"By purchasing goods worth 900 yuan (US$112.5), you can earn as much as 2,400 yuan (US$300) within 12 months."
Sound like a miracle?
This is what Heilongjiang Colleo Electronic Sale Co Ltd based in Harbin, capital of northeast China's Heilongjiang Province, boasted on a series of websites, so successfully that within half a year 5,000 people from across the country had signed up and sales topped 33 million yuan (US$4.12 million).
However, the company's luck ran out yesterday after the local Industry and Commerce Administration announced it had seized 20 computers used as website servers and issued 1.45 million yuan (US$181,200) in fines.
"It is a typical case of pyramid sales, which use huge rewards as bait to cheat money," said Zhu Zhigang, a worker in the fair trade section of the administration.
"Basically, the company is cheating money through a multi-level hierarchy of salespeople; its income does not come from sales but from membership fees."
The company offered customers the chance to buy products worth 900 (US$112.5), 1,800 (US$225) or 2,700 yuan (US$337.5).
And to attract more people, the company said that a person could become a small agent of the company if he or she bought products worth 27,000 yuan (US$3,375) at one time.
Members can then pick products and conduct trade through the company's website.
Wang Xiaosong, secretary of the Harbin Consumer Rights Association, expressed his surprise that the company could develop such a big network in less than six months.
"Are people really gullible enough to believe them?" Wang said, "It is so easy to see through the trick."
"You buy the product, you become the slave of the company and you have to cheat others to buy it," he said.
The company was unavailable for comment yesterday, but a statement dated August 7 posted on the company's website says the company is trying to find a new and legal method of operations and hopes consumers will not panic.
(China Daily August 10, 2006)
