What’s At Stake At China’s Biggest Wine Influencer’s Downfall

Here in this explainer, we break down what is known in the criminal investigation into Lady Penguin’s company and what remains unclear.

One of the most shocking stories to emerge from the wine industry this year is the dramatic fall of Wang Shenghan, known to millions of Chinese consumers as Lady Penguin.

As Vino Joy News reported yesterday, an official court announcement revealed for the first time that her company Beijing Lady Penguin Wines & Spirits Co., Ltd. and Li Baolong have been named as defendants in a smuggling case. The trial is scheduled for Sept. 1 at the Beijing No. 4 Intermediate People’s Court, which has jurisdiction over smuggling cases in the capital.

Major questions remain unanswered, including the roles of those involved, the value of the wines allegedly smuggled, the amount of tax allegedly evaded and the identity of the second defendant, Li Baolong. Here, we break down what is known so far, and what remains unclear.

Who is the second defendant Li Baolong?

Publicly available online records show that an individual named Li Baolong previously served as a principal staff member at the Beijing-Tianjin Tax Collection and Administration Bureau of China’s General Administration of Customs. He has participated in policy briefings covering the proper declaration of imported goods, customs classification, pricing risks and trade compliance.

On Sept. 20, 2019, China’s official drinks regulatory body, China Alcoholic Drinks Association, held a customs policy briefing in Beijing for companies importing spirits, wine and beer, as well as representatives of major alcohol distributors. The event was commissioned by the Beijing-Tianjin Tax Collection and Administration Bureau.

Li, then identified as a principal staff member at the customs bureau, gave presentations on customs requirements for the proper declaration of imported alcoholic beverages, the classification of alcohol products and pricing risks.

More recently, on May 24, 2024, Li appeared again as a business expert from the same customs bureau at a trade-compliance seminar for the agricultural and food industries. The event was organised by bodies including the China Customs Brokers Association and the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products.

Li discussed issues of concern to businesses, including compliant customs declarations for agricultural products, rules of origin, product classification and pricing.

There were rumors speculating Li is Wang’s boyfriend. However it was never confirmed by either party.

Additionally, no authoritative information has confirmed that the customs official named Li Baolong is the same Li Baolong named as a defendant in the Lady Penguin smuggling case. Whether they are the same person remains unverified pending disclosure by judicial authorities or other reliable evidence.

Who is Liao Xiaoyi?

Another central figure in the Lady Penguin business is Wang Shenghan’s mother, Liao Xiaoyi, a highly decorated environmental advocate who once received an honour described as the “Nobel Prize for the environment.”

Liao was appointed chairwoman and legal representative of Lady Penguin’s company in 2017. She is now its largest shareholder, with a stake of about 49.1%.

Born in Chongqing in 1954, Liao taught philosophy in Sichuan before moving to the United States with Wang in 1992 to join her husband, who was studying for a doctorate there. According to Liao’s own account, she took on low-paid jobs, including babysitting, to finance her environmental advocacy and documentary work.

She later used her own money to produce the television documentary Daughter of the Earth and served as independent producer of China Central Television’s Time for the Environment programme from 1996 to 2001.

Liao became the first Chinese grassroots environmentalist to receive the Sophie Prize, sometimes described as the “Nobel Prize for the environment.” She also received Australia’s Banksia International Environmental Award.

CCTV named her its Social Welfare Person of the Year in 2005, and she was selected as one of China’s Green Figures of the Year in 2006. She later served as an environmental adviser to the organising committee for the 2008 Beijing Olympics. That same year, former U.S. President Bill Clinton personally presented her with a Clinton Global Citizens Award. This is an award that recognizes “remarkable individuals for outstanding leadership and innovation in solving global challenges,” according to the Clinton foundation.

Liao sought to apply her environmental principles to family life. “There are two things my family will never buy in this lifetime: a private car and an air conditioner,” she once said.

Wang has recalled that she rarely received new clothes as a child and instead eagerly awaited hand-me-downs from the daughters of her mother’s friends.

The contrast between mother and daughter extended to their careers. According to Chinese media reports, Liao initially struggled to understand Wang’s interest in wine, which she regarded as a luxury serving the wealthy. Given the choice, she would have preferred her daughter to join her in public-interest and charitable work.

How severe are the crimes?

Under Chinese law, penalties for smuggling vary according to the goods involved and, in cases concerning ordinary goods, the amount of tax evaded.

The case involving Lady Penguin’s company depends heavily on the amount of wines involved and tax evaded, which will be revealed during the September 1 trial.

Tax evasion of between RMB 100,000 and RMB 500,000 can carry a sentence of up to three years in prison or criminal detention. The same penalty may apply to someone who smuggles again after receiving two administrative penalties for smuggling within a year.

If the tax evaded is between RMB 500,000 and RMB 2.5 million, or the case involves other serious circumstances, the prison term can rise to between three and 10 years.

Cases involving more than RMB 2.5 million in evaded tax, or other particularly serious circumstances, can result in imprisonment of more than 10 years or life imprisonment.

Courts may also impose fines of between one and five times the amount of tax evaded. In the most serious cases, property may be confiscated.

Would Lady Penguin herself be implicated?

The biggest contention in the case is whether Wang Shenghan, Lady Penguin, herself will face prosecution since it was not her but her company that was named in the case.

Li Cao, a senior partner at the Chengdu law firm of Duan & Duan and an experienced layer of criminal defence and commercial dispute resolution, said that under Article 31 of China’s Criminal Law, when a company commits a crime, the company may be fined while the managers directly in charge and other directly responsible personnel may face criminal punishment.

“Only two categories of individuals are punished in a corporate crime: managers directly in charge and other directly responsible personnel,” Li said. “Because Wang Shenghan participated in the company’s management and operations, she could fall into the second category.”

Turning specifically to this case, Li said Wang’s lack of shareholding might allow her to argue that she was a secondary participant. Under Article 27 of the Criminal Law, secondary participants should receive a lighter or reduced punishment and may, in some cases, be exempted from punishment. However, Li said that argument may not succeed if Wang was a core member of the company’s management.

Regarding whether other employees and investors in Beijing Lady Penguin Wines & Spirits could be held responsible, Li said the company’s ultimate controller and senior executives involved in decision-making would probably face scrutiny. Key business or finance personnel could also be pursued if they knowingly participated in unlawful conduct.

By contrast, a nominal legal representative who did not participate in the company’s operations would generally not be held responsible, while junior employees who had no knowledge of the alleged wrongdoing would also be unlikely to face prosecution.

According to company records, Chen Dan is listed as Beijing Lady Penguin Wine and Spirits company’s legal representative, while Wang Shenghan’s mother Liao Xiaoyi is identified as its ultimate controlling shareholder, with a 49.1886% stake.

Chen was named the legal representative only in 2025, while Wang’s mother was named legal representative in 2017, and was appointed as the company chairman the same year, according to company records on Qichacha.

When did her troubles begin?

In an October 2024 post, Wang Shenghan said she planned to retire from her public role as Lady Penguin, citing burnout, mounting pressure and other personal reasons. But the problems inside her company had begun years earlier.

The first warning came in 2018. According to a profile recounting Wang’s experience, her accountants informed her of an urgent RMB 2 million cash shortfall. Wang later said the crisis transformed her from an idealist into a businesswoman focused on commercial models and the fundamentals of running a company.

A much more serious crisis emerged in 2022, when Lady Penguin was accused of posting malicious reviews targeting a competitor. The court ruled against the company, ordering it to pay RMB 120,000 (US$16,955) in damages and publish an apology on its Taobao flagship store for three consecutive days.

By March 2023, Lady Penguin had still not complied with the apology order. In May, the Beijing market regulator, the Beijing Chaoyang District Administration for Market Regulation, fined the company RMB 200,000 for unfair competition involving commercial disparagement.

Six days later, the regulator added her company to its list of companies with abnormal business operations after authorities were unable to contact it at its registered address or place of business.

The fallout was devastating. Advertising, livestreaming and brand partnerships were suspended, online traffic declined and sales were cut in half. Banks stopped lending to the company, pushing its cash flow close to collapse.

By 2024, Lady Penguin had accumulated RMB 56 million in debt, Wang said. She was forced to mortgage her mother’s property and sell assets, while the workforce shrank from more than 100 employees to around 20.

Wang disappeared from public view in the second half of 2025, fuelling speculation that she was under investigation. On Aug. 6, 2026, a court announcement confirmed that Beijing Lady Penguin Wines & Spirits and Li Baolong had been named as defendants in a wine-smuggling case scheduled to be heard on Sept. 1.