Painful Lessons, The “Life And Death” Test For The Supply Chain Sector In 2025

In 2025 the supply chain sector underwent another round of painful consolidation across its subsegments, with winners following similar playbooks while losers suffered distinct and often dramatic setbacks. Over the past year, established firms with decades of history suspended operations and faced legal and financial scrutiny; major players breached regulatory boundaries to sustain an illusion of prosperity and incurred substantial fines; and previously profitable operators were dragged down by ill‑timed diversification efforts. These episodes offer stark warnings for industry participants as they prepare for 2026.

A prominent case involved Huisheng Group, long marketed as the leading buffalo‑milk stock, which in March 2025 was fined a total of RMB 10.5 million for repeatedly concealing material contracts in its annual reports. Regulators ordered the company to rectify its disclosures and issued fines to several senior executives, including the chairman and board secretary. Founded in 2001 and listed on the Shenzhen Stock Exchange in January 2010, Huisheng expanded into film, media and information services through a series of acquisitions, and later entered the photovoltaic sector with plans for large investment. Those cross‑industry moves failed to generate synergy, blurred the company’s core focus and contributed to a net loss exceeding RMB 600 million in 2024, compared with a profit of RMB 67.34 million the prior year. The episode illustrates how abundant capital from a core business can tempt management into unfamiliar, cash‑intensive ventures that the original business model cannot sustain.

ST Jiajia’s collapse into a governance vacuum exposed another failure mode. In September 2025 the company disclosed it had no controlling shareholder or actual controller, with China Orient Asset Management holding 23.42% and Zhuoyue Investment holding 18.79%. Founded in 1996 and listed in 2012, ST Jiajia once commanded a market value in the billions. Its founder, Yang Zhen, shifted focus to cross‑sector investments that underperformed, accumulating debt that was repeatedly addressed by China Orient. Judicial freezes on the founder’s assets and the freezing of nearly 42.29% of company shares through 2027 left the firm without a clear controlling party and mired in legal disputes. The case underscores the peril of concentrating corporate destiny in a founder’s personal decisions without robust board oversight and risk controls.

A criminal fraud case in the livestock sector further highlighted systemic vulnerabilities. Inner Mongolia Green Earth Agriculture and Animal Husbandry was found to have used large quantities of duck meat disguised as beef and lamb as collateral to obtain RMB 42 million in loans, of which RMB 39.86 million remained unpaid. The court determined that more than 800 tonnes of water‑injected duck meat had been presented as higher‑value products, and the founder was sentenced to 15 years in prison with a RMB 200,000 fine. The incident reflects the cash‑flow fragility of heavy‑asset agribusinesses, where seasonal procurement and slow turnover can precipitate desperate measures when liquidity collapses.

Longstanding frozen‑food manufacturer Furun Food experienced a rapid operational decline after its chairman was listed as a person subject to enforcement in November. Multiple senior executives and technical staff departed, production halted and the company faced a series of enforcement actions totaling more than RMB 500,000 by December 22. Once a regional leader with a nationwide distribution network and annual sales exceeding RMB 100 million, Furun Food’s reliance on traditional supermarket channels, family governance and failed overseas investments contributed to a severe cash‑flow squeeze and operational paralysis. The company’s trajectory illustrates how legacy manufacturers that fail to adapt to shifting retail dynamics and governance best practices can quickly lose viability.

In the aquaculture segment, Jiangsu Hongjiu’s collapse revealed the risks of aggressive expansion and demand dependence. After rapid growth that once produced daily sales of 150,000 jin and an annual output value of RMB 1.56 billion, the company defaulted on payments to partners and farmers, triggering litigation and consumption restrictions on its founder. Analysts attribute the failure to overexpansion and a downturn in restaurant demand for black fish products, demonstrating how full‑chain integration can amplify losses during industry contractions.

Xiwang Food’s troubles highlighted the consequences of shareholder instability and weakening core revenues. In May 2025 the parent Xiwang Group saw 111 million shares of Xiwang Food auctioned, reducing its stake from 28.91% to 18.72%. Although the company maintained that governance and operations would not be materially affected, market concerns persisted. Once known as the “first corn‑oil stock,” Xiwang shifted from contract manufacturing to building its own brand, but its vegetable‑oil revenue declined 21% by 2024 and the company recorded a net loss of RMB 444 million that year. The episode underscores that control‑structure shocks and deteriorating core margins can combine to undermine strategic flexibility.

Dairy producer Tianrun Dairy reported its first loss in a decade in 2025, with revenue of RMB 2.074 billion for the first three quarters, down 3.81% year‑on‑year, and a net loss of RMB 12 million. The company reduced its herd by 12,900 head to 51,900, citing the need to retire low‑yield cows and to alleviate inventory pressure amid weak national demand, intensified price competition and milk oversupply. While the herd optimization aims to cut feed and labor costs, the results reflect the broader margin pressure facing regional dairy players and the logistical challenges of cross‑regional expansion.

Qianhe Condiment’s brand crisis demonstrated the fragility of trust in consumer food categories. In March 2025 media testing detected cadmium in one of the company’s “zero‑additive” soy sauces, contradicting its “Qianhe 0” branding and eroding consumer confidence. Although the company maintained that trace cadmium originated from raw materials and complied with national standards, the reputational damage contributed to a 13.17% decline in revenue to RMB 1.987 billion in the first three quarters and a 26.13% drop in net profit to RMB 260 million. The incident highlights that marketing claims must be underpinned by rigorous supply‑chain transparency and quality controls to sustain premium positioning.

Collectively, these eight cases paint a stark portrait of the supply chain ecosystem in 2025. While the specific failures differ, common lessons emerge: preserve and strengthen the core business before pursuing unrelated diversification; treat cash‑flow resilience as a strategic imperative; maintain transparency and integrity with consumers, investors and regulators; and build governance structures that provide effective oversight and risk mitigation. As the industry enters 2026, the era of unchecked expansion has ended, and companies must confront the fundamental question of what will enable them to remain resilient and competitive over the long term.