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China closes 163 pyramid business schemes

BEIJING: China has closed 163 pyramid retail businesses since initiating a ban on the practice last year, the Legal Daily said on Thursday.

Since the State Council, or cabinet, ordered the ban in October of last year, authorities have shut down 163 pyramid retail businesses and forced 114 other enterprises to stop pyramid selling activities, the newspaper said.

Under the ban, new companies are barred from engaging in pyramid selling, and existing companies have been ordered to undergo a thorough re-examination by industrial and commercial administrations.

The ban was issued after six people were charged last year in a massive pyramid scam alleged to have cost state firms an estimated $380 million.

Pyramid selling involves the sales of goods through groups of distributors who arbitrarily raise prices across China's huge market in ever-widening networks to boost earnings.

Pyramid fundraising scams promise huge interest rates for borrowings and fees for bringing new people on board.-Reuter