Outdoor gear retailer Beneunder sparks ire of Communist Party mouthpiece People’s Daily as it seeks Hong Kong IPO

In a rare move, the newspaper accused the outdoor gear retailer of wasting revenues on advertising at the expense of profit

Some analysts believe the company’s use of online influencers to market products may be behind the scathing critique

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The piece accused outdoor gear retailer Beneunder of wasting revenues on advertising. Photo: SCMP Handout

Published: 8:26pm, 12 Jun 2022

An article in the People’s Daily, the mouthpiece of the Chinese Communist Party, recently questioned a company seeking to list its shares in Hong Kong, a rare move that has baffled some analysts and may affect the firm’s chances of a successful IPO.

The piece accused outdoor gear retailer Beneunder of wasting revenues on advertising, particularly by paying large amounts to famous online influencers to push its products. It said the company’s marketing costs had increased by more than 10 times over the past three years.

“The company’s revenue increased a lot in the past years while delivering a rather small profit. The marketing cost is its major expenditure, according to its IPO prospectus ... and a rather big chunk of the company’s revenue was pocketed by live-streaming top influencers,” said the article, which appeared in the newspaper’s capital market observations section on June 8.

The Post has approached Beneunder for comment.

Shenzhen-based Beneunder, which started out in 2013 producing umbrellas for protection against the sun, recorded revenues of 2.41 billion yuan (US$359 million) in 2021, up 67 per cent year-on-year, and delivered an adjusted profit of 136 million yuan.

“It is unclear why a mouthpiece media [outlet] commented on one particular company waiting for listing like this,” said Jeffrey Chan Lap-tak, a founding partner at Oriental Patron Financial Group, a Hong Kong-based firm. “Having light assets and paying a lot on branding seems more than common among current new-economy firms at an early stage to boost their presence.”