Deadly scheme

How pyramid selling gangs prey on graduate job seekers


On July 14 the bodies of two young men were found in the eastern port city of Tianjin. At first it appeared their deaths were unconnected. One had drowned, the other had died of heat stroke. They were found miles apart.

But then a link emerged: both had been lured to Tianjin on the promise of work and both had fallen victim to gangs running pyramids schemes.

In Europe and the United States multi-level marketing organisations (MLMs) are sometimes seen as great networking or money-making opportunities. Joining is voluntary and people can leave at any time – as long as they don’t mind taking a financial hit.

In China things are often more aggressive, where the schemes are literally known as ‘chain selling’. Young people are commonly tricked into joining the schemes and held captive while they are on the lower levels.

Some 2,800 pyramid schemes were investigated in China last year but the real extent of the problem is believed to be many times larger than that – one recent escapee told the Global Times there were 3,000 “cells” operating within the Jinghai district of Tianjin alone.

Typically, new members are held in small dormitories while they are indoctrinated. Their phones are taken away and they are often deprived of food or made to endure extreme physical activity.

They are then asked to buy into the scheme on the promise of huge profits in the future.

Attendees who have resisted have been assaulted and even beaten to death.  At least seven young people have died at the hands of pyramid gangs this summer.

“Pyramid schemes are a social cancer,” wrote the China Youth Daily, in early August. “Unfortunately, cancers can reproduce,” it added.

Amazingly, Die Bei Lei, the scheme connected to the death of the younger Tianjin victim has been around since 2005. Much like several other MLMs worldwide it sells cosmetics.

So how did Li Wenxing, a recent engineering graduate, get involved? Like Zhang Chao, the other man found dead, he was using online recruitment sites to find work. In mid-May he got a call from someone pretending to be from an internet company. They gave him an interview over the phone and offered him a job in Tianjin starting on May 20. After Li arrived in the city his family initially lost contact with him. He then started calling, asking for money. The last contact he had with his family was on July 8 when he called his mother telling her to ignore any further calls asking for cash.

Six days later the 23 year-old was found floating in a pond in an area known for housing MLM cells.

Zhang, who was 28, had worked for a construction company in Yunnan. Like Li he was from a rural area in Shandong and he was looking for work in northeast China to be near his parents. In early July he received a call from someone purporting to represent a Tianjin-based construction company, who asked him to come for an interview.

His mother told The Paper that his manner changed almost as soon as he got there, replying to questions about his new position with monosyllabic answers. She put it down to tiredness in his new job.

His body was found by the side of the road, although police believe fellow recruits tried to take him to the train station when they noticed he was sick (but he collapsed en route with heat stroke).

In the last week, the government has announced a three-month nationwide crackdown designed “to eradicate all kinds of chain selling organisations that trick job seekers to join through fraudulent postings”. Some areas of Jinghai have already emptied out, said the China Youth Daily, with fewer people ordering takeout noodles and steam buns.

BOSS Zhipin, the popular recruitment site where Li was searching for a job, has also come in for criticism for not better scrutinising the employers who use the site.

Meanwhile shares in US-based companies Herbalife, Nu Skin Enterprises and USANA Health Sciences plunged on fear that Chinese regulators would crack down on their marketing practices in China too (see WiC223).

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