Authorities in the Chinese port city of Tianjin had said in December that they were investigating TCM firm Quanjian Group over allegations, including false marketing.
The official local Tianjin Daily reported on Jan. 7 that police arrested Quanjian founder Shu Yuhui and 17 others. The story was widely picked up by national state media.
An official at the Wuqing office of the Tianjin Administration for Market Regulation confirmed the arrests to Reuters but declined to comment further.
An employee in Quanjian’s customer service department told Reuters that authorities were dealing with the matter but declined to provide further comment on the arrests.
Reuters could not reach Shu for comment.
Quanjian, headquartered in the northeastern city of Tianjin, has been under fire after an article recounting the death of a four-year-old girl from cancer went viral on social media. The girl had received a treatment from the firm.
Chinese people expressed anger over the case and shared their own experiences about how the company overstated the efficacy of its treatments. Some criticized Quanjian for operating a pyramid scheme for sales.
Operators of pyramid schemes typically make money by recruiting members, who pay fees to act as salespeople of goods, rather than relying on the sale of the goods themselves.
Founded in 2004, Quanjian has expanded into an empire with billions of yuan in sales and many hospitals and stores, local media reported. The company says it also owns sports clubs.
The Quanjian case has become one of the most widely discussed health cases since it went viral in late 2018, underscoring public concern over medical problems in China that range from a lack of doctors to slow approvals for new drugs.
The case also has echoes of an incident in 2016 when the death of a student drew attention to misleading advertising after he used search engine Baidu Inc to look for treatment for his rare form of cancer.
That prompted a major probe into healthcare advertising and led to a drop in Baidu’s earnings.
