China-Australia relations: wine piling up keeping Sydney exporter awake at night ahead of peak season

China announced two trade probes into Australia’s wine industry earlier this year before Beijing also ordered traders to halt purchases last month

Royal Star Wine’s Alex Xu has suffered a financial hit of A$200,000 (US$146,000) to A$300,000 due to cancelled orders

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Royal Star Wine has had six or seven orders from China cancelled, resulting in a financial hit of A$200,000 (US$146,000) to A$300,000, says owner Alex Xu. Photo: Bloomberg

Published: 10:33am, 18 Nov 2020Updated: 10:33am, 18 Nov 2020

Australian wine exporters should be preparing for their peak selling season, the months preceding Christmas and Lunar New Year celebrations in China. They are instead watching stockpiles of product mount in warehouses as its biggest market clamps down on shipments from the country.

Already on edge after China announced two trade probes into the country’s wine industry earlier this year, people familiar with the situation said this month Beijing had also ordered traders to stop purchasing at least seven categories of Australian commodities – including wine, rock lobsters, barley, and copper ore – in its most sweeping trade move against Canberra yet.

The prospect of indefinite bans would be a worst-case scenario for Australian exporters, who have already been hit this year by coronavirus lockdowns.

The issue is keeping Alex Xu awake at night as he tries to keep his business afloat. The Sydney exporter sells his own brands of wine from vineyards located in South Australia’s Coonawarra, McLaren Vale and Barossa wine regions, as well as custom products. About 80 per cent of its clients are in China.

This is a very serious matter because we don’t know how long we’ll be banned

Alex Xu

Lately, his company Royal Star Wine has had six or seven orders from China cancelled, resulting in a financial hit of A$200,000 (US$146,000) to A$300,000. The importers had been recently ordered not to buy Australian wine, he said. By whom, it is unclear.