China-Australia relations: more than 11,000 litres of wine detained in Shenzhen as ban continues

Su-Lin Tan
·5-min read

Nearly 9,000 litres of red wine from a vineyard owned by renowned Australian pearling company Paspaley Group were detained in south China last month, as Beijing’s block on Australian wine continues amid a protracted dispute between the two countries and new anti-dumping duties on the trade.

Some 8,640 litres from Paspaley’s Bunnamagoo Estate winery and 2,646 litres of red wine from Australian private label supplier Lindsdale were stopped in Shenzhen for poor labelling and excessive use of additives, respectively, Chinese customs data showed.

The seizure is the latest in a string of problems for Australian wine at the Chinese border and underlines Beijing’s message that it no longer wants to buy products from the country, export and import agents in China said.

Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.

But it also reflects how lucrative the Chinese market has been for Australian wine producers that, despite an unofficial ban imposed last November and temporary anti-dumping duties put in place last month, many exporters still think they can profit, said Tony Battaglene, CEO of Australian Grape & Wine.

China-Australia relations: do Beijing’s anti-dumping and anti-subsidy investigation claims hold up?

Exporters’ optimism, however, suffered a setback last Friday when Chinese authorities concluded a seven-month anti-dumping investigation into cheap Australian wine and confirmed duties of between 116.2 per cent and 218.4 per cent would be slapped on wines in containers of up to two litres.

The duties – higher than November’s temporary tariffs of between 107.1 per cent to 212.1 per cent – were applied for five years from last Sunday. The Chinese commerce ministry said the domestic wine industry had been hurt by the dumping of cheap Australian wine.

While the decision was expected, Battaglene said the industry would now focus on driving growth in new and existing markets. Exporters had gained traction in Britain and the domestic market and were pursuing sales across Asia, Europe and the United States, he said.

“Our focus now is twofold. Firstly, we’re working with industry and the Australian government to assess options available to us within the Chinese system, and internationally. And secondly, we’re focusing on growing demand for Australian wine in other markets,” he said.

We continue to reject the allegations levelled against Australian Grape & Wine members

Tony Battaglene

“We continue to reject the allegations levelled against Australian Grape & Wine members and have approached both investigations as collaboratively and transparently as possible.”

The industry group is considering lodging a complaint with the World Trade Organization through the Australian government, as the country’s barley industry has, but no decision has been made.

“We are assessing options and will make a call next week,” Battaglene said.

The Australian government expressed its disappointment with the anti-dumping decision, the second in the past year after duties were imposed on barley in May last year.

Trade relations have deteriorated sharply between China and Australia after Canberra called for an international inquiry into the origins of the coronavirus pandemic in April last year without consulting Beijing.

The two cases are among four anti-dumping cases Beijing has launched against Australia since 1995. Canberra has instigated 87 anti-dumping cases against China.

Australian trade minister Dan Tehan said the trade disputes were very difficult to navigate.

“We want to have a good working relationship with the Chinese Government. We want to be able to work through these disputes,” he said at a press conference in Australia over the weekend.

“But, as I’ve said, steps taken like this by the Chinese Government are extremely disappointing, and we’ll take all steps we can to try and reverse them.”

For wine exporters, the conflict between China and Australia has been devastating for business, with trade coming to a near complete halt.

The Australian trade department said in a senate hearing last week that wine exports had fallen to less than A$1 million dollars (US$759,000) in January. Before the conflict, China imported nearly 40 per cent of Australia’s wine exports worth around A$1 billion a year.

Wine Australia, a government authority, said Australia’s ability to find new markets to absorb products usually sold to China would be key to its survival in the next two years. Aside from Britain, there were also good prospects of increased exports to the US, it said.

“In the year ended December 2020, sales of Australian wine increased by 9 per cent in volume in the UK off-trade market, and by 6 per cent in the USA off-trade,” Wine Australia said in a market update on Tuesday.

The real supply pressure will come on towards the end of the year, if we can’t find new markets by then

Tony Battaglene

“The UK and USA markets, as well as the domestic market, have a higher demand for white wine, whereas almost all of Australia’s wine exports to China have been red wine.”

But markets in Britain and US would not replace the large volume of wine sold to China, Battaglene said, adding the severity of the blow in China was softened by low wine stocks.

Wine inventories are at an eight-year low after three years of under-supply, according to Wine Australia.

“The real supply pressure will come on towards the end of the year, if we can’t find new markets by then,” Battaglene said.

Neither Paspaley or Lindsdale responded to requests for comment.

More from South China Morning Post:

This article China-Australia relations: more than 11,000 litres of wine detained in Shenzhen as ban continues first appeared on South China Morning Post

For the latest news from the South China Morning Post download our mobile app. Copyright 2021.