July 21: Australian wine companies were hit because of astronomical taxes by China last November of up to 218% beating even India’s high import duties of 150%, but that the market is being now partially serviced through Hong Kong, and with the increasing push in the UK market, exports have managed to be only 10% lower than last year, writes Subhash Arora who marvels at their flexibility and aggressive approach to move fast into the potential markets and the ability of Wine Australia for accurate and timely information and advisory to the industry
Exports to Hong Kong increased by 111% in the fiscal year ending 30 June 2021 to A$187 million (US$136.7 million), according to the data released by Wine Australia. Despite a sharp drop of 45% exports to China. Interestingly, China remains the largest wine market for Australia in value even though Hong Kong has gained 3 spots to reach the 4th position.
Obviously, Hong Kong has become a hub for the mainland China. Wine exported to Hong Kong can be stored by the importers, wholesalers or specialist shops privately and then sold directly to customers in China. Direct delivery options became popular during the Covid -19 pandemic. This made it easier than ever to get wine in any label into the hands of every customer.
China had instantly shut the market practically for Australian wines with duties up to 218% last November. But these duties do not apply to Hong Kong which has an independent tax system from the mainland. The biggest Chinese online retailer JD.com still shows listings for Australian wine, showing that the mainland is not off-limits from Hong Kong, according to the Report in SMH.
Exports 10% lower than last year
The figures released by Wine Australia shows total year-on-year exports were down 10% for the year ending June 2021. fiscal year, to A$2.6 billion, with most of the damage sustained in the first half of 2021as Chinese shipments plunged a dramatic 97% to just A$13 million. Interestingly, in 2020-2021 China remained Australia’s biggest export market in value despite a shrinking of 45 % in value to $A606 million (US $442 million) due to the exorbitant, punitive tariffs slapped by Chinese authorities last year.
Outside of Asia, UK showed an increase of 23%, making it the biggest global market by volume. This contributed to the sales in Europe being the highest in the decade. However, the growth rate to the UK slowed to 8 per cent in the most recent six months.
Exports to North America dropped 5% to A$586 million, suggesting the industry’s efforts to attract new markets outside Asia, still needs more efforts.
Japan supports Australian wines
Meanwhile Japan has extended full support to Australia in the trade war and stresses that the Trade should never be used as the tool to apply political pressure. Japan has promised to help Australia turn from the volatile economic superpower China, according to The Australian. Tariffs on Australian bottled wine have been reduced to zero in Japan. It had been the biggest trading partner for 40 years and is now in the second position.
Subhash Arora
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