How Trump’s Trade War Affects the US and Chinese Wine Industries Part 2

Asian woman selling wine

How Trump’s Trade War Affects the Chinese Wine Industry

The 11th Annual Hong Kong International Wine and Spirits Fair was held from November 8th-11th. Many parties interested in the future of Chinese wine gathered at the fair to discuss the industry. There were 1,075 exhibits with representatives from 33 countries. However, much of the buzz at the fair surrounded how the trade war between China and the United States will impact both country’s wine industries.

vineyard

The trade war has already hurt many US industries who had been successfully doing business in China for years. The wine industry will be specifically hard hit in California because the bulk of China’s wine imports come from California vineyards. The question is not “if,” but “how big” of a hole will the tariff’s put in the US wine industry?

Jeffrey Williamson, director of the California State Trade Expansion Program, stated in an interview at the conference that if the trade war endures, the US wine exports to China will diminish by ten percent next year. The trade war continues to make it increasingly difficult for US exporters to compete in an already “really tough market,” which Williamson conceded “is too big to ignore.” 

Chinese man riding a yak

But What Does This Mean for China?

Well, first of all, it means that China will look to new countries to fill the vacuum left by US producers. As has been well established, the Chinese are foremost francophiles when it comes to wine. In 2017, China’s import volume from France was over 217 million liters which more than double Australia, the nation that was number two in volume

By contrast, the United States only exported 9.6 million liters of wine to China, however, the value of wine exported to China increased by about 44% in comparison to 2016.  This means that there will be a sizeable chunk of the market to be filled by other producers. The early candidates for this market share are lead by Australia with other New World producers such as Chile expected to see an uptick in exports to China.

Asian woman selling wine

This benefits China because the value of the wine they will get from these exporting nations stands to be better when looking at price and volume. It must also be pointed out that when mentioning the quality of wine, there is a certain amount of subjectivity to account for taste.  But in hard numbers, it will benefit both competitor nations and China at the expense of the US industry.

toasting over Asia dishes

Therefore,  the United States’ industry will feel the burn (particularly producers in California). Whereas China exports such a small volume of wine to the United States that the Chinese industry will barely flinch.

China stands to benefit further because they could see people consuming more domestically produced wine to make up for the lack of imports coming from the US.  As the quality of Chinese wine continues to improve with the price being better in comparison to the United States, the Chinese will become more patriotic in their consumption. This could conceivably result in the pouring of more money into the Chinese wine industry and consequently speed the growth, while the US market stagnates, allowing China to make gains on one of the most valuable markets in the world.

Clearly, the Chinese wine industry stands to benefit from nearly every angle at the expense of the US wine industry.

In Part 3, which will be published on 11/22/18, we will take a close look at how the trade war will impact the US wine industry and what that portends for the future.

 

About Loren Mayshark

I am the author of Academic Betrayal and the award-winning Death: An Exploration. Also, I deliver a newsletter with insider news, tips, and tricks for expanding consciousness and creativity.

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