One month after being hit with the largest scandal in its short corporate history, Chinese discount variety retailer Miniso (NYSE: MNSO) has announced aggressive buyback measures to get potentially harmful products out of the hands of customers.
The company’s founder Ye Guofu has said he has allocated RMB 100 million (USD 15 million) of his own money for the initiative and said he plans to implement stronger supplier oversight in the wake of numerous successive scandals, Miniso’s official Weibo account posted on Wednesday.
After Shanghai food and drug regulators revealed on September 23 that Yibukebo Jiayoujiao, a nail polish product by Miniso, contains carcinogenic chloroform 1,400 times above government-permitted levels, the retailer immediately removed the product from its shelves —totalling over 30,000 items. However, according to a report by outlet 36Kr on Monday, there are still 2,409 pieces in consumers’ hands. The company also promised to buy them back at ten times their original price of RMB 10 (USD 1.5), according to its Weibo post on Wednesday.
That untimely September scandal broke just one day before Miniso filed for an initial public offering in the US.
However, it apparently had little impact on the company’s public offering, as Miniso raised nearly USD 700 million in its IPO.
Read this: Tencent-backed variety retailer Miniso files for US IPO
The nail polish incident was not the company’s first run-in with negative press. In August, Guangdong food and drug regulators revealed that Miniso’s Garden perfume contained illegal materials and fined the contract manufacturer RMB 8,478 (USD 1,266) in total. In June, Shanghai regulators disclosed that Miniso’s KaKao Friends RYAN— which are food bowls for kids—contained above-standard levels of of melamine.
“In the past, we were passive, but now we are taking the initiative to ensure good quality of our products,” Ye told 36Kr.
Miniso has built a huge retail network of 4,200 brick-and-mortar stores worldwide since it was set up in 2013. The company’s wide variety of products including cookies, umbrellas, and hair dryers can be ordered on its app or via a mini program on Tencent’s WeChat. Tencent (HKSE: 0700) is a key shareholder of Miniso.
However, the company does not manufacture its own products, instead relying on suppliers, while it directly manages only 129 stores, with the rest controlled by franchisees.