China targets Australian wine in escalation of trade dispute
China's Ministry of Commerce has launched an anti-dumping investigation into the Australian wine industry in the latest trade strike by Beijing against a lucrative export industry amid a deteriorating relationship with the country.
The investigation will examine whether Australian winemakers dumped bottles containing less than two litres in China at reduced prices over a five year period, crowding out local producers and causing industrial damage. China is Australia's largest market for the $3 billion wine export industry.
"The Ministry of Commerce has decided to initiate an anti-dumping investigation on imported wines originating in Australia," China's Trade Remedy and Investigation Bureau said in a statement on Tuesday morning.
China is investigating claims that Australian exporters have dumped wine in China. Credit:iStock
China is Australia's largest trading partner and accounts for a third of all of Australia's exports. The relationship between the two countries has been marred by multiple disputes over the coronavirus, Beijing's crackdown on Hong Kong, territorial disputes in the South China Sea and the rejection of China's flagship 5G provider Huawei from western mobile networks.
China launched trade strikes on $1 billion worth of Australian beef and barley in April and has urged students and tourists to reconsider travelling to Australia.
Shares in Treasury Wine Estates are in a trading halt, pending a further announcement from Australia’s biggest wine company. The company did not offer any further information in an ASX announcement to the ASX shortly after 11.30am.
When trading in Treasury shares was halted on Tuesday morning the stock was down a hefty 14.1 per cent to $10.60.
Last week Treasury released its results for the 2019-20 financial year, revealing that its statutory net profit had fallen 36 per cent to $260.8 million, as COVID-19 shut hotels, restaurants and other venues around the world, it battled a US wine glut and consumers opted for cheaper wine.
In a statement to the ASX just before midday Treasury said it had been advised of the investigation and would cooperate with any requests for information from Chinese and Australian authorities.
“TWE has had a long and respectful relationship with China over many years through its team, partners, customers and consumers. As an importer of high-quality, premium Australian wine, including brands such as Penfolds, TWE remains committed to China as a priority market and will continue to invest in its Chinese business and its relationships with customers and consumers,” it said.
“TWE’s focus will remain on building premium and luxury brands, investing in the local operating model and team, and working with partners to enhance the wine category and grow our contribution to China."
Last week Treasury had reported some good news about its performance in China, saying that its sales volumes in China in the month of June were much stronger this year than in June 2019.
More to come