Analysis of Quality Crisis in Beijing Tongrentang's OEM Model and Brand Value Maintenance

In December 2025, the ‘Beijing Tongrentang 99% High-Purity Antarctic Krill Oil’ incident attracted widespread public attention. Tests showed that the product, labeled to contain 43% phospholipids, actually had

—meaning it contained no Antarctic krill oil components at all [1][2]. This outrageous result pushed the 356-year-old Chinese time-honored brand to the forefront of a trust crisis.

Investigations found that this product was custom-purchased by the distributor

from ; the product packaging was made according to the entrusting party’s requirements, and all involved products were supplied to the entrusting party for external sales [3]. Notably, Sichuan Health Pharmaceutical is a holding subsidiary of Tongrentang Health (with 51% ownership) and a member enterprise of Beijing Tongrentang Group.

Tongrentang’s brand system shows a ‘three-way split’ pattern [2]:

• Beijing Tongrentang Group
  : 100% controlled by Beijing State-owned Assets, is the core brand holder of ‘Tongrentang’
• Nanjing Tongrentang
  : Actual controller is Qingdao Municipal State-owned Assets Supervision and Administration Commission, with a final beneficial stake of 51%
• Tianjin Tongrentang
  : Beijing Tongrentang Group acquired 60% share control in December 2024

This historical division has caused chaos in brand management, laying hidden dangers for OEM disorders.

Currently, Tongrentang OEM products circulating on e-commerce platforms mainly point to two enterprises [2]:

• Sichuan Health Pharmaceutical
  : Uses the ‘Zhenhuang’ trademark
• Xing’an Health Technology
  : Uses the ‘Neiting Shangyong’ trademark

These products share common features: leveraging the ‘Beijing Tongrentang’ brand endorsement, strengthening brand identity through visual design, but not mentioning the OEM attribute at all, making it easy for consumers to be confused.

According to investigations, OEM categories cover health food, medical devices and other big health fields, with a minimum order quantity of only

, and fees ranging from tens of thousands to hundreds of thousands of yuan [4]. Everything from efficacy, ingredients to packaging design can be negotiated, and costs are customized according to needs. Although this ‘light asset’ model brings licensing revenue in the short term, it hides huge risks.

Time	Incident	Penalty/Impact
2018	Tongrentang Bee Industry recycled expired honey and marked false production dates	Revoked food business license, canceled ‘China Quality Award’, expected net profit reduction of 57.78 million yuan
2024	Rendan mercury content exceeded the limit by 50,000 times (reported by German consumers)	Damaged international reputation
2025 3·15	Internet-famous foot bath bag had excessive bacterial content	Tongrentang-related products were included
2025 December	Krill oil product contained no krill oil	Triggered public opinion crisis

The root cause of the problem lies in the

[4]:

• In August 2024, Beijing Tongrentang Group issued a statement saying ‘it has never allowed subordinate companies to use the ‘Tongrentang’ trademark or brand name to carry out investment and franchise activities externally’
• But the OEM business of its subsidiaries is still being promoted publicly
• The brand owner only focuses on sales profits, but does not check product quality, and even condones entrusted enterprises to produce and sell unqualified products

The 2025 Q3 financial report shows [5]:

• Operating revenue: 13.308 billion yuan, down
  3.70%
  YoY
• Net profit attributable to parent company: 1.178 billion yuan, down
  12.78%
  YoY
• Q3 operating revenue: 3.539 billion yuan, down
  12.76%
  YoY
• Total profit down
  36.43%
  YoY

R&D investment and sales expenses are seriously unbalanced:

• 2024 R&D investment: 409 million yuan, accounting for
  2.20%
  of revenue (lower than the industry average of 501 million yuan)
• Sales expenses: 3.595 billion yuan,
  8.8 times
  the R&D investment

The State Administration for Market Regulation responded on December 25, 2025 [3][6]:

• Will soon issue the ‘Measures for Supervision and Administration of Food Entrusted Production’
• Include trademark licensing, franchising and other methods into supervision and management
• Clearly refine the food safety responsibilities of both entrusting and entrusted parties
• Organize special sampling inspections of krill oil, fish oil and other products

Facing the crisis, Tongrentang Group took the following measures [4][6]:

Measures	Details
Launch ‘Zero Tolerance’ special action for strict brand management	Carry out a dragnet inspection of brand usage by enterprises at all levels
Establish a special working group	Sent to Sichuan to conduct a comprehensive and in-depth investigation of the involved products
Accountability handling	Ordered Li Shengyi to resign as general manager of Sichuan Health Company, and other managers to be suspended
Remove from shelves and compensate	Ordered the involved distribution entities to remove products from shelves and compensate consumers in accordance with laws and regulations
Legal accountability	Pursue trademark infringement liability of Sichuan Health, Habo Pharmaceutical and relevant e-commerce platforms
Product inquiry system	Launched a formal product inquiry service, opening more than 1000 product information inquiries

This incident sounded an alarm for the entire time-honored brand industry [4][6]:

1. Tighten OEM licensing
   : Establish a full-life-cycle management mechanism, suspend brand licensing for non-core categories
2. Strengthen quality control closed loop
   : Implement a ‘from raw material to finished product’ full-process traceability system; all OEM products must have quality testing led by the brand owner
3. Return to core business
   : Focus resources on innovation and inheritance of the core Chinese medicine business, rather than indulging in ‘light asset’ capital games
4. Reconstruct craftsmanship spirit
   : Adhere to the ancestral motto of ‘dare not save labor’, and hold the soul of the brand

As of the close on December 30, 2025 [5]:

• Tongrentang’s stock price closed at 32.32 yuan, shrinking by nearly
  20%
  from the start-of-year price of 40.09 yuan
• Nearly halved from the May 2023 high of 62.46 yuan
• Market value: 44.33 billion yuan, ranking fourth in the Chinese medicine sector
• Pien Tze Huang and Yunnan Baiyao still maintain market values above 100 billion yuan, while China Resources Sanjiu is 47.5 billion yuan

According to data from Yaozhi.com [5], since 2025, the retail market sales of Angong Niuhuang Pill have declined significantly compared with previous years, with YoY growth rates from June to September all below

. The gross profit margin of the Angong Niuhuang series fell below 50% for the first time in five years, only .

Industry insiders believe that in 2025, Beijing Tongrentang Group may accelerate the pace of incorporating Nanjing Tongrentang to achieve brand unification and reduce peer competition [1]. Brand unification is the basic work to solve the current chaos.

Tongrentang has developed into a huge business empire covering pharmaceuticals, health food, medical devices, retail medical care and other fields, with 36 production bases, more than 2400 terminal outlets, and can produce more than 2600 kinds of products. But

. Finding a balance between expansion and quality control is the core proposition facing management.

The core value of a time-honored brand lies in ‘quality commitment’. The OEM model reduces it to an ‘authorized trademark’. Although it can temporarily improve profits on the financial statements, it essentially

. Long-term dependence will lead to irreversible damage.

:

• Establish strict OEM access standards and dynamic evaluation systems
• Carry out a ‘dragnet’ cleanup of existing OEM cooperations
• Establish a mandatory exit mechanism to ensure every branded product can withstand quality inspection
• Assume main responsibility: if you use the Tongrentang name, you must take Tongrentang’s responsibility

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[1] Guancha.cn - Beijing Tongrentang’s 99% High-Purity Antarctic Krill Oil Contains No Krill Oil? Time-Honored Brand Falls Into OEM Crisis Again (https://www.guancha.cn/economy/2025_12_18_800898.shtml)

[2] Sina Finance - Tongrentang’s ‘Fraud Gate’ Behind Brand Dilemma (https://finance.sina.com.cn/stock/aigcy/2025-12-17/doc-inhcavhm7557920.shtml)

[3] Yicai - Frequent Accidents! How to Ensure Food Quality Safety in Entrusted Production? National Regulatory New Rules to Be Issued Soon (https://m.yicai.com/news/102977825.html)

[4] Caifuhao - Centennial Tongrentang Falls Into ‘OEM Sorrow’; Antarctic Krill Oil Incident Tears Open Management Rift of Time-Honored Brand (https://caifuhao.eastmoney.com/news/20251226095859120434130)

[5] Ofweek Finance - Another Quality Crisis: Tongrentang’s Transformation Is Underway (https://mp.ofweek.com/finance/a656714179597)

[6] Sina Finance - The ‘Real Problem’ Behind Tongrentang’s Quality Crisis (https://finance.sina.com.cn/jjxw/2025-12-24/doc-inhcwafv4716052.shtml)