July 15, 2010

Stock Prices Fall 16% Due to Media Revelation of Carcinogenic Substances in Bawang Shampoos

Translation of 媒体曝霸王洗发水含致癌物质 股价大跌16%

According to Hong Kong news reports, three products from B&W International Holdings Limited have been found by Hong Kong notary agency to contain dioxane, a chemical classified by the U.S. as carcinogen (The names of these shampoos are 中草药洗发露, 首乌黑亮洗发露, and 追风中草药洗发水, in case anyone uses the products). As of July 14, 11:53 am, the negative news have caused a 16.16% plunge in Bawang stock share price to 4.93 Hong Kong dollars. Bawang CEO Wan Yuhua (万玉华) responded by saying that most other shampoos on the market likewise contain the chemical. She stressed that dioxane in low levels is harmless to the human body.

Bank of American and Merrill Lynch issued a research report on the incident. If the media accusations pertaining to dioxane are true, then sales of all Bawang products and even the brand image will be negative affected. Today Bawang has to face the backlash from the market.

Part of a July 16 report 冯海宁:霸王“致癌门”更是“检验门”

Only a few Shenzhen stores have decided to pull Bawang shampoos off the shelves. Bawang claimed in a overbearing statement that there will be no recalls or returned products. Despite of Bawang's vigorous denials of its shampoos being carcinogenic and that most stores continue to keep them in stock, the public is not buying the claims. According to poll results from a portal website, 60% of the netizens believe that Bawang shampoos cause cancer, and 70% say they will stop buying the products.

It is obvious at this point that Bawang will try to obtain exonerating chemical test results from a third party.

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