Chen Baohua, the chairman of Zhejiang Huahai Pharmaceutical Co., Ltd., expressed his views on the disagreement with Zhou Minghua, one of the company's co-founders. He stated that he aims to establish a family-based system and speak with one voice, while Zhou Minghua prefers a modern corporate structure and management system. This fundamental difference in approach has led to growing tensions between the two former partners.
Zhou Minghua, who stepped down from the board last year, later proposed changes to his previous commitment not to engage in pharmaceutical business, as well as an increased profit distribution plan. These proposals were seen as a direct challenge to Chen Baohua’s leadership and sparked significant conflict.
The situation escalated during the 2007 shareholders meeting, where Zhou Minghua submitted two proposals, but both failed to gain majority support. The voting results showed low approval rates, with many shareholders abstaining. Despite the failure, Zhou Minghua remained determined to protect his interests and continue participating in the pharmaceutical industry.
Chen Baohua, on the other hand, emphasized the need for a team-based approach to ensure the company's continued growth. He argued that a strong corporate governance structure is essential for long-term success. However, Zhou Minghua disagreed, believing that the current system is too centralized and lacks transparency.
The two co-founders had a history of close collaboration, starting from their early days at Zhejiang Institute of Chemical Technology. They eventually founded the company together in 1988, building it into a major player in the pharmaceutical industry. Over time, however, their differing visions for the company’s future created friction, leading to a breakdown in communication and trust.
Zhou Minghua accused Chen Baohua of attempting to control the company and limit his influence. He also criticized the lack of clear rules governing shareholder disputes, arguing that both parties should have equal rights and opportunities to participate in decision-making.
In response, Chen Baohua admitted to buying shares before the release of the annual report, acknowledging that this may have violated regulations. He said he would cooperate with regulatory authorities if needed and was willing to accept any consequences.
Despite the challenges, both men still express concern for the company's future. Some shareholders have suggested a “win-win†solution, allowing Zhou Minghua to invest in equity while Chen Baohua continues to manage operations. However, such a proposal remains uncertain and faces resistance from both sides.
As the dispute continues, the company's executives hope that both leaders can find a way to resolve their differences and focus on the long-term development of Huahai Pharmaceutical. For now, the situation remains unresolved, with both parties committed to protecting their interests while navigating the complexities of corporate governance.
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