China Focus: New law, blacklist target bogus professional associations

For those who want to add glamour to career life, becoming a member of a professional society may help. But copycats have sniffed out an opportunity to make money through fake professional societies and credentials in China.

The Ministry of Civil Affairs (MCA) has announced its latest list of fraudulent non-government organizations (NGOs) to help the public identify scammers, and a new law adopted in late April will close a loophole for associations registered overseas.

The ministry's blacklist, published last month, identified more than 400 such groups operating on the Chinese mainland.

With official-sounding names such as "China International Calligrapher Society," "China Feng Shui Institute" or "China Luxury Association," scammers disguise themselves as respectable government-approved associations.

The unofficial societies charge fees ranging from 300 yuan (46 U.S. dollars) to over 1,000 yuan for a membership.

More than 80 percent of the societies contain "China" or "national" in their names, and some were founded or registered overseas by Chinese nationals, according to the MCA.

These societies sometimes even use the real names of government-backed associations and copy content from their official websites to appeal to members, said Ma Qingyu, an expert on social and cultural studies with the Chinese Academy of Governance.

PYRAMID SCHEMES AND EGO BOOSTS

The illegal NGOs mainly focus on cultural industries, fine arts, food and health care services, but are also spreading to emerging industries such as mobile Internet and finance.

"Unlike legal NGOs, these fake ones exist solely to extract cash from the innocent," said Ma.

The fake organizations cheat their members and businesses, negatively impacting society, said Zhan Chengfu, director of the MCA's NGO administration bureau.

Selling memberships as part of a pyramid scheme is the most common business model. A calligrapher with the surname Su told Xinhua that after paying 1,000 yuan annually in membership fees for several consecutive years, he was "elected" deputy president of the "China Painting and Calligraphy Research Society," which is on the MCA blacklist.

Some fake NGOs make money by bestowing grandiose yet worthless titles or awards to their members for a price. For example, the "China Corporate Development Promotion Association" charges 50,000 yuan for companies to become a "council member," and even more for those wanting the title of "permanent council member."

"The individual and corporate members are not always fools to fall for the copycats. Rather, they have their own commercial desires to meet," said Liu Shanying, a research fellow in political studies with the Chinese Academy of Social Sciences.

Awards such as "outstanding youth," "outstanding Chinese citizens" and "most influential figure" are a great boost to an individual member's ego and can enhance their company's image, said Liu.

One copycat even pretended to be a law enforcement department to blackmail and extort companies for "product quality problems," according to the Administration of Quality and Technology Supervision of Guangdong Province in south China.

NEW LAW TO CLOSE LOOPHOLE

According to Chinese law, setting up an NGO on the mainland requires approval and registration by civil affairs departments. If words such as "China," "national" or "All-China" appear in the name, further assessment and approval from the MCA are mandatory.

Yet there was previously no explicit regulation or law governing the registration or operation of associations registered outside the Chinese mainland, which created a major loophole, said Deng Guosheng, professor with the School of Public Policy and Management at Tsinghua University.

With new law on the books to govern overseas NGOs, that loophole is set to close.

According to the law adopted by China's top legislature on April 28, overseas NGOs must secure approval from Chinese authorities before they can set up offices and operate on the Chinese mainland.

The law, which will officially take effect on Jan. 1, 2017, will ban overseas NGOs from engaging in or sponsoring commercial and political activities.

The MCA has been making full efforts to expose fraudulent NGOs, said Zhan Chengfu. The public can visit the MCA's official website to check whether a specific association has been officially approved. Endi