The recent news of tightening regulation and a new 11.9% tax on all foreign goods bought on the internet in China has hit a number of ASX shares hard, especially those with significant Chinese ambitions.

Baby formula and nutrition businesses Bellamy’s Australia Ltd (ASX: BAL) and Vitaco Holdings Ltd (ASX: VIT) were smashed yesterday, losing 11% and 10% respectively. Beauty product seller BWX Ltd (ASX: BWX) was also decimated, losing 11% of its value despite the fact that the company’s operations are predominantly in Australia.

Other businesses to be affected include a2 Milk Company Ltd (Australia) (ASX: A2M) which also has most of its operations in Australia and New Zealand, although investors were apparently factoring in significant growth in its Chinese market. A2 shares dipped 6% yesterday, while vitamin seller Blackmores Limited (ASX: BKL) lost 7% in addition to a hefty 10% fall on Monday.

What’s really at risk?

Ultimately, the tax could potentially have a massive impact on sales, especially if equivalent products are available locally that are not subject to the tax. However, the primary consideration for many product purchases – especially those of Bellamy’s and Blackmores – does not appear to be cost alone, but a combination of perceived quality and safety associated with their Australian manufacturers.

(Chinese residents have been stung badly with food and product contamination scandals in the past).

Given that several of these products are reportedly selling at a substantial premium to their off-the-shelf cost in Australia, one could draw the conclusion that price is less important than quality or perhaps brand-name. If true, certain companies or products could be relatively immune to the tax, or able to pass the costs of the tax on to consumers quite easily.

Not all businesses are made equal

With that said, it would be naïve to assume that all businesses or all products are capable of passing on cost increases. Some, like Blackmores, have attractive brand names and some consumer rep in China, while newcomers attempting to imitate the business could potentially be hit unreasonably hard by the tax due to that lack of customer recognition.

The best solution would be for shareholders to do their own research into their company’s products and sales in China, and try to evaluate what the risks might be. A number of the above businesses have attractive business models and could remain value-creating machines for shareholders – tax or no tax. Despite recent falls, I would not consider selling any of the affected shares without further information.

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Motley Fool contributor Sean O'Neill owns shares of A2 Milk. The Motley Fool Australia owns shares of Bellamy's Australia. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.