Report: Bank Runs Have Spread To China’s Industrial And Construction-Heavy City Of Wuyishan

A Chinese Bank Run? (ZeroHedge, June 1, 2012):

The balance sheet recession that seems to have correctly diagnosed the problem facing Japan (and now Europe and the US)  – explicitly causing debt minimzation as opposed to profit maximization – seems to be taking hold. However, it appears this death-knell for credit-created growth is now being seen in China – as AlsoSprachAnalyst interprets “people are not borrowing, but selling assets to pay down debts, and/or holding cash“. What is most worrisome is that while the focus of the world has been on European bank runs (for fear of bank failure and redenomination risk), 21st Century Business Herald now notes that these bank runs have spread to China’s industrial and construction-heavy city of Wuyishan. Queues were seen on various branches of China Construction Bank, Agricultural Bank of China, and Industrial and Commercial Bank of China.

more from AlsoSprachAnalyst:

The reason which triggered the bank run was that there was a company that has just gone bust, with the founder and other executives ran away, brining probably RMB1 billion or more away with them.  The company in question looks like a Ponzi scheme.  It has set up an online shopping site which, on top of selling stuff, asks people to sign up and pay a certain among of money (e.g. RMB1,600), then the company will pay people back at a rate of RMB20 a day (a fee of 5% out of this RMB20 is deducted).  It sounds like a pretty good deal for the members, as far as it is working.  Based on the bank statement of the members obtained by 21st Century Business Herald, the company did pay back quite a fair amount, but, of course, the company has sucked up more than it has ever had a chance to pay back.

As the company went bust and the boss disappeared, the members of the website who have paid quite a lot of money in hope to be paid back even more became rather angry, and went to the office of this company in Fuzhou (which is actually not at all near Wuyishan) to protest and smash things.  However, as a lot of members of the website came from Wuyishan, people are worried.  On late 30 May, there was apparently some chatter that the government is dealing with the case, and will need to freeze personal bank accounts (presumably for investigations).  As a result of this, people started queuing up at virtually all banks the next day.  One local resident told the reporter that the city “has gone crazy”.

Now the boss is arrested, charged with taking deposits from the public illegally.  But victims of the scheme are still counting, and the exact count of the victims of the scheme is not known.  What is known is that because the website was so popular all over, the victims of this scheme will not be limited to one city of Wuyishan.

and from 21st Century Business Herald (via Google Translate):


May 31, the edge of the Fuzhou West, Fauci Lake Garden north-floor six-story is a mess, the whole layer of the huge office space only a few grid, ceiling air-conditioning, including all items have been looted. about 300 square meters of space can be seen everywhere damaged ceiling and scraps of paper waste, and even the Office of the Chairman of the glass door was smashed.

“In the middle of the night on the 28th, happened here the mob looting took indoor items is a member of the full mall, an angry crowd smashed the decoration.” Fauci Lake Garden security told this reporter.

This is where many members had placed 100% of fortune dream mall stronghold. This reporter saw a full-affected member notice pasted on its door bearing the words: you full members and the victims go to Fuzhou Economic Investigation Team focus, and discuss funeral.

“Full mall claimed more than 20 million members, covering 23 provinces and cities.” Member surnamed Chen, told this reporter, “the causes of things heard the full mall owners Yao Jianqing and senior have escaped more than 10 billion Pao Lu. ”

On the evening of May 31, the reporter learned from the Fuzhou police, Yao Jianqing was the same day was five brigade of the Fuzhou Public Security Bureau of Economic Investigation Detachment from the field and arrested and brought to the suspected charges of illegal deposits from the public, within a short time the police have registered the cheated amount of tens of millions million.

Involved in this case the number and amount, is still the legend diverse. Since the filing due May 29, made a report people are doing it, has not yet specific statistics on the amount involved and the victim number.

May 28 night in Fuzhou, looting, and has rapidly spread to northern Fujian Wuyishan City.

The Wuyishan banks a run

Hundred percent rebate comes from Fuzhou mall collapse event, but soon make waves in Wuyishan City, 356 kilometers away.

“In the evening of May 30, there are rumors that the relevant state departments to rectify rebate network, it may freeze the personal bank account.” Number of Wuyishan local residents confirmed to this reporter, “so people flocked to the bank teller, 31 withdrawals crowd formed the climax, are overcrowded urban areas, Construction Bank, Agricultural Bank of China, ICBC even Wuyi University, backdoor teller machines. “

“Wuyishan public Ma told the reporter, the evening of May 31, downstairs are loud call notification queue to take money out noise, thunder kept the motorcycle on the streets,” Wuyishan crazy, “she said, her husband is 100% rebate mall members.

“Rebate network the country’s most active areas of Wuyishan.” A local source revealed to him every day to listen to friends and colleagues talk about rebate network, earn money to buy a car also. March to April this year, most people throw money to rebate network, buy tens of thousands of people, or even hundreds of thousands of millions to buy. ”

Many local people said hundred percent rebate mall development in the Wuyi mountains of many shops and became an “investment” for quick profits, and slowly evolved over time and some people operating mode, to attract more to the more ordinary citizens to join.

The reporter learned from multiple sources, Following the Wuyishan whole city crazy, Jian’ou, Shaowu, Shunchang, Pucheng counties belong to northern Fujian, a variety of names, “Money begets money” rebate “riches” game the same hot.

But because of a sudden the same thing, and increasing number of withdrawals and report the number of people involved and the amount of these places is also not specific statistics.

“Money begets money” riches game

In, Fauci Lake Garden looting has been the passage of time, but until the afternoon of May 31, not when someone thirty-five together to come here to find out the full rebate mall situation.

While in front of a piece of paper “announcement”, said the arrears of rent, the landlord has the right to use recovery.

Property of the building told reporters the full rebate Mall to move into here at the end of the original tenants of the housing Yao Yuan, Fujian Jianou.

The reporter learned that operate 100% rebate Mall enterprise Fuzhou Yi Health Science and Technology Development Co., Ltd. (hereinafter referred to Yi Johnson).

Trade and Industry data show that Yi Health was founded on December 23, 2011, 10 million yuan of registered capital, is the software industry, business scope is very heterogeneous, including daily necessities, building materials, dozens of industries. The legal representative of the company for the original Yao Jianqing, March 31 and May 24 this year has changed to Feng tour wang, Weiping. The shareholders have also gone through two changes the Yao Jianqing, how to spend months changed to swim Wang, Feng, Fan Baoyu, and then change Weiping Gao and Ke Qimin.

The reporters found that the friendship born on December 25 last year, the Company changed to its present name by the the Jian’ou full E-Commerce Co., Ltd. “, founder of Yao Jianqing Department of Fujian Jian’ou, aged 39.

May 7 to 8, Yi Johnson was held in Fuzhou West Lake Hotel a national dealer meeting, a member of more than 500 from all 23 provinces and cities, agents, distributors attended the meeting. A percentage rebate mall dealers said.

According to its disclosure, in the so-called National Dealer Meeting

Publicity, only the 8th to the 14th week of May, Yi Johnson absorption member of several hundred million of funds. The same month on the 14th, the old site of the “100 per cent rebate of friendship Johnson Close, 18, named the” 100 per cent Mall new website, suction gold numerous two-day promotional activities.

The reporter learned from more than members mouth, Yao Jianqing began in May 2011 through the network of shopping malls full, to receive a 5% fee the way development agents and franchisees, and to absorb the member funds, commitment to 100 days back to this, net profit in 400 days of high returns, “Money begets money” profit mode.

The Fujian rebates network collapse scam involving 23 provinces and cities

The initial approach, Member Shopping 1 million in the franchisee, to pay 1600 yuan Yi Johnson, Yi & Johnson $ 20 per day rebate to members, for a total rebate of 500 days. With a membership of more and more, later converted to 1600 dollars you can get $ 20 per day rebate paid directly to the friendship Johnson, Yi Johnson received from members daily 20 yuan rebates 5% fee.

Yi Health want only take the model of development of the regional agency “offline” to grow the membership team. “Agents of the initial fee is $ 10,000, and promotional activities during the price is 5000 yuan, Fujian Province, one agent said. According to the odd members, full mall agents to join more than 6000 in the country.

The reporter May 31 the bank bills and customer information display, Yi Johnson call the members of the rebate a few hundred to several thousand dollars, the amount of remittance Join majority for a few thousand to several million .

More involved in the amount of Fuzhou, Fuqing City, under the jurisdiction of, a few people together tens of millions of dollars. “A member said,” after the outbreak of the fuse is also a few people be informed of the change of friendship born shareholders. force new legal representative Weiping return of investment funds, resulting in the collapse of 100% rebate Mall. “

Not good, not good at all.

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