Australian exporters hope growing rift with China will ease, eye opportunities in Chinese market
Published: May 08, 2021 08:48 PM
Australian firm Champion Wool Factory presents its wool products during the China International Consumer Products Expo in Haikou, capital of South China’s Hainan Province on Saturday. Photo: Zhang Hongpei/GT

Australian firm Champion Wool Factory presents its wool products during the China International Consumer Products Expo in Haikou, capital of South China’s Hainan Province on Saturday. Photo: Zhang Hongpei/GT

Despite downward spiraling bilateral relations between China and Australia that have caused many uncertainties for Australian exporters, they hold hopes that the growing rift will be eased as their commitment to the world's second largest economy remains.

A dozen Australian firms, led by the Australian Trade and Investment Commission, engaged in various sectors from high-end health care, skin care, to food and wine, attended the ongoing China International Consumer Products Expo (CICPE), which runs from May 7 to 10 in Haikou, capital of South China's Hainan Province.

One obvious change the Global Times spotted during the mega expo is that Australian wine exporters or brands dwindled starkly compared with their wide presence in the China International Import Expo (CIIE) held in Shanghai last November.

Wine products from other foreign countries such as France, Spain, Italy and New Zealand seem to take a dominant presence at the expo, revving up efforts to expand their presence in the Chinese market as they have sniffed the business opportunities left by Australian wine, which has been under swift pressure since November when the preliminary anti-dumping rate of up to 212 percent was announced by Chinese authorities.

In March, China started to impose anti-dumping duties from 116.2 percent to 218.4 percent on Australian wine. According to the ruling, dumping and subsidies have occurred in imported Australian wine, which caused substantial damage to the Chinese wine industry. 

Luis Lei, general manager of a wine trading firm based in Xiamen, East China's Fujian Province, which is mainly focused on shipping Spanish and Chilean wine to the Chinese market, told the Global Times on Saturday at an exhibition booth that the previous market share scenario that overseas wine shares in China has greatly changed since the end of last year: as Australian wine shipments to China plummeted, French and Chilean wine sales are soaring, quickly filling up the market void.

"We have seen that imported wine in the Chinese market has been on a downward trend since 2019, but robust growth momentum has started since the start of the year with China's consumption market returning to pre-virus levels," Lei said, calling the current consumption rise as "revenge" to release pent-up demand during virus-plagued 2020.

Australian winemakers shipped A$12 million ($9 million) of wines to China in the four months from December to March, down by 96 percent from A$325 million a year earlier, according to industry body Wine Australia.

China accounts for 39 percent of Australia's AU$3 billion wine exports, more than the combined value of the next four biggest markets - the US, UK, Canada and New Zealand.

Ivy Yao, chairman and co-founder of AU Life International, an Australian based e-commerce platform provider, told the Global Times on Saturday that Australian wine products under one of the company's subsidiaries have suffered a big export decline to China, 90 percent so far this year on a yearly basis.

"Our shipments to China and sales climbed each year with double-digit growth since 2015 when the China-Australia Free Trade Agreement was nailed down which set China's tariffs at zero for a majority of Australian goods," Yao said.

Facing the geopolitical dispute between the two countries, Yao said the firm will not back down on the presence of Chinese consumption which is at the prime of rise and upgrade.

To cushion the impact on its wine business, Yao said the firm is exploring exporting grape-related products like grape juice to China and transferring its original grapes to a third country.

Also, it launched ready-to-eat products with Australian grain-fed beef by partnering with enterprises in Central China's Hunan Province. The latter helps make the Australian imported product more catered to Chinese consumers regarding flavor.

"Different from wine, our other products like dairy and healthcare goods are not affected regarding business," she added.

Blackmores, the Australian health supplement maker that entered China in 2012, has treated the market as a significant pillar of growth strategy, with the company booking a 25 percent increase in revenues from the country in the second half of 2020.

The current dynamics between the two countries will not cause us to change its business layout in China, Kitty Liu, managing director of Blackmores China, told the Global Times in an interview during the expo.

"The huge potential of consumption upgrade the country is now onto... In particular, Chinese consumers tend to spend more in the health and nutrition sector in the post-virus era. Our focus is long-term operation in the market which has become our biggest overseas market now, and we will continue to invest in social impact in the years to come," she noted, adding that the firm is planning to cooperate with domestic medical universities on clinical research around eye health.

From zero to over 100, the number of domestic business partners that a wool firm from Melbourne, Australia - Champion Wool Factory - has joined hands with has been on a quick rise since 2018 when the Australian firm attended the first CIIE in Shanghai.

Eric Dong, its CEO, told the Global Times on Saturday that visitors' enthusiasm for Australian-made wool products that it exhibits has far beat his expectations for the expo in Hainan.

"China-Australian trade and economic relations are highly complementary. The current challenge will bring some uncertainties and concerns but I hope it's temporary," Dong said.