Is Investing in a Coffee Franchise Reliable? Famous Chain Coffee Brand Scams Over 30 Million from Chinese Investors, Flees to Thailand and Gets Arrested

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The Risks of Investing in Coffee Brands Without Mature Industry Chains

"Red Island Coffee," which was once extremely popular in multiple Asian countries, serves as a classic case study in the risks of investing in coffee brands without mature industry chains.

The Birth of Red Island Coffee

The "Red Island Coffee" brand was born in 2008, during the global financial crisis. At that time, many wealthy individuals and businessmen in China were afraid of currency devaluation and losing money, so they sought to preserve their capital through investments.

It was then that a Malaysian Chinese named Zhang Yufa recognized this opportunity and established "Red Island Coffee" in Malaysia. The coffee shop was decorated very luxuriously, and although it had few menu items, it gave people an overall sophisticated and foreign feel. Due to its high pricing, the clientele at Red Island Coffee consisted of high-income individuals, including many Chinese businessmen.

The Investment Scheme

Initially, the coffee shop's service was exceptionally high-class, and both the products and service were deeply loved by consumers. As more and more high-income individuals began using the coffee shop as a place for business discussions, Zhang Yufa began promoting: "Red Island Coffee House, your ideal investment project. Invest just ten thousand yuan and receive a substantial dividend every month, with an annual interest rate of up to 10%. The more you invest, the more you earn."

Wow, low investment with high returns - many businessmen were tempted! Of course, initially, no one dared to invest, as the market was poor and this was a project that suddenly appeared out of nowhere.

However, there were always those willing to be the first to try. These people actually received very high dividends just one month after investing ten thousand yuan!

Thus, such low-investment, high-return projects quickly spread like wildfire among Chinese circles and Chinese businessman communities. Meanwhile, Zhang Yufa also came to China to intensify his promotional efforts. Seeing the high dividends from Red Island Coffee, many Chinese businessmen also invested one after another, and Red Island Coffee indeed opened more and more locations, with business that could be described as "thriving"!

Regarding this, Zhang Yufa also promised: "All shareholders can actively develop their downlines. As long as you can bring in new investments, we will offer even higher dividends and interest on top of the original basis."

The Collapse and Aftermath

As a result, even more Chinese people invested in Red Island Coffee, and at this point, Zhang Yufa had already earned over 30 million yuan effortlessly! Then, while continuously encouraging more people to develop downlines, he quietly ran away with the money!

For a while, no one noticed that the founder of Red Island Coffee had already fled. Although they hadn't received dividends for several months, no one paid much attention because Red Island Coffee continued to open more and more stores, leading them to believe that dividends must be substantial. People didn't pay attention to the overall specific business situation of Red Island Coffee.

It wasn't until several months later that some investors discovered they hadn't received dividends for a long time! When they went to find Zhang Yufa, they discovered he had already fled! He had run back to Malaysia... Only then did everyone realize they had been scammed and that Red Island Coffee's business had always been extremely poor, with almost no products available to customers in the stores.

Those initial investors who joined Red Island Coffee were actually Zhang Yufa's accomplices. In reality, at that time, no one had actually invested in such a store... When Zhang Yufa returned to Malaysia, his first priority was to establish good relationships with influential people. When these deceived victims brought him to court, Zhang Yufa had already found a scapegoat. In this way, Zhang Yufa walked out of the detention center brazenly in front of everyone.

Subsequently, Zhang Yufa also opened shell financial companies in Malaysia, beginning a frenzy of "making empty promises." Through methods similar to those used with Red Island Coffee, he engaged in various pyramid schemes, focusing on low investment and high returns, primarily targeting Chinese businessmen.

Over the years, in China alone, nearly 2 million Chinese people were scammed. However, because Zhang Yufa's operations became so large-scale in later years, the Chinese government also targeted him, determining that Zhang Yufa's companies were pyramid schemes and began pursuit.

At this time, Zhang Yufa also fled to Thailand, intending to spend money to build connections. However, the Thai government was not swayed by his methods and collaborated with Malaysia and China to arrest Zhang Yufa.

However, those who had invested in Red Island Coffee and other pyramid schemes didn't get a single cent back, as the money had long been squandered...

Lessons Learned

Cheap things are rarely good quality - this saying applies equally to products and investments, and should make everyone cautious! Today, there are more and more low-investment coffee brands, but many of them simply copy and paste the models of other brands without having strong product power to compete with other brands.

Today's chain coffee shops that can survive in the coffee market have several common characteristics: excellent brand reputation, stable products, innovative offerings, and sufficient investors to maintain brand operations.

Never be fooled by promotions of low investment and high returns alone.

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