Best World

[JanQuin]

Boon

http://infopub.sgx.com/Apps?A=COW_CorpAn...4b312c0f79

The Board of Directors (the “Board”) of Best World International Limited (the “Company”, together with its subsidiaries, collectively the “Group”) wishes to announce that Best World (Zhejiang) Pharmaceutical Co., Ltd. (全美世界（浙江）药业有限公司), (“BWZ”), wholly-owned by the Company’s wholly-owned subsidiary, Best World Lifestyle Pte. Ltd., has on 30 June 2016 been granted its direct selling licence (直销经营许可证) (the “PRC Direct Selling Licence”) by the 中华人民共和国商务部 (Ministry of Commerce, the People’s Republic of China (“MOFCOM”)). Under the PRC Direct Selling Licence, BWZ is permitted to conduct direct selling in such areas in the People’s Republic of China (“PRC”) as shall be announced in due course on MOFCOM’s website on the administration of direct selling industry (商务部直销行业管理信息网站) (http://zxgl.mofcom.gov.cn/) (“MOFCOM’s Website”), for such categories of products as shall be announced in due course on MOFCOM’s Website. Pursuant to the grant of the PRC Direct Selling Licence, BWZ is not permitted to commence direct selling until BWZ has set up the requisite service centres in Hangzhou city within six (6) months of 7 June 2016, such service centres to be subject to the inspection and report of the Department of Commerce of Zhejiang Province, PRC. The grant of the PRC Direct Selling Licence is not expected to have any material effect on the consolidated net tangible assets and earnings per share of the Company for the financial year ending 31 December 2016. The Company shall make further announcements on the PRC Direct Selling Licence as and when there are any material developments. 

Cheers buddies!

The granting of the first DS license from the central government (the first step) has always been the hardest.
 
Therefore, this should be considered a MASSIVE milestone for BWI - for being granted a DS license for its China subsidiary, Best World (Zhejiang) Pharmaceutical Co., Ltd. (全美世界（浙江）药业有限公司), (“BWZ”) – regardless of limitation in its INITIAL “scope”.
 
So what are “such areas” and “such categories of products” being granted under the FIRST DS license for BWZ?
 
Area:
Hangzhou City
 
Categories of products:
6 health supplements manufactured by BWZ (Aurigen line of products – and not BWL line of products)
 
http://www.chndsnews.com/guancha/2016/0629/66003.html
 
To conduct DS in other areas beyond Hangzhou city, BWZ would need to apply and obtain the DS permit for each provincial branch office in which it wishes to operate – this should be an easier process after the granting of the first DS license. (note: Nu Skin China first started in Shanghai City).
 
To my understanding through further research (and I could be wrong on this), to increase the range of products that BWZ could market under its DS model in China, it would have to apply and obtain the necessary prior approval from the local authority – a much simpler process after the granting of the first DS license. However, these should be products manufactured by BWZ itself, or products manufactured by its parent company (i.e. BWI or BWL). OEM products do not qualify.
 
As most of BWL products are OEM - hence the need for the Tuas factory – to qualify products manufactured by the Parent Company.
 
http://www.mofcom.gov.cn/article/swfg/sw...6174.shtml

http://www.js315ccn.com/html/direct/deta...3448.shtml
 
In another words, the granting of the first DS license has not quite put BWZ into a position where it could sell BWL line of products in China under the DS model – nevertheless, it was a giant step closer - there are still works to be done to get there.
 
When could this happen?
 
“The grant of the PRC Direct Selling Licence is not expected to have any material effect on the consolidated net tangible assets and earnings per share of the Company for the financial year ending 31 December 2016.”
 
"Not within this year" - according to the management.
 
Likely to be next year – 2017 – I reckon – by then the Tuas factory should be up and running.
 
Is it a near term concern ? Not at all (continue operating under the export model – could be more profitable in the near term)
 
Direct selling in China is potentially a multi-billion dollar industry and the granting of a DS license would position  BWI a step closer to participate in this strong growth in China ,driven by strong domestic consumption, for many years to come. 
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The management knew about the service centres. During the investment seminar that I attended, COO stated that one reason BWL started small is the requirement for service centers. If they have gone bigger, they would face logistic nightmare in setting up the service centres which needed to be  audited.

Personally, I think that short term growth will continue to be supported by Taiwan. COO mentioned that they are much hungrier and passionate than Singaporean when it comes to direct selling. Mid and long term, China growth would be interesting. I am optimistic as they already have customers for their products through the export model. Having said that, anything can happen.

不怕一万，只怕万一。

(Vested)