The veteran private enterprise Red Bean Group faces governance and funding difficulties, with the listed entity’s announcement of regulatory letters revealing multiple violations.

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This newspaper (chinatimes.net.cn) reporter Xia Gaoqin, Nanjing report

Recently, Hongdou Group’s listed entity Hongdou Co., Ltd. (600400.SH) issued an announcement revealing that the company and its controlling shareholder Hongdou Group received a warning letter from Jiangsu Securities Regulatory Bureau and disciplinary decision from the Shanghai Stock Exchange, directly pointing out violations such as non-operational fund occupation and inaccurate information disclosure. Notably, another listed company under the group, General Shares (601500.SH), also announced simultaneously that due to the original controlling shareholder Hongdou Group’s failure to promptly inform about major matters such as share pledges and freezes, Hongdou Group also received regulatory penalties.

The simultaneous disclosure of regulatory penalties for two listed companies highlights a series of violations by Hongdou Group, behind which lies its ongoing financial difficulties.

Both announcements reveal that Hongdou Group is currently involved in multiple violations

Hongdou Co., Ltd. announced that the company and its controlling shareholder Hongdou Group received a “Decision on Corrective Measures” from Jiangsu Securities Regulatory Bureau ([2026] No. 33), and that the company’s then-Secretary of the Board Meng Xiaoping also received a “Decision on Warning Letter Measures” ([2026] No. 34). Upon investigation, Hongdou Group was found to have two clear violations against Hongdou Co., Ltd.: First, in May 2025, it non-operationally occupied 12.5 million yuan of funds from Hongdou Co., Ltd. through prepayment, which was not disclosed in the “2025 Semi-Annual Report,” violating relevant regulatory rules; second, as of December 31, 2024, Hongdou Group’s accounts receivable from Hongdou Co., Ltd. totaling 110 million yuan had overdue payments. Although all overdue amounts were recovered before April 30, 2025, by September 30, 2025, the accounts receivable from Hongdou Co., Ltd. to Hongdou Group had overdue again, with an overdue balance of 45.0943 million yuan as of September 30, 2025. This constitutes the daily operational fund occupation of the listed company by the controlling shareholder. Hongdou Co., Ltd. failed to strictly control related receivables and to follow up on collection, ultimately leading to a corrective order.

On the same day, General Shares announced that the shareholder holding more than 5% (the former controlling shareholder) Hongdou Group received a decision from Jiangsu Securities Regulatory Bureau titled “Decision to Issue Warning Letter to Hongdou Group Co., Ltd.” ([2026] No. 31). According to this decision, on August 19, 2024, Hongdou Group pledged an additional 110 million shares of General Shares, accounting for 6.92% of its total share capital; on September 11, 2024, it pledged another 15.16 million shares, accounting for 0.96%. Between September 30, 2024, and February 14, 2025, Hongdou Group’s holdings of General Shares were frozen multiple times, with a total of 111.88M shares frozen as of February 14, 2025, representing 7.04% of the total share capital. These pledge and freeze events are all major disclosures, but Hongdou Group, as the then-controlling shareholder, failed to promptly inform General Shares and cooperate in disclosure obligations, violating the “Administrative Measures for Information Disclosure of Listed Companies.” It was issued a warning letter and recorded in the securities market integrity archive. Currently, Hongdou Group remains the second-largest shareholder of General Shares; this matter does not involve the daily operations of the listed company.

“Multiple violations stacking up essentially reveal that Hongdou Group’s ‘firewall’ with the listed entities is virtually non-existent. During its control of General Shares, Hongdou Group’s information disclosure mechanism showed a tendency for ‘selective disclosure,’ with key information such as share pledges and freezes delayed in disclosure to General Shares. Moreover, after the overdue accounts receivable of 110 million yuan from Hongdou Group, the listed company only recovered the funds without reviewing or tracking Hongdou Group’s financial situation, leading to subsequent fund occupation again. This also reflects that the board of directors failed to perform its supervisory and balancing role,” said Gao Chengyuan, director of the Vision Impact Research Institute, in an interview with Huaxia Times.

Hongdou Group’s liquidity crisis intensifies violation risks

The simultaneous disclosure of regulatory notices by the two listed companies exposes Hongdou Group’s violations and reflects its worsening financial difficulties.

Hongdou Group is among China’s top 500 private enterprises, involved in apparel, tires, and pharmaceuticals. Tianyancha shows that the group has 394 member companies, with 47 core enterprises, including Hongdou Co., Ltd., its shareholding in General Shares, and Zishan Pharmaceutical (873858) listed on the New Third Board.

Public data shows that in 2022 and 2023, Hongdou Group achieved operating revenues of 19.34B yuan and 23.49B yuan, respectively, with net profits attributable to the parent of -277 million yuan and -154 million yuan, suffering losses for two consecutive years. As of the first three quarters of 2024, Hongdou Group’s total assets reached 55.46B yuan, with total liabilities of 37.11B yuan, and an asset-liability ratio of 66.91%. Its cash on hand is far insufficient to cover related debts. Additionally, since December 2024, Tianyancha shows that Hongdou Group has been repeatedly subject to enforcement actions, further aggravating its liquidity pressure.

To ease its financial strain, Hongdou Group has begun asset disposal. In June 2025, it transferred 24.5% of General Shares for 2.12B yuan, exiting its controlling position. Besides transferring control of General Shares, in August 2025, it transferred its 25% stake in Wuxi Xishang Bank to Wuxi Guolian Development Group. Between 2022 and 2023, the Zhou family sold off shares of Hongdou and General Shares for over 1.15 billion yuan, plus dividends of over 200 million yuan from the two companies, still unable to fill the funding gap. Currently, as of the end of October 2025, Hongdou Group directly holds 59.03% of Hongdou Shares, with 99.90% pledged, accounting for 58.98% of the company’s total share capital, and another 475 million shares marked.

The ongoing tightness of the capital chain has not only led Hongdou Group to occupy funds of the listed company but also caused it to neglect disclosure obligations regarding share pledges and freezes, forming a vicious cycle of “funding crisis → violations → regulatory penalties.”

In response to this regulatory punishment, Hongdou Group and related entities are required to submit a written rectification report to Jiangsu Securities Regulatory Bureau within 10 working days of receiving the decision. The regulatory authorities have emphasized strengthening information disclosure management, regulating related-party transactions and fund flows, and improving internal control mechanisms. However, given Hongdou Group’s previous violations and current financial difficulties, whether its rectification can fundamentally address governance shortcomings remains to be seen by the market.

Editor: Xu Yunqian Chief Editor: Gong Peijia