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Best World
01-01-2020, 10:42 PM. (This post was last modified: 01-01-2020, 10:46 PM by ¯|_(ツ)_/¯. Edit Reason: 2020 Huat to all valuebuddies )
Post: #1021
Rainbow  Outstanding info and doc requested since 13 May 2019
Allow me to add one point.

In it's letter dated 13 May 2019, SGX clearly request for BWL and it's partners to provide all the financial, delivery and government filing for investigation.
(click and see letter from SGX item 11 (d) )

As at late Oct 2019, after lengthy negotiation, then BWL's key partner is willing to cooperate and agrees to provide the necessary info and doc for investigation.

Since then, Independent Auditor had been traveling up and down Changsha as per BWL filing dated 1st Nov 2019.
(click for 1st Nov 2019 announcement)

Fast forward to 12 Dec 2019, BWL reported that some partners had not share the necessary info and doc due to confidentiality concerns.

What I'm very curious is: despite the withholding of info and doc, BWL is cautiously optimistic that company is able to meet the indicative timeline as copied in Bear's post above.
(click for 12 Dec 2019 announcement)


Actually, I'm not concern about the related parties transactions.
These numbers are small.
Whether it's between it's export agent, with Dora's brother-in-law or Ban Chin's wife, these are really small numbers.
Of course, I'm quite sure BWL is able to explain and reconcile after a few rounds of clarifications.
These are not my concern.

My concern is the actual reason Direct selling (DS) model is ditched and replaced with Franchise's model.
Yes, of course, I could understand the rationale that Franchise model is a stepping stone towards Direct selling model.
My question is what's the actual reason that BWL can not go with DS model and instead Franchise model will allow it to continue selling without touching the nerve of Chinese Government.
I mean, I understand that going with DS model now will clearly violate China law and that's why Franchise model is introduced immediately to de-risk.
I understand.
What I don't understand is what is the "thing" that DS model break?
And, of course, why Franchise model will rescue BWL from breaking the law?

Today is still New year and the topic sounds too heavy to digest.
Relax a little bit.
Best wishes to all valuebuddies had a blessed 2020 for another decade.
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02-01-2020, 11:19 PM. (This post was last modified: 02-01-2020, 11:38 PM by dreamybear.)
Post: #1022
RE: Outstanding info and doc requested since 13 May 2019
(01-01-2020, 10:42 PM)¯|_(ツ)_/¯ Wrote: ........
Actually, I'm not concern about the related parties transactions.
These numbers are small.
Whether it's between it's export agent, with Dora's brother-in-law or Ban Chin's wife, these are really small numbers.
Of course, I'm quite sure BWL is able to explain and reconcile after a few rounds of clarifications.
These are not my concern.

I am not sure what numbers are you referring to that are small. In FY2017 results, the revenue from Export segment amounted to 106 million, and Changsha Best being the primary import agent, the amounts flowing through it are certainly substantial. Referring to the objective on the review, "(b) To verify the sales to the Primary Import Agent and other import agents used by the Group in the China market, if any, for the period from FY2015 to FY2018 under the export model, and ascertain if these transactions were on normal commercial terms and conducted at an arm’s length basis....."

(01-01-2020, 10:42 PM)¯|_(ツ)_/¯ Wrote: ........
My concern is the actual reason Direct selling (DS) model is ditched and replaced with Franchise's model.
Yes, of course, I could understand the rationale that Franchise model is a stepping stone towards Direct selling model.
My question is what's the actual reason that BWL can not go with DS model and instead Franchise model will allow it to continue selling without touching the nerve of Chinese Government.
I mean, I understand that going with DS model now will clearly violate China law and that's why Franchise model is introduced immediately to de-risk.
I understand.
What I don't understand is what is the "thing" that DS model break?
And, of course, why Franchise model will rescue BWL from breaking the law?

Hmmm, where/why do you have the understanding that Franchise model is a stepping stone towards DS model, and that it is due to possible DS violations that BW switched to Franchise model in China ? 

As far as I know, the reason(s) for the transition can be found in 23/03/2019 Clarification Announcement.

"Rationale for Transition to Franchise Model

Since the Group’s entry into the China market through the Export Model, the Group had been exploring various options to evolve its business model to improve efficiency, enhance earnings and generate returns for shareholders. The Group considered transitioning the Export Model to the Direct Selling Model in China, which would require the expansion of the coverage of the Group’s direct selling licences, as well as establishing service outlets in every district of every city in which the Products are distributed due to legal requirements relating to direct selling in China.This was considered inefficient, costly and may inevitably lead to market competition between the Company and the existing primary distributors..

After careful evaluation of the different options and in consideration of market factors and the competitive landscape in China,the Group decided to transition to the Franchise Model in China. The Franchise Model would allow a more seamless integration with the Group’s existing network of primary distributors under the Export Model, which would allowthe Group to leverage on the growth momentum already achieved in China. In addition, given the population size and geographic expanse of the China market, the Group believed that the Franchise Model would enable the Groupto effectively establish a physical presence in several locations across China through close collaborations with the Franchisees......."

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03-01-2020, 10:34 PM.
Post: #1023
Rainbow  What's wrong with China Direct Selling?
What's wrong with China Direct Selling?

Thank you Bear for giving me a chance to share my thinking.

There are too many attentions on the 106m.
These to me is either a distraction or non-event.
Distraction - swing the investigation into tedious tasks of forensic and missed out more important issues.
Non-Event - BWL is a professional operating in MLM world. My thinking is with carefully crafted messages, BWL likely will get light or no punishment from the regulator.

Back to something more important
(which I'm not sure why it was ignored. There is a possibility that short-sellers is digging their foxhole on this more dramatic issues while distracting everyone to do the witch hunting on export sales transactions). 

My thinking is very simple.
Direct Selling is the way to go.
Franchises model is a interim solution before getting DS license.

Obviously, I was still under the euphoria of BWL proud announcement when they secured their DS license in China.
(click for 2016 China DS article)

BWL spend so much energy in getting their DS license in 2016.
With your help, I noted that Franchises model is here to stay and not a stepping stone to DS license.
Thank you.

Ok, can we go back to my real concern?

Before Franchise model was introduced, BWL tracks their members and reported these membership in their Annual Report.
With Franchises model, the memberships number disappear as there is no need to deal with members transactions any more.
BWL only need to deal with the Franchisees and hence BWL contractual obligation is towards it's Franchisees 
and therefor, it's obligation for it's members reduced significantly.

Reminder: these issues still exists today.
(click to read BWL response to China crackdown)

The difference is BWL no longer bounded by China Law as they are only required to deal with the Franchisees.
What Franchisees do (especially illegal stuffs), the Franchisees will need to be answerable to the China government.
BWL is off the hook, isn't it?



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Thanks all valuebuddies for helping me in my investment journey.
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11-01-2020, 10:40 AM.
Post: #1024
Rainbow  bwl - SGX strengthening continuous disclosures requirement for IPT
9 Jan 2020 SGX announced that it will strengthen continuous disclosures requirements in areas that are of high investor interest such as interested person transactions (IPTs).  

SGX RegCo will have powers with respect to IPTs to deem a person or entity an “interested person”, and aggregate separate IPTs entered into during the same financial year and treat them as if they were one transaction, in appropriate circumstances.

These amendments will safeguard investors’ interests in matters where they have indicated the greatest concern. 

(click to read SGX annoucement)



We hope that this is not reacting to BWL's ongoing investigation on Dora's brother-in-law or HBC's wife.
If this announcement is to strengthen the disclosures requirement because of BWL's incident, then we could deduced that BWL did not breaks any current SGX disclosures rules aka ChangSha Best is a non-issues as far as disclosure is concerned.

Based on BWL milestone,  the investigation report should be completed and submitted to SGX by early Jan 2020.

While waiting patiently for the key findings to be disclosed in early Feb,
meanwhile, relax and enjoy:


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感恩 
Thanks all valuebuddies for helping me in my investment journey.
I learn a lot from you.

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