Beijing’s decision to delay a rise in ecommerce import taxes has boosted Australian and New Zealand-based vitamin and food stocks, underlining the importance of Chinese online sales to the region’s consumer brands.
Shares in Blackmores, a supplements maker, rose as much as 19.1 per cent, and in a2 Milk Company, a dairy group, 5.3 per cent on Tuesday after China’s ministry of commerce said the planned tax rise would be delayed until January 2018. The increase, announced last April, met with protests from retailers in the booming cross-border ecommerce market worth an estimated $90bn annually. Beijing’s decision provides a temporary respite for foreign companies that had been fretting the revamped rules would crimp the flow of food and consumer goods into China.
China’s total cross-border ecommerce market has grown from Rmb53bn ($7.7bn) in 2011 to an estimated Rmb626bn in 2016, according to consultancy Mintel, making it a crucial channel for overseas consumer companies. Peter Nathan, chief executive of a2 Milk, said the decision signalled a “strengthening of the commitment to the cross-border ecommerce channel from the Chinese regulators”.
The original announcement of the policy last April prompted steep declines in shares of Australian stocks such as Bellamy’s, a milk powder maker, whose products had been popular with Chinese consumers and personal shoppers, or daigou, who run small-scale online stores selling foreign products into China. Food safety scandals are not unusual in China and foreign products are regarded as of higher quality than local goods, benefiting Australian and New Zealand companies that sell directly or through daigou. The ministry clarified on Friday that goods coming in via ecommerce platforms would be regarded temporarily as personal, rather than commercial in nature, and subject to a lower tax rate. Personal transactions are tax-free up to Rmb20,000 per person, whereas commercial imports are subject to import tax, consumption tariffs and value added tax.
Such goods also avoid requirements related to domestic registration or labelling. The ministry said retailers in 15 large cities including Beijing, Shanghai and Guangzhou had been cleared to import in accordance with the new regulations from January. Shares in Sydney-listed Bellamy’s, an organic foodmaker, closed 15.7 per cent higher on Tuesday. Shares in Hong Kong-listed Biostime, which owns Swisse, an Australian vitamin maker, and which would have been affected alongside Blackmores by new labelling requirements, jumped as much as 9.7 per cent. (Source: FT)