Yili’s Chairman Pan: A Chinese business story

Yili is one of China’s big two dairy firms along with Mengniu. Both companies are based in Inner Mongolia, although the former is state-controlled while Mengniu was founded in 1999 by a former Yili employee. Mengniu and Yili both escaped China’s 2008 melamine milk scandal more or less unscathed, but I believe the Chinese public remains dubious about the domestic dairy industry as a whole. Which is perhaps one reason why this story has legs:

• Earlier this month, we noted the story of two Chinese writers who were detained and accused of “defamation and picking quarrels and provoking troubles” (诽谤罪、寻衅滋事罪 fěibàng zuì, xúnxìn zīshì zuì) for online “slurs” about the giant dairy company Yili.
• The writers were accused of circulating a WeChat posting of a “fictional” story about a company very similar to Yili, run by a chairman very similar to Yili boss Pan Gang 潘刚. The dairy boss in the story ends up detained by the police.
• On March 26, Yili’s share price fell by more than 3.5 percent after the WeChat postings went viral.  
• Yili’s response at the time was to state that Pan had been out of the public eye and in the U.S. receiving medical treatment, but that he continued to participate in regular decision making and important meetings while abroad.
• Today, Yili’s shares jumped by 10 percent “after video footage showing the company’s chairman and CEO Pan Gang attending its annual shareholder meeting in his first high-profile public appearance recently, squashing rumors that the chairman had been taken away for investigation,” according to the South China Morning Post.

“Some argued that this incident has exposed a weak point in China’s non-comprehensive information disclosure system, as there are no clear rules on what information a listed company should reveal to shareholders,” says the South China Morning Post.

However, not even the most stringent disclosure rules could change the fact that successful Chinese businesspeople regularly disappear in mysterious circumstances. Sometimes they resurface, sometimes they are convicted of crimes, and sometimes they never appear in public again. Below are a few recent cases:

• DISAPPEARED: Xiao Jianhua 肖建华 of Tomorrow Group was seized by mainland agents at his luxury Hong Kong apartment in January last year. There has been no official announcement about his status, but yesterday, two sources told the South China Morning Post that Xiao will be out on trial in the second half of the year, and that the trial was delayed “as his former flagship company struggles to dispose of assets.”
• CONVICTED: Wu Xiaohui 吴小晖 of Anbang. Wu was sentenced to 18 years in prison after being convicted of fundraising fraud and embezzlement earlier this month.
• UNDER INVESTIGATION: Ye Jianming 叶简明 of CEFC China Energy. Ye was detained without public announcement in February, but the company has acknowledged that Ye is being investigated by Chinese authorities for suspected economic crimes.
• DISAPPEARED FOR A TIME: Guo Guangchang 郭广昌 of Fosun Group vanished for a few days in 2015 and was rumored to have been detained. Then Fosun released a statement saying that “after making enquiries, the company understands that Mr. Guo [Guangchang] is currently assisting in certain investigations carried out by mainland judiciary authorities.” Guo soon returned to lead the company, but the public and his company’s shareholders have no idea what really happened.