As its market hype fades, one of China’s most famous ice cream brands teeters on the brink of financial collapse as consumers shift away from indulgence and novelty in favor of affordability and practicality.

In early June, a subsidiary of Chinese premium ice cream brand Zhongxuegao, once dubbed the “Hermès of ice cream,” was placed under bankruptcy review after it failed to pay off its debt.

The news was the latest in a series of financial setbacks for the company. Late last year, a court ordered the auction of the subsidiary’s assets — including vacuum dough mixers, ice cream conveyors, and other machinery — due to its inability to repay creditors.

The company’s founder, Lin Sheng, is currently subject to multiple consumption restriction orders and was listed as a “dishonest person subject to enforcement” by the court. Several of his equity holdings in various companies have been pledged, effectively freezing Zhongxuegao’s core assets and severely limiting Lin’s ability to leverage capital operations to revive the company.

Founded in 2018, Zhongxuegao quickly rose to prominence, in part thanks to its savvy marketing as a luxury alternative to traditional frozen desserts. With single sticks priced between 20 to 70 yuan, and limited-edition flavors exceeding 100 yuan, the brand appealed to affluent urban consumers seeking quality products.

One of its most popular products, the “Ecuador Pink Diamond” popsicle, priced at 66 yuan per bar, sold over 20,000 units within just 15 hours during the 2018 “Double 11” shopping festival. The company hit the 100-million-yuan revenue milestone only 16 months after its founding.

Zhongxuegao’s rise was turbocharged by shrewd social media marketing, influencer collaborations, and a wave of “guochao,” or Chinese chic, enthusiasm among consumers. Its products featured traditional Chinese flavors such as yellow rice wine and oolong tea, and were often designed as gift sets for festivals and special occasions.

However, a major turning point came in the summer of 2022, when Zhongxuegao’s exorbitant prices began to attract public scrutiny. Consumers accused the brand of exaggerated marketing, and a backlash began, with Zhongxuegao being dubbed an “ice cream assassin” for its perceived killing off of more reasonably priced alternatives.

Around the same time, a viral video showing a Zhongxuegao ice cream failing to melt in temperatures above 30 degrees Celsius sparked widespread concerns about food safety and ingredient transparency. Although the company explained that it was the effect of edible stabilizers used in their products, public trust had been eroded.

In the same year, market regulators issued the brand two administrative penalties for false advertising. One involved falsely claiming that their raisins were sourced from the Turpan Basin in the northwestern Xinjiang Uyghur Autonomous Region — an area renowned for its high-quality fruit — but were actually regular varieties. The second was for promoting the use of Japanese tea, which turned out to be domestically sourced.

The brand’s sales have continued to plunge ever since. Founder Lin Sheng later admitted in interviews that the company was facing severe financial strain, which led to delayed staff and supplier payments, as well as layoffs.

The company’s online store remains operational, but only offers a handful of basic flavors. Offline sales remain bleak. 

Zhongxuegao’s fall reflects a broader consumer reset in China, where buyers increasingly seek value-for-money products over branding hype. In recent years, competition in the ice cream market has grown increasingly fierce. The rapid rise of affordable tea chains like Mixue, which also offer ice cream options, has posed new challenges for traditional ice cream brands. In addition, new players like Ye Gelato continue to enter the market, intensifying the competition.

Similarly to Zhongxuegao, China’s most famous liquor producer, Moutai, this year began to scale back its once highly sought-after baijiu-flavored ice cream due to initial hype surrounding the product having cooled.
 
China’s ice cream industry is expected to be worth over 220 billion yuan in 2025 and reach 250 billion yuan by 2030, retaining its place as the world’s largest market, according to a report by research agency ChinaIRN. The proportion of individual ice creams priced above 20 yuan now account for 25% of products, compared to 15% previously.

Editor: Tom Arnstein.

(Header image: Zhongxuegao ice cream. VCG)