Crossing the red line: Weibo Corporation's growth dilemma

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Recently, Weiwei Co., Ltd. issued an announcement stating that it received two regulatory documents from the Jiangsu Securities Regulatory Bureau and the Shanghai Stock Exchange. Both were issued because, from 2022 to 2024, Weiwei’s revenue recognition methods for certain grain and oil trading business were inappropriate, resulting in inaccurate disclosures of revenue and costs in its periodic reports for three consecutive years. The Shanghai Stock Exchange issued a regulatory warning to Weiwei Co., Ltd. and three senior executives of the company. Analysts noted that this information disclosure violation reflects misjudgment by Weiwei’s internal financial controls regarding assessments of business substance. Combined with external competitive pressures and internal structural problems, Weiwei has fallen into a growth predicament.

Information disclosure violations

On April 3, 2026, the Jiangsu Securities Regulatory Bureau issued to Weiwei Co., Ltd. an “Administrative Regulatory Measures Decision” (hereinafter referred to as the “Decision”). The document shows that, from 2022 to 2024, Weiwei applied inappropriate methods—gross method and net method—for revenue recognition of certain grain and oil trading business. This did not comply with Article 34 of the PRC Accounting Standards for Business Enterprises No. 14—Revenue, resulting in inaccurate disclosure of operating revenue and operating costs in Weiwei’s Q1, interim, and Q3 reports for 2022, 2023, and 2024.

Subsequently, Weiwei Co., Ltd. released an announcement titled “Announcement on Correction of Prior Accounting Errors,” stating that it correspondingly reduced operating revenue and operating costs for Q1 2022 by approximately RMB 117 million; increased operating revenue and operating costs for the first half of 2022 by approximately RMB 31.3605 million; and reduced operating revenue and operating costs for Q3 2022 by approximately RMB 105.6 million. It reduced operating revenue and operating costs for Q1 2023 by approximately RMB 129 million; reduced operating revenue and operating costs for the first half of 2023 by approximately RMB 247 million; and reduced operating revenue and operating costs for Q3 2023 by approximately RMB 448 million. It reduced operating revenue and operating costs for Q1 2024 by approximately RMB 126 million; reduced operating revenue and operating costs for the first half of 2024 by approximately RMB 71.9116 million; and increased operating revenue and operating costs for Q3 2024 by approximately RMB 33.7055 million.

According to Article 34 of the PRC Ministry of Finance’s “Accounting Standards for Business Enterprises No. 14—Revenue,” “An enterprise shall, based on whether it has control over the relevant goods before transferring them to a customer, determine whether its role in the transaction is that of a principal or an agent. If the enterprise can control the goods before transferring them to the customer, the enterprise is a principal, and it shall recognize revenue based on the total consideration received or receivable. Otherwise, the enterprise is an agent, and it shall recognize revenue based on the amount of commissions or fees that it is expected to be entitled to. That amount shall be determined as the net amount after deducting the consideration payable to other relevant parties from the total consideration received or receivable, or be determined based on the amount or proportion of the established commissions or other methods.”

The “Decision” shows that Weiwei Co., Ltd.’s above conduct violated Article 1 of Paragraph 1 of Article 3 of the “Measures for the Administration of Information Disclosure by Listed Companies” (China Securities Regulatory Commission Order No. 182) (hereinafter referred to as the “Information Disclosure Measures”). The company’s Chairman Ren Dong, General Manager Zhao Huixin, and Chief Financial Officer Zhao Changlei failed to perform their duties with due diligence and violated Article 4 of the “Information Disclosure Measures,” bearing primary responsibility for the company’s above-mentioned violations. In addition, according to Article 52 of the “Information Disclosure Measures,” the Jiangsu Securities Regulatory Bureau decided to take an administrative regulatory measure requiring rectification against Weiwei Co., Ltd., and take an administrative regulatory measure of issuing a warning letter against Ren Dong, Zhao Huixin, and Zhao Changlei, which will be recorded in the integrity dossier for the securities and futures market.

On the same day, the Shanghai Stock Exchange issued a “Decision on Issuing Regulatory Warnings to Weiwei Foods & Beverages Co., Ltd. and Relevant Responsible Parties.” “Periodic reports of listed companies are an important basis for investors’ investment decisions. A company should, in accordance with relevant requirements, adopt reasonable accounting treatment methods for production and operating activities during the reporting period, and ensure that information disclosure related to periodic reports is true, accurate, and complete.” The Shanghai Stock Exchange said.

Weiwei Co., Ltd. stated, “This correction of prior accounting errors and retrospective adjustments will not affect the company’s financial position and operating results, including the total amount of assets, total amount of liabilities, net assets, net profit attributable to shareholders of the listed company, and the net cash flow from operating activities.”

Regarding related issues concerning the information disclosure violation, Beijing Business Today reporter sent an interview request letter to Weiwei Co., Ltd. by email, but it was returned and showed “the email content was refused.”

Zhan Junhao, a well-known strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, said in an interview with the Beijing Business Today reporter, “The core difference between the gross method and the net method is whether the enterprise obtains control of the goods and bears the risks. Weiwei’s improper revenue recognition leading to inaccurate revenue and cost disclosures reflects that the company’s internal financial controls have lost alignment in judging the business substance—especially that there were serious oversights in contract review, revenue recognition rule implementation, and audit supervision in grain and oil trading.”

Not the first time

This is not the first time Weiwei Co., Ltd. has been issued a warning letter due to information disclosure issues.

On March 25, 2023, the Jiangsu Securities Regulatory Bureau issued a decision to order rectification measures against Weiwei Co., Ltd. The reason was: “In July 2022, Weiwei Co., Ltd., together with Xuzhou Xinsheng Investment Holding Group Co., Ltd. (hereinafter referred to as ‘Xinsheng Group’) and Guolian Tongbao Capital Investment Co., Ltd. (hereinafter referred to ‘Guolian Investment’), jointly invested to establish an industrial investment fund—Xuzhou Weiwei Shengtong New Consumption Investment Fund (Limited Partnership). In August 30, 2022, the fund completed filing with the China Association of Securities Investment Funds, but Weiwei Co., Ltd. failed to disclose this important development at the time of filing and registration completion, in accordance with Article 41 of the ‘Self-Regulatory Regulatory Guidelines No. 5 for Listed Companies—Transactions and Related Party Transactions’ of the Shanghai Stock Exchange (SSE Letter [2022] No. 6). The above conduct violates Article 3 and Article 25 of the ‘Measures for the Administration of Information Disclosure by Listed Companies.’”

In July 2022, the Shanghai Stock Exchange also issued a regulatory warning decision to Weiwei Foods & Beverages Co., Ltd.’s shareholder, Weiwei Group Co., Ltd. (hereinafter referred to as “Weiwei Group”). The reason was that after signing the “Share Transfer Agreement” with Xinsheng Group, Weiwei Group failed to fulfill its requirement to submit advance disclosure of planned share reductions 15 trading days before the reductions, as required.

Weiwei Co., Ltd. is a large cross-regional and cross-industry enterprise group mainly focused on “ecological agriculture, large grains, and large food.” Its current controlling shareholder is Xinsheng Group, holding 30.91%. Its main products include “Weiwei” brand soy milk powder and liquid soy milk, and other plant protein beverage series; “Weiwei Liuchao Song” flour series products; “Tianshan Snow” dairy products series; and “Yiqingyuan” tea series. Its subsidiaries include the liquor trading platform Minguangfang Company, whose main business is liquor with its own brands such as “Hanyuan,” and commissioned brands such as “Duogou,” among other well-known liquor. For many years, Weiwei soy milk powder has consistently maintained a leading position in the industry, with production and sales volumes ranking first in the industry for multiple consecutive years, and it has received the title of “King of Soy Milk” in China.

Senior dairy industry analyst Song Liang said, “In recent years, companies’ operating pressures have been relatively high. For certain listed companies, to maintain performance growth, they may ‘increase’ revenue or ‘reduce’ costs financially. For example, accelerating depreciation of fixed assets would increase net profit.”

Growth predicament

After Xinsheng Group took control of Weiwei Co., Ltd. in 2021, as a listed leader in plant protein beverage products, it proposed a strategy of “ecological agriculture, large grains, and large food,” attempting to develop grain procurement, warehousing, processing, trading, and production of healthy foods while opening up liquid soy milk through a ‘dual-wheel drive.’

According to Weiwei Co., Ltd.’s official website, it has successively cooperated with major domestic and international grain enterprises to build modern grain logistics parks in the Huaihai economic region—where high-quality wheat is mainly produced; in the southern Henan region—where small peanuts are mainly produced; in the Heilongjiang Suihua region—where non-GMO soybeans are mainly produced; and in the Jiamusi region—where quality rice is mainly produced, thereby forming a modern comprehensive grain industrial park integrating collection, storage, processing, and trading. In 2019, the Weiwei grain logistics industrial park located in Xuzhou was approved as a provincial-level grain logistics park in Jiangsu Province.

Regarding Xinsheng Group’s investment, Weiwei Co., Ltd. previously stated that since Xinsheng Group entered, it has coordinated its own high-quality resources, leveraged synergies with the company’s business development, and enhanced the company’s core competitiveness. Through cooperation with Xinsheng Group and Guolian Investment to establish food and beverage and modern agriculture industrial investment funds, focusing on Weiwei Co., Ltd.’s main businesses, the upstream and downstream of its industrial chain, and its future strategic plans, with key investments in areas such as food and beverages, new consumption, and agriculture.

It is worth noting that in recent years, the performance of four industry giants in plant-based beverages—Weiwei Co., Ltd., Chengde Lulù, Yangyuan Drinks, and Huanlejia—has all been “not great.” The financial reports show that in 2025, Huanlejia achieved revenue of about RMB 1.5 billion, down 19.11% year over year; and achieved net profit attributable to shareholders of about RMB 44.17 million, down 70.03% year over year. For the first three quarters of 2025, Chengde Lulù achieved revenue of about RMB 1.956 billion, down 9.42% year over year; and achieved net profit attributable to shareholders of about RMB 384 million, down 8.47% year over year. For the first three quarters of 2025, Yangyuan Drinks achieved revenue of about RMB 3.905 billion, down 7.64% year over year; and achieved net profit attributable to shareholders of about RMB 1.119 billion, down 8.95% year over year. Weiwei Co., Ltd. has even seen revenue decline for five consecutive years from 2020 to 2024. In the first three quarters of 2025, it achieved revenue of about RMB 2.388 billion, down 11.2% year over year; and achieved net profit attributable to shareholders of about RMB 241 million, down 1.93% year over year.

Song Liang said, “When revenue declines in plant-based beverage companies, first, due to the fragmentation of channels, consumers are becoming more personalized and scenario-based, allowing some private brands to develop rapidly. Second, ready-to-drink products are replacing traditional standard lineup products. For a traditional manufacturing company like Weiwei, the only way to grow revenue is to open up new areas, but judging from the current situation, it is very difficult to do so.”

Beijing Business Today reporter | Kong Wenxue

Editor | Kong Wenxue

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