After founder Deng Hongjiu was detained on suspicion of accounting fraud, Hongjiu Fruit's stock has become worthless and has officially been delisted by the Hong Kong Stock Exchange.
<h4>Key Points:</h4>
<ul>
<li>After only three years of listing, Hongjiu Fruit has been delisted by the Hong Kong Stock Exchange, and in the future, it may need to undergo debt restructuring and asset sales to deal with creditor claims.</li>
<li>The company was once regarded as China's largest fruit distributor, with its shares suspended from trading starting in March 2024, and several executives were arrested for allegedly fabricating sales data.</li>
</ul>
Tan Ying
In 1987, at just 17 years old, Deng Hongjiu started working as a laborer at the Chaotianmen Wharf in Chongqing, and later spent two days a week selling oranges, gradually developing his own fruit stall. In 2002, he co-founded Hongjiu Fruit with his wife Jiang Zongying. Ten years later, Deng Hongjiu bet on the Thai durian market, raising 100 million yuan (approximately 14.3 million USD) to build a processing plant there.
As the Chinese market gradually accepted the strong-smelling durian, this forward-looking layout earned Deng Hongjiu the title of &#34;King of Durian in China.&#34; He secured a firm grip on the high-profit market share by signing long-term supply contracts with large supermarkets. By 2021, Chongqing Hongjiu Fruit Co., Ltd. had become China's largest durian distributor and expanded its business to high-end fresh fruit categories such as dragon fruit, mangosteen, longan, grapes, and cherries.
However, this story of the fruit kingdom took a dramatic turn for the worse. Over the past two years, amid severe price fluctuations, fabricated sales, and mismanagement, Deng Hongjiu's business empire rapidly collapsed. In the highly time-sensitive and perishable fruit industry, any misstep can be fatal. This fruit tycoon’s dramatic life of &#34;slowly climbing, rapidly falling&#34; reached a symbolic conclusion this week—his company was forcibly delisted by the Hong Kong Stock Exchange.
Rewind to September 2022, when the newly listed Hongjiu Fruit was still thriving. At that time, the company had subsidiaries in Thailand, Chile, Vietnam, and the Philippines, and branches in 17 cities in China, along with its own cold chain logistics system. The pre-listing investor lineup included heavyweight institutions such as Alibaba and China Merchants Capital, and after going public, Deng Hongjiu and Jiang Zongying entered the ranks of China's wealthy, with a combined estimated net worth of about 8.5 billion yuan (approximately 1.2 billion USD).
However, by last week’s Christmas Eve, the Hong Kong Stock Exchange announced that it would cancel Hongjiu Fruit's listing status effective December 30, marking a stark change in circumstances. Major institutions, including Invesco Great Wall Fund and Huaan Fund, subsequently stated that their holdings in Hongjiu Fruit had been confirmed as worthless.
The disintegration of the fruit kingdom had actually shown signs of cracks more than a year ago. In March 2024, Hongjiu Fruit announced a trading suspension, triggered by significant doubts raised by auditor KPMG regarding the company's full-year performance for 2024, leading to KPMG's resignation. KPMG pointed out that Hongjiu Fruit was suspected of engaging in &#34;circular funding&#34; operations, where large payments were made to fictitious suppliers, and then these funds were funneled back to the company's accounts in the form of fake customer transactions to inflate revenue and accounts receivable. Meanwhile, Deng Hongjiu and his wife continued to borrow externally and pledged their shares as collateral, attempting to buy time for their declining business
Since September 2023, HONGJIU FRUIT has not submitted any financial information. The company disclosed that its revenue for the first half of 2023 was 8.5 billion yuan, with a profit of 802 million yuan. Despite continuous revenue growth in the years leading up to its listing, the company has been in a negative cash flow state since 2019, with the gap widening each year.
<h4>Durian Price Avalanche</h4>
Over the years, HONGJIU FRUIT has managed to maintain operations despite continuous capital outflows. However, the sharp decline in durian prices between 2023 and 2024 has dealt a heavy blow to the company. KPMG began to suspect irregular transactions after discovering anomalies in the fourth quarter of 2023. HONGJIU FRUIT made advance payments of 3.42 billion yuan to new suppliers in that quarter, accounting for about three-quarters of the company's total advance payments for the year. Some of these new suppliers did not have employees participating in the government-mandated social security program, and others had registered capital even lower than the amount of advance payments received.
In April of this year, the situation escalated further. Deng Hongjiu, Jiang Zongying, and six other executives were arrested in Chongqing on suspicion of loan fraud. To date, Deng Hongjiu and four other senior company executives remain in custody, while the others were released in May. It is reported that HONGJIU FRUIT used fictitious sales to generate fake accounts receivable as collateral for bank loans to support company operations.
Following the first round of arrests, three independent directors resigned in succession, which became one of the important factors for the Hong Kong Stock Exchange's final decision to delist the company.
Meanwhile, HONGJIU FRUIT continues to be operated by the remaining management and employees. In April of this year, the company applied to the court for a leading restructuring, indicating that a large-scale overhaul is imminent. The restructuring plan may include the sale of some assets, such as its 16 fruit processing plants and cold chain logistics infrastructure.
HONGJIU FRUIT's two major competitors, Baiguoyuan (2411.HK) and Xianfeng Fruits, are relatively better off, but the gap is not significant. Starting from August 2024, Xianfeng Fruits' chairman Han Shuren's equity worth over 300 million yuan was frozen by a court in Hangzhou, likely related to debt disputes, and the company has thus suspended its listing plans.
Baiguoyuan's latest financial report shows that its revenue for the first half of 2025 fell by 21.8% year-on-year to 4.4 billion yuan, with a shift from profit to loss, recording a loss of 342 million yuan. The company has also significantly reduced its store size, with the number of stores decreasing from 6,011 to 4,375, a drop of about one-third, reflecting increased operational pressure.
The difficulties in the fruit industry are not limited to leading enterprises. Emerging channels such as community group buying and fresh e-commerce continue to erode the market space of traditional sales models like supermarkets. In addition, the loss rate of fresh agricultural products in China is as high as 20% to 30%, far exceeding the approximately 5% level in developed countries, partly due to insufficient industry standardization.
The supply chain of the fruit industry from orchard to retail is lengthy and complex, with compliance risks lurking in almost every link. Chinese media reports indicate that nearly 30% of domestic fresh retail enterprises have issues with invoice management, about a quarter have not established a complete quality traceability system, and approximately 15% of enterprises do not meet industry standards for cold chain logistics
For HONGJIU FRUIT, the reason for the further deterioration of the problem lies in the company's long-term operation under the &#34;family business&#34; model, which has a weak governance structure. Before going public, the family collectively held over 46% of the shares, and the senior management was almost entirely composed of family members: Deng Hongjiu served as chairman, Jiang Zongying served as general manager, his son Deng Haoji was the chief operating officer, his daughter Deng Haoyu served as co-company secretary, and his nephew Yang Junwen was the deputy general manager

06689

HONGJIU FRUIT has been delisted by the Hong Kong Stock Exchange due to founder Deng Hongjiu's involvement in accounting fraud, and the stock is now worthless. The company was established only three years ago and was once the largest fruit distributor in China. It is facing debt restructuring and asset sales due to fabricated sales data and mismanagement. Deng Hongjiu was once known as the "King of Durian in China" for his market positioning in durians, but his business empire collapsed rapidly due to price fluctuations and management issues

The King of Durian Falls: HONGJIU FRUIT Withdraws from the Market