Chili sauce maker Laoganma to have $2.3 million assets frozen over unpaid Tencent advertisement fees

Source:Global Times Published: 2020/6/30 16:29:03

A bottle of Lao Gan Ma hot sauce Photo: CFP

 Chinese condiment giant Laoganma, famed for its chili sauce, is required to freeze its 16.24 million yuan ($2.3 million) worth of assets over unpaid advertisement fees to Tencent, according to a court ruling published on Tuesday. 

The condiment company was sued by China's internet company Tencent over contract disputes, and the court has ruled in favor of Tencent's requirment of freezing Laoganma's assets, according to the ruling statement posted on Monday by the Nanshan district court in Shenzhen, South China's Guangdong Province, where Tencent is headquartered.

Laoganma, based in Guiyang in Southwest China's Guizhou Province, has failed to pay Tencent advertising fees to promote its chili sauces for a long time, according to a statement Tencent sent to the Global Times on Tuesday. The two companies signed a contract on the cooperation in March 2019, which was worth up to tens of millions of yuan, the statement said. 

According to Laoganma's latest financial report, its revenue rose last year after sliding for two consecutive years. In 2019, the company's annual revenue reached a historical 5.02 billion yuan, up 14.43 percent year-on-year. Laoganma's products have penetrated over 96 percent of the domestic market, taking more than 65 percent of the market share, according to company data platform 

Laoganma, "Old Godmother" in Chinese, is hailed both domestically and overseas for its signature chili sauces. Founded in 1996, it is one of the oldest and most successful condiment brands in China. 

The company's chili sauces have also taken on foreign customers in overseas markets, making headlines on many food blogs and YouTube videos in recent years. It was at one point even sold on luxury goods website for eight times its price in China. 

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