A polyester giant founded in 1980 now teeters on the brink of delisting. Sanfangxiang received a disclaimer of opinion and an adverse internal control opinion on its 2025 annual report. Its controlling shareholder's shares are being auctioned, and cumulative overdue guaranteed debts have reached RMB 522 million. This is not just a single company's crisis—it is a mirror reflecting the brutal reality of extreme overcapacity in China's PET bottle chip industry, where profits have been hollowed out.
The Price of Capacity Frenzy
Sanfangxiang's losses align almost perfectly with the industry's capacity expansion. In 2021 and 2022, after acquiring Hailun Petrochemical, net profit reached RMB 630 million and RMB 818 million respectively. But from 2023 onward, the market turned. Public industry data shows that between 2023 and 2024, domestic PET bottle chip capacity surged past 20 million tons/year, while downstream demand stood at only 12 million tons/year—a supply-demand gap of 8 million tons.
This oversupply crushed product spreads. As the industry's second-largest producer, Sanfangxiang lost RMB 487 million in 2024 and RMB 885 million in 2025, accumulating total losses of RMB 1.628 billion over three years. The "more volume, less profit" paradox is not unique—when every major player expands simultaneously, the only way to compete is price wars, squeezing margins below breakeven.
More concerning is the fragility of its value chain. Sanfangxiang covers only the PTA-to-PET bottle chip segment, relying entirely on external purchases for its core raw material, PX. Any upstream price hike directly hits margins, leaving no buffer. The company's trade revenue dropped 59.97% year-on-year in 2025—a direct consequence of this narrow structure in a volatile market.
Debt Spiral and Guarantee Chain Reaction
Beyond losses, overdue guarantees hang like a second sword over Sanfangxiang. As of its latest filing, the company's cumulative overdue guaranteed debts for subsidiaries and affiliates reached RMB 522 million, representing 10.82% of the latest audited net assets. Among these, subsidiary Hailun Petrochemical failed to pay RMB 25.64 million in rent to Taiping石化 Financial Leasing, for which Sanfangxiang provided irrevocable joint liability guarantees.
The company's accounts receivable from related parties amount to RMB 3.561 billion, yet only RMB 107 million in bad debt provisions have been made. Auditors explicitly stated they could not obtain sufficient evidence to verify the recoverability of these receivables. If related parties default, Sanfangxiang faces massive write-offs. The controlling shareholder's shares have already been frozen by judicial order—if they are eventually auctioned, control of the company could change hands, further destabilizing an already fragile credit profile.
Can Anti-Involution Be a Lifeline?
Signs of government intervention have emerged. In the second half of 2025, relevant authorities convened a symposium for PTA and bottle chip leaders, focusing on preventing and resolving "involution-style" competition. Against a backdrop of severe overcapacity and razor-thin margins, this meeting was widely interpreted as a signal that the industry has hit bottom.
The impact showed in Q1 2026: Sanfangxiang reported net profit of RMB 32.74 million, returning to profitability. During the same period, the Strait of Hormuz blockade triggered a sharp rebound in polyester chain product prices, lifting margins. But sustainability remains questionable. On June 26, Lianhe Credit downgraded Sanfangxiang's long-term credit rating to A- with a negative outlook, indicating persistent market pessimism about its debt repayment capacity and operational continuity.
Implications for Buyers and Exporters
What does Sanfangxiang's plight mean for downstream buyers and foreign trade firms?