(Yicai) Dec. 10 -- More listed Chinese firms are embracing in-kind dividends, swapping cash payouts for everything from food gift boxes and cosmetics to theme park tickets as a way to reward investors and promote their brands. But analysts warn that while this can fuel short-term share price gains, the long-term impact on valuations remains far from certain.

More than 30 listed Chinese businesses in the cultural tourism, consumer goods, healthcare, technology, and other sectors handed out their products and services to shareholders as in-kind dividends this year, according to publicly available information.

Consumer firms have long been at the forefront of non-cash dividends, especially those in food and beverages. Traditional snack maker Wu Fang Zhai sent shareholders gift boxes of zongzi, glutinous rice parcels wrapped in leaves and filled with sweet or savory ingredients. Condiment producer Lotus Health distributed curated product assortments, while ready meals specialist Qianwei Yangchu handed investors product bundles valued at CNY200 (USD28).

Cultural tourism firms have also embraced the practice. Emeishan Tourism gave shareholders discounts on tickets, cable cars, hotels, hot springs, and skiing, while Yingxin Development allowed backers to buy three tickets to its scenic spots for a symbolic price of 99 Chinese cents (14 US cents) each, and stay one night at a designated hotel at a special price of CNY99 (USD14.02).

Even tech and healthcare companies are getting in on the action. Smart displays supplier Kangguan Technology gifted different product sizes according to shareholding ratios. Shareholders of medical devices supplier Aipeng Medical received some of its home health products for free.

The craze for in-kind dividends is the convergence of investor relations and experiential brand marketing, Tian Lihui, director of Nankai University's Institute of Finance and Development, told Yicai. Rather than simply aiming to boost their stock prices, companies are seeking to build an emotional bond with shareholders, he noted.

“When tourism companies give tickets, or consumer companies provide trial clothing, shareholders become nodes of word-of-mouth promotion,” Tian said.

Non-cash payouts are an innovative way to deepen brand penetration and customer acquisition while serving as a flexible complement to traditional cash payments, according to Xue Hongyan, a special researcher at SMB, a digital bank.

The companies most likely to embrace are small to mid-cap consumer businesses, thereby easing their financial strain, achieving low-cost market expansion, and enhancing investor stickiness by treating then like consumers, Xue said.

In-kind rewards can generate wide media coverage at low marginal cost, turning a shareholder giveaway into a public marketing event, Xue pointed out.

“Yet the model’s sustainability is doubtful,” he said. “Marketing success depends on creating sustained buzz, and if a company's business performance lacks fundamental support, any short-term stock gains may quickly fade.”

Editors: Tang Shihua, Martin Kadiev