Policy

Report reveals dangers of pyramid selling

Date Mar 21 2011 15:02:52

Mar.21,2011(SHMET)-- Online pyramid selling, an illegal and fraudulent method of business, lured more than 40 million people involving some 6 billion yuan ($913 million) in 2010 alone, a recent report reveals.

Pyramid selling, sometimes described as multi-level marketing, usually involves the promise of payment or services to entice other people into the scheme without providing any concrete investment or product. In the online world it is often disguised under the catch-all banner of e-commerce and threatens Internet security, according to the report jointly released by the Zhejiang-based China e-Business Research Center and the Beijing-based China Anti-Pyramid Selling Association.

Selling through a pyramid scheme is a marketing strategy in which the sales force is compensated not only for sales they personally generate, but also for the sales of others they recruit, creating a widening base, like a pyramid, of distributors and a hierarchy of multiple levels of compensation.

Pyramid strategies are applied in businesses such as online shopping, paid advertising clicking and online games, the report said.

The report highlighted an example. A shopping website that provides paid information, such as personal financing or distance education, will ask the user to pay a sum of money for membership. After the user becomes a member, they can recommend others to join, and will be compensated if they succeed in recruiting members.

College students, the unemployed and customer-to-customer online shop owners are often involved in online pyramid selling, as they believed they could earn cash quickly, according to the report.

It is an unsustainable strategy that can result in huge losses for its victims and cause widespread social problems, said Wu Xuefei, an analyst with China e-Business Research Center.

Xiao Feng, a resident in Chuxiong Yi autonomous prefecture in Southwest China's Yunnan province, said he was a victim.

"A friend of mine gave me a card promoting an education website 3xy.com.cn in 2009. Each card was worth of 380 yuan and my friend sold 20 cards to me," Xiao, a 37-year-old decorator, told China Daily on Sunday.

There was a code on the card through which school students could log on to the website and receive online education, he said.

Xiao said he attended a lecture held by the company who ran the website and was told that he would be compensated by 600 yuan if he could sell ten cards to a sub-distributor and he could then get more money after his sub-distributor recruited additional members.

"At the lecture, which was attended by some 300 'members', an experienced 'member' told us that he had made hundreds of thousands of yuan in just two months by promoting the card.

"I thought it's impossible to make such a large sum of money in such a short period of time, and I realized that it was an illegal program and I quit," he said.

Xiao said he still has the cards and suffered losses of 7,600 yuan.


Wu Xuefei from China e-Business Research Center said multi-level marketing is illegal and she attributed its widespread appeal to the Internet.

In general, online pyramid selling requires membership registration at a website but these sites are often fakes, she said.

The virtual world allows illegal marketing activities to easily spread to other locations, even overseas, making it harder for industrial and commercial watchdogs to track them and stop their operations, she said.

Wu suggested educating the public on the dangers of online business and the differences between legitimate commercial concerns and fraudulent ones.

The public should also be educated in how to resist the lure of illegal online pyramid selling activities and the dangers they pose, she added.

Edited by SHMET

China to import more high-tech products over the next five years

Date Mar 18 2011 14:40:05

Mar.18,2011(SHMET)--China's Ministry of Commerce (MOC) announced that the country would deepen high-tech trade exchanges with developed nations and called for the easing of restrictions in exporting high-tech products and advanced equipment to China over the next five years.

China would gradually raise the percentages of high-tech products, key components and equipment in the country's imports portfolio during the 12th Five-Year-Plan Period (2011-2015), according to a statement posted on the ministry's website Thursday.

During the period, China would meet the import demand from strategically important emerging industries at home, such as information technology, energy savings, environmental protection, new energies, and high-end equipment manufacturing.

The country would also set up mechanisms for bilateral high-tech trade cooperation with 20 countries including the United States, Japan, Finland and Israel. China also aims to jointly promote trade with other countries.

The importation of such high-tech products are expected to effectively bring down the pace of China's trade surplus growth with its trade partners, the statement said.

China's trade surplus shrank year on year by more than half to $6.45 billion in January this year. Meanwhile, in February the country recorded a trade deficit of $7.3 billion as the Lunar New Year holiday season hindered export growth.

Edited by SHMET

HK pushes to become financial hub

Date Mar 16 2011 15:13:00

Mar.16,2011(SHMET)--Having spent most of his career in Asia, Simon Galpin, originally from the United Kingdom, feels perfectly at home in Hong Kong. These days, he enjoys persuading other foreigners to relocate to the city.

As the director-general of investment promotion at Invest Hong Kong (InvestHK), Galpin's job is to promote Hong Kong and to encourage overseas businesses to set up and expand in the China's special administrative region.

Galpin said InvestHK has assisted more than 1,600 foreign and Chinese mainland companies set up or expand in Hong Kong over the past nine years.

He and his team reach out to potential companies and provide information and advice. If a company decides Hong Kong is the right place for them, InvestHK assists the company in its transition to a new environment, for example in finding office locations and suitable schools for employees' children.

This year, Galpin is working to promote Hong Kong as China's global financial center as well as to attract companies that will bring green energy and renewable energy to Hong Kong.

Shanghai, no doubt, is a very important financial center, he said, but there is room for China to have more than one financial center. He lists Hong Kong's English-speaking business community and low taxes as benefits to starting businesses. There's very little complexity for entrepreneurs to grapple with when they first set up shop in Hong Kong, he said.

Hong Kong is also seen as an ideal place to serve as an offshore renminbi center for China and this will further promote its standing as a global financial center, he said.

Hong Kong's status as a financial hub and its close proximity to Southeast Asia will help create demand for RMB investment, said Jiang Shu, an analyst at Industrial Bank.

According to the annual "Doing Business" report by the World Bank, Singapore remains the world's easiest place to do business, followed by Hong Kong.

But Galpin thinks Hong Kong has an advantage over Singapore for businesses that want to focus on China because of its closeness to the Chinese mainland.

"I think Hong Kong being part of China is a real advantage. Hong Kong is a great place for companies that are new to Asia to start off and also a great place to access opportunities on the mainland. At the same time, Hong Kong is the springboard for many mainland companies to go global," Galpin said.

Galpin cites recent moves of two senior executives to Hong Kong: General Electric Co Vice-Chairman John Rice and Caterpillar's Emerging Markets Chief Rich Lavin. In 2009, HSBC Holdings Plc moved CEO Michael Geoghegan to Hong Kong from London in its efforts to increase its focus on emerging markets.

In recent years, a number of Singaporean and Indian companies have set up or expanded their businesses in Hong Kong, many of them from the banking, transport and industrial sectors, Galpin said. However, the high cost of wages, rent and the cost of living in Hong Kong can be a deterrent to entrepreneurs.

According to a study by property consultancy DTZ, Hong Kong overtook London's West End last year as the world's most expensive place for office space rentals.

But Galpin said there is a range of cheaper options that even small companies can take advantage of.

"Hong Kong may be a very small economy, but you can easily find cheaper buildings within one to two blocks of those prestigious buildings. And if you are willing to go two or three blocks farther from the subway, the costs would be even lower," he explained.

Hong Kong, he said, is a fun place to live. Westerners will find that the cosmopolitan city has an array of schools, clubs and associations that expatriates can easily tap into.

"I think Hong Kong is a very accessible place for foreigners. It's very familiar. There are lots of choices, even though it's a small place. Expatriates can live very different lifestyles," said Galpin, who has lived in Hong Kong for 17 years.

Edited by SHMET

China's February new loans hit 535.6b yuan

Date Mar 14 2011 17:08:54

Mar.14,2011(SHMET)--The People's Bank of China (PBOC), the country's central bank, said Monday that new yuan-denominated loans stood at 535.6 billion yuan ($81.52b) in February.

The figure was 192.9 billion yuan less than February last year, said the PBOC in a statement on its website.

By the end of February, the balance of outstanding yuan-denominated loans stood at 48.89 trillion yuan, up 17.7 percent from a year earlier.

The rise was 9.5 percentage points lower than the rise a year earlier. China's broad money supply (M2), which covers cash in circulation and all deposits, increased 15.7 percent year on year to 73.61 trillion yuan by the end of February.

The rise was 9.8 percentage points lower than the same period last year.

The narrow measure of money supply (M1), cash in circulation plus current corporate deposits, climbed 14.5 percent from a year earlier to 25.91 trillion yuan.

New yuan-denominated deposits stood at 1.31 trillion yuan in February.

The figure was 333.4 billion yuan more than February last year, said the statement.

The balance of outstanding yuan-denominated deposits rose 17.6 percent year on year to 72.59 trillion yuan by the end of February.

The rise was 0.2 percentage points higher than the rise of January.

February's new loans were 600 billion yuan lower than the market expectations, said Zhou Wenyuan with Guotai & Junan Securities.

Zhou predicted that 2011 new yuan-dominated loans are likely to be less than 7 trillion yuan as the central bank maintains a tight credit control as it tries to soak up liquidity.

New yuan-denominated lending reached 7.95 trillion yuan last year, exceeding government's 7.5-trillion-yuan target ceiling.

Edited by SHMET

China welcomes WTO ruling on Sino-US business dispute

Date Mar 14 2011 17:07:55

Mar.14,2011(SHMET)-- China welcomes a ruling from the World Trade Organization (WTO) over a Sino-US business dispute, said the Ministry of Commerce (MOC) on Saturday.

The WTO ruled that US parallel anti-dumping and anti-subsidy duties imposed on four Chinese imports -- standard steel pipes, rectangular steel pipes, off-road tires and laminated woven sacks -- are inconsistent with WTO rules.

China argues that the US imposure of two sets of duties on Chinese products is a "double remedy" that is illegal and unfair. The WTO ruling supported China's position on the dispute, according to the officials.

Furthermore, MOC officials urged business authorities in the US to amend its parallel anti-dumping and anti-subsidy measures involving the four products.

Chinese officials hope that the US would correct its errors with regards to trade policies against Chinese imports and ensure fairness in the market.

 

 

 

Edited by SHMET