South Korea's Largest Coffeehouse Chain Goes Bust in China
Liao Shumin
/SOURCE : Yicai
South Korea's Largest Coffeehouse Chain Goes Bust in China

(Yicai Global) Oct. 16 -- The Chinese joint venture of Caffe Bene, South Korea's largest coffeehouse chain, has gone bankrupt after years of racking up debt.

A Shanghai court accepted the insolvency and liquidation case of Caffe Bene Shanghai Investment Management just over two months ago, online news portal Jiemian News reported. The first meeting of creditors, who should claim their rights by Nov. 9, is scheduled for Nov. 16, the report said, citing a statement from the Fengxian District People's Court dated Oct. 9.

Set up in 2013 with Caffe Bene Administration as its sole shareholder, the same court blacklisted the joint venture in 2015 for serious illegal activities and operating in bad faith, stating it had been "out of contact with its registered domicile or site for business operations for three years." Yi Qifan, the legal representative of both Caffe Bene Shanghai and Caffe Bene Administration, is missing.

Caffe Bene Administration invested in 230 companies and controlled 199 firms in China through Caffe Bene Shanghai, according to business information provider Qichacha. Most of these firms have seen their licenses cancelled or revoked or have been branded as running "abnormal operations." The two companies have been involved in over 300 lawsuits.

Founded in Seoul in 2008, Caffe Bene sells upscale tea, coffee, juice, waffles and bread at over 1,200 locations globally including China, the US and the Philippines. Caffe Bene expanded quickly after entering China in 2012 with locations scattered across first, second and third-tier cities.

Caffe Bene mainly relies on franchising for expansion. It had over 900 stores in South Korea by 2014, though only around 30 were direct-sale stores and the rest were franchises. In China, the franchisee pays 50 percent, 60 percent or 100 percent of the investment, while Caffe Bene finds the location, and provides the decoration and training.

At its peak, Caffe Bene had more than 600 stores in China and set a record for opening 200 outlets in a single year. But it ran into trouble after expanding too fast and because of poor management. In 2014, its stores delayed workers' salary payments and logistics operations were interrupted due to outstanding bills.

In 2015, Caffe Bene Administration China President Qi Dong quit, claiming he hadn't been paid for eight months, and only around 500 of its 1,200 employees stayed on. That same year, it was revealed that Caffe Bene's capital chain had collapsed, and 69 franchisees found its Beijing and Shanghai headquarters empty. They reported this to the Beijing authorities in the hope of getting their deposits back.

Editor: William Cleg

Follow Yicai Global on
Keywords: Caffe Bene , China , Joint Venture , Bankruptcy