Guizhou Bailing Group Pharmaceutical Co., Ltd. recently announced that its controlling shareholder, Jiang Wei, has received a formal investigation notice from the China Securities Regulatory Commission (CSRC) for alleged insider trading, information disclosure violations, and illegal stock transfers under restricted conditions.
The company stated that the investigation targets Jiang Wei personally and will not affect daily operations or business activities. However, this marks another regulatory challenge for Guizhou Bailing, which was itself investigated in November 2024 for suspected disclosure violations.
**Governance Crisis: Concentrated Power and Regulatory Scrutiny** Jiang Wei, who serves as chairman, legal representative, and acting board secretary, holds significant control over the company. Following the resignation of the former board secretary in December 2024, Jiang assumed additional responsibilities, raising concerns about weakened corporate governance checks and balances.
Regulatory issues have long plagued Guizhou Bailing. In August 2024, the Guizhou CSRC branch identified accounting inaccuracies and internal control deficiencies, leading to misreported financial data. The Shenzhen Stock Exchange also publicly reprimanded the company for failing to disclose its 2023 earnings forecast as required.
An audit in 2023 revealed major flaws in sales expense controls. Although corrective measures were taken in 2024, auditors still flagged unresolved issues, including the ongoing CSRC investigation. As of September 2025, Jiang Wei’s 17.55% stake in the company was fully pledged, heightening governance risks.
**Financial Concerns: Losses and Questionable Practices** Despite record revenue of 4.26 billion yuan in 2023, Guizhou Bailing reported its first annual net loss of 415 million yuan. A sharp spike in sales expenses in Q4 2023—reaching 82% of revenue—raised red flags, with the company attributing it to business model adjustments.
In 2024, regulators penalized Guizhou Bailing for inaccurate expense reporting and internal control failures. Auditors also issued a qualified opinion on its annual report, citing uncertainties over the valuation of key herbal medicine ingredients.
For the first three quarters of 2025, revenue fell 24.28% year-on-year to 2.1 billion yuan, with net profit down 35.6% to 56.81 million yuan, signaling persistent profitability challenges.
**Legal Disputes and Operational Struggles** A 2019 financial relief agreement with Huachuang Securities has escalated into a 1.76 billion yuan legal battle. Jiang Wei had secured 1.4 billion yuan in funding through asset management plans, pledging 11.54% of Guizhou Bailing’s shares, along with an additional 361 million yuan in stock-backed loans.
However, after the relief plans expired in 2022 and 2024, Jiang failed to repurchase the shares or repay the funds, prompting Huachuang to sue for repayment in August 2025.
Operationally, Guizhou Bailing faces declining demand for its core over-the-counter medicines amid industry-wide inventory adjustments and weak consumer spending.
**Conclusion** With its market value significantly diminished, Guizhou Bailing stands at a critical juncture. The outcome of the CSRC probe and the Huachuang lawsuit will shape its future. The case underscores the importance of robust governance and financial transparency for listed companies.
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