Best World

[Boon]

There seems to have been a confusion of 传销 and 直销 over here. 传销 is known as pyramid scheme. 直销 is known as direct selling. 
 
传销-Pyramid Scheme is illegal and why is it deemed to be illegal by the authorities is because:
 
Firstly because of its compensation plan which would over payout as it grows larger and larger with no long term sustainability. 
 
Secondly, pyramid schemes are people focus and any scheme which requires the continuation of pulling more people into the scheme to keep it sustainable is deemed to be illegal. 
 
Thirdly, there are no real business operations or product that is deemed of value and it is merely money merry go round operations. Some would call it financial engineering but the concept is just simply put as "robbing Peter to pay Paul".
 
The whole idea behind a pyramid scheme is to use the new downlines $ to pay the people who joined the scheme earlier. As the scheme gets larger and larger it gets to a point whereby there are lesser new downlines to pay off the earlier people who join and it starts to collapse. Causing a larger % of people who are below to lose $ as compared to the top people who benefitted from it. It is also referred to as a Ponzi Scheme. Why is it called a Ponzi because it started from this person called Charles Ponzi who ran an elaborate Ponzi Scheme. You can read more about it over here to know more about the difference with Ponzi Schemes and Direct Selling: https://www.biography.com/people/charles-ponzi-20650909
 
On the other hand, 直销-Direct Selling is a legitimate and sustainable business be it whether you have license to operate or not. The main reason why Direct Selling is deemed to be legal by authorities is because:
 
Firstly, its compensation plan is sustainable. Companies like Amway, Nuskin, Herbalife are still around to date doing billions of dollars in revenue with millions of members and distributors. The compensation plan does not over payout because it does not promise quick get rich commissions to attract more new members like 传销-pyramid schemes.
 
Secondly, Direct Selling is product focus unlike Pyramid Schemes which are people focus. The Direct Selling model would be sustainable because customers would consume/use the product and would re-order after they finish consuming/using it provided that the product is effective and works for them. This ensures recurring cashflows from the customers due to the effectiveness of the products that are offered through the Direct Selling model allowing it to be sustainable and able to grow long term.
 
Thirdly, there is a legitimate business in successful Direct Selling companies with millions of dollars put into R&D every year to come up with effective products and also a lot of investment put into growing the business in order to keep up with ever changing consumer demand and consumer purchasing behaviours. 
 
I was involved in an elaborate pyramid scheme when i was young and naive and was invited by our SG authorities for questioning to support and ongoing investigation. It was then that i know the difference between Pyramid Schemes vs Direct Selling. BWI is NOT running a pyramid scheme. They are a Direct Selling company and i must say a pretty successful one. 
 
Are they illegal in China? 
No they are not illegal in China because they are not a pyramid scheme. 
 
It was also highlighted by one of our fellow members that BWI has been operating Direct Selling in China before they got their license and this would get BWI into a lot of issue with the Chinese government. From my understanding, there are tons and tons of Direct Selling companies in China that do not even have a license but yet are operating in China. Do the authorities know about it? The answer is Yes, the authorities know about it. Are the authorities doing anything about it? The answer is No. Why is that so? Many people do not know how do the authorities operate. Everyday they have tons and tons of cases to solve and tons and tons of investigation going on. Direct Selling is a sustainable business and people get "self-employed" making a decent living by promoting a product that works for them. Why would they waste their time to catch these companies when they are clearly not causing any problems? 
 
The authorities will take full action when a scheme causes social unrest and got many people affected. Another way to say it would be only when enough people get hurt then the law will do something about it. It is sad to say this but it is true. Ponzi Schemes are only investigated when it grows too big, causing social unrest and when many people get cheated unable to get their $ back and they start reporting to the authorities. This is the flaw of the law. 
 
Moreover, Best World has gotten their license to operate DS in China they just became even more legitimate. i am confident that BWI will not get into any issues with the Chinese government and took advantage of Mr Market when there was a sell down on BWI to buy some BWI shares... 

To CONvince or CONfuse?
 
Be CONvinced or CONfused?
 
Without a product, what do you sell? It has to be people focus…………….
 
People focus without a product is not sustainable for sure. This is pyramid scheme and it is illegal.
 
With a product, but without people, how do you sell?
 
To sell a product under DS model, you need to pay someone to do it.
 
How do you compensate a salesperson?
 
A)  Single level commission (based on his own sales only)
B)  Multi- level commission (based on his own sales + commission from his downline)
 
BOTH A & B could be sustainable business and people get "self-employed" making a decent living by promoting a product that works for them.
 
But in China, B is illegal, for ALL business model be it retail, online, DS etc - that’s the MAIN difference.

B is an act of 传销 under the Chinese law

Has BWI been granted a DS license to sell Drs Secret? NO !

From the videos, CGL/BWI had been engaging in DS without a DS license

From the videos, CGL had been receiving passive income under BWL, which is an act B above or 
传销

Double violation of the Chinese laws. 

Hi Boon, thank you for your reply. 

Yes you are right: "BOTH A & B could be sustainable business and people get "self-employed" making a decent living by promoting a product that works for them."

And yes you are right that B is also illegal in China IF:

报酬计算上，直销以直销员个人销售业绩为计算报酬的依据，其他任何人的销售业绩都不与自己的报酬挂钩。传销以发展团队人员的数量或以团队人员的业绩，即以“个人发展人员数量+下线发展人员数量”或“个人销售业绩+下线销售业绩”为计算报酬的依据。传销常用的计酬方式有五级三阶制、双轨制、级差制＋双轨制等。　　直销中，支付直销员的报酬总额，不超过其直接向最终消费者销售产品的收入的30%。传销活动允诺的报酬绝大多数超过30%，有的根本不限制报酬。http://www.saic.gov.cn/hd/gzly/cjwt/zx/2...64066.html

You highlighted the earlier part of the paragraph but i think u missed out the 2nd half of the paragraph. According to Chinese regulators, commissions are to be kept under the 30%. Most pyramid schemes would not be able to operate if their commissions are capped at 30% and below. 

hi value explorer81,
It is pretty clear that there are 3 definitions that we are discussing here, rather than the 2 you mentioned.
 
Scenario:
Person A “recommends” Person B into the business. Person B sells the product to Person C.
 
(1) 直销 - direct sales : Person B gets a commission. Person A does not.
(2) 传销 as in MLM (multi level marketing) : Person A and Person B gets a commission.
(3) 传销 as in pyramid scheme: Person A and Person B gets a commission, but Person A gets more money from “recruiting B” than “B selling to C”.
 
- For the “30% rule”, unfortunately it does not state whether it applies to Person B only or include Person A as well. But regardless, the earlier part of the statement does state that the difference between (1) and (2)/(3) is that commission for the above scenario should only be paid to Person B.
 
- In this forum, we are clear that BW is not operating a pyramid scheme (at least from the facts and research presented thus far). So let’s focus on (1) direct sales vs (2) MLM, and leave (3) pyramid scheme out of the picture for now.

@ weijian,
 
Thanks,  the 30% applies to person B only.
 
http://zxgl.mofcom.gov.cn/front/getNews/8-3445
 
第二十四条　直销企业至少应当按月支付直销员报酬。直销企业支付给直销员的报酬只能按照直销员本人直接向消费者销售产品的收入计算，报酬总额（包括佣金、奖金、各种形式的奖励以及其他经济利益等）不得超过直销员本人直接向消费者销售产品收入的30％
 
@ Value Explorer 81,
 
“What gives me even more confidence is also Best World COO stepping up to send an announcement clarifying the issue that the announcement released on the SAIC website is targetted at 传销,pyramid schemes or ponzi schemes, not the licensed one like Best World. https://www.facebook.com/SharesInv/video...203848736/
 
Is stepping up clarification on the part of COO, an investor confidence boosting move? Or could it end up having an opposite effect?
 
BWZ, a subsidiary of BWI, has been granted a DS license to sell 6 Aurigen products ONLY, and in Hangzhou ONLY.
 
Has BWI been granted a DS license to sell DRs Secret products anywhere in China? The answer is NO.
 
With respect to DS license for the 6 Aurigen products, BWI (through BWZ) is the licensed one.
 
With respect to DS license for Drs Secret products, BWI is the unlicensed one.
 
Whether one is a licensed one or unlicensed one, one would be an illegal one if one has committed 传销.
 
A DS license is not a pre-condition to commit 传销。
 
And who says the campaign is only targeting at pyramid schemes only.
 
湖南打传办发布安全警示 6种传销行为请您警惕！

2017-08-25 15:07:17 来源：红网 作者：沈梦艳 编辑：李晓玲 红网官方微博

红网时刻长沙8月25日讯（记者 沈梦艳）记者从湖南省工商局了解到，近日湖南省打击传销工作联席会议办公室发布《关于防范各类传销违法行为的安全警示》，提醒公众警惕6种形式的传销行为，不参与传销，不为传销提供条件，发现传销及时举报。
　　6种形式的传销行为包括：
　　以招聘、介绍工作、谈朋友、国家扶持、国家工程、新型项目等名义，或通过捏造和歪曲领导讲话，以面对面集中授课“洗脑”的方式，用“财富、梦想、荣耀、成功”等词语诱导他人参与的；
　　以所谓合法公司为掩护，假借高科技、新产品的幌子，以专卖店、连锁销售、概念店、体验馆形式，出资购买区域加盟商的权利，通过发展加盟商按层级收取加盟费吸引他人参与的；
　　以互联网、报刊等媒介发布“消费返利”“免费互利”“免费购物”“循环消费”“网络资本运作”等暴富信息，引诱他人参与的；
　　以亲属、朋友、同乡身份介绍“新型营销”“全新致富理论”“网络营销”“合法直销”“消费联盟”“网络倍增”“加盟连锁”等信息，组织所谓“成功”人士现身说法或招商会、推荐会、免费旅游并赠送纪念品等活动诱骗他人参与的；
　　以互联网站和电子商务网站为平台，利用微信、微商等方式，打着上市融资、购买原始股的名义，极力美化公司形象，鼓吹预期收益，并通过展示已经参与人员的姓名、业绩、奖励、分红等虚假信息，刺激他人加入的；
　　以“爱心互助”“慈善互助”“爱心资助贫困学子”“消费养老”等为幌子，承诺高额回报来吸引投资或购买相关产品，鼓励发展会员并给予奖励的。
　　安全警示指出，凡参与传销活动都是违法行为，均要依法承担相应的法律责任。为传销活动提供经营场所、培训场所、货源、保管、仓储等便利条件的，均要受到相应的法律制裁

http://hn.rednet.cn/c/2017/08/25/4404760.htm