Australia-China Tensions Bring the Troubles of International Trade to Light

Those who take avid interest in the happenings of the wine industry would probably be aware of the hit Australia and China trade ties have taken. Simmering tensions between Australia and China have adversely affected Aussie exports, including wine. These recent developments have once again reminded the Australian winemaker of the risks of solely relying on international trade. With a domestic strategy being the need of the hour, let’s discuss the current Sino-Aussie fallout, the volatile nature of global trade and the best route for our winemakers to take in order to protect their interests.

Australia-China Relations at a Low

The trigger was media reports that surfaced a few weeks ago stating that the government was planning to introduce a legislation for banning political donations. The idea behind the move was to boost transparency between lobbyists and the foreign parties they’re associated with. This attempt to prevent interference by other countries apparently didn’t go very well with China. The Dragon denied meddling in Australian affairs, while Aussie goods entering China started to experience limitations and delays. These shipments include seafood, farmed produce, and wine, of course. It’s worth mentioning here that this trade is regulated by the popular China-Australia Free Trade Agreement (ChAFTA). This trade agreement entered into force in end 2015, with China being Australia’s largest trading partner. It’s important to note here that China buys about a third of all Aussie exports.

Aussie Wine Exporters Express Concerns

This diplomatic strain was immediately followed by Australian exports getting delayed at major Chinese ports. Treasury Wine Estates, Australia’s largest wine producer, confirmed to the South China Morning Post that it was clearance from the General Administration of Customs China (GACC) being delayed. The brand added that these delays were taking place despite it cooperating with the Chinese authorities to meet all regulatory criteria. Moreover, only Australian wines seemed to be facing new verification requirements.

Time for Aussie Winemakers to Rethink Strategy?

The latest Sino-Australian developments are just an example of the changing dynamics of international trade. No matter the product or its quality, a change in the trading environment can occur without a warning and leave our exporters economically vulnerable, without even a right to reply. Examples may be a major event such as the much talked about Brexit, i.e. Britain’s exit from the European Union. Think about it – even something like export incentives for competitor wine-producing countries can affect the Aussie winemaker. With international trade constantly facing such unexpected challenges from time to time, an increased focus on domestic markets might be our industry’s best bet.

Domestic Trade Strategy – Our Safest Bet

The aforementioned problems bring to light the risk of ignoring our own domestic customer base. Selling produce through eCommerce platforms like Just Wines can help businesses gain exposure to a vast market. Nitesh Bhatia, CEO and Founder of the online wine store, shared with us the indisputable benefits of using such channels.

• Foremost, online wine stores like Just Wines ‘level the playing field’. From large brands that have become household names to smaller, boutique wineries – everyone gets an equal opportunity.
• Wineries gain access to huge untapped markets, expanding their customer base. This is directly proportional to an increase in sales, and hence, revenue.
• Having outsourced selling and distribution processes, companies can divert all their resources to the craft of winemaking.
• Benefiting from the marketing campaigns of Just Wines, businesses can spend much less time and energies on marketing or retail distribution.
• These services also help shape supportive relationships between wineries and suppliers.

Australia is today one of the world’s top five wine producing nations. The terroir allows for the production of diverse wines, showcasing a variety of attributes. Our winemakers are skilled, but in order to truly grow, producers need to discover and grow the numbers of loyal customers, forge reliable networks and ensure as much control over the process as possible.