Suddenly the China cows/dairy products, baby milk and vitamins story is hot again.
After two months of wails, whines, boardroom battles, investor selling, gloom and doom about the apparent slamming of the door against Australian dairy, vitamin and other food exports to China, all seems bright and good in the world after an apparent huge change of heart in Beijing.
On the even of the visit to Australia by Chinese Premier Li Kequiang, to talk about a new free trade deal news emerged yesterday that tough new cross border e-commerce rules in China has been suspended indefinitely.
The news sent the shares of big Australian players rocketing with Blackmores (up 13.1%), Bellamy’s (up 15.7%), Bega Cheese (up 1.9%) and a2 Milk (up 4.4%) all enjoying good gains.
Those new laws that had threatened to disrupt the flow of Australian vitamins, milk powder and cosmetics and associated products into China’s booming markets.
A statement issued yesterday by China’s Ministry of Commerce said low-value products imported for personal use through e-commerce would be considered as a separate category. This is seen to remove labelling and registration requirements.
The Ministry said goods coming into the country via cross-border e-commerce platforms would be classified as "personal" rather than "common" trade, meaning there would be no additional requirements for local registration or labelling.
"We want to maintain the stability of cross-border e-commerce," the Commerce Ministry said in a statement late on Friday that was released in conjunction with five other ministries.
The statement also said the number of pilot free trade zones, which can house cross-border e-commerce operations, would be increased from 10 to 15.
China’s vice minister for foreign affairs, Zheng Zeguang, said in Beijing yesterday that China was “committed to a greater level playing field and promoting the sound development of retail imports in cross-border e-commerce”.
As a result, shares in Blackmores, A2 Milk and Bellamy’s all jumped yesterday and analysts started breaking out and updating old research.
The indefinite delay is a win for vitamin makers Blackmores and the unlisted by Chinese-owned Swisse, which were facing tougher new licensing and labelling rules in China. The backdown should also benefit infant formula makers a2 Milk Company, Bega and Bellamy’s Australia, whose shares have been hit by uncertainty on how the new regulations would be implemented.
Beijing proposed the tough new e-commerce laws on the eve of Malcolm’s Turnbull’s visit to China in April last year, a move which entirely changed the agenda for his trip.
But it is just not Australia companies that will benefit.
It will be good news for companies in many other countries – Japan, South Korea, Europe, Canada, the US for instance that were also concerned at the impact of the tougher rules.
It is a major change in policy since e-commerce is one of the fastest growing areas of business inside and with China. It is a major reversal of a tightening of red tape in this area as well.
