TianYouDe Qingke Liquor, a regional baijiu maker long associated with Qinghai’s barley spirit, has seen its chief executive resign, marking the second senior exit in a month and underscoring a deeper operational and governance crisis. The company has warned that 2025 net profit attributable to shareholders may collapse by 85–90% year‑on‑year, while its non‑recurring‑adjusted profits are set to fall by more than 92%. At the same time inventory sits at roughly RMB 1.48 billion and the firm’s inventory turnover has ballooned to an extraordinary 1,946 days — effectively a five‑plus year stock overhang.
The departing general manager, Wan Guodong, who joined TianYouDe at the end of 2022 from Jinpai (Jingpai) and led a push to “young‑ify” the brand and expand distribution, stepped down citing personal reasons. His short, turbulent tenure overlapped with that of his deputy, Lu Shuilong, who also resigned in late 2025 after a four‑month return to the company. Both executives had ties to Jinpai, and both were involved in a controversial equity‑incentive episode: following the first tranche of stock vesting in late 2023, six senior managers disclosed plans to sell some 625,000 shares, a move the market read as a vote of no confidence in the short‑term outlook.
Financial stress is visible across the income statement. Revenue for 2024 was RMB 1.255 billion, a modest 3.7% rise, but net profit fell to about RMB 42.1 million — roughly a 53% decline from the prior year. The deterioration accelerated in 2025: revenues in the first three quarters slid 10.8% year‑on‑year while net profit plunged 62%, with the second and third quarters producing losses of RMB 16.04 million and RMB 29.64 million respectively. Sales‑led tactics have failed to deliver efficient returns; selling expenses rose sharply, advertising outlays jumped more than 21%, yet margin erosion continued and gross margin slipped to 58.5% by Q3 2025.
Operational metrics point to a company producing far more than it can sell. Despite a reduction in the book value of inventory to about RMB 1.482 billion by mid‑2025, the effective turnover period is nearly five and a half years at current sales rates. Utilisation of core production capacity is deeply depressed — finished‑product plant utilisation was around 39% in the first half of 2025, and a newly acquired Tibetan facility was operating at just 6.5% the prior year. Distributor confidence is fading: contract liabilities, a proxy for dealer prepayments, fell from RMB 65 million at the end of 2024 to RMB 58 million in mid‑2025.
TianYouDe’s international and diversification bets have also drained resources. The Napa Valley winery acquired in 2013, operated through U.S. subsidiary Oranos Group (OG), has accumulated losses of about RMB 150 million since inception. OG recorded revenue of only RMB 3.07 million in H1 2025 against a RMB 13.02 million net loss, and wine gross margins were negative, indicating each bottle sold arguably worsens the company’s cash position. Remarkably, the group agreed in July 2024 to inject another US$4 million into OG even as domestic results deteriorated.
The woes of TianYouDe mirror broader trends applying pressure across China’s mid‑tier spirits sector. National brands with stronger distribution and brand equity — and deeper financial war chests — are extending into regional strongholds, accelerating a “Matthew effect” that concentrates profit pools. At the same time, consumer demand is cooling: official data show catering revenue growth slowed from 5.3% in 2024 to 3.2% in 2025, eroding a key channel for baijiu consumption as business entertaining and large‑scale banquets contract.
Corporate governance choices have compounded the company’s performance problems. An equity incentive intended to retain and motivate executives generated RMB 25.14 million in share‑based payment expense in 2024, consuming roughly 60% of that year’s attributable net profit. Senior executive pay has been cut — the board reported total director and senior manager compensation of about RMB 3.56 million in 2024, down nearly 29% year‑on‑year — but salary compression during a strategic inflection can undermine retention precisely when disciplined leadership is most needed.
For investors, suppliers and potential buyers, TianYouDe presents a high‑risk, high‑friction turnaround scenario. The company must confront bloated channels, write down slow‑moving inventory, and decide whether to keep sinking capital into an unprofitable overseas wine arm. Absent decisive cost restructuring, sharper portfolio focus and credible board‑level leadership, the firm risks further market share losses to national rivals or a forced balance‑sheet restructuring that would dilute current shareholders and unsettle creditors.