SA wine industry reports cancellations of shipments to China, as uncertainty over tariffs continues

SA winemakers are having to drop shipments to China – or having them cancelled on the other end.

South Australian wineries have already started having their orders to China cancelled, as trade tensions escalate .

SA Wine Industry Association chief executive Brian Smedley said companies had been contacting the group flagging order cancellations. He could not say which companies were involved, citing confidentiality, but said “we’ve got companies right across the wine regions in South Australia that export to China”.

The state exports about $700m worth of wine to China each year, making up the lion’s share of Australia’s $1.2bn in exports. Mr Smedley said Chinese markets accounted for about 60 per cent of the wine sent overseas.

On top of Chinese buyers cancelling orders, the uncertainty about what would come next was causing concern across the sector, he said.

“That’s something that’s very difficult to respond to, other than maintaining a relationship hoping that it will change at some stage in the future,” he said.

“It’s a very difficult issue – it’s not something we have had an official notification of.

“We’re asking how long is this going to go for. Is it going to be resolved soon, or is it a long term issue? Is it related to other things going on such as the investigations China is undertaking with anti-dumping … does it change if there’s the imposition of a duty?”

Chinese businesses have reportedly been told that Australian wine, sugar, coal, lobster, barley, copper and timber would be stuck at ports and would not clear customs.

Australia’s rock lobster exports to China were temporarily halted this week, after shipments were held up at a Chinese airport.

Gemtree Wines managing director Mike Brown said his McLaren Flat company on Friday cancelled a shipment to China because of the uncertainty.

Mike Brown, winemaker at Gemtree Wines in Mclaren Flat, said the company cancelled a shipment to China because of the uncertainty.

“Based on the stories of people having lobsters sitting on the wharf and information we've gathered this morning, that would be a commercially negligent decision to send that stock because there’s too much risk involved,” he said.

The shipment was the company’s final one bound for China ahead of the country’s busy Lunar New Year celebrations.

“As an Australian business selling wine for 20-odd years, it’s been a really challenging year for lots of reasons,” Mr Brown said. But it’s not the first time that we’ve faced a challenge that we have to overcome.”

Mr Brown said while the company was heavily invested in the Chinese market, it had also seen strong growth in exports to Taiwan and South Korea, and shipped premium wine to the UK for the first time this year.

“The domestic market has been the strongest it’s been in the history of our business in 2020 – and that’s with all the shut down.”

Trade Minister Simon Birmingham said there were “many deeply troubling rumours” about how Australian exports to China could be treated by authorities.

“These are often unconfirmed, unsubstantiated rumours,” he said.

“And I would urge people to treat them as such, to exercise caution and to not jump to conclusions at this point in time.

“As a government, we continue to give every possible assistance that we can at an administrative, diplomatic and political level to try to make sure that our exporters do retain the type of access they ought to have into China.”

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