Image via JC Group
Crayfish Town, one of the proposed towns by the JC Group
China's planned sex-themed main street, poetry village and crayfish town now look to be part of a massive multi-million dollar "illegal fundraising" scam.
Just like in Central Florida, where small towns try their best to differentiate themselves with things like being New England-themed or celebrating seaplanes, in China, small towns are struggling as the megacities of the country boom. Unlike Central Florida, though, the small towns in China have more unique themes they're embracing, and now that uniqueness is proving not so wise.
Yucheng, a small town along the Yangtze River about an hour outside of Shanghai, saw a fast-talking real estate developer, JC Group, promise big plans for the fishing village. JC Group announced plans for rebranding the town as "Happy Town" with a sex-toy shopping street, an adult-only hotel, and a "sex park." The $1.5 billion proposal for the sex-themed town became a viral sensation when it was announced in late 2017.The Parliament House-like "Happy Town" was just one of more than four dozen oddly themed cities that JC Group has proposed across the country with more than $10 billion in assets, according to company documents obtained by the South China Morning Post. Others included a Mermaid Town that would have VR experiences and was supposed to draw 8 million tourists a year, a Crayfish Town that would have had a research center and crayfish market, a poetry-themed development with poetry-inspired cultural attractions, and a Fairyland Town.
After raising roughly $4.5 billion for the proposed towns and other projects, suspicions began arising after JC Group attempted to block on-site financial inspections and started asking for extensions on its repayments. By October, the company had missed more than $2.5 billion in payments.
The problems came to a head a week and a half ago when the Chinese government announced a police probe into suspected illegal fundraising by the company. Within hours the government was rounding up dozens of executives from the company as the investigation began. More than 3,800 private investors now are wondering if their investments will ever be recouped as small towns across the country prepare for new scrutiny into their questionable public-private partnerships with the company. It's thought that some of the deals were used to hide debts the municipalities may be facing.
The collapse of JC Group is just the latest in a long line of real estate investment firm failures. Zhonghong Group saw a similar quick rise and fall. They invested billions in projects, including becoming the largest shareholder of Orlando-based SeaWorld Parks and Entertainment. Plans called for a line of SeaWorld-branded attractions across China, but as debts went unpaid, things at Zhonghong quickly spiraled out of control. Their CEO, at one point gone missing, was supposedly hiding out in a Hong Kong while on the run from the authorities.
Another previous golden child, Wanda Group, was forced to sell off many of its assets, scale back development projects and restructure the company after the Chinese government began investigating it. The company just a few years ago was one of the largest investors in theme park projects of the world, pumping millions of dollars into theme park plans, sponsoring the theater where the keynote speech was given at the annual IAAPA Expo, and wooing investors. Then last year the company began downsizing, selling off its theme park projects and trying to decrease its shares in overseas companies, including AMC Theaters.
With the JC Group investigation still so new, there are many unanswered questions, but, for now, if you were hoping to take a vacation any time soon to a sex toy village or crayfish-themed town, you might be out of luck.
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