Chen Baohua, the chairman of Zhejiang Huahai Pharmaceutical Co., Ltd., expressed his views to a reporter on the 16th, stating that he prefers to establish a structured corporate system and implement modern enterprise management. He believes this is the fundamental reason for the disagreement with Zhou Minghua, who has a different vision. While Chen emphasizes team-based development and a unified voice, Zhou disagrees, arguing that the company should follow the path of the capital market rather than a family-style approach.
Zhou Minghua, one of the founders of Huahai Pharmaceuticals, had stepped down from the management layer in April of the previous year. However, he later proposed changes to his non-compete commitment and suggested increasing profit distribution, which sparked significant tension between the two. Their conflict reached a peak during the 2007 shareholders' meeting, where Zhou submitted proposals that were not approved, leading to further division.
The brothers, once close, now find themselves at odds over governance and control. Chen Baohua insists on a structured corporate model, while Zhou Minghua believes the company should be more independent and less dominated by a single voice. The dispute escalated when Zhou was removed from the board of directors after a vote where he received only 43.4% of the votes, compared to Chen’s 99.47%.
Despite their differences, both men have deep roots in the pharmaceutical industry. They started their careers together in the late 1980s, eventually founding Huahai Pharmaceutical. Over time, their relationship became strained as their visions for the company diverged. Zhou argues that his original non-compete agreement no longer applies due to changing circumstances, while Chen believes it is unfair for Zhou to compete with the company.
At the shareholders’ meeting, many small shareholders hoped for a win-win solution, but the proposals were rejected, leaving Zhou feeling disappointed. He remains determined to protect his rights and continues to explore ways to regain influence over the company.
Meanwhile, Chen Baohua has faced scrutiny for buying shares before the annual report was released, which he admitted was a violation of regulations. He claims he did not intend to provoke a conflict and is willing to cooperate with regulators if necessary.
Experts suggest possible solutions, such as Zhou reducing his shareholding or freezing his voting rights, but both sides remain firm in their positions. The situation highlights the challenges of managing a publicly traded company with competing interests and differing leadership styles.
As the conflict continues, both men are struggling to find a resolution that benefits the company and its shareholders. For now, the future of Huahai Pharmaceutical remains uncertain, with tensions still running high between its co-founders.
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