This article only represents the author's own views.
A highflying Chinese Starbucks imitator called Luckin (LKNCY.US) made global headlines around this time two years ago, tumbling from grace after admitting to massively cooking its books. Now a much lower-profile but similar scandal is brewing at a Chinese cloud services company called Cloopen (RAAS.US), which is saying as much as 10% of its sales in last year’s second quarter and up to 20% in the third quarter may have been faked by rogue employees.
All this comes as the U.S. and China are hammering out an agreement that would give the U.S. securities regulator access it has long sought to the audit records of U.S.-listed Chinese companies. China has previously banned such access, but seems to realize giving it to the U.S. is ultimately in everyone’s interest by forcing Chinese companies to be more honest about their business.