On September 7, Li Tuchun, a well-known Chinese entrepreneur and former CEO and chairman of the board of the Prince Milk Group in Hunan, passed away from a sudden heart attack in Beijing at the age of 66. Li Tuchun had been detained by authorities for 15 months before being released without charge, but the company he founded had since undergone bankruptcy and restructuring, with its shares completely divided. His passing has once again brought attention to the sensational “Prince Milk Incident” that shook China over a decade ago.
On September 8, the Red Star Capital Bureau learned from Li Shuai, the son of Li Tuchun, at a famous entrepreneur in Hunan and the founder of Prince Milk, that Li Tuchun had passed away in Beijing on the 7th. Li Shuai revealed that Li Tuchun may have suffered a sudden heart attack, saying, “No one was around when it happened, and by the time the ambulance arrived, he had no vital signs left.”
Shortly after, several related topics surged to the top of Weibo’s trending list.
The cultural consultant of the Lingcui Mountain Academy, “Zhouyi Academy-Xuanmingzi,” mourned in a blog post, “From humble beginnings to conquering the business world, his reputation resounded across the land. Encountering calamity and enduring imprisonment, a warning handed down for generations. Achievements fleeting, only then realizing wealth is not to be contended with officialdom.”
The Weibo influencer, “Talking Right Away,” posted, “Drinking a bottle of Prince Milk every day, replenishing probiotics daily! Prince Milk founder Li Tuchun has passed away at the age of 66. When speaking of Prince Milk, one cannot avoid the ‘Li Incident,’ and cannot avoid the former Deputy Director of the Public Security Bureau in Zhuzhou, Ling Ya… In the 1990s, Li Tuchun dared to take risks, borrowed money to secure a prime-time slot on CCTV, and single-handedly turned Prince Milk into the leading domestic fermented probiotic beverage company, with a market share exceeding 70% at its peak, employing thousands of workers, and distributors scattered nationwide.
“The prosperity came rapidly, but the collapse was equally sudden. He entered into a gambling agreement with foreign capital (sound familiar?), but encountered financial crises and turmoil in the dairy industry, with banks pulling back loans, causing the Prince Milk financial chain to tighten suddenly, leading to Li Tuchun losing control of the company.
“After the change of ownership of the company, the turmoil did not settle. In 2010, Ling Ya, the then Deputy Director of the Public Security Bureau in Zhuzhou, led the establishment of a task force, resulting in Li Tuchun being arrested on charges of non-legitimate fundraising and other crimes.
“Overnight, the founder of a multi-billion-dollar company became a prisoner, detained for 15 months, with many relatives and senior executives also implicated, causing enormous trauma and persecution to his family… Within the prison walls, the Prince Milk personally built by him went through bankruptcy and reorganization, taken over by capital.
“In 2012, the Prosecutor’s Office issued a non-prosecution decision, determining that the so-called illegitimate fundraising was a private loan between companies, with insufficient evidence for embezzlement, misappropriation of funds, and other charges against Li Tuchun. Legally cleared of all charges, but the lost company, shattered family, and departed loved ones can never be returned.
“Until 2023, when Ling Ya, who led the case back then, voluntarily surrendered for investigation, her husband also fell from grace. The long-buried Prince Milk old case resurfaced in the public eye, with some individuals involved in the event back then being subsequently dealt with. But at this moment, it has been a full 13 years since the start of the ‘Li Incident.’
“The passion of entrepreneurship, the dangers of capital, the shadows of power, and the belated corrections intertwined to form Li Tuchun’s life. For us born in the 1980s, the childhood commercials still echo in our ears, the man who created Prince Milk has now come to a close.”
Public records show that Li Tuchun was born in 1960 in Linxiang, Hunan, and was the first EMBA graduate of Tsinghua University’s School of Economics and Management, a senior economist, and was named a distinguished private entrepreneur in China in 2004.
Public reports indicate that in 1993, Li Tuchun borrowed 100,000 yuan from a bank, printed a batch of calendars and sold them at a high price, earning his first bucket of gold in his life. In 1996, he used 1 million yuan to establish the Prince Milk Factory in Zhuzhou, Hunan. He once grew the sales of this probiotic drink to 3 billion yuan, surpassing companies like Le Baisi and Wahaha, and dominated over 70% of the fermented probiotic market.
In 1997, Li Tuchun acquired the prime-time advertising slot on CCTV for 88.88 million yuan for daily consumer goods, and secured an 800 million yuan order. Prince Milk’s sales skyrocketed from 50 million yuan in 2001 to 3 billion yuan in 2007, doubling its performance for six consecutive years.
In 2005, Li Tuchun’s business expanded into children’s clothing market, supermarket retail industry, chili sauce business, and real estate industry.
In early 2007, Prince Milk Group brought in investments from the UK Alliance, Morgan Stanley, and Goldman Sachs totaling 73 million dollars, and signed an agreement: within the first 3 years after the investment, if Prince Milk Group’s performance increased by more than 50%, the other party’s equity could be adjusted (reduced); otherwise, control would be lost.
In 2008, global financial crises and the Sanlu tainted milk powder incident led to a rupture in Prince Milk’s funding chain, resulting in declining profits and foreign banks starting to demand repayment, eventually causing Li Tuchun to completely lose control of Prince Milk.
In early 2009, the Zhuzhou government initiated the establishment of Gaoke Dairy, with Zhuzhou Gaoke Group and Zhuzhou State Investment holding 58.3% and 41.7% respectively, allowing the former to take control. Subsequently, Prince Milk’s core assets were entrusted to Gaoke Dairy for management through leasing, and while Li Tuchun still nominally held 61.6% of Prince Milk Group’s shares, they were all mortgaged to Gaoke Dairy.
In June 2010, Li Tuchun was taken into criminal custody on charges of illegal absorption of public deposits and was arrested in July. On November 30 of the same year, the Zhuzhou police claimed Li Tuchun was suspected of four crimes: illegally absorbing public deposits, occupation of duty, hiding and transferring funds, and embezzlement.
In December 2010, Li Tuchun’s attorney Wang Qinghui revealed that Li Tuchun was preparing to counter-sue Gaoke Dairy, formally suing them through Prince Milk’s Cayman Islands company, seeking compensation exceeding 350 million yuan.
On July 31, 2011, one year after Li Tuchun’s arrest, the chairman of High-Tech Dairy, the trustee company of Prince Milk, Wen Dibo was investigated by the Hunan Provincial Discipline Inspection Commission. In April 2013, he was sentenced to 9 years in prison for bribery and breach of contract.
On September 14, 2011, Li Tuchun was released on bail by the direct sub-bureau of the Public Security Bureau in Zhuzhou; in the same year in November, State-owned company Sanyuan Corporation, along with Xinhua United, participated in the restructuring, investing 715 million yuan to settle the debts, acquiring all the shares and assets of the three core companies under Prince Milk, thus changing hands with a star enterprise worth tens of billions of yuan. In January 2012, the Tianyuan District Prosecutor’s Office in Zhuzhou issued a “non-prosecution decision” for Li Tuchun, granting him freedom once more.
More than a decade later, on March 3, 2023, Ling Ya, the deputy director and Senior Superintendent Level II of the Public Security Bureau in Zhuzhou, Hunan Province under the Chinese Communist Party, turned herself in and accepted investigation before her arrest, as she was the head of the special task force for Prince Milk cases back then. Prior to her surrender, on January 3, Ling Ya’s husband Wu Bing was also investigated. Wu Bing was the former deputy party secretary and deputy chairman of the state-owned enterprise Zhuzhou Gaoke Group Corporation Limited.
The exact reasons for the simultaneous downfall of the husband and wife remain unclear at this time, but both are associated with the sensational “Prince Milk Incident” that rocked China.