The Bubs Australia Ltd (ASX: BUB) share price rose 4% on Friday after the company provided an ASX release about a CFDA registration and an agreement with Chinese e-commerce giant Alibaba Group Holding Ltd (NYSE: BABA).
Bubs Australia is a producer and seller of organic baby food and goat milk formula.
China Food and Drug Administration (CFDA)
In its public filing, Bubs announced it has entered into a binding manufacturing agreement with Australia Deloraine Dairy Pty Ltd, which is one of only 15 facilities in Australia authorised by Certification and Accreditation Administration to produce infant formula products eligible for import to China.
Bubs has now applied for China Food and Drug Administration (CFDA) registration. Bubs’ Chairman Dennis Lin said there is an increasing demand for goat milk based formula in China and this agreement will allow the company to advance its China expansion strategy.
“This strategic partnership is a crucial step in achieving CFDA registration, enabling us to advance our China expansion strategy for physical export of Bubs Chinese labelled infant formula products into Mother and Baby stores in China,” Lin said.
Bubs will purchase at least 500,000 tins in the first year after registration, reaching 1.5 million tins in the fifth year.
Alibaba and Tmall agreement
Alibaba is the largest e-commerce platform in China, it owns the Tmall website.
Bubs have launched on the Tmall Global store selling its range of formula, baby food, cereals and snacks. The company said it is hoping to generate around $1 million of sales in the first 12 months.
It seems Bubs is hoping to tread in the footsteps of Chinese success stories, Bellamy’s Australia Ltd (ASX: BAL) and A2 Milk Company Ltd (ASX: A2M).
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