Pillar of community falls from his perch

PUBLISHED : Monday, 07 January, 2008, 12:00am
UPDATED : Monday, 07 January, 2008, 12:00am

Wang Fengyou, the chairman of the Yilishen Tianxi Group who is in custody for allegedly instigating social unrest, took a long and winding road to become the 'King of Ants'.

Born into a poor farmer's family in a small village in Fushun , Liaoning , the 45-year-old made a living after finishing middle school by opening a tofu shop.

He tried to plant trees for timber for Fushun coal mines, only to find that trees did not grow quickly enough in the frozen north to meet supply. He then tried his luck opening an ice-cream factory in Yingkou , planting crabapple trees in Gaixian, and selling pork in Dalian , but each failed.

In 1993, Wang took his savings and went to Guangzhou to open a taxi company with 15 cars, one of which he drove himself. Five years later, he sold his company for his first bucket of gold and went back to Shenyang to open Shenyang Dingxi Technology, on which he built his ant empire.

He started a joint venture with a Hong Kong connection he made in Guangzhou and established the Yilishen Tianxi Group in 1999. The group comprised nine companies and had interests in health products and property. Wang ran it for eight years on hype, connections, and what appeared to be an irresistible offer - deposit 10,000 yuan to get a box of ants, then give them food and water until they died, when the firm would pick them up. After 14 months, depositors were promised 13,250 yuan, with an annual rate of return as high as 32.5 per cent.

The seemingly easy and safe deal attracted 1.1 million ant breeders in Liaoning, many of them farmers and laid-off workers. The firm published a catalogue with scores of letters from grateful breeders. Wang even said being an ant breeder was to 'get yourself a good job at home'.

Wang made a reputation for himself as a philanthropist and entrepreneur. He donated more than 10 million yuan over the years, for which he won a number of public honours.

He was said to have wide connections and escaped rounds of scrutiny about the nature of his fundraising method. The Ministry of Commerce gave the company a licence for a direct-selling business in 2006, even after the US Food and Drug Administration concluded that its major product's active ingredient was Viagra and banned the import of the company's products because they were being sold as health supplements rather than pharmaceuticals.

Company insiders said sales started falling in 2004, and Wang was knocked off his pedestal last October when the company missed its payment deadline twice. He wrote an open letter saying he had raised new capital from an overseas investor and money would be available on November 22.

When ant breeders heard the payments were to be delayed for the third time, they took to the streets in anger and fear. Wang was later arrested, suspected of also planning and organising people to besiege government offices. Reasons behind those demonstrations were unclear.

A court in Shenyang has accepted a bankruptcy application for the company, which is being liquidated. Television stations repeated footage of Wang in handcuffs apologising.

Some direct-selling experts said he had been trying to raise capital to expand his company, which had become a conglomerate, rather than to amass personal wealth and flee.

Another expert said all the publicity and charity activities were just lures to draw people into the Ponzi scheme. When ant breeding stopped being a way to meet production needs and became the income stream, Wang was raising funds illegally.