Australia’s leading wine authority closes offices in China as exports drop

Winston Wine representative Lin Tiangui looks at a bottle of wine produced by Australian private winery Winston Wine at one of its stores in Shanghai, China on October 18, 2011.

Kelay Shane | Bloomberg | Pictures | Historic Corbis | Getty Images

Wine Australia, Australia’s leading winemaking authority, will close its only physical office in China after selling to Greater China Yield to Beijing’s exorbitant duties.

A spokeswoman for Wine Australia said: “Wine Australia has made the difficult decision to close our physical office in Shanghai. This decision followed extensive consultations with the Australian grape and wine industry and is based on the current environment and market opportunities.”

“Wine Australia will continue to maintain our brand presence in China through our wine commerce and consumer-facing social media channels, and will continue to work closely with market trade representatives on brand building and marketing campaigns.”

Trade once slumped A$1.2 billion a year ($830 million) to just over A$200 million at the end of March, an alleged victim of tension between the two countries.

Wayne Australia said it will continue to operate in China as it does in other markets, through “relationships with key market agencies, marketing partners, trade fair organizers and education networks”, a format that tends to be used in smaller commercial markets.

The industry body is responsible for supporting the Australian wine industry through research and development as well as creating new export markets.

But China’s once-enviable trade with Australian exporters took a hit in 2020 when Beijing opened an investigation into allegations that China was dumping cheap Australian wine.

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Beijing later imposed anti-dumping duties of between 116.2% and 218.4%, making Australian wines uncompetitive in the Chinese market. This matter is arbitrated in the World Trade Organization.

Anti-dumping and subsidy duties are protective tariffs imposed by governments on imports they consider to be below fair market value, usually at prices below the domestic markets of exporting countries.

The punitive tariffs were among a series of Chinese trade restrictions on Australian exports including barley, coal and lobsters.

Many of these restrictions were unofficially enacted after a spat between the two countries when Canberra called for an independent investigation into the origin of the coronavirus, without consulting Beijing diplomatically.

The Australian National Association of Wine Producers, the Australian grape and wine company, said the closure of the Shanghai office did not signal “the end of an era”. She noted that despite the challenges, exporters are willing to return to the Chinese market and Chinese demand for Australian wine has remained resilient.

“We understand and support Wine Australia’s decision, which depends on operational requirements,” AGW general manager Lee McClain told me.

“We also note that there is still strong demand for Australian wines in China and we hope that Chinese consumers will have the opportunity to enjoy Australian wines again sometime in the future.”

Australian exporters struggled with wine sales in China after the tariffs were imposed, data from Wine Australia for 12 months ending in March. They have since shifted sales to other markets such as the US and UK, but they still face challenges associated with the pandemic such as supply chain and global shipping disruptions.

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Since then, the UK has dethroned China as the number one destination for Australian wine exports, although this market was less than half the size of the Chinese market at its height.

Australia exports 60% of wine production, previously China accounted for About 40% of those are exports.

But there have been some signs of a thaw between the two major trading partners in recent weeks after the election of a new Labor government in Australia.

Earlier this month, Australia’s new Defense Minister, Richard Marles, and China’s Defense Minister, Wei Fengyi, met on the sidelines of the Shangri-La Dialogue in Singapore, also known as the “Asia Security Summit.”

Before that, there had been no visits or ministerial talks between the two countries for several years.

Political observers also said Marles’ speech at the summit indicated a change in Canberra’s tone toward Beijing. Using less hawkish rhetoric, Marlis realized the reality of China’s rise but framed it in terms of the responsibilities that come with it, Nick Beasley, Professor of International Relations at La Trobe University, wrote in an opinion piece last week.

Chinese Premier Li Keqiang also sent a congratulatory letter to the new Australian Prime Minister Anthony Albanese after winning the Australian federal election in late May and in turn received a “letter of appreciation”.

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