Shutting down the market

China cracks down on infant formula imports

The extremely profitable boom in selling infant formula to China appears to be ending as the Chinese government cracks down on foreign foods.

Good bought through foreign websites now face an 11.9% tax in China, in a move announced late last week.

And now health foods face a new, expensive regulatory approval process.

According to Fairfax media reports this may cost up to $200,000 per item, and take up to four years to complete.

The crackdown may have already impacted on the share price of leading complementary medicine manufacturer Blackmores diving as much as 20% earlier today. Bellamy’s Organic and a2 Milk shares were also dropping, according to reports.

The Chinese government actions come as there are reports that Blackmores’ foray into the Australian infant formula market has yet to resonate with consumers.

The same media report said it had captured 0.1% of the pharmacy infant formula sales market. The range launches into supermarkets this month.

Natures Own (0.4%) and Coles Nutriforme Gold home-brand (0.8%) had also failed to make an impression, the IRI-Aztec sales data showed.

Blackmores’ shares had surged from $33 to $220.90 in January on the  back of the lucrative Chinese market.

A market analyst told Fairfax that a key challenge would be convincing the Chinese authorities that “a large of their products should be considered normal foods rather than health foods.”

Blackmores had not responded at the time this article was published

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