Xiaohongshu was reported by a former employee under real name, during a critical window period of rushing towards a Hong Kong IPO and a valuation of $30-70 billion. The content of the report is not the labor dispute itself, but the information disclosure of the VIE structure of many Internet companies. In 2022, Chen Hao joined Xiaohongshu as the head of commercial direct sales in South China. At that time, he was the regional sales leader with an annual performance of over 120%. When he joined, his labor contract was signed with the domestic operating entity Shuyi Shuer Cultural Media, and the employee options were signed with the overseas entity Xingin International Holding, commonly known as Little Sweet Potato. He received 30000 stock options, which will be vested over four years. In December 2023, there are only about 5 months left until the first batch of options are vested. However, Chen Hao received a notice of termination of his labor contract. The reason given by Xiaohongshu is' not competent for the job '. At the same time as the termination of the employment relationship, 30000 outstanding overseas options will also become invalid. Chen Hao refused the compensation of 110000 yuan proposed by Xiaohongshu. In two years, he successively filed labor arbitration, illegal termination of labor relationship litigation, and option loss litigation. In the trial, Xiaohongshu's defense was that the options were issued by a foreign company and the agreement was signed by Little Sweet Potato, not Xiaohongshu. This is a typical VIE architecture operation: domestic operating entities and overseas listed entities are controlled through agreements, appearing to be one company, but can be instantly split into two companies during litigation. Simply put, the employee sued 'Zhou Shuren', and the company responded, 'It has nothing to do with Lu Xun.' The court ultimately did not adopt this claim. After the two cases, Chen Hao ultimately received compensation of about 850000 yuan. So, in June of this year, Xiaohongshu was preparing for an IPO on the Hong Kong stock market, and institutions such as Goldman Sachs and CICC were exposed to be involved in the listing process, with market valuations rumored to have reached tens of billions of dollars. Chen Hao submitted a complete set of documents including court judgments, trial materials, and resignation certificates to the Listing Department of the Hong Kong Stock Exchange and the Hong Kong Securities and Futures Commission under his real name. The boomerang has returned. Initially, I claimed that Little Sweet Potato and Little Sweet Potato were two companies, but now that they are going public, I have to prove that Little Sweet Potato and Little Sweet Potato are one company. If the Hong Kong Stock Exchange believes that the report involves significant information disclosure, Xiaohongshu is likely to be required to provide additional explanations, update the content of the prospectus, and even accept multiple rounds of inquiries. The most realistic result is a longer audit cycle and a delayed listing time.