Call the police! More than 200 sellers were defrauded of 10 million yuan, and a Shenzhen agency operation company went bankrupt

Last Saturday, 51 sellers gathered at Zhan Tao Building in Longhua District, Shenzhen, and held up a banner that read "We want to eat! We want to live! Zhongda, give us back our money!" Afterwards, these sellers collectively went to Longhua Minzhi Police Station to report the case. Currently, the number of people who have reported the case has reached more than 50 , and I am one of them.

Starting last year, hundreds of sellers were invited to participate in the "Newegg Investment Promotion Conference/Product Selection Conference". "Official staff" recommended the agency operation incubation project to the sellers and promised a proportional refund if the sales volume did not reach US$50,000 in a year. Many sellers paid 39,000, 49,000 or 59,000 yuan on the spot.

When signing the contract, many sellers found out that the second party of the incubation agreement was not Newegg, but Shenzhen Zhongda Information Technology Co., Ltd. More than 200 sellers signed contracts with Zhongda, but by the end of the agreement, most of these stores had no sales or only sold a few hundred dollars.

But the sellers could not get the refund promised in the agreement. Now all the employees of Zhongda have resigned, except for the legal representative Zhao Guangxin, who said the company was poorly managed and suffered heavy losses.

According to statistics, the unrefunded service fees of Zhongda are as high as more than 10 million yuan. In addition, there are more hidden stories behind Zhongda's agency entry. The operation deceived many experienced business owners, and the actual situation is shocking.

More than 200 sellers were deceived by a call from the "investment manager"

Last December, a person claiming to be the "Newegg Investment Manager" contacted my boss Wang Xian and invited him to attend the "Opening Cross-border Stores and Taking Root in North America - Newegg Technology Category Investment Promotion Conference".

(Communication record)

The boss was invited to attend the meeting. At the meeting, the "President of Newegg China" explained the investment categories and said that there were nine categories, including computers and accessories, computer peripherals, etc., and each category could have a maximum of three companies. (In fact, the limit of three companies was completely false. As long as you pay the money, there is no limit on the number of companies.)

( “President” explained at the meeting)

The "CEO" introduced the agency operation project to the sellers and promised to refund the fees in proportion if the agreed sales volume was not reached. Many sellers paid on the spot, including my boss. Maybe she did explain it well, so many people paid at that time. But many people paid based on their trust in a large platform like Newegg.

In addition to promising sales and partial refunds if sales are not reached, the investment fair also emphasized that "only a few places are available" and forced sellers to place orders on the spot. Many sellers paid the fees on the spot with their credit cards, and some even maxed out their credit cards. Another seller, Chen An, was also depressed when he recalled: "We were all so fascinated."

Not everyone is willing to pay on the spot. One seller complained: "My teammates were brainwashed by their investment promotion conference, saying that they would refund if there was no sales. At that time, we were asked to pay 49,000 yuan. I was only willing to pay 10,000 yuan, but they refused. They held my teammates in the office for tea and would not let me leave. I paid 29,000 yuan first, and they felt cheated after operating for a month."

Another seller also said that he was "stopped and not allowed to leave". After swiping his card, he wanted a refund, but the other party said that he could only refund 7,000 to 8,000 yuan. For those merchants who did not pay on the spot, those who claimed to be Newegg managers kept following up until the merchants paid.

The seller who suffered the least loss only paid 3,000 yuan. He said: "After the review was completed that day, they urged me to pay. I said I didn't have that much money. Besides, this should be for public use. I refused to pay. They asked me how much I had. I had to pay the quota first. How much was the total amount of Alipay, WeChat, and credit card? I was very disgusted at the time. In a word, it was too greedy. I paid 3,000 yuan first. I didn't sleep all night after I went back. I started to check their company. I saw negative news and decisively refused. The next day, they kept asking me to pay the remaining amount. I ignored them. They also wanted to come to my company, but I decisively refused."

But most people are not so lucky. In October, November, December 2020 and January 2021, many sellers received invitations here, and then participated in the Newegg investment promotion meeting and paid on site.

After paying the fees and signing the contract, most people discovered that the agency operation project was not operated by Newegg, but by Shenzhen Zhongda Information Technology Co., Ltd. or Shenzhen Feijing Network Technology Co., Ltd. (hereinafter referred to as "Zhongda" and "Feijing") . These two companies are the same legal person.

One seller said: "We only found out when we signed the contract because the seal he stamped was Feijing, not Newegg. A few months later, the other party's operation sent a weekly report, and the company name under it was Zhongda. That's when I learned about Zhongda."

As far as we know, a total of more than 200 sellers have signed "Newegg Store Operation Incubation Agreement" with Zhongda/Feijing, and most of the payments range from 49,000 to 59,000 yuan.

( Incubation Agreement )

According to the agreement, the contract is valid for 1 year. During this period, the rights and obligations of Party B (Zhongda) are as follows:

1. Party B shall provide Party A with services such as store opening and settlement on the Newegg platform, store operation, English customer service, event submission, and overseas warehouse docking.

2. By entering the Newegg platform through Party B, you are exempt from the entry fee and deposit, and enjoy the 6-month free storage fee benefit of Newegg overseas warehouse.

3. Party B arranges professional personnel to provide services to Party A. Within 2 working days after Party A pays the service fee, Party B’s service personnel will join the group (1 store opening specialist, 1 business service specialist, and 1 cross-border operation specialist).

4. Party B shall provide Party A with the contents of the Service Description of this contract . Party B promises to achieve a minimum sales volume of USD 50,000 within one year from the date of product launch . If the annual sales volume is not reached, the corresponding basic service fee shall be refunded in proportion to the amount not achieved.

5. Party B assists Party A in carrying out activities in accordance with the requirements of the platform...

In addition to service fees, Zhongda can also get 8% commission on store sales. But when the contract expired, many sellers only had sales of a few hundred dollars, or even zero, and Zhongda did not refund as promised because the company had no money, and the sellers reported the case one after another.

Most sellers reported that Zhongda did very little work during the agency operation period and the content of the agreement was just empty talk.

A seller, Mr. Ling, said in the report that he registered an account and prepared to sell, but the sales were not started until three months after the contract was signed. He did not hold any of the promised dozen of activities a year, and sold two orders during that period, totaling less than $200. Later, the operator said that our product category was not good and asked us to choose other popular ones. I felt cheated and did not choose again. Later, the operator was ready to sign us up to open other platforms, such as Amazon, Wish and other e-commerce websites for simultaneous sales. We no longer believed them and did not continue to be deceived.

The seller, Zhang Tong, said that his company sells adult products. Before signing the contract, he confirmed with Zhongda staff whether the products could be put on the shelves for normal sales . The other party guaranteed that the products could be put on the shelves and promised a sales volume of 50,000 US dollars. If the sales volume was not reached, a refund would be given. However, after registering an account, Zhang Tong found that the products could not be put on the shelves and asked for a refund of 49,000 yuan in service fees. Zhongda said that the contract had not expired. After the contract expired, he contacted Zhongda again, but the other party still refused to refund the money on the grounds that they had no money.

"The legal representative asked me to sue Zhongda in court, recover the service fee from the public account, or continue to sign other service contracts. But the service fee was transferred from a private account, not to their public account."

In October, some of the sellers received a notice of dissolution from Zhongda, and the investment managers who had previously contacted us resigned one after another. WeChat messages received no responses or were blocked directly, and even the phone number could not be dialed. All employees were gone, and only this legal person was in the company. He said, "I am basically bankrupt now, you can do whatever you want."

On October 23, last Saturday, I went to the Zhan Tao Building, where Zhongda Company is located, to attend a rights protection meeting on behalf of my boss. Many merchants were not in Shenzhen, but came from Foshan, Jiangmen, Guangzhou, Zhuhai, and even farther away. Everyone held up banners, hoping to get back their hard-earned money.

(Rights protection scene)

According to statistics from a seller who is responsible for organizing the rights protection, 51 sellers have reported the case so far , and many of them have provided police report receipts. They will be prosecuted for criminal fraud next.

Losing money is depressing, but it is more embarrassing. A seller said: "I don't even want to recall the credit card swiping scene at that time. I feel very insulted. I was fooled by such a low-level scam. I swiped the card on the spot and signed the contract after swiping the card. I felt something was wrong at the time. Because of the impact of the epidemic, I also wanted to find a way out. Amazon was very popular at the time, and I felt that the competition was fierce, so I chose Newegg. It just so happened that the products were also mid-to-high-end..."

Investment suspicion: The "President" is fake, and the investment company took nearly 70% of the service fee

During the recruitment process, most sellers thought that it was Newegg that was recruiting. Until now, many people still leave the note "Newegg***" to the relevant contact personnel. Some even still think that the agency operation project is operated by Newegg. In fact, the agency operation project is operated by Zhongda, and the recruitment for sellers is conducted by the recruitment company that cooperates with Zhongda.

Now that Zhongda has collapsed, sellers have discovered that there are many suspicious points in the investment promotion meeting.

1. The so-called "President of Newegg China" is fake

After failing to get a refund, the sellers set up a rights protection group. Some people reported that the speaker at the investment promotion meeting claimed to be the "CEO of Newegg" and the Newegg platform logo and slogan were used in many obvious places in the PPT. However, this "CEO" was fake and his real identity was a lecturer hired by the investment promotion company. The legal representative of Zhongda Company later admitted this.

2. The investment company takes about 67% of the agency operation service fee

We learned that about 67% of the agency service fees paid by the public went into the pocket of the investment company. For example, the seller paid 49,000 yuan in service fees, of which 33,000 yuan went to the investment company. We are very confused about this. Zhongda is the agency operator. It is obviously unreasonable for Zhongda to spend so much on advertising. What is the relationship between Zhongda and the investment company?

At present, we have summarized four companies that are recruiting investors on behalf of Zhongda. A few days ago, Zhang Tong went to two of them to check the situation, but both companies were closed and empty.

(A closed investment promotion company)

In this incident, sellers also had doubts about the relationship between Zhongda and Newegg. Until now, some people still believe that the agency operation project is operated by Newegg because "Newegg is written on the cover of the contract and the Newegg service fee is also written on the receipt."

What is the relationship between Jones Day and Newegg?

Previously, at the investment promotion conference, many sellers heard Zhongda claim that it was the only service provider and agent of Newegg China in mainland China. Chen An was one of them. "If this is not the only way to open a store, I will not need him to operate it on my behalf. We have our own operation team."

In the process of communicating with the seller later, Zhongda employees also emphasized this point, and the authorization certificate of Newegg and the news that Newegg executives visited Zhongda were constantly pushed. Now, Zhongda’s official website still has the news that "Newegg Group of the United States visited Shenzhen Zhongda Information Technology Co., Ltd. for guidance and in-depth cooperation communication", the release time is 2020-12-11, and the inspection was on June 19, 2020:

"On June 19, 2020, after the press conference of the 3rd Global Cross-border E-commerce Festival 2020 was successfully held, Chen Gang, Executive Vice President of Newegg China and General Manager of Newegg Trading (Shanghai) Co., Ltd., came to Shenzhen Zhongda the next day to conduct personal inspections and guidance, and jointly discussed vigorously promoting cross-border retail business, promoting traditional foreign trade to overcome difficulties, and vigorously supporting Chinese domestic merchants to enter Newegg through the Newegg platform. Combining the advantages of Zhongda's professional operation team, using Chinese SMEs to quickly promote cross-border retail business, in order to cope with the stagnation of offline sales channels after the current epidemic, SMEs are faced with difficulties in finding orders, lack of online sales channels, and lack of understanding of operations. At the same time, integrate their own advantageous resources to better serve the majority of merchants. Zhao Guangxin, Chairman of Shenzhen Zhongda Information Technology Co., Ltd., Chen Huangchuan, General Manager, and all employees expressed a very warm welcome to the arrival of General Manager Chen Gang and other leaders."

These news undoubtedly increase the trust of sellers in Zhongda. We once reported this to Yien.com, and they asked Newegg about it. A senior manager of Newegg China replied:

" Zhongda is one of our agents in China. This company encountered problems when doing other projects, which led to problems in the company's internal operations. Regarding the deception mentioned by the seller, it was entirely this agent who deceived the seller and had nothing to do with Newegg. If the seller is deceived by the agent, he must report it and protect his rights.

At present, Newegg has also learned that suppliers were defrauded by Zhongda, and the company's legal department is urgently investigating and handling the matter. Next, Newegg will strictly screen agents and strictly require their qualifications to eliminate agents who deceive sellers. "

Regarding the public's doubts about Jones Day and Newegg China's joint efforts to defraud small and medium-sized sellers, the senior manager said that there was no joint behavior at all and it was impossible for Newegg to deceive sellers.

Cause of getting into the pit

In fact, the reason why sellers were deceived was that they wanted to expand new sales channels. Most sellers joined Newegg because of the platform halo. At first, the so-called "Newegg investment manager" introduced us a lot of information about Newegg, and there was a lot of public information about the platform:

Newegg has been deeply involved in the North American market for 20 years, providing 47 million high-end consumers with a full range of technology products including consumer electronics, games, smart home , etc. Currently, the platform has 40 million SKUs and 380 million page visitors.

In 2019, Newegg announced that it was selected for the "Top E-commerce Platform Selection" list, ranking third among e-commerce platforms in North America and tied for fifth in the global e-commerce rankings. Amazon, eBay, Tmall and JD.com ranked in the top four.

At the end of 2019, Newegg established a cross-border e-commerce team of more than 700 people in China, including business segments such as seller recruitment, e-commerce operations, marketing promotion, video sales, and cross-border logistics. In May 2021, Newegg Group successfully listed on the Nasdaq in the United States.

In 2021, in a report by iResearch, a domestic authoritative research institution, Newegg was shortlisted for the "Overview of Typical Platforms for Chinese Sellers to Export to North America" ​​list with its outstanding high customer unit price, operating model, logistics services, customer satisfaction and other indicators. By 2021, Newegg has developed into one of the largest online retailers in the technology category in North America.

Many sellers were interested in learning more about it, so they later participated in investment promotion conferences and paid fees for agency operation.

After this incident, Newegg said that sellers should choose official channels when entering the platform and be wary of fake agents that charge exorbitant fees. The platform will screen high-quality merchants, and the entry requirements include:

1. Must be a corporate seller and must provide a mainland business license or a Hong Kong BR business license;

2. No sales volume restrictions;

3. Ordinary enterprise sellers must have experience in cross-border e-commerce platforms and provide store turnover and links. Stores with good sales and high ratings will be given priority;

4. Factory merchants with no experience in cross-border e-commerce platforms are acceptable;

5. Brand owners need to provide a brand registration certificate.

Newegg is still recruiting Chinese sellers. Except for e-cigarettes and adult products, all other categories are welcome to join, and there is no charge for joining. There is no platform rent, no deposit, and no product listing fee. The transaction commission for all categories of the platform is 10%-15%.

However, in the agreement we signed with Zhongda, there is a clause that states " entering the Newegg platform through Party B is exempt from entry fees and deposits ". Zhongda is obviously fooling us.

According to a senior manager of Newegg in China, categories such as computers and accessories, computer peripherals, gaming and e-sports, mobile phones and peripherals, personal wearables, smart homes, large and small appliances, sports and outdoor, and automotive electronics have large traffic on Newegg and are the best-selling products.

In general, the platform has strength and the sellers have demand, and the other party recruits investors and promotes operation projects in the name of Newegg, so many people fall into the trap.

The characteristics of the sellers who fell into the trap this time are very obvious. Most of the sellers who signed contracts with Zhongda are traditional foreign trade companies that have just started to transform. Chen An said: "Now everyone is talking about transformation. Many traditional foreign trade companies are interested in this. Factories do not have professional e-commerce teams. Zhongda is an agent operator, so many people fell into the trap. In addition, with the help of a guaranteed sales volume, basically everyone jumped in."

Such a tortuous and brain-burning routine is rare in the cross-border circle. They are all a group of bosses. No one is willing to accept being deceived like this. We must send these people to jail and stop them from harming others.

In the past two years, the popularity of cross-border trading has continued to rise, and many foreign trade and cross-industry companies are interested in testing the waters. For several consecutive months in the middle of the year, the Amazon platform continued to fluctuate, causing many sellers to consider multi-platform layout to spread risks. Although the industry needs more potential platforms to accumulate water, it is recommended that you do your homework before trying to avoid pitfalls.

(This article is contributed by the seller in question)

Newegg