Back in 1994, Zhang Yong, together with his then-girlfriend Shu Ping, and his friend Shi Yonghong with his girlfriend Li Haiyan, pooled together 8,000 yuan to open a hotpot restaurant with just four tables on Sizhi Road in Jianyang County, Sichuan Province. As a teenager, Zhang Yong had little interest in academics and, after junior high, enrolled in a technical school to learn welding at his parents' urging, where he met his lifelong friend and future business partner, Shi Yonghong.

That small hotpot shop on Sizhi Road became the very first HAIDILAO location. None of the four founders had any background in the food service industry—Zhang Yong couldn't even prepare the soup base, so the flavor was nothing special. Recalling those early days, Zhang Yong once said, "The hotpot tasted mediocre, so to survive, we had to be extra attentive to customers. We had to be fast, and always wear a smile when addressing any complaints." He added, "In hindsight, it worked out well because hotpot quality varies little across competitors, making service the easiest way to stand out."

That philosophy gave rise to the extreme service HAIDILAO would later become famous for. Using this approach, Zhang Yong expanded the business beyond that four-table shop into a nationwide chain and eventually took it public on the Hong Kong Stock Exchange. In early 2021, HAIDILAO's share price surged to HK$85.80 per share, pushing its market value to an all-time high of HK$450 billion. At that time, the company earned the nickname "the Moutai of hotpot," and Zhang Yong and his wife rose to become Singapore's richest couple.

Five years on, the hotpot giant's glory days have faded significantly. Just days ago, HAIDILAO announced that Shu Ping, via her controlled entity SP NP Ltd., sold 259 million shares—representing 4.65% of the company's total share capital—through block trades. The transfer price was set at HK$10.62 per share, a 6.7% discount to the closing price that day. Through this sale, the boss's wife pocketed approximately HK$2.4 billion. The very next day, HAIDILAO's stock price plunged, falling more than 12% intraday, eventually closing at HK$10.34 per share, leaving the market value at just HK$57.6 billion, a fraction of what it was at its peak five years ago.

The pinnacle for HAIDILAO came in 2021. After its 2018 Hong Kong listing, the company aggressively expanded, rapidly opening new outlets. By 2021, its store count had grown from 273 pre-IPO to 1,443. However, the situation turned dramatically in 2022, when the share price suffered a cliff-edge decline. Market value fell from HK$450 billion in early 2021 to HK$85.6 billion just one year later, with hundreds of billions evaporating in that short span. By 2022, the store count had already dropped to 1,349, prompting Zhang Yong to launch the "Woodpecker Plan" to close underperforming locations, cut costs, and retrench. He admitted that his earlier rapid expansion strategy had been a mistake.

While the restructuring showed results, the capital market fairy tale was already over. The stock price has remained in the doldrums since, never recovering to previous heights. In the first half of this year, HAIDILAO generated 22.3 billion yuan in revenue, up 8% year-on-year, with net profit of 1.8 billion yuan, roughly flat from the same period last year. From a financial perspective, the company is still growing, but it is precisely at this juncture that the founder's wife chose to cash out heavily—and at a discount.

In May this year, Zhang Yong personally spent HK$150 million to buy 11.35 million shares on the open market at HK$13.39 per share, a clear attempt to prop up the stock price. However, HAIDILAO's share price remains stuck in a slump, dipping even below Zhang's purchase price four months ago. The contrast is stark: the boss buys to support the price, while his wife sells at a discount, pocketing HK$2.4 billion and triggering a sell-off.

When Zhang Yong increased his stake, HAIDILAO's announcement stated confidently that the move reflected his "full confidence in the group's overall development prospects and potential growth, with the possibility of further increasing his shareholding at an appropriate time." Now, regarding Shu Ping's reduction, the company has explained that "the sale is purely based on her own funding needs and financial arrangements, a private matter at the shareholder level, and has no bearing on the group's business, operations, financial condition, or development prospects."

In short, the message is that the boss's buying signals confidence, and the boss's wife's selling also signals confidence. Yet, if they truly believe in the company, why such a large-scale divestment, especially at a time when the stock is at its lowest, and at a discounted price? This is not just an attitude—it's HK$2.4 billion in real money.

Recent regulatory changes may hold a clue. The Ministry of Finance and the State Taxation Administration jointly introduced new rules tightening tax treatment on offshore trusts. The SP NP Ltd. entity used for this substantial reduction is controlled by Shu Ping through an overseas family trust set up via UBS in the British Virgin Islands. HAIDILAO's main operations and stores are in mainland China, but the shareholding structure of the listed company sits beneath an offshore family trust.

Previously, these business owners could take advantage of offshore trust tax breaks by deferring taxation as long as funds were not distributed back to China. Under the new rules, taxation now penetrates the trust structure—regardless of whether assets are nominally held offshore, the actual controller is taxed a flat 20% personal income tax. In the past, offshore trusts could avoid taxes by not distributing funds; that loophole is now closed. Many speculate that Shu Ping's share sale is likely linked to this new regulation.

Although Zhang Yong and Shu Ping hold Singaporean nationality, tax law looks beyond passports. If their family, businesses, major economic interests, or long-term management focus remain in China, they can still be deemed tax residents, making all personal income subject to Chinese taxation.

Over the years, HAIDILAO has maintained generous cash dividends—4.2 billion yuan in 2023 (93% payout ratio), 4.6 billion yuan in 2024 (97%), 3.6 billion yuan in 2025 (88%), and 1.8 billion yuan declared for the first half of this year (103%). Over the past three and a half years, total cash dividends distributed to shareholders have surpassed 14.1 billion yuan, meaning nearly all profits have been paid out. For a long time, Zhang Yong and his wife held 50% of the listed company's shares. After this reduction, their stake drops to 45.49%, but they remain the controlling shareholders.

Based on their shareholding, more than 7 billion yuan in cash dividends alone has flowed into the couple's family trust in the British Virgin Islands over the years. With the new offshore trust tax rules now in effect, these entrepreneurs have a three-month transition window to voluntarily report and pay back taxes without penalties. After that, late fees and penalties will apply. Now, the founder's wife is selling shares to raise the cash needed to settle these obligations.

For years, the listed company has channeled billions in cash dividends into an offshore family trust, but now some of that money must be repatriated to the tax authorities. The money can no longer be distributed at will.