News Ltd papers have been running a number of stories in the last week claiming that there is a huge “baby milk scam” involving Chinese nationals buying baby formula in Australia, shipping it back to China, and selling it for a profit.

Here’s one recent article

Chinese milk it in baby formula scam (News.com.au 5/1/13)

A CHINESE webpage advertising bulk orders of infant formula to buyers in China is getting its supplies from a major supermarket chain.

News Ltd reported this week that pharmacy and supermarkets shelves have been cleaned out of Australian and New Zealand name-brand powdered infant formulas after several health scares in China.

The Chinese website advertises that Karicare Aptimal Gold Stage 1 tins can be bought at Woolworths in Box Hill, Melbourne, for $22.49 each retail with the site organiser selling to buyers back home at about $37, an extra $15 per tin, or $90 profit per case of six. Express shipping costs another $63…

…As News Ltd reported yesterday, traders stand to benefit up to $700 a week, or more than $36,000 tax free from the scheme.

So what they are describing is this

1. Somebody buys a wanted product in Australia
2. Exports it to China
3. Sells it at a small profit to locals (I have no idea about shipping costs but the $15 per tin quoted it net not gross profit.)

I regularly shop on eBay. I see people do this regularly

1. Somebody buys a wanted product in China
2. Ships it to Australia
3. Sells it a profit to locals

We’d call the second example free market enterprise, and yet News Ltd labels the first example a “baby milk scam.”

Exactly how is buying products here and shipping them overseas for resale illegal….oh wait, it’s not. 

China, like Australia imposes tax on items imported into the country; in Australia you pay tax on items valued at over $1,000; in China, as best as I can find, you pay a 10% import duty on baby formula (Section 3 part 2 Tariff zone 1 Customs Duties of the Luggage and Mailed Articles.)

The import and export of such products, presuming such taxes are paid, is 100% legal in BOTH countries.

Once again, where is the scam exactly?

You can’t help but think there’s a touch of old fashioned “yellow menace” xenophobia in such absurd reporting, because if the Chinese are involved it must be a shady scam right…I mean that’s what the so-called journalist is trying to make the story into, when it’s clearly nothing of the sort.

That Australian product is in such demand in China is a good news story and yet the paper completely ignores the export opportunities; this is a huge opportunity for Australia formula makers to expand their product and to export their product China, the fastest growing market economy in world. Exporting this product would create jobs at home, help farmers, increase Government coffers through increased company and personal taxes, and help the trade balance.

Oh wait, that wouldn’t make a sensationalist scaremongering xenophobic headline though, would it 😉