Wednesday, November 14, 2007

Sunshine Empire 陽光大帝

Ok, since its raining heavily in Tampines now and I cannot get out of my house without the risk of getting wet, I shall sit down and do a little blog post of what I think of this company. Before I start off, I want to do a little disclaimer:
Below what I am about to say contains my personal viewpoint and it does not have any association in any way with Sunshine Empire Company. Readers should exercise their own judgement in believing what I have said.

If you have been reading the newspaper recently, or watching the news, Sunshine Empire should not be a term unfamiliar to you. It has been quite in the news recently over its business structure, which resembles the ponzi scheme. When I was first told about this company and how they operate, the first thought that came to my mind was: Well, looks like we got another MLM here. Although its director claim otherwise in the newspaper, but I still think they models after the MLM companies structure. Here is how they work. There are 2 kinds of plan offered by the company, which they termed it GP and SP. Of course, the higher the amount of money that you take out to invest, the higher the returns. Let us look at the most lucrative plan on offer here, which is the GP. By investing SGD$12000, you will be able to get back around SGD$1600 every month, and will continue to do so for the next seven years. In total, you will be able to claim back SGD$96000. In addition, you will also be getting roughly 2000 free minutes of talktime from their sub-company, Emcom. Sounds like a very good and tempting offer right? No, I don't agree with it, because in reality, no company on Earth will be able to sustain this kind of huge payout. Probe in deeper and you will question, so where is their money coming from? Here, I think is the crucial part. By buying their plan to invest, you will have the option to be a "merchant", a term they gave the people who are actively recruiting people to join the company and invest in their plan. Every time that you manage to recruit somebody in, you will be paid quite a substantial sum of money. So, by investing in this company, the company will in term use your money to act as payouts for the other people who has already invested in them. This will keep on continuing as long as there are people who keeps investing in the company scheme. Here, is where the normal ponzi scheme fails or crash, the most notably incident being the Swiss Cash Scheme. When people starts dwindling to a certain breakpoint and there is not enough income generated to fund all their investors, the company will declare bankrupt and leave the country, only to set up their shop in another place. Who is worse off in the end? They are the last line of investor who invest in the company. Who gains in the end? The people running the company and of course, those early birds who invest in the company and have receive all their potential payouts. Is Sunshine Empire running a ponzi scheme? No one knows for sure at this point. Singapore Monetary Authority of Singapore (MAS) and Malaysia have already blacklist this company on investor alert list, advising people to exercise caution in investing in the company's plan, and just yesterday, Singapore CAD (Commercial Affair Department) have began investigations into the company practices.

Boasting over 50000 members worldwide and a monthly turnover of USD$100 millions, the company talks about grand projects taking place in its company's recruitment talk. You can take a look at what the company is doing here. Based on these projects, the company projects an image that it has a huge amount of cash reserve and boast investors confidence in investing their money into this company as people usually think that big company will not con them and run away with their cash. Moreover, they assured the people that they will definitely get their money back because they have a sub-company in Taiwan that is generating huge amount of profits selling Internet broadband and line services. A newspaper check reveal that this source of information cannot be confirmed. A sub-company that just started and get to be awared such a big lucrative project? Something fishy is going on here. My gut instinct tells me that something doesn't seem right and more research should be done. A search on the Internet reveals that this company (Sunshine Empire) is just 1 year old and it has actively expanded its operation into 6 other countries, being Malaysia, Indonesia, Hong Kong, Thailand, Taiwan and South Korea. This I find should ring a red alert button in your head. Charging into 6 overseas market in just 1 year? I don't think that any company on this Earth will dare to do this kind of activity as the risk involved is just too great. Even Singtel Telecoms, the biggest line operator in Asia (I think), only invest into overseas market one at a time, usually not more than 2 a year. People are already casting their doubts over its expanding scheme and profits just a few years ago when it bought over one of the Indonesia telecoms and Optus Australia within a short period of time. But Sunshine Empire, 6 countries in 1 year? I just don't know what to say.

Now, about their project that is taking place. A look on their website includes grand projects that may need at least a few billion dollars in total. Where is their money coming from, as they seems not to be dealing in any other activities that could generate a huge amount of profits? Best of all, when the newspaper contacted the Malaysian authorities over Sunshine Empire's latest water theme park in Malacca, they have no idea of it, except that they did indeed receive a proposal from a company that wants to buy the parcel of land from the site!!! The application is still in the process of looking through by the relevant authorities. This again cast doubts on what the company has said and should provide people with the instinct that something is not very right here. For the grand drawings and floor plans they have provided for the people to view, I think that they could easily employ one architect to do up the relevant drawings for them. People should not be wowed by these grand drawing and simply believe everything that Sunshine Empire tells them. Up till now, all is still hear say from the Sunshine Empire as they did not provide us concrete examples of what has indeed taken place.

Just recently, Sunshine Empire's 2 directors are about to receive two awards from the EGO for being the most promising entrepreneur award, a ceremony grace by our Prime Minister Lee. I supposed that this must be quite a prestigious award, as they are able to get our Prime minister to attend the ceremony and give a talk. The members in the Sunshine Empire are all rosy about this, saying that this was good news for the companies and make them credible after reports on Sunshine Empire's business structure came out in the newspaper. I, however, poured cold water, remarking that the awards will have a high chance of cancelling since I do not believe in the company's way of operation and after all the controversy reported in the newspaper. True enough, EGO held an emergency meeting after some days and the awards awarded to their two directors are called off.

Even in media, I have heard Sunshine Empire name being mentioned before, most notably in the fund rising event 癌过有晴天. Towards the end of the show, Mark Lee says: Thank you Sunshine Empire for their generous sponsor. I was then thinking: A way to calm the public after all the controversy in the newspaper, and why was their company logo not in the programme or subtitle later? Funny, isn't it? I find there is a lot of loopholes in this company and strongly do not believe in their way of operation. However, I have no idea why there are so many people who still strongly believed in this company and continue to be charmed by them. I guess it must be the lure of money that makes people blind.

Below is a short copy of the release of the president message to their members after an article came out in Straits Times of Sunshine Empire. This is what I copied from his fourth and fifth statements:

4. It is a positive thing that the public awareness is drawn to Sunshine Empire by the ST – this is free publicity. Now everyone will want to know what is this Company? – This is the best time to sell to them that Sunshine Empire is a responsible company and that the business model works!
5. It is a positive thing that the ST did not call Sunshine Empire a scam, or say it is illegal – it merely said that the public should "take care" and that the "business model looks like a pure financial investment scheme".

When I read what the president have written, I went: Please, stop trying to twist the fact. The underlying meaning in Strait Times is clear. There is something wrong about the investment structure of the company, as no company can offer and sustain this lucrative payout for 7 years. Although Straits Times do not say it, but after reading the newspaper article analysis, I will want to think twice before doing anymore investment with the company. What does the words "take care" and "business model looks like a pure financial investment scheme" mean to any commoner? Something negative? So what positive things are there?

I also came out with a theory on my own on how Sunshine Empire might pull away scot free with its investment scheme. Since all the projects they advertise need a huge amount of cash, and they need the capital in a short period of time, in order to draw people to willingly part away with their cash, the best way is to came out with a lucrative investment scheme. Say they need $2 billion capital after factoring in all the cost and payout, how many people did they need to find? Not much, only 200,000 people. $12,000 to start investing is not an unattainable amount to most people, and for a start, Singapore has already supplied it with 20,000 members. This shows that its scheme of drawing people can work, and that is why they start tapping into overseas market to find more people. However, they know that this scheme will crash on itself in the long run (as in the ponzi scheme), thus they need to gather the money within a limited period of time, say give it a period of 3 years. What happens after the required money has been gathered? I think they will then stop offering the investment scheme and start profiting in the property developments they have built, in the mean time, continuing to payout to its investors until all the contracts have been fulfilled. In this way, it will be able to turn around from a potential scheme company into one of the world's leading company.

you may ask why am I so concern about this? Well, I know quite a few people who are in it. Though I gave my analysis and reasoning to them, they still don't believe me. What more can I say? They are adults, and they make their own judgements. We will just have to wait and see the final outcome of this saga. Is this a scheme, or a potential?

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