Suspected membership card fraud:
Gigantic Chinese retailer Fruitcamp faces sudden bankruptcy:
Fruitcamp, a prominent fruit wholesaler and online retailer, works with a prepaid membership system. Customers can upload money on membership cards to spend in shops or online, and receive discounts. Membership cards of the company suddenly 'expired' on the 16th of December and members received a message that 'Fruitcamp would close'. Card balances that members had uploaded to make purchases are now gone. As many stores closed down, members can go nowhere with their complaints. In some of the stores fruit supplies had already become very limited as of last month.
In addition, fruit suppliers and employees of the company have come to collect their unpaid debts. New company employees were promised a 3,800 Yuan salary, as well as royalty cards and a welfare card. Chung, an employee, complains on Wechat: “I have not received my salary for two months now”.
Employees of Fruitcamp protesting in Shenzhen. The banner reads: The collective rights organisation of employees in Shenzhen speaks out against Fruitcamp
Problems of the company have been caused by an unsustainable business model of shops, an expensive loyalty programme and misplaced investments in property. Chun: “the costs of running the stores are much higher than the turnover they generate. In addition, membership discounts are plenty and often large. For example, for every 2,000 Yuan uploaded, an additional 1,000 is given to a client."
Fruitcamp was founded in Shenzhen and has a registered capital of 1 billion Yuan. The company now runs shops in Shenzhen, Guangzhou and Shanghai and an additional 20 other smaller cities. On December the 13th the company released a first warning over 'short term liquidity problems'. The City Council of Shenzhen started to receive complaints from online customers since the 10th of December.
Customers in front of a closed Fruitcamp store in Guangzhou.
The company has given out a public statement that it will 'gradually resume operations'. It also said it will, together with the Council of Shenzhen, solve the problems with the membership cards and promised customers they will receive a refund within 10 days. Fruitcamp also promised to pay the wages as soon as possible, but does not know when it has funds available.
Daily Economic News, headquartered in Shenzhen, reported that a former legal representative is expected to have illegally transferred assets. If the total company collapses it will hit over 500 investors and could cause a loss of 10 billion Yuan in funds.
Customers reading an announcement at the entrance of a closed fruit store
In reaction to these unfolding developments, Freshplaza has decided to remove an article on Fruitcamp, published on the 9th of December, from its website.