02-05-2018, 06:34 PM
(02-05-2018, 01:44 PM)Boon Wrote: [ -> ](01-05-2018, 12:33 AM)dreamybear Wrote: [ -> ].........(truncated)
There is quite substantial Q&A on the low export sales in 1Q2018(ref : pg 12/13 AR), but basically the reason is as per given in the AR.
.........(truncated)
"There is quite substantial Q&A on the low export sales in 1Q2018(ref : pg 12/13 AR), but basically the reason is as per given in the AR."
Hi Dreamybear,
The reason given in 4Q/FY2017 results is:
“As Export Agent had placed their orders for the next three to six months in 4Q2017, there is a possibility that 1Q2018 may be weaker than 1Q2017”.
whereas reason given in AR2017 (page 12/13) is "the conversion from Export Model to China Wholesale Model".
Why the inconsistency ?
Hi Boon,
Some shareholders were worried abt the possible drop in share price because of this low export in 1Q2018, so during the AGM, they wanted to clarify with HBC.
I think it is the “manner” in which it is written. BW is currently shifting from
Existing Export Agent(EA) model : BW > EA > Beauty/Hair Salons > Members/Customers
to
New China wholesale model : Subsidiary BW China Pharmaceutical Co. (BWCP) > Exp Center(converted fr Beauty/Hair Salons) > Members/Customers.
Because there is a change in company(from EA to BWCP) importing products into China, there are additional paperwork to be approved by the Chinese govt. During this transition period, mgmt wants to factor in any delays which may arise from obtaining the necessary approvals. Hence in 4Q2017, BW deliberately imported more goods(i.e. 3 – 6 months worth) through EA, in case all the paperwork for BWCP hasn’t been sorted out by 1Q2018. This wil ensure ample supply for goods in China throughout 1Q2018.
So for 1Q2018, the revenue in the Export segment will be minimal(since already acct for in 4Q2017 revenue as additional supply were imported as a buffer). I guess in the event that the additional supply of goods imported through EA during 4Q2017 are not exhausted by 1Q2018, the 2Q2018 overall revenue figures will be impacted too. (once BWCP is in operation, revenue will be captured under China Wholesale category.)
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On a separate note(welcome views from all forumers) , since mgmt mentioned China Direct Selling regulation to be “3 levels 2 layers”(translated from Chinese), does it mean the following structure :
BWCP (level 1)
| (Layer1)
Exp Center (EC) / Distributors (level 2) < earn DS commission >
| (Layer 2)
Customers (level 3)
If this is the case, does it mean
1. Since only 1 level of commission is allowed, each BW China distributor has to work harder than traditional MLM because he/she cannot leverage off the network effect ?
2. Unless a person has the capital to open a EC, he/she cannot be a distributor ?
Would be grateful if anyone who is currently a China DS can share some insights.