China wine tax: Fears up to 6000 Australian jobs at risk, companies recall wine shipments

Australian wine makers are urgently ripping wine off ships bound for China to avoid massive new taxes, as the industry fears up to 6000 jobs could be lost.

Australian wine makers are urgently ripping sea containers of wine off ships bound for China to avoid massive new import taxes.

There are also fears up to 6000 jobs could be lost as a direct result of Beijing’s decision to slap interim tariffs of up to 212 per cent on Australian wine as part of an ongoing anti-dumping inquiry.

It comes as relations between the two countries hit a new low when a senior Chinese official posted an “outrageous” and “repugnant” fake image online of an Australian soldier threatening to slit a child’s throat with a knife.

Scott Morrison has demanded an apology from China, describing the graphic falsified image as an “outrageous and disgusting slur”, and “deplorable behaviour” that “diminishes” China in the world’s eyes.

“There are undoubtedly tensions that exist between China and Australia. But this is not how you deal with them,” Mr Morrison said.

A woman looks at a bottle of Australian wine at a supermarket in Hangzhou, in eastern China's Zhejiang province. Picture: STR / AFP) / China OUT

He said the “awful event” could hopefully be a trigger to “reset” relations, and urged the Chinese Government to restart diplomatic talks “without condition”.

Mr Morrison added that Australia had been transparent and honest in dealing with the allegations of war crimes committed in Afghanistan exposed in the Brereton report earlier this month.

Taylors Wines managing director Mitchell Taylor said his company and others were urgently trying to recall wine headed for China, and were urgently looking for other high-end international markets.

“We are getting four containers ripped off a ship heading that way,” Mr Taylor said.

“We’ll take them off when the ship docks in Singapore, and have them sent back and then we’ll re-label them at our own cost for other markets.”

Mr Taylor estimated about 20 to 30 other wine makers were also recalling shipments, and up to 300 containers may be taken off one ship.

He called for more marketing help from the government to target other countries such as the United States and Canada.

“All of this wine cannot come back to the Australian domestic market,” he warned, saying oversupply would push prices down while costs went up, and could impact jobs.

Tim Ford, head of Treasury Wine Estates which makes Penfolds, said the company was “extremely disappointed” in China’s decision to impose tariffs, and would now look to reallocate wine to other key luxury growth markets.

“There is no doubt this will have a significant impact on many across the industry, costing jobs and hurting regional communities and economies which are the lifeblood of the wine sector,” Mr Ford said in a statement to the ASX.

TWE will reallocate ‘luxury’ grape sourcing to its other Australian brands like Wolf Blass and Pepperjack.

Australian Grape and Wine chief executive Tony Battaglene said a “large number” of wine shipments were already stranded at Chinese ports, and companies would either have to pay the tariffs or could face charges for storage or lose their product entirely.

He said China’s tariffs could cause grape prices to rise, while Australian retailers may discount wine if there was an oversupply domestically.

It would hurt the sector even further.

“Without the China market, there’s going to be an impact on jobs in rural and regional Australia. It could be as big as 5000 to 6000,” Mr Battaglene said.

The wine sector will hold crisis talks with the federal trade and agriculture ministers on Wednesday.