In Depth: IPO Extortion Case Unearths Market for Burying Bad Press

In September 2023, Sichuan Kelun Pharmaceutical Co. Ltd. reported to police that a series of negative online articles were harming its business reputation. This sparked an investigation in Chengdu, revealing a hidden, multimillion-yuan gray market at the intersection of China’s media, finance, and corporate sectors. Rather than finding a powerful media competitor, the police traced the source to Shu Taihui, a 36-year-old living in rural Jiangxi. Shu operated multiple “self-media” accounts posing as legitimate financial news sources. His activities exposed the widespread but rarely acknowledged practice of companies paying for “silence” during public listings: self-styled journalists threatened to publish damaging stories about companies preparing for IPOs unless they paid for “cooperation agreements.” Financial PR firms, hired to manage image crises, sometimes facilitated and profited from these arrangements, even instigating negative media coverage themselves to ensure they were indispensable to their clients. Shu’s prosecution and eventual retrial drew attention to these complex and murky practices that had become normalized business costs for many firms in China’s fast-growing digital media world. [para. 1][para. 2][para. 3][para. 4]

Kelun, founded in 2002 and listed since 2010, became central to the investigation. The negative articles, spread by platforms like “Nancai Observer,” accused Kelun of suspiciously high sales costs in its 2023 financial report—implying these might hide bribery—and referenced information not found in public records. This prompted regulatory scrutiny, leading Kelun to submit a clarification to authorities. Investigators soon identified Shu Taihui, who, from his home, ran his own media outlets and collaborated with real journalists and intermediaries, including PR professionals. By December 2023, police had detained Shu, some of his family members, two professional journalists, and a corporate legal representative involved in channeling payment. [para. 5][para. 6]

Initially charged with “forced trading,” prosecutors later escalated the accusation to extortion and labeled Shu’s group an “evil force organization,” denoting organized crime. By December 2024, a court found Shu guilty of extorting 805,000 yuan from 12 companies and sentenced him to more than 10 years in prison, with additional penalties for his accomplices. Shu’s method involved sending targeted, negative-sounding interview requests to companies near IPO approval, exploiting their fear that such coverage could jeopardize their listing. Many firms opted to “cooperate,” signing advertising contracts with Shu’s media companies—paying, in practice, for silence rather than for public relations content. [para. 7][para. 8][para. 9][para. 10]

Shu’s defense argued these actions were typical business transactions and that sending interview requests is part of normal journalism. The largest payment identified in court came from Beijing Kawin Technology, which paid 180,000 yuan; the company feared negative coverage could affect its IPO. Notably, in many cases, even promised positive articles were never published—companies primarily wanted to avoid bad press rather than promote themselves. The defense also argued that PR firms sometimes arranged these transactions independently, acting primarily out of their own interests. [para. 11][para. 12][para. 13]

Evidence revealed that financial PR firms often promoted these “deal” structures and profited from both corporate and media clients, even suggesting negative angles for investigation. Shu alleged these firms directed his attention to targets like Kelun, orchestrated negative stories, and took significant cuts from the overall payments—sometimes both the price difference and a formal kickback. His lawyer claimed these PR firms were crucial to the scheme and should have faced prosecution too. [para. 14][para. 15][para. 16][para. 17][para. 18]

Despite official praise of Shu’s conviction as protecting private enterprise, in July 2025, the verdict was overturned and the case sent back for retrial. The key charge of being an “evil force organization” was dropped, and procedural disputes postponed the retrial. Shu’s new defense cited potential bias, and continued to argue that his activities did not qualify as extortion. Significantly, although police identified over 100 victim companies, only 12 cooperated as witnesses—the rest feared industry exposure or considered such practices routine “costs of doing business.” In response to the wider challenge, China’s cyber regulators launched a campaign to tackle “online black mouths” in 2025, highlighting ongoing systemic issues where media, influence, and corporate interests intersect. [para. 19][para. 20][para. 21][para. 22][para. 23][para. 24][para. 25]