Daily Management Review

Luckin Coffee and 43 other companies get $9M fine in China


China's chief market regulator has fined 61 million yuan ($ 9 million) two operating divisions of Luckin Coffee Inc. and 43 more companies that helped the coffee chain falsify sales and expense data.

They were found guilty of violating the law on preventing unfair competition, Xinhua news agency reported. The State Administration for Market Regulation of the PRC, following an investigation, found that in the period from April to December 2019, Luckin Coffee, in an attempt to gain competitive advantages and more trading opportunities, dishonestly exaggerated its main indicators, namely, sales revenues and profitability ratio, with the help of a number of third-party firms.

Luckin Coffee also used falsified data in its promotions from August 2019 to April 2020, thereby misleading consumers. As revealed by the investigation, only 43 third-party companies provided practical assistance in the illegal activities of Luckin Coffee.

On the official account in the Weibo microblogging service, the company said that it respects the decision on the fine and is ready to unconditionally execute it.

"We will continue to regulate our business in accordance with the requirements of relevant laws and regulations and ensure the smooth operation of our business," the coffee chain said in a statement.

Luckin Coffee is registered in the Cayman Islands. In May 2019, it conducted an initial public offering on the American stock exchange Nasdaq in the amount of $ 651 million. At the beginning of this year, the company raised another $ 865 million through the sale of shares and convertible debt.

source: wsj.com