The head of Blackmores Ltd, the Australian vitamin maker whose shares posted the steepest two-day drop since 1987, said investors are overreacting to China’s tax changes on imported goods bought online.
Chinese authorities last week announced a list of products that will be subject to new e-commerce tax rules, amid an overhaul of its system aimed at making levies on products posted to shoppers from overseas more comparable with rates paid locally.
Blackmores fell as much as 19 percent in Sydney yesterday, extending Monday’s 13 percent drop.
“People assume the worst,” chief executive officer Christine Holgate said in a telephone interview yesterday from Beijing. “There is nothing on those lists today that I can see that gives us any concern.”
Blackmores soared more than 500 percent last year as its profit jumped on demand from Chinese buyers willing to pay a premium for goods made in Australia.
Other Australian niche exporters have also tumbled since the tax changes were unveiled, with Bellamy’s Australia Ltd, which makes organic baby formula, falling 11 percent yesterday.
A2 Milk Co declined 6.5 percent, while Blackmores pared its drop to close 6.8 percent lower in Sydney.
Beijing last month said it would remove a so-called parcel tax that was previously levied on imports sold online. Rates ranged from 10 percent on food and infant items that came into the country through special zones, to 50 percent on cosmetics and alcohol.
Instead, it is to charge value-added and consumption duties that are imposed on most products sold in China, but with a 30 percent discount, according to a Chinese Ministry of Finance statement.
Items on the list published last week are also eligible for streamlined importing procedures.
“Historically, there have been two different import methods: personal use articles subject to the postal tax and the trade of goods subject to duties and consumption tax,” Dolly Zhang (張曉潔), director of indirect tax and business advisory services for Deloitte China in Shanghai, told Bloomberg BNA last week.
Now there is effectively a third category, she said.
“Regulation evolves on a daily and weekly basis,” Holgate said.
Blackmores has spent three decades developing a range of products from osteoarthritis pain relief to nutrition supplements and skin cream. It estimates China accounts for 40 percent of sales.
Bears are targeting the stock like never before. Short interest rose to 9.9 percent of outstanding shares on April 8, the highest on record, Markit Group Ltd data show. Blackmores is down 24 percent this year after a 519 percent surge last year.
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