Concerns over regulatory tightening in China on foreign goods hit the share prices of companies in that space on the ASX yesterday.
The Chinese changes involve a 11.9% tax on products bought from foreign websites in an effort to protect domestic Chinese retailers as well as the creation of a “positive list” of products allowed to enter the country via free trade zones.
Australia has a free trade agreement with China, but that seems to have been forgotten by the Chinese. Certainly the Federal Government didn’t want to go there yesterday as well.
Vitamins group, Blackmores lost 6.8% to $165 (it fell to around $144 at one stage), Bellamy’s Organic, lost 10.8% to $8.88 and Bega Cheese, dropped 3.3% per to $5.53.
Vitamins group, Vitaco lost 11% and Capilano Honey 5.4%. The A2 milk company fell 6.4% and the Murray Goulburn Unit Strust securities fellk 8.2% (Its linked to the Murray Goulburn co-operative.
But Treasury Wines shares advanced 0.9%.
Brokers said that although infant formula is on the positive list, shares in popular brands including Bellamy’s Organic and a2 Milk were swept up in the sell off yesterday.
Australian Trade Minister Steven Ciobo was still digesting the Chinese changes, which are understood to affect sales of mainly vitamin supplements and milk powders.
“We are analysing the information currently available and will continue to seek clarification from officials as to the full nature of the changes, which relate primarily to sales through bonded warehouses in 13 cities in China,” Mr Ciobo’s spokesman told Fairfax Media yesterday.
"Much of the detail on how this will affect sales of popular products like vitamin supplements and milk powders will become clearer as the implementation rolls out."
"Mr Ciobo’s spokesman stressed the changes only related to official cross border e-commerce channels, which he said was only "one pathway" for Australian companies to access the Chinese market.
"The new rules appear to seek a balance between different channels and many industry players anticipated changes," he said.
"Most Australian products can be imported conventionally by working with licensed importers and seeking necessary regulatory approvals. This will enable the sale both online and through regular retail outlets."
Mr Ciobo’s spokesman said Australia’s free trade agreement with China would see Australian products imported into China under "lower tariffs than most competitors, improving our competitive position in this important market."
Blackmore’s CEO, Christine Holgate, said the company’s main products, such as fish oil, were not classified as health products, meaning they were still allowed into China.
