China investigation creates headache for Australian wine makers

China has begun an investigation into claims that cut-price Australian wine imports are unfairly hurting its own producers – in the latest sign of tension between the two countries.
The launch of the anti-dumping probe by Beijing’s commerce ministry knocked as much as a fifth off the value of Australia’s biggest wine maker, Treasury Wine Estates.

China is the biggest market for Australian wine exports and the country’s largest trading partner.

Image: Shares in the maker of Penfolds fell by as much as fifth
But tensions between the two countries have increased after Australia called for an international inquiry into the origins of the coronavirus.
China recently imposed dumping tariffs on Australian barley, suspended some beef imports, and warned students and tourists that it was not safe to travel to Australia over claims of racism.

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The wine investigation was requested by the Chinese Alcoholic Drinks Association, which asked regulators to look into 10 wine producers including Treasury – maker of Penfolds wines.

It said Australian companies had cut their prices and were taking market share away from domestic businesses.

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Shares in Treasury fell as much as 20% as investors worried that the investigation might result in an import tax on Australian wine. They later partly recovered to close 14% lower.
The company said in a statement that it would cooperate with any requests for information from Chinese or Australian authorities and remained committed to China as a “priority market”.

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Australia’s trade minister Simon Birmingham said of the probe: “This is a very disappointing and perplexing development.
“Australian wine is not sold at below market prices and exports are not subsidised.”
The Chinese alcohol industry body said China’s imports of Australian wine more than doubled to 12.08 million litres between 2015 and 2019, while prices fell 13%.
Over the same period, the market share of domestic wine fell from 74% to just under 50%, it said.

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Australian industry figures show it sold A$1.1bn (£600m) worth of wine to China in 2019-20.
David Harris, managing director of South Australian Wine Group, which was named in the investigation, said: “The export data doesn’t support any facts that we’re dumping wine.
“Our wine’s more expensive than virtually any wine-exporting country in the world.”

Source : Sky News