The Nanjing Customs Anti-Smuggling Bureau has dismantled a ring smuggling high-end domestic and international spirits, including Moutai, Remy Martin, and Japanese whiskies, involving over RMB 12 million (US$1.7 million) and suspected tax evasion close to RMB 5 million (US$710,000). The contraband was declared as low-priced wine to evade detection.
The operation came to light when officials noticed shipments declared as containing 18% ABV wine, an unusual alcohol content for wine, especially originating from Japan, a country not known for wine exports. This prompted further scrutiny by customs personnel.
An examination of customs data over a two-week period identified 22 suspicious shipments. Each claimed to contain four bottles of wine valued at around RMB 790 (US$112), or approximately RMB 200 (US$28) per bottle, implying a tax liability of RMB 100 (US$14) per bottle.
However, inspections revealed the shipments contained premium brands like Moutai, Remy Martin, and Suntory whiskies instead of wine. The investigation led to the arrest of a suspect named Zhu.
Zhu confessed to buying high-end Chinese liquors and foreign spirits from Japanese websites since June 2021, then smuggling them into China via mail to sell at a profit.
From June 2021 to August 2023, Zhu was involved in 432 instances of smuggling, amassing over 12 million yuan, including nearly a hundred bottles of vintage Moutai. A notable find was a bottle of 1995 Moutai bought at a Japanese auction for about RMB 30,000 (US$4,250), which could command hundreds of thousands of yuan in China, underlining the operation’s profitability.
Chinese law imposes approximately a 50% import tax on wine, Chinese liquor, and brandy. By undervaluing a RMB 30,000 bottle of Moutai as RMB 200 wine, Zhu skirted around RMB 14,900 (US$2,110) in taxes per bottle.
The scheme also included smuggling vintage bottles from well-known international brands, some being limited editions with considerable collectible value, thus giving these smuggled items a competitive edge in the Chinese market due to tax evasion.
Moutai and Hennessy enjoy immense popularity in China, especially select vintages and special editions, leading to significant price disparities. Despite legal exports, a large volume of Moutai is reimported into China annually.
According to customs data, China imported US$320 million worth of Baijiu from January to December 2023, an 89.81% increase from the previous year, ranking third in the spirits category after brandy and whiskey. The prevalence of parallel imports, especially of premium cognacs — goods bought in cheaper markets to be sold in China — has further tempted individuals to resort to smuggling for greater profits.
