From Steaming Hot to Lukewarm: ChaPanda’s IPO Fails to Impress Hong Kong

The sectors of consumer durables, consumer non-durables, and business products in China are currently experiencing a downturn. This economic slump is not confined to mainland China but is also impacting Hong Kong, an international region under China’s jurisdiction, where the repercussions of China’s economic deceleration are distinctly visible.

Sichuan Baicha Baidao, a renowned low cost tea chain in China, ventured into the Hong Kong stock market earlier this year, but the outcome was less than satisfactory. This isn’t an isolated case; numerous other Chinese corporations and businesses are grappling with similar challenges. For instance, the Tianjin Construction Development Group, a private construction conglomerate from northern China, also made its debut in the Hong Kong stock market, but it too experienced a disheartening start, with a 25% drop. Presently, the majority of IPOs are off to a sluggish start, with shares plummeting further between 25 to 39 percent.

A multitude of prominent corporations, inclusive of brands such as Mixu Bingcheng, Goodme, and Auntea Jenny, endeavored to list themselves in Hong Kong’s stock market in January this year. However, their efforts were met with an underwhelming response. In reality, the past four years have witnessed a swift transformation in Hong Kong’s economic landscape, predominantly leaning towards a downturn. The misguided policies implemented by China’s Communist government bear a significant portion of the blame for this decline. Historically, Hong Kong was governed by British imperial law, a decision cemented under an agreement between Britain and China during Hong Kong’s integration into China in 1997. However, the Communist government of China instigated a change in Hong Kong’s leadership, accompanied by a comprehensive alteration in numerous rules and laws, effectively overhauling the administrative system in Hong Kong. This shift has had a profound impact on Hong Kong’s industrial sector, prompting a considerable number of both domestic and foreign industries and corporate entities to relocate their operations outside of Hong Kong.

The Communist government of China is extending its support to domestic companies, facilitating their Initial Public Offerings (IPOs) in Hong Kong. This assistance mirrors the aid it provides to manufacturers specializing in semiconductors and high-quality technical products. In line with this, the government has strategically pivoted its focus from consumer goods to high-tech commodities. However, this shift has not been without its setbacks. For instance, the IPO of consumer non-durable brands like Cha-Panda company, despite the anticipation, experienced a lackluster debut in the market. According to recent reports, the performance of IPOs across various companies in Hong Kong has been underwhelming.

In the first quarter of this year, a mere 12 IPOs were traded, amounting to an average of 4.7 billion Hong Kong dollars. Market agency Deloitte reported a 30 percent decline compared to the same period in 2023. The downturn was not limited to consumer goods. Cainiao Logistics, a subsidiary of the Alibaba Group, retracted its name from the Hong Kong stock market listing in March.

Brands such as Cha-Panda, Good-Me, Auntie Jenny, Mixu, and Nayuki, renowned for its bubble tea, are broadening their global presence, including Hong Kong. Some of these companies, Nayuki Bubble Tea for instance, have established outlets in Southeast Asia, Japan, and South Korea. However, they face challenges in securing necessary funding and affordable raw materials for their operations, as raising capital from domestic markets proves difficult. Compounding these issues is the intense competition they encounter. This competition is not only among themselves in these foreign markets, but also with local brands and Taiwanese counterparts like Coco and Gongcha.

Cha-Panda, a brand hailing from China, has been vocal in the media, asserting that despite the current lack of desired response, this experience will serve as a valuable lesson for the future, infusing a fresh impetus into their business operations. However, the stark reality is that the brand’s inception and subsequent business performance have been less than stellar, primarily due to China’s deteriorating economic climate. The seemingly illogical economic strategies implemented by the Chinese Communist Party are largely accountable for this predicament. Interestingly, no Chinese brand is prepared to publicly acknowledge this situation. Furthermore, China’s highest echelons of power are cognizant of this economic downturn, yet they are not devising any policies that could potentially yield economic advantages to Chinese brands and corporations, thereby enhancing China’s domestic economic landscape.