Shares of the hot pot giant tumbled more than 12% in intraday trading on Monday, hitting a two-year low. The sharp decline followed the sale of 259 million shares at a discount by Shu Ping, wife of founder and chairman Zhang Yong, raising approximately HK$2.75 billion.
The market took this as a clearer signal than any corporate slogan — when the founder's own family cashes out, confidence erodes. Employees, suppliers, and investors closely watch the actions of the boss's inner circle, not just the words spoken from a stage. The real test of leadership is whether those closest to you show faith with their own capital.
Where to begin the analysis
During Monday's morning session, HAIDILAO (HK: 06862) experienced a heavy sell-off, with shares at one point diving over 12% to HK$10, a level not seen since August 2024. Trading volume swelled to HK$3.3 billion for the day. The trigger was a pre-market block trade involving 259 million shares priced at HK$10.62 each, a discount of roughly 6.7% to the previous close.
Media reports, citing transaction documents, indicated that Shu Ping planned to sell the shares through UBS at a price between HK$10.60 and HK$10.70. The company has not yet issued an official response. Notably, this block represents over 1% of the company's free-float shares. The decision to sell at a discount suggests a priority on immediate execution over maximizing price.
A stark contrast emerges
The most striking aspect of this divestment is the timing. Just four months prior, in May, Zhang Yong himself had increased his stake, purchasing roughly 11.35 million shares at HK$13.39 each. That move was interpreted as a strong vote of confidence and briefly supported the share price.
Now, the sale by his wife at an average price of HK$10.62 represents a loss of about 20% from that May purchase. The contradiction — the founder buying in May, his wife selling in September — has puzzled analysts, with Morgan Stanley describing the development as "unexpected." While some may categorize this as a personal financial decision, the market's reaction speaks louder, delivering a clear verdict through the 12% drop.
The company's fundamentals haven't collapsed, however. First-half revenue reached RMB 22.34 billion, an increase of 7.9% year-on-year, with core operating profit up 4.4% to RMB 2.51 billion and the table turnover rate improving from 3.8 to 3.9. The issue is not operational performance but the perception that even the founder's family lacks conviction.
Lessons beyond the headlines
For owners of small and medium-sized enterprises, this is more than corporate gossip; it's a case study in signaling. A leader rhetoric can be persuasive, but the financial actions of family and close partners are considered the ultimate truth. Employees gauge a company's potential not by slogans but by observing the actions of the owner's inner circle.
Consider these scenarios: if a boss's wife quietly diverts business revenue while appearing supportive, employees will notice. If a partner speaks of grand plans while privately registering a competing company, key talent will follow. If a leader promises an IPO while relatives spread doubt about the company's survival, that negativity is more damaging than any competitor's smear campaign.
The Haidilao incident demonstrates that when the people closest to the boss start to exit, others will follow. Employees, suppliers, and banks all interpret these moves. Self-assessment is crucial. Are family members expressing support or sowing doubt? Are partners increasing commitment or seeking an exit? Are core executives fully engaged or mentally preparing to leave? Are the owner's investments visible and his promises kept?
The path to building genuine trust
Three principles can be drawn from Haidilao's experience. First, do not allow family members to become the company's biggest critics. While honesty at home is important, frames should be about problems and potential solutions, not feelings of hopelessness. A despondent spouse can inadvertently undermine confidence across the entire company.
Second, handle equity moves transparently. Whether it's a reduction, an exit, or a restructuring, communicate the logic and timeline clearly. The damage to Haidilao came not just from the sale itself but from the confusion created by its timing, directly contradicting the founder's earlier purchase. In your own business, if a partner needs to exit, negotiate a transparent buyback plan rather than leaving employees to interpret unsettling financial movements on their own.
Third, tangible incentives are infinitely more effective than motivational speeches. Employee trust is built on receiving salaries on time, seeing agreed commissions paid, and watching equity promises become a reality. If you cannot share value with those closest to you, why should employees believe in your vision?
Final message for business leaders
The actions of a leader's inner circle speak louder than any public pledge. A 20% loss accepted to exit a position shows true conviction — or the lack of it. The ultimate strategy for securing employee buy-in is not persuasive talk but visible commitment from your family, partners, and key executives. Their confidence is earned through consistent action, from fair compensation to decisive investment.