Recently, the fitness industry in China is facing another wave of closures. The well-known fitness chain Wilshire once had 165 branches nationwide, but now only two remain, leaving tens of thousands of members waiting for refunds. Insiders point out that the membership system in fitness clubs is akin to a “Ponzi scheme,” and with the backdrop of economic downturn and decreased consumer spending, sustaining this scheme has become difficult, leading to owners having no choice but to close shop.
One of the branches that faced sudden closure is Blue Castle Gym in Xi’an, where 300 members jointly filed complaints after the gym shut down without warning, involving an estimated amount of 200,000 yuan. Upon investigation, reporters found the gym closed and in disarray, with only three stationary bikes left behind.
A member named Yang expressed her frustration as she had purchased a new membership card, only for the gym to close unexpectedly within two months.
On July 25th, the legal representative of the gym posted a notice citing closure due to rental and property disputes but promised not to flee with the funds.
In addition, a netizen reported that the owner of Hangzhou Wulong Combat Gym owes coaches 200,000 yuan in wages and over 800,000 yuan to more than seventy students, totaling over a million yuan, before absconding. Many students have since reported the case to the police station.
Reports from “Tianyan News” under the “Guizhou Daily” revealed that consumers raised concerns about the abrupt closure of the Sky No.1 Gym in Guanshanhu District, Guiyang City, suspecting a financial crisis prompting the closure.
The burgeoning children’s sports center Zuo Yue recently faced a crisis with many franchise owners from various regions fleeing. Zuo Yue Children’s Sports Center, a comprehensive educational institution focusing on physical training for children aged 2 to 12 under the Beite Sports brand, had over 300 venues across 29 provinces in 2022.
According to recent reports from “The Beijing News,” during its peak, Wilshire had 165 branches nationwide, but as of July 20, 2025, only the Xuhuiyuan and Chuansha Huafu stores in Shanghai remained operational.
Since the outbreak of the “closure wave” in October 2024, the consumer service registration office in Shuning Road, Changning District, Shanghai, has received nearly ten thousand refund applications.
“We are still receiving our basic salary each month, but when will it stop? When will we get our money back? We really don’t know,” anonymously shared a staff member with the financial journalist from “The Beijing News.”
Public data indicates that Wilshire specialized in high-end annual cards and personal training services, with individual store sizes mostly exceeding 2000 square meters.
According to data from the Shanghai Consumer Protection Commission, complaints in the fitness industry surged by 63% in 2024 compared to the previous year, with complaints related to Wilshire accounting for 27%.
Why the spike in complaints last year? Upon review, the membership system of fitness clubs resembles a “Ponzi scheme,” and with a backdrop of economic recession and reduced consumer spending, the scheme, being unsustainable, prompts owners to flee.
A founder of a chain gym in Zhejiang commented, “It’s like a game of passing the parcel, using new members’ money to cover the service costs of old members. Once the expansion stops, the avalanche begins.”
Blogger “Legal Eye Society” shared a similar viewpoint, asserting that the membership system in gyms is a “Ponzi scheme.”
During its heyday, a 1000-square-meter gym could rake in five million yuan in advance payments through tactics like “opening year 30% discount” and “buy two years, get three years free.” Owners treated “future debts” as “current money.” Expansion relied on new members’ payments offsetting old members’ refunds, forming a cyclical “Ponzi scheme”; however, as new members wane, the debt will instantly explode.
Apart from the root flaws of the “Ponzi scheme,” the luxury attribute of fitness is exposed in the face of reduced consumer spending.
As mortgage, childcare, and medical costs squeeze household expenses, “getting a gym membership” becomes one of the first expenditures to be cut—not because people don’t want to stay fit, but because “you can run in the park, buy dumbbells for weightlifting, and there’s no need to spend 2000 yuan on a ‘shower card.'”
Data from a certain gym revealed that in 2022, customers’ average annual fitness expenditure was 12,000 yuan (including annual cards and personal training); however, by 2025, this figure dropped to 4800 yuan, and 70% of customers opted for monthly cards over annual cards.
Experts in the industry analyzed that Wilshire primarily failed due to the “three highs”: “firstly, high rental costs, typically choosing prime urban locations with large store areas, resulting in rental fees in the millions annually; secondly, high labor costs, with personal trainer salaries accounting for 40%; and lastly, high investment in decoration squeezing profit margins, with the industry’s average gross profit margin being less than 15%.”
According to insiders, Wilshire heavily relied on advance payments, with annual card revenue making up 70% of total revenue; hence, a slowdown in new member acquisition immediately ruptured the financial chain.