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After thorough communication with Lao Gan Ma - which translates
as "old godmother" - the two sides have cleared up any
misunderstanding and Tencent has apologised for inconvenience
and improper handling of the situation, a joint statement on
Chinese blogging website Weibo said on Friday.
A Shenzhen court last week said it would freeze 16.24 million
yuan ($2.3 million) in assets belonging to Lao Gan Ma at the
request of Tencent Holdings Ltd (0700.HK), which had sued the
manufacturer for failing to pay advertising fees under a 2019
contract.
Police in the southern city of Guiyang later said they had
arrested three people accused of forging Lao Gan Ma's company
seal - used in China to formalise documents - and pretending to
be staff from the firm's marketing department who signed a
cooperation agreement with Tencent.
The incident drew nationwide attention as netizens poked fun at
the idea Tencent's elaborate video game and esports-related
campaigns had served to promote a chilli maker.
Tencent said in the statement it has retracted its court
application for property preservation and related litigation,
and thanked local police for busting the alleged fraudsters.
The two sides would explore formal cooperation, the statement
said, without giving details.
Tencent, China's biggest social media and video game company, is
under pressure to maintain high growth of its advertising
business as it seeks to weather the disruption caused by the
COVID-19 pandemic.
Lao Gan Ma, headquartered in Guiyang, is one of China's
best-known food brands, selling millions of bottles of its red-labelled
chilli oil at home and abroad annually.
(Reporting by Pei Li; editing by Barbara Lewis)
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