China’s Ponzi-Dodging Pensioners Chase High Returns, Free Lunch
- Little-known investment firms promising 10%-60% annual returns
- Fliers distributed outside supermarkets target China's seniors
Little-known private investment firms have been popping up all over China, luring pensioners’ savings by promising annual returns of more than 10 percent, and sometimes as high 60 percent, to fund cash-thirsty projects unable to get bank loans.
Distributing fliers outside supermarkets and drawing on word-of-mouth, the private firms -- part of China’s unregulated network of shadow financing-- typically lure retirees with the offer of free lunch. A recent feast of radish soup, spare ribs, red-cooked pork, fried vegetables and a yogurt cup at a downtown Beijing restaurant drew about 100 mostly elderly people to hear a passionate lecture on the importance of investing. Attendees were treated to a magic show in which a magician chopped off the hand of his assistant in a bloody flourish, a bamboo flute concert, a whirling acrobat, and lucky drawings -- as well as the promise of 12 percent annual returns to lend their money to a real estate project in Chengdu.