On December 11th, the National Enterprise Bankruptcy Reorganization Case Information Network released information stating that Shanghai Huayimei Cosmetics Limited Company (referred to as “Shanghai Huayimei”) has been applied for bankruptcy liquidation. The Third Intermediate People’s Court of Shanghai has formally accepted the case, indicating that Huayimei has officially entered the bankruptcy liquidation process.
Public information shows that Shanghai Huayimei has a history of 20 years, and its acne brand ZP has left a deep impression in the industry. The news of the company’s bankruptcy liquidation has surprised many industry insiders and also reflects the difficult market conditions.
A well-established company of 20 years goes bankrupt
According to a previous announcement by the Third Intermediate People’s Court of Shanghai, on November 8, 2023, Ye Jiali filed for bankruptcy liquidation of Shanghai Huayimei, citing the inability of the company to repay its due debts and a clear lack of solvency. The case has been formally registered.
Yesterday, the Third Intermediate People’s Court of Shanghai issued another announcement stating that the court has ruled to accept the case of bankruptcy liquidation for Shanghai Huayimei and requested the company’s creditors to declare their claims to the administrator before January 10, 2024. It was also announced that the first meeting of creditors will be held on January 25, 2024.
It is understood that corporate bankruptcy can be categorized into three modes: bankruptcy liquidation, bankruptcy reorganization, and bankruptcy settlement. Based on the above announcement, the bankruptcy of Shanghai Huayimei falls under the category of bankruptcy liquidation.
According to the procedural flow of bankruptcy liquidation, once a company is declared bankrupt by the court, it will be taken over by a bankruptcy administrator. The process involves four steps, including acceptance and appointment of the administrator, conducting liquidation work, declaring bankruptcy and distributing assets, and ultimately seeking the court’s termination of the bankruptcy proceedings and deregistration of the company, leading to the legal exit of the company from the market.
In other words, the current case of bankruptcy liquidation for Shanghai Huayimei is in the initial stage where the case has been accepted and an administrator is about to be appointed.
In fact, the bankruptcy of Shanghai Huayimei does not come as a surprise. As early as December of last year, the company had been subject to court-enforced execution. As of the time of writing, the China Judgment Enforcement Information Disclosure Network shows a total of 34 execution records for Shanghai Huayimei, with the amount of execution targets exceeding tens of millions of RMB.
These cases cover disputes related to sales contracts, house lease contracts, equity disputes, and other disputes. The most recent execution case was filed on December 1st of this year, in which the effective legal document determined that Shanghai Huayimei should pay an employee named Meng a salary of 23,239 yuan ($3235). The specific situation of the dishonest debtor’s behavior falls under the category of “having the ability to perform but refusing to perform the obligations determined by effective legal documents.”
According to data from Qichacha, Shanghai Huayimei and its legal representative and actual controller Zhang Mouhua have become dishonest debtors and subjects of execution, with a total of 16 restrictions on high consumption information.
Three affiliated companies have all been subject to execution
According to the National Enterprise Credit Information Publicity System, Shanghai Huayimei was established on January 10, 2003, with a registered capital of 36 million yuan ($5 million). According to information from Qichacha, the company is a wholly-owned subsidiary of Anhui Huayimei Technology (Group) Company Limited (Huayimei Group), which was founded in October 2000 and is a technology enterprise group integrating research, production, sales, and beauty services.
It is reported that Shanghai Huayimei also holds controlling stakes in three subsidiary companies: Shanghai Dingjian E-commerce Co., Ltd., Shanghai Dingjian Bo Business Network Technology Co., Ltd. (referred to as “Dingjian Network”), and Shanghai Yiheng Yimei Biotechnology Co., Ltd. (referred to as “Yiheng Yimei”). Among them, Yiheng Yimei was deregistered in July 2021.
It is worth noting that both Huayimei Group and Dingjian Network have also become dishonest debtors. Among them, Huayimei Group has an involved amount of up to 7.7017 million yuan ($1.07 million).
Overall, the reasons for the execution of Huayimei Group and its subsidiary and affiliated companies are mostly related to failure to timely pay the counterparties’ payment for goods, rent for premises, and employee salaries, as well as non-compliance with legal obligations or court judgments.
This may indicate that Huayimei Group, from top to bottom, has found itself in a predicament. However, Shanghai Huayimei became the first company within the group to be subject to bankruptcy liquidation.
ZP single product once achieved billion yuan in sales
In fact, Huayimei Group and Shanghai Huayimei, with a history of over 20 years, have also had their moments of glory.
It is reported that Shanghai Huayimei Group has two major production bases in Shanghai and Hefei, and its brand portfolio includes ZP, Xianchen, Huayimei, EIEVI, Taqiman, and more. Among them, Huayimei company mainly produces series products under the Huayimei and EIEVI brands. Huayimei brand products focus on the commercial and supermarket channels, while EIEVI brand products target high-end beauty salon channels. At that time, Huayimei claimed that the annual designed production capacity of the factory, after being fully completed and put into operation, was 3 billion yuan ($417.6 million).
Among the various independent brands under Huayimei, the ZP brand is the most well-known. Public information shows that ZP’s flagship product is the ZP Acne Treatment series, which has not only been popular in the domestic market for many years but has also been exported to international markets such as Europe, America, Oceania, and Southeast Asia for more than a decade.
Furthermore, the ZP Acne Treatment series was recognized with honors such as “High-tech Product of Anhui Province” and “Famous Brand of Anhui”. Reports have stated that the “ZP Acne Treatment Essence” single product achieved billion yuan in sales.
CHAILEEDO has noticed that ZP once used cosmeceutical as a selling point. However, after the prohibition of cosmeceutical in 2018, ZP’s development gradually declined.
Currently, ZP’s Tmall flagship store only has one product listed, called ZP Xiao Dou Jing Essence, with two links and a total sales volume of 900+. The Douyin account “ZP Flagship Store” has been inactive since April 2022, and the product links have been cleared.
It is worth mentioning that when using the keyword “ZP” to search on a cosmetics regulation app, it shows that ZP has filed registrations for four ordinary cosmetics, all of which were registered by Shanghai Guoyi Kangmei Health Management Co., Ltd. (referred to as Shanghai Guoyi Kangmei) in October and December of this year. According to Chinese trademark information, the third-class cosmetics trademark of “ZP” belongs to Shanghai Guoyi Kangmei.
In addition, according to information from the National Medical Products Administration’s special cosmetics registration platform, Shanghai Huayimei has registered over 20 ZP products for whitening and spot removal. However, most of the product licenses have expired.
In recent years, in addition to its own brands, Shanghai Huayimei has also vigorously developed OEM/ODM. According to information from the National Medical Products Administration’s ordinary cosmetics registration platform, the company has registered 421 products as the applicant. The most recent product registration date was September 19th of last year, and there have been no new registered products since then. Currently, most of the products registered by Shanghai Huayimei are shown as “cancelled” status.
In fact, Huayime and ZP have been well-known in the industry, and the bankruptcy liquidation of the company from its previous status as a star enterprise is inevitable. An industry insider who learned about Shanghai Huayimei’s bankruptcy news expressed regret, saying, “It’s a pity that ZP used to be a well-known acne treatment brand.”
An insider who worked at Shanghai Huayimei for many years told CHAILEEDO that the bankruptcy of Huayimei may be related to the company’s failure to keep up with the changing times in its business strategies. The insider also revealed, “Currently, Huayimei is just not operating the factories, but the brand is still running.”
It is worth noting that according to information released by the Shanghai Municipal Administration for Medical Regulation, on December 1st of this year, Shanghai Huayimei was found to have produced and released 1,932 bottles (batch number CF2701) of “Xianchen Pore Cleansing Essence” without appointing a responsible person for quality and safety during the period from June to July 2022. The company failed to provide batch production records, raw material procurement records, sales targets, and corresponding payment vouchers during the production of the aforementioned product. As a result, Shanghai Municipal Administration for Market Regulation fined the company 40,000 yuan.
Previously, in August 2021, Shanghai Huayimei was fined 100,000 yuan ($13,921.5) for using the medical term “anti-inflammatory” in advertisements for ZP cosmetics on its Tmall flagship store.
From the above investigation, it is not difficult to see that several companies under Huayimei Group have been subject to execution and have been listed as dishonest individuals since last year, and now Shanghai Huayimei has been applied for bankruptcy liquidation. It can be seen that this long-established apologize.
Looking at the entire industry, it is not uncommon to see companies like Huangyimei facing difficulties. An industry insider who prefers to remain anonymous revealed to Qingyan that there have been particularly many bankruptcies and closures this year. “Being able to go through bankruptcy liquidation is considered good. Many companies that can’t sustain themselves will choose to flee.” This indicates that although the pandemic has subsided, the beauty industry is still facing a harsh winter.
