In mainland China this year, numerous businesses that have been operating for over a decade or even several decades have been intensively entering bankruptcy, restructuring, and liquidation processes. From manufacturing companies that once received the title of “specialized and new” from the Chinese Communist Party (CCP) to internet, cosmetics, and pharmaceutical companies, a large number of companies with technology and official recognition have been collapsing one after another. Interviewees allege that the CCP’s policies are retrogressive and continue to systematically strangle private enterprises; the bursting of the real estate bubble, depletion of local finances, shift of foreign trade orders, and bank withdrawals are all continuously cutting off the cash flow of many physical businesses.
On July 28, the Nanghai District Court of Foshan City, Guangdong Province ruled that Foshan Guanjing Optoelectronic Technology Co., Ltd. went bankrupt and terminated the bankruptcy proceedings. The court announcement showed that Guanjing Optoelectronic was unable to repay its maturing debts, and its assets were insufficient to cover the debts. The liquidator had completed the distribution of the bankruptcy assets. The company was established in 2011 and had been in operation for about 15 years, having previously received titles such as “specialized and new” enterprise from CCP authorities in Guangdong Province.
According to information released by the National Enterprise Bankruptcy and Restructuring Case Information Network, Guanjing Optoelectronic’s bankruptcy involved 97 employee creditors with an amount of approximately 4.21 million yuan. The plight of a company that was packaged by the CCP system as “specialized and new,” ultimately unable to cover its debts and leaving employees waiting for repayment, has exposed the gap between CCP industrial upgrading propaganda and the reality of private enterprises in mainland China.
Mr. Liang, a manufacturing professional in Foshan, expressed to reporters that under the CCP’s harsh economic policies, factories are facing life-threatening cash flow crises and even falling into the dilemma of being too scared to shut down even if they wanted to. He bluntly stated that the CCP views private enterprises as lambs to be slaughtered, and once a factory closes, it may face systemic extortion such as tax investigations and retroactive taxes.
He said, “Many friends who have been running businesses for over a decade, with top-notch expertise in the industry, are now struggling. Upstream material and chip factories are blocked, forcing us to pay in cash and queue for supplies; downstream foreign trade orders have shifted to Southeast Asia, coupled with tight local finances, major clients extending payment terms from 3 months to 1 year, and only providing acceptance bills.”
Under the double pressure from continued pressure from Western countries like the United States and internal disorder in CCP economic policies, an economic winter is spreading across mainland China. From internet giants to the consumer goods industry, a wave of once-capital-chased enterprises are now entering bankruptcy, restructuring, and liquidation processes.
Previously hailed as the “unicorn” of internet recruitment, Lagou.com, which once had over 20,000 companies registered during its peak, also obtained multiple rounds of financing. However, in April of this year, it entered bankruptcy review, and in May officially began the bankruptcy restructuring process. This well-known internet company in mainland China undergoing judicial restructuring reflects the ebbing tide of China’s era of rapid internet expansion.
At the same time, the cosmetics industry is also experiencing intensive bankruptcies and liquidations. In the first half of this year, at least 20 related enterprises entered bankruptcy proceedings or were forcibly liquidated, nearly double the number during the same period in 2024. After July, Jinhua City’s Weizishow Cosmetics Co., Ltd. entered bankruptcy proceedings, and Beijing Tongrentang Cosmetics Co., Ltd. also entered compulsory liquidation.
From the internet to the consumer industry, companies are falling one after another, contrasting the CCP’s propaganda of the economic situation “stabilizing and improving.” The bursting of the real estate bubble, depletion of local finances, weak consumption, and the deteriorating operating environment for private enterprises are pushing more and more businesses towards the brink of financial collapse and judicial measures.
Economic scholar Ren Hongyu (pseudonym) told reporters that this wave of cross-industry bankruptcies and restructurings in China is the inevitable result of the CCP’s attempt to end the market economy and shift towards a planned economy. He said, “When the real estate bubble bursts, local finances dry up, and a large number of private enterprises are strangled, their bankruptcies are inevitable. Today, if enterprises cannot completely shift from ‘pursuing scale’ to ‘safeguarding cash flow,’ it will be difficult for them to survive this macroeconomic storm.”
Beijing Tongren Tang Cosmetics Co., Ltd. was established in 2005 and has been in operation for about 20 years. In July of this year, the Beijing First Intermediate People’s Court publicly announced the compulsory liquidation case of the company, with the applicant being the China Beijing Tongrentang (Group) Co., Ltd. holding a 51% stake.
In addition, on August 5, the Chongqing Drug Administration announced a list of companies intending to cancel drug operation licenses, including the Chongqing Qijiang Medicine Co., Ltd., which has been operating for over 40 years. While such license cancellations differ from judicial bankruptcies, the withdrawal of long-standing pharmaceutical commercial companies also shows that the adjustment of mainland Chinese enterprises has already affected traditional industries that have been operating for decades.
Economic analyst Mr. Lai analyzed to reporters, “We used to think that bankruptcy was the ‘survival of the fittest’ in the market, but now it looks more like a ‘downward transmission of cost.’ Entrepreneurs, due to personal asset entanglements, gamble-style persist until the last moment. The result is that when companies truly enter judicial procedures, assets have shrunk to zero, banks have taken away mortgaged factories, and the employees who have been with the company for decades, as well as the suppliers who provided deferred payments and supplies, are forced to bear more than 90% of the bad debt consequences.”