Summary of Key Points
Chen Shunjun, the chairman and general manager of Yao Yigou, resigned due to the "omission of related party information," a rare occurrence where two positions are vacated simultaneously in the A-share market. Zhou Yuewu, the husband of the company's founder Li Yanfei, has taken over. Companies associated with Chen Shunjun have conducted significant transactions with Yao Yigou, which may indicate gaps in financial disclosure. Yao Yigou is currently facing performance pressures (half-yearly losses), weak new businesses, and its 2025 financial report received a qualified audit opinion. Zhou Yuewu's experience in retail, cold chain logistics, and health services could help the company address its internal control weaknesses and financial issues.
I. The Rare Act of "Resigning Due to Blame"
In the A-share market, it is uncommon for a company's chairman to voluntarily resign due to responsibility. Most problematic executives leave quietly without publicly acknowledging their fault. The only previous instance was in 2019, when the chairman of Shenzhen Datong resigned due to employees' violent resistance to legal orders. Chen Shunjun's resignation from both chairman and general manager positions is even more rare.
The direct reason for his resignation was the omission of related party information provided to the company and the audit firm. In simple terms, he failed to provide a complete overview of all the companies under his control or influence to the company and auditors. These related companies' transactions with Yao Yigou might not have been fully disclosed, potentially hiding financial risks.
The core company controlled by Chen Shunjun is Sichuan Shen Niao Century Technology, which provides digital services for pharmaceutical retail (helping pharmacies manage memberships and promote products), complementing Yao Yigou's pharmaceutical wholesale business. This was the basis for their cooperation, but the deeper the collaboration, the greater the risk of information omission.
II. The "Holes" in Related Party Transactions
The volume of transactions between Yao Yigou and Chen Shunjun's associated companies is substantial. In 2026, the total related party transactions are expected to reach up to 629 million yuan, with purchases from Shen Niao Century and Zhen Tu Health (also controlled by Chen Shunjun) alone exceeding 200 million yuan. Based on Yao Yigou's annual operating costs of around 4 billion yuan, this portion accounts for 5%, meaning that for every 20 yuan spent, 1 yuan goes to Chen Shunjun's companies.
Why are there so many transactions? Yao Yigou operates in the pharmaceutical wholesale market for small and medium-sized pharmacies in Sichuan, where competition is fierce, and it relies on Shen Niao's digital services to retain customers. However, the question arises: As both the chairman and owner of related companies, were these transactions fair, or were there instances of conflict of interest? Moreover, the fact that not all related companies were disclosed to the auditors could turn these transactions into "gray areas" in financial reporting.
III. Yao Yigou's Current Situation
Yao Yigou's performance in the first half of the year was poor, with revenue of 2.18 billion yuan (a slight increase of 0.8%) and a net loss of nearly 10 million yuan. The gross profit margin of its core pharmaceutical wholesale business is declining (only 4.35%), due to the challenging grassroots market: many small and medium-sized pharmacies have closed, and demand has shifted to larger hospitals.
The new businesses, which held great promise, have also failed to perform well. The revenue from the pharmaceutical manufacturing sector decreased by 9%, Chongqing Yao Damai incurred a loss of 6.66 million yuan despite earning 130 million yuan, and the net assets of Health Home Pharmacy are negative. Additionally, the 2025 financial report received a qualified audit opinion, indicating issues with financial data, including errors in consolidated financial statements and equity investments. These problems may be related to the previous omissions in related party information.
IV. The New Chairman, Zhou Yuewu: Can He Save Yao Yigou?
Zhou Yuewu is the husband of founder Li Yanfei and directly holds 3.45% of the company's shares, together with Li Yanfei, controlling 40% of the equity. This return of control to the founding family could be beneficial for addressing previous financial issues, as insiders are more likely to take tough measures.
Zhou Yuewu's experience is relevant to Yao Yigou's needs: he has 13 years of experience in retail chains (Suining Hongqi Chain) and understands cold chain logistics, which is essential for pharmaceutical distribution. He also has experience in health services, which can be integrated into the company's chronic disease management and traditional Chinese medicine cloud pharmacy initiatives. His primary task upon taking office is not expansion but to strengthen internal controls and address financial disclosure issues.
Conclusion
The change in leadership at Yao Yigou is aimed at resolving the financial risks associated with opaque related party transactions. Chen Shunjun's departure was due to the failure to provide complete information about his companies. Zhou Yuewu's appointment represents a return of family control and the use of his expertise to improve the company's internal controls and business operations. The success of Yao Yigou will depend on whether he can fill these financial gaps and make the new businesses profitable.