March 6 (Reuters) - Infant formula maker Bubs Australia Ltd said on Wednesday it intends to form a joint venture with Shenzhen-listed Beingmate Baby & Child Food Co Ltd to distribute Bubs’ products in China.
The companies have entered a non-binding memorandum of understanding with the intent of eventually forming a joint venture in Shanghai, Bubs said in a statement.
Bubs’ products will be distributed across Beingmate’s 30,000-strong store network, the company said. Beingmate’s board has agreed to establish the joint venture with costs of up to 10 million yuan ($1.49 million).
China represents a valued growth market for several Australian manufacturers, owing to its vast spending population and their preference for Australian imports. Formula makers such as Bellamy’s Australia and a2 Milk Co make a bulk of their fortunes in the Asian superpower.
However, fickle regulators in China also provide an element of risk to selling in the country, as evidenced by Bellamy’s recent profit drop.
$1 = 6.7060 Chinese yuan renminbi Reporting by Ambar Warrick in Bengaluru; editing by Grant McCool and Lisa Shumaker