SINGAPORE (Aug 15): Best World International has issued a statement to address potential investor concerns regarding market concerns arising from China’s State Administration for Industry & Commerce (SAIC) Monday announcement of its intention to crack down on pyramid selling practices.

To recap, Bloomberg this morning published an article online which detailed how certain direct selling companies have seen their share prices drop since SAIC’s announcement, which Best World says is “widely anticipated” in light of recent news reports on the drowning of a university student who allegedly fell victim to a certain pyramid selling scheme’s advertisement.

See: Herbalife, Nu Skin Shares Plunge Over Fears of Chinese Crackdown

Best World’s share price plunged more than 10% this morning following the publishing of the article, prompting the Singapore Exchange (SGX) to issue it a query with regards to its trading activity.

While Best World says it is unaware of any information announced by itself to explain the unusual trading activity, the company emphasises that although its subsidiary holds a direct selling license, the group has yet to convert its business in China to direct selling yet.

See: Best World International’s subsidiary granted direct selling licence in China

“Presently all DRs’ Secret, Avance and Optrimax products are available for purchase by customers through DRs’ Secret outlets and workshops,” says the group, referring to the brands of skin care and beauty products which it specialises in developing, manufacturing and distributing.

As such, the company believes the SAIC statement has little or no impact to its China business.

Best World further highlights that its current preparations for conversion to direct selling is in line with SAIC’s regulations, with all service outlets set up by the company being subject to verification by local authorities beforehand, and with them not being within any school compound.

“Our membership criteria, upon conversion to direct selling, shall also not accept students, civil servants, police and military personnel etc.,” states the company.

“The company would like to reiterate that it adheres to strong principles of legal business, transparency and corporate governance and is fully compliant with the rules and regulations of business operations under China’s laws,” it adds.  

Shares of Best World closed 12% lower at $1.36 on Tuesday.