Popular Chili Sauce Maker Lao Gan Ma Sued Over Unpaid Tencent Ad Fees

By Barnaby Lofton, July 1, 2020

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UPDATE (July 2, 2020 3.36pm CST): On Wednesday, Guiyang police announced that three people were arrested after allegedly forging Lao Gan Ma’s company seal to properly sign a cooperation deal with Tencent, Reuters reported. “The aim was to obtain online game package codes that Tencent gave away as part of its promotional activities, which they later resold online to profit, illegally,” according to a statement by Guiyang police on its official Weibo account.

Lao Gan Ma, one of China’s most recognizable chili sauce makers, is now facing the heat. The condiment company was sued by internet giant Tencent over contract disputes and has been ordered to freeze RMB16.2 million (USD2.3 million) worth of assets, according to a court ruling in Shenzhen, where Tencent is headquartered. Tencent’s legal team has a powerful reputation, with 29 undefeated lawsuits since 2013. 

According to a statement from the internet conglomerate sent to Global Times, Lao Gan Ma “has failed to pay Tencent advertising fees to promote its chili sauces for a long time.” The two companies allegedly signed a contract in March 2019 which was worth “up to tens of millions of yuan.” Chinese media speculates that the dispute is over the mobile game ‘QQ Speed’ in which customized content was created for Lao Gan Ma as seen below.

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Image via 66.wz

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Image via 36kr

Lao Gan Ma, based in mountainous Guizhou’s capital city Guiyang, denies any malpractice and claims that they had never signed a contract with Tencent, and has reported the case to the police. 

Last year, Lao Gan Ma’s reported revenues were at a historical high of RMB5.02 billion, a 14% year-on-year increase. The sauce boss’ products have penetrated 96% of the domestic market and taken 65% of the market share. Founder Tao Huabi is not short on cash as she has an estimated net worth of RMB7.5 billion (USD1 billion) as of 2016. 

Lao Gan Ma has has a cult following both inside and outside of China. You may recall in 2018, WWE wrestler John Cena professing his love for the sauce in Mandarin (which by the way, was not an ad – he really just loves the sauce on broccoli). 

[Cover image via Wikimedia]

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