The sudden resignation of Shede Liquor’s vice-president Wang Yong has lifted the veil on deeper fragilities at the Sichuan-based baijiu maker, exposing a company squeezed by changing market dynamics and complicated governance. Wang’s exit — a senior executive who doubled as a crucial conduit with local governments and distribution channels — has prompted questions about whether Shede can steady itself without that local bridge.
Fosun Group acquired control of Shede via a judicial auction in 2020 and has alternated between installing its own executives and empowering local management to run the business. Despite those changes, Fosun retains clear boardroom dominance, with several directors and senior figures drawn from the Fosun ecosystem. Guo Guangchang, Fosun’s chairman, has repeatedly expressed personal enthusiasm for Shede’s products, but affection alone cannot reverse deteriorating operating metrics.
Financial pressure is evident. In the first three quarters of 2025 Shede reported revenue of Rmb3.702 billion, down 17% year-on-year, and attributable net profit fell 29.4% to Rmb472 million. The decline has been concentrated in mid-to-high-end lines — traditional revenue drivers — while ordinary, entry-level products have only just resumed modest growth. Inventory has ballooned: stock levels rose from Rmb2.794 billion in 2021 to Rmb5.219 billion in 2024 and reached Rmb5.677 billion by the end of Q3 2025, with inventory turnover days surging to an eye-catching 1,127 days.
Those company-specific woes reflect a broader industry recalibration. After the 2026 Lunar New Year the baijiu market has not staged a full recovery; consumption occasions are shrinking and channel inventories remain high. The sector’s ‘Matthew effect’ has sharpened: ultra-premium brands with formidable moats continue to perform, mass-market segments benefit from basic consumption demand, and the squeezed middle — where Shede sits as a regional, next-tier premium — bears the brunt.
Strategically, Shede presents contradictions. Management has articulated a four-pronged strategy — aged-spirits, multi-brand, youth positioning and internationalisation — but the results have been underwhelming. The company continues to push large-scale capacity expansion, with a Rmb7.054 billion production-enlargement plan underway despite low utilisation. At the same time Fosun has maintained a generous dividend policy, returning substantial cash to shareholders and underlining Shede’s role as a cash-yielding asset within a broader industrial portfolio.
Wang Yong’s departure matters because he was more than a routine executive: his background in local government made him an effective operator in provincial markets, smoothing relations with authorities and distributors. Losing that practical know-how risks accelerating distributor attrition and weakening regional market management at a time when mid-tier brands require nimble, localised execution to defend share against national heavyweights.
Looking ahead, Shede faces three uncomfortable choices: invest still more in brand building and channel remediation funded by short-term cash returns from the parent; pare back capacity expansion and focus on stabilising distributors and inventory; or become a candidate for consolidation, sale or another portfolio reshuffle inside Fosun. The path chosen will determine whether Shede is rescued as a strategic national brand or treated as a declining but profitable cash cow.
Investors and industry watchers should watch next quarter’s channel inventory figures, distributor churn rates, and any changes to capital expenditure plans or dividend policy. Those signals will reveal whether Fosun intends to double down on operational fixes or to monetise value while the market is weak.