One of China’s most powerful regulators has opened an investigation into Luckin Coffee, the Starbucks rival that is now at the centre of an accounting scandal, reported the Financial Times.
The decision by the State Administration for Market Regulation underlines the concern in Beijing over the damage the scandal could do to Chinese companies seeking overseas listings, according to FT sources.
Shares in Luckin, which vowed to displace Starbucks as the biggest coffee chain in China when it floated on Wall Street last year, have collapsed after the company disclosed at the start of this month that an internal investigation had uncovered RMB 2.2 billion ($310m) in fabricated transactions.
The probe by the watchdog, which has sweeping powers, adds to an existing investigation by the China Securities Regulatory Commission, the country’s top securities regulator.