Yilishen Tianxi Group

Yilishen Tianxi Group was a Chinese company established in 1999 by Liaoning businessman Wang Fengyou. It marketed traditional Chinese medicine and health products whose principal ingredients were ants, including ant-based pills, wine, and a product promoted as an alternative to Viagra. The company operated under the Yilishen name and built a substantial consumer presence through television advertising, celebrity endorsements, distribution through Chinese pharmacies, and public-facing charitable and civic donations. Its most consequential business activity was not ordinary retail sales but an ant-breeding investment arrangement. Customers, many of them unemployed factory workers, rural residents, or other households with limited financial resources, paid for boxes of black mountain ants and were instructed to raise them using sugar water, egg yolk, cake, and other feed. Yilishen promised to repurchase the mature ants after roughly three months at a substantial return. Reported returns ranged from approximately 30 to 60 percent, encouraging participants to reinvest their proceeds and purchase additional ant boxes. The company processed dead ants into health products, including pills and wine, and claimed a broad distribution network reaching more than 50,000 pharmacies. Yilishen’s public image benefited from celebrity and official associations. Television advertising featured Bao Xishun, known at the time as China’s tallest man, and comedian Zhao Benshan. Wang Fengyou was photographed with Bo Xilai, then a senior Chinese government official, and the company received a direct-marketing license in 2007. Wang was also recognized in a national entrepreneurial ranking. These associations were perceived by many participants as evidence that the business was legitimate and had official support. The model began to fail in 2007 as sales of the underlying health products declined. Accounts described the company as relying increasingly on money from new participants to meet obligations to earlier investors, rather than generating sufficient operating income from product sales. In November 2007, the company failed to make promised payments, leading to large demonstrations in Liaoning. More than 10,000 investors were reportedly confronted by riot police in Shenyang, while other groups protested outside government buildings. Wang Fengyou was arrested on 7 December 2007 by public-security authorities in Liaoning in connection with alleged disruption of public order. His arrest and a televised confession followed protests by ant farmers. The company subsequently entered liquidation. The collapse caused severe losses for participants, including people who had invested family savings and retirement funds. Reports also described suicides, self-immolation, intimidation, arrests, and alleged police violence connected with the protests. The Yilishen case became one of the most prominent examples of a failed Chinese ant-breeding investment scheme and contributed to public concern about fraudulent investment programs presented as health-product or direct-selling businesses.

Yilishen Tianxi Group was founded in 1999 by Wang Fengyou, a businessman from Liaoning. It developed and sold health products presented as traditional Chinese medicine, using ants as a principal ingredient. Its product range included ant-based pills and wine, as well as a sexual-health product promoted as an alternative to Viagra. The company manufactured products from ants collected or raised through its network and reportedly distributed them through tens of thousands of Chinese pharmacies. The company’s defining commercial mechanism was an ant-breeding arrangement marketed to households as a source of investment income. Participants purchased boxes containing black mountain ants, raised them according to prescribed feeding instructions, and were promised that Yilishen would buy the mature ants back after approximately three months. Reported returns of 30 to 60 percent encouraged many participants to reinvest their proceeds. The arrangement attracted large numbers of people, particularly unemployed workers, rural residents, and families seeking an alternative source of income. Yilishen operated a factory that processed dead ants into pills and wine, providing a product-based explanation for the breeding network. Yilishen also invested heavily in public visibility. It advertised on television and used endorsements from Bao Xishun and Zhao Benshan. Wang Fengyou was photographed with Bo Xilai, and the company received a direct-marketing license in 2007. Wang was named in a national entrepreneurial ranking. These connections and official associations helped create an impression of institutional legitimacy among customers and investors. The company also made reported donations totaling about US$1.4 million to charitable causes and the 2008 Summer Olympics, including support associated with infrastructure in Liaoyang. Allegations later emerged that the company had paid bribes to officials in exchange for favorable treatment, although the supplied reference does not establish the outcome of those allegations. The business deteriorated in 2007 when demand for its health products fell. According to accounts of the collapse, Yilishen increasingly depended on money from new participants to provide income to earlier participants. Once the flow of new funds was insufficient, it could not meet the promised repurchase and return obligations. In November, investors began protesting after payments were missed. More than 10,000 people were reportedly involved in demonstrations in Shenyang, and other ant farmers gathered outside government offices. The protests drew a forceful response from police and became a highly visible social and financial crisis. On 7 December 2007, Wang Fengyou was arrested by Liaoning public-security authorities for alleged disruption of public order. Local television broadcast his arrest and confession, in which he was reported to have acknowledged responsibility for instigating protests. Yilishen subsequently entered liquidation. Participants reportedly lost life savings and pensions, and press accounts described suicides, an attempted self-immolation in Tiananmen Square, surveillance fears, short-term arrests, and alleged beatings of protesters. Some investors were reportedly required to register with local authorities, while the availability of compensation remained uncertain. The collapse was part of a broader pattern of ant-breeding schemes in China. In February 2008, a different man in the same province received a death sentence for defrauding investors of three billion yuan in a similar scheme. Yilishen’s failure is remembered as a major case in which a purported health-products enterprise used a tangible commodity and direct-selling language to support an investment proposition that ultimately proved unsustainable. The company is now defunct and no longer operates as an active consumer brand.

• 2007

  Direct-marketing license obtained

  [1]Yilishen Tianxi Groupen.wikipedia.org

  The company received a direct-marketing license, an event that many participants interpreted as official recognition of its business model.

• 2007

  Investment scheme collapses

  [1]Yilishen Tianxi Groupen.wikipedia.org

  Declining health-product sales and an inability to meet promised returns triggered protests by ant-breeding participants and the company’s subsequent liquidation.

• 2007

  Wang Fengyou arrested

  [1]Yilishen Tianxi Groupen.wikipedia.org

  Wang Fengyou was arrested on 7 December in connection with alleged disruption of public order following investor protests.

• 1999

  Company established

  [1]Yilishen Tianxi Groupen.wikipedia.org

  Wang Fengyou established Yilishen Tianxi Group in Liaoning to develop and sell ant-based health products.

The company positioned itself at the intersection of traditional Chinese medicine, consumer health products, direct selling, and household income generation. Its commercial narrative combined purported health benefits from ant-derived products with an investment proposition promising rapid returns from breeding and reselling ants. This dual positioning helped it reach consumers beyond conventional medicine buyers, but also blurred the distinction between product sales and investment solicitation.

• Traditional Chinese medicine and supplements

  Ant-based health products

  Yilishen marketed health products made with ants as a principal ingredient. The products were promoted through television advertising and distributed through a large Chinese pharmacy network. The company presented them as traditional Chinese medicine or health products rather than ordinary food commodities.

• Health supplement

  Ant-derived pills

  The company manufactured pills using ants supplied through its breeding network. These products formed part of the commercial rationale for purchasing and raising ants, although the investment program became more central to the company’s public controversy than the retail products themselves.

• Traditional medicinal beverage

  Ant-based wine

  Yilishen produced wine made from dead ants collected or raised through its network. It was marketed within the company’s broader traditional-medicine and health-products portfolio.

• Direct-selling investment scheme

  Ant-breeding investment boxes

  Participants bought boxes of black mountain ants and were told to raise them with sugar water, egg yolk, cake, and other feed. Yilishen promised to repurchase mature ants after roughly three months at a substantial return. The arrangement attracted more than one million participants according to the reference account and later became the central subject of fraud and Ponzi-scheme allegations.

• 2007

  Ant-breeding investment scheme exposed as a Ponzi scheme

  The company’s promised repurchase returns became unsustainable after health-product sales declined. Accounts described Yilishen as using money from new participants to pay earlier investors, leading to widespread losses when the flow of new funds stopped.

  Source

• 2007

  Investor protests and alleged official suppression

  Thousands of participants protested missed payments in Liaoning. Reports described riot-police intervention, arrests, surveillance fears, and alleged beatings of people who attempted to publicize their losses.

  Source

• 2007

  Arrest of Wang Fengyou

  Wang Fengyou was arrested for alleged disruption of public order after investor demonstrations. His arrest and a televised confession became part of the public handling of the collapse.

  Source

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• 2007Charitable and Olympic-related donations

  China

  The company was reported to have made substantial donations to charity and to the 2008 Summer Olympics, including support associated with infrastructure in Liaoyang. These activities enhanced its civic image during its expansion.

  Outcome. The donations contributed to the company’s public image, but did not prevent its later collapse.

  Source
• Television celebrity advertising

  China

  Yilishen promoted its health products through television advertising featuring Bao Xishun and Zhao Benshan. The endorsements helped associate the brand with recognizable public figures and broadened its consumer visibility.

  Outcome. The advertising supported the company’s public profile before the ant-breeding investment scheme collapsed.

  Source

• 2007

  Expand the ant-breeding model through direct sellingStrategy

  Background

  Yilishen combined ant-derived health products with a household ant-breeding arrangement promising rapid repurchase profits. The model attracted a very large participant base and relied on continued recruitment and product demand.

  Action taken

  The company sold ant boxes, instructed participants how to raise the insects, and promised to buy mature ants back after approximately three months.

  Aftermath

  When health-product sales weakened in 2007, the company reportedly could not maintain promised payments. The model collapsed, producing large investor losses and liquidation.

  Source

• 2007

  Obtain direct-marketing authorizationStrategy

  Background

  The company operated in a sector where formal authorization could materially strengthen consumer confidence in a direct-selling model.

  Action taken

  Yilishen obtained a direct-marketing license in 2007.

  Aftermath

  Many participants interpreted the license as government endorsement, although the company later failed and entered liquidation.

  Source

1. 1Yilishen Tianxi Groupen.wikipedia.org