What Lessons Does Dangdai Group’s Restructuring Leave Behind? (AI Translation)

【周刊提前读】从资产千亿到破产重整 当代集团留下什么教训？

Wuhan Contemporary Technology Industry Group Co., Ltd. (Contemporary Group), established 37 years ago, is now approaching its demise after once having assets of over RMB 100 billion [para. 1]. In June 2025, China Merchants Group (CMG) paid RMB 7.08 billion as the first installment for restructuring, following an April 2025 bankruptcy reorganization plan approved by the Wuhan Intermediate People’s Court. CMG’s subsidiary, China Merchants Innovative Technology (CMIT), will invest RMB 11.8 billion in the restructuring, with the main target being the group’s core asset, Renfu Pharmaceutical, a major player in opioid painkillers with a 90%+ market share in fentanyl [para. 2][para. 3]. Post-restructuring, CMIT will control Renfu Pharmaceutical, while Contemporary Group and its founder Ai Luming are fully ousted. Key Renfu executives have resigned, and new board appointments from CMG are scheduled [para. 4].

Ai Luming, born in 1957 from a prestigious family, founded Contemporary Group with university peers in 1988. They began by extracting urokinase from urine, quickly moving into pharmaceuticals via mergers and acquisitions, culminating in the 1997 IPO of Renfu Pharmaceutical. By 2018, Contemporary Group had stakes in six listed companies across multiple sectors, but this diversification led to strategic drift [para. 5][para. 6][para. 7].

Ai Luming later reflected on three major mistakes: straying from the core business, lax management, and neglectful oversight, particularly after ceding more executive powers post-2015 to younger executives such as Yu Lei [para. 8]. Yu Lei spearheaded capital operations but, along with associates, was later implicated in financial irregularities and money laundering. A collapse began as debt defaulted in 2022, leading to mass investor losses and government intervention, with asset sales ordered to compensate individual investors [para. 9][para. 10].

At its peak, Contemporary’s assets were valued at RMB 110 billion, but debts ballooned to over RMB 800 billion with over 1,100 creditors, particularly after ill-fated ventures in finance and real estate [para. 11]. Tianfeng Securities, its key financial platform, also became a major creditor. The court-approved restructuring plan involves small creditors receiving cash payouts up to RMB 3 million, with excess converted into trust shares tied to future Renfu Pharmaceutical stock gains [para. 12]. Recovery rates are projected at 8.5–17.5% for ordinary creditors [para. 13].

Renfu Pharmaceutical will now anchor CMG’s push into life sciences, fitting its “third entrepreneurship” strategy. CMG outbid several state and central SOEs, drawn by Renfu’s leadership in the opioid sector [para. 14]. The restructuring features complex trust structures: CMIT directly and indirectly holds 12% of Renfu’s shares, with creditors sharing in future gains only after CMIT’s priority returns are satisfied, requiring significant future increases in Renfu’s stock price for meaningful creditor recovery [para. 15][para. 16].

Throughout, Ai Luming’s entrepreneurial drive persisted; he openly apologized to partners for failures but voiced hopes for new ventures. Ultimately, the saga of Contemporary Group illustrates the dangers of over-diversification, excess leverage, and mismanaged financial ventures, even for once-celebrated market pioneers [para. 17][para. 18][para. 19]. The group’s rise and fall mirrors the broader shifts in China’s private sector, regulated by intensified state intervention and the complexities of managing large, multi-sector conglomerates in a volatile market environment [para. 20][para. 21].