The Chinese Ministry of Commerce (MOFCOM) will investigate complaints Australian wines are being subsidised and sold into mainland China below cost. Federal trade minister Simon Birmingham said the allegations are “deeply troubling and quite perplexing”.
Anti-dumping enquiries aren’t unusual, Australia has launched 170 of them against China since 2012, mainly in relation to China dumping steel and building products here. The process normally takes around 18 months.
MOFCOM said it had received an anti-dumping complaint from its local wine industry in July and would investigate all Australian wine imports from Australia in containers of two litres or less.
The Australian wine industry exports $1.2 billion of wine to China every year. It is the industry’s largest export market, accounting for around 42 per cent of total wine exports.
Australia’s largest wine company Treasury Wine Estates entered a brief trading halt after its share price fell 14 per cent following an anti-dumping investigation was announced. Sales in China account for more than 43 per cent of TWE’s profits.
TWE told the ASX it would cooperate with any requests for information from Chinese or Australian authorities. “TWE has had a long and respectful relationship with China over many years through its team, partners, customers and consumers… TWE remains committed to China as a priority market and will continue to invest in its Chinese business and its relationship with customers and consumers,” it said.
Chinese trade expert, Think Global Consulting CEO David Thomas told Food & Drink Business this is the latest in a series of moves by China in response to increasing tensions with Australia.
“Over the last twenty years Australia, the US and many other countries had a prosperous relationship with China. Many agree China may have over-reached in certain areas, but because the relationship was mutually beneficial many turned a blind eye.
“We’ve never had a strategy on how to deal with China and its growth – its power and influence – and we haven’t really wanted to because we’ve all enjoyed the benefits.”
Thomas said Trump has changed all that, bringing a new type of political leadership in the US which sees now as a chance to fight back and right any wrongs of the last 20 years.
Thomas said it is a tricky situation for Australia because of existing and potential market share. “We export a third of our wine production to the mainland and there are still only fifty million wine drinkers in China. That’s a huge number but not when you consider its entire population is more than one billion and more than four hundred million make up its middle class. We could see our wine export to China easily grow three to four times.”
Australia is also in an enviable position when it comes to existing Chinese tariffs on wine. Australian, Chilean and New Zealand wines are taxed at 23 per cent, European Union wines – including French – at 41 per cent and wines from the US, 93 per cent.
Thomas said Australia is in a difficult position and the immediate impact will not be dramatic. “We’re a middle power but we think like a big power. The focus needs to be on relationships not transactions. The China market is alive and well, their consumers want our products we just need to step away from the politics.
“But what we should be doing is doubling efforts to China – the wine industry needs to work really hard to reinforce we’re not dumping wine, that we’re committed to the relationship and are in this for the long term.”