Two‑Year Capital Dream of the “Zhan Ding” Group Shattered as Second Shareholder Exits and Related‑Party Defaults Surface

Capital exit exposes a once‑hot story

Bayi Shikong (八亿时空) announced on March 9 that it had sold its entire 11.5892% stake in Nantong Zhanding (南通詹鼎), crystallising a reported 123% premium and a net gain of over RMB 86 million. The disposal — the second major investor exit from the “Zhan Ding” group — ripped away the glossy capital narrative that had propelled the group to celebrity status: in 27 months its headline valuation reportedly rose by as much as 700% and drew marquee investors such as Sequoia Capital (红杉资本). But the sale also coincides with a cascade of operational and governance problems that suggest the rise was driven more by story‑telling than sustainable performance.

From valuation euphoria to operational contradictions

Nantong Zhanding was spun as a poster child for China’s AI‑driven demand for liquid cooling and semiconductor materials: early investors were told the company could play in a fast‑growing electronic fluorinated liquids market. Bayi Shikong’s initial participation — RMB 20 million at a reported pre‑money valuation of RMB 150 million — was followed by another RMB 50 million as the company’s pre‑money valuation reportedly climbed to RMB 1 billion. Yet delayed disclosures show the reality: in 2024 Nantong Zhanding delivered RMB 108.75 million in revenue but only RMB 85,100 in net profit, and its first three quarters of 2025 saw revenue slump to RMB 21.19 million and a net loss of RMB 41.54 million. It has been reported that aggressive capacity builds in Jiangxi and Gansu produced idle plants, cross‑company asset shifts and a RMB 16.8 million lawsuit against the Jiangxi entity — actions that investors now cite as signs of internal mismanagement.

Related‑party collapse and a failed backdoor listing

The unravel has a second centre: Xipu Materials (兮璞材料), a closely tied affiliate that was pitched as a route to public markets through a major asset reorganisation with Xiangrikui (向日葵). That deal was terminated after regulatory scrutiny and media probes; Xiangrikui was later handed an administrative penalty and a RMB 5.1 million fine for misleading disclosures. It has been reported that Xipu’s plants were not operational as claimed and that much of its product flow relied on external procurement rather than in‑house manufacture. The failure of this backdoor listing attempt removed a key exit pathway and amplified contagion across the Zhan Ding ecosystem.

Lessons for investors and policy context

Why did such a rapid build‑and‑bash collapse occur? Partly because China’s hard‑tech boom — fuelled by domestic substitution policies and Western export controls that incentivise on‑shore supply chains — attracted speculative capital chasing AI and semiconductor narratives. But regulators have grown stricter, and market due diligence is catching up. The Zhan Ding episode underlines that hot sector labels cannot replace transparent operations and governance. Can the group’s founder, Chen Chaoqi (陈朝琦), repair the businesses and restore investor confidence? For now, the answer remains uncertain as legal claims, shrinking revenues and regulatory penalties reshape what looked like a two‑year capital dream.