VIPSHOP Marks Return of Chinese IPOs

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VIPSHOP, the online discount retailer in China went public today under the VIPS ticker symbol over at the New York Stock Exchange, selling 11 million shares at $6.50 each, thus raising $71.5 million. It is the first Chinese public offering in a long while, and follows a wide controversy of Chinese-based US-traded companies involved in fraud and misconduct. The company's CEO, Donghao Yang, stopped by the CNBC Squawk on the Street Set on the NYSE Exchange, shortly after ringing the first stock sale. "The IPO is a natural progression in the development of the company." the company's CFO told CNBC. "We want to raise capital to further invest in infrastructure, especially in warehouses and IT systems, to improve our service to our suppliers and consumers." VIPSHOP's CFO addressed concerns that the company's profits are far from matching its stellar revenue growth. "We are growing very fast in terms of the top line. We believe we have very clear path for profitability." he said, providing no specific guidance. "We are going to get there," Yang said when pushed on a more specific goal for profitability growth: "We strongly believe in the prospect of the company turning profitable in the near future." The company goes public at a time when analysts believe China is entering a period of hard landing in terms of economic activity. xxx did not concur. "I believe China still has the strongest growth momentum. 7.5 percent is lower than nine or ten, but it is still the fastest growing economy in the world." VIPSHOP trades in luxury branded goods sold at a discount, a lot like many other sites in the United States. On its ubiquitous competition in China Yang said: "Yes, there is competition everywhere, and so it is in our business, but we are already the leader in China's online discount retail business. We are confident we are going to strengthen that leadership and be competitive." Yang explains that his company's competitive key may rest on its focused niche, in which it is already a leader: "Our mid- to high-end market is where the best prospect for growth exists in China. Forty percent of the company's revenues are in apparel sales. Sportswear brands such as Adidas and Nike
NKE
are big partners of the company and play to the Chinese consumer's love for big brands. VIPS opened for trade this morning and currently trades down 8 percent at $5.98.
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