Yunnan’s Former Wealthiest Placed Under Surveillance for 2.5 Years, 6 Tobacco Companies in Trouble

Recently, the actual controller of Shaanxi Jinye has been placed under residential surveillance at a designated location by the Chinese Communist Party authorities, making it the sixth tobacco-related listed company since 2022 to have its actual controller facing issues.

Shaanxi Jinye Science and Education Group Co., Ltd. (“Shaanxi Jinye”) announced on August 16th that the company has recently learned that its actual controller, Chairman of the Board and CEO Yuan Hanyuan is currently under residential surveillance at a designated location by the public security authorities due to relevant matters.

According to Shaanxi Jinye, as of the date of this announcement, the progress and conclusion of the relevant matters are still unknown, and the company will continue to monitor the subsequent developments.

The 2023 annual report of Shaanxi Jinye shows that the company’s current business categories include education, tobacco-related industries, and medical care industries. The education business mainly involves higher education and other educational services, as well as educational investment; the tobacco-related industries primarily focus on the production and sales of cigarette labels, cigarette wrapping paper, and mouthpieces; while the medical care industry has established hospitals and a medical care project company, but has not yet engaged in specific operations.

In 2023, Shaanxi Jinye’s tobacco-related business (cigarette labels, cigarette wrapping paper, etc.) accounted for 59.12% of total revenue, with education accounting for 36.72%.

The 2023 annual report shows that Yuan Hanyuan currently serves as the Chairman and CEO of Hong Kong Wanyu (Group) Development Co., Ltd., the Chairman of the Board of Wanyu (Group) Co., Ltd., the Chairman of Singapore Wanyu (Group) Development Co., Ltd., the Chairman of the United States Wanyu (Group) Co., Ltd., the Chairman of the eighth Board of Directors of Shaanxi Jinye, the Chairman and CEO of Mingdeyuan Education Technology Group Co., Ltd., the Chairman of Shenzhen Ruifeng New Materials Technology Group Co., Ltd., the Chairman of Xi’an Mingde Polytechnic College, and the Chairman of Handu Hospital Co., Ltd.

According to reports by The Paper, in 2006, Yuan Hanyuan appeared on the Forbes China Rich List with assets amounting to 1.19 billion yuan, ranking 257th and being the richest person in Yunnan. His Wanyu Group is mainly engaged in real estate, biopharmaceuticals, and cultural industries. After appearing on the Forbes Rich List for three consecutive years, Yuan Hanyuan disappeared from the rankings.

In April of this year, Shaanxi Jinye’s first-quarter report for 2024 revealed that the company achieved a total operating income of 330 million yuan, a year-on-year increase of 14.48%; and a net profit attributable to the parent company of 26.1616 million yuan, a year-on-year increase of 36.51%.

In recent years, the anti-corruption storm in the tobacco system initiated by the Chinese Communist authorities has been escalating. As a result, several individuals related to listed companies involved in the tobacco business have come under investigation.

According to the China Fund News on August 16th, since 2022, there have been 6 tobacco-related listed companies whose actual controllers have been placed under investigation and residential surveillance.

One of the most notable cases is Zhu Linyao, the actual controller of Huabao Group, whose main business is in tobacco-based flavors and fragrances. With a wealth of 37.4 billion yuan, she ranked 99th on the 2021 Forbes China Mainland Rich List.

Since January 2022, Zhu Linyao has been under residential surveillance by the public security authorities in Hunan, Jiangxi, and Chongqing, and has been under investigation.

Similarly, Enjie Co., Jinqia Co., and Jiuyou Co., which are engaged in businesses related to cigarette labels, have also had similar incidents involving their actual controllers.

In April 2022, Jinqia Co. announced that its actual controller and chairman Qiao Luyu was under investigation and placed in custody by the Supervisory Commission of Shangyou County in Jiangxi Province; in November 2022, Enjie Co. announced that its actual controllers Li Xiaoming and Li Xiaohua were under residential surveillance at a designated location by the public security authorities; and in January 2023, Jiuyou Co. announced that its actual controller, chairman, and CEO Xu Shanshui were under investigation and detained.

The most recent incident is the ongoing cigarette packaging business of Dashengda, which has been escalating since 2024. On the evening of August 13, 2024, the company received a notice from the family of its actual controller and chairman, Fang Nengbin, informing them that Fang Nengbin was under investigation and held in custody by the Supervisory Commission of Xigong District, Luoyang City.

Along with Shaanxi Jinye, there have been a total of 6 tobacco-related listed companies since 2022 whose actual controllers have been investigated and placed under surveillance or under investigation.

Besides several individuals related to listed companies involved in tobacco business facing investigations, multiple former officials of the Chinese State Tobacco Monopoly Administration have fallen from power this year.

In October 2023, the former director of the Chinese State Tobacco Monopoly Administration, Ling Chengxing, was officially investigated, becoming the highest-ranking official to be implicated in the anti-corruption crackdown within the Chinese tobacco system since 2021.

Prior to Ling Chengxing’s investigation, the tobacco system had already been rocked by a series of developments, with several department-level officials being removed from their positions, including former deputy directors of the State Tobacco Monopoly Administration, He Zehua and Zhao Hongshun, and former director of the Technology Department of the Monopoly Administration, Zhang Hong.

Data indicates that the China National Tobacco Corporation, under the Chinese State Tobacco Monopoly Administration, is a monopoly organization in the tobacco industry, with its subsidiary companies accounting for the world’s top tobacco production output. In 2023, the China National Tobacco Corporation contributed a total of 1.5028 trillion yuan to the national treasury.