In this explainer, we laid out all the facts surrounding China’s shocking ban on Australian wine imports, which will come into effect on November 6, as well as reactions from Australian, Chinese governments, importers, logistics companies and wineries.
What we know so far
A leaked memo reported by us this week showed that the government will have a de facto ban on Australian wine imports starting from November 6 this Friday, a significant escalation of relations between the two major trading partners.
This was announced amid China’s twin investigations into Australian wine in August on allegations of dumping and subsidy. The investigations were announced in August by Ministry of Commerce following complaints lodged by China’s Alcoholic Drinks Association (CADA), the country’s official drinks trade and regulation body.
The investigations will last for at least a year, and over 30 Australian companies have completed a sample questionnaire from the Chinese government, of which four of Australia’s biggest wine exporters are singled out for a second round of questionnaires in late September based on their sales volume. They are Treasury Wine Estates, owner of popular brands Penfolds and Wolf Blass, Casella, parent company of Yellow Tail, Chinese-owned Australian company, Swan Vintage, and Pernod Ricard, owner of Jacob’s Creek.
They were given a month to complete the in-depth questionnaire, which means by now the Chinese government should have collected the answers from the four companies, if there’s no delay or extension.
It’s not known how long the ban will be in effect but it’s speculated to last until China decides how much tariff to impose on Australian wines, according to industry insiders.
An earlier report by Australian media ABC says CADA has made a written request to Ministry of Commerce to apply retrospective tariffs on Australian wines exported to China.
Vino Joy News has reached out to CADA’s wine division secretary general Huo Xingsan this morning, he confirmed that the association has filed a written request.
It’s not known if the ministry has accepted the request yet at this stage.
TWE, the biggest exporter of Australian wine to China and the company perhaps with most at stake in the trade row, earlier in a statement said, “It is not known whether [the ministry] will accept CADA’s request, whether tariffs will be determined to apply to the products as a result of the anti-dumping investigation or, if they do, whether they will be applied retrospectively,” adding that it will make an official announcement if it’s accepted.
Australia is by far the biggest wine supplier to China, accounting for 40% of market share. In the last 12 months ended in September this year, Australia exported AU$1.26 billion worth of wines to China including Hong Kong and Macau, according to Wine Australia.
Reactions so far
Australian government is demanding clarification from their Chinese counterpart.
Chinese Ministry of Commerce hasn’t posted any official announcement on its website to confirm or deny the existence of such a meeting as of today.
Importers in the country who talked to Vino Joy News are shocked by the news and said the move is much harsher than previously expected. Most of the wine importers in the country started stockpiling wines upon the announcement of anti-dumping probe in August, which helped push up the country’s Australian wine import numbers in the lone month of September, as we have reported.
A few of the importers also suggested that they are looking to Chile to replace Australian wines.
One logistics company in Shanghai cleared 120,000 cases of Australian wines just in the month of September, according to one person with knowledge of the matter. It was a race in September and October among logistics companies to ship in as many Australian wines as possible before any announcement of tariff increase.
Li Wei, CEO of Australia Swan Vintage, one of the four companies named for further investigation, told Vino Joy News through WeChat, like many other wine companies he is at a loss amid so many uncertainties.
“What we can do is to wait and see, and hope that relations between China and Australia will improve as soon as possible”, he commented.
When asked about another rumor that China might introduce first round of tariff next week, Li admitted it’s hard to follow with everything going on. “I heard so many rumors right now, but nothing official yet.”
The thing I will love to watch evolve is how Chinese businesses will work out how to go around these restrictions. They are masters of illegal imports and using third country channeling.