Barring and unforeseen last minute entrants, 2013 will undoubtedly go down as a the year the MLM industry’s underbelly ruthlessly targeted both China and South America.

Whereas efforts by South American regulators  over the past few months have finally begun to stem the tide of thinly veiled Ponzi schemes masquerading as legitimate MLM companies, over in China, specifically Hong Kong, things have been comparatively quiet.

In the face of several Hong Kong based schemes that are increasing in both exposure and scope, Chinese citizens who feel cheated by one particular company have taken to the streets.

Digital Crown Holdings Limited (DHCL) is the parent company of Billion Venture International, a company that launched in the US earlier this year but thus far has apparently failed to gain any traction.

Both DCHL and Billion Venture National market lamps that cost well over a thousand dollars US. And by lamps, I do mean those things that provide light. Along with said lamps the company also markets other luxury tier products.

With what can only be described as the narrowest of narrow niche markets, not surprisingly DCHL and Billion Venture’s business model and compensation plans are geared towards affiliate recruitment.

Taken from the BehindMLM Billion Venture International Review published earlier this year:

Of particular concern is a complete lack of a retail storefront, with affiliates only able to enter something called an e-calculator in order to purchase product directly from the company.

All in all, this appears to be the focal point of the Billion Venture International business. You sign up as an affiliate, buy a bunch of products from the affiliate that recruited you and then go out and recruit new affiliates who buy from you.

I suspect revenue wise Billion Venture International would be generating revenue overwhelmingly sourced from affiliates.

Indeed this would appear to have been going on locally in China for thirteen years (DCHL was founded in 2000), with over a decade of luring Chinese mainland citizens to buy into DCHL in Hong Kong prompting a series of public protests against the company.

For a company that likes to sign up mainland distributors discreetly in Hong Kong to get around mainland law, Digital Crown Holdings (Hong Kong) Limited has attracted a lot of unwelcome attention lately.

Twice within a month unhappy mainlanders have marched on Hong Kong government headquarters to call for tighter laws on multilevel marketing (MLM) schemes.

The latest march followed the deployment of police armed with shields to prevent protesters entering the Causeway Bay premises of DCHL which, they claim, owes them HK$10 million. The protest continued yesterday.

Protesters allege they were told to buy hundreds of thousands of dollars worth of goods that turned out not to be resaleable and that they never received any reward through a system of bonuses.

A DCHL insider has conceded that the scheme is complex and says the company is waiting on legal advice on how to reform its marketing tactics.

With an almost racketeering feel to DCHL’s recruitment practices (see “Mr Muscle” account in the Billion Ventures International BehindMLM review), whether or not anyone would be purchasing products through DCHL becomes a real issue.

One that Hong Kong authorities up until now seem reluctant to approach or at the very least investigate.

When questioned by the South China Morning Post,

A DCHL insider conceded that the scheme is complex and says the company is waiting on legal advice on how to reform its marketing tactics. We trust it is serious about addressing grievances.

Hong Kong is proud of its reputation as a good place to do business under the rule of law. In outlawing pyramid sales, it has rightly been concerned not to affect legitimate businesses.

But it is also important that if the city is used as a base for inducing mainlanders to risk their money on get-rich-quick schemes, that laws banning dodgy business practices are not circumvented.

With Hong Kong currently home to two of the biggest names in global MLM Ponzi schemes today (Better Living Global Marketing and WCM777), perhaps after they’re done with pyramid schemes Hong Kong’s regulators can make a start on the proliferation of Ponzi schemes the city is seeing too.