 China's scandal-hit Luckin Coffee ousts chairman Beijing (AFP) July 14, 2020 - China's would-be Starbucks rival Luckin Coffee has removed its co-founder and chairman after a scandal involving fake sales figures that resulted in the company being delisted from the US Nasdaq and the ouster of two top executives. Luckin's billionaire founder Charles Zhengyao Lu has been replaced as chairman by Jinyi Guo, previously the acting CEO, the embattled coffee chain said in a statement on its website dated Monday. Guo will also take over as CEO. The announcement came days after company directors had voted to keep Lu on the board despite an internal investigation that found the company had inflated its 2019 sales revenue by some 2.12 billion yuan ($311 million). Luckin was delisted from Nasdaq earlier this month after suspending trading on June 29, having been asked to do so by the exchange. Lu's removal had increasingly been seen as a key step for the company to move forward and begin repairing its tarnished brand. Its shares had been in freefall since April after the company revealed that a top executive had cooked the books. Apart from the inflated revenue, Luckin's 2019 costs and expenses were also inflated by 1.34 billion yuan, the internal investigation found. Launched in 2017, the Chinese coffee chain made a remarkable debut on Wall Street in May 2019, raising US$561 million during its IPO. Shares soared by more than 50 percent in initial trading. The coffee start-up had aimed to dethrone Starbucks in China by pursuing an aggressive growth strategy, enticing customers with an app-based purchasing model which prioritised takeaway and delivery options, and generous mobile coupons. By the end of 2019, the Xiamen-headquartered chain's 4,500 outlets in mainland China had already surpassed Starbucks' 4,300 stores, and investors touted the company's potential to go global. Luckin said on Monday it would "continue to focus on growing its business". Luckin stock, which had peaked at around $50 per share in January, traded on the off-exchange over-the-counter markets at just $2.90 on Monday.
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Chinese trade enjoyed surprise growth in June as the world slowly emerges from economy-strangling lockdowns, though officials warned of headwinds for recovery owing to the spread of the pandemic.
The figures come days before the release of data expected to show the world's number two economy returned to growth in the second quarter following a contraction in the first three months of the year.
The 2.7-percent growth in imports was the first since December and much better than the nine-percent contraction forecast in a Bloomberg News poll, while exports also beat expectations by rising 0.5 percent.
In May, imports had collapsed 16.7 percent and exports retreated 3.3 percent.
Customs spokesman Li Kuiwen told reporters Tuesday that imports and exports showed "signs of recovery and stability" in the second quarter and that China was "forging ahead" with efforts to ensure stability in areas such as employment, foreign trade, and investment.
But he cautioned the external environment is "more grim and complicated" now, with COVID-19 plunging the global economy into a deep recession and international trade and investment experiencing sharp contractions.
In the first half, exports dropped 6.2 percent on-year while imports fell 7.1 percent, official data showed, reflecting the hit from the pandemic, which first surfaced in central China.
ING China economist Iris Pang told AFP agricultural purchases boosted imports and that the push could continue if floods ravaging much of central China persist, threatening food supplies.
"We also see a broad-based recovery in exports," she said.
China's economy is expected to have grown in April-June, having shrunk 6.8 percent in the preceding three months as the virus battered the planet.
That was the first quarterly contraction since China began logging such data in the early 1990s.
Beijing's trade surplus with the United States -- a major cause of anger in the White House -- narrowed slightly to $29.4 billion in June, down 1.7 percent year-on-year.
Tensions have been rising as the superpowers trade barbs on multiple fronts, including the pandemic and a new security law in Hong Kong.
But Li said the US and China will continue to implement a phase-one trade deal signed in January that marked a truce in their long-running trade war.
Analysts warn, however, that the trade recovery could lose momentum due to weak external demand from renewed lockdowns in key trading partners.
HSBC chief China economist Qu Hongbin said in a recent report that "the gauges for new export orders in China's purchasing managers' index... still contracted in recent months", referring to the key indicator of factory activity.
Imports were likely supported by continued improvement in domestic demand and commodity prices, he added.
Martin Rasmussen of Capital Economics noted that the boost from shipments of medical products and work-from-home equipment, "which are still growing at over 30 percent year-on-year, will continue to fade".
Risk consultancy SinoInsider cautioned that despite Chinese efforts to rely more on its domestic consumer market, this could be hampered as overall spending power decreases.
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