A short social-media video — a kitchen scissor handle snapping off while cutting fish — did what financiers and courts had failed to do: thrust Zhang Xiaoquan, a century-old Chinese cutlery brand, back into the spotlight and into public scrutiny over quality, governance and debt. The product in the clip looked like a single-piece metal shear but concealed a plastic core; the apparent “design mislead” and a slow customer-service response crystallised consumers’ anger and reopened questions about whether the brand has been hollowed out by years of aggressive expansion by its controlling shareholder.
The fallout is more than reputational. The controlling shareholder, Fuchun Holdings, has been forced to sell prized assets at steep discounts — a Mercedes‑Maybach was sold on a judicial auction for ¥303,300 after its reserve price was slashed four times — and courts moved last year to accept restructuring petitions for Fuchun, Zhang Xiaoquan Group and dozens of related entities. The corporate filings and court notices show Zhang Xiaoquan Group itself carried about ¥653m in overdue debt principal and was party to guarantee defaults totalling roughly ¥5.17bn, creating an aggregate risk exposure close to ¥6bn. Executions against the group exceeded ¥3.9bn by mid‑2025.
The corporate anatomy of the crisis is familiar to China watchers: a logistics group turned conglomerate bought the heritage maker and then pushed into heavy, illiquid sectors such as real estate, aged care and packaged‑food parks. To finance those bets it cross‑pledged and cross‑guaranteed assets across dozens of related companies, converting Zhang Xiaoquan — once a standalone knife-and-scissor maker headquartered in Guangdong’s Yangjiang cluster — into the group’s “cash cow”. Wealth extracted from the listed entity via unusually high dividends and share pledges helped fund the parent’s expansion but left the listed company exposed when liquidity dried up.
The company’s operational performance has not helped. After a peak in 2019 when revenues hit about ¥480m, net profit attributable to shareholders dropped from roughly ¥78.7m in 2021 to ¥25.0m in 2024. Its business mix is almost monolithic: household hardware accounted for more than 98% of revenue for several years and reached 99.3% in 2024. Other segments are tiny and volatile, leaving the firm vulnerable to a single product line’s downturn.
Management choices compounded the problem. Between 2021 and 2024 Zhang Xiaoquan’s selling expenses jumped from ¥117m to ¥169m — a 44% rise — while R&D spending crept up from ¥23m to ¥28m. By mid‑2025 the company’s R&D intensity was a mere 2.8% against a selling‑expense rate above 18%. The firm also relies heavily on OEM partners; design and production control have weakened, and the combination of low R&D, high marketing and outsourced manufacturing has eroded product quality and innovation capacity. Patent filings underline that shift: eight invention patents versus dozens of appearance designs.
The brand’s short‑term rescue has come from an unexpected quarter. In 2025 a large block of shares was auctioned and bought by an entity linked to Wang Aoyan, founder of the White Rabbit Group — a leading MCN (multi‑channel network) and livestreaming operator — for about ¥358m. White Rabbit’s founder emerged as a major shareholder and injected marketing muscle: the company reported stronger top‑line performance in 2025, with multi‑channel sales reportedly reaching ¥140m during a single shopping festival and consolidated revenue up 14.1% in the first three quarters.
But the cure may be worse than the disease. MCNs excel at traffic and conversion; their incentives favour rapid sales growth and quick monetisation rather than rebuilding manufacturing competence. If Zhang Xiaoquan’s owners lean on live commerce to mask deeper product and governance failings, they risk accelerating brand erosion. Chinese cutlery clusters such as Yangjiang are pushing the industry toward higher margins through technology, design and vertical integration; competitors are increasing R&D and moving up‑market while Zhang Xiaoquan’s high‑end offerings still represent less than 10% of sales above ¥300.
For investors and policymakers the saga raises two interconnected concerns: corporate governance in group‑controlled listed firms and the resilience of China’s venerable consumer brands. Cross‑guarantees and aggressive dividend extraction have become recurring fault lines in China’s post‑boom era, and judicial reorganisation of dozens of related entities signals the state of distress when leverage meets a cyclical downturn. Meanwhile, consumers voting with their wallets can unpick a brand’s intangible capital far faster than accountants can restate balance sheets.
The scissors video is a small mechanical failure with outsized meaning. It signals the point where marketing fiat — vivid livestreams, catchy collaborations and traffic spikes — can no longer paper over the absence of product integrity and supply‑chain control. How Zhang Xiaoquan navigates restructuring, whether new investors prioritise manufacturing and R&D, and how regulators and courts resolve cross‑guarantee exposures will determine whether the company survives as a credible heritage brand or becomes another cautionary tale of brand commodification in the internet age.