The Nasdaq-listed Luckin Coffee, Starbucks’ major rival in China, announced that it has terminated Jenny Qian and Jian Liu as CEO and chief operating officer, respectively, amid an ongoing internal investigation into the company’s fabricated transactions.
The decision was made after the board received “evidence that sheds more light on the fabricated transactions,” according to a statement.
Luckin Coffee founder and CEO Jenny Qian / Photo credit: Luckin Coffee / Photomontage: Tech in Asia
The company’s board has also demanded and subsequently received Qian’s and Liu’s resignations from the board, the statement said.
Jinyi Guo, who’s a board director and senior vice president at Luckin, will be the company’s acting CEO. Senior vice president for store operations and customer service Wenbao Cao and vice president for strategic partnerships Gang Wu have been appointed as board directors.
The company said it had also placed six other employees who were involved in or had knowledge of the fraudulent transactions on suspension or leave at the onset of the internal probe.
Luckin said it has been cooperating with regulatory agencies in both the US and China and will continue to cooperate with the internal investigation.
Earlier this year, due diligence specialist Muddy Waters Research cited an anonymous 89-page report claiming that Luckin had fabricated its operational and financial figures, inflating revenues by US$310.5 million.
Around one month later, US law firms moved to start investigations into Luckin on behalf of investors. In April, the company announced an internal probe into the fabricated transactions.
Founded in 2017, the company claimed to operate 4,507 stores across China as of the end of last year, surpassing Starbucks’ 4,300 outlets in the country.
Editing by Charmaine de Lazo
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