Cash-Starved Food and Beverage Brands Turn to Lender Founded by Former HKEX Chief
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A small business lender co-founded by former Hong Kong Stock Exchange (HKEX) chief Charles Li is gaining traction among Chinese food and beverage brands, as retailers trying to expand further face tighter scrutiny over mainland listings and an ailing Hong Kong share market.
Since March, at least 28 F&B brands have received funding from institutional investors through the Micro Connect Macao Financial Assets Exchange (MCEX), according to the exchange’s website. Even some brands with just a few outlets were able to raise more than 1 million yuan ($138,000) in financing.

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- Micro Connect, co-founded by Charles Li, has funded at least 28 Chinese F&B brands through the Micro Connect Macao Financial Assets Exchange since March.
- The exchange has helped Chinese F&B brands raise around 1.04 billion yuan in nine and a half months, focusing on international institutional investors via Daily Revenue Obligations (DROs).
- Chinese F&B brands, facing strict mainland listing rules and a sluggish Hong Kong market, are using Micro Connect to expand in smaller cities, targeting growth amidst competition and weak consumer sentiment.
A small business lender named Micro Connect, co-founded by former Hong Kong Stock Exchange (HKEX) chief Charles Li, is becoming popular among Chinese food and beverage (F&B) brands. These retailers are seeking to expand but face challenges such as stricter mainland IPO regulations and a weakened Hong Kong stock market [para. 1][para. 2].
Since March, at least 28 Chinese F&B brands have secured institutional investment through the Micro Connect Macao Financial Assets Exchange (MCEX), some raising over 1 million yuan ($138,000) despite only having a few outlets [para. 2]. These brands collectively raised about 1.04 billion yuan over the past 9.5 months, which exceeds the total amount they had raised through Micro Connect from 2021 to August 2023 [para. 3].
The MCEX doesn’t operate like traditional stock exchanges. Instead, it trades Daily Revenue Obligations (DROs), allowing investors to buy into specific business contracts to gain a share of the daily revenue over time. Investors can also purchase these DROs packaged as Daily Revenue Portfolios [para. 4].
Micro Connect was established in August 2021 by Li and veteran investor Zhang Gaobo, focusing on tapping international capital to fund small and micro businesses in China, which often face difficulties in securing bank loans [para. 5]. Initially lending directly, the startup launched its exchange last year, attracting international institutional investors such as funds, banks, and insurance companies. The exchange remains closed to individual investors [para. 6].
For some retail chains and franchisees, Micro Connect offers a rapid expansion route. For example, a franchisee in Henan province used its funding to open more stores, a move that increased his overall earnings despite sharing cash flow [para. 7]. Similarly, Guiyang-based milk tea brand Quchashan expanded from 29 to 100 branches with about 5 million yuan in funding [para. 8]. By August, Micro Connect had helped F&B brands secure more than 910 million yuan in financing, representing 40% of the company’s total fundings [para. 9].
Despite the downturn in stock and bond markets, international investor interest in retail remains robust, which Micro Connect welcomes [para. 10]. Chinese F&B brands are betting on opening franchises in smaller cities to boost growth amid strong competition and weak consumer sentiment [para. 11]. Investors, such as Ba Capital, back ambitious retailers, believing that the market is large enough for new brands to thrive [para. 12].
However, tighter IPO rules on the mainland have posed challenges for these retailers. The Chinese securities regulator issued guidelines early last year discouraging certain companies from listing domestically. Specifically, baijiu-makers are entirely banned, and some companies using aggressive franchise models face restrictions [para. 13].
As a result, many Chinese bubble-tea makers are turning to Hong Kong and the U.S. for IPOs, where the scrutiny is less stringent. Leading brands such as Mixue Bingcheng and Zhejiang-based XSQ Tea are exploring these markets [para. 15]. Although Hong Kong is seen as the best alternative due to regulatory conditions, its sluggish stock market remains a concern. For instance, the bubble tea chain ChaBaiDao faced a significant plunge in its Hong Kong market debut due to intense competition and weak consumer sentiment [para. 17].
This summary encapsulates the strategies and challenges faced by Chinese F&B brands in securing financing and navigating regulatory landscapes for expansion. The information underscores the adaptable yet complex nature of funding for these businesses through innovative financial models like those offered by Micro Connect, amid shifting market conditions.
- Micro Connect
- Micro Connect, co-founded by Charles Li and Zhang Gaobo in August 2021, is a small business lender that offers funding through products called Daily Revenue Obligations (DROs) via its Macao Financial Assets Exchange (MCEX). Not trading traditional stocks or bonds, it targets Chinese F&B brands, helping them expand by providing easier access to international capital. MCEX is open mainly to institutional and professional investors, not individual investors.
- ChaBaiDao
- ChaBaiDao is a Chinese bubble tea chain that experienced a significant decline of over 37% during its trading debut in Hong Kong in April. Analysts attributed the disappointing start to increased competition and weak consumer sentiment. It highlights the challenges faced by F&B brands looking to list in the sluggish Hong Kong stock market.
- August 2021:
- Charles Li co-founded Micro Connect with veteran investor Zhang Gaobo.
- July 2023:
- Bloomberg reported that China's regulators discreetly advised against listings for companies relying on explosive franchise business models, including Baijiu-makers and certain F&B chains.
- By August 2023:
- Micro Connect had helped F&B brands secure more than 910 million yuan in financing, accounting for 40% of the total financing provided by the company.
- By the end of August 2023:
- F&B brands had raised more through MCEX in nine and half months than in the combined amount from 2021 to August 2023.
- February 2024:
- Financial Times reported that Quchashan received about 5 million yuan to grow from 29 branches to 100.
- March 2024:
- At least 28 F&B brands had received funding from institutional investors through MCEX since March 2024.
- April 2024:
- Chinese bubble tea chain ChaBaiDao plunged more than 37% in its trading debut in Hong Kong.
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