The Paper, 8/07/17
Chinese internet and mobile services firm Tencent's (0700.HK) WeChat mobile messaging app has blocked an official account run by Gejia Network Technology, after accusations that the official account was selling products under a pyramid scheme. The account, called Global Scanner and operated by Gege Jia subsidiary Zhipin Culture, said that the problem was due to third-party marketers.
Zhipin Culture had its assets frozen by court order in Jingzhou, Hubei province for engaging in pyramid sales scheme earlier this year.
The cause of the controversy is Global Scanner's marketing model, which was mostly based on spokespersons. Marketers who purchased a certain value of snacks on Global Scanner would receive an exclusive QR code, which could be used to attract new users. Successful sales earn these users and the spokesperson who recruited them substantial bonuses. Users also had to pay an RMB 299 technical services fee to participate in the multilevel marketing scheme.
Editor's Note: For more information on this topic, please see "Foodstuffs Cross-border M-commerce App 'Gege Jia' Lands Series A," MD 3/03/16 issue.