IN the business world, placing too many eggs in one basket has always been a recipe for disaster.
But it can so easily happen. Someone loves your product, and as their demand grows, you devote more time and resources to meet their needs. The win-win relationship becomes increasingly comfortable, particularly as the rivers of cash flow.
The Australian wine industry’s trade relationship with China is a case in point.
China is clearly the top wine export destination for Australia, accounting for 39 per cent of total exports.
By any measure, it’s a lot of bottles to place in the one basket.
But, sadly, the disaster has inevitably hit.
China has doubled down on its dummy spit with Australia by slapping tariffs, ranging from 107 to 212 per cent, on Australian bottled wine imports.
It’s a move that is already having a devastating impact on local producers, including Sunraysia’s.
“It’s grape growers, it’s regional communities and it’s small exporters that have very little ability to adjust,” Tony Battaglene, chief executive of Australian Grape and Wine, said this week. “They’re the ones that are going to suffer.”
Mr Battaglene explained that getting into other markets on short notice takes time, relationships and money.
“But we just don’t have that,” he said. “This is our peak time of export — 50 per cent of our product goes into China in the last four months of the year. That’s closed. So this product has nowhere else to go.”
Already this week there are reports of local wine being stuck on the docks in China through government customs delays.
The fuse for the trade dispute was lit by Prime Minister Scott Morrison earlier this year when he demanded investigators go into China and identify the origins of COVID-19.
He poked the panda and China responded by placing tariffs and impositions on Australian exporters. China now won’t even answer our phone calls.
China’s embassy in Canberra has also supplied a list of 14 complaints, including that we have blocked some Chinese takeover bids for Australian companies; that we banned Huawei from the 5G network; that we made people working for foreign governments register; that we speak out against human rights abuses in China and the illegal creation of military bases out of coral reefs in the South China Sea; and that we want a full independent investigation of the Wuhan virus.
There was even the propaganda image from a senior Chinese official, of an Australian soldier slitting the throat of an Afghan child, which our PM demanded an apology for.
But is it really a shock that a bullying nation like China would respond so unreasonably. So cruelly?
What did our PM think talking tough with China was going to achieve? Did he really expect an apology from a country that will never apologise? That their resultant behaviour would have been any different?
On the diplomacy front, the Australian Government has much work to do to rebuild trade relations.
But while the glass may look half-empty, China’s actions this year will force a much-needed rethink in how the wine industry and other exporters do business in the longer term. And you can bet your bottom dollar diversifying and finding new markets will be front of mind.
That’s a good thing.
While the industry is paying a big price for having too many eggs in China’s basket, it won’t want to make that mistake again.
So, as a country, we must show strength and unity to ride out the current trade crisis. That will extend to us buying a bottle of local wine instead of something from overseas this Christmas. Every little drop will count.
We must show China the only thing that will be crushed in regions like Sunraysia will continue to be our wonderful grapes. For more of the world to enjoy.
