Exclusive | Hongsheng announces suspension of production at some Wahaha OEM factories

**　　[Caixin]** Multiple sources told Caixin that Hongsheng Group notified several of its factories yesterday that they would halt production for a week. One source stated that, except for the factory producing red Wahaha bottled water, almost all other factories would cease operations. “The branches across the country (even) the production factories of AD Calcium Milk and Nutritional Express have been urgently shut down,” said another person close to Wahaha. Another source indicated that production is expected to resume after April 2. Hongsheng Group did not respond to Caixin’s inquiries.

Multiple sources indicated that the reason for the shutdown may be to allow the market to digest excess inventory, “Recent sales have not been good, and (the market) inventory is quite large.” However, some have questioned the true reason for the shutdown: “The company has never stated that it halts production due to excess market inventory after so many years.” A person close to Wahaha said. Others speculate that the real reason for the shutdown may be a change in Wahaha Group’s equity.