Bubs to manufacture goat milk in China

Bubs Australia is now planning to start production of its goat milk in China, as the company becomes increasingly concerned over the political rifts between China and Australian governments which might lead to more trade regulatory controls in the near future.
Recently, Bubs has signed a memorandum of understanding (MoU) with Chinese infant formula giant, Beingmate to start manufacturing in mainland China of infant formula using Australian sourced goats milk. This action seems to be a huge contrast from the past when Chinese consumers prefer to buy imported (foreign) milk products due to the melamine milk contamination scandal in 2008. With growing nationalism, Chinese consumers now seem to have no problem with buying domestic brands.
China had tightened regulation around the sale of infant formula, which involved limiting the number of brands available via accreditation from the State Administration for Market Regulation (SAMR). Kristy Carr, Bubs’ Chief Executive said, “Since April 2019, 92 product applications have been successful in obtaining SAMR registration. Of these, 77 are manufactured in China. Of the 15 products that are manufactured outside of China, 9 are Chinese owned brands manufactured in France. The only international brand to achieve certification during this period was Wyeth for 6 products manufactured in Singapore.”
Bubs’ new strategy of localising production is to combat China’s targeting of Australian brands following Australian government’s enquiry over the source of COVID-19 pandemic. It was highly suspected that export of milk powder will soon face punitive restrictions, and this might be detrimental to Australian suppliers who depend heavily on China for exports.
Ms Carr said, “This breakthrough localisation strategy for a ‘created by Bubs’ product to be packed in China exclusively from our own Australian premium goat milk mitigates key risks and provides a secure pathway to gaining full access to the world’s largest and fastest growing Infant Formula market, valued at A$55 billion (US$40 billion).”
Bubs China label Goat Milk Infant Formula will be produced in Beingmate’s certified Infant Formula production facility in Beihai and be positioned as a premium product targeting China’s lower-tier cities. Beingmate has great success for many years driving distribution of their 51 registered infant formula products across their 30,000 strong Mother and Baby store network. Under the MoU, Bubs will also acquire an ownership interest (25-35%) in Beingmate’s Infant Formula factory at Beihai in China, and obtain Beingmate’s crucial support in securing SAMR registration while retaining full IP ownership of the Bubs brand.
Currently, Bubs does not have the necessary regulatory approval to sell Chinese label goat milk infant formula products in Chinese retail stores. However, by producing at the certified Beihai factory, Bubs hopes to get the approval for its own China label products manufactured at the plant to be sold in Chinese retail outlets.