"Milk Powder First Stock" Being Acquired: Why Did Beingmate Previously Fall Into Rumors of "Industrial Hemp"?

Produced by: Shanxi Evening News · Kedu Finance

In March, a single announcement wrote the most ironic footnote to Beingmate’s 30-year rise and fall as China’s first listed infant formula company.

In March, a single announcement wrote the most ironic footnote to Beingmate’s 30-year rise and fall as China’s first listed infant formula company. This leading company—once able to stay out of the melamine incident and rise to the top in the industry by leveraging a “safety” label—has now issued a restructuring announcement. After 8.56 billion yuan in restructuring funding takes effect, the actual controller will be changed from founder Xie Hong to Jinhua Municipal State-owned Assets Supervision and Administration Commission, bringing the largest control-change in the company’s listing history.

Image source: Company announcement

From terminal chaos caused by the illegal shifting of sell-by dates for near-expiration infant formula, to patent disputes and compliance failures triggered by cross-industry hype involving industrial hemp, the chain of escalating negative public opinion had long since penetrated—layer by layer—the core bottom line of safety trust in the maternal-and-child category.

With channel partners’ willingness to place orders dropping sharply, end-market sell-through continuing to slow down, and brand premium pricing completely wiped out, the situation ultimately materialized as financial results with growth stalling in the financial statements and hidden risks in the balance sheet. This change in control has never been a sudden capital move; it is the inevitable end after Beingmate has run down years of trust, seen performance decline, and failed to achieve a successful self-rescue.

01

A Chain of Public Sentiment Blasts Through the Brand’s Bottom Line

All off-balance-sheet brand trust collapses ultimately become financial risks on the balance sheet. Even if Beingmate’s 2025 third-quarter results show a rebound on paper, it still couldn’t break this closed loop.

The trust crisis brought by a series of negative incidents has shattered the survival bottom line of the maternal-and-child category and the very foundation of the infant formula industry. At stake is consumers’ absolute trust in the words “safety.”

As of now, on the Black Cat Complaints platform, complaints against Beingmate involve illegal sales of near-expiration infant formula, product quality issues, and more. Some consumers have clearly reported that the infant formula contained worms.

After the incident was exposed, discussions on social platforms about “not daring to give Beingmate to children” continued to ferment, and the reputation within maternal-and-child communities collapsed rapidly. For the infant formula category, the damage from near-expiration controversies is irreversible. When parents choose infant formula for their children, their sensitivity to dates is far higher than for other fast-moving consumer goods. Once a brand is tied to “near-expiration date changes,” it is effectively labeled “not safe.”

Beinmatter, in November 2021 and January 2022 respectively, signed the “Exclusive License (Exclusionary Operation) for Patented Products (and Joint R&D Cooperation Agreement)” and a supplemental agreement with Heilongjiang Fengyou Planting (Seed) Industry Co., Ltd., taking an exclusive license for 20 years to use multiple CBD-related invention patents held by the other party in the field of formula milk for pregnant and nursing mothers and milk-based nutritional products.

By September 2024, although all eight CBD-related invention patents connected to Heilongjiang Fengyou had been approved, they still had not obtained the new resource food license specified in the patent license agreement, meaning the cooperation project could not be implemented at all.

In December 2025, because the cooperation purpose could not be achieved, Beingmate filed a lawsuit with the Hangzhou Intermediate People’s Court in Zhejiang Province, requesting to terminate the relevant cooperation agreements, and to require Heilongjiang Fengyou to return the 50 million yuan patent license deposit already paid, along with the corresponding interest—totaling a claim amount of approximately 56.85 million yuan. In February 2026, Heilongjiang Fengyou filed a counterclaim, arguing that it had fulfilled all contractual obligations, and that Beingmate’s breach caused the project to stall.

Even if the company achieved accounting profits during the reporting period, the impairment risks on the asset side, the rigid pressure on the liability side, and the weakening of cash-flow “blood generation” ability were not fundamentally resolved. The “air” on the asset side had long continued to be exposed under the impact of negative events.

As of the end of September 2025, Beingmate’s total assets were 4.039 billion yuan, basically flat compared with the end of the prior year. Under a seemingly stable scale, multiple impairment risks were hidden. Inventory stood at 396 million yuan, basically level with 408 million yuan at the beginning of the year.

Image source: Company announcement

During the reporting period, the company accrued asset impairment losses of 30.76 million yuan, up 41.68% year over year, mainly from inventory write-down losses and impairment provisions for royalty rights, confirming the potential risks on the inventory side.

Accounts receivable totaled 295 million yuan, slightly down from the beginning of the year, but during the reporting period the company accrued credit impairment losses of 27.45 million yuan, up 165.36% year over year. The core reason was an increase in bad-debt provisions for accounts receivable, and the problem of worsening collection ability among downstream channel partners had not improved. Prepayments surged 192.24% from the beginning of the year, with the increase amount reaching 109 million yuan. The company explained that this was due to an increase in prepaid goods. Against the backdrop of pressure on end-market sell-through, these large prepayments further tied up the company’s cash flow and also magnified the risk of future inventory backlog.

Image source: Company announcement

In addition, the company’s balance of long-term equity investments was 104 million yuan, up 17.77% from the beginning of the year, mainly due to small equity stakes in dairy companies such as Heilongjiang Anjia Dairy and Xi’an Annuo Dairy. The pressure on the liability side remained hanging over the company at all times.

As of the end of September 2025, Beingmate’s total liabilities were 2.26 billion yuan, with an asset-liability ratio of 55.95%, though slightly improved compared with the end of the prior year. Looking at the breakdown, the company’s short-term borrowings were 1.158 billion yuan, down slightly from 1.219 billion yuan at the beginning of the year, but rigid debt-repayment pressure still remained.

Total current liabilities were 2.211 billion yuan, corresponding to total current assets of 2.434 billion yuan. The current ratio was only 1.1, far below the industry safety line of 1.5, meaning the company’s short-term solvency still remained at a relatively weak level. Even more alarming is that its cash-flow “blood generation” ability has been greatly weakened.

In the first three quarters of 2025, the company’s net cash flow from operating activities was 103 million yuan, down sharply by 68.67% from 328 million yuan in the same period of the prior year. The core reasons were reduced sales collections and increased cash-paid expenses. Even if the company was profitable on paper during the reporting period, its core operating cash-flow “blood generation” ability had already clearly slid, and the sustainability of its profitability was in doubt.

Image source: Company announcement

In addition, as of the end of Q3, 12.28% of the shares held by controlling shareholder Zhejiang Xiaobei Damei Holding were pledged at an extremely high pledge ratio of 98.85%, and some of the shares were also under judicial freezing. The controlling shareholder’s debt crisis could at any time be transmitted to the listed company, triggering shareholding turbulence. All the data points to one conclusion: Beingmate itself can no longer completely resolve the controlling shareholder’s debt risks. This is also the core motivation behind the need to introduce state-owned asset restructuring this time.

02

Cross-Industry Transformation Is Ineffective “Trial and Error”

The 2025 third-quarter report shows that in the first three quarters, the company’s net profit attributable to shareholders increased 48.07% year over year. Behind the seemingly impressive performance are the persistent deceleration of the core business, profitability growth inflated with “water,” and the full-line failure of cross-industry transformation. While the fundamentals of revenue continued to slow down and the core business’s market share kept shrinking, against the backdrop of steady growth in the overall industry, Beingmate kept treading water in place. Its market share had long been squeezed nearly to exhaustion by leading players.

In the first three quarters of 2025, Beingmate achieved total revenue of 2.033 billion yuan, down 2.59% year over year. Third-quarter single-quarter revenue was 678 million yuan, up only 1.17% year over year.

For more than a decade since listing, the company has remained highly dependent on the infant formula for infants and young children business. For years, the revenue contribution of this segment has been maintained at over 90%, yet it watched the core business continue to contract without any ability to hedge risks.

The continuing deterioration in the business quality further compressed its survival space. However, Beingmate has never managed to establish itself in the high-end market. As its revenue scale kept shrinking, Beingmate’s accounting profits in the first three quarters of 2025 still appeared impressive but in fact had plenty of “water,” and the main business had long lost its ability to support sustained performance growth.

In the first three quarters of 2025, Beingmate achieved net profit attributable to shareholders of 106 million yuan, up 48.07% year over year. Non-recurring items attributable net profit was 86 million yuan, up 76.23%. By breaking down the profit structure, it becomes clear that this profit growth did not come from an expansion of the main business scale. The core support came from three non-main-business factors: improved gross margin. In the first three quarters, the company’s consolidated gross margin was 45.06%, up 2.17 percentage points from the same period last year. The core reason was a decline in raw material costs, not an improvement in the company’s ability to command product premium pricing.

Second, investment income surged. In the first three quarters, the company generated investment income of 18.31 million yuan, compared with a loss of 9.38 million yuan in the same period last year. It turned losses into profits year over year, with the core driver being gains from equity-method accounting for associates, unrelated to the main business operations.

In addition, financial expenses decreased significantly. In the first three quarters, financial expenses were 11.10 million yuan, down from 24.17 million yuan in the same period last year, a decrease of 54.08%. The core reason was that foreign exchange losses fell—not that the company’s debt structure was optimized.

Image source: Company announcement

A lack of expense-management capability further exacerbated the operating predicament of the main business. In the first three quarters of 2025, while revenue fell 2.59% year over year, selling expenses increased 1.6% year over year to 595 million yuan, and the selling expense ratio rose to 29.27%.

With revenue scale continuing to contract but selling expenses staying high, it means each yuan of revenue has to bear higher marketing costs, and the scale effect has completely failed. At the same time, the company’s R&D investment was seriously insufficient. In the first three quarters, R&D expenses were only 17.36 million yuan, and the R&D expense ratio was 0.85%.

For Beingmate to reach where it is today, for many years it has been trapped in path dependence. It has clung to a single track yet lacked competitiveness. Every cross-industry transformation has been a shallow attempt—a meaningless trial-and-error—without forming any second growth curve.

Over the past decade, Beingmate has remained highly dependent on the single business of infant formula, yet it never built any barriers in product R&D, channel development, or brand marketing.

On the channel side, offline maternal-and-child stores were squeezed by brands such as Feihe and Junlebao. Online, the deployment of e-commerce and live-streaming e-commerce channels was slow. On the brand side, apart from the old slogan accumulated in the early years as the “China’s first listed infant formula company,” there was no new brand awareness. Instead, its remaining brand value was continuously consumed by negative events.

Over the past decade, Beingmate has made countless cross-industry attempts—from industrial hemp to children’s complementary foods and nutritional products, and then to maternal-and-child services, parent-child e-commerce, and childcare services. It almost touched every capital-market hotspot, but none of the businesses truly took off.

From 2024 to 2025, the company laid out the goat-milk formula track multiple times. It successively took minority stakes in Heilongjiang Anjia Dairy, Xi’an Annuo Dairy, and Xinjiang Tianshan Yunyumilk Dairy, with shareholding ratios of only 5%-10% each time, with no controlling rights. After goat-milk formula products such as “Xiao Yang Lanlan” and “Ai Jia Yuanyuan” were launched, they still did not form large-scale sales, and to date the company has failed to gain a foothold in the goat-milk formula track.

03

The Founder Era Ends,

Can the State-Owned Takeover Rewrite Beingmate’s Final Outcome?

This change in control has never been a simple state-owned takeover. It is the last choice for Beingmate’s survival after founder Xie Hong repeatedly returned for self-rescue and failed every time; it is also the inevitable destination for tail-end players after the pattern in China’s infant formula industry solidified.

The restructuring’s core framework is clearly visible in the announcements released by Beingmate and the information disclosed in its 2025 third-quarter report: controlling shareholder Zhejiang Xiaobei Damei Holding and Jinhua Zhenhe signed a “Restructuring Investment Agreement.” With restructuring investment of 856 million yuan, after the restructuring is completed, Jinhua Zhenhe will, through Zhejiang Xiaobei Damei Holding, indirectly hold 12.28% of Beingmate’s equity, becoming the indirect controlling shareholder of the listed company. The company’s actual controller will change from Xie Hong to Jinhua Municipal State-owned Assets Supervision and Administration Commission.

The core of this restructuring is to resolve the debt crisis of controlling shareholder Xiaobei Damei Holding, not to directly inject capital into the listed company. The 856 million yuan restructuring investment will be used entirely to repay the maturing debts of Xiaobei Damei Holding, and to lift share pledges and judicial freezing. It will not directly enter the listed company’s accounts.

In other words, this restructuring can only resolve the shareholding turbulence issue related to the listed company’s controlling shareholder, and avoid the risk of the actual controller being out of control due to an auction of the controlling shareholder’s shares. However, it cannot directly fill the listed company’s operating-level cash flow shortfall, nor can it directly improve the listed company’s operating fundamentals.

The only benefit lies in the state-owned background of Jinhua Municipal State-owned Assets Supervision and Administration Commission, which can bring a certain degree of repair to channel confidence that is on the verge of collapse.

This company, founded by Xie Hong himself, once stood at the industry peak under his leadership, yet ultimately ended up with his ownership being transferred to state-owned assets in his hands.

Beingmate’s highlight moment began with the 2008 melamine incident. At that time, most of China’s leading infant formula brands had detected melamine, and industry trust collapsed completely. Beingmate was one of the few domestic infant formula brands that had not detected melamine. Riding on the “safety” label, it rose against the trend. In 2011, it successfully listed on Shenzhen Stock Exchange, becoming the bona fide “China’s first listed infant formula company.” At its peak, its market value surpassed 300 billion yuan and it ranked among the top three in the domestic infant formula industry.

After 2014, Beingmate’s performance began to decline continuously and fell into a loss quagmire. Xie Hong returned to rescue three times. Each time, he called out reform slogans and rolled out a series of measures such as channel adjustments, product upgrades, and brand reshaping—yet each time ended in failure.

In 2018, on the first return, Xie Hong adjusted channels aggressively and cleared inventory, but it caused chaos in the channel system, worsened the issue of unauthorized reselling, and further drove performance down. In 2021, on the second return, Xie Hong rolled out a high-end strategy and focused on online channels, but he couldn’t keep up with the industry’s pace. High-end products couldn’t be sold, and online channel deployment was slow. After the third return in 2024, Xie Hong attempted to improve performance through category expansion and cost control, but he still couldn’t reverse the trend of revenue decline, and the controlling shareholder’s debt crisis fully broke out.

Xie Hong’s self-rescue has always treated symptoms rather than the root causes. He could address short-term financial losses and channel turbulence, but he could not repair the brand trust that had already collapsed. He could not reverse the fundamental problems of the company’s strategic vacillation and the degradation of its core competitiveness.

It cannot be denied that the state-owned takeover can bring tangible benefits to Beingmate. The credit endorsement from Jinhua Municipal State-owned Assets Supervision and Administration Commission can help restore confidence among channels and suppliers and temporarily stabilize end-market sell-through. But if Beingmate wants to turn things around, it has to face industry barriers and brand dilemmas that are almost impossible to cross.

The pattern of the domestic infant formula industry has long been completely fixed. After a decade of stock-and-inventory competition, industry concentration continues to rise.

As for the nature of the infant formula industry, it has always been about trust. In the maternal-and-child segment, once trust collapses, there is no possibility of rebuilding it. When parents choose milk formula for their children, they will always prioritize brands with stable reputations and without negative issues. No one would risk their child’s health to bet on a brand entangled with negative problems being able to turn things around and reform itself.