Australia Learns There’s No Replacement for the Chinese Consumer

Spat with China leaves wine merchants to seafood sellers facing hard slog to find alternative markets Author of the article: Bloomberg News Swati Pandey, Sybilla Gross and Ben Westcott Publishing date: Nov 20, 2022  •  13 hours ago  •  6 minute read Join the conversation A bucket-wheel reclaimer stands next to a pile of coal at…
Australia Learns There’s No Replacement for the Chinese Consumer

Spat with China leaves wine merchants to seafood sellers facing hard slog to find alternative markets

Author of the article:

Bloomberg News

Swati Pandey, Sybilla Gross and Ben Westcott

Publishing date:

Nov 20, 2022  •  13 hours ago  •  6 minute read

Join the conversation

A bucket-wheel reclaimer stands next to a pile of coal at the Port of Newcastle. Photographer: David Gray/Bloomberg Photo by David Gray /Bloomberg

(Bloomberg) — Australia has spent big to attract swathes of Indian tourists to its shores, signed a free-trade deal with post-Brexit Britain and uncovered new Middle East markets during its 30-month trade rift with China.

Still, outside iron ore and other key commodities, there’s been substantial pain for exporters. For a small and open economy like Australia’s, branching away from the emerging global superpower is easier to imagine than realize.

Financial Post Top Stories

Sign up to receive the daily top stories from the Financial Post, a division of Postmedia Network Inc.

By clicking on the sign up button you consent to receive the above newsletter from Postmedia Network Inc. You may unsubscribe any time by clicking on the unsubscribe link at the bottom of our emails. Postmedia Network Inc. | 365 Bloor Street East, Toronto, Ontario, M4W 3L4 | 416-383-2300

China’s inability to source its massive iron ore requirements outside Western Australia’s Pilbara region means that it’s still Australia’s biggest trade partner by a long way, despite the diplomatic freeze.

But for other key industries, there’s been no simple substitute for Chinese consumers of quality lobster and wine or its big-spending tourists and students, who’ve also been kept away by Covid-19 restrictions. While there are some signs tensions are thawing — new Prime Minister Anthony Albanese met President Xi Jinping last week, the first tete-a-tete between the countries’ leaders since 2019 — Australian businesses aren’t banking on restrictions easing anytime soon.Here is how six key sectors — tourism, seafood, wine, education, barley and coal — at the heart of China’s trade reprisals have fared.  


Two years after China imposed tariffs ranging to more than 200% on Australia wine, vintners are still processing the messy breakup with what was its most lucrative export market, previously worth about A$1.2 billion ($802 million) a year.

Mitchell Taylor, who runs South Australia’s Taylors Wines, said the size of the adjustment required can’t be underestimated.

“While we’ve found new little opportunities, there was never anything that could replace a market of that size and scale, particularly at the luxury end,” he said. Taylors Wine previously used to get about a fifth of its annual export revenue from China alone.

“With some of the nibbles we’re getting, we’ve probably recovered about half of that.”

Taylor is looking at destinations including Singapore, South Korea and North America. While India might one day emerge as a big market, that’s probably at least a decade away due to access issues and tariffs, he said.Meanwhile, the UK — o​​​​​nce seen as a prime market for cheaper product — has now surpassed China to become the top destination for higher-end Australian wine.

“We’re now getting our feet back on the ground,” he said. “It’s not all doom and gloom, there’s certainly these opportunities to build.”

Other luxury wine producers have taken a different approach to being frozen out of China. Treasury Wine Estates Ltd., best known for its Penfolds brand, in September started producing in China — a move that’s allowed it circumvent the restrictions on Australian-made tipples.

While Taylor hopes relations improve, banking on China alone is too risky a strategy in the long-term, he said.

“I think we’ve got to be very realistic and cautious about China,” he said. “We’d need a lot of reassurance and we’d want to hear a lot of positives.”


The absence of high-spending Chinese visitors is still felt acutely by the tourism industry, with numbers down 92% in September compared with the same month in 2019, before the pandemic. Operators can’t afford just to wait and see when China’s Covid Zero policies will ease, so to try and bridge the gap, Tourism Australia is counting on a revival from other countries, including India. 

As part of its recent “Come and Say G’Day” campaign, it hosted Indian cricketers ahead of the 20:20 World Cup hosted in Australia.

The sports stars took a yacht to Rottnest Island, just off the coast from Perth, and posted their action-packed day on social media, from celebrating a birthday and a game of lawn ball to mingling with quokkas, a native marsupial the size of a domestic cat. The posts delivered a billion impressions, according to Tourism Australia.

While India has great potential as a market — the Indian diaspora in Australia has expanded 40% over the past five years opening-up huge opportunities for visits from friends or relatives — it’s nowhere near as lucrative.

Prior to the pandemic, visitors from China spent on average A$215 a night. That compares with just A$84 a night by Indians, according to figures from Australia & New Zealand Banking Group Ltd.

“In terms of spending, or export revenue, the tourism sector needs almost twice as many visitors from India than from China to make the same revenue,” said ANZ economist Madeline Dunk.


Australia’s international education system is also still struggling with the double whammy of tensions and the aftermath of border closures. 

Enrollments from China, Australia’s biggest source of international students, are still less than 70% of their pre-pandemic levels, according to government data. 

Offering some relief is a more robust return from Indian and Nepalese students, the next two leading countries. At the end of August, 110,000 Indian students were enrolled in Australia, down only about 15,000 on 2019’s numbers.

For the wider economy though, a permanent change in the composition of students would be significant, as Chinese students typically spend more money on consumer goods when they are in Australia than other nationalities.


The timing of China’s anti-dumping tariffs of over 80% on Australian barley in 2020 couldn’t have been worse. The move came just weeks after many growers put seeds in the ground, leaving farmers unable to tweak planting programs. 

Australia found a new home for the grain by diverting much of its bumper harvest to Saudi Arabia, which jostles with China for the position of the world’s largest barley importer.

But the pivot hurt. Saudi Arabia typically uses most of the grain for animal feed, meaning high-grade Australian malting barley, which previously fetched an attractive premium in China, was sold at a hefty discount.

Fortunately, there was a solution: plant something else. “Farmers already work on a rotation,” said Zach Whale, Policy and Advocacy General Manager at GrainGrowers.  “At the farm level, if there aren’t these malt premiums, you would just plant feed barley.”

Farmers are also now planting things like canola and wheat, both in high demand after Russia’s invasion of Ukraine.


Australia’s seafood industry, which exports nearly half of its production, has also been hunting the globe for new markets.  

While China is still the top single biggest destination, Hong Kong has picked up significant market share while demand from the US, Vietnam and Taiwan have surged, according to the Seafood Industry of Australia. 

“China is still our major trading market. It’s a relationship where we’re well known to each other,” said Veronica Papacosta, chief executive of SIA. “We’re finding really good purchase in other markets, but it does take some time.”

The trade body will take about 20 suppliers to a major show in Boston for the first time, said Papacosta, who is also the managing director of Sydney Fresh Seafood. Earlier this month it also collaborated with the wine and dairy industry to showcase a range of premium products in Thailand, she added. More events are planned from South Korea to Indonesia.


By contrast with other industries, fossil fuel revenues are now booming. 

Coal exports to China plunged from almost 100 million tons in the 2019-20 financial year to about 20 million tons, a massive blow to the sector in its second-largest market. Yet from July 2020, coal purchases by Japan, South Korea and India rose, as exports intended for China were diverted to other markets.By the end of 2021, the economic surge brought on by the end of Covid-19 restrictions had pushed coal exports to new highs despite the ongoing embargo by China, according to government data.

The boom only grew in 2022, as the demand for fossil fuels sparked by the invasion of Ukraine put Australia’s coal industry on track for one of its most lucrative years ever. At the same time, China has reportedly been considering dropping its restrictions on Australian coal to ensure it has enough supply as demand for fossil fuels grows around the world.

Experts now suggest the biggest threat to Australia’s coal exports isn’t China’s lingering ban but the steady march towards renewable energy in some of the country’s biggest commodity markets. 

Read More

Leave a Reply

Your email address will not be published.

Related Posts
Explosions rock Ukrainian capital Kyiv, mayor says
Read More

Explosions rock Ukrainian capital Kyiv, mayor says

Author of the article: KYIV — Kyiv was rocked by several explosions early on Sunday, the mayor of the Ukrainian capital said, a day after officials said troops had recaptured a swath of the battlefield city of Sievierodonetsk in a counter-offensive against Russia. “Several explosions in Darnytskyi and Dniprovskyi districts of the capital,” Kyiv Mayor…
Olympics-Team Taiwan says it will be at Beijing Games opening ceremony
Read More

Olympics-Team Taiwan says it will be at Beijing Games opening ceremony

Author of the article: TAIPEI — Taiwan’s team for the Beijing Winter Olympics will be at the opening and closing ceremonies after being told by the International Olympic Committee it was required to participate. Chinese-claimed Taiwan has feared Beijing could “downgrade” Taiwan’s status by putting its athletes alongside those from Chinese-run Hong Kong at the…
China state council’s think-tank met with property developers, banks -source
Read More

China state council’s think-tank met with property developers, banks -source

Author of the article: SHANGHAI/BEIJING — The think-tank of China’s state council held a meeting with real estate developers and banks in the southern city of Shenzhen, a source with direct knowledge of the meeting told Reuters, amid intensifying worries over a liquidity crisis in the country’s property sector. Participants at the meeting, which took…
Polish PM Calls on Norway to Share Oil and Gas Profits Windfall
Read More

Polish PM Calls on Norway to Share Oil and Gas Profits Windfall

Author of the article: Bloomberg News Maciej Martewicz (Bloomberg) — Norway should share the “gigantic” profits it’s recently made as a result of higher oil and gas prices, especially with Ukraine, said Polish Prime Minister Mateusz Morawiecki. Morawiecki, answering a question about his government’s energy policy Sunday at a meeting of a youth group, said…