Marketing scheme cause for concern

PUBLISHED : Wednesday, 25 July, 2012, 12:00am
UPDATED : Wednesday, 25 July, 2012, 12:00am


It is ironic that promoters of a marketing scheme banned on the mainland can get around the law by drawing tens of thousands of people to visit Hong Kong to sign up for it. To reassure them about the legality of this, a senior instructor tells them that the Hong Kong police even send officers to help maintain order when there are long queues of new applicants outside sales centres.

According to a proverb, if it walks like a duck, quacks like a duck, looks like a duck, it must be a duck. It is therefore understandable that the instructor goes to such lengths to reassure participants that they are not joining a pyramid sales scheme, which would break a Hong Kong law carrying penalties of up to seven years' jail and a HK$1 million fine. As our recent report on the operations of the Causeway Bay sales centres of Digital Crown Holdings (Hong Kong) Limited revealed, police have been closely monitoring DCHL but have found no evidence it is breaking any law. DCHL sells magic lamps claimed to sterilise the air, wine, and health and beauty products through layers of distributors who recruit others.

Democratic Party chairman Albert Ho Chun-yan, one of the lawmakers who passed recent amendments to the pyramid sales law, has received hundreds of complaints from people claiming to have been cheated. 'I believe [they are] running a pyramid scheme ... the distributors' income depends on the number of people they recruit,' he said. DCHL says it is running a multi-level marketing (MLM) scheme, which is also banned on the mainland but not in Hong Kong - hence the local operations. Companies and individuals engaged in MLM say it is about reward for sales of genuine goods, rather than for the introduction of new participants, as in pyramid sales.

In drafting the latest amendments to the law the government was rightly concerned not to affect legitimate businesses. It should also be concerned to see that if Hong Kong is to be used as a base for separating poor mainlanders from their savings, or their borrowings, in get-rich-quick schemes, that the intent and spirit of the law are upheld. Hong Kong and Beijing should be ready to work together on this.