Qilai Shen | Bloomberg | In pictures | Corbis Historical | Getty Images Wine Australia, Australia’s leading wine industry body, will close its only physical office in China after sales in China surpassed Beijing’s prohibitive tariffs. “Wine Australia has made the difficult decision to close our physical office in Shanghai. This decision follows extensive consultation with the Australian Grape and Wine sector and is based on the current environment and market opportunities,” said a Wine Australia spokesman. “Wine Australia will continue to maintain our brand presence in China through its wine-trading and consumer-friendly social media channels and will continue to work closely with marketers for branding and marketing campaigns.” Australia’s $ 1.2 billion trade ($ 830 million) fell to just over $ 200 million at the end of March, a supposed victim of tensions between the two countries. Wine Australia said it would continue to operate in China as well as in other markets, through “relationships with key agencies and marketing partners, trade show organizers and training networks”, a form that tends to be used for smaller markets. The industry is responsible for supporting the Australian wine industry through research and development as well as creating new export markets. However, the once jealous Chinese trade for Australian exporters was hit in 2020, when Beijing launched an investigation into allegations of dumping cheap Australian wine in China. Beijing then imposed anti-dumping duties of between 116.2% and 218.4%, making Australian wines uncompetitive in the Chinese market. The matter is under arbitration in the World Trade Organization. Anti-dumping and anti-subsidy duties are protectionist measures imposed by governments on imports that they consider to be below fair value, usually at prices lower than the domestic markets of the exporting countries. The duties were among a number of Chinese trade restrictions on Australian exports, including barley, coal and lobster. Many of these restrictions were introduced unofficially after the two countries’ dispute when Canberra called for an independent inquiry into the origin of the coronavirus, without diplomatic consultation with Beijing. The Australian National Wine Producers Association, Australian Grape and Wine, said the closure of the Shanghai office did not signal “an end to an era”. He noted that despite the challenges, exporters would like to return to the Chinese market and Chinese demand for Australian wines remained on the rise. “We understand and support Wine Australia’s decision, which is based on operational requirements,” said AGW General Manager Lee McLean. “We also note that there is still a great demand for Australian wine in China and we hope that Chinese consumers will have the opportunity to enjoy Australian wines again sometime in the future.” Australian exporters have struggled with wine sales in China following tariffs, according to data from Wine Australia for the 12 months to March. They have since diverted their sales to other markets such as the US and the UK, but continue to face pandemic-related challenges such as supply chain and global freight breaks. The United Kingdom has since dethroned China as Australia’s top wine export destination, although this market is less than half the size of the Chinese market at its peak. Australia exports 60% of its wine production and China previously accounted for about 40% of these exports. However, there have been some signs of thawing between the two major trading partners in recent weeks following the election of a new Labor government in Australia. Earlier this month, Australia’s new Secretary of Defense, Richard Marles, and Chinese 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 Marls’s speech at the summit showed a change in Canberra’s tone towards Beijing. Using less aggressive rhetoric, Marles acknowledged the reality of China’s rise, but framed it in terms of the responsibilities that come with it, wrote Nick Bisley, a professor of international relations at La Trobe University, in an opinion article last week. Chinese Prime Minister Li Keqiang also sent a congratulatory message to Australia’s new Prime Minister Anthony Albanese following his victory in the Australian federal election in late May and received a “letter of appreciation”.
