As a company, LongRich Bioscience has been doing and is still doing just fine. A grand product of Xu Zhiwei’s entrepreneurial mind in 1986, LongRich is not only setting the pace for other companies in the health and skincare market but it has also diversified the Real Estate, Furniture, Household cleaning, and Logistics markets.
In 2009, LongRich launched its Multi-Level-Marketing opportunity with the aim of having a large salesforce across the over 50 countries it operates. It also aims to serve as an investment opportunity for these salespersons.
In today’s global market, network marketing is a good sales strategy. For Longrich though, this is a problem. Its MLM business model, the workings of this model, and the business offerings of Longrich give it off as just a Ponzi/ Pyramid Scheme.
For one, LongRich relies heavily on affiliate and investor recruitment. For an investor to really earn much, a downline of at least three investors is needed. At a time when the skepticism of the public about MLM companies is soaring high, recruiting seems an uphill task.
Also, due to the fact that Longrich is in the relatively latter stage of its corporate existence, its momentum could be said to be waning. Early momentum is necessary if an investor is considering an MLM company. From 2009 to 2020, there must have been a lot of high ranking affiliates in the pyramid of Longrich MLM business. The structure of MLM companies ensures that new recruits work to enrich a few early adopters. As such, joining Longrich now is a bad investment choice.
Upon research, an affiliate soon finds that the percentage of sales coming from non-affiliates is very much lower than the percentages of sales from investors or affiliates. That is, LongRich products are being subscribed to mostly by its affiliates. This sales trait is cardinal to Pyramid schemes.
It is disturbing that a company that boasts decades of corporate existence does not offer an income disclosure. There is no proof that Longrich gets income from other sources apart from income generated by new affiliates. This is another feature of a Pyramid scheme.
LongRich’s website, to put it mildly, is unprofessional. It reminds an investor of those shady Pyramid schemes. One expects more from LongRich than what its website gives off.
Most importantly, LongRich’s compensation plan is complicated and presented incompletely on its website. It could be gathered though, that it runs a 12 tiered ranking system and that there are five entry levels. It also runs what could be called a “trinary compensation structure” that places an affiliate atop a level of three personally recruited affiliates. This structure could span down an infinite number of levels.
LongRich uses the trinary structure to funnel funds gotten from newly recruited affilliates upwards to existing ones. This structure is also used to shuffle funds in order to create a semblance of earnings amongst affiliates.
As could be found with other Ponzi/Pyramid schemes, LongRich decorates its business model with bonuses and incentives meant to drive sales and pressurize affiliates into recruiting other investors. On the surface, there are about 4 bonuses and 3 incentives to be enjoyed by affiliates. As an affiliate moves up the ranks, other ridiculous underlying incentives and bonuses would be gotten. A flourishing 34-year-old company could try to compensate its investors. Yet, LongRich’s idea of compensation is too unrealistic.
Some might argue that LongRich is not a Ponzi or Pyramid scheme because it does have a wide range of products its market. Technically, this is not too far away from being true. Yet, this could be said to be a very narrow definition of Ponzi/Pyramid schemes. Other factors qualify an MLM company to be a Ponzi scheme. Besides, LongRich meets most of the Ponzi scheme criteria: high and guaranteed returns, no proof of a substitute means of income, heavy reliance on affiliate recruitment, pressurized recruitment, and over-the-top incentives and bonuses.