So she got a necklace with a jade-coloured pedant, put it on, got a photo of President Xi and good fortune did come to her. In the next two years Blackmores shares rocketed more than 520 per cent to more than $200. But this week – the same week that Prime Minister Malcolm Turnbull took about 1000 of Australia's business leaders to China for the country's biggest trade mission – Blackmores' luck appeared to be running out. While the trade mission, as expected, involved tours, high-level meetings, photo opportunities and banquets, what was not anticipated was falling share prices back in Australia and mass confusion among the financial community. Investors were rattled after President Xi's government launched a crackdown on online sales, and Blackmores' products were in the firing line.

Almost $650 million has been blasted off the company's market value in the past week, with its share price tumbling from $203.88 last week to $165.68 on Friday morning. The changes involve charging an 11.9 per cent tax on cross-border e-commerce sales and drafting a list of what can or cannot be sold on that platform in an attempt to level the playing field between online and traditional bricks and mortar stores. The challenge for Blackmores was that under the new rules, health foods, needed similar approval to products sold through traditional import channels. Working in China doesn't work that way. You have to have patience. It takes time and things go wrong but this truly is a land of opportunity … this is a place where dreams are made of. Blackmores chief executive Christine Holgate This process is lengthy, particularly for dietary supplements, taking about three years, and is expensive. Industry insiders told Fairfax Media approval for one item could cost about $200,000.

"We are going through it now," Holgate says, adding they had been waiting one year for product approvals. But she is adamant China's new rules weren't locking out Blackmores' products from the country. Indeed, customs officials approved a shipment of Blackmores goods when they arrived in Shanghai on Monday. "There are three routes into China," she says. "I think it's a really important market, but … we estimate that China-influenced sales in the first half were $130 million. That [cross-border] bonded warehouse part was $15 million, so it's a fraction of the overall opportunity here." Blackmores chief executive Christine Holgate and chairman Marcus Blackmore. Credit:James Brickwood Blackmores competitor Swisse is also continuing to sell products into China. But chief operating officer Adem Karafili says, in the longer term, it will be tougher for the company to gain regulatory approval for some of its more complex products.

"There are three different categories that our products sit under," Karafili says. "There's food, there's health food, there's dietary supplements. To get right through to the dietary supplements you need the full 'blue hat' registration, which can take up to three years and is inordinately expensive. Fortunately for us, many of our bigger-selling products in China actually fit in a couple of other categories." In the meantime, he says Swisse will divert some of its product back to Australia to be sold on the grey market back to China, which is not subject to the new rules. Such is the demand on the grey market – which involves customers selling or gifting products to each other – that many popular brands of infant formula, and vitamins, sold out across Australian supermarkets late last year, following China's biggest online sale, Singles Day. It is a market that has been growing steadily and fuelled revenue surges for companies including Bellamy's Organic and a2 Milk.

It is now estimated that about half of all the infant formula sold at Australian groceries ends up in China. "That direct small parcel trade to China is still relevant," Karafili says, adding that Swisse was expecting a surge in trade through this channel. But he says this won't mean the company will increase supply. "The way we're looking at it, it's not necessarily an incremental increase [in supply], rather a shift in allocation of revenue," he says. "So stuff that we might have been directing to China … we'd probably shift that back into direct Australian consumption. What it would do is increase the retail activity here in Australia, so it might be good for our retailers here." Demand for food and health products in China isn't expected to slow as its middle class grows. Karafili hopes Beijing will eventually streamline the approval process for goods to be sold through authorised channels. In the months following the signing of Australia's long-awaited free trade agreement with China last year, Swisse has been campaigning for Beijing to recognise the Australia registration system for health products, which is set by the Therapeutic Goods Administration.

Holgate made a similar call this week. "This is a pretty pertinent time now to really start looking at what free trade actually is," Karafili says. "Our regulatory environment here in Australia … is the best regulatory environment globally. "The consumer gets it, I think the [Chinese] government will get it over time." China's four biggest online retailers – Alibaba, JD.com, VIP.com and Yihaodian – were having high-level meetings with Chinese officials to clarify the law changes for their Australian, US and European retail partners to ensure smooth trade in the immediate future. How it works China's biggest online retailer, Alibaba, withdrew products from Australia's biggest milk processor, Murray Goulburn, from its popular Tmall site, pending further information from the Chinese government.

Murray Goulburn managing director, Gary Helou says the company was fortunate that it had a wide distribution network in china through conventional importers, so he doesn't expect the new rules to materially effect the dairy co-operative's overall sales. But Freedom Foods, which also uses traditional importers and had certification for general trade, said confusion still reigned. "There are a lot of people running around, a lot of high level meetings in Beijing, and a lot of representation from players to clarify the rules around vitamins and supplements and infant formula," says Freedom's managing director, Rory Macleod, who is on the trade mission. "It's quite ambiguous." UHT and powdered milk were excluded from the list of goods allowed to be sold through the cross-border e-commerce channel, prompting Freedom to reshuffle its product distribution arrangements in China. It is now estimated that about half of all the infant formula sold at Australian groceries ends up in China. Credit:Steven Siewert

The company – backed by the billionaire Perich family – had been increasingly selling UHT milk – produced through its joint venture with Australian Consolidated Milk, Pactum Dairy – via the cross-border e-commerce platform. "Some of the changes are a little bit of a disruption … because we are shifting more of the UHT sales to cross-border, and now we are shifting that back into general trade," Macleod says. But he says Freedom Foods had been expecting China to tighten the cross-border market for some time. "The whole cross-border market has allowed you to effectively sell under whatever your own domestic requirements are, without having to be subject to China regulation," he says. "It has been a way of fast tracking entry. Effectively it has been a way for the government to allow consumers to catch up without having to completely change the rules in China. In time, you will have to see equalisation and Chinese regulation will have to improve." Beijing's tightening of regulation was felt back in the electorate of the man Malcolm Turnbull left in charge of running Australia while he was in China – Nationals leader Barnaby Joyce.

Prime Minister Malcolm Turnbull with Chinese Premier Li Keqiang. Credit:Andrew Meares Bindaree Beef, which is based at Inverell in Joyce's electorate of New England in Northern NSW, has been exporting meat – in supermarket-ready packaging – via JD.com for the past four months. It sends product to China directly to JD.com, which is controlled by billionaire Richard Liu, in a conventional-type import relationship rather that through the free-trade zones. But Bindaree chief executive James Campbell expects the new regulations will spill over into all types of trade. "It looks like there will be a flow on effect into the overall online platforms regardless of cross-border or direct though," Campbell says. "What we are seeing is innovation, and very quick effective innovation, and then reform quickly following up."

Bindaree is working on developing non-internet based distribution relationships in China, but Campbell says partnering with a big e-commerce player helped eliminate some of the risk of "your product being lost or covered up with competition". Is China crying over spilled milk? "They [the e-commerce giants] are creating an entire set of channels and they are touching every possible corner of business in China and soon-to-be the world." What hit him between the eyes was the importance of "doing of what you're absolutely best at. Whether that is … in our case with Bindaree Beef Group, getting a product into a retail pack and shipped into China and then partnering up with someone who is best at hitting the distribution and sales." "What we are really focused on is retail-ready, chilled, packed-in-Australia product, online. We have been going at it for four months. It's selling in the market. We are now working hard to open up those channels further into an offline environment."

A JD.com spokesman expects Chinese consumers to pay higher prices for some products but says there are still tax advantages for cross-border trade. "Further, the new regulations should unify the code across all cities," he says. But the tightening of retail trade for foreign goods has triggered questions about how 'free', Australia's free trade agreement with China really is. Trade Minister Steven Ciobo stresses the new rules didn't contravene the spirit of the agreement, telling the ABC that Australia still has a "material advantage" over other countries exporting to China. "Let's not lose sight of that fact," Ciobo says. "Australia does have preferential market access under the China-Australia Free Trade Agreement, we'll be in a better position relative to our competitors to still be a market leader in the China market. "Now, domestic policy changes that are made by the Chinese government, with respect to the decision about where they impose taxes, are of course rightly the decision that falls upon the Chinese government."

Turnbull is similarly upbeat and was confident China's regulatory changes wouldn't put the brakes on the so-called dining boom. "We will all benefit from a stronger Chinese economy," Turnbull said from Beijing on Friday. "So many of our small and medium businesses are partners in that, as you saw 1000 of them coming to Shanghai. But many thousands back home in Australia are enjoying the greater opportunities from a Chinese economy that is more diverse, where household consumption plays a much larger part." And despite the rollercoaster ride Blackmores and other companies faced this week, Holgate believes her luck isn't running out – her mother even stitched the jade-coloured pendant necklace into her wedding dress when she got married in January. "[It is] not about quarterly or half-year earnings pressure," she says. "Working in China doesn't work that way. You have to have patience. It takes time and things go wrong but this truly is a land of opportunity … this is a place where dreams are made of."