Tegucigalpa in Honduras. Guangzhou in China. Tashkent in Uzbekistan. Antananarivo in Madagascar. And Los Angeles in the United States. You can find a Miniso store in every one of those cities. The Chinese retailer, modeled after Japan’s 100-yen variety stores, has created a formidable empire since its founding in 2013.

Miniso has 2,500 stores in China and another 1,700 in more than 60 countries abroad, selling products from snacks to clothes and accessories to home goods. To keep customers coming back, the company puts out 100 new products a week. It brought in $1.3 billion in revenue in its fiscal year ending June 30, despite the havoc wreaked by Covid-19, which has bankrupted many retailers.

In many ways, Miniso is similar to other low-cost retailers or Japanese variety stores that have built a global presence. But the company is a rare example of a Chinese business that has built a brick and mortar chain across the globe. And it has done so with the support of Asia’s most prominent investors. Tencent, the Chinese technology juggernaut, and Hillhouse Capital, the Asia-focused private equity group that grew out of Yale University’s investment office, put about $150 million into the company, according to data from Pitchbook.com, each taking a stake of more than 5 percent.

This month, Miniso went public on the New York Stock Exchange, raising more than $600 million and attaining a valuation of $6 billion. The company’s founder, Ye Guofu, grew up in Hubei Province, in central China, and ran a women’s jewelry store chain called Aiyaya before starting Miniso. Now, his stake in the company is valued at roughly $4.5 billion, making him one of the country’s wealthiest entrepreneurs. ¹According to Forbes ranking of China’s wealthiest, Ye’s shares in Miniso put him at about No. 67.

New investors in Miniso have reason to be excited. Walt Disney and Marvel have teamed up with the company, licensing characters to Miniso for branded products. And with 30 U.S. stores in states such as California, Florida, and Nevada, Miniso has ambitions to make a dent in the market.²Miniso received between $350,000 and $1 million in coronavirus bailout funds from the U.S. government in April.

“The U.S. market has a lot of potential — it has a potential to reach the same level as Miniso China,” Zhang Saiyin, the company’s chief financial officer, told The Wire. The retailer did about $860 million in business in China last fiscal year.

Yet some of Miniso’s practices have raised eyebrows. Its logo is almost a carbon copy of that of Uniqlo, the Japanese clothing chain. And observers say Miniso’s products are knock-offs of Muji, another Japanese retailer. Until 2017, Miniso’s website even said its headquarters were in Tokyo, even though the company has always been based in Guangzhou.³Although Miniso’s global footprint is double Muji and Uniqlo’s combined, the Japanese brands are more profitable. Uniqlo’s annual revenue was $16 billion, while Muji brought in about $4 billion, according to their most recent annual reports.

Potentially more troubling has been some of its partnerships.

In 2017, Miniso found a North Korean partner to open a Miniso franchise in Pyongyang. The company made about $100,000, according to its prospectus, before officials in Japan and Hong Kong questioned Miniso, as did the United Nations panel that monitors North Korean sanctions compliance. Miniso says it ended the relationship that year.

Allegations that Miniso has had a relationship with a peer-to-peer financing platform called Fenlibao have also raised concerns. A Chinese newspaper, 21^st Century Business Herald, found that Miniso had been encouraging its franchises to take out loans from Fenlibao without disclosing that the platform was closely tied to Ye, Miniso’s founder. A series of reports across Chinese media argued that this relationship meant Miniso and Fenlibao were boosting their own bottom lines while pushing risk on to franchise partners.

Zhang, the chief financial officer, said Miniso had no relationship with Fenlibao. But according to WireScreen, the data division of The Wire, Ye was Fenlibao’s legal representative at one point, and an investment vehicle owned almost entirely by him has previously acknowledged ties to both Miniso and Fenlibao. It is not clear if Ye still has financial ties to Fenlibao.

The U.S. market has a lot of potential — it has a potential to reach the same level as Miniso China.

Zhang Saiyin, Miniso’s Chief Financial Officer

Within China, there is still ample room for Miniso to expand, and Zhang says the company plans to grow its presence in lower-tier cities. The retailer also appears to be planning to continue its aggressive expansion worldwide. On its website, Miniso solicits franchise partners in developed countries like Germany and Switzerland, developing ones like the Central African Republic and South Sudan, and island nations far out in the Pacific Ocean, like Tonga.

Some analysts, however, think that Miniso may face an uphill battle in building long-term success around the world. 

“Truly global retail franchises within general merchandise and variety store categories are more the exception than the norm,” Amanda Bourlier, head of retailing at Euromonitor International, a market research firm, said in an email. Miniso’s local “partnerships haven’t always gone smoothly in the past,” she added, pointing to a dispute with its Canadian partner.

For now, investors appear impressed by Miniso’s story of rapid growth. Its initial public offering, underwritten by Goldman Sachs and Bank of America, priced above the expected range, and the shares surged on their first day of trading, on Oct. 15.

The I.P.O. came at a rocky time for Chinese stock listings in the United States. The U.S. Senate passed a bill in May that might force Chinese companies to leave U.S. exchanges, and investors had been rattled by the implosion of Luckin Coffee, the Nasdaq-listed Chinese stock whose value — at one point as much as $12 billion — nearly vanished after it disclosed fraudulent sales of more than $300 million in April. 

Nevertheless, American appetite for Chinese stocks remains high, and Chinese companies have flocked to U.S. exchanges in recent months. Forty Chinese companies have gone public in New York this year, compared with 21 in the same period last year, according to S&P Capital IQ. 

“The U.S. is so awash with liquidity, interest rates are zero, and there are dollars everywhere chasing a fixed number of assets,” said Adam Lysenko, an associate director at the Rhodium Group, which researches Sino-American capital flows. “There’s so much appetite for exposure to China; China is where global growth is.”

Zhang, Miniso’s chief financial officer, said that listing on NYSE would give consumers confidence in the brand. “Capital markets in the United States are the most powerful and most efficient in the world,” he said. “So, it was the best choice for Miniso to go public in the U.S.”

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