China’s Ministry of Commerce announced on Monday it will impose anti-dumping deposits ranging from 30.6% to 39.0% on brandy imported from the European Union, starting from October 11, marking the country’s first significant action since a preliminary ruling in August found EU brandy to be sold at unfairly low prices.
The deposit rates vary slightly depending on the brandy producers. The Ministry of Commerce’s published list shows that the deposit rates are based on the margin of dumping, ranging from 30.6% to 39.0%. Among the three known French brands, Martell was hit with the lowest rate at 30.9%, while Hennessy and Rémy Martin were hit with 39.0%, and 38.1%, respectively.
Other companies that cooperated with the investigation will be subject to a rate of 34.8%, while other EU companies will face a rate of 39.0%.
In addition to the security deposits importers have to put down, the total costs will also include a 13% value-added tax and a consumption tax of 20% plus RMB 0.912 per liter, meaning the final deposit for a bottle of brandy valued at RMB 100 could amount to around RMB 55, the ministry said. (Details of the calculation can be found at the bottom of the article.)
It is important to clarify that the anti-dumping deposit applies only to brandy originating from the EU that is bottled in containers of less than 200 liters. Brandy in containers of 200 liters or more is not included in the investigation.
An anti-dumping deposit is one of the interim measures imposed following a preliminary ruling of dumping, as outlined in Articles 28 and 29 of China’s Anti-Dumping Regulations. A similar deposit was collected for a period when Australian wine was preliminarily ruled to be subject to anti-dumping measures by China in 2020.
When the preliminary ruling of dumping for EU brandy was announced on August 29, the Ministry of Commerce initially stated that no temporary anti-dumping measures would be taken. At the time, some importers were optimistic about this decision, but the unexpected imposition of the deposit more than a month later has taken some by surprise.
However, not all Chinese importers have reacted strongly to the anti-dumping measures on EU brandy. During the investigation period, some liquor merchants expressed that, given the challenging economic environment, their current inventories could last for a long time, meaning the anti-dumping tax would have minimal impact. Others noted that the dumping margin for EU brandy is not as significant as it was for Australian wine, allowing them to continue selling lower-value brandy.
According to data released by Chinese customs, from January to August 2024, China imported 21.85 million liters of brandy, valued at US$798 million, a year-on-year decrease of 20.75% in volume and 21.84% in value.
How it’s calculated?
The Ministry of Commerce’s formula for calculating the deposit is as follows: “Deposit amount = (customs-assessed dutiable value × deposit rate) × (1 + VAT rate on imports) ÷ (1 – consumption tax rate on imports).” For example, a bottle of brandy from “other EU companies” with a customs-assessed value of RMB 100 would be subject to a deposit of approximately RMB 55.
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