China probes Australian wine imports

China has started anti-dumping investigations into wines imported from Australia and the same is being conducted in accordance with legal procedures, the Ministry of Commerce said on Thursday.

The probe is expected to be completed in a year, but could be extended by another six months in exceptional cases, said the ministry.

"The investigation has just begun and is proceeding in accordance with legal procedures," Gao Feng, a spokesman of the ministry, said at a regular news briefing in Beijing. He said that the ministry will protect the legitimate rights of all stakeholders in the investigation.

The ministry's move followed a request from the China Alcoholic Drinks Association that claimed the surge in imports of wines from Australia in recent years at decreasing prices has threatened the domestic wine industry.

The anti-dumping probe will look into imports of wine from Australia in containers holding two liters or less in 2019, according to a statement of the ministry.

Australia is the largest wine exporter to China. The value of wine imports from Australia reached $318 million in the first six months of this year, accounting for 38.18 percent of market share in China, according to data released by the China Chamber of Commerce of Import and Export of Foodstuffs, Native Produce and Animal By-Products.

"The market of China's wine industry has been seriously squeezed by the imported wines. The industry is facing a big threat from Australian wine, which has shown a clear pattern of increasing volumes and decreasing prices, and its market share in China is gradually rising," said Huo Xingsan, secretary-general of the wine branch at China Alcoholic Drinks Association.

China has seen a rapid increase in wine imports from Australia in the past years. The volume of imported Australian wine surged by 113 percent from 56,700 kiloliters in 2015 to 120,800 kiloliters in 2019. The imported price decreased by 13.36 percent from $7,759 per kiloliter in 2015 to $6,723 per kiloliter, according to data from the General Administration of Customs.

Australian Grape & Wine, an industry association, said in a statement on Aug 18 that it was aware of the request by the Chinese industry to the Chinese Ministry of Commerce to launch an anti-dumping investigation on Australian wine in China.

"We believe that the Australian grape and wine sector is well placed to respond to this investigation and Australian Grape &Wine and our exporting companies will cooperate fully," it said in a statement.

Zhang Yongjun, a researcher at the Beijing-based China Center for International Economic Exchanges, said that the growth in imported wines is closely related to the expanding appetite of Chinese consumers and the country's tariff policies.

"The removal of import tariffs on wine imports from Australia under free trade agreement between the two countries is one of the reasons behind the rapid rise of Australian wines," he said.

China is one of the fastest growing markets in wine consumption and ranks fifth in the world after the United States, France, Italy and Germany, according to media reports citing data from the International Organization of Vine and Wine. China's wine market has huge potential to grow as the country's per capita wine consumption was only around 0.6 liters in 2019, compared with 10.1 liters in the US.

Zhu Wenqian contributed to this story.