An 84-year-old founder of one of China’s best-known private traditional medicine makers has been placed under a court-ordered consumption restriction after a loan dispute tied to a family‑owned hotel. Harbin’s Songbei District People’s Court imposed the measures on Antu Daoziran Hotel Co. and restricted high-end and non‑essential spending by the hotel’s legal representative, Zhao Xiùqín, and the company’s principal, founder Zhao Buchang. The action stems from an unpaid RMB 16 million loan owed to Harbin Huisheng Electric Power Engineering Co.; the restriction is an enforcement tool used when a party fails to meet obligations determined by a final judgment.
The case is technically separate from Buchang Pharmaceuticals’ listed business, but it highlights the entanglement of family holdings and the reputational risk that can follow. Zhao and his wife, Wu Haiqin, are the hotel’s principal shareholders, holding 51 percent and 49 percent respectively, and the hotel is described as a key vehicle for the family’s property investments. Chinese courts increasingly use consumption restrictions to pressure debtors to comply with judgments, and enforcement against high‑profile individuals quickly attracts investor and public attention even when the corporate connection is indirect.
The timing compounds scrutiny of Buchang Pharmaceuticals’ corporate model. The company has long relied on heavy marketing spend and comparatively light research and development investment. From 2019 to 2024 Buchang reported sales and marketing expenses of RMB 80.81bn, RMB 83.73bn, RMB 83.00bn, RMB 74.84bn, RMB 63.69bn and RMB 43.23bn respectively — a six‑year total of roughly RMB 429.3bn — while R&D outlays in the same period amounted to RMB 5.05bn, RMB 5.33bn, RMB 4.09bn, RMB 2.84bn, RMB 3.35bn and RMB 3.45bn, or about RMB 24.11bn in aggregate. Over those six years, R&D spending was less than 5.6 percent of marketing spend, a ratio that underscores the company’s commercial, rather than innovation, emphasis.
Buchang’s flagship product, Naoxintong capsule, built the company’s market position after its 1994 launch and became a dominant player in the heart‑and‑brain TCM segment, peaking in sales in mid‑decade. The company listed on the Shanghai main board in 2016 at an issue price of RMB 55.88 per share and reached a peak market capitalization of about RMB 1.05 trillion. That peak proved ephemeral: by the close on 11 February 2026 the stock traded at RMB 17.19 and the market value had shrunk to roughly RMB 181.3bn, more than an 80 percent decline from its high.
Financially the firm has shown some signs of stabilization. Buchang forecast a return to net profit for 2025, targeting RMB 320m–468m in attributable net income after several years of losses. Management attributes the turnaround to lower production costs, the completion of amortization stemming from earlier acquisitions, and a significantly smaller projected goodwill impairment charge in the current year compared with the prior period, all of which reduce one‑off drag on earnings.
Yet the episode with the founder underscores structural governance questions investors should weigh. Heavy reliance on a legacy blockbuster, aggressive marketing budgets and sprawling family investments create execution and reputational risks, and the court action — even when tied to a private hotel — can prompt closer regulatory and market scrutiny. In China’s current climate of more assertive creditor remedies and attention to corporate compliance, small, family‑owned liabilities can have outsized consequences for listed companies associated by name and ownership.
For foreign and institutional investors the case is a reminder to parse related‑party exposures, founder shareholdings and off‑balance‑sheet entanglements when assessing Chinese conglomerates built around a single product or charismatic founder. A modest RMB 16 million loan may be material less for its size than for the signal it sends about governance practices, succession risk at an advanced founder age, and the degree to which a listed firm’s fortunes depend on continued market dominance of a few established products.