Just under a week after resubmitting its IPO application to the Hong Kong Stock Exchange, a product issue has emerged for Junlebao. On August 26th, Hong Kong's Centre for Food Safety reported that a batch of Junlebao's ambient pure milk registered a bacterial colony count exceeding the standards set under the city's Dairy Regulations. A spokesperson for the Centre noted that while the excessive colony count indicates substandard hygiene conditions for the product, it does not necessarily imply a risk of food poisoning. All products from this batch have been sealed at the importer's warehouse in Hong Kong, have not entered the market, and have consequently caused no harm to any consumers.

Interestingly, just two months prior, Junlebao launched a new advertising campaign featuring the slogan “Zero incidents in a decade of supplying Hong Kong,” leveraging the city's rigorous testing standards to bolster its brand credibility. Although this campaign was specifically for its infant formula business, the close association between formula and liquid milk products means that a defect in the latter naturally raises public concerns about the former's safety. On August 31st, Junlebao issued a statement explaining that the batch's abnormal readings were caused by improper handling during loading and unloading at the Hong Kong warehouse, leading to damage to some product packaging.

However, regardless of whether the problem originated in production or transit, this is not the primary concern for consumers. Once a product fails to meet the high standards of Hong Kong's testing system, the brand trust Junlebao has cultivated through its “Zero incidents in a decade” narrative is inevitably diminished. More critically, on August 20th, Junlebao resubmitted its listing application to the Hong Kong Stock Exchange, placing it in the crucial filing phase for a Hong Kong IPO. Discovering a product quality issue in the very market where it intends to list is far from favorable for its listing timeline.

In its prospectus, overseas expansion is a key narrative repeatedly emphasized by Junlebao, with Hong Kong identified as its premier major offshore market and a stepping stone for future growth. The timing of this incident, occurring precisely in Hong Kong, is particularly inopportune. If the company cannot consistently meet even the foundational standards of Hong Kong, it becomes difficult for capital markets to have confidence in Junlebao's ability to establish a mature cross-regional quality control system in the broader international arena.

Analysts suggest that this event directly exposes a notable weakness in Junlebao's ability to adapt to differing market standards. It may trigger inquiries from the Hong Kong Stock Exchange regarding the company's quality control systems and risk management capabilities, potentially slowing the review process for its listing. Historically, after failing to pursue an A-share listing, Junlebao submitted its prospectus to Hong Kong on January 19th. In late May, the China Securities Regulatory Commission raised six major questions concerning matters such as capital contribution defects in previous equity changes, procedural compliance of earlier capital reductions, shareholder penetration checks, transfer of incentive equity to departing employees, rectification of administrative penalties, litigation progress, and its A-share listing plans. On July 19th, the prospectus lapsed because the company failed to enter the hearing stage within six months. Now, with its resubmitted application facing a product quality issue, the uncertainties surrounding Junlebao's listing have further increased.