How will China's wine tariffs impact Australian producers?
Team Veye | 08 Dec 2020
An immediate fallout of China's decision to impose tariffs of up to 212% on Australian wine imports is that it has endangered its business with mainland China.
Though the Chinese Ministry of Commerce (MOFCOM) has said that duties imposed should last no more than four months but could be extended to nine months. Australian wine has been having zero tariffs since 2019 under the China- Australia free trade agreement.
At the time of taking this decision, China's Commerce Ministry had announced that it was made after finding preliminary evidence of dumping. While protesting this move, Australian officials have maintained that China has not been able to provide proof. The move could be seen as a repercussion of hardening relations between the two countries.
After the imposition of tariffs, orders were either being suspended or being cancelled altogether. In some extreme cases, some container ships that were en route to mainland China had to turn back to Australia or were being diverted, after the announcement.
According to Australian Grape and Wine, a national association, around 800 wine producers in Australia have "built their businesses" around exporting to China and were now left with no backup plan.
China is Australia’s biggest export market. Australia had been exporting 39 per cent of its wine exports to China and only 15 and 14 per cent to the United States and Britain respectively.
Australian wine producers were also being urged to increase their exports to Britain. Britain's thirst for Australian wine was only growing. In the past one year, sales of Australian wine in Britain grew by 10 per cent to be worth $1.3 billion, according to market research and data company IRI. The emergence of Europe as a strong market could be particularly comforting to small producers.
Veye Pty Ltd(ABN 58 623 120 865), holds (AFSL No. 523157 ). All information provided by Veye Pty Ltd through its website, reports, and newsletters is general financial product advice only and should not be considered a personal recommendation to buy or sell any asset or security. Before acting on the advice, you should consider whether it’s appropriate to you, in light of your objectives, financial situation, or needs. You should look at the Product Disclosure Statement or other offer document associated with the security or product before making a decision on acquiring the security or product. You can refer to our Terms & Conditions and Financial Services Guide for more information. Any recommendation contained herein may not be suitable for all investors as it does not take into account your personal financial needs or investment objectives. Although Veye takes the utmost care to ensure accuracy of the content and that the information is gathered and processed from reliable resources, we strongly recommend that you seek professional advice from your financial advisor or stockbroker before making any investment decision based on any of our recommendations. All the information we share represents our views on the date of publishing as stocks are subject to real time changes and therefore may change without notice. Please remember that investments can go up and down and past performance is not necessarily indicative of future returns. We request our readers not to interpret our reports as direct recommendations. To the extent permitted by law, Veye Pty Ltd excludes all liability for any loss or damage arising from the use of this website and any information published (including any indirect or consequential loss, any data loss, or data corruption) (as mentioned on the website www.veye.com.au), and confirms that the employees and/or associates of Veye Pty Ltd do not hold positions in any of the financial products covered on the website on the date of publishing reports. Veye Pty Ltd hereby limits its liability, to the extent permitted by law to the resupply of services.