China reported to be changing cross border e-commerce rules for ASX companies again

Bellamy's Australia Ltd (ASX:BAL) and Bubs Australia Ltd (ASX:BUB) are subject to regulatory hurdles in China.

| More on:
a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Professional analysts, investors, and share market watchers are all likely to be confused over the ever-changing regulatory environment in China when it comes to rules around Australian foodstuffs companies physically exporting goods either via cross border shipping or 'e-commerce channels'.

The companies themselves are also likely to find the changing rules and moving goalposts challenging as they work out what they are required to do in order to sell their goods into China either online or in physical stores.

The issue is further complicated by the role of Chinese daigou shoppers in Australia who buy goods like baby formula in bulk to then on-sell in China either via online shopping sites like Alibaba or Tmall.

Over recent years China has brought in numerous new rules to require companies to have their products quality certified and also other new rules to ensure labelling is in Chinese language where required.

Unless a company has the required licences or meets the required language labelling standards it is at danger of being frozen out of the market. In addition China has been implementing new rules for the governance of e-commerce sales as well.

Today, The Australian Financial Review attempted to cut through some of the confusion around the issues by reporting that some new e-commerce rules requiring additional Chinese labelling on products would be delayed in their implementation in order to give companies more time in their applications for compliant status.

This is potentially good news for those companies in the regulatory firing line such as infant formula businesses Bellamy's Australia Ltd (ASX: BAL), Bubs Australia Ltd (ASX: BUB), or even vitamins maker Blackmores Limited (ASX: BKL).

News today that the Australian government is set to block Hong Kong-based CKI Group's takeover bid for gas pipeline operator APA Group (ASX: APA) will not help the political and trade tensions between the two countries.

Nor will the Australian government's recent decision to block Huawei from constructing the 5G infrastructure needed for a next-generation mobile network.

Investors in stocks with exposure to Chinese consumer demand then are vulnerable to the unpredictable nature of Chinese regulations and should brace for some occasional volatility.

Motley Fool contributor Yulia Mosaleva has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Blackmores Limited. The Motley Fool Australia owns shares of A2 Milk. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

More on Share Market News

Doctor doing a telemedicine using laptop at a medical clinic
Healthcare Shares

3 small-cap ASX healthcare shares 'with strong prospects'

Fund manager IML discusses why these 3 ASX healthcare shares are likely to rise in value.

Read more »

Magnifying glass on a rising interest rate graph.
Share Market News

Will the RBA finally cut interest rates next week?

Let's see what economists are saying about the central bank's meeting.

Read more »

A couple sits on a sofa, each clutching their heads in horror and disbelief, while looking at a laptop screen.
Share Gainers

Here are the top 10 ASX 200 shares today

Investors endured a rough Friday to close the trading week today.

Read more »

a man wearing old fashioned aviator cap and goggles emerges from the top of a cannon pointed towards the sky. He is holding a phone and taking a selfie.
Broker Notes

7 ASX All Ords shares elevated to 'strong buy' status in October

The brokers turned bullish on these ASX companies last month.

Read more »

A businessman compares the growth trajectory of property versus shares.
Share Market News

How ASX shares vs. property performed in October

The national home value rose for the 21st consecutive month while the ASX 200 dipped.

Read more »

Person with thumbs down and a red sad face poster covering the face.
Share Fallers

The worst 3 ASX 200 stocks to buy and hold in October unmasked

You would have done well to avoid these three ASX 200 stocks in October.

Read more »

A female Woolworths customer leans on her shopping trolley as she rests her chin in her hand thinking about what to buy for dinner while also wondering why the Woolworths share price isn't doing as well as Coles recently
52-Week Lows

Why is the Woolworths share price at its lowest point since 2020?

We haven't seen Woolies shares this low since COVID.

Read more »

A man sits in despair at his computer with his hands either side of his head, staring into the screen with a pained and anguished look on his face, in a home office setting.
Share Fallers

Why AFT, Amcor, Corporate Travel, and Macquarie shares are falling today

These shares are ending the week in the red. But why?

Read more »