On December 24, 2017, Lin Ruiyang (left) and Zhang Ting attended the opening event of Tingting Secret flagship store in Taipei. Picture/IC
In the following week, Zhang Ting and his wife and the beauty brand "TST Ting Secret" they have worked hard for many years have appeared on the hot search lists of major platforms several times. The unknown secrets of this billion-dollar business empire are being revealed one after another.
According to media reports, relevant staff of the Yuhua District Market Supervision and Administration Bureau of Shijiazhuang City once said that after verification, the bureau determined that Shanghai Dalwei was suspected of pyramid schemes. Its relevant behavior began in 2013 and had three characteristics: a long span, many people involved, and large funds involved. At present, the case has entered the financial audit stage, and the amount involved and illegal income will be audited. The next step will be to punish Shanghai Dalwei based on the audit data.
Regarding the progress of the case, You Jianying, chief of the Anti-Unfair Competition Section of Yuhua District Market Supervision and Administration Bureau, Shijiazhuang City, Hebei Province, told China News Weekly on January 5: "The case occurred in Yuhua District, and many people reported it. It is still under investigation."
"Dreams are the universal currency"
Liu Ling still does not believe that "Ting Secret" is suspected of pyramid schemes. At 8 a.m. the next day after the news that Shanghai Dalwei was investigated for suspected pyramid schemes came out, she posted a picture of Tingmi products in her WeChat circle of friends with the text "A big tree attracts the wind."
Three hours later, Liu Ling posted a second post on WeChat Moments: "I have encountered many anti-fans, and we have always been fine." In order to increase her credibility, she also said: "I have followed TST through seven years of ups and downs, and it is about to enter its eighth year." According to Liu Ling's recall to China News Weekly, she only became a TST agent in the second half of 2018, and it has been no more than 4 years. The conclusive words in the circle of friends were copied and pasted directly from the agent group.
Liu Ling couldn't figure it out, how could a celebrity boss lie to people? She had just given birth to her second child and quit her job to take care of her baby at home. She saw Zhang Ting recommending her own products on a variety show, and was attracted by her promotional rhetoric. She was even more moved by Zhang Ting's lively signature of her age-defying appearance. Liu Ling immediately searched for "TST" online and purchased her first set of TST skin care products in an online store. The shop owner and Liu Ling lived in the same city, living in a second-tier coastal city. Later, the shop owner became Liu Ling's "upline" and was called the "company chairman."
Song Siwen, who came from a second-tier city in the north, joined the "organization" passively. After the Spring Festival in 2016, a friend I met while traveling began to contact Song Siwen frequently and even went to Song Siwen's city to visit her. Seeing that the other party was very enthusiastic, Song Siwen did not refuse. As soon as they met, the other party started to introduce how profitable he was by doing micro-business, and showed Song Siwen his circle of friends about eating, drinking and having fun. He also said that a young girl born in 1992 had a monthly income of more than 200,000 and had already bought a sports car.
At first, Song Siwen was not moved by these stories. It was not until this "friend" came to see her for the third time that he said, "I made 20,000 yuan in 4 months." Song Siwen was moved. At that time, her child had just entered kindergarten, and she was working as a logistics worker in a company. Her income was not high, and she was planning to start a side job to earn extra money.
Lin Ruiyang wrote in his autobiography "Lin Ruiyang Farewell to Lin Ruiyang": The users of the "TST" platform are mainly young women born in the 80s and 90s in second, third and fourth tier cities. They generally have relatively weak foundations and are eager to use the TST platform to join their own businesses and change themselves through unremitting efforts.
"Dreams are the universal currency", this sentence appears more than once in Lin Ruiyang's autobiography. Lin Ruiyang and his wife personally weaved this dream based on "beauty, wealth, and independence" for the agent, and continued to strengthen the ability to realize the "dream" through fan meetings one after another.
Liao Minshan, a mother born in the 1990s, never dreamed that she would get a ticket to the "First Year-end Ceremony of the Nation's No. 1 Micro Queen Family". At that time, she was introduced by her classmates and transformed from a user to a product agent. At her craziest time, she designed her own product leaflets and distributed them in nearby supermarkets. From colleagues around her, to her aunt's sister, and even netizens she has never met, Liao Minshan can be developed as offline. In 2016, when TST was developing at its fastest pace, Liao Minshan was able to sell 40,000 to 50,000 yuan a month. She was successfully elected as the "sales elite" of the local "group" and got a place to participate in the grand ceremony. For this, she spent a week choosing a dress and even matched it with a crown.
At events such as this, Liao Minshan and others can meet micro-business "stars" from different families. Most of them are mothers. They told on the stage how they went from living in poverty, where they could barely afford to raise their children, to "earning millions a year" and "buying a car and a house" after "meeting TST". The touching stories made them burst into tears.
A billboard in front of the TST Secret Shanghai headquarters building. Picture/IC
These inspirational stories can also be "personally" forwarded by Lin Ruiyang's "Brother Lin". Sometimes the forwarder is "TST Court Secret Micro-Business Brother Lin (Unit No. 1)", sometimes it is "TST Anti-Innovation Platform – Brother Lin (Unit No. 4)". It is reported that Lin Ruiyang has 8 mobile phones to connect users from all over the world and communicate problems at any time.
For Liao Minshan, who attended the ceremony for the first time, the most exciting thing was to take a photo with the brand founders Zhang Ting and Lin Ruiyang. There were more than 100 people lined up in front of Liao Minshan, and each person was given no more than 30 seconds to take pictures. They arranged their clothes, posed, and clicked the shutter. When it was her turn, before she could say hello to "Brother Lin," the assistant signaled "next person."
Behind Liao Minshan, there are hundreds of agents holding number plates, and the entire photo session may last for several hours. Lin Ruiyang, who was almost 60 years old at the time, sat upright and kept smiling throughout the whole process. After receiving the photo, some agents forwarded it with the caption, "Although I am a celebrity boss, I have no airs at all!" and then received a lot of envy in the comment area. Liu Ling made no secret of her envy for having met Zhang Ting "online". She has two "online" WeChat accounts, and their avatars are both taken with Zhang Ting.
Dalwe, who has no shortage of celebrity resources, has developed the corporate culture into a fan culture that is full of stickiness and market efficiency. In the spring and summer of 2018, Dalwe held three fan meetings in Shanghai, Nanjing, and Macau respectively. In addition to Zhang Ting and Lin Ruiyang, the event also invited Tao Hong, Lin Chiling, Wu Zongxian and others to stand on the stage, as well as singers such as Wu Mochou and Cao Ge to sing. Thousands of micro-business fans attended each event.
At a cruise event at the end of 2018, Lin Ruiyang played Santa Claus and interacted with fans. He also served as the "flower girl" at a collective wedding of employees. The white-haired Lin Ruiyang was ridiculed by netizens as "Grandma Zhang Ting." Sometimes he wears formal clothes and shouts emotionally: "Let my sisters stand on my shoulders to make money."
Lin Ruiyang, who is 62 years old this year, was born in Luodong Town, Yilan County, Taiwan, China. In his early years, he was known as "Taiwan's No. 1 Xiaosheng" for his starring role in the Qiong Yao drama "Yilian Youmeng". The last chapter of his autobiography writes that Lin Ruiyang devoted himself to studying the Soviet Stanislavsky acting system. Performance advocates experience and immersing himself in the emotions of the character.
At the birthday party on May 20, 2018, the birthday boy Lin Ruiyang wore a black T-shirt and jeans and entered on a motorcycle, while his wife Zhang Ting put on a youthful and energetic campus outfit. Every carefully designed detail is not only to thank fans, but also to pave the way for new product launches. There were countless mothers at the scene, holding their sleeping babies in one hand and holding their mobile phones high in the other to take selfies, recording their elegance at the "TST Secret of the Court" event, forwarding it to their WeChat Moments, and accompanying it with a new product promotional poster.
A founder-level agent introduced on his social platform that when the agent team reaches 100 people, a company can be registered. Multiple companies form a group. TST internally calls the group a family. The higher the level, the more sources of bonus compensation. Under such an incentive system, according to TST's official website, since its establishment in 2013, "TST Secret" has helped 12.46 million people find employment and mentored more than 3,300 people to establish start-up companies in the past seven years.
"The large-scale event fully utilizes the essence of Taiwan's MLM." Song Xuebao, associate professor of the Marketing Department of Tsinghua University School of Economics and Management, told China News Weekly. Organizations create strong psychological attachments to participants by creating gods. Most people who engage in MLM lack a sense of independence, and these people often prefer to own and express themselves. This need is seen by the organization and met in a timely manner, which makes it easier for people to fall into the trap of MLM. A variety of high-profile activities satisfy the participants' sense of belonging and vanity at the same time. Everyone hugs each other to support each other, as if this has legitimacy.
However, Song Xuebao also pointed out that "the activity itself is not illegal. What violates the "Prohibition of Pyramid Selling Regulations" is the incentive mechanism of tiered remuneration."
"The identity of the founder can be hereditary"
Song Siwen looked back on his crazy four years as an agent, and it felt like he was stuck in a quagmire. The more he struggled, the deeper he fell.
Initially, she just went online and registered as a silver card member using her ID number and mobile phone number, and also bound a personal bank card. At this time, she could only buy cosmetics for her own use and could not go offline. If you spend 500 yuan that month, your personal account will receive a 75 yuan rebate on the 12th of the next month, which is equivalent to enjoying a 15% discount. There are also different consumption levels in the silver card stage. The higher the consumption, the more discounts you will enjoy.
After going online, Song Siwen sent copywriting and new product pictures to WeChat groups every day. Song Siwen followed it and forwarded it to Moments for two days. A friend who was an overseas purchasing agent suddenly found her and wanted to join TST as an agent. Song Siwen recalled that her supervisor was very excited when she heard about this incident, and immediately told Song Siwen, "You open a card for her, and she opens a card for others. You will have a son, your son will have grandchildren, and your children and grandchildren will buy things, and you will make money."
Seeing Song Siwen's excitement, the online player quickly added: "You have a silver card now, which is not high enough. You have to upgrade to a gold card to develop your offline and open cards for others." To upgrade to a gold card, you must first buy enough performance of 2,500 yuan. TST is known as "zero investment, zero stocking". Song Siwen also felt that something was wrong at the time, and went online to persuade her: "You have members below, and you have never used it yourself. Do you know what the product looks like? Just look at the pictures and have no experience of using it. How can you share it with others? If you don't use it yourself, just post it on WeChat, which has no soul." This set of rhetoric made Song Siwen confused and spent more than 2,600 yuan, and successfully upgraded.
(TST official information) TST Court Secret 2020 blue card (left) and red card member bonus system.
At that time, it was the outbreak period of micro-business. Public data shows that in mid-2015, WeChat's monthly active users exceeded the 500 million mark, and the number of payment users reached about 400 million. Everyone has several WeChat business friends in WeChat, and "traffic fission" can occur at any time. In 2016, the number of jobs created by micro-business exceeded 20 million, and the revenue exceeded 500 billion. Under such a background, Song Siwen's development speed also accelerated. From 0 to 200, it only took three or four months, and soon grew to 500 people.
At that time, the "gold and silver card" bonus system was soon replaced by the "red and blue card" system, but the rules were basically the same. The gold card in the past corresponds to the current red card. The red card stage is divided into 7 levels. The higher the sales performance, the higher the level, and the more rebate points for personal sales bonuses. In addition to personal sales bonuses, the salary of red card members also includes "agent wholesale and retail difference" and "self-media promotion award". The so-called "agent wholesale and retail difference" means that a certain proportion of the total performance of the downline is fed back to the red card members. And if you want to get the "We-Media Promotion Award", both individual performance and team performance must meet certain requirements.
Song Siwen did the math and sold the products to friends at a discount. Plus monthly rebates, it was just enough to cover the cost and make almost no money. The upline told Song Siwen, "If you have 100 downlines, you can establish a company. After establishing the company, there will be a team management award. Your descendants will be endless generations, all related to you." The upline also said: "You have enough people now, but the performance is not enough. You must make at least 100,000 yuan per month and meet the standards for three consecutive months before you can establish a company."
The total amount of 300,000 yuan almost made Song Siwen sober. At that time, she tried her best to pull down the line. Her monthly sales were only more than 20,000 yuan, and she wanted to reach 100,000 yuan, unless she stocked up on goods. The upline advised her: "By the time your three-month assessment period expires, the number of downlines will have already exceeded 1,000. Each person will buy a few hundred yuan on average, and 300,000 yuan will be enough to repay the investment in a month." The upline also said, "The founder's identity can be hereditary. When you quit, it can be passed on to your children."
Later, Song Siwen began to borrow money to stock up on goods, overdrafted Huabei, Jianbei, and credit cards, and asked classmates to borrow money. In order not to lose money, I kept stocking up while frantically pulling down the line. "At that time, my tactics for attracting people were the same as those for my online development. My classmates and friends would avoid me when they saw me. I couldn't sleep well at night, and I was thinking about how to add others on WeChat every day." Song Siwen told China News Weekly.
Three months later, it was not easy for Song Siwen, who successfully registered the company and became the "founder". Once her performance is not up to standard, she will not get paid. Song Siwen recalled that the low-cost standard for "founders" dropped from 8,000 yuan to 6,000 yuan, and finally to 4,000 yuan. She later understood that the company was established to help Shanghai Dalwei avoid taxes – "rebates" became "public-to-public business transactions" rather than "payment of wages."
During this period, Song Siwen's "brainwashing" by the boss could be described as both kindness and power: on the one hand, he constantly created anxiety, saying every day that "women are not independent and have no value, and your children will look down on you when they grow up"; or they ranked in the WeChat group to stimulate agents to strive for performance. Only the top-ranked people have the opportunity to participate in the event and meet Sister Ting and Brother Lin; wages are paid on the 12th and 15th of every month, and various agent groups start to explode. Some people post performance screenshots to prove that they earn tens of thousands a month, and some people say that they have bought a house and a car.
On the other hand, the online presence is constant to appease people. From the end of 2018 to the beginning of 2019, news about TST's upcoming listing emerged one after another. Sometimes it was said that it would be listed on the A-share market, and sometimes it was said that it would be listed in Hong Kong. At that time, Dalwei also made a shareholder poster for Song Siwen. She stood behind her eldest brother and Sister Ting. The poster read "Sharing 800 million shares with several big-name chairman" in two lines of characters.
The news that "Dalway may be listed" is not groundless. In November 2017, Shanghai Dalwei planned to sell 51% of the equity of its subsidiary giant Yiwang to the listed company Shandong Huapeng for a price of no more than 650 million yuan. But the deal ended up being terminated a week later. Shandong Huapeng stated in the termination announcement that "there are overlapping and intersecting assets between Dalwei and Jujuyi.com, making it difficult to effectively distinguish, and Jujuyi.com's business is heavily dependent on Dalwei."
“The No. 1 Micro-Business Brand” and “Micro-Business Godmother”
According to the National Enterprise Credit Information Publicity System, Shanghai Dalwei was established on June 6, 2013, with a registered capital of 231.8 million yuan. It belongs to the wholesale industry and is engaged in the import and export of goods and technology. Its business scope covers cosmetics, knitted textiles, daily necessities, etc. The legal representative of the company is Lin Jirong (former name of Lin Ruiyang). Lin Jirong also serves as the director and general manager of Dalwei. The chairman of the company is Zhang Shuqin (former name of Zhang Ting).
In terms of equity structure, according to Tianyancha, Shanghai Dalwei has 9 legal person shareholders and 3 natural person shareholders, including the well-known actor Tao Hong, who ultimately benefited from 6.64% of the shares. According to the official information of "TST Court Secret", the celebrity "shareholders" of Dalwei Company also include singer Cao Ge and Cao's wife Wu Suling.
In July 2021, "Shanghai Tao Buting Culture Media Co., Ltd." founded by Zhang Ting and his wife was renamed "Tao Buting Culture Media". The original shareholder Tao Hong no longer holds shares as a natural person, and this part of the shares accounted for 1.8911%.
According to Tianyancha, Zhang Shuqin works for 90 companies. Among them, 77 companies have Zhang Shuqin as legal person, all located in Shanghai. Lin Jirong worked for 69 companies. Up to now, Zhang Ting and Lin Ruiyang have been "associated" with 11 companies, including Shanghai Dalwei. In addition, Shanghai Dalwei has made a total of 28 foreign investments, of which 25 investment companies have Lin Jirong as the legal person, involving e-commerce, advertising, business consulting, real estate development, life technology and other fields.
Official information from Shanghai Dalwei shows that "TST Secret" was founded in 1996 by Lin Ruiyang, and its predecessor was the Taiwanese brand LA FEE. That year, 26-year-old Zhang Ting had already become famous for starring in "Joke Qianlong", while 36-year-old Lin Ruiyang was experiencing the "seven-year itch" from his previous marriage. Not long after, Zhang Ting moved to the mainland, where his role as "Little Maruko" in the TV series "Love Through Time" was loved by the audience. Lin Ruiyang also started a real estate business in the mainland during that time. In 2006, the two returned to Taiwan to get married.
According to media reports, Lin Ruiyang’s real estate brokerage company suffered from poor performance from 2011 to 2013. Zhang Ting once revealed in a well-known talk show that Lin Ruiyang was a very ambitious person. He was obsessed with stock trading and once lost all his money. He never gave up and spent all his savings to support Lin Ruiyang.
After 2014, Zhang Ting’s stage also moved from film and television dramas to micro-business platforms. As live broadcasts became increasingly popular, Zhang Ting and Lin Ruiyang started operating TST live broadcast business again. While many celebrities were still unwilling to condescend to enter the live broadcast room, Zhang Ting had already completed his first show with goods on June 10, 2020. His very down-to-earth style was very popular among consumers, and the first broadcast completed sales of 256 million yuan.
The WeChat public account "Green Qingpu" of the Shanghai Qingpu District Government Information Office released the list of Qingpu's "Top 100" outstanding enterprises in 2018 in early 2019. Shanghai Dalwei ranked first, followed by STO Express, Yunda Freight, and Shanghai Jahwa. Zhang Ting and his wife once announced that Dalwei’s total tax payment in 2018 was as high as NT$9.6 billion, which is approximately 2.1 billion yuan. The titles of Dalwei’s “No. 1 Micro-Business Brand” and Zhang Ting’s “Micro-Business Godmother” have since spread.
After the micro-business scandal
At the beginning of 2021, Song Siwen accidentally learned from several former TST employees that the "Brother Lin" WeChat he added with great excitement earlier was actually not Lin himself, but his assistant had been managing it. This moderate blow made Song Siwen, who believed deeply in "eldest brother and sister Ting", begin to reflect, and issues that she had previously ignored began to emerge from her mind.
As the details of the alleged pyramid scheme of "TST Court Secrets" were gradually revealed, some netizens questioned: Why has no one noticed it from 2013 to now? Song Siwen told "China News Weekly" that most of the early participants were "beneficiaries" and would not betray the company. A large number of later participants did not invest much money, and many of them have not yet awakened. Agents like her who usually join in the mid-term can only continue to deceive themselves and others in order not to lose money.
Zhou Yang, director lawyer of Tianjin Chengli Law Firm, told China News Weekly that according to relevant regulations, if the purpose is to defraud others of their property, and it has the characteristics of soliciting people, forming a hierarchy of three or more, and the company's profit model is soliciting people to pay fees rather than sales profits, it can basically be judged It is suspected of pyramid schemes, and the difficulty in investigating micro-business related rumors is that it is difficult to fix the number of people, scale, and levels of online sales platforms. If the case handling agency wants to fix the evidence, it must freeze the backend data and then hand it over to the physical evidence laboratory and other departments for organized recovery of the backend data. The process is very complicated.
An agent who has been with TST for seven years revealed to China News Weekly: "Sister Ting and Big Brother" have been adjusting the team's compensation model since 2017, from multi-level to "secondary", and from gold and silver cards to red and blue cards, just to avoid pyramid schemes.
"This company has done a lot of evasive actions. Although there is no promise of rebates for pulling down the line, and it seems to be less than three levels, it is actually a pyramid-style bonus structure and incentive mechanism. Of course, whether it is a pyramid scheme in the end depends on the judicial decision." Song Xuebao said.
Wu Changhai, a law professor at China University of Political Science and Law and deputy director of the Institute of Capital Finance, believes that no matter whether the hierarchical team is three-tiered or multi-tiered, if the income of early participants is the principal of later participants, and the business model does not create more commercial value, and the product does not eventually enter the consumption stage, it is a pyramid scheme. "Judging from external manifestations and behaviors, for example, whether the product is reasonably priced and whether it can be returned, if the answer is yes, it is not a pyramid scheme."
In 2016, Wu Changhai led a research team to visit Hebei, Guangdong and other provinces, interviewing victims, regulatory authorities and multiple related companies. After half a year, he released China's first micro-MLM research report, "New Online MLM – Research on the Development, Harm and Prevention of Micro-MLM in my country." The report pointed out that at that time, “at least half of the MLMs in China were micro-MLMs.” "Micro-MLM is not a fixed concept, but a simple definition of the mainstream marketing form at that time compared with traditional MLM." Wu Changhai said.
Since the popularization of smartphones, traditional offline pyramid schemes, which feature restrictions on personal freedom and "brainwashing" in classes to attract members, have become outdated. After 2013, online MLM has become a new trend. MLM organizations use smart phones to conduct MLM through social platforms such as WeChat groups, mobile QQ groups, QQ language chat rooms, Momo, and public accounts. New features such as virtuality, cross-regionality, concealment, financiality, and more deception have emerged.
With the popularity of WeChat and the rise of micro-business, many MLM organizations seem to have seen the value of the "private traffic" gathered by this platform, and have put on the micro-business vest one after another. Cheng Xusen, a professor at the Department of Economic Information Management, School of Information, Renmin University of China, analyzed that the entry threshold for the WeChat platform is not high, the operation technology is not difficult, and it is easy to get started. Moreover, WeChat has strong social attributes, fast dissemination speed, and low customer acquisition cost, which is far better than traditional e-commerce. These all meet the needs of pyramid schemes well.
In the impression of Song Xuebao, associate professor of the Marketing Department of Tsinghua University School of Economics and Management, micro-business started in 2013, developed most rapidly in 2016, and began to decline around 2018. "MLM is definitely not the only way out for micro-business, but the decline of micro-business is inevitable, and now micro-business is in the process of differentiation." Song Xuebao said.
In the end, some micro-businesses will continue to stay on the WeChat platform to maintain user relationships, some will move to live broadcast platforms to sell goods, and some will turn into pyramid schemes in disguise.
Wu Changhai pointed out that MLM turns actual product sales into financial activities. In the end, only funds flow, but no goods flow. This is the essence of MLM. According to the existing legislation, although we can pay attention to whether MLM has external characteristics such as "paying entrance fees", "pulling people in" and "forming hierarchical teams for compensation", we cannot simply judge that "a three-layer organization is a pyramid scheme, and if it is less than three layers, it is not a pyramid scheme". Otherwise, it will only allow organizations that formally circumvent the characteristics of MLM, but actually practice MLM, to go unpunished.
At present, the legislation targeting "pyramid schemes" is still the "Regulations on the Prohibition of Pyramid Schemes" promulgated in 2005. But compared with the past, the current forms of MLM can be described as "various". Wu Changhai concluded that the current trend of MLM is combined with fashionable concepts. Whatever the state encourages the development of, MLM organizations will graft it onto themselves, from blockchain, big data, to the current hot metaverse. This is the case.
"Doing MLM is like taking opium. That group of people will never disappear. When some forms are severely cracked down, they will try to find other models. In comparison, traditional legislation has obviously fallen behind. To completely crack down on MLM, we must fundamentally improve the legislation and refine or supplement MLM standards." Wu Changhai said.
(At the request of the interviewee, Liu Ling, Song Siwen and Liao Minshan are all pseudonyms in the article)
