Multi-level marketing firm placed on MAS alert list
Wednesday, 24-October-2007
| Multi-level marketing firm placed on MAS alert list
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| The concern is that its business model works like a pure financial investment scheme
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| By Lorna Tan, Finance Correspondent
UNDER SCRUTINY: Sunshine adviser and spokesman James Phang, seen here in a picture taken in his office, said the company did not deal with illegal business and that it would mediate to get its name off the alert list. -- ST PHOTO: SHAHRIYA YAHAYA
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| THE authorities in Singapore and Malaysia have put out an alert on a firm operating in several Asian countries including Singapore .
The Straits Times understands that the Commercial Affairs Department is investigating the firm's practices. Based at Toa Payoh HDB Hub, home-grown Sunshine Empire, a multi-level marketing (MLM) firm, has attracted 20,000 people here since it was set up last July.
MLM firms, which are legal here, typically invite people to pay cash for the right to market goods to other people. They also get cash for recruiting other MLM marketers.
Under Sunshine's scheme, people usually put down $12,000 to become a 'merchant', as it calls users of its online shopping platform offering thousands of goods, including health supplements, lingerie and electronics goods.
After signing up, they can buy Sunshine's online goods.
But they are also rewarded with potentially hefty cash rebates, though these are not guaranteed. Merchants can build their own sales force as well.
The scheme is structured in such a way that participants are not required to use the rebates to buy Sunshine's goods.
The cash rebates are based on Sunshine's global turnover. The option of converting the rebates into cash only makes Sunshine more attractive than other MLM firms where people must maintain sales quotas.
But this is understood to be the nub of the concerns held by the authorities over Sunshine's business practices.
The fact that its 'merchants' can notch up what seem like profits without ever buying or selling products means its business model looks like a pure financial investment scheme.
Sunshine was placed on the Monetary Authority of Singapore's (MAS) investor alert list last month and that of Malaysia 's Securities Commission a few months ago. The regularly updated MAS list warns people of companies which may be offering products regulated by MAS without authority.
Sunshine denies it is doing anything wrong, but the Ministry of Trade and Industry has warned people to take care in dealing with any MLM firm.
'MLM schemes often disguise themselves as sellers of items, software and training programmes, for example, when their main interest is to make quick returns through recruitment,' a spokesman said.
'Members of the public should be vigilant of such schemes and be suspicious of get-rich-quick promises.' Sunshine also operates in Indonesia , Thailand , Hong Kong , Korea and Taiwan , and has 50,000 merchants. It plans to expand to the United States by next year.
According to its marketing brochure, Sunshine projects global monthly turnover of US$100 million ($146 million) for December.
Sunshine's adviser and spokesman, Mr James Phang, 48, told The Straits Times recently that its operations are above board.
'I won't deal with illegal business. It is a groundless allegation in Malaysia that we're an investment firm. We are mediating to get our name off the list.
'When that happens, we will start talking to the authorities here,' he said.
Sunshine is an associate of conglomerate Empire Group Alliance of which Mr Phang is a founder and international president. He does not own Sunshine which is headed by Mr Jackie Hoo, whom Mr Phang had mentored.
It holds regular recruitment sessions in English and Mandarin. One recent session, attended by The Straits Times, had nearly 100 people.
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posted by Shei at
11:19 PM
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