BUBS AUSTRALIA BOOSTS CHINESE PRESENCE, SHARES SURGE MORE THAN 13 PER CENT

Written on the 19 June 2017 by David Simmons

BUBS AUSTRALIA BOOSTS CHINESE PRESENCE, SHARES SURGE MORE THAN 13 PER CENT BUBS Australia Limited (ASX: BUB) has expanded its footprint in China after signing a strategic partnership with NetEase Kaola.com which will give it access to up to 15 million potential new customers

The infant formula and organic baby food producer will sell its range on Kaola's cross-border e-commerce platform and the announcement sent Bubs shares up by 13.8 per cent to $0.17.

Kaola has the highest market share among China's cross-border retail import e-commerce business, meaning Bubs is well placed to tap into the strong appetite the Chinese market has for safe infant formula products.

NetEase Kaola CEO, Ms Zahng Lei, says Bubs' products will be well received by their 15 million targeted and affluent customers.

"Their goat milk infant formula and organic baby food will be in great demand in the high-end oriented and diversified Chinese market," says Lei.

"Kaola is looking forward to the deeper collaboration with Bubs Australia to offer Bubs high quality Australian made products to our Chinese customers."

As part of the announcement of the partnership the two companies participated in a livestream event showcasing Bubs products which was viewed more than 1.3 million times.

Baby products, including infant formula, make up Kaola's second largest product category, behind cosmetics, with 42 per cent of their customers having purchased related products.

Kaola's customers spend twice as much as the cross-border e-commerce industry average per transaction.

Bubs Australia CEO, Nicholas Simms, says the partnership with Kaola, owned by NASDAQ-listed Chinese internet group NetEase, is an important step in the group's international expansion strategy.

"We consider this strategic partnership with NetEase Kaola to be an important development in progressing our cross-border e-commerce strategy," says Sims.

"By establishing long-term agreements directly with leading platforms, we can reinforce Bubs premium positioning and Australian provenance in a controlled environment, whilst remaining highly scalable and appropriately manage our inventory."

Bubs is not the only company successfully tapping the Chinese demand for infant formula. Last week the a2 Milk Company (ASX: A2M) upgraded its forecast revenue by almost $19 million because of increased Chinese demand.

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Author: David Simmons

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