On November 28, the actual controllers of Dongguan Mengda Group Co., Ltd. (Mengda Group) and several others were placed under investigation for allegedly illegally absorbing public deposits and criminal measures have been taken. Mengda Group is a well-known B2B platform in China and has been recognized as one of the top ten B2B platforms. This news quickly became a hot topic.
According to a “Police Alert” released by the Nancheng Sub-bureau of the Dongguan Public Security Bureau on November 28, “On November 27, the actual controller of Dongguan Mengda Group Co., Ltd. voluntarily reported to the public security organs. The public security organs have initiated a criminal investigation against Li and others for allegedly illegally absorbing public deposits and have taken criminal enforcement measures.” It also requested investors to actively cooperate with the public security organs in providing evidence and to truthfully reflect the details of the case, as well as lawfully and reasonably express their demands.
The announcement listed three ways to report – online, by mail, and by phone.
On October 24, the official WeChat public account of Mengda Group released a letter titled “A Letter to Sixke and Xiaogu Customers.” The letter mentioned, “Hundreds of users have engaged in runs on the company, and abnormal termination of business activities on the platform has intensified, leading to significant withdrawal of funds by customers… In order to handle this situation, the company has transferred a large amount of cash from its platform and consolidated subsidiaries, resulting in the company facing tight cash flow.”
The letter also stated, “Over the years, the company has served a large number of small and medium-sized physical enterprises, many of which faced operational difficulties, resulting in overdue payments or bad debts. The company could only dispose of the goods, leading to severe losses.”
According to a report by “Daily Economic News” on November 30, the runs mentioned in the letter mainly occurred on the platforms of Sixkeyunbang and Xiaogufengshou. Prior to this, rumors about Mengda Group’s financial difficulties had already spread online.
Several investors expressed concerns to the media that the runs might damage their investments and hoped to withdraw their investments, but felt it would be difficult to achieve this. Therefore, they chose to report the issue to authorities.
Public information shows that Mengda Group was established in 2010, headquartered in Dongguan, and is a national-level high-tech enterprise focusing on services for the integration and development of industries. Leveraging digital technologies such as big data, the Internet, the Internet of Things, blockchain, and artificial intelligence, the company has built an industry digital technology service platform with transactions at its core, integrating online and offline services. It has offices in Guangzhou, Shenzhen, Guizhou, and other locations.
“Daily Economic News” mentioned that the company has over one million customers in the plastic and chemical industry, with online trading volume exceeding 240 billion yuan, making it one of the top ten B2B platforms in China.