Companies respond as China regulates cross-border sales

The Chinese Government has introduced a tax on goods bought through foreign websites, and is reportedly poised to release a list of products that can be imported through 'cross-border' channels.

According to media speculation, milk powders and UHT milk products are not on this 'positive list', but infant formula is.

Murray Goulburn, which is preparing to launch Devondale Natra Start infant formula, said in a statement today that further clarification is expected from Chinese Authorities in the coming weeks regarding the 'positive list'.

The dairy cooperative already sells its Devondale UHT and consumer milk powder products in China, and it said it had been aware of this Chinese regulatory development for some time, and was “well progressed in preparing for any changes which includes using the more traditional off-line distribution arrangements as well as domestic on-line arrangements”.

“We note that Devondale consumer milk powder and UHT have been temporarily removed from some sites for immediate sale,” the company said.

“MG’s traditional import channels are already well developed, and currently distribute a significant volume of product. MG assures Chinese consumers that Devondale’s wide range of products remain available through traditional channels.

“Based on the information currently available to us we do not believe there will be any material impact to our business, and we will keep the market informed in the event that this changes,” MG said.

The 11.9 per cent tax introduced on April 8, meanwhile, will be levied across a broad range of product categories, including food and beverage, which reportedly account for 20 per cent of purchases made through online marketplaces.

The aim is to create fair competition between domestic retailers and cross border e-commerce platforms. Some say cross-border web sites will as a result see costs rise substantially, meaning they may have to negotiate with suppliers to get a better prices.

Shares in infant formula makers, Bellamy's and Blackmores – the latter of which recently launched a new infant formula range in partnership with Bega Cheese – have fallen on the back of the news.

Blackmores said that like many countries, regulation evolves and develops in China.

“In the last week alone there have been several important developments,” the company said. “Blackmores’ view of these latest developments is that we welcome the focus from the Chinese Government on clarifying rules for importing.”