A2M - Letter to AFR rebutting journalist on A2 China sales

Dear HC readers

Two days ago an AFR writer wrote and I quote the relevant parts only

Chinese economic worries hit Australia's hot exports of infant formula | copyright link
"Chinese economic worries hit Australia's hot exports of infant formula

Chinese economic worries hit Australia's hot exports of infant formula | copyright link <link href="/etc/designs/ffx/afr/css/icons.png.css" rel="stylesheet">
One of Australia's hottest-selling products, infant formula, has been caught up in the market woes about the health of China's economy.
Shares in some of Australia's most-popular infant formula brands have plummeted in the past month amid increasing concerns from analysts that the world's second-largest economy will cool further this year."

So I decided to write to the AFR and today they printed my version to support the real facts and that is infant formula sales are booming in China

here is my letter in the AFR today

Quote
More baby formula and less iron ore
The headline on Jared Lynch’s article ‘‘Chinese worries hit Australia’s hot exports of infant formula ‘‘ distorts the reality of infant formula sales in China. As reported in The Australian Financial Review, China’s service sector grew 8.3 per cent in 2015, while the steel sector declined 11 per cent. The Achilles heel for Australia is iron ore, while infant formula, not generic milk products, and certified Australian produce is flying off supermarket shelves in both countries because Chinese consumers have an insatiable demand for our infant milk products.

   With regard to the share price falls for a2 Milk Company and Bellamy’s   Australia, we need to put them in perspective. Both had stellar runs, achieving 700 to 800 per cent gains for investors since March 2015. By comparison, shares in resources companies Rio and BHP have fallen 39 per cent and 52 per cent respectively during the same period. The biggest price corrections for both companies came in two days, December 30 and 31, before the Chinese sharemarket collapse, and was a healthy correction to their ‘‘frothy’’ share prices.

   China’s economic woes are a result of rising questionable debt in manufacturing, steel, property and ship building; an overvalued   sharemarket; the structural transition to a ‘‘new’’ economy. China will be speeding up the closure of steel mills and coalmines because of pollution, which is severely affecting the environment. Shipyards are closing because of the overcapacity of ships and declining shipping ore trade.

   It’s a good time to worry about whether trans-Tasman companies can ensure the steady supply of that frothy formula to keep the Chinese consumers happy in this economic transition in both economies.