Beijing’s decision last week to impose tariffs of up to 212% on Australian wine imports has endangered business with mainland China, according to Tony Battaglene, CEO of Australian Grape and Wine, a national association.
Battaglene works with around 800 wine producers in Australia who have “built their businesses” around exporting to China and are now left with no backup plan, he added.
“We were surprised, we were shocked,” Battaglene told CNN Business. “Having the extent of these interim tariffs, I mean essentially they will close the market to Australian bottled wine, to premium wine, in China. There’s no way that we can compete at those levels.”
The tariffs on wine, which took effect on Saturday, have forced businesses to scramble. After the announcement, some container ships that were en route to mainland China had to turn back to Australia, according to Battaglene.
“Orders are being canceled, orders are being suspended,” he said. “No one’s willing to … take extra import duties just to get it through customs. Essentially the market will be closed to us.”
Some of the wine TWE is considering reallocating had already arrived at a port in Shanghai, according to CEO Tim Ford. “We will reassess [what to do with] that product,” he said on an analyst call Monday.
“We are extremely disappointed to find our business, our partners’ businesses and the Australian wine industry in this position,” Ford added. “Our attention’s very clearly on building our business outside of China over the next period of time.”
The plan wasn’t enough to reassure investors. TWE shares closed down 6.9% in Sydney on Monday, following an 11.3% drop on Friday, when the tariffs were announced.
On Monday, Ford called on the Australian government to help businesses find a solution.
“Left unresolved, there will be a significant impact,” he said. “Things may change, and we’ll deal with that as they change, but we’re sort of dealing with the cards that we know at the moment, without a strategy of hope if you like. Because a strategy of hope is not a very smart strategy.”