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Luckin Coffee, China's unprofitable Starbucks rival, goes public

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  1. #31

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    Quote Originally Posted by topworld
    Let's not forget about Arthur Andersen or Enron.
    Those are once in a decade. Chinese shenanigans are far more frequent.
    Coolboy likes this.

  2. #32

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    Quote Originally Posted by RMDNC
    Those are once in a decade. Chinese shenanigans are far more frequent.
    Exactly. The issue is not that fraudulent practices don't happen in the West, they certainly do, whenever greed, money and pressure to meet short-term unrealistic goals exist, that will happen anywhere even with the best regulations and oversight. BUT, the key is the frequency of these fraudulent practices and there is no question we've seen a lot of those from China.

    The question then is why is it so frequent? The most obvious answer is poor regulation and enforcement. In the wild west of Chinese "capitalism" where rules of corporate governance and accounting/auditing standards are there but unevenly enforced, this sort of environment allows for many dubious practice and entities to exist. Then why are these rules so weak or unenforced? China is still experiencing early stages of its experiment with capitalism? Not convincing line of argument, Deng's reform and opening up is over four decades now. Well this is not simply a financial question, but is connected to the overall political environment.

    Rules are weak and poorly enforced because the rule of law in general is poorly enforced or respected on the mainland. In China we have what we call "rule of man", it is political leaders who decide what is to happen, not the law. So you end up with an ad hoc reality where a rule may apply to company A and not to company B. And why not company B? Well that company might have good relations with certain powerful backers. Without an resemblance to an impartial application of regulations, fraudulent schemes escape the notice of would-be regulators.

  3. #33

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    Quote Originally Posted by Coolboy
    Exactly. The issue is not that fraudulent practices don't happen in the West, they certainly do, whenever greed, money and pressure to meet short-term unrealistic goals exist, that will happen anywhere even with the best regulations and oversight. BUT, the key is the frequency of these fraudulent practices and there is no question we've seen a lot of those from China.

    The question then is why is it so frequent? The most obvious answer is poor regulation and enforcement. In the wild west of Chinese "capitalism" where rules of corporate governance and accounting/auditing standards are there but unevenly enforced, this sort of environment allows for many dubious practice and entities to exist. Then why are these rules so weak or unenforced? China is still experiencing early stages of its experiment with capitalism? Not convincing line of argument, Deng's reform and opening up is over four decades now. Well this is not simply a financial question, but is connected to the overall political environment.

    Rules are weak and poorly enforced because the rule of law in general is poorly enforced or respected on the mainland. In China we have what we call "rule of man", it is political leaders who decide what is to happen, not the law. So you end up with an ad hoc reality where a rule may apply to company A and not to company B. And why not company B? Well that company might have good relations with certain powerful backers. Without an resemblance to an impartial application of regulations, fraudulent schemes escape the notice of would-be regulators.
    Yup. Also a moral ethical compass issue. I think with many but not all Mainlanders, "win" at all costs means you are a good businessman or businesswoman. I might get you to sign a contract but even if I don't follow the terms of the K, I'm a good businessman because I baited you into a deal where I'm gonna extract as much as I can from you. If I didn't get you to the table with a K there would be no business at all.

  4. #34

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    Quote Originally Posted by RMDNC
    I might get you to sign a contract but even if I don't follow the terms of the K, I'm a good businessman because I baited you into a deal where I'm gonna extract as much as I can from you. If I didn't get you to the table with a K there would be no business at all.
    Devil's advocate here... I believe the mindset is that a contract is an agreement between two parties at a certain point in time. When one of the two parties do not feel those terms are fair or advantageous or acceptable any more, the expectation is that the contract can be changed/renegotiated (either formally or via an informal agreement... or with no agreement, if the counterparty wants to stick to what was signed).

    I don't think there is foul play in this... from my (limited) experience, that is genuinely what they believe imho.

    Is it annoying? yes, it certainly is

  5. #35

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    Quote Originally Posted by RMDNC
    Yup. Also a moral ethical compass issue. I think with many but not all Mainlanders, "win" at all costs means you are a good businessman or businesswoman. I might get you to sign a contract but even if I don't follow the terms of the K, I'm a good businessman because I baited you into a deal where I'm gonna extract as much as I can from you. If I didn't get you to the table with a K there would be no business at all.
    The problem with this mentality is that they think they can keep taking advantage of others with no consequence. That may worked within China when they are well protected due to their connection with powerful officials. But not with foreign partners, clients or investors. Sooner or later they will get wise to these trickery and the net result is that Chinese companies will be shunned, banned or worse. Then China will attack foreign discrimination yet never ever acknowledge its own problematic conduct that led to those consequences.

  6. #36

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    Quote Originally Posted by alexdown
    I don't think there is foul play in this...
    No foul play? You really don't understand what contract means do you...

  7. #37

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    Quote Originally Posted by Coolboy
    No foul play? You really don't understand what contract means do you...
    I do understand what foul play means though
    Morrison likes this.

  8. #38

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    https://www.axios.com/luckin-coffee-...e4b713b90.html

    What a disgrace. Both should be hanged from a tree if you are a shareholder who bought the company's stock.
    Last edited by shri; 13-05-2020 at 04:57 AM.

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