Lisa Zhu
The Ivory Tower Collapses
When Shenzhen Hezi Huaxi Medical Laboratory filed lawsuits against health departments in Putian and Hailar last year, it signaled more than contract disputes—it marked the downfall of China’s most infamous pandemic entrepreneur. Zhang Hezi (张核子), who built a nationwide COVID-testing empire processing over 700 million samples at its peak, now wages legal battles over unpaid invoices across provincial lines. This extraordinary pivot from industry titan to litigant reveals systemic cracks beneath China’s pandemic response apparatus, where unpaid COVID testing fees cripple private medical labs and local governments spar over pandemic-era debts. As Zhang’s cases advance through courts in China’s third-tier cities, they spotlight urgent questions about balancing public health obligations with commercial contracts.
Key developments unfolding now
– Lawsuits target health bureaus in Putian (Fujian) and Hailar District (Inner Mongolia) alleging unpaid testing contracts
– Claims filed as ‘service contract disputes’ sidestep complex state procurement rules
– Sources reveal settlements occurred in undisclosed cases with undisclosed amounts
– Industry-wide accounts receivable exceed tens of billions yuan for major labs
The deeper payment crisis
– Medical testing giants like KingMed and DiAn suffer significantly because of similar overdue government receivables
– Specialized collection systems established in provinces like Fujian still leave 65% of testing bills unpaid beyond 120 days
– Municipal bankruptcies threaten repayment capacity according to China Securities Journal analyses
Lawsuits Beneath the Surface
Through his Shenzhen Hezi Huaxi Medical Testing Laboratory, Zhang Hezi has targeted administrative health bureaus rather than hospitals or CDC offices. These municipal bodies often oversee epidemiological operations but lack dedicated funding mechanisms for pandemic expenditures—creating powder-keg conditions for unpaid COVID testing fees. Court filings reviewed by financial outlets show claims initiated against:
Putian Municipal Health Bureau
Operating in Fujian province’s third-tier urban center, this bureau faces allegations of breach despite settlement talks reported internally
Hailar District Health Bureau
Serving Inner Mongolia’s Hulunbuir region, this administration allegedly defaulted on debts incurred during border testing drives
The Wuhan Precedent
Zhang’s laboratory network gained prominence serving Wuhan’s lockdown in early 2020—tests running 24-hour cycles as Chinese CDC subsidiaries crumbled under sample volume. But operational shortcuts soon drew sanctions:
Regulatory rap sheet
Shenzhen Hezi Huaxi amassed penalties nationwide
– November 2022: Lanzhou lab falsely registered negative results for infected individuals
– January 2021: Jinan facility misreported positive cases in Hebei’s Longyao County
– May 2021: Hangzhou branch cited for disinfection violations
The Assembled Empire
Operating through franchised clinics and mobile testing fleets, Zhang deployed capital with military efficiency:
Testing network expansion
– Launched franchised testing clinics across 45 cities
– Promised regional investors RMB 500,000+ annual returns
– Claimed capacity exceeding 100,000 daily samples per metro area
The leverage trap
Overreliance on volumes generated vulnerability
– Workforces grew beyond compliance support systems
– Speculative partners invested believing indefinite pandemic profits
– Accounts receivable ballooned when municipal budgets froze
Unraveling in Slow Motion
When mass nucleic testing stopped, so did Zhang’s cash flows. Since January 2025, investigators have documented regression:
Cascading defaults
Shenzhen Nuclear Gene Technology Limited (Zhang’s parent company)
– Failed wage payments led to court-imposed consumption restrictions
– Executives prohibited from business-class flights/vacation spending
Post-pandemic reconstruction
The consumer reinvention faltered badly
– Real estate brokerage subsidiary collapsed during market downturn
– Pre-made meal distributor dissolved after F&B safety rejections
– Personal TikTok channel now teaches entrepreneurial failure stories
Public Health Finance Under Microscope
Municipal health spending pathways present systemic barriers preventing timely settlement of debts like unpaid COVID testing fees. Research coordinated by Shanghai Jiaotong University health economists reveals:
Collection bottlenecks
– Province-level central payments systems cover only emergencies
– Ongoing epidemic management relies on county treasuries
– Automatic approvals cease when localities exceed deficit thresholds
The grassroots accounting maze
Local health bureaus manage complications including
> Unapproved supplementary purchases during outbreaks
> Retroactive expense authorization processes
> Uncertainty around disputed service interpretations
Coda in the Courts
Zhang Hezi’s struggles amplify dilemmas confronting entrepreneurs balancing crisis profits against governance accountability. Legacy obligations—both financial and ethical—linger when public health emergencies fade. Evaluating partnerships transparently during volatile collaboration windows guards against predicaments like unresolved unpaid COVID testing fees. Citizens deserve reassurances that safeguards prevent both inaccurate testing and abandoned payments moving forward.
Actionable insights
Industry stakeholders should consider urgent measures
1. Comprehensively audit municipal liabilities owed to medical service providers
2. Standardize reconciliation protocols for public-private pandemic contracts
3. Prioritize clearing legacy healthcare debts to preserve clinical capacity
