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ANZ formula companies reeling in wake of China’s production plans

Infant milk formula companies in Australia and New Zealand including Bellamy’s and the A2 Milk Company were dealt a blow this week after China unveiled a plan to boost its local formula output and reduce reliance on imports.

China revealed plans to exceed 60 per cent self-sufficiency for baby formula and improve the quality of domestic brands, Bloomberg reported.

Authorities are hoping to restore confidence in the $27 billion industry after a deadly milk scandal in 2008, which saw several deaths and tens of thousands of babies hospitalised, rocked consumer confidence in local products.

AuMake made a statement on Wednesday regarding China’s plans saying that it will not be affected as it sources infant milk formula brands from ANZ suppliers and these are then purchased by Australian-based daigou and visiting tourists.

“Delivery of ANZ products to China via parcels (including the payment of all relevant taxes) continues to be a secure pathway for ANZ products to reach the Chinese market,” the company said in a statement to the ASX on Wednesday.

A2 Milk fell 11 per cent to NZ$14.09 on Tuesday, while Bellamy’s Australia Ltd. lost 5.4 per cent, or A$50 million ($35 million), adding to Monday’s 3.2 per cent drop.

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