Modern Australian

Conditions built into Frydenberg's okay for Chinese baby formula takeover

  • Written by Michelle Grattan, Professorial Fellow, University of Canberra
Conditions built into Frydenberg's okay for Chinese baby formula takeover

The proposed acquisition of infant formula producer Bellamy’s Australia Ltd by China Mengniu Dairy Company Limited has been given approval by Treasurer Josh Frydenberg.

Strict, legally enforceable conditions, have been set by the treasurer, which have provided critics with a degree of reassurance, although the decision still came under some fire when it was announced on Friday.

Frydenberg indicated he acted on the basis of a unanimous recommendation from the Foreign Investment Review Board.

Bellamy’s sells into China but has had trouble getting the needed Chinese approval for its formula to be sold in retail outlets there, in a period of significant change to China’s dairy industry.

Ups and downs ahead of takeover

It achieved some brand recognition when its product was bought in local supermarkets and shipped to China through daigou, a micro export channel of individual and small buying operations.

Mark Harrison, senior lecturer in Chinese studies at the University of Tasmania, told The Conversation Bellamy’s performance had been “up and down” and it had been through significant management upheavals in recent years. These had opened the possibility of a takeover.

It had brand value but the failure to run a consistent business would have made it an attractive target for the Chinese company, Harrison said.

Read more: Chinese personal shoppers have created a new type of retail store in Australia

Frydenberg said the approval “will ensure Bellamy’s can continue to support jobs in Australia and strengthen its ability to expand its domestic market as well as its export opportunities, particularly into the growing Asian market.

"The decision will also provide opportunities for the suppliers that contribute to Bellamy’s products, including Australian dairy farmers.”

The conditions require:

• a majority of Bellamy’s board to be Australian resident citizens

• maintenance of its headquarters in Australia for at least ten years; and

• an investment of at least $12 million in establishing or improving infant milk formula processing facilities in Victoria.

Frydenberg said the conditions would ensure that Bellamy’s maintained its presence in Australia, and that Bellamy’s proceeds with previously announced investment in infant milk formula processing facilities.

He pointed out the conditions were legally enforceable.

Independent MP Andrew Wilkie, from Tasmania, said it was “very disappointing to see another iconic Australian company fall into foreign hands”.

Although Bellamy’s is a relatively new company with a limited physical presence in Australia, … it has achieved a very important role in the supply of high-quality baby formula for Australian consumers.

Bellamy’s is number four by market share in the Australian infant milk formula market.

Wilkie warned against “a repeat of the farcical sale of the Van Diemen’s Land Company, where foreign buyers promised the world but failed to deliver on just about any of it.

The Foreign Investment Review Board must be sure that the Bellamy’s approval is accompanied by an ironclad guarantee that Australian jobs will be maintained, and that the continued supply of baby formula to Australian markets is not interrupted.

Greens Treasury spokesman Peter Whish-Wilson, also from Tasmania, said the decision was regrettable but he highlighted the conditions.

"We welcome the decision to apply binding and enforceable conditions on the sale of Bellamy’s such as compelling local investment and employment”.

‘Regretable’ but conditional

Whish-Wilson said Frydenberg’s move “clearly acknowledges the problems with the previous controversial Van Diemen’s Land approval where promises were voluntary and have not been implemented”.

Pauline Hanson slammed the decision. “Stop, just stop! Enough with the rampant sell off of Australia,” she said on Facebook.

She said this took “another chunk out of Australia’s ability to produce enough food for our own people”.

Shadow treasurer Jim Chalmers said it was up to Frydenberg to explain how and why the the decision was in the national interest.“We need to know more about the undertakings that have been given and that they’ll be followed through”.

Read more: Worried about agents of foreign influence? Just look at who owns Australia's biggest companies

Former Nationals leader Barnaby Joyce told the Australian he was “disappointed to see yet another piece of Australia sold to the Chinese” but pointed out Bellamy’s was not a monopoly.

He emphasised that there should not be slippage in the application of the conditions.

Authors: Michelle Grattan, Professorial Fellow, University of Canberra

Read more http://theconversation.com/conditions-built-into-frydenbergs-okay-for-chinese-baby-formula-takeover-127121

NEWS

Morrison won't have a bar of public service intrusions on government's power

Scott Morrison has rejected or sidelined a number of recommendations from the long-awaited Thodey review.AAP/Paul BravenScott Morrison has rejected or sidelined a number of recommendations from the long-awaited Thodey review...

Michelle Grattan reflects on the year in politics

For their last video for the year, University of Canberra Vice-Chancellor Deep Saini and Michelle Grattan look backwards to the big issues which have shaped political discourse. They discuss the...

no wonder many Christian men today are having a masculinity crisis

How men saw God shaped how they saw themselves, and in turn, how they saw women. WikimediaThis article is part of our Gender and Christianity series.To understand contemporary Christian ideas...

Australia needs a national crisis plan, and not just for bushfires

Bushfires aren't the only catastrophic emergency Australia is likely to see. AAP Image/Mick TsikasCalls are growing for a national bushfire plan, including from former prime minister Malcolm Turnbull, who says...

Your Christmas shopping could harm or help the planet. Which will it be?

Many Australian consumers are concerned at the environmental impact of their shopping habits, especially at Christmas.AAPAustralian shoppers are set to spend $52.7 billion this Christmas. In the words of the...

Right-swipes and red flags – how young people negotiate sex and safety on dating apps

For many young people, app dating is just part of regular dating life.freestocks.org/UnsplashPopular commentary on dating apps often associates their use with “risky” sex, harassment and poor mental health. But...

Bougainville has voted to become a new country, but the journey to independence is not yet over

The Autonomous Region of Bougainville, a chain of islands that lie 959 kilometres northwest of Papua New Guinea’s capital, Port Moresby, has voted unequivocally for independence.The referendum saw 85% voter...

Friday essay: eco-disaster films in the 21st century

A scene from the 2017 film Geostorm: many societies have historically attempted to deal with collective trauma by replaying and restaging it in art.Warner Bros., Electric Entertainment, Rat Pac-Dune EntertainmentIt...

A new study shows an animal's lifespan is written in the DNA. For humans, it's 38 years

A genetic "clock" lets scientists estimate how long extinct creatures lived. Wooly mammoths could expect around 60 years.Australian MuseumHumans have a “natural” lifespan of around 38 years, according to a...

Australia's wafer-thin surplus rests on a mine disaster in Brazil

On Monday the Australian government will release the Mid-Year Economic and Fiscal Outlook (MYEFO). This will – as required by the Charter of Budget Honesty – provide an update on...

these 5 charts show our democracy is safe in the hands of future voters

Almost 900 school kids, aged 12 to 17, were surveyed.ShutterstockA new, ongoing survey on how young Australians understand and imagine their democracy is already challenging long-held stereotypes. The survey –...

Private health insurance premiums should be based on age and health status

Policy changes have failed to stop young people dropping their private health insurance.ShutterstockPrivate health insurance has come under intense scrutiny in recent months, as it becomes clear health insurers are...

Popular articles from Modern Australian

Are Root Canals for Baby Teeth Necessary?Simple Yoga Exercises to Stretch and Strengthen7 Tips for Effective Spring Cleaning Stress Less - 5 Tips For Getting Through The Holiday Season On A Shoestring BudgetMesmerising Interior Design Trends for 2020 That Will Transform Your HomeTips for Sports BettingWhat Essentials to Consider to Avail Right Insurance Policy6 Essential Features You Should Consider Before Buying a Ski WatchNew or Used Car: How to Select The Best For Your FamilyChoosing a home builder in SydneyWhy regular visits to the eye doctor are important6 Budget Tips for a Student Studying Abroad in Australia5 Ways to Style Your Winter Wardrobe Essentials Into Versatile Outfits5 Brisbane Summer Classes Your Teens Can AttendSummer Gardening Tips