How We Got Scammed Out of $100,000 in Shanghai
The Surprisingly Dark Reality of Chinese Tourism
Some Chinese tour groups cater exclusively to Chinese citizens who have emigrated (to the US, Canada, Australia) and are returning to vacation in their home country. These inexpensive tours consist of several hour-long visits to tea, silk, or jade factories and half hour-long visits to actual tourist destinations. Although claimed to be subsidized by the government, groups are actually supported by these very factories. Aggressive tour guides make a commission on every purchase, so many will go to surprisingly complex and malicious means to make money. Travel agencies, factories, and tour guides prey on these tourists because they are unaware of the parasitic nature of the newly evolved Chinese tourism industry.
For reference: 1 USD ~ 6 RMB
It’s our last day on the tour, our group of 50 is at yet another jade jewelry store, Shanghai Tianmai Jewelry. Our tour guide David asks us to simply go through the motions because the stop is required by the travel agency (check out some of Monica’s tweets that capture some of the shit that David has said on the trip). He tells us to expect to spend around 15 minutes.
This was notably strange because before stopping at other factories on previous days, David would always spew out consumeristic descriptions of the product we were “lucky enough” to buy that day and then proceed to lock us in the factory until a certain quota of goods was purchased.
Tianmai Jewelry looks like a typical jade store from the inside, with ornate jade statues and carvings lining the walls. A saleslady immediately greets us and begins explaining the history and health benefits of jade. It soon becomes clear to us that she’s pretty oblivious of life outside China. For example, she’s in awe when we tell her that we can receive Chinese television in the US. We end up frequently correcting her naive assumptions, but she actually starts to grow on us and we find her idiosyncrasies rather charming. We are soon led to a large conference room where she continues to entertain us, and the room soon fills with laughter, warmth, and trust. She mentions that she’s really nervous because this is her first time interacting with such a large group of Chinese Americans, and I see in the faces of many people in the room a sense of affirmation in the perceived superiority of their American identities. At this point, everyone has their guards down. She’s different from other salespeople. We can trust her.
Many people believe that trust is created through brands and credentials. It’s not. Trust is a psychological relationship between individuals, and is created through real-time face-to-face personal interactions. Buyers make decisions irrationally, or in other words, emotionally. Thus, a seller’s trustworthiness is immensely valuable to the buyer. In our case, we like the saleslady because we think that she likes us; therefore, we trust her and are more likely to buy goods from her. Furthermore, research has shown that people like being labeled — they like being part of a group that implies some superior quality or level of status. This is called the in-group bias, a manifestation of our innate tribalistic tendencies. The in-group bias is largely fueled by the release of the neurotransmitter oxytocin, which helps us forge tighter bonds with people in our in-group and inflates our sense of self-worth. The sales lady classified us as “Chinese Americans” for this very reason.
The Con Artist Emerges
She suddenly remembers that the CEO of the company is at the store today and might want to come talk to us due to our status as Chinese Americans. A few minutes later, a middle aged man wearing brightly colored clothing meekly walks in. He speaks very softly and high-pitched, with a heavy Thai accent. He tells us that like us, he is an immigrant, coming to China from Thailand, and that he’s only here for the day because his wife’s birthday is the next day, so it must be fate that we met. He then sits down and begins to recount his life story. He asks us if we remember the Sichuan earthquake. Of course we nod along. He tells us that he travelled there and witnessed firsthand the immense destruction, the destitute children, the collapsed buildings and broken homes and death and devastation. “I donated 10 million RMB on the spot.” The elderly tourists have tears in their eyes. The CEO drills in the importance of acting unselfishly and of always doing good. He then asks if we would like to tour his store, and we eagerly follow him.
Remember the famous Milgram experiments, in which volunteers were convinced to continue delivering supposedly incredibly painful shocks to unseen subjects, even when they could hear screams of pain? The presence of a man in a lab coat telling them what to do was enough to earn the compliance of almost all of the volunteers. People are hard-wired to respond to authority (or the appearance of authority). Because of his title, CEO, we were naturally inclined to respect him. We believed his life story, trusted the quality of his jewelry, and were honored when he took a personal interest in us. He again labeled us as immigrants, and this time, included himself in the classification, feeding our in-group bias.
He tells us that he’s soon opening a store in New York City, on 5th Avenue, and that because we’re Chinese American immigrants (with a chunk of us residing in New York), he wants to befriend us. As he leads us along a counter, he says that the pieces in his store are very expensive, and that because we are his friends, he will not allow us to buy anything, as he makes a huge profit off of each item. He declares that he only sells expensive items to non-Chinese people. I hear behind me a wife mutter approvingly to her husband. The CEO orders all of his salesladies to not sell us a thing, and he proclaims that he isn’t lacking in money and does not want our business.
The CEO positioned himself with us and in opposition to others (non-Chinese), to strengthen our trust in him and create an “Us vs. Them” effect. Similar to how “trendy” Apple users are compared to their “boring” PC counterparts, the CEO got us on his side by leveraging an innate distrust of non-Chinese people.
He soon leads us over to a large pendant and asks the sales lady for the price. “120,000 RMB.” He smiles and wags his finger, “Very expensive, do not buy.” He does the same for several more items. His next piece is a circular jade necklace. He holds it up to the light and asks us to admire its transparency, which he says is indicative of quality jade. The saleslady declares, “1,600 RMB.” Without any hesitation, he ties the necklace around the neck of a little girl in our group and proclaims, “A gift for you!” The girl beams while our jaws drop. The CEO announces that as a token of friendship, he wants to give all of us jade necklaces and orders a sales lady to prepare 50 for us. “But we can’t! Those necklaces are expensive!” He waves her off, and says that he’ll absorb the costs because we’re all friends. All he asks is that we never sell the necklace because friends don’t take advantage of each other. The room buzzes with energy. All around me, I hear the phrases, “What a generous man!” and “He’s such a good person” and “I would even pay 1,600 RMB for this necklace!” Suffice it to say, we were hooked.
Turns out, these “expensive jade necklaces” were fake, made of nothing more than cheap quartz. But none of us were jade experts, and because a declaration of quality was coming from an authority figure that we trusted, none of us questioned the authenticity of the jade or his motives. His reasoning behind asking us not to sell stemmed from a desire to not get caught. If we never sold, we would never discover his fraud.
He then pulls out a tray of ruby rings. Our entire tour group is already under his spell at this point and we “ooh” and “ahh.” The saleslady declares, “10,000 RMB each.” He frowns and declares that he would never sell to us because he doesn’t want to take advantage of us, that we’re basically family to him. But then he slowly starts talking: “If you’re all really Chinese…” We lean closer. “And if you really like these rings…” Our eyes open wide and we start feverishly nodding. “Then I will give them to you for free; after all, I don’t need your money and it is my wife’s birthday tomorrow, so I want to give back.” Our jaws drop. “But… if you feel embarrassed taking these for free, then you can pay $50 USD.” The women paw through their purses. The men whip out their wallets. There is a race for who can slap a $50 bill on the counter the fastest. This is the deal of a century, a once in a lifetime opportunity that we — of all people, we — were blessed enough to chance by. No way were we going to let this slip through our fingers.
Honestly, the rings weren’t anything special. In fact, according to previous warnings about Tianmai, the rubies were fake. But we were all so caught up in the generosity of the CEO that we were eager to please. Maybe if we “oohed” and “ahhed” loud enough, he would give out a ring or two. So when he asked for a $50 donation, all of us paid without hesitation. The thing is, none of us knew how much a ruby ring was supposed to cost. A parallel can be drawn to Ikea, which sells food in its restaurant at a loss in order to reinforce the low prices of its furniture. We don’t know if $500 is a good price for a bed, but we do know that $4 is a great deal for a full meal. Therefore, we are compelled to believe that because the food is cheap, the bed is cheap as well, so we buy. Same principle for Tianmai Jewelry. Because we know that “free” is a good deal, we believe that $50 must also be a good deal. So we buy, and we buy a lot.
During this frenzy, he pulls my family aside. After finding out that we’re from Los Angeles, he leads us into his VIP room, complete with a remote controlled sliding door, white leather couches, and floor-to-ceiling display cases filled with jewelry ranging from a couple hundred thousand to a couple million RMB. He demands that we give him our phone number so he can contact us if he’s ever in America. We feel honored, and my dad’s hand even nervously shakes as he writes down his contact information. The CEO then starts to explain that rubbing a jade pendant on your nose can eradicate snoring. Of course he’s right. He’s an expert, a CEO — and a very generous one at that. So I nod along. He then chooses a pendant for my dad, ties it around his neck in a flourish, and exclaims, “We’re friends, right? Of course I would never make money off of a friend. All I want for you is happiness and peace.” He writes down the figure $1900 USD in a flourish. The sales lady gasps and starts to protest. Even my dad starts to protest at the CEO’s generosity. The price tag on the pendant is 198,000 RMB. I stare at him in disbelief. How could we be so fortunate to end up at his jewelry shop? I start to believe in fate, in the goodness of humanity, in China as a growing country. After we pay, just as quickly as we were pulled in, we are escorted out of the room.
As we exit Tianmai, I notice on everyone’s neck a jade pendant and on every woman’s finger a ruby ring. I wonder, “How did we get so lucky today?”
Of course I should’ve noticed something was off when David displayed no surprise at the CEO’s generosity. He sauntered around and even went out of his way to lend tourists his own money. And on the bus, he publicly shamed the man who questioned the authenticity of the “CEO.” He claimed that the CEO donated 30 million RMB to the Sichuan earthquake relief effort (the CEO himself claimed 10 million RMB) and that he had the privilege of attending a few events with the CEO. He then scolded us and told us to have faith in the goodwill of others. What a joke. The jade and rubies were either fake or of extremely low quality. The CEO was fake. The salesladies were fake, with all of them trained to act as a member of a supporting cast. Their shock and awe helped sell the act. The bandwagon effect also added to the con. I remember looking around and seeing everyone else in a mad rush to purchase jewelry, and was convinced that the CEO must be offering a good deal, or else why would people be buying?
Looking back, I had no interest at all in purchasing rubies or jade. But humans are hard-wired to be loss averse. When we’re faced with the threat of losing something, even if it’s something we don’t want, we’ll crave it and chase it until it’s ours. We all thought we were getting the deal of a lifetime, and an irrational fear of missing out led to spontaneous purchases — many, many spontaneous purchases. We didn’t have access to the internet at the time; neither did any of the other group members, since we all came from overseas. Perhaps that was another reason why we were targeted.
But what surprised me the most was that this wasn’t just an isolated con. This was encouraged by our tour guide and supported by our Chinese American travel agency, Tian Bao Travel. This, and other manifestations of corruption, are byproducts of China’s rapid ascension to global dominance. In China, money matters the most — it can buy college acceptances, employment, political power. Perhaps this is why people like David, the “CEO”, and our travel agent are so hungry to and so willing to exploit.
Nearly everyone in our 50 person group bought a ~$2000 pendant + the countless amount of rings sold = $100,000