(Yicai) Sept. 11 -- The founder of Mech-Mind Robotics, which listed in Hong Kong last week, has said China’s robotics industry is rife with related-party transactions that he described as generating false and unsustainable revenues at startups, and accused them of wielding state-owned capital to pressure local governments for support as they race to go public.

Many embodied intelligence developers, including well-known and high-valuation companies based in Beijing and Shanghai, extensively use “data acquisition centers” and related transactions with local governments, investors, and suppliers to “fabricate false and unsustainable revenue,” Shao Tianlan said in post to WeChat Moments yesterday.

“This practice is illegal, unethical, and unwise,” said Shao, who is also Mech-Mind’s chairman and chief executive, adding that it represents a major threat to the innovation and entrepreneurship ecosystem and the healthy development of the capital markets.

This behavior clears the way to a quick initial public offering at the expense of ordinary investors, but also creates a trap for the companies themselves, as they need to step up the practice in each succeeding year so as to grow annual revenues, he said.

“Is there a single Beijing municipal official willing to step forward and claim responsibility for supporting such a company’s listing?,” Shao asked. “Or does such a person simply not exist, and is the claim merely a bluff by these companies?”

Galbot IPO

In comments made below the post, Shao named Galbot, a Beijing-based robotics company registered as Galaxy General Robot, without disclosing specific details of the circumstances behind his remarks.

He questioned whether the claim that “Beijing supports Galaxy General's IPO” was merely corporate posturing, or whether there was actual substance to it. He went on to ask whether any Beijing official was willing to step forward and state their support for Galbot's IPO.

Galbot subsequently released a statement saying it does not engage in “meaningless verbal battles and will not be disturbed by short-term noise,” adding that the company simply aims to improve its products, solidify its applications, and deepen its technology.

Galbot was established in 2023 and has completed several financing rounds at a valuation of over CNY20 billion (USD3 billion), according to data from corporate information platform Qichacha. Its backers include local government-linked funds, industrial investors, and venture capital firms.

Galbot’s products have been deployed in multiple industries, with scaled applications in manufacturing, retail settings, and pharmacies, and have undergone two years of continuous operational testing, according to reports.

Mech-Mind and Galbot have so far not responded to Yicai’s requests for comment.

IPO Frenzy

Shao has spoken out a number of times on the IPO frenzy in the robotics industry. Except for a few special cases, he has said, most companies considering an IPO should first demonstrate product-market fit, establish a genuine, sustainable, and sizable business, and achieve an adequate level of corporate governance.

Founded in 2016, Mech-Mind is a supplier of intelligent robot components, offering smart robot guidance products, intelligent detection, measurement products, and next-generation cornerstone parts. It went public on the Hong Kong Stock Exchange on Sept. 1.

Mech-Mind’s shares [HKG: 9615] closed 6.2 percent higher at HKD95 (USD12.11) each today, taking the stock’s gain since listing to 21 percent and giving the business a market capitalization of nearly HKD11.9 billion (USD1.5 billion).

Ten robotics companies went public in Hong Kong in the first half, and 16 others are awaiting regulatory approval, according to Choice data.

The embodied intelligence sector is still in the early stages of development, with many companies attempting to explore and implement real-world applications, industry insiders told Yicai, though only a few have achieved profitability. Some investors also note that the valuations of these companies rely more on the "price-to-dream ratio" rather than on commercial fundamentals.

Editor: Futura Costaglione