China targets Australian wine industry

[felixp21]

I'll repeat, this move by the Chinese has nothing to do with a perceived threat of Australian wine imports to the local product, but is one of many measured responses to the move of dear ScoMo leading the charge on the Covid inquiry.

[Dragzworthy]

I'll repeat, this move by the Chinese has nothing to do with a perceived threat of Australian wine imports to the local product, but is one of many measured responses to the move of dear ScoMo leading the charge on the Covid inquiry.

In this particular instance I believe it's more associated with this:
[url]https://www.google.com/amp/s/asiatimes.com/2 ... -build-up/[/url]

But China is generally irritated with Australia over Covid and the five eyes network at a broad level.

[felixp21]

yea, could be!!! China has lots to be irritated about at the moment concerning Australia

[Matt@5453]

Thanks Matt

Would love to hear of small quality producers who have made inroads into China and if they will be affected?

I met Alistair Ashmead ( Elderton ) in Shanghai years ago. Their's is the type of winery I'm wondering about? But they produce high quality in smaller numbers so alternative markets may be easier to find? UK & Hong Kong perhaps, the USA if the dollar low enough.

To early to tell Jamie, this will be a 12 month process I am hearing. Obviously it is cause for concern, some comments from Chester here:

[url]https://www.abc.net.au/news/2020-08-19/wine- ... n/12571800[/url]

[JamieBahrain]

China is generally irritated with Australia over Covid and the five eyes network at a broad level.

The Chinese Communist Party ( when not arresting each other ) is generally irritated with everyone! But you'll hear those with vested interests trying to lay blame on a gobby PM. It's getting really bad- for a lot of countries.

All makes me pine for a glass of Aussie red.

[qwertt]

Felix 21

It might be helpful if you actually gave us specific links to definitions that say that non imposing local broad based consumption taxes are 'dumping', rather than just wave your keyboard broadly at the internet.

It certainly defies ordinary sense and would result in just about any export from any country in the world that imposes a domestic sales tax but not an export tax being classified as dumping.

In my view the Chinese government is throwing its bullying weight around by basically picking on something so clearly NOT dumping as to leave us Australians in no doubt that this is economic punishment for standing up to China. And trying to get local business and consumers in Australia, terrified of what Chinese sanctions will cost us, to put unbearable pressure on our Government to kowtow.

[felixp21]

qwertt,
what you are saying is entirely correct. However, I'm not 'waiving" my keyboard at anything, just go google economic dumping and you will understand what the legal technicalities are. My guess is that even if they discover they are in the legal wrong, it won't change any CCP policy.
as I have said, three times now, the Chinese response has nothing to do with any perceived threat to their wine industry (which is much larger than Australia's) but everything to do with retaliation. Pure and simple, it is an excuse to exert economic pressure on Australia.
I must say, I am finding it rather amusing that you seem to think I agree with the CCP in this matter, still wondering why readers have leapt to that conclusion!!!
having been in business in China for many years now, I am well aware and fully understand how their economic philosophy works, and it really doesn't change much from global economics of the CCP right down to the local vendor in the street.
people who don't understand it usually get frustrated and cry foul, but trust me, that won't worry the Chinese. Businessmen across the globe go to China expecting to make millions out of the vast hordes of ignorant fools, and rant and rave when the sand shifts. Westerners haven't learned much from the time Commodore Perry first cast doubts on dealing in China a long, long time ago.

Hatin' on China is in vogue, but go have a look at the behaviour of the good ol' USA over the past 75 years, actually, pretty much exactly 75 years, and you'll see where they learned their golbal foreign policies from

[phillisc]

Geo-political irony of the wine & missiles comment lost on the expected.

Oh do humour me...irony, like the signature

Cheers Craig

[Polymer]

Felix 21

It might be helpful if you actually gave us specific links to definitions that say that non imposing local broad based consumption taxes are 'dumping', rather than just wave your keyboard broadly at the internet.

It certainly defies ordinary sense and would result in just about any export from any country in the world that imposes a domestic sales tax but not an export tax being classified as dumping.

In my view the Chinese government is throwing its bullying weight around by basically picking on something so clearly NOT dumping as to leave us Australians in no doubt that this is economic punishment for standing up to China. And trying to get local business and consumers in Australia, terrified of what Chinese sanctions will cost us, to put unbearable pressure on our Government to kowtow.

I think you're misunderstanding the argument...I don't think Australian wineries are dumping their wine onto China....but if you look at what happens with WET and the rebate...you could probably argue it technically is dumping.
Without the rebate you could just say it is a pure tax..but with the rebate you have a higher price and you subsidize some of it back to the wineries. As I said before, given this rebate happens whether you export or not, you can definitely argue it has nothing to do with exported wine..

But the fact remains..on the surface it can look like dumping and that's all they really need...

You're exactly right, China is trying to get these businesses to cry to the politicians...

And frankly, with what Penfolds has been doing, they deserve to take the hit...it is unfortunate so many will be hurt by this but I think people need to remember, this could happen for anything for any reason and if you're sitting there complaining to your local politician, you're doing exactly what they want. They now own you and they know it. The question you have to ask yourself is are you ok with that?

[mjs]

You have to remember a couple of things:

1. This is not about Penfolds wine directly
2. It is the CCP playing the bully when it is not capable of dealing sensibly with some straight talking and has to be seen to standing up to any body that makes a comment that could be construed as criticising China
3. In 20-30 years, China will produce more wine than the rest of the world put together, even though it will be crap

[felixp21]

Malcolm, I understand the argument from the Australian perspective, but technically that argument is flawed. It is based on emotion and a sense of "fairness". Neither of those bases are of any interest to the Chinese at all.
It is their opinion, and I agree with them, that Australia is dumping wine in China, as silly as that logically sounds. I'd be happy to take any wager they end up proven correct, as illogical as that may sound. Is it fair? I wouldn't have thought so, but that carries no legal weight whatsoever.

The Chinese are way too smart to do what those dumb Yanks do, and jump into wars that cost them literally trillions of dollars. They absolutely understand that winning an economic war is far cheaper and more effective than any military campaign.

[Dragzworthy]

Malcolm, I understand the argument from the Australian perspective, but technically that argument is flawed. It is based on emotion and a sense of "fairness". Neither of those bases are of any interest to the Chinese at all.
It is their opinion, and I agree with them, that Australia is dumping wine in China, as silly as that logically sounds. I'd be happy to take any wager they end up proven correct, as illogical as that may sound. Is it fair? I wouldn't have thought so, but that carries no legal weight whatsoever.

The Chinese are way too smart to do what those dumb Yanks do, and jump into wars that cost them literally trillions of dollars. They absolutely understand that winning an economic war is far cheaper and more effective than any military campaign.

I dont agree..I think Australia can readily prove that wines sold offshore are sold at higher margins than they are domestically. I don't see how a claim could be made that there's dumping behaviour occurring here whatsoever. Additionally, one poster above made a very interesting point in that wine is not homogeneous, it's not as though we can compare wines readily across borders.

In my opinion, it just remains to be seen what China asks for behind the scenes and whether or not Australia bends to the table.

[Polymer]

Well nothing about determining whether or not it is dumping is easy, unless it is blatantly obvious..

They can easily claim it...and as Felix pointed out, they're not stupid enough to just bring up something without some level of truth. It could be how they've determined it is dumping is ultimately considered incorrect but I don't think it is baseless. And after a period of time they can have provisional duties, etc (I believe) so they don't have to be actually right..they just have to have something that might look right. In the meantime Australian wineries reliant on China are punished. The difference when China does it is it doesn't just end up with a situation where a higher end user price impacts market share...their population generally falls in line and just won't buy.

But as it has already been pointed out. This isn't about protecting their wine industry. This is getting Australian businesses to scream at politicians. This is taking the reliance on businesses selling to China and getting them to influence the Australian (or put whatever country is here in a similar situation) government to behave the way China wants them to. So any of the screaming, crying, worrying and blaming ScoMo is exactly what they want. Once you start doing that, they own you.

[Dragzworthy]

Well nothing about determining whether or not it is dumping is easy, unless it is blatantly obvious..

They can easily claim it...and as Felix pointed out, they're not stupid enough to just bring up something without some level of truth. It could be how they've determined it is dumping is ultimately considered incorrect but I don't think it is baseless. And after a period of time they can have provisional duties, etc (I believe) so they don't have to be actually right..they just have to have something that might look right. In the meantime Australian wineries reliant on China are punished. The difference when China does it is it doesn't just end up with a situation where a higher end user price impacts market share...their population generally falls in line and just won't buy.

But as it has already been pointed out. This isn't about protecting their wine industry. This is getting Australian businesses to scream at politicians. This is taking the reliance on businesses selling to China and getting them to influence the Australian (or put whatever country is here in a similar situation) government to behave the way China wants them to. So any of the screaming, crying, worrying and blaming ScoMo is exactly what they want. Once you start doing that, they own you.

Yes I agree..I disagreed with Felix's comment:
"It is their opinion, and I agree with them, that Australia is dumping wine in China, as silly as that logically sounds. I'd be happy to take any wager they end up proven correct, as illogical as that may sound"

[mjs]

The Chinese are way too smart to do what those dumb Yanks do, and jump into wars that cost them literally trillions of dollars. They absolutely understand that winning an economic war is far cheaper and more effective than any military campaign.

Absolutely agree, their horizons are much longer and more strategic that what we get with 3-4 year political cycles. I am sure that there is a 50 or 100 year plan. Having had some exposure to things like Belt and Road, while the rest of the western world is asleep, China is exerting economic influence over much of the under developed world. It's going to be an interesting ride!

[Mahmoud Ali]

I am no expert on the Wine Equalisation Tax (WET) but I thought it was a tax introduced to maintain the previous level of tax on wine when the GST was introduced. Prior to the introduction of GST the tax on wine was about 40%, and when the 10% GST was introduced they scrapped the wine tax and introduced the 29% WET. In effect the federal government introduced the WET to bridge the gap between the old tax and the GST. The WET applies to almost all wine sales, domestic and imported. In effect it is nothing more than a sales tax on wine, and since it is also levied on imports then I don't see how it is a subsidy for domestic producers. If anybody can correct me on this please feel free to do so.

Given the above (assuming that I am correct of course), what this means is that the WET has nothing to do with dumping. A wholesaler can sell wine at the same price to both domestic retailers and exporters and the WET will apply only on the domestic sale. There is no dumping, only a WET "sales tax" on the local consumer. Different jurisdiction have different levels of sale taxes and they are not related to dumping. I am in Alberta, and we have no provincial sales tax, just the federal GST, so I pay 5% on a wine purchase. Meanwhile in British Columbia (BC), consumers pay 10% provincial sales tax and the 5% GST for a total of 15%. If I order wine directly from a cellar door in BC they can only charge me the federal GST.

This begs the question as to why the Chinese Government is looking at the WET? Simple, it is a an excuse to use trade to address political disputes. This is nothing new. Trade sanctions, dumping allegations, embassy and consulate closures, diplomat expulsions, as well as technical, safety, and quality regulations, are all used to address other issues. For example, take a look at what is happening to Huawei. The US, and the allies that go along, are using the security issue to address competitive and political policy. Mainstream media tends to downplay this but reports indicate that there is no security issue. The US National Security Agency (NSA) has already hacked into Huawei headquarters and have a "backdoor" to all Huawei customers and data all the way into Europe.

Here is an excerpt from a 2014 article in Computer World:

"But according to new reports over the weekend from The New York Times and Der Spiegel and based on documents leaked by Snowden, the NSA succeeded in penetrating equipment at Huawei headquarters in a plan to monitor communications on the company's networking equipment worldwide. The NSA "pried its way" into Huawei servers at the company's headquarters in Shenzhen, China, according to an online report in The New York Times Saturday.

Among the information cited by newspaper was a 2010 document detailing Shotgiant operations. However, covert operations against Huawei go as far back as 2007, The New York Times report said. The NSA also monitored communications of Huawei executives, the report said.
One goal of Shotgiant was to place backdoors on Huwei technology in order to monitor communications on network equipment acquired by the company's customers, which include U.S. allies and adversaries, according to the report."

So there you go, the pot calling the kettle black, the US accusing the Chinese of doing what they've already done. The security argument is being used as a tool to go after a Chinese company for being competitive in price and further along in 5G technology.

With the Australian government joining the US in banning Huawei, going after China for the corona virus, and sabre rattling about spying, the trade issue is being used as a retaliatory ploy. After all, the WET has been around for ages and I don't recall the dumping issue being raised, by China or any other country, even during the boom in Australian Shiraz exports.

With regard to Chinese spying, isn't that a laugh coming from countries with their own spy organisations, including Australia. What do people think their spy organisations do? Why is it outrageous for the Chinese to do the same thing, do people think that spy agencies are not operating out of embassies in China? There seems to be a double standard here but that is nothing new when it comes to "western" attitudes towards others.

Cheers .................... Mahmoud.

[felixp21]

always been horrendous Western double standards, even on display in this thread!!!

[JamieBahrain]

Well at least you've put you're money where your mouth is Felix, living in the mainland amongst it. We've had a taste this year and I'm worried. Now I'm not going to say my conscience will get the better of me, sitting on a nice wage drinking tax free wine, feeling guilt over abused religious minorities, persecution of whomever the party doesn't like or Tibet. It's a lot more than that and I'm seeing friends tearing up their kids' passports and maintaining only their "western" ones.

In my travels, always amazed me those living in non-western countries, quick to rattle off simple conspiracies and be critical of the west, yet, that's where they are desperate to emigrate to. Can't blame them. And of course, they have the right once in the west to continue on with their rants ( which is a good thing as long as freedoms extend to those with opposing views ).

Amusing to see comparisons to Australian spying in China from the limited confines of an embassy, to the multi-pronged assault originating from the mainland. I'm more than happy our government and society is now awake- but how do we mitigate inevitable economic casualties? Folks affected will tire of the we’re all in this together-like mantra echoing during COVID. We need to support our wine industry.

Chatting a few friends who sell a lot of Aussie wine in HKG and they say the mainland market is vibrant with mainland customers. I'd expect it to pick up as this dispute intensifies. So first advice would be make hay while the sun shines.

[felixp21]

China is neither faultless nor blameless in this situation, but what you learn from living there for many years, speaking the language and understanding how the mainlanders think, you come to realise there are always two sides to every story.

China 's foreign policy is gentle as a dove in comparison to the USA. Go chat to the people in Okinawa, the previous inhabitants of the Bikini Atoll (part of a sovereign country, no less), those in Guatemala, Iran, Iraq, Liberia, Somalia, Peru, etc etc etc. Goodness, you don't need to even do that!!! Oppression of minor religious groups? Not a good thing, for sure. But then again, go have a chat with some African Americans in Detroit, Chicago, Washington, and you will REALLY get a decent feel for oppression!!!!

Imagine if China had turfed people out of their homes, off their land, and exploded nuclear weapons on their lagoon!!!!
Goodness me, the World would have had mass hypertensive episodes and the sky would be dark from flying missiles

Anyway, let's all hope this is settled amicably and the Aussie growers can continue to sell their excellent products throughout China.

[Alan Foo]

China is neither faultless nor blameless in this situation, but what you learn from living there for many years, speaking the language and understanding how the mainlanders think, you come to realise there are always two sides to every story.

China 's foreign policy is gentle as a dove in comparison to the USA. Go chat to the people in Okinawa, the previous inhabitants of the Bikini Atoll (part of a sovereign country, no less), those in Guatemala, Iran, Iraq, Liberia, Somalia, Peru, etc etc etc. Goodness, you don't need to even do that!!! Oppression of minor religious groups? Not a good thing, for sure. But then again, go have a chat with some African Americans in Detroit, Chicago, Washington, and you will REALLY get a decent feel for oppression!!!!

Imagine if China had turfed people out of their homes, off their land, and exploded nuclear weapons on their lagoon!!!!
Goodness me, the World would have had mass hypertensive episodes and the sky would be dark from flying missiles

Anyway, let's all hope this is settled amicably and the Aussie growers can continue to sell their excellent products throughout China.

I fully agreed and to this days the people of Bikini island are still suffering and not to forget about the Great Opium war.

[JamieBahrain]

China is not a dove state. It just never had the military capability to do much but slaughter within its own borders. And they did. They've fought on their own borders in support of the advance of a vicious brand of communism and the west bungled policies in SEA in countering. And I can easily imaging China turfing people out of their own homes- look at the various stages of the communist revolution killing tens of millions.

Now, they've made massive technological inroads militarily, much of it stolen, and we note their policies are getting more aggressive. China actually sat under the Western umbrella of energy security as it industrialised.

There are two sides to every story and I bet you get a nice dose up your way. Down here its multi-faceted. Many swam to HKG to escape, lost their property. Many are in support riding the wave of wealth though often possess Western passports.

Bit of waffle the rest. I do know and speak to say Okinawans ( far more complex than you may be aware ). I am aware of the Cold War backdrop and dirty side wars and I don't see ethnic policies in the US remotely like to the north.

So now the politics of Aussie wine. What will they do? I think there will be winners and losers. Public shaming of certain brands but no less demand- perhaps just different avenues of supply.

[felixp21]

I'm currently in Australia, and well and truly (obviously) know both sides of the story.
China has a dark past, USA has a dark past, Australia has a dark past. Hell, every country does.
I don't agree with you regarding what is going on in China today, I have been to Xinjiang, spoken to plenty of Muslims and plenty of other minority religious and ethnic groups. There are problems, probably insoluble, within the Chinese borders, just as there are in most countries, including Australia.
I respect your opinion of how you perceive China and the CCP, but I simply disagree with you. No big deal.
But as a Westerner living in China, well educated and fluent in both languages, I think I can formulate a pretty good first-hand idea of what the country is like, what the people are like, and where the CCP may or may not be heading without listening to CNN, Fox or some other independent ( ) media source.
The news most HK people are fed is crap, I've even heard utter BS about SZ from people in HK, and it saddens me to think that there doesn't seem to be any way for China to receive a "fair" hearing outside it's own borders. That is the power of the modern media, heck, including some much fake crap on social media.
Lots of people struggling to get out of China? More fake news, maybe 10 million out of 1,430 million would like to re-settle. Those %'s are about the same for every country. 99% of those are most welcome to leave, the problem is not in the leaving, it is in the finding a country that will accept them!!! I have a lot to do with the Australian consulate in GZ, play golf with the guys there once a year or so..... applications to emigrate to Australia are well down on what they were even 5 years ago, but I'm sure the fake news won't mention that.

[Mahmoud Ali]

Felix, Felix, Felix, are you trying to take a nuanced position? Tsk, tsk, tsk.

[JamieBahrain]

I'm not going to argue against the indefensible. Plenty of perspective where I sit and plenty of risk too with new security laws.

Decanter article indicates the Europeans went through a anti-dumping investigation as well.


Australia's First Families of Wine are mentioned. Hard to imagine many of them not finding alternative markets, or their wines making their way into China via other means.



[url]https://www.decanter.com/wine-news/china-lau ... es-442862/[/url]

[Mahmoud Ali]

It's worth noting that there is no mention of the WET in the Decanter article. It is a straight forward anti-dumping allegation against certain parties not Australian government policies.

"The investigation will look into whether Australian producers have dumped ‘wines in containers holding 2 litres or less’ into the Chinese market below fair market value during the time period between Jan 1st 2019 to Dec 31st 2019.
An additional investigation on the injury to the domestic industry will focus on the time period from the beginning of 2015 until the end of 2019."

As for the investigation into EU dumping, the article clearly implies that it was intended as a retaliatory move:

"The incident coincides with China’s anti-dumping investigation into wine imports from the European Union in 2013 as a (though never officially admitted) countermeasure against the EU’s threat to raise tariffs on solar panels entering the EU from China."

Cheers ...................... Mahmoud.

[Mark Jappe]

Jamie come home.
Methinks your posts might see you as an honoured guest in a re-education camp soonish.

[tarija]

Jamie come home.
Methinks your posts might see you as an honoured guest in a re-education camp soonish.

Reckon the only thing holding him back is the prospect of having to pay WET and GST to bring in that enormous Barolo collection.

[JamieBahrain]

Jamie come home.
Methinks your posts might see you as an honoured guest in a re-education camp soonish.

Reckon the only thing holding him back is the prospect of having to pay WET and GST to bring in that enormous Barolo collection.

They sent me here for re-education.

[Mahmoud Ali]

Does one have to pay WET on wines that are part of a personal collection? I would have thought there are exemptions for overseas resident who are returning with their household goods provided they are not recent purchases (6 month to a year) prior to returning.

Does anybody know?

[JamieBahrain]

From The Australian -

National Press Club Lunch With Speech From China's Second Most Senior Diplomat.

Aussie Beef, Barley & Wine Served.

Wang was served a main of “ginger, shallot and chilli glazed Tajima wagyu rump (MB 6+); coriander and shallot pearl barley; baby Asian greens; Cognac, star anise and soy broth”.

Paired with the choice of a 2017 Mondiale Shiraz McLaren Vale (SA), 2018 Oatley Signature Series Chardonnay, Margaret River (WA), 2018 Young Poets Cabernet Sauvignon (NSW) or 2018 Johnny Q Sauvignon Blanc, Adelaide Hills (SA).