(Yicai Global) Dec. 27 -- Chinese herbal medicine company Quanjian Group, which has annual sales of tens of billion yuan, faces public questioning this week after a report claimed it intervened in and delayed the treatment of a four-year-old girl named Zhou Yang who suffered from cancer and who eventually died. 

Authorities in the eastern Chinese city of Tianjin where the company is based said that corresponding investigations have been initiated.

Quanjian, which formed in 2004, started out with 'fire therapy' -- igniting alcohol-soaked towels applied to the patient's body to 'dredge the circulatory system' -- before developing several healthcare products such as insoles and sanitary napkins. 

The company's business now encompasses healthcare, Chinese herbal medicine and medicinal cosmetics, finance, machinery, sports and other sectors, information on its website shows.

Quanjian has registered capital of CNY40 million (USD58 million), and its founder Shu Yuhui holds a 51.1 percent stake in the company, corporate filings indicate. It has more than 7,000 franchise stores in China and annual sales of over CNY20 billion (USD290 million). 

Its healthcare product business is operated by its unit Quanjian Natural Medicine Science & Technology Development, the company's promotional materials show.

Untimely Intervention

Online medical community DXY accused Quanjian Natural Medicine in an article published on Dec. 24 of persuading the parents of a four-year-old girl named Zhou Yang, who suffered from a malignant tumor, to stop chemotherapy and instead administer its products. 

Zhou's condition, it reported, deteriorated after taking Quanjian Natural Medicine's 'drugs' for two months. 

She ultimately died in December 2015, though she returned to the hospital to resume conventional treatments, per the article.

Quanjian claimed in a statement yesterday that DXY's article was untrue and libeled the company, seriously impaired its rights and interests and distorted its image in the public eye. It demanded that DXY issue a retraction and apology and threatened legal action otherwise.

Zhou's father said in an interview that testimonials with leads such as 'Zhou Yang's cell tumor was cured by a secret recipe,' 'Four-year-old cancer girl Zhou Yang got a new lease on life from Quanjian Natural Medicine' and others appeared on several websites and forums during the girl's treatment, after which many strangers called him to ask about the effectiveness of the company's products. 

The interview with the father attracted widespread public attention after it aired.

Zhou senior filed suit against Quanjian for false advertising in early 2015 but lost since the court found he was unable to prove it had authorized or issued these product endorsements.

Quanjian Natural Medicine has been a party to 22 lawsuits since January 2015, four of which involved people's rights to body and health, Yicai Global has learned from court records. 

False TCM Claims

One Quanjian cancer hospital in Tianjin was investigated and prosecuted for publishing false and illegal Chinese medical advertisements in September 2016, information from the website of the governmental National Administration of Traditional Chinese Medicine shows.

Tianjin market oversight authorities responded to media reports yesterday, saying they were verifying the information in the article.

Quanjian Group was accused of false advertising, multilevel marketing and many other infractions by WeMedia on Dec. 25, which attracted extensive attention. 

Both Tianjin's municipal committee of China's Communist party and its city government view these matters as of great importance and have directed local market regulators and the health commission and other agencies to set up joint teams to examine and confirm these issues. 

The team has already conducted an onsite investigation of Quanjian Natural Medicine's company premises.

These revelations have driven the share price of Quanjian Group's holding company JC Finance & Tax Interconnect Holdings [SHE: 002530] down for three straight trading days to CNY7.3 (USD1.1) as of press time, a drop of nearly 10 percent from their Dec. 24 close of CNY8.

Editor: Ben Armour