Zhang Xiaoquan lights up the "yellow alert"

In the past year since the change of leadership, Zhang Xiaoquan's business situation has not improved, but has taken a sharp turn, and the pressure has fully shifted to Zhang Zhangsheng's shoulders.

In the past year, the company has tried to repair the negative impact of the garlic door, but there are still major events, and the signboard of the time-honored brand has been lit up with a "yellow alert".

The controlling shareholder, Zhang Xiaoquan Group, has huge financial pressure and also provides pledge guarantee for the related party Fuchun. After the outbreak of the financing dispute, part of the equity of the listed company held by it was frozen by the judiciary, which made the situation worse.

Equity is frozen

Last Friday, Zhang Xiaoquan (301055. SZ) announced that about 19.96 million shares of the company held by the controlling shareholder Zhang Xiaoquan Group were frozen, accounting for 26.26% of its shares and 12.80% of Zhang Xiaoquan's total share capital.

According to the notification letter of Zhang Xiaoquan Group, in the factoring financing business between Fuchun Holding Group and Shanghai Chengbang Commercial Factoring Co., Ltd., the Group provided a pledge guarantee for the other party.

A few days ago, Fuchun Holdings' financing contract dispute occurred in the East Window, resulting in part of the equity of the listed company held by Zhang Xiaoquan Group being refrozen by the Hangzhou Intermediate People's Court.

Fuchun Holdings holds 99.998% of the shares of Zhang Xiaoquan Group, and is the core enterprise in the "Fuchun Capital System" created by Zhang Guobiao and Zhang Zhangsheng brothers. Founded in 1992, after more than 30 years of development, it has formed four major business segments, mainly industry, real estate, e-commerce and logistics, and finance, and has ranked among the top 100 private enterprises in Shanghai.

After the incident, the two parties involved communicated many times, and the dispute was settled. At present, the creditors and debtors have reached a settlement, and the procedures for unfreezing are being accelerated.

In fact, Zhang Xiaoquan Group itself is under great pressure. As of October 24, Zhang Xiaoquan Group and its concerted actors have pledged nearly all the shares of Zhang Xiaoquan held by them, and the funds obtained are mainly used for production and operation and replenishment of working capital.

As of the above announcement date, the balance of Zhang Xiaoquan Group's interest-bearing loans is 390 million yuan, which needs to be fully repaid in the next six months to one year.

In the first half of 2023, the Group achieved an operating income of 483 million yuan, a net profit of 8.8864 million yuan, and a cash/current liability ratio of 0.10.

The group said that its liquidity is gradually recovering, and through a variety of ways, it is actively revitalizing assets and resolving debt repayment risks as soon as possible.

Live in the shadows

Zhang Xiaoquan's unique skill is to make scissors, and the most famous is "broken knife".

In September 2021, Zhang Xiaoquan landed in the capital market and became the first listed company in the domestic knife and scissors industry. The following year, the garlic door incident occurred, and this time-honored brand was roasted on the fire, causing a brand crisis.

In July last year, a consumer in Guangdong spent 99 yuan to buy Zhang Xiaoquan's kitchen knife, and the kitchen knife suddenly broke when he was shooting garlic, and was told by the official customer service that the kitchen knife was not recommended to shoot garlic. This response that does not conform to common sense quickly rushed to the hot search.

Netizens also moved out the interview video of Xia Qianliang, the general manager of the company, who taught people to cut vegetables: "You have learned to cut vegetables for decades is wrong, and all Michelin chefs don't cut like this." In order to shoot the garlic door incident, it added fuel to the fire.

For more than one year, Zhang Xiaoquan has never been able to get rid of the influence of patting garlic, but has continued to have major events.

In January this year, the company was listed on the list of the top ten consumer rights protection hotspots in 2022 released by the China Consumers Association, and the competent authorities warned Zhang Xiaoquan that the kitchen knife could not shoot garlic and that the rights and interests of consumers must be respected.

In order to weaken the impact of incidents such as the garlic door as soon as possible, the company took a biased approach and organized employees to swipe orders, which was investigated in November this year.

According to the Credit China website, Hangzhou Zhang Xiaoquan E-commerce Co., Ltd. (a wholly-owned subsidiary of Zhang Xiaoquan) was entrusted by Zhang Xiaoquan to organize order control reviews for its own products on the e-commerce platform from December 2022 to April of the following year. Among them, the two major e-commerce platforms of Tmall and Jingdong swiped orders, forming sales of about 78,400 yuan.

After the relevant departments of Hangzhou verified this, they ordered him to stop the illegal acts and fined him 250,000 yuan.

It is not difficult to pay the fine and reflect deeply internally, but the bigger crisis is that Zhang Xiaoquan's time-honored status is already in jeopardy.

At the beginning of November this year, the Ministry of Commerce and other 5 departments announced the results of the review of China's time-honored brands, and "Zhang Xiaoquan" became one of the 73 "conditionally approved" brands and was shown a "yellow card". It means that after this time-honored brand undergoes 6 months of rectification, it must be judged by the relevant departments in a unified manner.

Investors flee

In December last year, Zhang Guobiao resigned ahead of schedule from all positions such as chairman and director of Zhang Xiaoquan, and his brother Zhang Zhangsheng took over the handsome seal.

From leading Fuchun Holding Group to reorganize Zhang Xiaoquan, share reform, and becoming the first share of knives and scissors, Zhang Guobiao played a key role.

Zhang Xiaoquan's knife and scissors business has been in business for nearly 400 years, and after Zhang Zhangsheng took over, the burden on his shoulders was not easy.

In 2022, the company achieved revenue of 827 million yuan, a year-on-year increase of 8.75%, and a net profit attributable to the parent company of 41.49 million yuan, a year-on-year decrease of 47.30%.

Since the beginning of this year, this situation has not been improved, and in the first three quarters, revenue and net profit attributable to the parent company fell by 13.78% and 77.41% respectively.

The durability of the knives and scissors, the long replacement cycle, and the business itself is not very sexy.

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In the company's prospectus, it has recognized the particularity of the industry and decided to rely on the time-honored brand to start a second business.

In addition to the traditional knife and scissors business, Zhang Xiaoquan has launched products such as rice cookers and ultrasonic dishwashers based on kitchen and household consumption scenarios. At present, kitchen appliances and hardware business still account for a relatively small proportion of the company's revenue.

Small and medium-sized investors are anxious in their eyes, and they make suggestions on the interoperability platform, suggesting that the company increase its efforts to bring goods through live broadcasting, and open up the sword market for martial arts and other segments.

I don't know if the company will accept these suggestions. Anyway, the number of shareholders of the company is visibly decreasing, and as of the end of September, the number of shareholders was 10,050, more than half of the time when it was listed.

There are not many time-honored brands that are re-emerging and living a good life.

Goubuli withdrew from the new third board, Quanjude, 18th Street Twist and other lackluster performance, the root cause, these time-honored brands stick to an "old" word, unable to adapt to the new consumption environment, catering to the appetite of a new generation of consumers?

Zhang Xiaoquan's knife and scissors industry, the market pattern has already changed abruptly. Foreign-funded Zwilling people, domestic eighteen sons, Aishida, etc. have flocked to the market, and their channel advantages and brand awareness have long surpassed Zhang Xiaoquan.

Walking on the blade, it is difficult for Zhang Xiaoquan to play new tricks.

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