Ann: MOU to Manufacture SAMR Infant Formula in China, page-88

Bubs on front foot to avoid China trade backlash

Simon EvansSenior Reporter
Aug 24, 2020 – 3.23pm




The company is trying to protect its access to the lucrative China market by signing an agreement with Chinese-listed group Beingmate to have a Chinese-labelled infant formula packaged at one of Beingmate's plants in Beihai in south-west China.



Bubs Australia founder Kristy Carr: "This way, we believe the Chinese consumer will be getting the best of both worlds.'' Chris Hopkins


Founder Kristy Carr said geopolitical and regulatory risks were rising for Australian infant formula companies generating strong sales in China.


"There's no point hiding from this. It is what it is,'' Ms Carr said.


Bubs intends having the goat's milk infant formula canned and packaged in China through a joint venture with Beingmate to try to circumvent any backlash on its own business from the trade tensions which have hit Australia's barley producers and threaten to kneecap wine exporters.



"It helps to mitigate some of the risk,'' Ms Carr said.


She also said since the advent of COVID-19 there had been a shift in many industries back towards local manufacturing. Global groups such as Nestle had done similar deals in the China market in the past months.


"We are seeing a change in sentiment. There is consumer pride in local manufacturing,'' she said.
"This way, we believe the Chinese consumer will be getting the best of both worlds.''


Bubs, which last month announced a move into children's vitamins, told the ASX on Monday it had signed a memorandum of understanding agreement with Beingmate, which is listed on disallowed in Shenzen.


Disrupted daigou trade


The goat's milk would still be sourced from Victoria. "No change will happen to our English-label products,'' she said.


But Bubs and Beingmate still needed to gain regulatory approval for the Bubs brand to be sold in China. How long that might take was difficult to predict, Ms Carr said. "That's an element that is outside of our control.''


The coronavirus pandemic has severely disrupted the daigou trade, in which local traders in Australia buy up vast quantities of infant formula and vitamins and then sell them on e-commerce sites in China. Infant formula giant a2 Milk is confident they will return, along with international students and tourists.
China has been tightening regulations in the infant formula industry and has made it tougher for brands outside of China to secure State Administration for Market Regulation (SAMR) accreditation.



Ms Carr said that since April 2019, 92 product applications had been successful in obtaining SAMR registration.


Of those, 77 were manufactured in China, while nine were Chinese-owned brands manufactured in France.


The only international brand to achieve certification during this period was Wyeth, for six products manufactured in Singapore.


Bubs on July 27 announced it was expanding into the vitamins sector with a new range of children's products called Vita Bubs, signing up international model Jennifer Hawkins as the front person for the brand that will be sold through pharmacy giant Chemist Warehouse from October.


Ms Hawkins, a former Miss Universe and television personality, has a nine-month-old baby.