China targets Australian wine industry

[JamieBahrain]

Some years ago, Penfolds announced its direct supply links into China without an agency. This obviously amounts to an increase in profits. It also dealt a blow to unconventional supply sources of Penfolds products through grey marketing and advanced levels of smuggling.

Fast-forward to an FTA with China and recent media commentary and where could the big guys be in trouble? Are some Penfold's product lines landing in China for less than what they sell in Australia? It's going to be grubby and complex to determine.

Another issue is cleanskins. I go to wine bars in China or wine shops and the many dozens of bottles of Aussie wine on offer are from non-existent labels back home. How they can be fit into a dumping regime will be of interest.

Another small point, when I spend time in China I often buy Aussie produce, avoiding local produce at considerable cost! A litre of Aussie organic milk in Nanjing, from a Chinese owned dairy company, costs $10-$12 AUD a litre. Air Freight considered, the mark up is considerable. As with Aussie wine- there's still considerable mark up outside of the big guys. Where in the supply line is it considered dumping? At face value, the pricing is way too expensive to be dumped at the retail level.

Thanks Brodie. I read many ASPI articles with interest. A small regional power does have the ability, through area-denial, to deter military adventurism within their EEZ from a larger player ( Australia is restructuring and rearming in light of this ). What is very difficult is what we are seeing now, bought off politicians or expedient members of industry, which in developing nations is nothing but extraordinary. One counter-stroke ( again an ASPI article ) was the publishing of traceable wealth of the leaders of certain countries. It's a bit odd to have your mother's real estate in the billions whilst on a party salary? This can take the heat off the advantage of grey zone warfare that debilitates western responses to aggression.

[JDSJDS]

Here in Canada, China has also been busy. After the arrest in 2018 of Meng Wanzhou, a company executive and the daughter of Huawei's founder (the Americans requested this via a legal agreement between Canada and the US), there have been four Canadians in China given the death sentence. Two additional Canadians have been arrested and charged with espionage in that time. The most recent news is that the CanSino company - a collaboration between Canadian and Chine research companies now developing a Covid vaccine - has been told that China has not allowed the test vaccine to be sent to Canada, even though it is ready for testing, and is being tested in China.

Interestingly, Australia is the main country who has challenged Canadian wine laws and policies. In 2018, Australia filed a complaint to the WTO, saying a range of distribution, licensing and sales measures (e.g., product markups, market access and listing policies) and duties and taxes on wine applied at the federal and provincial levels in Canada all discriminate against imported wine.A partial agreement was recently announced, and of course the wine industry in Canada is howling that the changes will severely damage the wine industry here ([url]https://winesinniagara.com/2020/08/the-canad ... r-assault/[/url]).

[JamieBahrain]

Just bought a few cases of Australia wine for quaffing. Hong Kong is Australia's number 14 trading partner which surprised me. There are 100,000 Australian expats here so demand for Australian products is high and the community has acted as passive ambassadors for Aussie products too. I guess we don't count as a Chinese city as yet, however, it seems inevitable the screws will eventually be tightened if the soft war continues ( with Australia's not insignificant interests targeted ).

The detention of an Australian journalist in the least few days is unnerving for those who work in the region. I just don't understand the apologists, who know full well, you can just disappear. Especially in tit for tat circumstances as we have seen in Canada.

[dingozegan]

Interestingly, Australia is the main country who has challenged Canadian wine laws and policies. In 2018, Australia filed a complaint to the WTO, saying a range of distribution, licensing and sales measures (e.g., product markups, market access and listing policies) and duties and taxes on wine applied at the federal and provincial levels in Canada all discriminate against imported wine.

That's ironic, Australia is showing some serious hypocrisy there!

[Polymer]

Interestingly, Australia is the main country who has challenged Canadian wine laws and policies. In 2018, Australia filed a complaint to the WTO, saying a range of distribution, licensing and sales measures (e.g., product markups, market access and listing policies) and duties and taxes on wine applied at the federal and provincial levels in Canada all discriminate against imported wine.

That's ironic, Australia is showing some serious hypocrisy there!

Yeah..completely....

[JamieBahrain]

Trade spats and politics aside, weren't some Canadian wines taxed differently to imported wines, amounting to a tariff of sorts?

Foreign wine coming into Australia is taxed the pretty much the same as local wine. The cellar door subsidy no doubt open for debate.

[Mahmoud Ali]

In Canada the differential pricing (as in government markups on wholesale prices) ended a long time ago. The trade dispute with Canada is with regards to the British Columbia (BC) government changing its retail liquor policy to allow grocery stores to sell BC VQA wines (Vintners Quality Alliance) to the exclusion of all other wines. I suspect this policy was introduced both as a benefit to BC wineries but also as a way to allow smaller wineries shelf presence. The large government owned stores has an extensive reach but the limited production of small wineries presented logistical and distributional difficulties.

The fact that a grocery store, in the first instance a large nation-wide grocery chain with a sectioned off "wine store" within the store, would sell BC wines to exclusion of all other wines prompted the US government to ask for consultations on the issue. Subsequently Australia filed a complaint with the WTO and was later joined by NZ, the US and others.

It strikes me that the complaint may have merit since the policy literally precludes the retailer from stocking foreign wines. A more nuanced approach that might have escaped WTO scrutiny would have been to stipulate a production threshold, thereby allowing foreign wines a presence but effectively serving the same purpose.

Mahmoud.

[JDSJDS]

All correct above, but it became a Canada-wide issue, given the recent partial agreement. Wine sales in grocery stores are a mere drop in the bucket here in BC (less than 1% of all sales), and I think less than 10 grocery stores decided to sell wine. There was also a foreign and local sales option, but no store chose that model for some reason (probably the BC govt made it more expensive or harder in some way?).

[Diddy]

ABC News reported this morning that no more Australian wine imports being accepted into Chin from tomorrow. Also mentioned retrospective tariffs.

[wiggum]

Looks like Jamie’s our newest Nostradamus as per his predictions of 2/9/20. Still a few of us were thinking the same thing.

[Benchmark]

The Oracle.

[phillisc]

The Oracle.

Ha ha ha.
Cheers Craig

[felixp21]

Hope I don't get abused for another comment

China is in a post-Covid recovery state. The government aim is to grow the economy. The tariffs being imposed on a host of Australian products are being replicated throughout China's trading partners across the globe. It is their equivalent of "Buy Australian" which we have all seen for years and years, only their slogan, of course, is "buy Chinese". With a population of one and a half billion, the main driver of the economy is local consumption.

Status quo will be returned in 18-24 months, this political posturing is more about economics than retribution, but locally, that idea of showing China's might is very palatable to the populous.

My guess is that the bigger Aussie wine exporters know this, and will simply mark time in the interim. 2022 will see a return to normal Aussie wine sales in mainland China, I believe you can take that to the bank

[Polymer]

That might be true...but some of the goods aren't available locally.

Either way, they've done their job...you have Australian businesses screaming at the politicians. Essentially, Australian exporters have become lobbyists for the Chinese Government....

[JamieBahrain]

Feels like 1938 where I am. Time to come home.

[Michael McNally]

Feels like 1938 where I am. Time to come home.

Don't leave it too late!

Cheers

Michael

[felixp21]

That might be true...but some of the goods aren't available locally.

Either way, they've done their job...you have Australian businesses screaming at the politicians. Essentially, Australian exporters have become lobbyists for the Chinese Government....

.... and Australian diplomats, good article in the Fairfax media on what our senior diplomats think about the idiotic rhetoric our politicians are using.

[JamieBahrain]

Feels like 1938 where I am. Time to come home.

Don't leave it too late!

Cheers

Michael

Hahahaha can't come home even if I want to. Utterly disgraceful of Australians to abandon their citizens abroad. If the government had the will, it has the resources, to remote quarantine those from high risk countries and free up hotels for less risky countries.

Too many zombie apocalypse movies or have Australians just become unkind morons?

[Michael McNally]

Feels like 1938 where I am. Time to come home.

Don't leave it too late!

Cheers

Michael

Hahahaha can't come home even if I want to. Utterly disgraceful of Australians to abandon their citizens abroad. If the government had the will, it has the resources, to remote quarantine those from high risk countries and free up hotels for less risky countries.

Too many zombie apocalypse movies or have Australians just become unkind morons?

Simple lack of politcal will on the part of the federal government sorry.

Remember such quaint stories as the Berlin Airlift?

We could bring everyone home safley within weeks or a month or two, but it would take a lot of organisation and shitloads of money. I for one would be happy to pay higher taxes to do so (or the government could just print a few more billion).

Cheers

Michael

[sjw_11]

It is not a question of "bringing everyone home in a month or two" ... It is like the commentary I see a lot in Oz "oh people have had plenty of time to come back if they wanted to" so now screw them, close the borders ... but situations change. Where you might initially have stayed in an ex pat situation (for example, how easy is it to get alternative work in a global pandemic?) what happens if that changes which is likely to happen frequently (see again: its a global pandemic, jobs that appeared safe might routinely become less safe). What are people then meant to do? Stay on in a foreign country that might no longer welcome them? Or pay exorbitantly to return to Aus, even assuming they are allowed to and can get a flight (no guarantees there)?

[JamieBahrain]

Airliners are being sent to Australia consistently with thirty people on board- so 300 plus seats spare! It's the government/state quota system. Good luck getting home without paying a fortune.

It would not cost a lot of money to get Aussies home, free enterprise would do it! This would leave government resources ( RAAF etc ) to put in place a military operation to bring home Aussies stuck in remote regions not serviced by flights to Australia. Using military aircraft in exceptional circumstances is expensive, however, some cost is offset in that there's flying that needs to be done anyways for training. That said, charter flights are cheaper and the cost could be recovered by charging citizens for the seat. The cost of making this a military operation, from high risk countries say , would be activating remote bare-bones military facilities for quarantine. RAAF bases such as Learmonth, Derby, Weipa would require medical facilities. Yet again, the cost of this would in someway be offset by the training benefits for military personnel. These bases are designed to be activated for offensive/defensive military operations and a secondary humanitarian role. If we can't utilise them in a humanitarian manner, the ADF should be considered impotent in it's stated role.

I believe this is a national failing. Australians abroad were told to stay put in March if gainfully employed. COVID has been weaponised politically at home and there's considerable hysteria. The public fear sees more votes in abandoning Australian citizens than actually attempting to repatriate them in a safe and pragmatic manner.

Keeping it relevant, one role I've found myself doing is organising people to sell their wines. Can't bring it home! Some folks have nice wines generating quick cash. Others, sadly, are so desperate, unemployed and broke, they offer up worthless wines I have to tell them to just pull the cork on or try and illegally sell themselves.

[wiggum]

https://www.theage.com.au/world/asia/china-h ... 56ikr.html


News is in. Not good for Aussie wine industry that exports to China.

[GraemeG]

Donald Horne was right in 1964, and still is today: "Australia is a lucky country, run mainly by second-rate people who share its luck."
Thing is, the luck might be running out.
Still, narrow-minded parochialism goes a long way. Just look at most of the nation's parliaments.

[Mahmoud Ali]

Donald Horne was right in 1964, and still is today: "Australia is a lucky country, run mainly by second-rate people who share its luck.

Regardless of it being apt or not, kudos for remembering that, or even being able to dig that out.

Mahmoud.

[michel]

Donald Horne was right in 1964, and still is today: "Australia is a lucky country, run mainly by second-rate people who share its luck.

Regardless of it being apt or not, kudos for remembering that, or even being able to dig that out.

Mahmoud.

Pretty famous quote from a significant book...

[JamieBahrain]

Wine is pretty inconsequential. $AUD is strengthening amongst the punitive bullying by the Chinese Communist Party ( along with coal and agricultural products being on the CCP hitlist). Tamper with iron ore exports and it will be game on for Australia.

Although many Australian expatriates stranded, they were big consumers of Aussie wine abroad and passive wine ambassadors by promoting Australian wine with its consumption. On the other hand, wise governments at both state and federal level, should be looking at normalising the repatriation of expatriates, so the one's with a bit of money, can help feed a recovering Aussie economy. The one's without need a bit more compassion!

[Dragzworthy]

Wine is pretty inconsequential. $AUD is strengthening amongst the punitive bullying by the Chinese Communist Party ( along with coal and agricultural products being on the CCP hitlist). Tamper with iron ore exports and it will be game on for Australia.

Although many Australian expatriates stranded, they were big consumers of Aussie wine abroad and passive wine ambassadors by promoting Australian wine with its consumption. On the other hand, wise governments at both state and federal level, should be looking at normalising the repatriation of expatriates, so the one's with a bit of money, can help feed a recovering Aussie economy. The one's without need a bit more compassion!

Australian Dollar isn't rallying so much as the USD is just weakening Vs most things. The market continues to price in a weaker Dollar due to the fiscal largesse that the US administration has embarked upon. But yes...wine represents only 1.2pct of total Australian exports (according to a quick Google search) so relatively punitive. The more concerning factor is that roughly 63pct of Australian wine is exported...and you'd have to imagine a big portion of that is China...that means some of the wine makers will be under pressure to fold unless the Australian or other global consumers make up a big gap..?

[Mahmoud Ali]

Donald Horne was right in 1964, and still is today: "Australia is a lucky country, run mainly by second-rate people who share its luck.

Regardless of it being apt or not, kudos for remembering that, or even being able to dig that out.

Pretty famous quote from a significant book...

Non-Australian here and did not immediately realize, though it really shouldn't be an excuse.

[michel]

Regardless of it being apt or not, kudos for remembering that, or even being able to dig that out.

Pretty famous quote from a significant book...

Non-Australian here and did not immediately realize, though it really shouldn't be an excuse.

No problems
It’s a local cultural thing

[sjw_11]

Donald Horne was right in 1964, and still is today: "Australia is a lucky country, run mainly by second-rate people who share its luck."
Thing is, the luck might be running out.
Still, narrow-minded parochialism goes a long way. Just look at most of the nation's parliaments.

I am undeniably Australian, but I actually hadn't seen that quote before either (although of course I know the "lucky country" nickname)... It feels apt, although I think most countries feel disappointed at least some of the time in the quality of their leadership. (As a dual Brit / Aussie I don't know which country bothers me more at the moment in that respect).

As Plato perhaps put it- if you don't participate in politics, you end up being governed by your inferiors, and many of the most capable people simply wouldn't get into the whole sordid business (for better or worse reasons).

At the start of the crisis there was a lot of talk about how pandemics had often acted as catalysts for radical change in societal structures, etc etc, but beyond a bit of pot banging for the NHS and a few more people likely to keep working from home I don't feel like we have really seen it play out. Maybe it happens with a delay? It would be nice if a few things changed for the better as a result of this awful year!