A few months ago organic baby formula company Bellamy's Australia was riding high.

Chinese consumers couldn't get enough of the product, buying up all the Chinese supply they could get and snapping up tins of the infant formula in Australian supermarkets to take home.

Shares in the company were trading as high as A$16.50 ($17.23 ) each and the company was valued at over a billion dollars.

But in a sign of how fickle and fleeting success in China can be, Bellamy's has come crashing back to earth.


The company's share price has fallen by more than half since it said revenue for 2017 would be around A$240 million - not a terrible result for most companies but a disaster for a high-growth company like Bellamy's.

It is a long way below the A$368 million analysts were expecting - a figure which the company didn't dispute or correct as recently as its annual meeting in October.

"The company has experienced temporary volume dislocation in China sales channels which are adjusting for regulatory changeover," the firm said.

But only six weeks before news of this "temporary volume dislocation" (whatever that means) Bellamy's told investors it was well-prepared for the new rules. "Bellamy's has planned for the anticipated regulatory changes over the last two years," the company said at its AGM.

The Chinese government is trying to cut back on the number of infant formula brands in the market, although how it will affect Bellamy's isn't clear.

The turning point for the company was disappointing sales on "Singles Day" - the biggest online shopping event in the world on November 11. It seems the company overestimated its sales and brought in too much stock, so now is slashing prices in China to get rid of it.
Its profit margins will be lower as a result of the discounting.

Bellamy's has well and truly lost its status as a market darling. Its shares surged on debut a little over two years ago and at one point were trading at 16 times their A$1 issue price. Those sort of stock prices need to be fed by a constant supply of good news - one misstep and the company is severely punished, as Bellamy's has learned.

The company is promising to bounce back in 2018 but we would have to take what they say with a grain of salt. "Looking forward, Bellamy's continues to build a sustainable long term business, focused on increasing distribution across Australia and Asia, while sowing the seeds for new markets."



Another company suffering at the hands of Chinese regulators is James Packer's Crown Resorts Regulators in Beijing halved allowable cash withdrawals in the world's biggest gaming hub Macau, where Packer has casino interests.

China UnionPay cardholders will now only be permitted to withdraw 5,000 patacas a day from ATMs in Macau, essentially reducing the amount of cash gamblers will be able to lose in Packer's casino.

Shares in Crown, which owns 27 per cent of Macau casino operator Melco Crown, were down 6 per cent to $11.30 on Friday.

All in all it's been a bad year for Packer, with several of his casino sales people arrested recently in China, hurting Packer's ability to attract Asian high rollers.

There are a lot of opportunities in China, but it's also an unpredictable market with a lot of pitfalls.


The government looks as if it is making some progress with its crackdown on multi-national companies avoiding paying tax in Australia.


The Australian Tax Office is pursuing seven global companies over unpaid tax worth A$2 billion.

In total, the ATO has identified 105 companies which fall within the scope of its new Multinational Anti-avoidance Law, which aims to stop major corporates shifting profits out of Australia and to low tax or no tax jurisdictions.

The law hits companies which shift profits offshore with a punitive 40 per cent penalty on top of the tax they have to pay.

Already, 24 of the affected companies are restructuring their Australian operations to book their profits onshore, and the ATO expects most of the others to do the same.
Despite the success, there is still more work to do.

Of the 1904 companies operating in Australia which have revenue of A$1 billion or more, 679 paid no tax in the 2014-15 tax years, hardly any less than the year before.

There can of course be legitimate reasons that companies pay no tax, mainly that they didn't make a profit.


However, the fact that 36 per cent of Australia's largest companies paid no tax should make us suspicious.

The crackdown comes at a time when the government is trying to legislate a cut in the corporate tax rate from 30 per cent to 25 per cent. This tax cut should be a reward for good corporate citizens, not for those who have shirked their responsibilities and debts to Australia for so many years.