I worked in China for a number of years. If there's one lesson I took from that time, it's that companies like Luckin are the rule, not the exception.
Fake accounts, inflated metrics, bribery and graft are the norm. It's not even considered unethical, it's just the way business is done. If someone cheats you, then you can only blame yourself for being cheated. What's more, you should also blame yourself for not cheating them first.
A lot of Westerners fall into the same trap, thinking there's no way that anybody could be so blatant in lying, cheating and stealing, so they give their Chinese partners the benefit of the doubt.
Well, China certainly can be so brazen. Luckin literally inflated its quarterly sales figures by 88%, and it wouldn't surprise me if they did so just by fiddling with a spreadsheet. The fraud I encountered was rarely sophisticated.
It's also naive to think that auditors - even Western firms - provide any assurance at all. It requires a special type of stomach/spine to stand up to a client pressuring you or flooding you with information that is difficult to verify.
How do they feel about repeat business with cheaters ? Don’t they also have a system of personal relationships , are those also built to tolerate cheating ?
> How do they feel about repeat business with cheaters ?
The prevailing mentality is that:
a) everyone does it, so why wouldn't I do it too? Even if you cheat me (or I cheat you), there's still money to be made, so why are you so upset?
b) China is so big, if you screw over one partner permanently, there are hundreds more where they came from.
> Don’t they also have a system of personal relationships , are those also built to tolerate cheating ?
Let's say you invest in my company, and I hire your son for a job. That relationship isn't going to stop me from embezzling money from the company accounts. So yes, there is a precarious system of IOUs, favours and horse-trading. But I wouldn't say it "tolerates" cheating. It just changes where and how it occurs.
Again, I should reiterate that this isn't every Chinese company. Legitimately honest, trustworthy Chinese businesses do exit.
But pick one at random, and it's far more likely to be a dishonest one.
It exists, but it's hardly effective. It's mostly a merry-go-round of bribery and currying favours. As an example, look at how little consumers trust inspections carried out by authorities (hence why Australian milk powder carries such a premium).
The organizers had a hunch that Luckin Coffee, China’s fast-growing challenger to Starbucks and a company traded in the U.S. stock market, was falsifying financial statements to exaggerate its sales. The organizer set out to prove it, deploying 1,510 investigators to count sales and record traffic at more than 600 of the company’s retail stores, one mobile phone video at a time.
Fake accounts, inflated metrics, bribery and graft are the norm. It's not even considered unethical, it's just the way business is done. If someone cheats you, then you can only blame yourself for being cheated. What's more, you should also blame yourself for not cheating them first.
A lot of Westerners fall into the same trap, thinking there's no way that anybody could be so blatant in lying, cheating and stealing, so they give their Chinese partners the benefit of the doubt.
Well, China certainly can be so brazen. Luckin literally inflated its quarterly sales figures by 88%, and it wouldn't surprise me if they did so just by fiddling with a spreadsheet. The fraud I encountered was rarely sophisticated.
It's also naive to think that auditors - even Western firms - provide any assurance at all. It requires a special type of stomach/spine to stand up to a client pressuring you or flooding you with information that is difficult to verify.