Liangmianzhen changes ownership to break the deadlock; a new chapter emerges amid segmentation in the toothpaste industry

Jingji News reporter Dang Peng reports from Chengdu

A share transfer agreement, and the longstanding herbal toothpaste company Zangmian Zangmian (600249.SH) is ushering in an upgrade in state-owned-asset control.

On the evening of March 31, Zangmian Zangmian announced that its former controlling shareholder, Liuzhou Industrial Investment Development Group (hereinafter referred to as “Liufa Group”), and its parties acting in concert entered into a “Share Transfer Agreement” with Guangxi State-Owned Capital Operation Group (hereinafter referred to as “Guangxi Guokong”), transferring a total of 154 million shares they jointly held to Guangxi Guokong, accounting for 28% of the company’s total share capital. After the transaction is completed, Zangmian Zangmian’s controlling shareholder will change from Liufa Group to Guangxi Guokong, and the actual controller will also be upgraded from the Liuzhou Municipal SASAC to the Guangxi Zhuang Autonomous Region SASAC.

However, the current operating situation of Zangmian Zangmian is hard to call optimistic; declining performance and underutilized production capacity have become its two major pain points. In response, Zangmian Zangmian’s board secretary office told a reporter from China Business Journal that this change in controlling shareholder is a decision at the shareholder level, and the listed company cannot make an assessment. Regarding the company’s problem of declining performance, it said that in the future, with the commissioning of its Jiangsu plant, the introduction of high gross-margin products, and the development of health products, there will be new breakthroughs.

Well-known strategic positioning expert and founder of Fujian Huace Brand Positioning Consulting, Zhan Junhao, said that Zangmian Zangmian’s core path to break through should be prioritizing brand revitalization and product upgrading. With gross margin at only 13.45%, the room to reduce costs is limited; it must, with state-owned-asset backing, strengthen consumer mindsets for “traditional Chinese medicine oral care,” and reshape brand premium pricing. Strategically, it should first use the capital strength of state-owned assets to complete a younger visual refresh and product-line renovation for the brand, and then synchronously integrate Guangxi’s featured traditional Chinese medicine raw-material industry chain to achieve long-term efficiency gains, using brand dividends to drive scale growth.

New owner, new life

On March 27, Zangmian Zangmian released an announcement about planning a change in control and suspended trading effective from March 30. The progress disclosed on March 31 shows that the company’s former controlling shareholder, Liufa Group, and its parties acting in concert, namely Liuzhou Yuanhong and Liuzhou Jingtou, entered into a “Share Transfer Agreement” with Guangxi Guokong, intending to transfer a total of 28% of shares to Guangxi Guokong at a price of 7.9742 yuan per share, for a total transfer price of 1.23B yuan. The price represents a premium of about 25% over the closing price of 6.37 yuan per share before the suspension of trading. As a result, Zangmian Zangmian’s actual controller is upgraded from a municipal-level SASAC to a provincial/autonomous-region SASAC.

For this change of controlling shareholder, Zangmian Zangmian did not provide a specific explanation. As for what kind of empowerment Guangxi Guokong will provide to the company in the future, it also did not respond. But after Zangmian Zangmian resumed trading on April 1, the stock hit the daily limit. On April 2, it was still up 1.65% at close, closing at 7.14 yuan per share.

For Zangmian Zangmian, the decline in performance is precisely what it is eagerly awaiting to be empowered to fix. The company’s recently disclosed 2025 annual report shows that its operating revenue was 1.06B yuan, up 0.9%; its net profit attributable to shareholders was 9.8461 million yuan, a sharp year-on-year decline of 87.86%; and non-recurring net profit was 4.2798 million yuan, down 52.17% year on year.

In 2023 and 2024, Zangmian Zangmian’s non-recurring net profit was 14.23 million yuan and 8.95M yuan, respectively. Clearly, Zangmian Zangmian’s non-recurring net profit has continued to decline significantly.

According to the announcement, in 2025, Zangmian Zangmian’s output of household toothpaste was 34.7372 million units, and sales were 31.4395 million units. Meanwhile, the designed annual production capacity of the household toothpaste plant in its Liuzhou plant area was 138.6 million units per year, and its capacity utilization rate in 2025 was only 34.58%.

The reporter, visiting community supermarkets in Chengdu such as FamilyMart (Meiyijia) and Wudongfeng, did not see Zangmian Zangmian products; only Hongqi Chain had two products being sold.

Even so, Zangmian Zangmian told reporters that its Jiangsu base will be officially commissioned this year. On November 25 last year, Zangmian Zangmian announced that its controlling subsidiary, Zangmian Zangmian (Jiangsu) Industrial Co., Ltd., plans to invest and expand in Yangzhou, Jiangsu, to build a production base for Zangmian Zangmian’s herbal functional oral care products, with an estimated total investment of 68.8522 million yuan.

According to local media in Yangzhou, in fact, the smart factory project for Zangmian Zangmian’s oral care products, which started construction in February 2025, has a total investment of 1 billion yuan, and will build a production base integrating oral care, daily chemicals, and hotel consumables. After completion, it will form capacities of 500 million units of oral care products, 4 billion units of oral care products for hotels, and 200 million sets of hotel daily consumables, with expected invoiced sales of 1.5 billion yuan and tax revenue of more than 50 million yuan when stocked.

Strategic positioning expert and chairman of Jiude Positioning Consulting, Xu Xiongjun, said that Zangmian Zangmian’s core problem is that it missed the industry’s growth peak. As an established herbal toothpaste brand, it has long suffered from a lack of brand positioning; it has not, like Yunnan Baiyao, converted its herbal resources into a clear perception of differentiated efficacy. As a result, it has gradually fallen behind in fierce market competition.

Zhan Junhao said that the advantage of traditional Chinese domestic brands lies in their assets of traditional Chinese medicine culture, while the shortcoming is that their brand context is outdated. New Chinese brands are stronger in marketing innovation, but lack a research and development foundation. Zangmian Zangmian should leverage Guangxi’s location advantages facing ASEAN and build a differentiated moat around “natural herbal remedies” by taking advantage of the RCEP trade network. When going overseas, it needs to avoid rigid “hard” exports and adopt a strategy of “localizing the expression of effective ingredients” to mitigate cultural adaptation risks, and build a professional East-style oral care image.

Rise of domestic toothpaste

Although Zangmian Zangmian’s performance shows a downward trend, the rapid rise of domestic toothpaste has already become an undisputed fact.

According to publicly available financial reports: Yunnan Baiyao toothpaste has continued to secure the top spot as the No. 1 domestic toothpaste brand by relying on a mid-to-high-end positioning and differentiated efficacy in stopping bleeding with herbal ingredients. Its 2025 financial report shows that its health products business segment, including toothpaste, achieved operating revenue of 6.75B yuan. The toothpaste business continues to rank first in terms of share in the domestic full-channel market, and the company’s overall revenue, net profit attributable to shareholders, and non-recurring net profit attributable to shareholders all hit record highs. Dengkang Oral Care (Lengsuanning) as another representative traditional domestic brand also performs strongly. In 2024, revenue from adult toothpaste business was about 1.25 billion yuan. In the first three quarters of 2025, the company’s revenue, net profit attributable to shareholders, and non-recurring net profit attributable to shareholders achieved year-on-year growth of 16.66%, 15.21%, and 19.78%, respectively. Adult toothpaste business accounted for more than 80% of total revenue, becoming the core growth engine.

According to Frost & Sullivan’s materials, measured by retail sales in 2025, the top five brands by market share are, in order: Yunnan Baiyao, Colgate, Xiaokuo Group, which owns the Sen Ban brand, Wei Meizi, which operates the Shu Ke brand, and Dengkang Oral Care under Lengsuanning. The market shares of these five brands are 11.8%, 6.7%, 6.5%, 5.2%, and 3.1%, respectively.

Xu Xiongjun said that previously, foreign toothpaste brands occupied more than half of the domestic market; now that proportion has fallen to 40%. Local leading brands’ market share has risen to 35% or above, and the remaining 15%—25% is occupied by new brands focusing on younger generations such as Sen Ban and Bingquan. The rise of Generation Z consumer purchasing power has driven new brands focusing on new technologies and online operations to grow rapidly, further challenging the traditional market structure. The market advantage of foreign giants such as Colgate, Crest, and Colgate (Black) continues to weaken, and the rise of domestic brands has become an irreversible industry trend.

Zhan Junhao said that the logic of differentiation in the toothpaste industry is that channels shift from shelf-driven purchase to interest-driven purchase. New brands reach consumers precisely through short videos. Product value has moved from single cleaning to oral care and beauty-like needs, matching Generation Z’s preferences for aesthetics and social etiquette.

Build corporate moats through R&D

The reporter noted that among new brands, Sen Ban’s parent company Xiaokuo Group submitted a prospectus to the Hong Kong Stock Exchange on March 27, aiming to take a shot at the No. 1 Hong Kong stock in oral care.

Its prospectus shows that in terms of revenue, from 2023 to 2025, Xiaokuo Group’s revenue was 1.1B yuan, 1.37B yuan, and 2.5B yuan, respectively, with a three-year compound annual growth rate of 51%. Among them, 2025 revenue surged 82.5% year on year.

In terms of profit, in the past three years, Xiaokuo Group’s adjusted net profit was 54M yuan, 66M yuan, and 1.55 billion yuan, respectively, with a compound growth rate of 70%.

But the reporter noticed that although Xiaokuo Group’s performance is growing rapidly and it already has more than 500 SKUs and has more than 300 SKUs in reserve, as of the end of 2025 it had entered more than 110k offline outlets nationwide. However, in 2025, its R&D spending was only 19.39 million yuan, accounting for only 0.8% of revenue. From 2023 to 2025, Sen Ban’s marketing expenses were 570 million yuan, 720 million yuan, and 155M yuan, accounting for revenue ratios rising from 52% to 55%. This means that over the past three years, Sen Ban has spent nearly 2.7 billion yuan on marketing alone.

Even so, the reporter, on the Xiaohongshu and Black Cat Complaint [Download Black Cat Complaint client] platforms, saw many consumers questioning Sen Ban’s whitening results. “A single use boosts stain removal by 170%, and in three days whitening improves by 271%”—this is precisely Sen Ban’s core selling point.

Zhan Junhao believes that Sen Ban’s high growth relies on traffic dividends, with heavy marketing and light R&D hiding risks. High marketing expenses erode profits; controversies over efficacy undermine trust. Growth at this scale may not be sustainable. After the IPO, it needs to cut traffic spending and step up efficacy research and clinical validation. It should expand into offline channels such as pharmacies and convenience stores; shifting from internet celebrity hit products to professional oral care, replacing marketing power with product strength to build long-term moats.

Xu Xiongjun pointed out that Sen Ban’s growth depends heavily on large-scale marketing spending investment, which also leads to issues faced by some new consumer brands, such as increasing revenue without increasing profit and low return on investment. This also tests Sen Ban: how to transform from an internet celebrity brand into a long-lasting red-hot brand and build sustainable brand competitiveness is an even more critical question than rushing to complete its IPO.

Relatively speaking, Zangmian Zangmian’s R&D expenses in 2025 increased year on year by 10.24% to 110k yuan, accounting for 1.8% of revenue, reflecting the intensity of innovation investment. Zangmian Zangmian told reporters that this year it will extend into the big health area by relying on an academician workstation.

Even so, the reporter noticed that Lengsuanning’s parent company, Dengkang Oral Care, has kept its R&D expense ratio stable long-term at 3.0%—3.5% of revenue.

Zhan Junhao predicts that in the next 1—2 years, the marginal decline of traffic dividends will accelerate, and the industry will enter a game for existing customers. Brands that have control across multiple channels and hold mindshare in niche categories will raise market concentration.

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