security authorities on suspicion of embezzling funds, according to reports by multiple media outlets including The Economic Daily. The amount involved was about RMB 400 million. As of now, no public final judgment results have been released.

Did Cheng Long really turn into a magic curse?

When news of Zhigao’s bankruptcy came out, netizens brought up again the “Cheng Long endorsement curse.” At the most prosperous time, Li Xinghao even snatched Cheng Long’s endorsement from Gree and signed a ten-year deal. He also dared to openly challenge Dong Mingzhu, saying, “Gree makes air conditioners too, but it’s not better than Zhigao—it just has better marketing,” and even proclaimed big talk like “reaching a scale of one trillion in ten years, exceeding Gree and Midea.” Even its advertising slogans wanted to ride along—he shouted “Great air conditioners, made by Zhigao,” taking shots directly at Gree with that face-to-face marketing.

Zhigao Air Conditioner did not publicly disclose Cheng Long’s specific endorsement fee. But it can be inferred roughly from other angles. In 2014, Zhigao took over from Gree as Cheng Long’s new endorser. According to sources within Zhigao, when the endorsement fee in that era exceeded Gree’s endorsement fee in that era, the endorsement fee per year might be as high as or even above RMB 15 million. The deal between Cheng Long and Zhigao Air Conditioner was a 10-year long-term contract. Even if the annual fee were RMB 10 million, it would still cost RMB 100 million. ②

From Aidu VCD and Little Overlord to the “Overlord” shampoo brand, many companies Cheng Long endorsed all “cooled off,” and Zhigao was no exception—some even said that once Zhigao took over Cheng Long’s endorsement from Gree, it was destined to decline.

To be honest, Cheng Long really became a “scapegoat”! Gree had also hired Cheng Long before. When Dong Mingzhu’s contract expired, they didn’t renew. It wasn’t some superstition about a magic curse—it was just that they had calculated the bills. Gree spent RMB 60 million on endorsement fees in just four years. Dong Mingzhu said it was better to invest the money into R&D and making products.

In contrast, Zhigao, to challenge Gree, paid even higher prices to sign Cheng Long for ten years. The high endorsement fees squeezed out the R&D budget, trapping it in a fatal loop of “heavy marketing, light products.” ③

What a scheme for a “golden cicada shedding its shell”

According to the latest publicly available information, Zhigao Air Conditioner’s parent company, Guangdong Zhigao Air Conditioner Co., Ltd., has officially initiated bankruptcy liquidation procedures, as there is no longer any actual need for it to operate.

Bankruptcy liquidation has become a foregone conclusion. The court has ruled to accept it: on February 12, 2026, the People’s Court of Nanhai District, Foshan, formally ruled to accept Guangdong Zhigao’s application for bankruptcy liquidation.

Serious insolvency: the company self-reported liabilities of about RMB 3.2 billion; claims not yet enforced are about RMB 3 billion; and it involves more than 100 unresolved cases. Its assets (such as real estate, trademarks, and patents) are far from sufficient to cover the debts.

Completion of separating historical burdens: since 2021, Zhigao has carved out high-quality assets such as its core brand, production lines, overseas channels, and after-sales teams into the new company “Zhigao Geow Technology.” The former parent company only bears debts and no longer operates.

Legal aspects: as an independent legal entity, Guangdong Zhigao still remains in the bankruptcy liquidation process and needs to complete statutory procedures such as creditor claims filing, asset disposal, and debt repayment. For now, it still “exists” in legal form, but has no operational value.

Brand aspects: the “Zhigao” air-conditioner brand has not disappeared; it is continued to be operated by Zhigao Geow Technology. In the first three quarters of 2025 alone, overseas sales grew by more than 50%, mainly targeting Southeast Asia, the Middle East, and Latin America markets.

Guangdong Zhigao Air Conditioner Co., Ltd. (the parent company) no longer has any need to continue operating. Its bankruptcy liquidation is to completely isolate historical debts, allowing the brand to take on new operations via a new entity and move forward lightly. As industry insiders say, this helps “clear out the ‘historical burdens’,” which is actually favorable for the long-term development of the Zhigao brand.

It is worth mentioning that the bankruptcy liquidation this time only applies to the old entity, Guangdong Zhigao Air Conditioner Co., Ltd. Its core business was already reorganized and carved out in 2021, with Guangdong Zhigao Geow Technology Co., Ltd. (hereinafter referred to as “New Zhigao”) as the successor, achieving a complete separation from the old debts.

Source of image: Chief Business Review

In 2025, New Zhigao’s sales grew against the trend by more than 45%, and overseas markets increased year over year by more than 50%, giving the appearance of signs of “rebirth.”

But in today’s air-conditioner market, the Matthew effect is becoming even more pronounced. Gree, Midea, and Haier together firmly hold over 70% of the market share. Even brands in the second tier are already engaged in brutal competition for survival, leaving very little room for Zhigao.

If New Zhigao cannot completely discard the low-price mindset of the past, stay locked in on core technologies, refine product strength, and rebuild its channel system, then even if it sheds the debt burden, it will ultimately still be unable to escape the fate of being eliminated by the market.

[Quote]

① (A generation of air-conditioner giants blew up! Once challenged Gree, and ultimately fell because of its own flower.) Huadu Caijing 2026-03-11)

② (Zhigao Air Conditioner bankruptcy liquidation liabilities exceed RMB 6 billion; Cheng Long endorsement curse sparks renewed discussion. Author: Meng Xiao)

③ (A generation of air-conditioner giants blew up! Once challenged Gree, and ultimately fell. Produced by Huadu Caijing; Observations written by Hua Jian)