A2 Milk welcomes China crackdown on counterfeit products

Infant formula marketer a2 Milk has welcomed China's new e-commerce rules. Photo/NZ Herald.

A2 Milk said it welcomed moves from China aimed at cracking down on counterfeit products trading on e-commerce platforms.

An announcement from China's State Administration of Market Regulation and other ministries and bureaus late yesterday outlined measures to ensure successful implementation of new e-commerce legislation, which came into force in April.

A2, which is responsible for over 5 per cent of the Chinese infant formula market, said it revealed an intention to increase the focus on supervision and enforcement of the e-commerce legislation.

In the process, China would standardise e-commerce business practices, enhance the integrity of the digital market trading environment - including advertising and marketing - and maintaining market order.

The announcement sets out China's intention to ensure that no counterfeit product is sold via all e-commerce platforms, including social e-commerce and cross-border e-commerce channels.

"We welcome measures that protect the rights and safety of consumers and the overall integrity of e-commerce channels and will continue to work closely with our partners through this process," a2 Milk said in a notice to the NZX.

Oyvinn Rimer, senior research analyst at Harbour Asset Management, said the announcement builds on last year's commerce law and kicks off with a multi-agency research programme to identify illegal activities on e-commerce platforms.

"No specific details but there is broad based e-commerce scope - with no reference to single products like infant milk," he said in a note.

China's announcement contained "very tough" language about the severe penalties involved, he said.

"Personally, it reads well for a2 Milk being a compliant and registered brand with legitimate distribution," Rimer in a note.

Shares in a2 Milk were trading down 34c or 2.4 per cent at $13.96 in late afternoon trade.

One fund manager said it appeared that a2 Milk had been caught up with the trend on the ASX - where a2 Milk is also listed - of profit-taking among the so called "growth" stocks.

He said weakness in the share price did not appear to be connected to the announcement

Harbour Asset has a stake in a2 Milk.