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China’s decision to back down on proposed plans to tighten cross-border e-commerce rules has given a big boost to Australian vitamin and food stocks.
Beijing’s ‘as you were’ stance provides some respite for foreign companies that, in the wake of a new a new tax regime for international e-commerce transactions, had been fretting revamped rules would crimp the flow of foreign food and consumer goods to the mainland.
News of the latter, in particular, led to a sharp fall in share prices in April for a handful of Australian stocks such as vitamin maker Blackmores, and milk powder makers Bellamy’s Australia and a2 Milk Company whose products had been popular with China’s so-called daigou – personal shoppers who travel overseas and return with suitcases of foreign products to sell on the mainland. Foreign products are typically regarded as higher quality than domestically produced alternatives.
Investors in Australia are today processing an announcement by China’s Commerce Ministry on Friday in which it said goods coming into the country via e-commerce platforms would be regarded as personal trade, rather than for commercial distribution. Such goods therefore avoid additional requirements related to domestic registration or labelling.
The Commerce Ministry said via a statement on its web site:
In the future, legislation on e-commerce and the development situation of cross-border e-commerce import sales will be integrated, with supervisory methods being improved as necessary.
This has prompted sizeable share price gains on Tuesday for those relevant stocks.
Just before midday in Sydney, Blackmores was up 14.3 per cent, Bellamy’s bounced 8.1 per cent and a2 Milk was up 4 per cent. Hong Kong-listed Biostime, which owns Australian vitamin maker Swisse and would have been adversely affected alongside Blackmores by new labelling requirements, edged 0.2 per cent higher on Monday.
Particularly for Blackmores and Bellamy’s, today’s news comes a little bit too late. The two have been struggling with fundamental shifts in their businesses and share prices are down sharply from record highs hit 14 months ago.