NZ Herald
  • Home
  • Latest news
  • Herald NOW
  • Video
  • New Zealand
  • Sport
  • World
  • Business
  • Entertainment
  • Podcasts
  • Quizzes
  • Opinion
  • Lifestyle
  • Travel
  • Viva
  • Weather

Subscriptions

  • Herald Premium
  • Viva Premium
  • The Listener
  • BusinessDesk

Sections

  • Latest news
  • New Zealand
    • All New Zealand
    • Crime
    • Politics
    • Education
    • Open Justice
    • Scam Update
  • Herald NOW
  • On The Up
  • World
    • All World
    • Australia
    • Asia
    • UK
    • United States
    • Middle East
    • Europe
    • Pacific
  • Business
    • All Business
    • MarketsSharesCurrencyCommoditiesStock TakesCrypto
    • Markets with Madison
    • Media Insider
    • Business analysis
    • Personal financeKiwiSaverInterest ratesTaxInvestment
    • EconomyInflationGDPOfficial cash rateEmployment
    • Small business
    • Business reportsMood of the BoardroomProject AucklandSustainable business and financeCapital markets reportAgribusiness reportInfrastructure reportDynamic business
    • Deloitte Top 200 Awards
    • CompaniesAged CareAgribusinessAirlinesBanking and financeConstructionEnergyFreight and logisticsHealthcareManufacturingMedia and MarketingRetailTelecommunicationsTourism
  • Opinion
    • All Opinion
    • Analysis
    • Editorials
    • Business analysis
    • Premium opinion
    • Letters to the editor
  • Politics
  • Sport
    • All Sport
    • OlympicsParalympics
    • RugbySuper RugbyNPCAll BlacksBlack FernsRugby sevensSchool rugby
    • CricketBlack CapsWhite Ferns
    • Racing
    • NetballSilver Ferns
    • LeagueWarriorsNRL
    • FootballWellington PhoenixAuckland FCAll WhitesFootball FernsEnglish Premier League
    • GolfNZ Open
    • MotorsportFormula 1
    • Boxing
    • UFC
    • BasketballNBABreakersTall BlacksTall Ferns
    • Tennis
    • Cycling
    • Athletics
    • SailingAmerica's CupSailGP
    • Rowing
  • Lifestyle
    • All Lifestyle
    • Viva - Food, fashion & beauty
    • Society Insider
    • Royals
    • Sex & relationships
    • Food & drinkRecipesRecipe collectionsRestaurant reviewsRestaurant bookings
    • Health & wellbeing
    • Fashion & beauty
    • Pets & animals
    • The Selection - Shop the trendsShop fashionShop beautyShop entertainmentShop giftsShop home & living
    • Milford's Investing Place
  • Entertainment
    • All Entertainment
    • TV
    • MoviesMovie reviews
    • MusicMusic reviews
    • BooksBook reviews
    • Culture
    • ReviewsBook reviewsMovie reviewsMusic reviewsRestaurant reviews
  • Travel
    • All Travel
    • News
    • New ZealandNorthlandAucklandWellingtonCanterburyOtago / QueenstownNelson-TasmanBest NZ beaches
    • International travelAustraliaPacific IslandsEuropeUKUSAAfricaAsia
    • Rail holidays
    • Cruise holidays
    • Ski holidays
    • Luxury travel
    • Adventure travel
  • Kāhu Māori news
  • Environment
    • All Environment
    • Our Green Future
  • Talanoa Pacific news
  • Property
    • All Property
    • Property Insider
    • Interest rates tracker
    • Residential property listings
    • Commercial property listings
  • Health
  • Technology
    • All Technology
    • AI
    • Social media
  • Rural
    • All Rural
    • Dairy farming
    • Sheep & beef farming
    • Horticulture
    • Animal health
    • Rural business
    • Rural life
    • Rural technology
    • Opinion
    • Audio & podcasts
  • Weather forecasts
    • All Weather forecasts
    • Kaitaia
    • Whangārei
    • Dargaville
    • Auckland
    • Thames
    • Tauranga
    • Hamilton
    • Whakatāne
    • Rotorua
    • Tokoroa
    • Te Kuiti
    • Taumaranui
    • Taupō
    • Gisborne
    • New Plymouth
    • Napier
    • Hastings
    • Dannevirke
    • Whanganui
    • Palmerston North
    • Levin
    • Paraparaumu
    • Masterton
    • Wellington
    • Motueka
    • Nelson
    • Blenheim
    • Westport
    • Reefton
    • Kaikōura
    • Greymouth
    • Hokitika
    • Christchurch
    • Ashburton
    • Timaru
    • Wānaka
    • Oamaru
    • Queenstown
    • Dunedin
    • Gore
    • Invercargill
  • Meet the journalists
  • Promotions & competitions
  • OneRoof property listings
  • Driven car news

Puzzles & Quizzes

  • Puzzles
    • All Puzzles
    • Sudoku
    • Code Cracker
    • Crosswords
    • Cryptic crossword
    • Wordsearch
  • Quizzes
    • All Quizzes
    • Morning quiz
    • Afternoon quiz
    • Sports quiz

Regions

  • Northland
    • All Northland
    • Far North
    • Kaitaia
    • Kerikeri
    • Kaikohe
    • Bay of Islands
    • Whangarei
    • Dargaville
    • Kaipara
    • Mangawhai
  • Auckland
  • Waikato
    • All Waikato
    • Hamilton
    • Coromandel & Hauraki
    • Matamata & Piako
    • Cambridge
    • Te Awamutu
    • Tokoroa & South Waikato
    • Taupō & Tūrangi
  • Bay of Plenty
    • All Bay of Plenty
    • Katikati
    • Tauranga
    • Mount Maunganui
    • Pāpāmoa
    • Te Puke
    • Whakatāne
  • Rotorua
  • Hawke's Bay
    • All Hawke's Bay
    • Napier
    • Hastings
    • Havelock North
    • Central Hawke's Bay
    • Wairoa
  • Taranaki
    • All Taranaki
    • Stratford
    • New Plymouth
    • Hāwera
  • Manawatū - Whanganui
    • All Manawatū - Whanganui
    • Whanganui
    • Palmerston North
    • Manawatū
    • Tararua
    • Horowhenua
  • Wellington
    • All Wellington
    • Kapiti
    • Wairarapa
    • Upper Hutt
    • Lower Hutt
  • Nelson & Tasman
    • All Nelson & Tasman
    • Motueka
    • Nelson
    • Tasman
  • Marlborough
  • West Coast
  • Canterbury
    • All Canterbury
    • Kaikōura
    • Christchurch
    • Ashburton
    • Timaru
  • Otago
    • All Otago
    • Oamaru
    • Dunedin
    • Balclutha
    • Alexandra
    • Queenstown
    • Wanaka
  • Southland
    • All Southland
    • Invercargill
    • Gore
    • Stewart Island
  • Gisborne

Media

  • Video
    • All Video
    • NZ news video
    • Herald NOW
    • Business news video
    • Politics news video
    • Sport video
    • World news video
    • Lifestyle video
    • Entertainment video
    • Travel video
    • Markets with Madison
    • Kea Kids news
  • Podcasts
    • All Podcasts
    • The Front Page
    • On the Tiles
    • Ask me Anything
    • The Little Things
  • Cartoons
  • Photo galleries
  • Today's Paper - E-editions
  • Photo sales
  • Classifieds

NZME Network

  • Advertise with NZME
  • OneRoof
  • Driven Car Guide
  • BusinessDesk
  • Newstalk ZB
  • Sunlive
  • ZM
  • The Hits
  • Coast
  • Radio Hauraki
  • The Alternative Commentary Collective
  • Gold
  • Flava
  • iHeart Radio
  • Hokonui
  • Radio Wanaka
  • iHeartCountry New Zealand
  • Restaurant Hub
  • NZME Events

SubscribeSign In
Advertisement
Advertise with NZME.
Home / Business / Companies

China's shake-up heightens regulatory risk for Kiwi businesses

Duncan Bridgeman
By Duncan Bridgeman
NZME Business Managing Editor·NZ Herald·
9 Sep, 2021 05:00 PM4 mins to read

Subscribe to listen

Access to Herald Premium articles require a Premium subscription. Subscribe now to listen.
Already a subscriber?  Sign in here

Listening to articles is free for open-access content—explore other articles or learn more about text-to-speech.
‌
Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Former a2 CEO Geoff Babidge with infant formula on the production line. Photo / Supplied

Former a2 CEO Geoff Babidge with infant formula on the production line. Photo / Supplied

China's dramatic regulatory crackdown is being closely followed by local fund managers amid speculation of possible flow-on effects to some Australasian businesses.

Questions have been raised, for example, about whether China could potentially look at introducing price caps on the sale of premium infant formula manufactured by international companies.

The speculation first surfaced after the State Council of China released new birth policy in July with a strong focus on reducing the costs of raising a child.

China moved to a three-child policy in May but the country's declining birthrate is thought to be more to do with the cost of education and other middle-class necessities than the controversial one-child policy.

Advertisement
Advertise with NZME.

While China is encouraging the population to have more babies, the Government has now moved to ease the financial burden on parents.

That resulted in the forceful intervention in the education sector last month, alongside a range of other regulatory moves in the online technology sector and against billionaires.

Investors in China have been shaken in recent weeks by a slew of regulations targeting sectors ranging from gaming to education. Photo / 123rf
Investors in China have been shaken in recent weeks by a slew of regulations targeting sectors ranging from gaming to education. Photo / 123rf

"Fortunately, there are no major Australasian companies that are largely impacted at this stage. But there is uncertainty for some industries, such as infant formula where there are some concerns that China may go as far as introducing price caps to reduce the costs of raising children," said Will Curtayne, fund manager at Milford Asset Management.

"It's just speculation at this stage but the situation continues to develop and quite rapidly.
"[Raising a child] is pretty expensive if you are not a wealthy Chinese parent. Some of them will be paying nearly $60 a tin for premium infant formula."

Advertisement
Advertise with NZME.

He noted a recent shift toward domestic manufacturers in China, which has come at a cost to some international brands like a2.

"Price caps could be another way if they wanted to hurry up a transition back to domestic brands even more, by potentially just putting price caps on international products, rather than your domestic stuff," Curtayne said.

However, local firms see no reason to panic – at least not at this stage.

Fonterra, which doesn't export a huge amount of infant formula to China, appears reasonably unfazed by what's happening over there.

"We're seeing no changes in Infant Formula prices in China," a spokesperson said.

The a2 Milk Company, which has already experienced multiple earnings downgrades over problems with its sales network in China, declined to comment specifically on China policy.

However, as expected it has been monitoring developments closely.

A spokesperson said the company couldn't identify any reliable statement at the time that the government intended to take measures on infant formula pricing.

Advertisement
Advertise with NZME.

In its results commentary last month, a2 said the "dynamic and challenging market conditions" over the past year highlighted the need to review and adapt elements of the company's long-term strategy and execution.

"The company recognises that the China infant nutrition market structure is changing rapidly. While consumers still have a strong preference for premium infant nutrition, market growth is being impacted by a more pronounced reduction in the birth rate. In addition, the shift towards China label infant nutrition continues, the rate of new product innovation has ramped up, channels to market are changing and competitive intensity is increasing, with domestic players continuing to gain market share."

It has initiated a comprehensive review, including the company's approach to infant nutrition growth in both China label and English label channels.

Meanwhile, investors in China have been shaken in recent weeks by a slew of regulations targeting sectors ranging from gaming to education.

Chinese President Xi Jinping. Photo / Greg Bowker
Chinese President Xi Jinping. Photo / Greg Bowker

China's two tech giants Tencent and Alibaba have both slumped more than 35 per cent from their highs for the year. Online tutoring companies such as New Oriental Education and TAL Education Group are down more than 85 per cent. Milford's Curtayne said China's intervention in the education and online tech sectors is a big reminder that regulation risk has heightened.

"China is not just doing this to spite international firms. They are doing this probably reluctantly to deal with growing social unrest driven by wealth inequality and the lack of affordability in education and health etc.

"The big shock and awe factor has probably largely played out but there will be incremental fine tuning and adjusting and certain sectors they continue to look at.

"So, for New Zealand businesses doing business up there it's a good reminder that the cost of capital and required return on investing in China has got to be higher because it is a high-risk destination."

Save

    Share this article

    Reminder, this is a Premium article and requires a subscription to read.

Latest from Companies

Premium
Property

'Grit their teeth': Sweeney on Dubliners living on proposed MetroLink route

07 Jul 03:05 AM
Premium
Companies|tourism

Why former SkyCity execs are being sued for breach of duties

07 Jul 01:56 AM
Premium
Retail

Kiwi beverage maker leaves $7m in unpaid debts

06 Jul 09:20 PM

From early mornings to easy living

sponsored
Advertisement
Advertise with NZME.

Latest from Companies

Premium
'Grit their teeth': Sweeney on Dubliners living on proposed MetroLink route

'Grit their teeth': Sweeney on Dubliners living on proposed MetroLink route

07 Jul 03:05 AM

'I would have preferred to stay in New Zealand,' says Sweeney.

Premium
Why former SkyCity execs are being sued for breach of duties

Why former SkyCity execs are being sued for breach of duties

07 Jul 01:56 AM
Premium
Kiwi beverage maker leaves $7m in unpaid debts

Kiwi beverage maker leaves $7m in unpaid debts

06 Jul 09:20 PM
Premium
'Give it a second chance': Ruby's recycled clothing venture takes off

'Give it a second chance': Ruby's recycled clothing venture takes off

06 Jul 03:00 AM
Solar bat monitors uncover secrets of Auckland’s night sky
sponsored

Solar bat monitors uncover secrets of Auckland’s night sky

NZ Herald
  • About NZ Herald
  • Meet the journalists
  • Newsletters
  • Classifieds
  • Help & support
  • Contact us
  • House rules
  • Privacy Policy
  • Terms of use
  • Competition terms & conditions
  • Our use of AI
Subscriber Services
  • NZ Herald e-editions
  • Daily puzzles & quizzes
  • Manage your digital subscription
  • Manage your print subscription
  • Subscribe to the NZ Herald newspaper
  • Subscribe to Herald Premium
  • Gift a subscription
  • Subscriber FAQs
  • Subscription terms & conditions
  • Promotions and subscriber benefits
NZME Network
  • The New Zealand Herald
  • The Northland Age
  • The Northern Advocate
  • Waikato Herald
  • Bay of Plenty Times
  • Rotorua Daily Post
  • Hawke's Bay Today
  • Whanganui Chronicle
  • Viva
  • NZ Listener
  • Newstalk ZB
  • BusinessDesk
  • OneRoof
  • Driven Car Guide
  • iHeart Radio
  • Restaurant Hub
NZME
  • About NZME
  • NZME careers
  • Advertise with NZME
  • Digital self-service advertising
  • Book your classified ad
  • Photo sales
  • NZME Events
  • © Copyright 2025 NZME Publishing Limited
TOP