Crossing the red line: Weibo Corporation's growth dilemma

Recently, Weiwei Co., Ltd. issued an announcement stating that it received two regulatory documents from the Jiangsu Securities Regulatory Bureau and the Shanghai Stock Exchange. Both cited improper revenue recognition methods for certain grain and oil trading business income from 2022 to 2024, resulting in inaccurate disclosures of revenue and costs in its quarterly regular reports for three consecutive years. The Shanghai Stock Exchange issued a regulatory warning to Weiwei Co., Ltd. and the company’s three senior executives. Analysts said that this information disclosure violation reflects that Weiwei Co., Ltd.’s financial internal controls have deviated in assessing the substance of its business; with external competitive pressures and internal structural issues overlapping, Weiwei Co., Ltd. has fallen into a growth predicament.

Information disclosure violations

On April 3, 2026, the Jiangsu Securities Regulatory Bureau’s《Administrative Regulatory Measures Decision Letter》 (hereinafter referred to as the《Decision Letter》) issued to Weiwei Co., Ltd. showed that, from 2022 to 2024, for certain grain and oil trading business revenue, Weiwei Co., Ltd. improperly applied the gross-sum method and the net-sum method, which did not comply with Article 34 of the《Enterprise Accounting Standards No. 14—Revenue》. This led to inaccurate disclosure of operating revenue and operating costs in the company’s Q1, H1, and Q3 reports for 2022, 2023, and 2024.

After that, Weiwei Co., Ltd. issued an announcement titled《Announcement on Correction of Prior Accounting Errors》, stating that it correspondingly reduced operating revenue and operating costs in Q1 2022 by approximately RMB117 million, increased operating revenue and operating costs in H1 2022 by approximately RMB31.3605 million, and reduced operating revenue and operating costs in Q3 2022 by approximately RMB105.6 million; reduced operating revenue and operating costs in Q1 2023 by approximately RMB129 million, reduced operating revenue and operating costs in H1 2023 by approximately RMB247 million, and reduced operating revenue and operating costs in Q3 2023 by approximately RMB448 million; reduced operating revenue and operating costs in Q1 2024 by approximately RMB126 million, reduced operating revenue and operating costs in H1 2024 by approximately RMB71.9116 million, and increased operating revenue and operating costs in Q3 2024 by approximately RMB33.7055 million.

Pursuant to Article 34 of the《Enterprise Accounting Standards No. 14—Revenue》issued by the Ministry of Finance of the People’s Republic of China, “An enterprise shall, based on whether it has control over the goods before transferring them to the customer, determine whether it acts as a principal or an agent in the transaction. If the enterprise can control the goods before transferring them to the customer, it is a principal and shall recognize revenue based on the total consideration received or receivable. Otherwise, the enterprise is an agent and shall recognize revenue based on the amount of the commission or fee that it expects to be entitled to receive. That amount shall be determined as the net amount after deducting the consideration payable to other relevant parties from the total consideration received or receivable, or determined based on the predetermined commission amount or ratio, etc.”

The《Decision Letter》 shows that the above conduct of Weiwei Co., Ltd. violated Article 1 of Paragraph 1 of Article 3 of the《Administrative Measures for Information Disclosure of Listed Companies》 (China Securities Regulatory Commission Order No. 182, hereinafter referred to as the《Information Disclosure Measures》). The company’s chairman Ren Dong, general manager Zhao HuQing, and financial controller Zhao Changlei failed to perform their duties diligently and responsibly, violating the provisions of Article 4 of the《Information Disclosure Measures》 and bearing primary responsibility for the above violations by the company. At the same time, pursuant to Article 52 of the《Information Disclosure Measures》, the Jiangsu Securities Regulatory Bureau decided to take administrative regulatory measures requiring rectification against Weiwei Co., Ltd.; take administrative regulatory measures to issue warning letters against Ren Dong, Zhao HuQing, and Zhao Changlei; and record these actions in the integrity file for the securities and futures markets.

On the same day, the Shanghai Stock Exchange published a《Decision on Issuing Regulatory Warnings to Weiwei Food and Beverage Co., Ltd. and Relevant Responsible Parties》. “Periodic reports of listed companies are an important basis for investors’ investment decision-making. Companies shall, in accordance with relevant requirements, adopt reasonable accounting treatment methods for production and operating activities during the reporting period, and ensure that information related to periodic reports is disclosed to be true, accurate, and complete.” The Shanghai Stock Exchange stated.

Weiwei Co., Ltd. said, “This correction of prior accounting errors and retrospective adjustments will have no impact on the company’s financial position and operating results, such as the total amount of assets, total amount of liabilities, net assets, net profit attributable to shareholders of listed companies, and net cash flow from operating activities, etc.”

Regarding the related issues of the information disclosure violations, a reporter from Beijing Business Today sent an interview inquiry letter to Weiwei Co., Ltd. by email, but it was returned and showed that “the email content was refused.”

Renowned strategy positioning expert and founder of Fujian Huace Brand Positioning Consulting Co., Ltd. Zhan Junhao, when speaking with a reporter from Beijing Business Today, said, “The core difference between the gross-sum method and the net-sum method lies in whether an enterprise obtains control of the goods and assumes risks. Weiwei Co., Ltd.’s improper revenue recognition leading to inaccurate disclosure of revenue and costs reflects that its financial internal controls have deviated in assessing the substance of the business, with particularly serious oversights in contract review for grain and oil trading, the execution of revenue recognition standards, and audit supervision.”

Not the first time

This is not the first time Weiwei Co., Ltd. has been issued a warning letter due to information disclosure issues.

On March 25, 2023, the Jiangsu Securities Regulatory Bureau made a decision to take measures requiring rectification against Weiwei Co., Ltd. The reason was: “In July 2022, Weiwei Co., Ltd. jointly invested with Xuzhou Xinsheng Investment Holding Group Co., Ltd. (hereinafter referred to as ‘Xinsheng Group’) and Guolian Tongbao Capital Investment Co., Ltd. (hereinafter referred to as ‘Guolian Investment’) to establish an industrial investment fund, Xuzhou Weiwei Shengtong New Consumption Investment Fund (Limited Partnership). In August 2022, on August 30, the fund completed filing with the China Securities Investment Fund Association, but Weiwei Co., Ltd. failed to disclose this important development when completing the record registration for the fund in accordance with Article 41 of the《Shanghai Stock Exchange Listed Company Self-Regulatory Guidance No. 5—Transactions and Related Party Transactions》 (SSE Letter [2022] No. 6).” The above conduct violated the provisions of Article 3 and Article 25 of the《Administrative Measures for Information Disclosure of Listed Companies》（CSRC Order No. 182）.”

In July 2022, the Shanghai Stock Exchange also issued a decision to issue a regulatory warning to the shareholder of Weiwei Co., Ltd., Weiwei Group Co., Ltd. (hereinafter referred to as “Weiwei Group”). The reason was that after signing the《Share Transfer Agreement》with Xinsheng Group, Weiwei Group failed to fulfill the pre-disclosure obligation for any reduction in holdings 15 trading days in advance as required.

Weiwei Co., Ltd. is a large enterprise group operating across regions and industries, primarily focused on “ecological agriculture, large food supply, and large food products.” Its current controlling shareholder is Xinsheng Group, holding 30.91% of the shares. Its main products include plant protein beverage series such as “Weiwei” brand soy milk powder and liquid soy milk; “Weiwei Liu Chao Song” flour series; “Tianshan Snow” dairy products series; and “Yiqingyuan” tea series. It also has subordinate liquor trading platforms, including the Mingjiu Fang Company, whose main business includes autonomous brands such as “Hanyuan,” and agency brands such as “Shuanggou,” and other well-known liquor brands. For many years, Weiwei soy milk powder has consistently maintained an industry-leading position; its production and sales volumes have ranked first in the industry for many consecutive years, and it has earned the title of China’s “Soy Milk King.”

Song Liang, a senior analyst in the dairy industry, said, “In recent years, companies have faced relatively heavy operating pressure. For some listed companies, in order to maintain revenue growth, they may ‘increase’ revenue or ‘reduce’ costs in financial reporting. For example, accelerating depreciation of fixed assets can make net profit appear larger.”

Growth predicament

After Xinsheng Group became the controlling shareholder in 2021, Weiwei Co., Ltd., as a leading listed company in plant-based beverage products, proposed a strategy of “ecological agriculture, large food supply, and large food products,” attempting to use a ‘dual-engine drive’: while expanding liquid soy milk, it also sought to develop grain acquisition, warehousing, processing, trading, and healthy food production.

According to the official website of Weiwei Co., Ltd., it has cooperated successively with large grain enterprises in China and abroad. In the Huaihai economic region, the main wheat-producing area; in Yunan, the main small peanut-producing area; in Heilongjiang Suining, the main non-GMO soybean-producing area; and in Jiamusi, a high-quality rice-producing area, it established modern grain logistics parks to form a modern comprehensive grain industrial park integrating collection, storage, processing, and trading. In 2019, the Weiwei Grain Logistics Industrial Park located in Xuzhou was approved as a provincial-level grain logistics park in Jiangsu Province.

Regarding Xinsheng Group’s investment, Weiwei Co., Ltd. previously stated that since Xinsheng Group’s entry, it has coordinated its own high-quality resources, leveraged synergy with the company’s business development, and enhanced the company’s core competitiveness. By establishing food and beverage and modern agriculture industrial investment funds in cooperation with Xinsheng Group and Guolian Investment, with Weiwei Co., Ltd.’s principal business, the upstream and downstream of its industrial chain, and its future strategic plans at the core, the company focuses on key investments in areas such as food and beverage, new consumption, and agriculture.

It is noteworthy that in recent years, the performance of four industry giants—Weiwei Co., Ltd., Chengde LuLu, Yangyuan Beverage, and Huanlejia—whose main business is plant-based beverages has all been “not great.” According to financial reports, in 2025, Huanlejia achieved revenue of approximately RMB1.5 billion, down 19.11% year over year; and realized net profit attributable to shareholders of approximately RMB44.17 million, down 70.03% year over year. In the first three quarters of 2025, Chengde LuLu achieved revenue of approximately RMB1.956 billion, down 9.42% year over year; and realized net profit attributable to shareholders of approximately RMB384 million, down 8.47% year over year. In the first three quarters of 2025, Yangyuan Beverage achieved revenue of approximately RMB3.905 billion, down 7.64% year over year; and realized net profit attributable to shareholders of approximately RMB1.119 billion, down 8.95% year over year. Weiwei Co., Ltd. in particular has seen consecutive five-year revenue declines from 2020 to 2024. In the first three quarters of 2025, its revenue was approximately RMB2.388 billion, down 11.2% year over year; and its net profit attributable to shareholders was approximately RMB241 million, down 1.93% year over year.

Song Liang said, “When revenue declines in plant-based beverage companies happen, first, due to the fragmentation of channels, consumers are trending toward personalization and scenarization, and some private brands are developing rapidly. Second, ready-to-drink (made-to-order) products are replacing traditional standardized products. For a traditional manufacturing-oriented enterprise like Weiwei Co., Ltd., there are only two ways to increase revenue—exploring new opportunities—but currently it appears to be very difficult to do so.”

Beijing Business Today reporter Kong Wenxie