The 11 Chinese cities most notorious for their pyramid schemes

Pyramid schemes are illegal in China and have been implicated in a number of deaths; in one city, as many as 10,000 people were lured

PUBLISHED : Monday, 04 June, 2018, 5:20pm
UPDATED : Tuesday, 05 June, 2018, 10:27am

Chinese authorities in 11 cities named and shamed in a national blacklist for their high numbers of pyramid schemes have launched urgent campaigns to put a stop to them, according to a report.

The list of cities advised to take action against pyramid selling was issued in April by the State Administration for Market Regulation, which said it would monitor the cities’ performance for the rest of the year, news website news.ynet.com reported.

The move came after several deaths related to pyramid selling in 2016 and 2017. A pyramid scheme that recruits members using a promise of payment for persuading others into the scheme is illegal on the mainland and often turns into a Ponzi scheme – which generates returns for older investors by finding new investors – sometimes following violence and illegal detention.

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The municipal governments of the 11 cities – Beihai, Nanning, Guilin, Langfang, Nanjing, Wuhan, Changsha, Nanchang, Guiyang, Hefei and Xian – have taken measures in the hope of being removed from the blacklist by the end of the year.

In Beihai city, a three-month campaign against pyramid selling began in May. On the first day of the campaign, a gang of 199 members had been arrested.

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In a single district, Xixia, of Nanjing city, the number of people lured into local illegal pyramid schemes had been as high as 10,000, the report said. The local authorities plan to send police officers, social workers and volunteers to every registered rental flat in the city at least once a month to check for any new residents who may be recruits to such a scheme.

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The rampant spread of pyramid schemes – with low-income migrant workers, the recently unemployed and recent graduates often falling victim to schemes promising quick riches – has coincided with China’s wealth gap and an imbalance in development between urban areas and more remote provinces.

Between 2005 and 2015, Chinese authorities exposed than 21,000 pyramid scheme cases, Xinhua reported.