Don't simply equate WeChat trade with pyramid selling

A new business model based on social network WeChat has been emerging since last year. Almost overnight, many people used to seeing friends post selfies on homepages began being introduced to products for sale by the same friends. Data show the number of WeChat "traders", or those trying to sell something via WeChat, has grown from 10 million to 20 million across China this year, and the number is growing.

But it is also true that the WeChat model of business is losing its reputation, as more and more consumers say they have been delivered substandard goods or received poor services. In particular, after a report of China Central Television revealed that some WeChat businesses made money by building a network for more people to buy and sell, instead of selling true products, many people now say WeChat business is nothing but pyramid selling.

The mixed response means we should neither idolize nor demonize WeChat business. In fact, like other forms of e-commerce, WeChat business has two models, namely, B2C (Business to Customer) and C2C (Consumer to Consumer). The former allows shop owners to make profits by selling their products, while the latter focuses mainly on finding lower-level agents and making profits by building networks in which lower-level agents pay membership fees for every business deal. It is the C2C business model that people equate with pyramid selling.