Plannned changes to China’s e-commerce have led to a sharp fall in profits at leading Australian supplements brand Blackmores, according to local media reports.
Blackmores’ executive Richard Henfrey said that talk of potential changes to China’s e-commerce regulations and “the suitcase trade” – in which Chinese entrepreneurs and tourists buy products in Australian stores to sell in China at mark-ups of up to 50% – have dramatically impacted buying patterns.
The reduction reportedly came without warning and led to full-year profit at Blackmores for 2016/17 tumbling 41 per cent to $59 million. news.com.au reported that Blackmores made a record profit of $100 million in 2015/16, “estimating that more than $200 million of its total $717 million revenue came from Chinese consumers as visitors took products home”. Domestic sales meanwhile stayed in line with the previous year.
Another big Australian supplements player, Swisse, has also seen the number of daigou – a Chinese ‘shopping agent’ – buying and selling its products fall from 100,000 too around 20,000, over the last year.
The company’s sales director, Michael Howard, told the Financial Times: “New cross-border ecommerce rules introduced in China created uncertainty for daigou and we saw resellers sell off stock to reduce risk.”