The angry ant farmers, and other stories you might have missed

Global Voices has been swamped with comments this past week, and has seen a surge in traffic. What’s the issue that’s got everyone speaking out? The Israel-Palestine peace talks in Annapolis? Emergency rule in Pakistan? Britney Spears’s plan to invade Uganda?

Nope. Ants.

Ants are big business in China, where they are a popular ingredient in a variety of Chinese medicines. And some Chinese businesses are researching new health products based around ants. The Tianxi Group President, Wang Fengyou explains:

21 century is a century of life sciences, which is the general trend of the development of modern science. Exploring life sciences and letting them serve people is the goal which Yilishen Tianxi Group Is consistently pursuing. Yilishen Tianxi Group has minutely focused on ants. We aim to scientifically and reasonably examine the consumption and medicinal values of ants and to produce high-quality ant products. We provide health care products to every corner of the world and actually realize the logo of our company.

The logo of Yilishen Tianxi Group

Yilishen Tianxi group pursued their production of high-quality ant products by encouraging investors to purchase ant-farming kits from them, producing crops of ants and selling them back to the company. Others simply bought shares in the company, which promised a regular dividend on funds invested. The Yilishen Tianxi Group is rumored to have collected over 10 billion yuan (about $1.4 billion USD), primarily from small investors.

As you might have guessed, Yilishen Tianxi wasn’t able to provide timely dividends to their investors. According to press reports, their “herbal viagra” product contained the active ingredient in Viagra, making it illegal to sell in the US as a health supplement. It’s possible that the company meant to purchase ants from their ant farmers, but it’s also possible that the company was simply a Ponzi scheme. These certainly aren’t new to China – Wang Zhendong, the creator of another ant farming scheme, was sentenced to death for swindling residents of the Liaoning province of almost $400 million.

Many of the investors who lost money to Yilishen lived in or around Shenyang, the capital of Liaoning province. As it became clear that thousands had lost their life savings, some took to the streets, some mobbed government offices… and many took to the blogs. John Kennedy, our Chinese-language editor, has an amazing collection of videos, photos and blog posts that detail the company’s collapse, the anger of investors and the reaction of the government to outrage over the ant farming industry. Most of these blogposts were deleted or blocked by Chinese internet censors, and John’s collection of posts became one of the best ways for angry Liaoning residents to follow the controversy… until the Chinese government began blocking our article, possibly due to a keyword block on the term “Yilishen”.

For those of us outside of China, it’s useful to take a close look at situations like the Yilishen protests. First, it’s worth asking the question of why people would invest in an idea like ant farming. Richard Spencer, writing from Beijing, offers useful insight:

With banks offering tiny interest rates for China’s glut of personal savings, and investing abroad not allowed for most people, pensions have gone into property speculation, the highly volatile stock market, and in many cases small companies relying on local appeal.

This sort of behavior isn’t uncommon in countries transitioning to a capitalist system, which suddenly experience entrepreneurship without regulation. Pyramid schemes were extremely common in post-Communist states – widespread pyramid schemes nearly destroyed the Albanian economy in 1996.

It’s also worth asking why this particular issue sparked censorship on the part of the Chinese government. The simple answer – it brought people into the streets, as some of the photos on the Global Voices post document. When online action leads to manifestations in the physical world, it’s a sure thing that online protests will get blocked or censored.

Ultimately, it looks like the provincial government will step in, perhaps to compensate the victims of this failed business. In that sense, the reaction to Yilishen – offline and online protests – looks a bit like the Russian reaction to the scam Gravikol medications, where protesters managed to get the Russian government to act to protect purchasers.

It’s worth noting that this story received very light coverage in European and US media, though it was clearly of major interest to Chinese bloggers. Another case where I feel like Global Voices is doing its job half-well… we’re finding important undercovered stories, but we’re not always doing a great job of getting Western media to pay attention to them.