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LK - Luckin Coffee


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Do. Not. Invest. In. Chinese. Companies. Full stop. That is my well meaning advice and I hope to save somebody a few grand with it. By far the most +EV play you can make with any sino business is to indiscriminately throw them all into the bin.

 

Tencent says hi from a tropical island.  8)

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  • 8 months later...

Well, seems like as of right now they can raise more if they so choose as they continue to trade freely on the public markets.

 

An appropriate settlement would be to pay back the fraud amount or liquidate and pay back as much as they have, or bankruptcy at the very least. Worldcom, for example, received a more appropriate $3B civil/criminal fines on $3.8B in fraud accounting.

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Does anyone know if the executives ended up getting criminally charged and serving?  Was there a trial or was the corrupt judiciary bought off? All I see so far is that China fined the company miniscule $9 million for defrauding investors.

If the message CCP is sending is that you get to serve a sentence if you say anything bad about CCP, but you can get away with making fictitious accounting statements as long as you are on good terms with CCP, it will encourage lot more fictitious numbers reported by companies.

Kind of makes it hard to trust other Chinese companies' numbers also. 

Edited by LearningMachine
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2 hours ago, LearningMachine said:

Does anyone know if the executives ended up getting criminally charged and serving?  Was there a trial or was the corrupt judiciary bought off? All I see so far is that China fined the company miniscule $9 million for defrauding investors.

If the message CCP is sending is that you get to serve a sentence if you say anything bad about CCP, but you can get away with making fictitious accounting statements as long as you are on good terms with CCP, it will encourage lot more fictitious numbers reported by companies.

Kind of makes it hard to trust other Chinese companies' numbers also. 

You should watch the China Hustle, being mindful that it's made in Hollywood. I still think it drives home important points about investing in China. 

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18 hours ago, spartansaver said:

You should watch the China Hustle, being mindful that it's made in Hollywood. I still think it drives home important points about investing in China. 

Thanks @spartansaver for sharing.  Just watched it.  

Good to learn that it is not illegal in China to make false statements in SEC filings, and even theft of money raised from shareholders almost always goes unpunished.  We saw it with Jack Ma too - no punishment for stripping AliPay!  I like how they said to imagine what kind of system it would create even here if those were the incentives for executives here.   Makes you realize that you wouldn't invest here if those were the incentives here, even if the American economy was growing really fast. 

Also, good how they explained the concept of "guanxi" to call favors on local folks to escape punishment for any crimes.  No wonder, there were reports of Jack Ma offering part of AliPay to regulators to get something in return. 

Edited by LearningMachine
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