Chinese CEO Laments Many Robotics Firms Fabricate Revenue

The co-founder and CEO of Mech-Mind Robotics, a Beijing-based robotics firm that recently went public, said in a post on WeChat on Thursday that many Chinese embodied AI companies are “creating false and unsustainable revenue,” in response to The Information’s scoop on Chinese regulators tightening the approval of humanoid startups’ listings.

Mech-Mind CEO Tianlan Shao said many companies are using so-called “data collection centers” and related party transactions with local governments, investors and suppliers to inflate their revenue.

“This practice is illegal, unethical and unwise,” Shao said in the post. If the companies keep generating more revenue through such practice, this will lead them into “a vortex of continuous fraud and financial ruin,” he added.

Shao said the embodied AI firms engaging in such practices include “some well-known and highly valued companies in Beijing and Shanghai that have appeared on the Spring Festival Gala,” referring to China’s most-watched annual TV program that kicks off the Lunar New Year holiday.

Shao also mentioned Galbot, a major Beijing-based humanoid maker whose robots appeared in the gala, in additional comments under his own post. “For example, is there any Beijing municipal government leader who would step forward to support Galbot’s IPO? Please feel free to contact me, and everyone is welcome to screenshot and share this,” he said. Mech-Mind, which makes 3D cameras and software for robots, debuted in Hong Kong last week.

The Information reported on Wednesday that the Chinese Securities Regulatory Commission gave its informal “window guidance” to raise the bar for humanoid companies’ IPOs. Companies must demonstrate they can generate recurring revenue, are on a path to narrow their losses or achieve real innovation before approvals can be considered, according to people with knowledge of the guidance.

In his earlier WeChat post on Wednesday, Shao cited The Information’s scoop and argued that most companies should first prove that they have a product-market fit, a real, sustainable and sizeable business and sufficient governance before they can go public.