Community & Education HKFP Voices

The rise and fall of a ‘patriotic investment charity’ in China

By Oiwan Lam

Beijing has seen its biggest protests in recent years after the founder of Shanxinhui was arrested for running an operation similar to a pyramid or Ponzi scheme.

Shanxinhui is a popular investment company that promotes itself as a “patriotic charity”. Despite the government crackdown, many of the company’s 5 million investors insist that Shanxinhui is a legitimate patriotic business.

shanxinhui

Photo: Shanxinhui via Youtube.

Shanxinhui, which means “kindhearted exchange” in Chinese, was registered as a business in 2013 with a goal of spreading “positive” and “virtuous” culture in China. Through its online investment platform, Shanxihui offers a high return rate to individual investors, and promises donations to charitable causes and government-endorsed programs to help the poor.

Every night at 8:30 pm, Zhang Tianming has a live-streamed video section on its website for its investors, where it reports the company’s commitment to charity work and encourages members to share their kindness by inviting more people to join the investment scheme.

Authorities accuse Zhang Tianming, the founder of Shanxinhui, of defrauding “a huge amount of property” from victims “under the guise of helping the poor and achieving common wealth.”

Earlier this year, Shanxinhui was promoted and featured in a number of official media outlets including the state-owned China.com.cnChina Central TelevisionHainan Television and Xinhua News. During the interviews, Zhang Tianming emphasized that the company was an innovative attempt at charity and was meant to help fulfil Chinese President Xi Jinping’s China Dream. Here is the company’s introduction:

Shanxinhui upholds the culture of kindness as its core value, works with all walks of life to practice the socialist core value, advocates “the aggregation of kindnesses for a harmonious heaven and earth”. It’s business principle is “market demand as standard, consumer’s interest as foundation, state patriotism as direction”. It explores a new economic model that helps the country to allocate resources for poverty relief and demand-oriented reform so as to build a harmonious society with common prosperity, assisting the state in the China dream of national revival.
“善心汇”以善文化为核心理念,携手各界仁人志士,共同践行社会主义核心价值观,唱响“善心汇,和天下”的前进号角,秉承着“以市场需求为标准,以消费者利益为基石,以国家民族大义为导向”的原则,致力于探索构建新经济生态模型,推动国家精准扶贫和供给侧改革战略落地,打造一个共同富裕的和谐社会,助力国家早日实现中华民族伟大复兴的中国梦。

Investors protest carrying Chinese flags

Even after China’s public security bureau explained on social media how the company made profits through a Ponzi scheme, members of the investment-cum-charity company believe the crackdown is a result of a “failed blackmailing” of the group.

More than 50,000 people, many of whom carried Chinese flags, demonstrated outside Beijing’s Dahongmen International Convention Exhibition Centre and the Supreme People’s Procuratorate on July 24 demanding the release of Zhang Tianming, the founder of Shanxinhui.

For some, the protests was a deja vu of the massive Falun Gong protests in 1999 outside Zhongnanhai. Back then, the Chinese Communist Party (CCP) responded with a series of crackdowns on the religious group.

Similar to members of Falun Gong in 1999, Shanxinhui’s protesters are very loyal to the ruling CCP. Independent media outlet @iyouport posted a video showing protesters peaceful knelt down outside Dahongmen:

“The head of the marketing business “Shanxinhui” has been arrested. Hearsay, more than 6 million people were cheated.”

Twitter user @suxinPL talked to one of the members near the protest site:

“This woman is a member of Shanxinhui. She was talking to onlookers near the protest site and explained to them how the authorities had abused their power. She stressed they were not protesting but petitioning. She also said that the gathering was not organized, members just spontaneous gathered at the spot where their leader was arrested illegally. Her presentation is very rational with self-restraint, with is different from the democratic political circle.”

Members of Shanxinhui believed that Zhang was arrested for rejecting “blackmail” by the Yongzhou public security bureau. Their version of the story was told in a smaller scale protest which took place in June outside the Yongzhou city government building. The protest scene was recorded by Twitter news outlet @Images from China:

“Shanxinhui members protested outside Yongzhou city government last month. On June 4 this year, Yongzhou public security bureau demanded Shanxinhui to give a “guarantee fee” of RMB 20 million [approximately US$ 2.97 million] as the company was under suspicion of fraud. The company’s director Zhang Tianming rejected the payment. That night, an investigation team from Yongzhou public security bureau arrested eight technical staff members from the company’s data center. A few members of the group were arrested and an over RMB 110 million [approximately US$15 million] investment fund had been suspended.”

Since 2015, a number of online peer-to-peer lending platforms have been cracked down on for involvement in financial scams. During the same period, Shanxinhui’s “charitable financing service” business was taking off quickly.

Shanxinhui’s social media presence is censored by Chinese authorities

Despite quick deletion of posts about Shanxinhui’s charity work, news and photos about the massive protests and critical comments questioning the police crackdown, Shanxinhui’s supporters keep voicing out on different news threads. Below is a selection of the group’s followers’ comments:

The corrupt police put up a trap to crackdown on the excellent national corporation, it will face retribution.
黑公安钓鱼执法,打压民族优秀企业,早晚得到报应
Such a charitable platform, no one has lost money. Everyone is aided. We contribute our money to help those in need voluntarily. What have we sold out? Why keep deleting our posts about the good deeds we have done? Isn’t that we have to praise positive acts? For all the charity work that we have done, why don’t you report on them? The public security officers have committed crime on purpose and are they allowed to do that?
那么一个大爱的平台,没有一人亏钱,都是受助者,我们善家人都是自愿拿自己的钱去帮助需要帮助的人,请问传什么了,销什么了? 为什么要不停的删除我们做的好人好事,做好事不是要受到表扬吗!做了那么多好事,你们为什么不报道?试问公安知法犯法也是对的吗
I am an university student and I am speaking for justice. Why has the public security police deleted posts about all the charity work and yesterday’s massive protest incident? All the posts about the group’s donation have been deleted, petitions have been stopped, and protesters have been beaten. If people were guilty, can’t you openly, fairly and publicly present the case? Some powerful people are behind the crackdown.
我是大学生,为正义说话!公安为啥删除人家做的好事,封杀所有昨天的10万人上坊事件!捐款事情全被削毁,阻止上坊!殴打天明,如果人家有罪,可以公平公开公正申吗?用脑子想就知道有权有势的人在操纵!!

On the other hand, supporters of the police action criticized members of Shanxinhui for having been “brainwashed” by the group. Some even labelled the group as a religious cult similar to Falun Gong, which has been outlawed by the communist party since in 1999. Below are a selection of pro-government comments:

Ponzi scheme style marketing is damaging. Don’t be seduced by high interest rate.
传销危害巨大,应当提高防范意识不要被高利所诱惑。
Ponzi scheme company’s online navy are low in quality and IQ. With such low IQ how can you turn black into white?
贵传销公司的水军,也真是没素质而且不带智商,像你们这种智商还指望能把黑的说成白的咯!
Don’t argue anymore, they have been brainwashed and you can’t save them. Their chief has been arrested and they have lost money, of course they feel that the government has wronged them and unjustly arrested people. Their path to fortune has been destroyed.
别说了,他们都让洗脑了。救不了他们了。老大也让抓了,钱打水漂他们也觉得是政府不懂他们,不公正瞎抓人。害了他们的财路。
SXH is more threatening that Falun gong. The young generation does not believe in FLG, but there are so many young people in SXH. They don’t work hard and just dream about making a fortune. The flowers of motherland have fallen to the scum of the society. They don’t work and are not creative. How can the society move on without a work ethic? Ponzi scheme style marketing is an evil cult that destroys the country and the people – this is the best description of SXH. People demand that such evil entities should be punished.
这个SXH比F轮功更可怕!至少当年年轻一代不信F轮功,这个SXH里面有很多年轻人,好吃赖做,天天梦想发大财!长期以往,祖国的花朵和未来就要堕落成社会余渣,不去劳动,没有丝毫创造力,没有劳动价值贡献,社会还有前进的动力吗?传销邪JIAO祸国殃民,8个字是对SXH最恰当不过的定位!不严惩人民不答应!

For those who neither stand-by Shanxinhui nor the authorities, they were critical of how the incident was handled. A netizen commented on Weibo:

Hearsay, Shanxinhui has more than 5 million members. Why hasn’t the police stopped them from expanding in the first place. How many family have been ruined [because of the crackdown]? Why does justice come so late? This company has been registered under Administration of Industry and Commerce. It started its scheme more than two years ago and the government just took notice? Now so many people have been cheated, the government said: the law would not protect a Ponzi scheme. When we needed protection, where was law enforcement. I feel pain for my country.
据说500多万会员,警察早干什么去了,这得多少家庭家破人亡,为什么总是迟到的正义,在这个破公司成立之除,工商部门哪儿去了,忽悠欺骗2年多,政府哪儿去了,现在那么多人被骗那么多钱,政府一句,传销损失不受法律保护,我们需要保护的时候,你们这些人法律卫士又在哪儿?心痛我的国家。

Outside the great firewall, Twitter user @lichengyi pointed out that the the appropriation of patriotism for personal gain has become a rather commonly seen phenomenon in China:

“Shanxinhui has development into massive protests at Dahongmen in Beijing. No one could imagine that the leader of the Ponzi scheme cheated money in the name of “charity”, “party”, “state” and “people” and all the politically correct rhetoric. For me, those who keep saying that they love the country or those who change the national flag into their leader’s portrait are most likely evil people whose version of patriotism is shortsighted and twisted. The failure of our patriotic education is that we have not taught people how to love the country genuinely.”

This article originally appeared on Global Voices.

Comments

The rise and fall of a ‘patriotic investment charity’ in China