Starbucks China is fined for false accounting data

“Starbucks China” is fined for false accounting data

The coffee chain dubbed “China Starbucks”, Luckin Coffee, and more than 40 affiliated companies have just “received” a total penalty of nearly $ 9 million for inflating business data.

Outside a Luckin store in Beijing, China in July 2020. Photo: AFP

The Chinese market regulator on September 22 sanctioned a group of 45 businesses, including Luckin Coffee, with a total fine of 61 million yuan (equivalent to 8.98 million USD) due to the implementation. vi related to the Luckin incident Coffee falsify financial records and deceive the public in this country.

Previously, the Chinese Ministry of Finance said Luckin had recorded 2.25 billion yuan in sales through a fake coupon application program from April 2019 to the end of this year. The survey results of the Ministry of Finance also showed that Luckin also exaggerated other figures for the same period, including: revenue, expenses and profit.

The Luckin investigation conducted in April 2020 found that the coffee chain in Beijing was in violation of competition laws and misled the public with statistics, the Chinese market regulator said. fake from August 2019 to April 2020.

In addition to 2 branches of Luckin, there are 43 other enterprises supporting this coffee chain to make false declarations of the data, also sanctioned this round.

Responding to the incident on the Weibo social network account, Luckin representative said on September 22 that they respect the decision of the regulator. “We have adjusted all related matters,” Luckin emphasized, “we will further improve operations under relevant laws and regulations”.

In the Chinese market, Luckin has positioned itself as an ambitious rival to America’s coffee chain Starbucks. By mid-2019, Luckin has developed a system of 2,370 stores across China and has an ambition to raise 2,500 stores to overtake Starbucks and become the largest coffee chain in the country.

In May 2019, Luckin raised $ 561 million from the sale of 33 million US deposit shares (ADS) – a form of US dollar-denominated shares of a company based abroad available for trading. an American stock exchange. Worth mentioning, more than 30 million ADS shares were sold at ceiling price of 17 USD / share.

However, at the end of June, this “China Starbucks” was “ousted” from the Nasdaq stock exchange after admitting to accounting fraud.

According to Luckin’s internal investigation in July, 2019 sales of this coffee chain increased “short” by about 2.12 billion yuan. Also during the investigation, Luckin fired both key positions, including: chief executive officer (CEO) and chief operating officer (COO).

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