As U.S.-China trade tension rises, in the “Land Down Under,” there might be an upside for Australia’s wine industry.
They aim to expand their sales in China, if it imposes even higher tariffs on U.S. goods. CGTN’s Greg Navarro explains how.
Follow Greg Navarro on Twitter @greg_navarro
On most days in Australia’s Hunter Valley, you’ll find Chinese visitors included in the stream off traffic meandering through the picturesque countryside.
It’s not surprising when you consider what the makers of the area’s prized asset have done to attract the market.
“We have a young lady who works here who speaks fluent Mandarin and we are not the only people in the district,” said Bruce Tyrrell, General Manager of Tyrrell’s Wines.
Australia’s wine industry is also seeing the fruits of its marketing efforts in China, which included an increasing number of Chinese visitors.
“We also try to understand what they want in a wine as well,” added John Drayton, Manager of Drayton’s Wins. And there’s also a boost in Chinese investment in Australian wineries. In fact, it’s estimated that half of all foreign interest in vineyard sales across the country come from China.”
But the real winner here is Australian wine exports to China, which have grown dramatically. Last year alone saw exports increased by more than 60 percent.
“It is a huge phenomenal figure and the Chinese consumer is starting to drink the higher quality wines as well and the price from the Australian point of view is starting to climb as well,” explained Drayton.
Australia’s wine industry is among several of the country’s export sectors, including fruit and nuts, that stands to gain an even larger share of the Chinese market if a tariff-driven trade war escalates between the U.S. and China.
“I think in some ways the erratic nature of the U.S. under the Trump administration makes Australia a very stable and reliable trading partner for China, for Japan, for South Korea so in some ways this sable rattling over tariffs could be quite good for Australia,” said Tim Harcourt, an economist from the University of New South Wales.
While tariffs on U.S. wine exports could go up, tariffs on Australian wine exports to China have been falling thanks to the Free Trade Agreement between the two countries.
“From 2015 to the end of this year, the 14 percent import tariff on Australian wine is disappearing. We’re paying 2.8 percent at the moment and as of the first of January 2019, it’s gone,” detailed Tyrrell.
Most winemakers in Australia said they don’t want to see a trade war escalate. They’re also well aware of what their industry stands to gain if it does happen.