Crossing the red line: Weibo Corporation's growth dilemma

Recently, Weiwei Foods Co., Ltd. announced that it received two regulatory documents from the Jiangsu Securities Regulatory Bureau and the Shanghai Stock Exchange. Both documents cited that, due to improper revenue recognition methods for certain grain and oil trading business income from 2022 to 2024, the company’s revenue and cost disclosures in its periodic reports for three consecutive years were inaccurate. The Shanghai Stock Exchange issued a regulatory warning to Weiwei Foods and three senior executives of the company. Analysts said that this information disclosure violation reflects a failure in Weiwei Foods’ internal financial controls to accurately judge the substance of business transactions; combined with external competitive pressures and internal structural problems, Weiwei Foods has fallen into a growth dilemma.

Information disclosure violations

On April 3, 2026, the《Administrative Regulatory Measures Decision Letter》 (hereinafter referred to as the《Decision Letter》) issued by the Jiangsu Securities Regulatory Bureau to Weiwei Foods shows that, from 2022 to 2024, Weiwei Foods applied incorrect methods for revenue recognition for certain grain and oil trading business, using the gross method and the net method. This does not comply with the provisions of Article 34 of《Accounting Standards for Business Enterprises No. 14—Revenue》, resulting in inaccurate disclosure of operating revenue and operating costs in the company’s Q1, interim, and Q3 reports for 2022, 2023, and 2024.

Subsequently, Weiwei Foods released the《Announcement on Corrections of Prior Accounting Errors》, stating that the company would reduce operating revenue and operating costs for Q1 2022 by approximately RMB 1.17 billion, increase operating revenue and operating costs for the first half of 2022 by approximately RMB 31.3605 million, and reduce operating revenue and operating costs for Q3 2022 by approximately RMB 117M. It would also reduce operating revenue and operating costs for Q1 2023 by approximately RMB 105.6M, reduce operating revenue and operating costs for the first half of 2023 by approximately RMB 2.47 billion, and reduce operating revenue and operating costs for Q3 2023 by approximately RMB 4.48 billion. For 2024, it would reduce operating revenue and operating costs for Q1 2024 by approximately RMB 129M, reduce operating revenue and operating costs for the first half of 2024 by approximately RMB 71.9116 million, and increase operating revenue and operating costs for Q3 2024 by approximately RMB 33.7055 million.

Pursuant to Article 34 of the《Accounting Standards for Business Enterprises No. 14—Revenue》 issued by the Ministry of Finance of the People’s Republic of China, “An enterprise shall determine whether it is the principal or the agent in a transaction by assessing whether it controls the relevant goods before transferring them to the customer. If the enterprise is able to control the goods before transferring them to the customer, the enterprise is the principal and shall recognize revenue based on the total amount of consideration already received or receivable; otherwise, the enterprise is an agent and shall recognize revenue based on the amount of commission or fees that it is expected to be entitled to receive. The amount shall be determined based on the net amount after deducting the consideration payable to other relevant parties from the total amount of consideration already received or receivable, or based on the amount or proportion of the commission as agreed in advance.”

The《Decision Letter》 shows that the above actions by Weiwei Foods violated Article 1 of Paragraph 3 of the《Measures for the Administration of Information Disclosure by Listed Companies》 (CSRC Order No. 182, hereinafter referred to as the《Information Disclosure Measures》). The company’s chairman Ren Dong, general manager Zhao Huqing, and chief financial officer Zhao Changlei failed to perform their duties diligently and responsibly, in violation of the provisions of Article 4 of the《Information Disclosure Measures》, and bear primary responsibility for the above violations by the company. In addition, according to Article 52 of the《Information Disclosure Measures》, the Jiangsu Securities Regulatory Bureau decided to take administrative regulatory measures requiring Weiwei Foods to make corrections; and to take administrative regulatory measures requiring Ren Dong, Zhao Huqing, and Zhao Changlei to issue warning letters, and to record the matter in the integrity archive for the securities and futures market.

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

Weiwei Foods stated that “the current corrections of prior accounting errors and retrospective adjustments will not affect the company’s financial position and operating results, including the total amount of assets, the total amount of liabilities, net assets, the net profit attributable to shareholders of the listed company, and the net amount of cash flows from operating activities, etc.”

Regarding the issues related to the information disclosure violations, a reporter from Beijing Business Today sent an interview request letter by email to Weiwei Foods, but it was returned and showed “the email content was refused.”

A well-known strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, Zhan Junhao, said in an interview with a reporter from Beijing Business Today that, “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 Foods’ improper revenue recognition led to inaccurate revenue and cost disclosures, reflecting that the financial internal controls missed the mark in judging the substance of the business; especially, there were serious oversights in the contract review for grain and oil trading, execution of the revenue recognition standards, and audit supervision.”

Not the first time

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

On March 25, 2023, the Jiangsu Securities Regulatory Bureau issued a decision requiring Weiwei Foods to make corrections, because “in July 2022, Weiwei Foods, together with Xuzhou Xingsheng Investment Holding Group Co., Ltd. (hereinafter referred to as ‘Xingsheng Group’) and Guolian Tongbao Capital Investment Co., Ltd. (hereinafter referred to as ‘Guolian Investment’), jointly invested to establish an industrial investment fund—Xuzhou Weiwei Shengtong New Consumption Investment Fund (Limited Partnership). On August 30, 2022, the fund completed filing with the Asset Management Association for Securities Investment Funds in China, but Weiwei Foods failed to disclose this important progress at the time the fund completed the filing and registration, in violation of the provisions of Article 41 of the《Self-Regulatory Guidance No. 5—Transactions and Related Party Transactions》 of the Shanghai Stock Exchange (SSE issued [2022] No. 6). The above conduct violates the provisions of Article 3 and Article 25 of the《Measures for the Administration of Information Disclosure by Listed Companies》 (CSRC Order No. 182).”

In July 2022, the Shanghai Stock Exchange also issued a regulatory warning decision to Weiwei Foods’ shareholder, Weiwei Group Co., Ltd. (hereinafter referred to as the《Weiwei Group》). The reason was that after signing the《Share Transfer Agreement》 with Xingsheng Group, Weiwei Group did not, as required, fulfill its duty to pre-disclose the reduction of holdings 15 trading days in advance.

Weiwei Foods is a large, cross-regional and cross-industry enterprise group mainly centered on “ecological agriculture, large grains, and large food.” The current controlling shareholder is Xingsheng Group, holding 30.91%. Its main products include the plant protein beverage series such as “Weiwei” brand soy milk powder and liquid soy milk; the “Weiwei Liuchao Song” flour series; the “Tianshan Xue” dairy product series; and the tea series under “Yiqingyuan,” as well as a wine and spirits trading platform. Its subsidiary, the 茗酒坊 company, primarily sells self-owned brands such as “Hanyuan,” and agency brands such as “Shuanggou,” and other well-known liquor brands. For many years, Weiwei soy milk powder has consistently maintained a leading position in the industry; its production and sales volumes have ranked first in the industry for multiple consecutive years, earning the title of “King of Soy Milk” in China.

Song Liang, a senior analyst in the dairy industry, said, “In recent years, business pressure on companies has been relatively high. For some listed companies to maintain revenue growth, they may ‘increase’ revenue or ‘reduce’ costs in financial reporting. For example, accelerating depreciation of fixed assets will increase net profit.”

Growth dilemma

As a listed leader in plant-based protein beverage, after Xingsheng Group took control of Weiwei Foods in 2021, the company proposed a strategy of “ecological agriculture, large grains, and large food,” attempting to adopt a ‘dual-engine drive’ approach to develop grain procurement, warehousing, processing, trading, and healthy food production while expanding liquid soy milk.

According to Weiwei Foods’ official website, it has collaborated with large grain enterprises in China and abroad to build modern grain logistics parks in the Huaihai Economic Area, the main producing area for high-quality wheat; in South Henan, the main producing area for small peanuts; in the main producing area for non-GMO soybeans—Suihua in Heilongjiang; and in the main producing area for high-quality rice—Jiamusi. This has formed 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 Xingsheng Group’s investment, Weiwei Foods previously stated that since Xingsheng Group’s entry, it has coordinated its own high-quality resources, leveraged the synergy effect with the company’s business development, and strengthened the company’s core competitiveness. Through cooperation with Xingsheng Group and Guolian Investment to establish food and beverage and modern agriculture industrial investment funds, with Weiwei Foods’ core main business, the upstream and downstream of its industrial chain, and its future strategic plans as the focus, key investments have been made in areas such as food and beverage, new consumption, and agriculture.

It is worth noting that in recent years, the performance of four industry giants in the plant-based beverage segment—Weiwei Foods, Chengde Lulou, Yangyuan Drinks, and Huanlejia—has been “not performing well.” According to financial reports, 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. In the first three quarters of 2025, Chengde Lulou achieved revenue of about RMB 247M, down 9.42% year over year; and achieved net profit attributable to shareholders of about RMB 384 million, down 8.47% year over year. In the first three quarters of 2025, Yangyuan Drinks achieved revenue of about RMB 448M, down 7.64% year over year; and achieved net profit attributable to shareholders of about RMB 126M, down 8.95% year over year. Weiwei Foods’ revenue, in particular, has declined for five consecutive years from 2020 to 2024. In the first three quarters of 2025, it achieved revenue of about RMB 1.96B, 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 plant-based beverage companies’ revenues decline, one reason is that as channels become fragmented and consumers become more individualized and scenario-based, some own-brand products have grown rapidly. Second, existing-made products are replacing traditional default packaged products. For a traditional production-oriented company like Weiwei Foods, the only way to increase revenue is to explore new areas, but judging from the current situation, the difficulty of exploring new areas is very high.”

Beijing Business Today reporter Kong Wenxie