Treasury Wine facing China customs delay amid diplomatic rift

Galtero Lara
May 17, 2018

But the wine exporter conceded that it was also having problems getting wines into China, with delays in its shipments occurring with Chinese customs in the wake of new verification requirements introduced last month, saying they "seemingly appear to only apply to Australian Country of Origin wines, and to Australian exporters operating "warehouse models".

Treasury shares fell as much as 12 percent in morning trading, their biggest decline since 2014 when the company issued a profit warning related to a troubled expansion in the United States.

The owners of the Penfolds, Wolf Blass and Rosemount labels reported sales volumes to China jumped 60 percent in the half year to December and it wants to make China its biggest export market this year. The broader market was down 0.2 percent.

Treasury, whose exports to China have boomed in recent years, said it has been affected by new "verification requirements" in China that came into force in April and are affecting its shipments.

Ciobo, speaking to reporters in Shanghai at the start of a three-day visit, said a diplomatic team had been "mobilized" to sort out the customs delays.

"I do believe that this will be a short term getting-used-to process for us and other players in Australia", he told an investor conference call.

Treasury Wine facing China customs delay amid diplomatic rift
Treasury Wine facing China customs delay amid diplomatic rift

Overall Australian wine exports to China grew by almost two thirds in 2017, according to government data, making the wine industry one of the biggest beneficiaries of a 2015 free trade agreement between the countries.

Relations began to sour in November when Prime Minister Malcolm Turnbull proposed to register lobbyists working for foreign countries, citing "disturbing reports about Chinese influence".

China responded with a formal protest and has reportedly withheld visas for Australian government officials, jeopardising a biennial trade fair and sparking fears the row could escalate and further threaten economic ties.

"Until now it has been a diplomatic spat, we haven't seen it play out beyond the diplomatic and political realm", said Nick Bisley, an expert on global relations at Melbourne's La Trobe University.

The United States and China will resume trade talks on Thursday over tens of billions of dollars in tit-for-tat tariffs.

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