The controlling shareholder of Guizhou Bailing Group Pharmaceutical Co., Ltd., Jiang Wei, has received a "Notice of Case Filing" from the China Securities Regulatory Commission (CSRC) for suspected insider trading and information disclosure violations. What began six years ago as an 18 billion yuan bailout dispute has now escalated from a "corporate debt controversy" to a "personal compliance crisis."
On one side, Huachuang Securities accuses Jiang Wei of failing to fulfill his repurchase obligations, demanding repayment of 1.761 billion yuan in principal plus penalties. On the other, Jiang countersues, alleging "unreasonable litigation" and claims that Huachuang is "seeking control." As this "Rashomon" scenario unfolds, the company's stock price has already plummeted 6.28%, shrinking its market cap to 7.3 billion yuan.
This dispute is far from a simple case of a "bailout gone wrong." Instead, it exposes flaws in private enterprise bailout mechanisms, undercurrents of control battles in listed companies, and the survival anxieties of the "top Miao medicine stock" amid declining performance. Jiang Wei's troubles epitomize the broader imbalance between capital operations and compliance in privately held listed companies—a systemic issue that warrants deeper industry reflection.
### Bailout Turns Into Quagmire In 2019, Huachuang Securities injected 1.8 billion yuan in bailout funds into Guizhou Bailing, initially seen as a lifeline. Jiang Wei alleviated his stock pledge pressure, the securities firm secured reasonable returns, and the company stabilized its control structure. Yet six years later, this cooperation has devolved into a legal circus, with the root cause lying in the bailout mechanism's "inherent flaws" and "execution failures."
The agreement allowed for a three-year term extendable to five years and granted Jiang Wei repurchase rights—provisions meant to balance risk and reward. However, it lacked clear constraints on exit strategies. Huachuang missed the chance to sell shares when prices rose over 30%, insisting instead on Jiang's repurchase. Meanwhile, as Jiang's finances deteriorated, he failed to explore alternatives like share transfers, opting instead to dilute equity through pledged asset transfers. This led to a deadlock: no funds for repurchase, no shares sold.
More alarmingly, a covert "control battle" emerged. Despite Huachuang's pledge not to seek control, it secured 22.43% voting rights via proxy in 2020 and later installed key personnel, including directors and a CFO. These moves—beyond pure bailout intent—fueled Jiang's accusations of Huachuang "controlling the company through key positions."
Bailouts should rescue emergencies, not chronic problems. If financial institutions exploit bailouts to meddle in operations or seize control, they betray the original purpose and plunge companies into "capital infighting."
### Jiang Wei’s Dual Crisis Jiang’s CSRC investigation, while framed as a personal compliance issue, stems from his long-standing disconnect between capital maneuvers and corporate operations. As the helm of the "top Miao medicine stock," he led Guizhou Bailing’s 2010 IPO and became Guizhou’s richest person in 2017 with 16.5 billion yuan in wealth. But his focus soon drifted from core business—dabbling in real estate, hotels, racing teams, and even rumored aircraft ventures. These scattered investments strained liquidity, leading to 100% share pledges and financial distress.
His capital missteps directly impacted the company. Since 2019, Guizhou Bailing’s performance has slumped: a 415 million yuan net loss in 2023, with 2025 Q1-Q3 revenue down 24.28% and net profit down 35.60%, far from its annual targets of 4 billion yuan revenue and 120 million yuan profit. The decline reflects eroding core competitiveness—key products like cold and cough medicines faced weak demand amid industry destocking, while insufficient R&D failed to open new growth avenues.
Compounding this, the company’s 2024 ST designation for internal control failures exposed compliance gaps in cost management and disclosures. Jiang’s investigation now deepens the trust crisis.
Having long served as chairman and later adding the board secretary role in 2024, Jiang centralized decision-making power without checks. When personal capital gambles backfire, listed companies become "risk vessels," harming minority shareholders and long-term interests.
### Industry Warnings Guizhou Bailing’s saga sounds alarms for both private listed firms and bailout institutions.
For bailout providers, the priority should be "liquidity relief," not "control grabs." Huachuang’s actions blurred lines between rescuer and investor, tainting bailouts and its own reputation. Future bailouts must set clear "no interference" boundaries, with robust exit mechanisms (e.g., predefined sell-off price bands or third-party takeovers) to mitigate reliance on fragile repurchase clauses.
For private companies, Jiang’s lesson is "focus on core business, prioritize compliance." As a Miao medicine pioneer, Guizhou Bailing should have deepened R&D and market expansion. Instead, Jiang’s capital diversions sapped competitiveness. Amid economic headwinds, firms must hone core strengths through innovation and operational discipline—not speculative shortcuts. Strengthening governance to prevent "one-man rule" is equally vital to curb compliance risks.
While Guizhou Bailing and Huachuang’s lawsuit continues, and Jiang’s investigation remains unresolved, the 1.8 billion yuan bailout saga leaves enduring questions. It’s not just about Jiang’s fate but how private firms balance capital and operations, how bailout institutions uphold their mandates, and how regulators refine rescue frameworks.
Capital markets need bailouts that "deliver timely aid," not "opportunistic power plays." Listed companies need "steady navigators," not "reckless adventurers."
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