Beijing-Based Veteran Medical Distributor Sold for RMB 302 Million, Files IPO Prospectus

On the evening of May 12, 2025, China Meheco (600056.SH) announced that it intends to acquire 100% equity interest in Beijing Jinsui Technology Development Co., Ltd. (“Jinsui Technology”) held by China Xinxing Group Co., Ltd. (“Xinxing Group”) for a cash consideration of RMB 302 million.

Xinxing Group is a wholly-owned subsidiary of Genertec, the Company’s controlling shareholder, and this transaction constitutes a related-party transaction. Upon completion of the transaction, Jinsui Technology will become a wholly-owned subsidiary of the Company, helping China Meheco build an e-commerce operation platform.

Jinsui Technology has operated in the e-commerce operations services industry for many years, establishing deep integration with upstream brand owners and downstream platform channel resources, thereby building a relatively stable cooperative ecosystem based on mutual benefit. According to the announcement, Jinsui Technology’s core business is e-commerce operations services, with product portfolios covering personal health consumer products, general wellness, and other categories. The company has established partnerships with well-known domestic and international brands such as Philips and Omron. Notably, Jinsui Technology’s current core business consists of authorized distribution of Philips’ personal health consumer products and related items.

The Company will leverage Jinsui Technology as a key business platform to deeply tap into resources in the pharmaceutical, medical device, and broader health industries. It will integrate and develop its big health businesses, including personal health consumer products, health monitoring, and healthcare supplements, while implementing unified management of its online e-commerce operations to achieve integration and upgrading of its e-commerce business.

Jinsui Technology, formerly known as Beijing Jinsui Technology Development Company, was established in Beijing on May 3, 1993, and was initially affiliated with the Beijing Enterprise Administration Bureau of the General Logistics Department of the Chinese People's Liberation Army. At the end of 1998, in accordance with strategic decisions, Jinsui Technology was decoupled from the military and restructured, becoming a third-tier subsidiary under Xinxing Group.

Since 2012, Jinsui Technology has entered the e-commerce sector, primarily engaging in online sales and operational services for high-end brands. Its product portfolio covers home appliances, health supplements, and daily sundries. Guided by the “Internet Plus” development strategy, Jinsui Technology has leveraged its proprietary e-commerce platform to accelerate brand expansion and extend its business chain. The company’s business platform is increasingly aligning with a high-end brand marketing platform.

In October 2013, Jinsui Technology was merged into Xinxing Hotel Co., Ltd., a subsidiary of Xinxing Group, becoming its wholly-owned subsidiary with a registered capital of RMB 4.2837 million. In September 2016, in accordance with the internal planning of Xinxing Group, the company was transferred to China Xinxing Traffic and Logistics Co., Ltd., becoming its wholly-owned subsidiary.

In 2017, pursuant to the resolution of the shareholders’ meeting, undistributed profits were capitalized by RMB 2.9977 million, and capital reserves were capitalized by RMB 18,600. Following the capitalization, the total paid-in capital amounted to RMB 7.3 million, and the total capital reserves stood at RMB 48,300. In May 2019, upon approval by China Meheco Group Co., Ltd., the parent company of Xinxing Group, Jinsui Technology was transferred from Xinxing Logistics to the direct management of Xinxing Group, becoming a wholly-owned second-tier subsidiary under the Group, with Xinxing Group holding a 100% equity interest.

Following its entry into the e-commerce sector, Jinsui Technology has achieved steady growth. According to the official website of Xinxing Group, Jinsui Technology “has now become the largest distributor of the Philips brand in North China and a platform partner on JD.com.” The company also established an online sales venture for health and wellness products in partnership with Zhangzhou Pien Tze Huang Pharmaceutical Co., Ltd. Its product portfolio extends beyond the health and wellness sector to include small home appliances such as electric toothbrushes, coffee makers, and air purifiers.

In terms of channel expansion, Jinsui Technology has established partnerships with leading and vertical e-commerce platforms, including JD.com, Tmall, Douyin, Pinduoduo, and Poizon.

In terms of business logic, Jinsui Company provides brand clients with one-stop e-commerce service solutions by integrating an innovative STI service matrix system (SCM+TP+IMC). These solutions include big data integration and analytics-enabled supply chain management services, refined e-commerce management and omni-channel operation services, and IMC integrated marketing services. The areas covered encompass e-commerce, brand operations, digital marketing, and related fields.

In terms of business model, Jinsui Technology primarily operates through authorized distributor and e-commerce consignment operation models. In addition to providing e-commerce service solutions that include supply chain management, the company holds operational qualifications for the sale and import/export trade of medical devices and food products.

Data shows that as of the end of March 2025, JinSui Technology’s unaudited consolidated total assets amounted to RMB 890 million, with net assets of RMB 225 million. In fact, JinSui Technology had already expressed intentions to divest its business in 2021. This was due to a significant contraction in performance in recent years, with revenue declining from RMB 1.747 billion in 2021 to RMB 511 million in 2024, and corresponding net profit decreasing from RMB 46.1306 million to RMB 21.3574 million.

The primary reasons include Philips’ business integration and product portfolio restructuring, which led to a decline in Jin Sui Technology’s revenue. Philips stated that it would lower its full-year profit outlook due to increasingly severe trade barrier costs. The company also noted that despite implementing “significant tariff mitigation measures,” tariff policies would still have a net impact of €250 million to €300 million (approximately $283 million to $340 million).

Consequently, Jinsui Technology has been optimizing its product portfolio and seeking business transformation for a considerable period.

China Meheco stated that it will leverage Jinsui Technology’s operational expertise to strengthen its capabilities in building e-commerce platforms and expanding its product pipeline, accelerate its transformation from a pharmaceutical enterprise to a healthcare enterprise, and further integrate and upgrade its e-commerce operations.

China Meheco was established in 1984 under the name “China National Pharmaceutical & Health Care Products Import & Export Corporation.” It centrally managed the foreign economic and trade sector for pharmaceuticals and health products in mainland China, successively establishing more than 40 branch companies across various provinces and municipalities, and setting up over 10 overseas enterprises in countries such as the United States and Japan. In 1999, it became a subsidiary of China General Technology (Group) Holding Co., Ltd. (and has since become the group’s sole platform for the production and operation of pharmaceuticals and medical devices).

In 2004, China National Pharmaceutical & Health Care Import & Export Corporation was renamed China National Pharmaceutical & Health Care Co., Ltd. Subsequently, the company acquired equity stakes in Guangzhou Daguang Pharmaceutical Co., Ltd., Xinjiang Tianshan Pharmaceutical Industry Co., Ltd., and Meikang Jiuzhou Pharmaceutical Co., Ltd. In 2013, it successively acquired equity stakes in Tianfang Pharmaceutical and Keyi Pharmaceutical, and assumed overall trusteeship of Sinopharm Holdings Co., Ltd. under China General Technology Group. In 2014, the company was officially renamed China Meheco Group Co., Ltd.

In recent years, China Meheco has initially established an integrated industrial pattern combining trade, industry, technology, and services, driven by pharmaceutical and medical device commerce and supported by pharmaceutical manufacturing. Its business scope covers the entire industry chain, including cultivation and processing, research and development, production, sales, logistics, import and export trade, academic promotion, and technical services.

What followed was performance under significant pressure.

In 2024, China Meheco reported revenue of RMB 34.148 billion, a year-on-year decrease of 12.04%, and net profit attributable to shareholders of the parent company of RMB 535 million, a year-on-year decrease of 48.91%. Revenue declined across several key business segments, with pharmaceutical commerce down 9.72% year-on-year, pharmaceutical industry down 9.85% year-on-year, and international trade down 41.82% year-on-year. In the first quarter of 2025, China Meheco achieved revenue of RMB 8.263 billion, a year-on-year decrease of 5.84%, while net profit attributable to shareholders of the parent company reached RMB 166 million, a year-on-year increase of 14.27%. The decline in revenue was primarily attributed to the reduced scale of temporary medical supply assurance operations.

In fact, China Meheco has recognized that its business may face multiple risks. For instance, severe homogenization among domestic generic drug manufacturers has intensified competition in the pharmaceutical manufacturing sector. Meanwhile, influenced by factors such as anti-corruption campaigns in healthcare and centralized volume-based procurement, growth in the pharmaceutical distribution industry has remained sluggish, further exacerbating market competition.

China Meheco’s proposed acquisition inevitably brings to mind its purchase of a 40% equity stake in General Technology Liaoning Pharmaceutical Co., Ltd. (“Liaoning Pharmaceutical”) for RMB 68.4372 million in own funds approximately six months ago, aimed at enhancing regional competitiveness. Liaoning Pharmaceutical is primarily engaged in pharmaceutical distribution and direct sales, while also conducting certain e-commerce operations. It serves nearly 2,000 primary healthcare institution clients and boasts relatively comprehensive network coverage within Liaoning Province.

Making Liaoning Company a wholly-owned subsidiary of China Meheco will facilitate the latter in further leveraging regional synergies across Liaoning, Jilin, and Heilongjiang provinces, integrating advantageous industrial resources within the region—such as pharmaceuticals and medical devices—enhancing its regional competitive edge, reducing management costs, and improving decision-making efficiency.

This may also explain why the industry is optimistic about strategic acquisitions that strengthen China Meheco’s industrial chain layout. According to China Meheco’s announcement, the company will subsequently integrate and develop its broader health businesses, including personal health consumer products, health monitoring, and health supplements, while implementing unified management of its online e-commerce operations to achieve integration and upgrading of its e-commerce business.