The sudden downfall of HONGJIU FRUIT is not only a result of its own financial irregularities and governance failures but also exposes the immense pressure inherent in the fruit distribution industry's "high prepayments + long receivables" business model.
The demise of the "first fruit stock" is stark. HONGJIU FRUIT's official website shows the company was founded in 2002. Positioned as a "global fruit chain, sharing happy fruit," it is a full-industry-chain operating group focused on high-end imported fruits and high-quality domestic fruits. Its product portfolio includes imported items like Thai longan, mangosteen, durian, Vietnamese dragon fruit, Chilean cherries, and red grapes, as well as domestic products like yellow peaches, kiwifruit, and pomegranates. From 2016 to 2020, HONGJIU FRUIT completed several rounds of financing, including investments from Alibaba among other capital sources. On September 5, 2022, HONGJIU FRUIT listed on the Hong Kong Stock Exchange at an issue price of HK$40 per share, becoming the "first fruit stock." On its first trading day, the company's market capitalization approached HK$19 billion. That same year, its annual revenue reached 15.081 billion yuan, a 46.7% year-on-year increase; net profit was 1.452 billion yuan, surging 397.95% year-on-year. However, just over a year after listing, HONGJIU FRUIT's shares were suspended from trading, marking the beginning of its delisting process. The delisting was triggered by the failure to publish its full-year 2023 and interim 2024 results. Consequently, trading in the company's shares was suspended starting March 20, 2024. As it failed to meet the resumption guidance within the stipulated period, the Listing Committee of the Stock Exchange decided to cancel its listing status on October 3, 2025. Although HONGJIU FRUIT applied for a review on October 13, the decision was upheld, leading to its formal delisting effective 9:00 a.m. on December 30, 2025. At that time, its auditor, KPMG, raised concerns about the prepayments in the 2023 financial statements. KPMG stated that as of the end of 2023, the company's prepayment balance was approximately 4.47 billion yuan, of which about 3.42 billion yuan was paid to certain suppliers in the fourth quarter of 2023. Most of these suppliers were new counterparties added in 2023, and some had registered capital lower than the prepayment balance and zero employees enrolled in social security. Consequently, KPMG recommended the company's audit committee establish an independent investigation committee to examine the commercial rationale behind these prepayments and consider hiring an independent third party to assist the investigation. According to the company's earlier announcements, its revenue for the first three quarters of 2023 was approximately 13.427 billion yuan, a 26.4% increase year-on-year. While still suspended, HONGJIU FRUIT's senior management became embroiled in a criminal investigation. On April 16, 2025, an announcement from HONGJIU FRUIT revealed that Chairman Deng Hongjiu, Directors Peng He, Jiang Zongying, Yang Junwen, Tan Bo, and Supervisory Board Chairman Yu Lixia, among others, were subjected to criminal compulsory measures by public security authorities for allegedly obtaining loans by deception and falsely issuing special value-added tax invoices. Simultaneously, this incident led to restricted access to one of the company's main offices by public security authorities starting January 6, 2025, preventing normal business operations. On May 20, HONGJIU FRUIT disclosed the latest developments. As of the announcement date, except for Deng Hongjiu, Peng He, and two other management members who remained under arrest, all other restrictive measures against company personnel by the public security authorities had been lifted or relaxed, and the investigated individuals were permitted to resume participation in company operations. The series of negative events compounded, increasing HONGJIU FRUIT's financial pressure. In May 2025, HONGJIU FRUIT applied to the court for restructuring and pre-restructuring, while also considering introducing strategic investors to support its restructuring plan. On May 30, all three of HONGJIU FRUIT's independent non-executive directors collectively resigned, leaving the company with no independent non-executive directors and no audit committee members.
The immense pressure of the business model is evident. Several industry insiders pointed out that HONGJIU FRUIT's developmental pressures are closely linked to its business model. Its model, characterized by high prepayments and long receivables collection periods, placed enormous and sustained pressure on its cash flow. One fruit industry practitioner noted that HONGJIU FRUIT employed a traditional B2B distribution model where the intermediary must prepay suppliers at the origin and then wait for payment from downstream buyers, creating a cash squeeze at both ends that easily leads to broken capital chains. This distributor's cooperation with several large domestic supermarkets was facilitated through dealers; the advantage of this model is securing payment upon delivery, whereas direct dealings with supermarkets often involve excessively long payment terms. Another procurement professional in the fresh retail sector mentioned that besides bearing the "cash squeeze from both ends," fruit distributors also face significant risks from product price volatility. Prices are high when market conditions are good and low when they are poor; if the purchase price exceeds the selling price, intermediaries can easily incur losses. Furthermore, partnerships can be disrupted due to funding issues or disputes over payment terms at related companies. In 2022, HONGJIU FRUIT's bank loans increased from 874 million yuan to 2.282 billion yuan, primarily used for fruit procurement, logistics, and supply chain facility expansion. Concurrently, the company was accelerating its expansion; by the end of 2022, it had nearly 400 local employees and 16 processing plants in Thailand and Vietnam, and had established 60 sorting centers domestically, further exacerbating capital consumption. Moreover, competition in the fruit industry has intensified in recent years, highlighting HONGJIU FRUIT's operational difficulties. Currently, the "direct sourcing from origin + direct shipping from source" model is gradually becoming mainstream, compressing intermediate links. Fruit prices have been on a sustained downward trend, with formerly high-priced fruits like durian and cherries becoming increasingly affordable, directly impacting businesses focused primarily on premium fruits. Another player in the fruit sector, Pagoda, has also encountered developmental bottlenecks in recent years. In 2024, Pagoda's revenue was 10.273 billion yuan, down 9.8% year-on-year, marking its first net loss in nearly five years, with net losses continuing into the first half of 2025; between the first half of 2024 and the first half of 2025, Pagoda cumulatively closed 1,639 stores. A Nanhua Futures research report mentioned that China's fruit consumption market is undergoing significant transformation. High-priced fruits like durian and blueberries are rapidly becoming more mainstream; between 2020 and 2025, the average annual price decline for premium fruits was about 15%, and the domestic substitution rate has increased to 60%. In recent years, topics like "durian prices drop to 15 yuan per jin" and "cherry wholesale prices plunge" have repeatedly trended on social media, as consumers can easily purchase affordable fruits through various channels.
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