Best World

[dreamybear]

As for the Franchise website,not sure it will be meaningful.

I had been monitoring the DS website as part of my google home page.
Completely waste of time.

Don't give up on your 宝贝 .....  一生所爱. Mine too, but I am still vested albeit lesser now. But DODD.  
 
 
 
I also monitor the DS website from time to time and was also caught off guard by the new website(http://txjy.syggs.mofcom.gov.cn/manager/...id=6652565). Sigh, that's why investing is so hard, literally like spending most of the free time to adapt, learn and research.
 
Interestingly, I used the same website to search for Amway, Nuskin(China) but couldn't get any results. I am not sure how the chinese search algo is coded, e.g. can use partial char search, use * , etc, Of course, there are many other DS sellers which I didn't have time to search one by one.
 
But assuming the case that BW is the first foreign entity(excl. China/HK) to use this franchisee bizness model for DS, I wld infer BW mgmt made an effort to continously optimize their China model - they cld have just followed the "proven" China DS models from the MNCs which entered China before them.  Of course, this is not saying the franchise model is without risk but imo, lesser risk than having many independent DS sellers. Like what chialc mentioned, if any of the franchisees do funny stuff, BW's reputation ultimately wld also be affected and BW probaby investigated by authorities. However, I think BW is prudent enough to have a yearly renewal agreement with its franchisees as a "check-and-balance".  

I think to effectively reduce China risk, BW needs to build up its revenue in other countries, but how many countries in our world offer such a growing middle class growing population receptive to DS/ social selling ?

Other news - BW is ranked no.61 on top 100 direct sellers 2018 (dd 02.05.2018) https://www.directsellingnews.com/dsn-an...lobal-100/ . (Just for reference, the revenue reported by BW recently for FY2018 is SGD$266M). I don't think BW made it to the top 100 list in previous years despite qualifying in terms of the revenue.

[dreamybear]

But since the 'franchisees' are now performing the most difficult of tasks, would they not move up the value chain and create their own product to sell, if they are such excellent marketeers?

I do not have experience running a franchise, but I wld imagine the capable ones will aspire towards it. Having said that, I am not sure whether there are franchisees who managed to do it in real life, e.g. gong-cha, kumon, subway, 7-Eleven, etc.

I think being listed(which demonstrates meeting relatively "stringent" reqd) is one of the competitive adv(e.g. differentiate btw the less reputable fly-by-night pdts) BW mgmt intended it to be.

Other differntiating factors (off-hand) :
1. Place of manufacturing, i.e. "Made in XXX". They thought locating factories in Japan, Korea, USA("branded" countries) etc but also considered the political implications, and after intensive internal discussions settled on SG.
2. If a franchisee wants to become the next BW, it has to build up the reputation of its pdts(i.e. years in mkt esp for beauty pdts), sheer scale of logistics and manpower(China's land area) which may not be feasible for small bizness owners, and of course the monetary resources(which BW has in abundance now).
3. If the franchisees just want to earn good $, BW has to ensure the remuneration scheme is attractive enough(at least for it to abandon its previous hairstyle/beauty local bizness and cost of renovation and be more competitive than other rivals like Nuskin, Amway, etc).

[chialc88]

Look at BWL numbers in 2012 and try to figure out why I'm not looking at BWL now. What's the diff?
1. Revenue increase 16.1% YOY
2. Net profit increase 5 times YOY
3. Cashflow +ve from operating activities
4. Debt free
5. Net cash
6. NAV SGD 23.27 cents (vs Share price of SGD 18.5 cents)
7. Dividend SGD 1.2 cents ~6.5%
8. Business environment - positive trend

---

@B, workshop is definitely more dubious than lifestyle center as the location of workshop can change from time to time.
My thought is BWL can only control those that they can control.
For those that they are not able to control, they will make it clear and clean cut to  distance themselves.

Question is whether they can escape freely?

For my simple mind, it's very difficult to shred responsibilities when someone is using your brand name to do something bad.

We can see (read, I meant) what had already happened. Quite bad, I think.

@Jason article.
Jason must be heavily into BWL, simple as that.
The most important problem I see is bad guy is using BWL brand name (certificate in DS) to develop it's MLM network.
I closed my eyes and I felt the sharp pain. 

@new website.
It's for Franchises. The original website is for DS.  The DS website is still valid. Just be mindful that (my feeling) BWL had ditch DS as it's not practical.
Besides, Franchises model suit it's needs better than DS.

---

Thank you everyone.
It's a excellent pick from you.
I benefited tremendously and I'm forever in debt to your contributions.

Thank you B, too.

[Squirrel]

 Boon, not even looking at the price, so no intention to enter anytime soon.

回头太难     Anyway, just to let you know quite a no. of brokerages has imposed trading restrictions on BW.




BEST WORLD: Investor gives his take on BT article
Published: 06 March 2019

Jason Wee, CFA, who has been a Best World International shareholder for several years, was Head of Asian Small Caps Research at CLSA, until he retired. He contributed this article to NextInsight.

More details on : https://nextinsight.net/story-archive-ma...bt-article

Interesting quote from the article, that attempts to support the validity of the size of their business

Indeed, while this journalist was wondering if BW was really a significant business, the global direct selling community had already decided it was.

After all, BW’s Chairperson was recently appointed secretary to the World Federation of Direct Selling Association, the first Asian CEO to ever hold this position.

So is their business direct selling or not? According to them they are doing Franchise Model in China. Then why appointment as secretary to a direct selling association? By virtue of the statement, if they have significant direct selling business, it must be in China, but yet they only have certification for Aurigen products...

But oh well, the author is vested I guess...

[Boon]

As for the Franchise website,not sure it will be meaningful.

I had been monitoring the DS website as part of my google home page.
Completely waste of time.

Don't give up on your 宝贝 .....  一生所爱. Mine too, but I am still vested albeit lesser now. But DODD.  
 
 
 
I also monitor the DS website from time to time and was also caught off guard by the new website(http://txjy.syggs.mofcom.gov.cn/manager/...id=6652565). Sigh, that's why investing is so hard, literally like spending most of the free time to adapt, learn and research.
 
Interestingly, I used the same website to search for Amway, Nuskin(China) but couldn't get any results. I am not sure how the chinese search algo is coded, e.g. can use partial char search, use * , etc, Of course, there are many other DS sellers which I didn't have time to search one by one.
 
But assuming the case that BW is the first foreign entity(excl. China/HK) to use this franchisee bizness model for DS, I wld infer BW mgmt made an effort to continously optimize their China model - they cld have just followed the "proven" China DS models from the MNCs which entered China before them.  Of course, this is not saying the franchise model is without risk but imo, lesser risk than having many independent DS sellers. Like what chialc mentioned, if any of the franchisees do funny stuff, BW's reputation ultimately wld also be affected and BW probaby investigated by authorities. However, I think BW is prudent enough to have a yearly renewal agreement with its franchisees as a "check-and-balance".  

I think to effectively reduce China risk, BW needs to build up its revenue in other countries, but how many countries in our world offer such a growing middle class growing population receptive to DS/ social selling ?

Other news - BW is ranked no.61 on top 100 direct sellers 2018 (dd 02.05.2018) https://www.directsellingnews.com/dsn-an...lobal-100/ . (Just for reference, the revenue reported by BW recently for FY2018 is SGD$266M). I don't think BW made it to the top 100 list in previous years despite qualifying in terms of the revenue.

I do find the mofcom platforms (for DS and Franchise) very useful..............

Amway (China)
http://zxgl.mofcom.gov.cn/front/getEnterpriseInfo/440101400020905
 
Nu Skin (China)
http://zxgl.mofcom.gov.cn/front/getEnterpriseInfo/310000400519945

What do you mean by "using Franchise Model for DS"? Doing funny stuff ? Ha-ha! More on this later.

On TOP D Sellers Ranking, all non-DS revenue should be excluded IMO..................

[Boon]

 Boon, not even looking at the price, so no intention to enter anytime soon.

回头太难     Anyway, just to let you know quite a no. of brokerages has imposed trading restrictions on BW.




BEST WORLD: Investor gives his take on BT article
Published: 06 March 2019

Jason Wee, CFA, who has been a Best World International shareholder for several years, was Head of Asian Small Caps Research at CLSA, until he retired. He contributed this article to NextInsight.

More details on : https://nextinsight.net/story-archive-ma...bt-article

Interesting quote from the article, that attempts to support the validity of the size of their business

Indeed, while this journalist was wondering if BW was really a significant business, the global direct selling community had already decided it was.

After all, BW’s Chairperson was recently appointed secretary to the World Federation of Direct Selling Association, the first Asian CEO to ever hold this position.

So is their business direct selling or not? According to them they are doing Franchise Model in China. Then why appointment as secretary to a direct selling association? By virtue of the statement, if they have significant direct selling business, it must be in China, but yet they only have certification for Aurigen products...

But oh well, the author is vested I guess...

" In my 13 years as an analyst, which culminated with a top ranking for my pan-Asian small caps coverage, I too have come across dozens of companies with questionable business models. 

Yet, I have only publicly challenged one. The reason is simple - getting it wrong can result in a lingering negative stain on an otherwise healthy and promising business.

In this specific case of BW, the journalist could have joined as a direct seller herself and befriended any number of senior direct salespersons. Most of them would have immediately verified for her the strength of BW’s China business." 
_________________________________________________________________________________________

Joined as Direct Seller and befriended Senior Direct Salespersons in order to understand the strength of BW's China business?

Is he suggesting BWI is conducting DS business in China ? 

If not, where is the "logic" of his argument?

To CONfuse or to Convince ?

[chialc88]

I am new to this best world company.
Is it a MLM kind of business?

Thanks

flipping back to mslee888 question in 2016,
we already know that BWL success is building on MLM.
link to 2016 post

we also know htat MLM is legitimate operating in Singapore, for sure.
link to MTI MLM

and from the MTI link, we also know what distinguish MLM from Pyramid scheme.

Obviously, we expect Franchise/Social Selling model stays within the limit of China laws.
we also expect BWL continue to educate it's Franchisee in doing the right things.

In additional to question on how BWL can increase its revenue and maintain its profit,
my other concern is whether BWL can be excused when bad guys using its name and selling based on
  ... Pyramid scheme.

Many pyramid schemes often disguise themselves as sellers collectors' items,
software, training programmes, etc,
when all they are interested is to make a quick buck through recruitment.
Members of the public who attend sales talks must be vigilant to such schemes.
Illegitimate MLM schemes usually share the following characteristics:

• When the promoter hype about how easy it is to earn money, 
  people can get very rich in a very short time and thatthe way to earn money is by recruiting others to join the scheme;

• The so-called product that you are supposed to sell is not something 
  you would normally buy at its price; Participants are required to invest money into the scheme, whether in the form of a joining fee, or buying inventory.

Of course, MLM vs Pyramid scheme is very easy to differential.
and, only the bad guys doing the Pyramid and BWL might not be responsible for these bad guys (legally).



Anyone brought a T4? or DR's Secret skin care?

[Coco]

BT has rarely done any "investigative" journalism. Analysis, yes, but not go out of its way (when its resources are so limited) to query here and there . Was reporter guided (or misguided) by Iceberg's Arnaud ? Iceberg's Twitter account mentioned its " own findings" -- well, it has not said anything more. Can they stand up to scrutiny or were they best passed to reporter to do what she can? In the light of Best World's response to BT article, it seems that Iceberg misguided.


   

[chialc88]

Jason is right that Marissa should get all her facts checked before reporting.
However, I would like to thank Marissa as her post had give a chance for HBC to clarify more into how BWL operates in China.

If a season financial reporter like Marissa could be misguided easily,
then the average man in the streets (or school girls studying in University) will even be more vulnerable.

BWL direct selling license is a very powerful marketing tools.
Many people were confused by it's DS license.

Not you, of course, you had been here long enough.

Sad.

[Boon]

How many shareholders really understand their explanations on Export Model, Wholesale Model or Franchise Model?


It is getting too complicated... haha 

“The adoption of a Franchise vs DS model for China also complicates the analysis as it limits investors’ ability to reconcile between sales figures and underlying consumptions in China.............

We are also suspending coverage on the stock given limited visibility on underlying consumption trends in China under the new Franchise model”------------------DBS Vickers
 
https://sginvestors.io/sgx/stock/cgn-best-world/analyst-report

6. Statementin the Article:
“Unlike typical franchise agreements where the franchisor takes a cut of the franchisees' sales, Best World's agreement with its Chinese franchisees allows it to recognise revenue upfront, because they must make payment before any inventory is shipped. (Recognising revenue upfront was an issue flagged by DBS' Ms Tay as she had problems reconciling it with underlying consumer demand.)”

Company’s Response:
The term “Franchise Model” was adopted by the Company to refer to the Group’s distribution model for premium skincare Products in China for the purpose of reporting, and should not be interpreted narrowly. The term was used in replacement of the term “China Wholesale”6 due to its similarity to the Manufacturing/Wholesale Model used for “Aurigen” (全金) Products.

The Franchise Model developed by the Group incorporates elements of authorised distributorship and franchise arrangements, where the Group sells the Products to the Franchisees, and the Franchisees on-sell these Products to consumers. The term “Franchise Model” was adopted as it describes the franchise elements of the arrangements, under which the Franchisees may only sell the Products (to the exclusion of other brands) and are permitted to use the Group’s trademarks in operating BWL Lifestyle Centers, as well as comply with the Group’s brand standards and operating manuals.

The Group recognises revenue upon delivery or completion of the sale to the Group’s direct customers. These direct customers under the Franchise Model are the Franchisees, who are generally required to pay in cash before delivery and are subject to a no returns policy(except for defective goods). Accordingly, under the Franchise Model in China, the Group records its sales at the time the Products are sold to the Franchisees, which is when control of the inventory is passed to the Franchisees with cash payments received. This revenue recognition is in line with SFRS(I), the accounting standard of the Group.
_______________________________________________________________________________________________________________

Recognising revenue upfront in itself is not an issue, IMO, reconciling it with underlying consumer demand seems to be the concern of the analyst.

Has this concern been addressed ?