Outside Talent Bolsters Luckin Board
Scandal-rocked Luckin Coffee has announced its newly structured board, with the new team comprising eight members including five independent directors and three directors from Luckin's management team. Guo Jinyi becomes the new chairman and CEO after previously holding the role of acting CEO.
The former CEO, Qian Zhiya, and ex-COO Liu Jian were removed from the board. This came after the ouster of co-founder Lu Zhengyao and two independent board directors, Li Hui and Liu Erhai in early July.
Zeng Ying, Yang Jie, Liu Feng and Cha Yang, the new independent board directors, were recommended by the other independent director Zhuang Weiyuan, who was the senior vice president for Starbucks China Supply Chain, China Economic Network reported.
Analysts said the five independent board directors have extensive professional backgrounds and their expertise might help Luckin navigate through its financial problems and the complex legal cases it faces.
Zeng Ying served as a partner of international law firm Orrick Herrington & Sutcliffe LLP; Yang Jie currently serves several roles at China University of Political Science and Law; Liu Feng acts as a professor and the director of the Center for Accounting Studies at Xiamen University; and Cha Yang is a venture partner for several venture capital firms with a focus on early-stage technology start-ups.
Luckin reportedly had RMB2.12 billion (US$300 million) in fabricated transactions in 2019, while the actual annual revenue was RMB3.2 billion (US$460 million).
Dangdang Resumes Business After Failed Coup
The once-popular B2C-based e-commerce company Dangdang announced a return to regular business operations as its company seal and other important company files were returned after co-founder Li Guoqing was arrested.
On July 7, Li forced his way into Dangdang's offices with 20 people and broke into the safe that kept company files. Li afterward posted on his Sina Weibo that he would officially "take over" the company to regain the throne.
Dangdang reported Li's illegal entry and gang robbery to the police, and he was apprehended by the authorities shortly after.
The round-shaped official company seal is the most important tool for any business operating in China, as it is used for day-to-day business operations.
Currently helmed by Yu Yu, Li's estranged wife, the Beijing-based e-commerce platform was founded in 1999, the same year Jack Ma founded Alibaba, and it labeled itself "the Chinese Amazon."
In 2010, Dangdang became the first China-based B2C online business listed on the New York Stock Exchange, with a peak market value approaching US$3 billion. In 2016, the company announced its delisting and returned its status to a private holding company, at a market value of US$536 million.
Now Dangdang has fallen behind rivals including Alibaba and JD.com.
Dangdang's twists and turns also include the founding couple's internal fights and scandals. Li Guoqing claimed he filed to the court for a divorce in 2019, but the complaint was refused by Yu Yu, who had accused Li Guoqing of homosexual relations, infection with syphilis and of stealing RMB130 million from their joint savings account.
Outstanding Yuan Funds For Forex Continue Decline
China's outstanding yuan funds for foreign exchange declined in June to RMB21.17 trillion (US$3.02 trillion), the fifth month in a row outstanding yuan funds for foreign exchange have declined, according to People's Bank of China (PBOC) data released Tuesday.
Funds were down by RMB6.02 billion (US$0.82 billion) from May, a slower pace of decine from its RMB11.22 billion (US$1.6 billion) drop from April.
China's outstanding yuan funds for foreign exchange are an important indicator of cross-border foreign capital flow and domestic yuan liquidity because it represents the money the PBOC pays financial institutions and commercial banks each month for purchasing foreign currency generated by trade surplus and foreign investment.
China's foreign exchange reserves rose US$10.64 billion in June to US$3.112 trillion, according to the State Administration of Foreign Exchange (SAFE), the third month in a row forex reserves have expanded.
Following Hainan's Model, More Cities Plan Duty-Free Markets
Hainan, a southern China province, recently initiated policies easing restrictions on duty-free shopping, is setting an example for more Chinese cities to boost local economies in a similar fashion.
During the period from July 1 through July 7, Hainan duty-free shopping stores hosted about 10, 000 tourists per day, raking in RMB60 to 70 million (US$ 8.57 to 10 million) in daily revenue, of which duty-free represented over RMB9 million daily. The first week of sales in July approached RMB450 million (US$64.3 million), according to China's Customs statistics.
Shandong Province in the north, which formerly focused on heavy industry and has seen young skilled workers migrate away in recent years, is instituting a similar policy to set up duty-free services in the ports of Qingdao, Yantai and Rizhao, Economic Information Daily reported on Wednesday.
Even economic hubs such as Shanghai and Guangzhou intend to seek opportunities to cash in on duty-free business inside their cities. The Lin'gang section of Shanghai Pilot Free Trade Zone plans to develop a 30,000 square meter duty-free store hub that is based upon the Hainan Island business model.
In March, the National Development and Reform Commission issued a general guideline in an attempt to expand domestic consumption volume. The guideline stresses enhancing duty-free policies and encourages those cities with resources in land and financing to support duty-free business development.
China Charges 23 in Quarantine Hotel Collapse
China's State Council presented the official result of investigations into illegal construction alternations that led to the quarantine hotel collapse on March 7, in the southern city of Quanzhou in Fujian province, state media Xinhua press reported Tuesday.
The proprietor Yang Jinqiang and other 22 people of the Xinjia hotel are charged of illegal construction alternation and defrauding to obtain an administrative license.
The investigation unveiled the four-floor hotel, which accommodated dozens of people during quarantine in the early COVID-19 response, illegally added three additional floors. The additional weight overcame the structural integrity of the hotel design and resulting in a collapse killing 29 people and leaving 42 injured. Many were buried in rubble when the collapse took place and the overall direct economic loss reached RMB57.94 million (US$8.27 million).
China's State Council said the local government officials failed to properly assess safety certifications of the hotel and some had colluded with the proprietors to falsify assessment reports. Further investigation of possible officials' corruption will be undertaken by Fujian Discipline Inspection and Supervisory Commission.
