Chili Sauce Maker Lao Gan Ma Claims No Contract With Tencent After Court Loss

Update July 1, 10 p.m.:  Chinese police said on Wednesday it had arrested three people for forging Lao Gan Ma’s company seal and signing a cooperation agreement with Tencent.

Chinese condiment giant Guiyang Nanming Lao Gan Ma Flavored Food Co., Ltd. said on Tuesday it never had any commercial cooperation with Tencent. The company has reported its dispute with the tech giant to police.

“The tech giant was cheated by a fake company,” a spokesperson for Lao Gan Ma responded, “We never signed any contract with Tencent.”

A court ordered Lao Gan Ma’s 16.24 million yuan ($2.3 million) in assets frozen to cover unpaid advertising fees to Tencent, according to a court ruling published on Tuesday.

Internet giant Tencent said it signed a cooperation agreement with Lao Gan Ma worth tens of millions of yuan to promote its chili sauce products in March 2019. While Tencent fulfilled its obligation, it said it took legal action after Lao Gan Ma failed to pay its advertising fee.

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Netizens speculated this agreement may be related to the annual tournament of Tencent’s mobile game QQ Speed. In April 2019, Tencent announced Lao Gan Ma would be its newest partner for the tournament. During the competition, Tencent hosted several promotional actives for Lao Gan Ma and presented its brand image in the game.

Lao Gan Ma, which means “old godmother” in Chinese, is well-known both domestically and abroad for its signature chili sauce. Founded in 1996, it is one of the oldest and most successful condiment brands in China.

The company’s revenue reached a record 5.02 billion yuan in 2019. Its products occupy more than 65 percent of the market, a spokesperson for Lao Gan Ma said.