A bruising internal battle over the Beijing operations of once‑household brand Huiyuan has pushed Guozhong Water (600187.SH) — a wastewater‑treatment and environmental services firm that diversified into beverages — to the threshold of a stock‑market warning and possible delisting. The conflict has not only erased a planned asset injection intended to transform Guozhong’s business, it has also exposed fragilities at the heart of the Pengxin group controlled by Jiang Zhaobai, the entrepreneur once crowned Nantong’s richest man.
Guozhong this year warned that consolidated net losses for 2025 will be RMB 104–130 million on revenues of only RMB 210–252 million. Those figures meet Shanghai Stock Exchange criteria for an imminent *ST (special treatment) designation — the first formal step toward delisting — unless year‑end accounts alter materially. The company’s shortfall is driven not by operational collapse in sewage treatment but by large, non‑operating items: a RMB 39.4 million bad‑debt provision and a key RMB 242 million impairment on its equity stake in Zhújì Wenshenghui, the vehicle through which Guozhong had tried to take a piece of Beijing Huiyuan.
The investment was part of a broader “dress up the balance sheet” strategy Jiang began after taking control of Guozhong in 2016. In late 2022 Guozhong spent RMB 930 million to buy a 36.49% stake in Zhújì Wenshenghui, becoming the platform’s second‑largest shareholder and thereby gaining an indirect holding of roughly 21.9% of Beijing Huiyuan. The idea was simple: acquire the right beverage assets from Huiyuan’s court‑supervised restructuring and inject them into the listed company to pivot away from low‑growth environmental services.
That plan dissolved into acrimony in 2025 after Wensheng Asset — the new controlling party of the restructuring — clashed publicly with Huiyuan’s founder, Zhu Xinli, over funding, control and strategy. Complicating matters, a related party, Shanghai Yongrui, saw its stake in Zhújì Wenshenghui frozen amid a legal dispute with a Guangdong investor body, robbing Guozhong of the operational control it had counted on. In April 2025 Guozhong formally terminated its planned additional share purchases; the stock promptly hit three straight daily limit‑downs.
The dispute has also produced a rare corporate phenomenon in China: two rival entities both claiming the Huiyuan name. In January 2026 Wensheng‑controlled “Beijing Huiyuan” and the Zhu family’s “Huiyuan Group” staged a public standoff over brand ownership and corporate control. Huiyuan Group has sued for alleged fundamental breach and moved to freeze the Zhújì Wenshenghui holding of 60% of Beijing Huiyuan. Some short‑term friction eased after Shanghai Yongrui and the Guangdong investor reached an equity‑for‑debt settlement and began freeing frozen shares, but the core ownership and governance disputes remain unresolved.
The crisis at Guozhong is just one front of a wider squeeze on the Pengxin ecosystem. Pengxin Resources (600490.SH), another Jiang‑linked listed platform, has sued Jiang and his brother for RMB 430 million in cash plus 220 million shares to enforce performance guarantees tied to a high‑profile 2018 acquisition of a South African gold asset via Ningbo Tianhong. Pengxin Resources says Ningbo Tianhong pledged cumulative net profits of RMB 1.944 billion for 2018–24; instead the unit posted a cumulative loss of RMB 364 million, leaving a performance gap of roughly RMB 2.308 billion. At Pengxin Resources’ share price in early February, the 220 million compensatory shares equate to about RMB 1.956 billion, putting the total claim near RMB 2.386 billion.
Even if Pengxin Resources wins in court, reclaiming value is far from certain. The group’s controlling shareholders and related parties have pledged a large portion of their holdings — 62.45% of their shares, representing 19.33% of the company’s total stock — leaving only 191 million unpledged shares, fewer than the 220 million shares sought as compensation. Separately, a prolonged vacancy in the company’s board secretary role and a recent regulatory warning underline deeper corporate‑governance weaknesses.
Jiang’s rise and the architecture of his empire matter to understanding how the current crisis unfolded. Starting in the late 1980s as a real‑estate entrepreneur, Jiang expanded Pengxin through aggressive buyouts and capital‑market deals between 2012 and 2014, turning a regional property player into a diversified conglomerate with listed platforms in agriculture, environmental services and mining. That expansion relied heavily on equity fundraising, large‑scale acquisitions and frequent share pledges — an approach that swelled asset size but left the group exposed when underlying assets underperformed and market sentiment shifted.
The consequences have been severe and public. Pengdu Agribusiness was delisted in 2024 after sustained losses and governance questions, Jiang’s wealth ranking has tumbled since its 2014 peak, and now Guozhong and Pengxin Resources find themselves on opposite sides of legal and financial disputes that threaten shareholder value and the survivability of remaining listed entities. For minority investors, the episode is a stark reminder of the risks of related‑party deals, heavy pledge structures and ill‑executed asset‑injection strategies.
What happens next matters beyond Pengxin’s immediate circle. An *ST tagging or eventual delisting of Guozhong would be another high‑profile example of the limits of using public markets to paper over operational deficiencies. A judgement requiring Jiang to make good on performance guarantees could materially strain his liquidity and force asset disposals, but recovery for creditors and minority holders will be constrained by pledged stock and frozen assets. Regulators and institutional investors will watch closely: the episode underscores both the tightening oversight of related‑party transactions and the long tail of reputational and financial risk when conglomerates rely on opaque intra‑group deals to shore up balance sheets.