A fraud case involving one of China’s biggest tech companies and its most famous maker of chili sauce has artfully illustrated the dangers of doing business in China.
This week, it was revealed that internet giant Tencent had sued Lao Gan Ma (老干妈) over unpaid advertisement fees, freezing 16.24 million yuan ($2.3 million) of the spicy company’s assets in the suit.
Tencent said that it had signed a promotional agreement with Lao Gan Ma worth tens of millions of yuan in March 2019 and had fulfilled its end of the bargain but had to receive any compensation for its efforts.
However, Lao Gan Ma declared that it had not signed any deal with Tencent and reported the matter to the police.
On Wednesday, police in Guiyang, Guizhou province announced that they had detained three people for forging Lao Gan Ma’s seal, posing as market managers for the company, and inking a contract with Tencent.
According to police, the scammers were after online game package codes that Tencent gave away while promoting Lao Gan Ma during its annual mobile game tournament. They then turned around and resold these codes online for profit.
Based on a traditional chili sauce recipe from Guizhou province, Lao Gan Ma was created in 1996 by Tao Huabi when she was 50 years old. Her face now adorns the label of the celebrated sauce which occupies more than 65 percent of the market in China and exports to over 30 countries around the world.
Even John Cena is a fan.