today’s Australian
Bubs in move to sidestep China ban

JARED LYNCH

Growing Chinese nationalism has spilled into infant formula, with goat milk-focused producer Bubs planning to start manufacturing in China to combat increased regulatory tightening from Beijing and growing hostility towards Australian products.

Bubs announced on Monday it had signed a memorandum of understanding with Chinese infant formula giant Beingmate to start the manufacturing in mainland China of infant formula from Australian-sourced goats milk.

The move is contrary to a decade-old trend of Chinese parents looking to buy foreign infant formula brands, particularly from Australia and New Zealand, following a contamination scandal in 2008.

Chinese parents distrusted their locally produced product after it was contaminated with melamine, killing six babies and putting another 54,000 in hospital.

But Bubs chief executive Kristy Carr said the tide was turning, with more parents swooped up in President Xi Jinping’s tide of renewed nationalism and looking to buy products made in China.

“We are seeing a shift in consumer sentiment and a bit of a resurgence in Chinese infant formula brands,” she said.

“We have seen them over time start to win back market share and trust in Chinese consumers. And since March, really, we have seen a shift to a higher level change of consumer behaviour to not only where they purchase but what brands they are purchasing.”

Bubs’ shares jumped 4.7 per cent to 97c, compared with a 0.3 per cent gain across the broader sharemarket.

Ms Carr said China had tightened regulation around the sale of infant formula, which involved limiting the number of brands available via accreditation from the State Administration for Market Regulation (SAMR).

“Since April 2019, 92 product applications have been successful in obtaining SAMR registration,” she said. “Of these, 77 are manufactured in China. Of the 15 products that are manufactured outside of China, nine are Chinese-owned brands manufactured in France.”

Bubs’ strategy also aims to combat China increasingly targeting Australian brands following Scott Morrison pushing for an inquiry into the origins of COVID-19 earlier this year. Already Beijing has imposed a punitive 80 per cent tariff on Australian barley, suspended imports from Queenslands abattoirs and last week began an antidumping investigation into Australian wine.

Speculation is mounting that the communist regime will soon target milk powder, which has delivered many Australian infant nutrition brands riches in the 12 years since the melamine scandal.

“Given the current geopolitical landscape and regulatory risks, this breakthrough localisation strategy for a ‘Created by Bubs’ product to be packed in China exclusively from our own Australian premium goat milk mitigates key risks and provides a secure pathway to gaining full access to the world’s largest and fastest-growing infant formula market,” Ms Carr said.