Australia’s leading wine body is closing its Chinese office as exports decline

Lin Tiangui, a representative of Winston Wine, examines bottles of wine produced by Winston Wine’s own Australian winery in one of its stores in Shanghai, China, on October 18, 2011.

Qilai Shen | Bloomberg | In photos Corbis Historical Getty Images

Australia’s Leading Wine Authority Wine Australia to Close Its Only Physical Office in China Following Sales in Greater China succumbed to Beijing’s prohibitive obligations.

“Wine Australia has made the difficult decision to close our physical office in Shanghai. This decision is after extensive consultation with the Australian grape and wine sector and is based on the current environment and market opportunities,” said a spokesman for Wine Australia.

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

At one time, trade in A $ 1.2 billion a year ($ 830 million) shrank to just over A $ 200 million at the end of March, an alleged victim of tensions between the two countries.

Wine Australia has said it will continue to operate in China, as it does in other markets, through “relationships with key market intermediaries and marketing partners, trade fair organizers and educational networks”, a format commonly used for smaller commercial markets.

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

However, the once enviable Chinese trade for Australian exporters suffered a blow in 2020 when Beijing launched an investigation into allegations of dumping cheap Australian wine in China.

Beijing subsequently imposed anti-dumping duties between 116.2% and 218.4%, making Australian wines uncompetitive on the Chinese market. The issue is being addressed by the World Trade Organization.

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

Penal tariffs were among a series of Chinese trade restrictions on Australian exports, including barley, coal and lobster.

Many of these restrictions were introduced informally after the two sides broke up when Canberra called for an independent investigation into the origins of the coronavirus, without diplomatic consultation with Beijing.

The National Association of Wine Producers in Australia, Australian Grape and Wine, said the closure of the Shanghai office was not a sign of “the end of an era”. He noted that despite the challenges, exporters would like to return to the Chinese market and demand for Australian wines in China remains active.

“We understand and support Wine Australia’s decision based on operational requirements,” said AGW General Manager Lee McLean.

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

Australian exporters have struggled to sell wine in China following the imposition of tariffs, according to Wine Australia for the 12 months ending in March. They have since diverted sales to other markets such as the United States and the United Kingdom, but still face pandemic challenges such as the supply chain and global freight disruptions.

Since then, the United Kingdom has dethroned China as a major destination for wine exports from Australia, although this market is less than half of the Chinese market in full swing.

Australia exports 60% of its wine production, while China has previously reported about 40% of these exports.

But there have been some signs of a thaw between the two main trading partners in recent weeks following 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 Fenghe, met on the sidelines of the Shangri-La dialogue in Singapore, also known as the Asia Security Summit.

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

Political observers also said that Marles’ speech at the summit showed that there had been a change in Canberra’s tone towards Beijing. Using less hawkish rhetoric, Marles acknowledges the reality of China’s rise, but formulates it in terms of the responsibilities that come with it, Nick Beasley, a professor of international relations at La Trobe University, wrote in an opinion last week.

Chinese Premier Li Keqiang also sent a congratulatory message to Australia’s new Prime Minister Anthony Albanese after his victory in the Australian federal election in late May, and in turn received a “thank you letter”.

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