At the end of this summer China opened an investigation on the import of European wines, accusing the EU of unfair competition. It was the beginning of what it has been defined the wine battle. The precautionary measures adopted by Beijing would result in an increase of customs duties on wine, which could cause – and somehow already did – harsh repercussions on the Italian wine industry, which largerly consists of small and medium-sized enterprises.

In the first half of this year, in fact, even in the presence of an unchanged turnover (-0.7%), Beijing effectively cut the quantity purchased, which was reduced by 41.9%.

European Numbers

French have the lion’s share, with the 50% of the market (for a total value of approximately € 750 million), followed by Spain and Italy. Our country currently controls approximately 8% of the Chinese market, with a turnover of € 80 million that  grew of about 40% in 2012.

Numbers are therefore very attractive, but there could be a sharp reduction in case of an increase in duties, which are currently 20% on the wine in bottle and 14% on the bulk.

All because of solar panels

The dispute between Europe and China arises because of the low cost solar panels Beijing has been exporting to the Old Continent: their price is in fact in some cases 88% less than what it should be normally. Brussels has decided to act by increasing the rate of customs duties on Chinese panels from 11, 8% to 47%.

And now the Chinese have threatened to do the same with European wines, by opening an investigation. The charge to the countries of the Union is to make dumping, that is to invade the market with products that has too much more competitive prices, using best production conditions.

An opportunity for China: internal production and external acquisitions 

Benefits from this situation would go to the Associations of Chinese Winemakers, who could exploit the gaps that would be opening in the internal market. In fact, if the relationship between wine and China is becoming more and more visible as far as the international market is concerned, we have to consider also internal wine producers:  something like 400 vineries, most of them owned by the government, with a surface area of 390,000 hectares able to grow by 77% in the coming years.

However, the Chinese strategy at the moment remains more focused on imports. China, which has already bought several luxury wineries in France, is widening the shooting outside its borders, aiming to acquire wines of the highest range. In short, it seems that institutions and private investors are willing to bet on the potential of chinese and asian markets.

And the actual numbers seem to be quite convincing.