The chaotic sales of Kayou Technology products was exposed by CCTV. The prospectus of the related party's listing in Hong Kong has expired.
2024-08-07
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The summer vacation is halfway over, and card blind boxes, which are in the peak season for product sales, can be said to be the "most handsome guys" in the eyes of primary school students. However, the disorderly development of the industry in the past few years has also caused some social problems and endangered the physical and mental health of minors.
Against this backdrop, a recent investigative report by CCTV's "Financial Investigation" program on the chaos in the blind card box market and the irregular operations of its main manufacturer, Zhejiang Kayou Technology Co., Ltd. (hereinafter referred to as "Kayou Technology"), resonated with a large number of students' parents.
CCTV exposes card game chaos, Kayou Technology criticized for not complying with regulatory regulations
On July 28, CCTV's "Financial Investigation" column released "The Changing Taste of "Cards"", exposing the problem of disorderly sales of card blind box products among minors, which caused children to become addicted. The main product exposed was the card blind box based on the characters in the animation "My Little Pony", which is also the flagship product of Kayou Technology.
The "Financial Investigation" column found that in order to obtain rare cards in blind boxes, children spent money to draw cards almost crazily, and even discovered "new business opportunities": in order to get the cards they wanted, children traded with each other, selling duplicate or disliked cards, and using the money they earned to buy new cards. The rarer the cards, the more expensive they are.
During the investigation, the program team found that in addition to offline Kayou stores, underage accounts can also place orders at will on the Kayou App and mini-programs.
"In this card blind box trading game, card game companies sell card blind boxes, rating agencies charge for card appraisal and rating, pushing up card prices, and second-hand merchants recycle rare cards and resell them. Every link makes a lot of money, but only children are addicted to opening and buying cards and can't extricate themselves."
The "Financial Investigation" program stated that according to the relevant provisions of the "Guidelines for Standardized Operation of Blind Boxes" of the State Administration for Market Regulation, minors are not allowed to purchase such card blind boxes alone, but as the producer of the "My Little Pony" card blind box, Zhejiang Kayou Technology Co., Ltd. did not comply with the relevant regulations in its actual operations and management.
It is understood that the State Administration for Market Regulation issued the "Guidelines for the Standardization of Blind Box Business Operations (Trial)" in June 2023, in which Article 23 states: Blind box operators shall not sell blind boxes to minors under the age of 8. When selling blind box products to minors aged 8 and above, it shall be confirmed in accordance with the law that the consent of the relevant guardian has been obtained; blind box operators shall remind minors aged 8 and above in a prominent manner that the purchase of blind boxes requires the consent of the relevant guardian; blind box operators shall take effective measures to prevent minors from becoming addicted, protect the physical and mental health of minors, and provide convenience in resolving consumption disputes among minors.
The prospectus has expired, and the China Securities Regulatory Commission has previously required additional materials
Kayou Technology was established in Quzhou, Zhejiang in 2019. It is a cultural innovation company that focuses on animation and creative stationery industries. It was founded by Zhejiang businessman Li Qibin and is also a wholly-owned subsidiary of Kayou (Hong Kong) Co., Ltd. Kayou Co., Ltd., another company of Li Qibin in Hong Kong, submitted a prospectus to the Hong Kong Stock Exchange in January this year, with Morgan Stanley, CICC and JPMorgan Chase serving as joint sponsors.
According to Kayou's prospectus, the company's core products are toys, especially trading cards. In 2021, 2022, and the first three quarters of 2023, Kayou's operating income was approximately RMB 2.298 billion, RMB 4.131 billion, and RMB 1.952 billion, respectively; during the same period, the revenue from trading cards was approximately RMB 2.17 billion, RMB 3.93 billion, and RMB 1.675 billion, respectively.
On March 15, the China Securities Regulatory Commission issued a public notice on the requirements for supplementary materials for overseas issuance and listing registration, requiring Kayou to supplement certain matters or materials and ask lawyers to verify and issue clear legal opinions.
The matters or materials that Kayou needs to supplement include: supplementing the conclusive opinions on the legality and compliance of regulatory procedures such as foreign exchange registration, overseas investment, foreign investment, and tax payment involved in building the equity structure and return mergers and acquisitions, and explaining the transaction price, pricing basis, payment method, payment period and compliance of the return mergers and acquisitions; explaining whether there are any abnormal share prices in the company's existing equity incentive plan.
In addition, the CSRC also requires Kayou to explain: the specific measures taken by the issuer and its domestic operating entities to implement the "Data Security Law of the People's Republic of China", "Measures for Data Outbound Security Assessment", "Measures for Data Security Management in the Field of Industry and Information Technology (Trial)", "Regulations on the Network Protection of Children's Personal Information" and other relevant laws, regulations and policy requirements; whether they have established an effective data security management system and data security protection measures; whether they have conducted data outbound security assessments in accordance with laws and regulations before providing relevant data to overseas controlling entities; the development and operation of websites, apps, mini-programs, public accounts and other products, the scale of user information collected and stored, the collection and use of data, whether there is any situation of providing information to third parties, and arrangements or measures for personal information protection and data security before and after listing.
On July 26, information from the Hong Kong Stock Exchange showed that the listing application submitted by Kayou had expired.
Haidai Financial Comprehensive
