Biaohui - Taiwanese lending societies

Looking at that other thread, it seems like some of you seem to know your stuff when it comes to saving and investing. has anyone ever analysed the Taiwanese ‘biaohui’ or ‘genghui’ saving/borrowing set-ups. I’m in one at the moment and it seems like a good return. Whaddya think?


Those can be great (two that I belonged to before were fine). But if
some members of the group do not fulfull their obligations or just take
the money and run, you are in big trouble. The last one I was involved
with was this kind so I am hesitant to be involved with a biaohui again.

I read about these in an article and my ex-gf told me about them. They work somewhat like a micro-lender. A group of people pool their money together. A group of bidders bids the interest rate that they will pay. The bidder offering the highest interest rate wins.

Why they came about:
Back in the day(1950s on), an adequate business loan from a bank without the proper political connections and bribes was almost impossible to get. If you did get one, it was by placing yourself in debt to a more powerful person who could get you one. Like one of those

My wife has just finished being part of one - and was very happy with it.

The main point, as the other posters have alluded to, is that you absolutely need to trust the organiser of the thing. It seems that there have been several cases of people just disappearing with everyone elses money - and if that happens you’re stuffed.

Apart from that, it seems to be quite a neat and efficient way of a group of people helping each other. There don’t seem to be any gotchas or smallprint that can catch you out, and there’s no big bank/lending co out to make a tidy profit out of you.

So if it suits your needs and you are (again) 100% confident about the organiser, go for it!

You’re wrong about one thing Okami. I’m pretty sure there are now laws governing Biaohui. The better one’s will be all set up with contracts, which make a payment defaulter legally liable.

There’s always a hui tou (head) who is responsible for the group. They have to ensure payments are made and that only trustworthy people are let in. I agree only go for one that you can trust. I am iin one that my mother-in-law is in. Her good friend is the hui tou.

There are two ways these work. Here’s the first variation. There is a fixed amount. Usually 20000. Then there’s a period of monthly payments. Let’s say 30 months. This number is equal to the number of participants, so int his case there are 30 people in the group. That gives a total of 600000. Basically what happens is that everyone pays 20000 a month and every month one of the members takes the money. The way you decide who takes the money is by bidding ‘interest’. So let’s say it’s week one. Everyone who wants to take the 600000 gives a bid to the hui tou (head). Whoever gives the highest bid gets the 600000. Eg Mr Wong bids 23000 and that is the highest. He takes the 600000 (including 20000 from himself) and from then on he has to pay 23000 a month instead of 20000. So effectively he’ll be paying 90000 on a 600000 loan over 30 months. Let’s say I’m the last person to take the money. I’ve put in my 20000 a month. But because I’m the last one to take the money, everyone else will be paying more than 20000. Let’s say the average is 2000. Then I get 660000, so I make 10% on my total after saving 20000 a month for 30 months. The only little twist is that the hui tou always takes the money in the first month, but continues to pay only 20000, so he gets an interest free loan of 600000.

The second way is kind of the opposite. The same principles apply, but the lowest bid wins. So if Mrs Wu bids 17000, she gets 17000 from everyone. From now on she has to pay 20000 though. So if the next bidder bids 17200, he will get 17200 from everyone, but 20000 frm Mrs Wu. The last bidder will pay a varying amount less than 20000 for 30 months, but collect 600000 at the end.


contracts? never heard of that in a biaohui, interesting. thought it was minjian (not covered under laws) all the way.

the closer to the end you get the more luck you need to not get picked and maximize your interest.

watch out, everyone has got a horror story about these. good friends are the way to go but more than one friendship has ended in a biaohui.

[quote]contracts? never heard of that in a biaohui, interesting. thought it was minjian (not covered under laws) all the way.

Well, just what is minjian anyway? My wife says that the biaohui is covered by minjian falu. We got a contract and everything.


minjian literally means “between people”. my understanding is that it means you have no legal recourse if the people run off with the money. ie not covered under any law. maybe it actually means civil law? i never thought about it that way. now i’ve never heard of a contract involved with a biaohui, maybe there are new laws? i’m curious to know as well.

Per my knowledge (or understanding), huis are currently regulated only in that if one of the members defaults, the huitou is responsible for making the defaultee’s payment/s.

Of course, under Taiwan law, individuals and or entities are free to enter into virtually any type of contractual arrangement they desire, so long as the subject contemplated by the contract is not illegal. As such, it isn’t surprising that some people would draw up written agreements to govern their rights and obligations per a particular hui. But such is certainly not the norm.

My wife has been very successful in a number of huis. She always joins huis with groups of individuals who all know each other and who are somehow (other than via the hui) tied to one another. All the gals in my office are involved in huis, and some, like my secretary, belong to several huis merely to finance other huis.

But yes, there is always an element of risk involved in joining a hui. Thus, the same advice applies… don’t get into it if you cannot afford to lose your investment… I guess… I’m a financial idiot, and that’s why my wife handles all of our finances.

Just an anecdote. While taking Chinese classes, our class shared proverbs from our countries. I told them Benjamin Franklin’s line to the effect that people who lend money to their friend, often lose both their money and their friend. The teacher nodded vigorously, and shared with us her experience with some financial thing one of the other teachers ran. (Not sure if it was a biao hui or some stock thing.) Anyway, you can probably guess what happened–the colleague disappeared one day, money go “poof”.

I’ve always been curious about Biaohui. The structure(s) described by Bradman are interesting, though a bit complicated for a layman I would say. Everyone has a different rate of return, and there seems to be a high risk of default.

I lived in Taiwan years back and loved it (I was a student at Dong Hai University, Shi Da, and Chengchi U.; I was also a journalist at the China Post). Afterwards, I came back to the US and worked on Wall Street at an investment firm.

Now here’s my personal plug, which seems legit since the topic is biaohui and people who invest in biaohuis would probably be interested in what I have to say. I am now a professional investor on my own and am always raising capital for my investments in the US. For people who are interested in earning interest on their money but don’t have any opportunities to safely earn a high rate of interest in Taiwan, please PM me.

If you decide to lend to my company, our lending relationship will be documented by a legal contract that is governed and enforceable by New York state law. Your funds will be secured by collateral. I typically offer a 5-7% interest rate per year (more for higher amounts lent). If 5-7% isn’t enough, I can offer an even higher rate of return for those that have a higher appetite for risk. If you were to run a credit check on me by one of the major credit agencies, you would find that I have perfect credit with no blemishes ever. Credit history is one of the best predictors of someone’s reliability as a borrower.

Look forward to hearing from interested parties,

Anyone who has anything to do with a “hui” is a fool. A significant percentage of the average prosecutors caseload in Taiwan consists of “hui runaway” cases. And as the Taiwanese economy slumps further the number of “hui runaways” will increase.

take care,

Let me add something to my last post; several people have pointed out that the “hui” relies on “trusting” the organizer. Two problems with that:

  1. you gotta trust more than the organizer, you gotta trust everyone who can get their “paws on the pot”.
  2. When a local says they “trust” the organizer they generally mean that their Auntie Ding Dong knows the second cousin of the organizer and the second cousin pressed Auntie Ding Dong into getting more members and Auntie Ding Dong needs to “pass the pressure on” to save her face.

take care and keep your money in your pocket,
Anti-Fraud Division

My wife, a local, just chided me for being too negative about a dear Taiwanese institution so I will balance my negative comments with what I think is good about Taiwanese hui.

I am a second generation Californian and I love my “home state”. California is in big financial trouble, as you may have seen in the paper. The second most common destination for locals running away with the hui money is California (the number one destination is mainland China).

So, the good news about Taiwanese hui’s is that they are a source of income for the State of California. So, if you are a member of a hui and pondering where to “run for the border” when the pot gets big enough and it is your turn…please consider California, the state needs the income revenue.

thank you,
Brian the Old Anglo Californio