The Australian wine industry – as well as the other industries that depend on its healthy existence such as tourism and specialist agriculture – have reason to be concerned following the announcement by China’s Ministry of Commerce of the anti-dumping probe into Australian wine sales in the highly lucrative China wine market.
However, according to Jeremy Oliver, the Australian wine critic who played a significant and formative role in the development of the China market for Australian wine, Australian wine producers should be encouraged by the tone and timeframe of the announcement.
‘For a start, provided that China does not implement any other action prior to or separate from this announcement, there is no immediate action on the table that affects Australian wine producers or sales of Australian wine in China’, he says.
‘Instead of implementing a typically dramatic tariff or other barrier with immediate effect, China says it has chosen to take an entire year – or more if needed – to engage with representatives of Australian wine and work through the issue.’
According to Oliver, the notion implicit in the claim made by the China Alcoholic Drinks Association to the Ministry of Commerce that Australian winemakers have been receiving unfair government assistance is demonstrably incorrect. Despite the existence of State and Federal development programs and grants – dozens of which were listed in the claim itself – the benefits available to the wine industry from such pale into insignificance against the fact that the Australian wine industry is the highest-taxed of its kind and scale in the world.
‘Furthermore, while exported wine is subject to neither GST nor the so-called Wine Equalization Tax – a 29% tax at wholesale value on which GST is later applied – this industry makes far less profit from a bottle of wine sold in Australia than does the Australian Government’, he says. ‘Australian winemakers might receive some assistance from a range of government sources, but at a level that is insignificant relative to their contribution to government revenue.’
Regarding dumping, Oliver suggests that the owners of some Australian wine brands might rethink some of their sales strategies to take into account the differences between Chinese and Australian cultures. ‘Chinese wine producers are clearly concerned at the way in which some Australian brands are filling sales channels with wines at discounted prices’, he says. ‘This is in large part due to flattened market conditions in a post-Covid China that has of course made it harder for Chinese wine producers to get their wines in front of buyers at competitive prices.’
‘In Chinese culture, unlike here, if I sell you a product that you then have difficulty selling to your customers, we both have a problem, even if I think the transaction is concluded. One or two Australian brand owners might perhaps remind themselves of that’, says Oliver.
Ultimately, says Oliver, this matter has a lot less to do with wine than it does to the relationship at government level between Australia and China. China flagged wine as a potential area of concern some in May this year after entirely unrelated government to government issues were aired in the fashion they were.
‘The key take from this is that Australia needs to be aware of the importance of China as a buyer of our products, and that there are no other options over the horizon that have anything close to the ability of replacing China as a customer’, says Oliver.
‘It would be wise for Australia to spend time and effort to work on the long-term relationship with its largest customer, and from what we have seen and heard to this point in time, China has left the door open with respect to wine. Let’s take full advantage of this opportunity.’