Efforts by Beijing to protect domestic producers from tough import competition have hit Australian producers of dairy and pharmaceutical products on the stock exchange.
China has this week cracked down on imported food and consumer goods coming into the country at airports and though some of its largest e-commerce sites, according to reports.
Under a new policy, China has published a list of products allowed to be imported, which currently excludes several major dairy and pharma products.
“Nobody really knows what to do,” Natalie Zhu from food importer Ajyaguru was quoted by AFR. “The whole situation is chaotic.”
Another source quoted by Fairfax said: “Adult milk powder and UHT was not on the list. The situation is unclear for those doing healthcare products, like vitamins, and also for cosmetics.”
The news negatively impacted ASX-listings for Blackmores (down 6.8%), Murray Goulburn’s unit trust (down 8.2%), Bega (down 3.3%) and Freedom Foods (down 4.2%).
Meanwhile China Dairy Corporation, also listed on the ASX, surged from an opening value of 26c on Monday to a peak of 49c a share on Tuesday. It opened at 42c a share on Wednesday morning.
“The big issue that was facing Bellamy’s Bega Cheese, Blackmore’s etcetera was this sort of ‘grey’ channel where products of Australia are bought on market and then sold into China,” IG market strategist Evan Lucas explained to SBS.
“But it’s not clear yet who will be affected and who isn’t.”
In a statement, Murray Goulburn said it expected further clarification from Chinese Authorities on the new policies.
“MG has been aware of this Chinese regulatory development for some time, and is well progressed in preparing for any changes which includes using the more traditional off-line distribution arrangements as well as online arrangements,” 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.”