Shares in Blackmores Limited (ASX: BKL) are trading flat around $161 this morning despite a news report in The Australian Financial Review claiming an anonymous Australian retailer has seen a significant drop in vitamin sales as a result of new Chinese regulations.

According to the paper an unnamed Australia-based retailer has informed it that vitamins sales destined for the Chinese market have seen a drop since regulatory changes introduced by the Chinese government in April of this year. The anonymous retailer did not name whether the vitamin sales falls affected one particular vitamin retailer or not, such as Swisse, Blackmores, or others.

Others involved in the exportation of foodstuffs to China such as Bellamy’s Australia Ltd (ASX: BAL) or a2 Milk Company Ltd (ASX: A2M) are also vulnerable to increased taxes levied by the Chinese government and new rules as to what products can and cannot be imported through different channels.

Blackmores currently has more than 5% of its outstanding stock shorted, while Bellamy’s has more than 8% of its stock shorted by hedge funds betting that share prices and sales will fall due to Chinese regulatory restrictions. These hedge funds are likely to enjoy the anonymous claims of falling sales therefore as they look to book quick profits from falls in share prices.

Sales of Blackmores’ vitamins may well take a short-term hit due to the new regulations, as the Chinese government looks to raise its share of taxes from this booming sector, although the long-term growth outlook still appears positive for the business.

In the first half of the financial year Blackmores earned $2.80 per share, which means it trades on around 29x annualised earnings per share if you assume it can match its profit result over the second half of the year.

Given the third quarter of FY16 was Blackmores’ tenth consecutive quarter of sales and profit growth this would seem a fair assumption even if the final quarter to June 30 2016 is impacted by uncertainty over new Chinese regulations.

I still think long-term focused investors would be wise to retain some exposure to the thematic of growing demand from Asia for well marketed Australian foodstuffs such as Blackmores or Bellamy’s and arguably neither company is trading on outlandish valuations given the outlook.

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Motley Fool contributor Tom Richardson owns shares of Bellamy's Australia and Blackmores Limited.

You can find Tom on Twitter @tommyr345

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.