CBME China 2024

17-19 July 2024 | National Exhibition and Convention Center (NECC), Shanghai, China

| EN

Tax Hikes in China Hits Aussie Companies| CBME, Shanghai Children Baby Maternity Industry Expo, NECC, Baby market news

TAX hikes in China on overseas online sales have spooked the Australian market, causing dramatic falls in the share prices of Australian vitamin and infant formula exporters.

Blackmores, Bellamy’s Organic, A2 Milk and Murray Goulburn have all lost value in the two days of trading since the Chinese government released details of the tax increases.

A “positive list” of 1142 categories of items allowed to be imported into the country via bonded warehouses was unveiled this week.

The new cross-border
e-commerce taxes will lead to an 11.9 per cent tax increase for the majority of the items sold through bonded warehouses, including maternity products, snacks, apparel, electrical appliances and toiletries.

Blackmores chief executive Christine Holgate, who is in Shanghai as part of a trade delegation with Trade Minister Steven Ciobo, welcomed the regulatory changes, despite investors hammering the company’s share price.

“It’s going to provide clarity around what can be sold through the bonded warehouses and give people more confidence inside the free trade zone,” she said.

Ms Holgate said that during the six months to February 25, roughly $15 million worth of the $350 million in Blackmores sales to China were through bonded warehouses.

“We had a shipment that came into port yesterday which got cleared, our products are still being traded in China,” Ms Holgate said.

Shares in Blackmores closed 6.76 per cent down at $165; Murray Goulburn shares lost 8.22 per cent at $2.01; Bellamy’s shed 10.75 per cent at $8.80, and A2 Milk lost 6.45 per cent at $1.59.

Research analyst Toby Bucks from Phillip Capital believes the release of the “positive list” by the Chinese authorities took investors by surprise, triggering a dramatic short-term selling spree.

Mr Bucks said the 1142 categories on the list were up for negotiation and would change over time.

“The list is dynamic and changing … the only real issue at the moment is UHT and skim milk, which would affect A2 Milk and Murray Goulburn.”

Murray Goulburn yesterday said UHT and Devondale consumer milk powder had been “temporarily removed from some sites for immediate sale”, but “based on the information currently available to us we do not believe there will be any material impact to our business”.

A Trade Department spokesman yesterday stressed that cross-border e-commerce sales were only one pathway into the Chinese market.

 

source: dailytelegraph