Finance Small Business Pour decision: China’s latest trade salvo against Australia hurts family-run winemakers
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Pour decision: China’s latest trade salvo against Australia hurts family-run winemakers

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Australian family-run wine businesses could be crushed following China’s latest salvo in a bubbling multibillion-dollar dispute with the Morrison government.

And wine connoisseurs have been called upon to support smaller labels and sample their varietals over Christmas lunch to help reduce their financial troubles.

Under China’s declaration on Friday, wine producers will be slugged a levy up to 212.1 per cent (depending on the company), which could be refunded pending the outcome of a Chinese investigation.

Beijing has accused Australian wine producers of deliberately selling their drops to Chinese importers at prices below the cost of production – an industry practice known as “dumping”.

Trade Minister Simon Birmingham told ABC’s Insiders on Sunday the government would stand with local vineyards in fighting the new levies, as it also moved to escalate a trade dispute over barley to the World Trade Organisation.

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More than a third of Australia’s wine exports are consumed by China. Photo: Getty

Australian exports of timber, lobsters, barley, cotton and copper have been held up due to a range of Chinese trade and regulatory restrictions.

Some of these have been seen as punitive measures from the Chinese government, in retaliation for Australia criticising the country’s human rights record and calling for an international inquiry into the origins of the coronavirus, which Beijing sees as a proxy investigation into China.

But Senator Birmingham stopped short of calling China’s recent actions “economic coercion”.

“It really is a matter for Chinese authorities to speak plainly and clearly about what it is driving this consistent trend of actions,” Senator Birmingham said.

“China, with the welcome rise of its economy, has also become more assertive in other ways … we want to see that assertiveness channelled into good, into engaging in ways with the rest of the world, that helps to drive economic growth rather than dampens it.”

Senator Birmingham said Australia was still working through preliminary appeals against the wine tariffs, but did not rule out also escalating that dispute to the WTO.

Prime Minister Scott Morrison told ABC Radio on Sunday the Coalition was open to providing a financial support package for the reeling local wine sector.

China currently accounts for more than 40 per cent of Australian wine exports, with statutory body Wine Australia estimating the country purchased $1.1 billion of locally-made drops in the past financial year.

And Chinese consumers also relish locally grown drops, with Australian wine (37 per cent market share) beating out French (27 per cent) and Italian (6 per cent) winemakers.

The Australian wine exporter market has largely weathered the coronavirus pandemic. Graphic: Wine Australia

Australian Grape & Wine CEO Tony Battaglene “completely refutes” the idea local producers “dump” their wine in China, telling The New Daily the country provides the highest dollar per litre for any market in the world.

And he said of Australia’s 2400 wine exporters to China, about 1400 were under “immediate threat” as they exclusively or near-exclusively deal with the Asian powerhouse.

Mr Battaglene’s assertion follows comments made by Australia-China Relations Institute director James Laurenceson, who in September said Beijing’s sanctions on Australian exports were not a blight on the quality of Australian produce.

Rather, they are punishment for Australia’s ‘sovereign’ interventions.

Among them include the decision to forbid Chinese telco Huawei from supplying infrastructure for Australia’s 5G network, the introduction of new foreign interference laws, and calls for an independent investigation into the origins of the coronavirus.

Australian Small Business and Family Enterprise Ombudsman Kate Carnell told The New Daily local growers did not doubt the importance of the government’s rhetoric on protecting the country’s sovereignty.

But she said it needs to strike the right balance with ensuring smaller companies do not end up as collateral in a broader diplomatic row.

“One of the greatest challenges for smaller businesses – whether they be winemakers or other agricultural firms – is trying to find new markets that would replace China is really quite difficult, especially in a COVID world,” Ms Carnell said.

“It’s really quite difficult to build new international relationships when you can’t travel overseas to have in-person business meetings.

“And the other problem that shouldn’t be underestimated is China is such a big market and the challenges of replacing that won’t be done with one entity – and that just heightens the complexity.”

Mr Battaglene said the “obvious solution” to countering hefty tariffs from our largest wine importer is fostering more market diversification, which could be done through a long-term federal government roadmap.

Along with a federal tax relief package, it could help growers pivot to new export markets while minimising the financial hit.

“We export to 170 markets around the world, so a lot of our producers already do it. But diversification is much harder for smaller producers and they’ve gone to China knowing their consumers love our product,” Mr Battaglene said

“But we desperately need not only a strategy about diversification for Australian wine, but for Australian products more broadly.”

He said although United States and Canada were obvious choices as they are “underweight” in terms of their imports of Australian wine, low levels of social gatherings because of their COVID-19 response means uptake at restaurants and bars would remain sluggish.

Instead, Mr Battaglene believes growers could build better long-term relationships with south-east Asia, northern Asia, India and Africa.

So, what can local wine lovers do to lend a helping hand?

Ms Carnell said buying a bottle of red or sparkling from a fledgling label to complement their Christmas feasts could go a long way.

“I’m not suggesting Australians should overimbibe, but the message has got to be clear that we should use this opportunity to drink Australian wine and there’s going to be a lot of businesses doing it pretty tough because of these trade sanctions,” Ms Carnell said.

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