Compound Capitalism: A Political Economy of Southeast Asia’s Online Scam Operations

ABSTRACT

In the past few years, the online scam industry has undergone seismic changes. After emerging in Taiwan and mainland China in the 1990s, in the 2010s scam operations began to relocate servers and offices to Southeast Asia, especially Cambodia and the Philippines. While initially the majority of operations were small-scale and largely hosted in apartments, villas, and hotel rooms, in the second half of the decade they began to assume industrial dimensions, coalescing into bigger walled compounds often hosting dozens of companies, many staffed by workers held against their will and forced to perform scams. Drawing from extensive fieldwork and a set of in-depth interviews conducted with survivors of scam compounds in Cambodia, Myanmar, and Laos, this paper offers the first in-depth examination of the political economy of Southeast Asia’s scam industry, arguing that these operations should be framed as part of compound capitalism, a new manifestation of predatory capital.

KEYWORDS:

• China
• Southeast Asia
• online scam industry
• labor rights
• organized crime

Disclosure statement

No potential conflict of interest was reported by the authors.

Acknowledgements

The authors wish to thank Sijia Zhong for her valuable help with this research, as well as Christian Sorace, Nicholas Loubere, and Diego Gullotta for their feedback on earlier drafts of the article.

Correction Statement

This article has been corrected with minor changes. These changes do not impact the academic content of the article.

Notes

1 Tan and Jia 2022; Zhuang 2010.

2 Chang 2014; Zhuang and Ma 2021.

3 Cambodia News English 2021a.

4 Cambodia News English 2021b.

5 Venzon 2023.

6 Embassy of the People’s Republic of China in the Republic of the Philippines 2022.

7 Casayuran 2023.

8 Turton and Chheng 2017.

9 Xinhua 2019.

10 Manabat 2023.

11 Senate of the Philippines 2023.

12 The picture is further blurred by the fact that the Cambodian government generally refers to all illegal online activity as online gambling.

13 Interpol 2023.

14 Stevenson 2023.

15 Ding 2023.

16 OHCHR 2023.

17 See, for instance, Zhang and Chin 2003; Zhang 2008; Chin and Zhang 2015; Lhomme et al. 2021; van Uhm and Wong 2021.

18 The online scam industry has been absent from mainstream discussions of modern slavery until very recently. For instance, a prominent report on modern slavery released by the International Labor Organization (ILO) entitled Walk Free, and a September 2022 report by the International Organization for Migration do not mention scam compounds (see ILO et al. 2022). On the other hand, the release of the recent OHCHR report could be a sign that things are changing.

19 Cyber Scam Monitor 2022.

20 Southern and Kennedy 2022.

21 These businesses collaborate with outside groups such as social media influencers, brokers, and human traffickers, to entice and facilitate individuals’ entrance into the compound, but this aspect of their operations is outside the purview of this paper, which focuses instead on the internal organization of these entities.We will offer a detailed discussion of these external connections in our forthcoming book (see Franceschini et al. forthcoming).

22 See, for instance, Keeton-Olsen and Nguyen 2022.

23 Frontier Myanmar 2023.

24 Podkul 2022; BBC 2023.

25 Belinda 2023.

26 Incidentally, the last sentence is a catchphrase associated with Xi Jinping, see Baidu Baike 2018.

27 Keeton-Olsen and Nguyen 2022.

28 See, for instance, China’s Ministry of Public Security 2019 and China Anti-Fraud Centre 2021.

29 Faulder 2022.

30 For this and the following anecdote, see Lo 2023.

31 Singapore Police Force 2022.

32 Gallagher 2023a.

33 Gallagher 2023b.

34 Das and McIntyre 2023.

35 Cf. Franceschini 2020.

36 Ong 2006.

37 Slobodian 2023, 3.

38 The name is a play on the Chinese word for “spinach” (bocai), which is a homophone for gambling (bocai).

39 Tower and Clapp 2020; Cheng 2022.

40 Smith 2003, 333.

41 Crush 1994, 302.

42 Bezuidenhout and Buhlungu 2011, 244.

43 Van Onselen 1976; Crush 1994; Bezuidenhout and Buhlungu 2011; Phakathi 2012.

44 Bezuidenhout and Buhlungu 2011, 238

45 Chris Smith and Pun Ngai cite the South African compound labor regime as one of the ideal predecessors of this arrangement while also taking care to point out the differences, as mining compounds for Black workers in southern Africa were more coercive, as well as “racialized, colonial, male and factor restricted—accommodating workers close to where diamond and gold mines were located.” See Smith and Pun 2006, 1457.

46 Pun and Smith 2007, 30.

47 Ibid., 29.

48 On this, see see Andreas 2019; Franceschini and Sorace 2022.

49 See Fei 2020; Monson 2009; Lee 2017; Driessen 2019; Peng 2022.

50 Fei 2020, 15. Ivan Franceschini has highlighted how this kind of spatial organization of labor dominated Sihanoukville’s construction sites long before the city became an online scam hub. See Franceschini 2020.

51 Frontier Myanmar 2023.

52 Zuboff 2019, 8.

53 For instance, McKenzie Wark has graphically written: “Whatever disgusting and terrifying power lurks in these more recent stories does not so much eat bodies as brains. This combinatory works two ways: either your mind is erased and your body is another mind’s vehicle; or your mind is subordinated to the will of another power. Either way, your mind is not your own. It feels like some vile takeover. But what if this isn’t just a takeover, but a whole new class relation?” Wark 2019, 41.

54 Gallagher 2023a and 2023b.

55 Reuters 2023.

56 This is a predatory loop of desperation exploited at both ends, a dynamic akin to the ouroboros snake eating its own tail described by Nancy Fraser in Cannibal Capitalism (2022).

57 The moniker “cyber slaves” has been employed in other contexts—for instance, journalist Geoff White (2022) uses it to refer to North Korean hackers—but the term is now predominantly associated with the people subjected to forced labour in the online scam industry.

58 Due to space constraints, in this paper we do not delve in detail into the fourth component of compound capitalism, that is, the desperation that drives many of these workers into the scam compounds. We include a detailed discussion of this aspect in our forthcoming book.

Additional information

Notes on contributors

Ivan Franceschini

Ivan Franceschini is a senior lecturer in Chinese Studies at the University of Botswana. His current research focuses on Global China from the vantage point of Cambodia. He is a founder and co-editor of the Made in China Journal and The People’s Map of Global China / Global China Pulse. His latest books include Xinjiang Year Zero (ANU Press, 2022), Proletarian China: A Century of Chinese Labour (Verso Books, 2022), and Global China as Method (Cambridge University Press, 2022). With Tommaso Facchin, he co-directed the documentaries Dreamwork China (2011) and Boramey: Ghosts in the Factory (2021).

Ling Li

Ling Li is a PhD candidate at Ca’ Foscari University of Venice, a project manager at Humanity Research Consultancy, and a regional consultant on Southeast and East Asia for the Centre for the Study of International Slavery at the University of Liverpool. Since early 2022, she has been intensively engaged with survivors of Cambodian scam compounds, interacting with local and international civil society organisations to bring them relief and repatriation.

Mark Bo

Mark Bo is a civil society practitioner who works globally with local civil society partners to monitor and advocate for improved environmental and social practices in Chinese overseas projects. He has published extensively on the trends, impacts, and regulation of Chinese global finance and investment, particularly with respect to land and natural resource rights and the environment.