The A2 Milk Company Ltd (ASX: A2M) share price is down over 1% on Chinese news.
The a2 Milk Company is one of Australia and New Zealand’s largest infant formula producers and the leader in a2-only protein based dairy products. It has operations in New Zealand, Australia, USA and China thanks to key supply and distribution agreements.
A2 Milk’s Chinese e-Commerce News
A2 Milk made an announcement referring to China’s State Administration of Market Regulation (SAMR) and other ministries and bureaus which aim to ensure the implementation of the e-Commerce legislation which became effective from April 2019.
The Chinese update relates to all goods and services transacted via e-commerce platforms.
What China intends to do is increase the focus on supervision and enforcement, standardise e-Commerce business practices, enhance the integrity of the digital market (including advertising and marketing) and maintain “good e-Commerce market order”.
China also intends to ensure that no counterfeit products are sold on e-Commerce platforms including social e-Commerce and cross-border e-Commerce channels.
What Did A2 Milk Have To Say About This?
A2 Milk CEO and Managing Director Jayne Hrdlicka said: “We welcome measures that protect the rights and safety of consumers and the overall integrity of e-Commerce channels and will continue to work closely with our partners through this process.”
What Does This Mean For A2 Milk?
It might be too early to say exactly what it means, but my guess would be that it’s going to increase costs for A2 Milk ensuring that its products are proven to be genuine.
However, it could also mean that A2 Milk makes more sales of its genuine products as I imagine there are quite a few fakes out there.
I can see why the A2 Milk share price has fallen in response to this news, but I think there’s still a lot of uncertainty. I wouldn’t make a decision either way until there is a bit more meat to the changes. The Bellamy’s Australia Ltd (ASX: BAL) share price is actually up by 0.2%.
For now I’m going to focus my attention on growth shares with clearer growth over the next year, such as the ASX growth shares in the free report below.
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