Explain China new tax policy and formula registration with CFDA, page-39

THE AUSTRALIAN – BUSINESS REVIEW
Regulatory change remains a key risk for A2 Milk – UBS
11 HOURS AGO | 9:33AM | DAVID ROGERS

While regulatory moves to limit the number of brands sold in China could be positive for A2 Milk in spurring market consolidation, there are two regulatory changes that are likely to have negative impacts, according to UBS.

“The introduction of an 11.9% VAT on cross-border eCommerce makes it incrementally harder to profitably send infant formula into China. More importantly, in our view, is the risk of requiring Chinese labelling for all infant formula being sold online in China.”

“We believe this requirement has the potential to be the most disruptive legislation to A2M because it would make a significant portion (probably the majority) of the grey channel unviable"

"This regulation may not apply to parts of the C2C channel that distribute English-labelled product outside Free Trade Zones, but the share of this part of the channel may be low given the small parcel delivery method.”

UBS has a Neutral rating on the Australia and NZ listed company.

http://www.theaustralian.com.au/bus...ry-change-remains-a-key-risk-for-a2-milk-ubs/
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