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Hero to Zero

Current Price: S$1.36

Target Price: S$0.00


In our first report, we pointed out that Best World has been running an illegal MLM business in China for years and still is. The company has stood by their claim that they have fully converted that business into a franchise model and no longer runs a direct sales model since 2018. They even said that they have booked more than S$130 million in franchise sales and net profit of over S$42 million just from China.

Setting aside the very dubious links with Changsha, which was set up and owned by Dora Hoan’s brother-in-law (claiming that the company remains independent is ridiculous), the key question to the business is this: What is the nature of its business in China?


If it is a franchise model, then BWL can claim to be a legitimate business in China


If it is not, then the business in China is worth nothing.


In such a scenario, there are no greys – there is only black and white. And we intend to show that Best World is a very dark company indeed on three counts: The structure of remuneration in China remains very much an MLM model; BWL Singapore continues to pay its salesforce directly; the cult-like behavior it instills in its agents.


Our research is based on actual interviews with dozens of Best World agents in China, backed by audio and video recordings of their testimonies. We will be happy to send these on to SGXRegCo and the independent auditors PwC for verification. They will see, as we have, that the leaders of Best World have been consistently lying about their business model in China.


Best World Changsha company still controls the core database of all members in China and that the company is still responsible for onboarding members and directly collecting membership payment and making commission payments in the MLM pyramid selling scheme.


BWL describes its business in China as being a franchise model. This means that they sell their products to Chinese agents and receive payment upfront. After this point, BWL is supposed to have no more dealings with their agents.


But we have clear evidence, up till April this year, that BWL continues to interact directly with its agents/members, including collecting payment directly from them.


For one thing, BWL continues to tout its MLM model to parties interested in joining the company.


Source: Members of Best World explicitly explain (over WeChat) the commission payment structure among the different 7 levels within the MLM scheme (dated 13 March 2019)


The process of becoming a member and given the permission to start selling BWL’s products, new members are required to pay a membership fee (referred to as ‘deposit’ in Chinese) of RMB 10,000 directly to Best World China Subsidiary. This practice is typical of MLM companies.



Source: Wechat conversation on 19th March 2019 with one of the Best World’s members. Our colleague asked, “How do I receive the commission payment?”, and Best World’s representative replied, “Once you’ve become a member, your personal details, including bank accounting details, will be registered / recorded by the company (Best World China). After that, the company will transfer (the commission) to you directly.”



Source: Wechat print screen (dated 19 March 2019) provided by a Best World member to our colleague providing the Best World (China) company bank account details for transfer of the 10,000 RMB membership payment (after a new member is being screened and approved by Best World).



Source: Another print screen evidence (dated 15 March 2019) of a 10,000 RMB membership payment (bank transfer) from an existing member to Best World Changsha (entity owned by Koh Kim Chuan)


We’ve also obtained audio recordings and PowerPoint decks from BWL’s 101 and 104 training courses.

Here are the salient points from the presentations:


a) Listing: Best World China asked new members to list all their contacts in a form for their superiors to select potential sales targets. The selection criteria included whether they were rich and whether they had vulnerable characters, etc. BWL also called the eligible sales target "Fat Sheep". During this process, BWL repeatedly instilled hierarchical relationships into new members, demanding that subordinate members unconditionally obey their superiors, and even directly calling their superiors “mother”.


b) Super “ABC sales technique”: After selecting the sales target, BWL would encourage members to fabricate life experiences that are similar to that of the potential new member (sales target) in order to recruit them. They then set up fake encounters with superiors, isolate the sales target into a confined environment, and then through a series of a tag-team, coordinated psychological warfare, induce the target to become a Best World member.

Source: Best World’s PPT slides on the ABC technique


c) Aggressive follow up: Best World members would then use a few aggressive follow-up sales techniques, such as helping target pay in advance so as to guilt-trip the target into completing the purchase. Such behaviour is highly encouraged at Best World China, with its’ primary goal of attracting more members to join the scheme rather than actually selling the products as if in a retail shop.


All of these interactions between our colleague and BWL China members were done in the first few months of this year. BWL claimed to have moved to the franchise model last year – the conclusion is clear: MLM remains the de facto model for BWL in China.


The most worrying thing is that it was not even difficult to gather the evidence if one knows where to look. Believing that it is thousands of miles away from its home base, the company probably thinks that few would check on its activities in the country. They are not wrong – there are only a few who have the resources and patience seek the truth of the matter. We are one of them.


What does it mean for the company for weeks and months ahead?


The next big event on BWL’s calendar is its annual general meeting. It will see many angry shareholders who have seen their investments shrink after the company’s share price halved in a matter of months.


The company’s management will undoubtedly defend themselves and look to soothe the nerves of their investors with lies and more lies. It will say that Changsha is an independent company, and that it voluntarily asked for an independent review after the Business Times article.


It has nothing to hide, the management will claim, and that short-sellers are just out to profit at their misery. After all the company has cash in the bank, verified by accountants. How can the cash be there if the business is not real?


It will be a convincing story but we urge investors to cut through the deception by asking a few questions.


1) Show them the evidence that we have gathered here and ask them if they continue to deny that they are no longer using the MLM in China.

2) Ask them to show specific proof – receipts, numbers – that their products are bought by consumers, rather than agents/sales people.

3) Ask them if they are afraid of the Chinese government investigating the company for direct selling practices – if they are not, then ask for them show proof that the Chinese authorities have specifically cleared them of direct selling.


The arm of justice is a long one. The Chinese government may have chosen to ignore, wittingly or unwittingly, Best World up to recently but it will be a matter of time before they start probing into the company. This is especially the case if Chinese citizens start losing the money they put into the company.


One just has to look at the recent examples to know that the Chinese government does not mess around with MLM schemes. Besides the epic downfall of Quanjian (mentioned in the first report), Peanut Diary, a Guangzhou-based social commerce portal, has been ordered recently in March 2019 by local market regulators to pay RMB 74.5 million (S$15 million) in fines for online pyramid/MLM scheme. This also implies that the laws are not limited to offline selling activities. Similarly, Yunji Weidian was fined RMB 9.6 million (S$1.9 million) for a similar offence in 2017.


We believe that the China sales should be written down to zero simply because it is not a legal business. With the Chinese business gone, fines and penalty partially or fully paid, we doubt there would still be much, or any value left in this company.

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