China’s October wine imports surged for the first time this year as merchants rush to stockpile Australian wines before any hefty punitive tariffs that have now come into effect this month.
According to data released by ASKCI, a Chinese research company, wine imports in the month of October jumped by 9.3% in value to US$217.9 million compared with the same month last year, bolstered by merchants’ pre-emptive move to pile up Australian wines to avoid imminent tariffs.
In August, China announced twin investigations on Australian wine on allegations of dumping and subsidy as relations between the two countries continue to deteriorate over 5G, Huawei and coronavirus inquiry.
This prompted importers and merchants in China to stockpile Australian wines before any wine ban or tariff hikes in the following months.
However, in early November China put in place a de facto Australian wine ban, resulting in longer clearance time and delayed shipping at ports, citing reasons of hygiene or lack of relevant certificates, according several importers who spoke to Vino Joy News.
Just last week, China again announced a shocking measure, imposing up to 212.1% tariff on Australian wines starting from November 28, effectively putting AU$1.2 billion wine exports on a choke hold.
Among some 30 companies that “voluntarily” participated in Chinese government’s investigation. Treasury Wine Estates, the biggest Australian wine exporter to China, was slapped with the highest tariff at 169.3%, prompting the company to pivot to other markets to fill China’s share, which contributes to 30% of the company’s annual earnings – by far its most valuable export market.
Other wine companies that did not participate in the investigation will have to pay 212.1% tariff, which essentially rolled back Australia’s zero tariff privilege under a China-Australia Free Trade Agreement signed five years ago.
Australia currently accounts for 40% of China’s wine market, ahead of France and Chile.
The question now on many people’s mind is who is going to fill up the void left by Australians.