A false cancer report destroyed BaWang — and winning the libel case didn't bring it back

BaWang was founded in 1989 by Chen Qiyuan in Guangzhou and built its brand around traditional Chinese herbal shampoo, especially the anti-dandruff line that dominated the mass market. By 2009 it held 46.3% of China's shampoo market, ranking fourth nationwide behind only P&G, Unilever, and L'Oréal. The company listed on the Hong Kong Stock Exchange on July 3, 2009, at HK$2.38 per share, was oversubscribed 446 times, and rose 27% on debut.

On July 14, 2010, Hong Kong's Next Magazine published a cover story titled 'BaWang causes cancer,' claiming the shampoo contained carcinogenic levels of dioxane. The stock crashed 18% that morning and fell another 14% when it reopened, erasing HK$3.8 billion over two days. China's drug regulator tested the products and found dioxane levels safe — well below the world's strictest standards. In 2016 the High Court ruled the article defamatory, awarded BaWang HK$3 million plus 80% of costs, and called the reporter's methodology 'illogical, arbitrary and without scientific basis.'

The legal victory could not undo the damage. Consumers associated BaWang with cancer regardless of the verdict. Revenue collapsed and never recovered. BaWang reported a net loss of RMB 118 million in 2010 and posted five consecutive years of losses. A diversification into herbal tea in 2010 was abandoned by 2013 after poor sales. The company shrank to a shadow of its former self — by 2025 its stock had fallen 98.7% from the IPO price to HK$0.031, its market cap was just HK$108 million, and it employed only 253 people.