A useful time to complain

Mainland workers are discovering that an employer’s Hong Kong IPO can turn an ordinary labour dispute into a more potent one

A stock exchange is an unlikely venue for a labour dispute. Yet employees of Chinese companies seeking Hong Kong listings have begun taking grievances to the Hong Kong Stock Exchange (HKEX). They are not asking it to adjudicate dismissals, unpaid benefits or share options. They are trying to turn such disputes into questions of disclosure, compliance and fitness to list.

The clearest example is Xiaohongshu 小红书, the Shanghai-based social-media platform known overseas as RedNote. As we first reported in English last month, Chen Hao, a former employee, widely publicized his complaints to HKEX and Hong Kong’s Securities and Futures Commission. His more relevant point is not an employment dispute he had won, but that in his labour litigation, Xiaohongshu had argued that its Chinese operating company, which had hired Mr Chen, was distinct from the offshore entity that issued his options. This sits uneasily with the control Xiaohongshu must demonstrate when it places domestic operations beneath an offshore listing vehicle in the variable-interest-entity, or VIE, structure: no connection when an employee claims, close connection when investors pay. Reuters followed suit in a report a week later, where Xiaohongshu denied it had confidentially filed for a Hong Kong listing, or that Chen’s suits hindered its IPO process.

A newer case concerns Xingyu Automotive Lighting 星宇股份, a leading Chinese maker of vehicle lamps that is already listed in Shanghai and is seeking a Hong Kong flotation. After it submitted a fresh application in July, Chinese media reported this week that newly hired graduates from China’s top universities had been told to leave or accept transfers to production-line jobs. Some complained to labour authorities; some reportedly sent material to HKEX. Employees have suggested that Xingyu’s downgrade of new employees coincided with cuts to the existing workforce, which had already fallen by 27% between 2024 and 2025, and were connected with the listing effort. That remains an allegation. Their decision to involve the exchange is the more notable development.

The choice is not entirely fanciful. HKEX is both a market operator and the frontline gatekeeper for Hong Kong flotations. Its IPO Vetting Department reviews new applications, while the exchange maintains a formal channel for complaints concerning listing applicants. HKEX also lists a “material complaint” among the developments that may prompt additional correspondence during an application.

Whatever view HKEX takes of employee disputes in any particular flotation, mainland commentary has increasingly treated labour-related controversies as another possible complication for companies approaching the capital markets.

Lalamove, the Chinese-founded on-demand freight platform, has repeatedly sought a Hong Kong listing. Chinese financial media have discussed its long-running listing effort alongside regulatory disputes over driver fees, platform rules and the treatment of drivers. There is no public evidence that these issues caused earlier applications to lapse, but they have become part of the discussion surrounding the company’s IPO prospects.

GoGoX, another intra-city freight platform, faced similar scrutiny before listing in Hong Kong in 2022. Chinese reporting on its prospectus partly focused on its classification of drivers as non-employees and the possibility that future rules might require social-insurance contributions, increasing costs and potentially changing its business model.

Mixue, the hugely popular chain selling inexpensive ice cream and tea, disclosed shortfalls in social-insurance and housing-fund contributions before its Hong Kong IPO. Chinese media covered the issue during the listing process. Mixue nevertheless listed successfully in March 2025. Its experience is a useful reminder that the significance of labour-related compliance problems can vary greatly.

There is also a mainland precedent for treating complaints as part of the listing process. China’s securities regulator explicitly includes the verification of complaints and tip-offs 投诉举报核查 among the tools it uses to police entry to the domestic IPO market. For Chinese companies and their employees, the notion that a dispute might acquire additional importance when one side is awaiting approval to list is therefore not entirely new.

The appeal of this tactic is easier to understand in the context of Chinese employment relations. Absent independent labour unions, employees are generally in a weaker bargaining position than employers, particularly the sizeable companies capable of mounting an IPO. Labour arbitration or litigation may produce compensation in an individual case—as it did for Mr Chen in Xiaohongshu—but the sums at stake can be modest relative to the company, the process lengthy and the resulting pressure limited.

Some aggrieved employees also believe that the imbalance extends beyond the workplace. Large companies have public-relations operations, relationships with media and online platforms and much greater access to official channels. Critical posts can disappear, discussions can be restricted and a dispute that matters enormously to one employee can attract little sustained public attention. Whether or not every such perception is justified, it helps explain why an employee who feels that the ordinary avenues have been exhausted might look for a point at which the employer is unusually exposed.

An IPO provides just such a moment. Management wants an orderly process. Sponsors have to investigate new information. Lawyers worry about incomplete disclosure. Regulators may have to consider whether an allegation is material. A claim that would ordinarily be an ordinary employment dispute can therefore become inconvenient when a company is asking investors to entrust it with large sums of money.

The publicity surrounding a complaint may itself provide leverage. Saying that a dispute has been “reported to the Hong Kong Stock Exchange” gives it a different status in the mainland information environment. Whatever one makes of Stephen Roach’s claim that “Hong Kong is over”, its institutions still, at least in the eyes of many mainland Chinese, carry more professional and legal authority than at home. A complaint sent to HKEX therefore sounds more consequential than an ordinary workplace grievance. The exchange may ultimately take no action, but the filing can still circulate on social media and attract financial-press coverage. For some employees like Mr Chen, that may be leverage enough.

None of this means that HKEX should become an alternative labour tribunal, nor that every employment dispute belongs in an IPO file. The more interesting possibility is almost the reverse. Capital markets impose disciplines that ordinary employment relations sometimes do not. A company seeking access to international investors is expected to explain material liabilities, disclose regulatory risks and satisfy outside gatekeepers that its business is run with a reasonable degree of compliance.

If Hong Kong’s listing regime occasionally forces mainland companies to take employee grievances more seriously, disclose labour problems more fully or clean up employment practices before entering the market, that would be a modest but worthwhile consequence of the IPO process. Capital markets are usually discussed in terms of what companies gain from them. In these cases, the more interesting question may be what the disciplines of a maturer market economy can, indirectly, give back to workers.(Enditem)

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