Nobody does fake like China. In 2011, a fake Apple store popped up in the southwestern city of Kunming. It looked so authentic, even some employees thought it was real.
This year, three farmers in central China set up a fake local government.
This month, police shut down a fake bank in the eastern city of Nanjing, where depositors reportedly lost nearly $33 million.
The fake bank had the trappings of a real one. There were security guards, computers and LED screens that displayed real-time interest and foreign exchange rates, according to state-run China National Radio.
Oliver Rui, who teaches finance at China Europe International Business School in Shanghai, says Chinese depositors were easily fooled.
“People are not well-educated on financial services,” says Rui. “People think as long as there is an office, looks like a bank and will provide the bank’s service.”
Depositors were attracted by higher interest rates than the notoriously low ones in China’s state-run banks.
A man named Shan told China National Radio that he deposited the equivalent of almost $1 million and that the bank immediately paid him a whopping $54,000 in advance interest. But when Shan returned later for his money, he couldn’t get it back.
All told, 200 depositors were duped.
“They want to earn high interest, but they don’t understand that the high interest usually comes with high risk,” says Rui.
The bank opened in 2013, but Rui says local regulators paid no attention.
He says the fake bank wasn’t a pyramid scheme, but invested in real estate projects that went sour as China’s market slid. The fake bank’s managers are now in police custody.
As to why fakery is so rife in China, Rui — like many — blames the Communist Party, which demolished traditional Chinese values.
“People are lacking religion, lacking faith,” Rui says. “They don’t have basic moral standards.”
Unless that changes, fakery will continue, he says.
“Without this so-called universal value system, China will not be respected,” Rui continues. “Even if China has a lot of money to spend, it will not earn respect from other countries.”