Australian wines stack up as China shuns imports

  China is the biggest buyer of Australian wine, importing A$1.2 billion in the year through September.
China is the biggest buyer of Australian wine, importing A$1.2 billion in the year through September.PHOTO: AFP

SYDNEY • Australian wine exporters should be preparing for their peak selling season, the months preceding Christmas and New Year celebrations in China.

They are instead watching product pile up in warehouses as its biggest market clamps down on shipments from the country.

Already on edge after China announced two trade probes into the country's wine industry earlier this year, people familiar with the situation said this month that Beijing had also ordered traders to stop purchasing at least seven categories of Australian commodities - including wine, rock lobsters and copper ore - in its most sweeping trade move against Canberra yet.

The prospect of indefinite bans would be a worst case scenario for Australian exporters, who have already been hit by Covid-19 lockdowns.

The issue worries Sydney exporter Alex Xu who sells his own brands of wine from vineyards located in South Australia's Coonawarra, McLaren Vale and Barossa wine regions. About 80 per cent of his clients are in China.

Lately, his company Royal Star Wine has had six or seven orders from China cancelled, resulting in a financial hit of A$200,000 (S$196,000) to A$300,000. The importers had been recently ordered not to buy Australian wine, he said. By whom, it was unclear.

"This is a very serious matter because we don't know how long we'll be banned," said Chinese-born Australian Mr Xu. The orders not cancelled are being delayed at China customs, and he currently has more than 20,000 bottles waiting to clear customs in China.

China has not officially confirmed whether the bans are a government directive. Still, a spokesman for China's Ministry of Foreign Affairs said on Tuesday that Australia is to blame for souring relations, listing complaints against Canberra for interfering in matters related to Hong Kong, Xinjiang and Taiwan, among others.

The wine trade to China appears to have effectively stopped, according to Mr Tony Battaglene, chief executive of industry group Australian Grape and Wine.

About 40 per cent of Australian wine exports would typically be shipped in the final four months of the year, he said.

Australia's agriculture sector is watching the situation closely, with industry shipments to China comprising about A$16 billion in 2018-19.

China is the biggest buyer of Australian wine, importing A$1.2 billion in the year through September, according to government marketing body Wine Australia. That was 167 per cent more than the value of exports to its next biggest market, the United States.

Mr Xu had hoped that trade in the lead-up to Chinese New Year and Christmas would make up for pandemic-related trade disruptions earlier in the year.

He is not sure his business will make it beyond three or four months if things continue as they are, and has recently invested in a Sydney childcare centre.

"Because of the trade issue, we have to put our investment into a different basket," he said.

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A version of this article appeared in the print edition of The Straits Times on November 19, 2020, with the headline 'Australian wines stack up as China shuns imports'. Print Edition | Subscribe