Economic crisis spreads in Mainland China: Pacific Coffee closes 114 stores in just 14 months

Economic crisis spreads in mainland China. Pacific Coffee closes 114 stores in just 14 months. The watch is gone and the money is gone. A Zhejiang woman sold luxury watches online and became an online fugitive. The fiscal deficit is high. The CCP intends to impose a 20% tax on the overseas investment income of the rich. According to data from the Catering Data Query Platform, Xiamen Canyon, since August 2023, in the 14 months ending October 15, the number of Pacific Coffee stores in the mainland has decreased by at least 114, leaving only 71 stores in the mainland. Pacific Coffee's stores in Guangdong have also been closed in large numbers, and at least 10 stores will be closed in Zhuhai and Guangzhou in the near future. Pacific Coffee did not deny the rumors of a large number of store closures. According to the Southern Metropolis Daily, a relevant person in charge of Pacific Coffee responded on October 16 that in recent years, the mainland coffee industry has encountered greater market competition and challenges, and the adjustment of the number of Pacific Coffee stores in the mainland is a strategic and proactive choice. Pacific Coffee is one of the largest coffee chains in Hong Kong. Founded in Hong Kong in 1992 by a couple from the United States. In 2010, China Resources Enterprise, a subsidiary of China Resources Group, a central enterprise of the Communist Party of China, acquired 80% of the equity of Pacific Coffee. At that time, the number of Pacific Coffee stores in Hong Kong was almost equal to that of Starbucks. After being incorporated into China Resources territory, Pacific Coffee entered the Chinese mainland market in April 2011 and opened its first store in Shanghai. In September 2012, the number of Pacific Coffee stores in the mainland exceeded 100. At the beginning of entering the mainland, Pacific Coffee mainly opened stores in Beijing, Shanghai, Guangzhou, and Shenzhen, focusing on boutique coffee with a unit price of around and the target consumer group was business people. By 2015, Pacific Coffee had become the coffee brand with the second largest number of stores in the mainland after Starbucks. However, after three years of epidemic lockdown, Pacific Coffee began to close stores drastically since the end of 2022. In 2023, mainland media reported that Pacific Coffee would be sold. According to the data from Ximen Canyon, as of August 21, 2023, Pacific Coffee had only 309 stores in China, of which 123 were in Hong Kong and 185 were in the mainland. Based on the data from Ximen Canyon and Dianping, as of October 16, 2024, Pacific Coffee has only 71 stores in the mainland, a reduction of 114 stores in 14 months. The watch is gone, and the money is gone. A Zhejiang woman sold luxury watches online and became an online fugitive. The local authorities of the Chinese Communist Party are in financial difficulties and have been seizing money through judicial means. Recently, after a woman in Zhejiang sold a second-hand luxury watch online and received payment, her account was frozen by Guiyang Public Security Bureau, and she was listed as a person to be pursued online. Mainland lawyers analyzed that this was the Guiyang police illegally seizing money across provinces under the guise of justice. On October 15, according to Mainland Dawan News, in February this year, Miss Cao in Wenzhou, Zhejiang, listed a Rolex watch, purchased in 2022, for sale on the Xianyu second-hand trading platform, priced at 148,000 yuan, marked no bargaining. On June 21 this year, a buyer contacted Miss Cao on the Xianyu platform to inquire about the transaction. The WeChat records provided by Miss Cao showed that both parties agreed to deliver offline on the 23rd, and the buyer transferred 140,000 yuan and 8,000 yuan to Miss Cao through a bank card and Alipay, respectively. However, on the night of the transfer, Miss Cao found her bank card was frozen. The next day, Miss Cao went to the central police station of the Longwan branch of the Wenzhou Public Security Bureau to report the case, but was told she had been listed as an online fugitive by the Yunyan branch of the Guiyang Public Security Bureau. She said, a victim in Yunyan reported being defrauded of 2 million yuan and 140,000 yuan of that was transferred to my card, so this amount is considered involved in the case. After learning the reason, Miss Cao submitted her case report, the decision letter filing her as a victim, the original online transaction chat records, video materials, and legal documents proving ownership of the Rolex watch to the Yunyan branch's handler via the local police, but no action was taken. On the morning of the 25th, Miss Cao raised 140,000 yuan to return to the reporter in Guizhou, which allowed her online fugitive status to be removed and change the compulsory measures to bail pending trial. The Yunyan branch provided a situation statement confirming that, after verification, Cao has been ruled out of suspicion of involvement in the case. Miss Cao questioned why, after the incident, both her watch and money were gone. The report quoted Zhang Changxing, a lawyer from Anhui Huishan law firm, as stating that, according to the law, without Miss Cao's knowledge, the money transferred to her from selling the watch should not be considered as property involved in the case. Netizens commented, who committed the fraud? Whose money should the police confiscate? What does this have to do with the woman selling the watch? Should people now ask their customers, is your money clean? Is it from fraud? Another netizen posed an example. If a fraudster uses their balance to buy a watch at Wang Fujing department store, should the general manager also be wanted, released on bail, and have their account frozen? If the fraudster buys food or groceries with that money, should they return it? Netizens accused the authorities of phishing enforcement. This is all phishing enforcement. Knowing the other party's account was suspicious, why didn't they freeze it beforehand instead of allowing the transfer and then wasting police resources tracking it down? What kind of logic is that? The police are acting like hooligans and the people are truly suffering. Isn't this just deep sea fishing? In recent years, local CCP authorities have been exhausting their finances and have increasingly used judicial means to seize corporate and personal assets. They have frozen accounts, arrested victims across provinces, and labeled them as criminals, which netizens have ridiculed as distant sea fishing. In some regions and counties in central, western, and northeastern China, where finances are tight, there have even been target amounts set for distant sea fishing by the local police, which is completely criminal. Since the second half of this year, this phenomenon has worsened. Alongside large enterprises, small businesses, individual traders, and private citizens have also been affected. Large transactions have led to accounts being frozen by police under the pretext of telecommunications fraud or cryptocurrency laundering. Searching on mainland platforms reveals many complaints. In some places, agencies specialize in negotiating with police in other regions on behalf of victims with frozen accounts. Once frozen, funds cannot be used. If the account owner needs the money and wishes to unfreeze it, they can negotiate with the police through an agency, transferring part of the funds to a designated account, allowing for the unfreezing. The fiscal deficit is high. The CCP intends to impose a 20% tax on the overseas investment income of the rich. As China's economy continues to weaken and the real estate industry remains deeply mired in a debt crisis, the fiscal gap in CCP governments at all levels is widening. In an effort to address the tax shortfall, Beijing authorities intend to impose a tax on the overseas investment income of China's wealthy, with the rate possibly reaching as high as 20%. Experts warn that this could further erode business confidence. This information was disclosed in a Bloomberg report on October 14th. According to the report, sources familiar with the matter revealed that in recent months, tax authorities in several major cities have begun interviewing local wealthy individuals or holding meetings with them, asking them to assess their overseas investment income or potential tax liabilities, including taxes owed for previous years. Sources said that some locked Chinese wealthy individuals hold at least $10 million in offshore assets, and some of those interviewed are shareholders of publicly traded companies in Hong Kong or the United States. Some of them could face a tax of up to 20% on their investment income, and some may also face penalties for overdue payments. The report noted that, amid declining land sales and slowing economic growth, these measures highlight the urgency of expanding revenue sources for the Chinese government at all levels. This move also aligns with Xi Jinping's goal of achieving common prosperity. Public data shows that from January to August this year, the Chinese government's fiscal revenue was approximately 14.8 trillion yuan, down 2.6% compared to the same period last year. Tax revenue also fell 5.3%, while local government land revenue dropped by 25%. To fill the growing fiscal gap, local Chinese officials have become increasingly eager to collect taxes from companies. Bloomberg quoted Peter Ni, a partner and tax expert at Zhonglun Law Firm in Shanghai, as saying, in the future, the enforcement of the personal income tax law will be stricter, and eventually, the offshore income of these high-income individuals will become a specific target for the tax authorities. Yeh Weiming, vice chairman of Deloitte China, said, China already has a treasure trove of CRS data, and the tax authorities can easily mine this data to find opportunities for taxation. He also noted that compared to corporate tax audits, the likelihood of Beijing authorities intensifying personal tax audits is increasing. Bloomberg sought comment from the Chinese Tax Bureau on this news, but they did not respond. According to public information, as early as 2018, Chinese authorities introduced new tax measures, aiming to use the Common Reporting Standard, CRS, an international global information-sharing system designed to combat tax evasion, to tax the global income, including investment income, of Chinese residents. However, due to various factors, these measures have not been fully implemented until recently. Since the introduction of CRS, the Chinese government has automatically exchanged account information of tax residents with nearly 150 jurisdictions over the past six years. On the other hand, the number of Chinese wealthy individuals emigrating has surged in recent years. Since 2021, at least 1.2 million people have left China and immigrated to other countries.