An anti-dumping investigation looks at whether an imported product is being sold at an unfairly low price and can result in import duties being imposed to offset the price difference.

The China Alcoholic Drinks Association, which represents 122 members, said the growing number of low-priced Australian wines sold in China had “severely disrupted and inflicted a serious negative impact on the local market”.

China first imposed an anti-dumping duty on Australian barley and suspended beef imports from four Australian abattoirs with a history of product labelling issues.

While both actions complied with international trade rules, the timings of the announcements, combined with a Chinese government warning for tourists and students to avoid travelling to Australia because of the risks of violence, raised questions whether they were being used as trade retaliation.

In its application, the China Alcoholic Drinks Association provided evidence that since 2015, the volume of cheap Australian wines has risen while prices have fallen. Overall, 40 per cent of Australian wine is exported to China.

“In recent years, in order to seize and expand its market share in China, Australia wine manufacturers have not hesitated to cut prices so that they can export large quantities of wine products into the Chinese market,” it said.

Makers of well-known Australian wine exports such as Penfolds’ Treasury Wine Estates and Yellow Tail’s Casella Wines were named in the application, along with South Australia’s Accolade Wines and Victoria’s The Wine Company.

Some of the groups listed also sell some of the cheapest wines in the Australian market.

Treasury Wine Estates said in a statement that it would cooperate with both Chinese and Australian authorities as it regards China “as a priority market” in which it will continue to invest.

Australian industry group, Australian Grape & Wine, confirmed all the companies named would cooperate fully.

“The Australian industry welcomes the opportunity to build on these ties and work with the Chinese industry and government to further technical cooperation and develop lasting relationships,” the group said in a statement.

Australian Minister for Trade Simon Birmingham labelled the investigation “deeply troubling and quite perplexing”.

“Australian wine is by no means subsidised, it is by no means sold at or below anything other than market rates in the world market,” he said. “Australian wine during the first half of this year proved itself to be the second-highest priced wine sold in the Chinese market.”

The National Farmers Federation also said the proposed investigation was "baffling and deeply concerning" as Australian wine exports are some of the least subsidised in the world meaning they have no incentive to sell at a loss.

"Claims that Australian wine makers are selling wine into the Chinese marketplace at below market price are completely unsubstantiated,” the Australian non-profit organisation said.

Minister for Agriculture David Littleproud added that while he respected China’s decision to protect its domestic producers, he rejected “any claim that Australian wine product has been ‘dumped’ into China”.

Independent Australian winemakers, such as Shaw Wines, said that while the commercial groups named in the investigation were known to have sold a lot of low-cost wine, fake products were also a cause for the low prices.

Penfolds has been the subject of bootlegging and counterfeit labelling operations using its name in Asia in recent years.

Shaw Wines owner Graeme Shaw said the investigation was surprising, as many Chinese consumers have started leaning towards premium and higher priced wines.

“I think it’s all political posturing and they are targeting the wrong country,” Shaw said.

The large Australian wine groups named as part of the investigation bottle and package wines from across Australia into private labels mainly for the export market.

One of the named exporters, South Australian Wine Group, said it specialised in buying bulk wine directly from vineyards, while offering bottling and labelling services.

Each group produces a portfolio of many locally known wines, as well as wines that are unknown in the Australian market.

The Compass label is made by Accolade Wines especially for the well-known key opinion leader Lady Penguin, whose viral wine recommendations target younger middle-class Chinese consumers.

Lady Penguin sells wines and offers lifestyle discussions on her Drunken Goose channels on Chinese social media platforms WeChat and Weibo.

In one Taobao advert, two bottles of “direct Drunken Goose” cabernet sauvignon Shiraz from The Compass are offered for 76 yuan (US$11), while on 1919.com the same wine is being sold at 47.7 yuan per bottle.

Accolade Wines declined to comment.

07:34

Australia and China cooperation too valuable for 'nonsensical' decoupling

Australia and China cooperation too valuable for 'nonsensical' decoupling

Australian brands are not the only cheap wines sold on Chinese e-commerce sites, with many French labels also offered at low prices.

While locally produced Chinese wines are not as well-known or marketed as broadly as the Australian or French labels outside China, domestic sales have grown steadily in recent years.

French luxury group LCVH invested in vineyards in the Meili Mountains, in southwestern Yunnan province on the edge of the Himalayas, to produce the Chinese label Ao Yun. Started by the group’s Moët Hennessy chairman Christophe Navarre, the vineyards produce cabernet sauvignon and cabernet franc wines.

Domaine Chandon also has a winery in the Helan Mountains area in the northwestern province of Ningxia, producing the Chandon Me vintage.