London
CNN
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China is opening an investigation into the worth of brandy imported from the European Union in a transfer seen as retaliation for the bloc’s probe into an inflow of low-cost Chinese language electrical vehicles into Europe.
The Chinese language Ministry of Commerce instructed reporters Friday that it had launched the anti-dumping investigation on the request of native liquor producers. Dumping refers back to the apply of exporting items to a rustic at costs that don’t replicate their price.
The European Fee was “assessing documentation” obtained from Chinese language authorities, and would help within the investigation “in shut cooperation” with EU liquor corporations, Fee commerce spokesperson Olof Gill mentioned in an announcement.
China is a vital marketplace for European brandy producers, and information of the probe despatched shares of luxurious client items teams tumbling.
Agatha Kratz, director at Rhodium Group, mentioned the overwhelming majority of the businesses that may very well be affected by Beijing’s investigation have been French cognac manufacturers.
“China has change into such an enormous marketplace for spirits, and French spirit corporations,” she instructed CNN. “In 10 years, (China has) change into one in all their key income drivers and progress drivers.”
Shares of Pernod Ricard fell almost 4% in Paris. The corporate owns Martell, a maker of cognac courting again greater than 300 years. Rémy Cointreau’s inventory plummeted over 11%, whereas Bernard Arnault’s LVMH, which owns Hennessy cognac, dropped 1%.
Jessica Whyte, a spokesperson for Pernod Ricard, mentioned that the corporate was “assured that (its) merchandise and industrial practices absolutely adjust to Chinese language and worldwide rules.”
China may finally impose tariffs on imports of French brandy, simply because it did to imports of Australian wine in 2020 following an anti-dumping investigation. The tariffs crippled many Australian wine exporters.
Kratz, at Rhodium Group, mentioned she believes the transfer was in retaliation for France’s robust help for the EU probe into suspected anti-competitive commerce practices by China.
“A number of French corporations (towards) the top of the 12 months have been telling us that (they) hadn’t seen any retaliation and have been feeling good,” she mentioned, including that the brand new investigation supplies a “chilly bathe” for the business.
In September, the European Fee mentioned it had launched an investigation into Beijing’s potential use of “large state subsidies” to maintain costs for its electrical automobile exports “artificially low.”
“International markets at the moment are flooded with cheaper Chinese language electrical vehicles,” European Fee President Ursula von der Leyen mentioned in a speech. “That is distorting our market,” she added.
Brussels has clamped down on low-cost Chinese language imports in current months. In November, the European Fee imposed temporary tariffs of as much as 24% on sure plastic merchandise imported from China following an anti-dumping investigation.
Then, in December, the EU opened another anti-dumping investigation into Chinese language biofuel imports, which native producers have claimed are “severely harming” their business.
“We anticipate 2024 to be a reasonably tense 12 months in EU-China relations, and we anticipate the EU Fee to doubtlessly launch extra investigations into sure Chinese language exports,” Kratz mentioned.
Maya Szaniecki contributed reporting.