China’s daigou crackdown hurts Blackmores
A CRACKDOWN on personal shoppers sending goods to China is hurting vitamin maker Blackmores which has launched a strategic review to re-engage consumers in its key overseas market.
Shares in Blackmores slumped yesterday after it booked a double-digit fall in net profit for the first nine months of the financial year and called out a “challenging” operating environment.
The result confirms Blackmores as the highest-profile casualty of China’s moves to tame a runaway market of informal importers, known as daigou, which involves personal shoppers sending goods back to the Asian powerhouse economy.
New China e-commerce law came into force in January, requiring Chinese companies that import goods online to be registered with the government and for certain products to pass through governmentlinked customs warehouses where they incurred tax.
The global daigou market is worth billions of dollars in sales annually.
Vitamin and infant formula makers have been key local beneficiaries of the sales channel into the world’s second biggest economy.
“The third quarter has been challenging for the company,” interim chief executive Marcus Blackmore said yesterday.
“However, we firmly believe that this result does not reflect the long-term growth potential of the business.”
Net profit for the nine months to March came in at $44 million, down 14 per cent on the same period a year earlier,
The Sydney-based company also warned its secondhalf profit would be weaker than the first half.
Net profit for the three months to March was $10 million, down 43 per cent on the prior period a year ago.
Revenue for the quarter fell 4 per cent to $141 million.