The popular self-heating hot pot brand "Zihai Guo," once valued at as much as 7.5 billion yuan, is now on the verge of bankruptcy. On February 8, it was noted that an affiliated company of Zihai Guo, Hangzhou Jinlingyang Enterprise Management Consulting Co., Ltd., recently faced a bankruptcy review case. According to Tianyancha APP, the applicant is an individual surnamed Ma, and the case is being handled by the Yuhang District People's Court in Hangzhou.
Zihai Guo was once highly sought after by investors, setting a record of selling 5 million units in just 10 minutes. It was nearly acquired by the listed company Lotus Holdings Co., Ltd. The brand's founder, Cai Hongliang, previously established the snack brand "Baicaowei," which he sold in 2016 before moving on to launch Zihai Guo as his second high-profile venture.
To date, Hangzhou Jinlingyang has been subject to six enforcement actions involving over 140 million yuan, and Cai Hongliang has been placed under consumption restrictions.
Not only Zihai Guo but the entire self-heating hot pot sector, once booming, is now cooling down significantly.
On February 5, a bankruptcy review case for Hangzhou Jinlingyang was publicly disclosed. In addition to this case, the company has multiple records of enforcement actions, defaulters, and frozen equity. Currently, Hangzhou Jinlingyang has six enforcement cases with amounts exceeding 140 million yuan, 16 historical enforcement cases totaling over 320 million yuan, and nine default records involving more than 58.79 million yuan. There are also 26 equity freeze records.
Zihai Guo, a leading brand in the self-heating hot pot industry, was founded in 2018 by Cai Hongliang. Leveraging a focus on single-serving meals and the "lazy economy," along with heavy advertising, the brand quickly became a market standout. In 2020, with increased demand for at-home dining, Zihai Guo saw explosive sales, becoming a viral product. It set records, including sales exceeding 100 million yuan in just 21 minutes during a Singles' Day promotion.
Between 2018 and 2021, Hangzhou Jinlingyang completed five rounds of financing, raising over 550 million yuan from prominent investors such as China International Capital Corporation, Matrix Partners, CMC Capital, and Gaorong Capital. At its peak, the company's valuation reached 7.5 billion yuan. However, as stay-at-home demand declined after 2022, the brand's popularity waned. In March 2023, Lotus Holdings expressed interest in acquiring a stake in Hangzhou Jinlingyang, but the deal fell through five months later.
Subsequently, Zihai Guo reemerged in public attention amid reports of lawsuits, enforcement actions, and consumption restrictions imposed on its founder due to financial strain.
Why did Zihai Guo fall from grace? Operational challenges had already surfaced. From 2019 to 2021, Hangzhou Jinlingyang reported revenues of nearly 800 million yuan, 958 million yuan, and 992 million yuan, respectively. In 2022, revenue dropped to 820 million yuan, a decline of nearly 20%. The company posted losses of 152 million yuan in 2020 and 318 million yuan in 2021, turning a small profit of 19.94 million yuan in 2022.
This turnaround was partly due to drastic cuts in branding and promotional expenses, which were reduced by approximately 258 million yuan. Meanwhile, Zihai Guo expanded its product lineup to over 100 SKUs, but sales failed to increase. The company disclosed that after 2021, it built 15 factories nationwide, but soon faced a sharp drop in sales, leading to gradual shutdowns of its supply chain.
The failed acquisition by Lotus Holdings further deprived the company of critical capital support. Based on the proposed acquisition price, Hangzhou Jinlingyang was valued at up to 3 billion yuan, despite having a net asset value of only 140 million yuan—a premium exceeding 2,000%, which drew regulatory scrutiny.
Strained cash flow led to unpaid advertising fees. In 2024, Hangzhou Jinlingyang was enforced for failing to pay 11.25 million yuan to Focus Media, resulting in consumption restrictions for the company and Cai Hongliang. The company has not disclosed financial results since 2023. As of February 8, there has been no response from Zihai Guo regarding the bankruptcy review application.
The self-heating hot pot industry as a whole is undergoing a shakeout. Market data shows that in the fourth quarter of 2024, the sector's growth slowed significantly, with sales volume and value dropping by 29.18% and 32.67% year-on-year, respectively. Market concentration has increased, with leading players like Yihai International and Mo Xiaoxian gaining share, while brands like Zihai Guo face pressure.
Even major players are scaling back production. Yihai International, for instance, adjusted its planned capacity for instant food products to 28,000 tons in 2023, a 66% reduction. Some companies have exited the business entirely. U-PRESID CHINA discontinued its "Zhushiguang" self-heating hot pot in 2022, while WL DELICIOUS's brands "Beiguo Xia" and "Zilai Shu" are no longer available on e-commerce platforms.
Industry analysts attribute the downturn to multiple factors. Self-heating foods are primarily designed for specific scenarios and emergency use. With the decline in home stockpiling and the return of dine-out and delivery options, the core market has shrunk. Consumers have also cited issues such as inferior taste compared to fresh food, plastic odors during heating, safety concerns, and high prices.
In summary, the self-heating hot pot sector is experiencing a consolidation. The previous model of relying on capital and marketing to accelerate growth is no longer sustainable. Brands that can strengthen their supply chains, enhance product value, and cater to specific consumer needs are likely to endure.