China’s new ecommerce law suits a2

AUCKLAND: A2 Milk Co says it welcomes new ecommerce law in China, as it awaits further information.

On Friday, Chinese legislators passed the law, which will come into effect on January 1, 2019. Xinhua, China’s staterun press agency, said the law ‘‘requires all ecommerce 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 multichannel approach to selling its products, using online platforms such as Kaola.com, JD.com and Alibaba’s Tmall alongside bricks and mortar stores. Its supplier, Synlait Milk, achieved registration for a2’s China label infant formula products in September 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 yesterday the new law created a broad framework for ecommerce and covered both domestic and crossborder activity. It encompassed ecommerce 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 December 31), is expected in the coming months,’’ a2 said. ‘‘The company welcomes the new ecommerce 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 would 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% to $81.3 million.

Before the law passed, Xinhua reported the draft ecommerce law would impose penalties of up to 2 million yuan (about $NZ442,000) for ecommerce operators failing to prevent intellectual property rights infringement by merchants on their platforms, or unreasonably restricting transactions on the platforms.

A2’s shares recently traded at $12.60, down 0.2% yesterday but up 56% this year.