Australia’s wine trade body Wine Australia has announced that it will close its China office in Shanghai, after exports to its once most profitable market plunged under China’s punitive tariffs.
The news was announced by the trade body on June 21, after two years into the punitive tariffs of more than 200% that have shaved AU$1.2 billion exports to China to merely AU$200 million in the last 12 months ended in March.
Australia enjoyed one of the fastest wine growths inside China when relations between the two countries were still warm. Benefiting from a Free Trade Agreement signed in 2015 that gradually reduced import tariff to zero, by 2019 Australia has surpassed France to become China’s biggest wine exporting country.
However, that did not last long. Disputes over trade, politics, human rights issues, Covid-19 to name a few strained the two trade partners’ relations, and since 2020, they have been locked in a tit-for-tat trade retaliation. In August 2020, China announced anti-dumping investigation into Australian wine, and in March 2021, it has imposed up to 218% punitive tariffs on its exports for five years.
“Wine Australia has made the difficult decision to close our physical office in Shanghai. This decision follows extensive consultation with the Australian grape and wine sector and is based on the current environment and market opportunity,” a Wine Australia spokeswoman said.
“Wine Australia will continue to maintain our brand presence in China via our wine trade and consumer facing social media channels, and will continue to work closely with in-market trade representatives on brand building and marketing campaigns.”
Australia has tried to diversify its export markets, exporting more wines to the UK, US and Southeast Asian countries, but it failed to offset loss in China.
The de facto ban of Australian wines to China pushed down Australia’s total wine exports by 26% in value to AU$2.05 billion, in the year ended this March, according to Wine Australia.
Still, the country’s biggest wine producers are not yet ready to part ways with the Chinese market. Treasury Wine Estates has since begun making Rawson’s Retreat in South Africa, and bottling its Max’s series in Shandong and most recently announcing its upcoming made-in-China Penfolds from Ningxia.
Yellow Tail also started selling Chilean Yellow Tail for the Chinese market last month, as we have reported.