Monday 3rd September 2018
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A2 Milk Co says it welcomes new e-commerce law in China, as it awaits further information.
Chinese legislators passed the law, which will come into effect on Jan. 1 2019, late on Friday. Xinhua, China's state-run press agency, said the law "requires all e-commerce operators to fulfill their obligations to protect consumers' rights and interests as well as personal information, intellectual property rights, cyberspace security and the environment."
In China, a2 operates a multi-channel approach to selling its products, using online platforms such as Kaola.com, JD.com and Alibaba's T-mall alongside bricks and mortar stores. Its supplier Synlait Milk achieved registration for a2's China label infant formula products in Sept. 2017, which was necessary for it to keep selling its products beyond January this year. Earlier this month a2 also extended its deal to sell infant formula to China, via China State Farm, for a further three years to 2021.
A2 said today that the new law creates a broad framework for e-commerce, and covers both domestic and cross border activity. It encompasses e-commerce operators, including registration of platform operators, contracts, dispute resolution and promotion.
"Further implementation guidance, including implications in respect of the CBEC grace period (due to expire on 31 December), is expected in the coming months," a2 said. "The company welcomes the new e-commerce law and the Chinese Government’s continued support of CBEC, which the company considers will ultimately further protect the rights and safety of consumers and the overall integrity of the channel."
A2 said it will keep working with its partners to respond to the new law and yet-to-be-released guidance. The company has benefited from selling infant formula and milk powder into China, and in the year to June 30 its China and other Asia segment more than doubled revenue to $233.6 million while earnings before interest, tax, depreciation and amortisation rose 148 percent to $81.3 million.
Before the law passed, Xinhua reported that the draft e-commerce law would impose penalties of up to 2 million yuan (about $442,000 NZD) for e-commerce operators failing to prevent intellectual property rights infringement by merchants on their platforms, or unreasonably restricting transactions on the platforms.
Xinhua also reported that the draft law said e-commerce operators should promote environmentally friendly packaging, storage, and transportation, and delivery providers should ask customers to consent to packages being accepted by people others than themselves.
A2's shares recently traded at $12.60, down 0.2 percent today but up 56 percent this year.
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