Direct-marketing 'cult' draws fire

Public security authorities have intensified a crackdown on direct marketing, with officials describing it for the first time as an "economic cult."

South China Morning Post/November 11, 2001

The increased campaign was ordered out of concern that such marketing schemes involved "secretive" and "cohesive" organisations, and could be used to finance political activists or criminals, the People's Daily said.

"This is not only an economic problem, but also a political one," the party mouthpiece quoted an unnamed "leader-ranking official with the State Council" as saying. "We should not under-estimate the matter and a severe crackdown is necessary."

Using a phrase usually used to refer to political dissent, the paper said direct marketing operations - including pyramid schemes - should be "nipped in the bud."

The latest alert came as the State Council revealed that many direct-marketing schemes could be utilised to finance outlawed spiritual groups, such as the Falun Gong, underground political bodies, or triad societies, the People's Daily said.

"These schemes have manipulated victims through the mind-control method of brainwashing," the official said.

The report said people recruited into the schemes had been separated from their families and brainwashed about the schemes' merits.

Direct marketing and pyramid sales schemes have been banned on the mainland since 1998, but public security officials have received more than 500 complaints since then about such organisations in Guangdong, Guangxi, Shanxi and Hainan provinces.

In August, mainland newspapers reported that the manager of a Guangzhou-based Internet marketing company disappeared after the firm went bankrupt and failed to pay its 200,000 "sales people" an unspecified amount in "commissions."

The Ministry of Public Security later warned of the threat of direct marketing schemes and launched a massive investigation.

Analysts said the stepped-up campaign was linked to the September 11 attacks in the United States, saying Beijing wanted to eliminate all possible sources of funding for terrorists.

China has branded Falun Gong - which was banned in July 1999 - "an evil cult with a terrorist nature", an accusation vigorously rejected by the group.