Aussie Winemaker, Rock Lobster Traders Avoid Paying China's Huge Tariffs
The Aussies are giving the Chinese a lesson or two on the folly of using high tariff walls to punish countries that do not follow their bidding, and they are running circles around President Xi Jinping, who thought that Australia would cave in to his demand that Huawei be allowed to corner its 5G market, or stop quibbling about a thorough probe into the origins of the COVID-19 in Wuhan.
Photo Insert: Fishers simply started selling rock lobster to Hong Kong instead, with the lobsters then smuggled into China via a so-called “grey route,” sales hardly affected by the sanctions.
China’s brutal trade war with Australia has brought many companies to their knees. But one famous firm has managed to sidestep the drama, Alexis Carey reported for news.au.com.
The relationship between Canberra and Beijing first began to sour in 2016, resulting in a diplomatic freeze – but things stepped up a notch last year when around a dozen Australian goods exports were slapped with tariffs. Coal, barley, beef, timber, lobster, and wine have been among the casualties, and earlier this month, we learned just how crushing the spat has been.
According to a report from the Australia-China Relations Institute (ACRI) in early December, Australia’s exports across 12 key commodities impacted by Beijing’s sanctions plummeted by a staggering $17.3 billion in the first nine months of 2021 compared with 2019.
ACRI director Prof. James Laurenceson told news.com.au many Australian brands and livelihoods had been devastated by the ongoing trade war. “When you start looking to the longer term, a lot of the cost will depend on whether the Chinese market continues to outperform alternate markets as it has done for the past 20 years – for example, research shows that for the past 15 years, China has added 60 million people to the middle class every year and that far exceeds anywhere else – India is nowhere near that,” he said.
“So when we’re locked out of the Chinese market, diversification is all well and good, but all we can try and do is sell to smaller, slower-growing markets, and that comes at a cost.
But other industries like wine were beginning to “really struggle” – although he said some Australian brands, such as the iconic Penfolds, had taken some “really clever” steps to stay in the game.
“Penfolds is a flagship Australian wine brand, and guess what they are doing? They are still selling in China, and they are sourcing product in California rather than the Barossa Valley,” he said.
“So it’s an Australian brand going into China, but the product is not actually Australian – California grape growers are benefiting from that trade now, and we will see more and more Australian companies do things like that – and good for them, they are keeping the brand afloat, but it comes at a price to the Australian economy.
“It’s a sad reality check on what’s been happening.” Prof. Laurenceson said it was a similar story with the rock lobster industry, which was locked out of China last November.
While the industry feared a looming disaster at the time, fishers simply started selling to Hong Kong instead, with the lobsters then smuggled into China via a so-called “grey route,” which meant that “sales have hardly been affected” by the sanctions.