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Aussie wine exports flow to Hong Kong after China tariffs

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Hong Kong has develop into an important participant in Australia’s commerce stoush in opposition to China, with the port metropolis now a black market hub for Aussie wine.

In November final yr, China launched crippling tariffs of up to 212 per cent for Australian wine exports as a part of an escalating commerce battle.

But now specialists imagine Chinese consumers have discovered a manner round that – unlawful wine imports are flowing by way of Hong Kong as a backdoor into the mainland.

Wine Australia’s annual Wine Export Monitor, launched on Wednesday, reveals that gross sales in Hong Kong have skyrocketed whereas China’s buy of exports have plummeted.

Hong Kongers spent $186 million on Australian wine within the 2020-21 monetary yr, an annual rise of 111 per cent.

At the identical time, exports to China fell 45 per cent to $605 million, down from greater than $1 billion the yr prior.

Lowy Institute senior fellow Richard McGregor says the figures imply it’s very doubtless that Hong Kong’s “grey market” has returned, which is sweet information for Aussie producers.

“This has been rumoured for a long time, and now it’s showing up in the stats,” he advised information.com.au.

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China has been embroiled in a commerce battle with Australia for the final 18 months, after Prime Minister Scott Morrison angered the communist nation by calling for an investigation into the origins of the coronavirus.

Wine in addition to iron ore, barley and even lobsters have fallen foul of the Asian superpower in its bid to undermine Australia’s financial system by way of chopping off commerce.

Mr McGregor mentioned that outdated, unlawful commerce routes have been being reopened between Hong Kong and China to keep away from shopping for wine from Australia instantly.

“That role of Hong Kong as the middleman to the world has gradually disappeared over time because now you trade directly with China,” he mentioned.

But in mild of current commerce wars, “some people have tried to revive Hong Kong’s role as a trans-shipment point,” he added.

Hong Kong is the fourth greatest purchaser of Australian wine, which is three spots up from a yr earlier.

“At this point it’s not legal, it’s basically the grey market,” Mr McGregor mentioned.

“There is some leakage from Hong Kong into China. The trade (is) damaged but not destroyed.”

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Australian wine isn’t the one commodity to be ferried again to the mainland on this manner.

David Olsson, National President of the Australia China Business Council, says it’s been taking place a while with Australian rock lobsters.

“I anecdotally heard from a trade official that there’s more lobster coming into Hong Kong than could possibly be eaten,” he advised information.com.au, talking from Hong Kong on a enterprise journey.

“One can put two and two together and assume they’re going into the mainland.”

Lobster exports rose by greater than 2000 per cent in Hong Kong after commerce sanctions have been positioned on them.

“The environment we’re living in is encouraging that grey market,” he mentioned.

Although the “backdoor” is offering a lifeline for Australian producers, Mr Olsson warned that bother is on the horizon.

“While this provides short-term relief for our exports, it’s a high-risk strategy, particularly the speed with which they (authorities) can shut down those channels,” he defined.

Mr McGregor agreed.

“If the Chinese really wanted to shut this off, they can,” he mentioned.

“It’s very hard as a producer to rely on the grey market. Chinese customs could shut it down at any time. It’s not a substitute for legal and aboveboard trade.”

The drawback can also be that the gray market doesn’t present practically as a lot money as official commerce.

Strong progress in wine exports to the UK and Hong Kong, who have been quantity two and three on the record, failed to make up for the large lower from the primary purchaser – China.

China’s punitive tariffs on Australian wine noticed total export volumes drop 5 per cent and their worth drop by 10 per cent to $2.56 billion.

“I don’t think (the grey market) is ever going to be more (than) a relative fraction of the profit we can bring it if we trade directly with China,” Mr McGregor mentioned.

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