Africa’s Miners And Winemakers Toast China’s Row With Australia

Bottles of its reds, whites and roses piled up when South Africa banned alcohol sales under a strict lockdown and visitors who once flocked to the vineyard near Cape Town to sip wine and snap photos of its famed Indian Runner ducks vanished.

That changed when Beijing slapped tariffs of up to 212% on Australian wine in November after Canberra led calls for an inquiry into the origins of the COVID-19 outbreak in Wuhan.

It wasn’t just wine. Beijing hit a range of Australian goods with punitive duties, created new layers of red tape and banned some Australian imports outright, giving African suppliers of anything from coal to beef to copper a boost.

“We can now get much greater volumes of sales,” said Shaun McVey, marketing manager at Vergenoegd Löw, which has signed a new Chinese deal. “Instead of sending maybe three or four containers in a year, we’ve upped that to 15 to 20 containers.”

Chinese drinkers bought nearly 40% of Australia’s wine exports before the long-simmering tensions between Beijing and Canberra boiled over and brought the trade to an abrupt halt.

Over the past three months, exports of South African wine to China jumped 50%, according to the Wines of South Africa trade body, and hopes are high for even more sales once Australian stocks are polished off during China’s Lunar New Year holiday.

Martyn Davies, Deloitte’s managing director for emerging markets and Africa, said a protracted trade war would create a wide window of opportunity for miners and other sectors such as agribusiness, though seizing the potential would take work.

The Chinese market presents a range of obstacles, from language barriers and inscrutable bureaucracy to tailoring marketing to its unique social media ecosystem, analysts said.

“Many African companies are significantly behind the curve,” said Deloitte’s Davies. “Australian companies have been engaging China for 35 years.”

BAUXITE BOOST

The lack of trade deals between China and countries in sub-Saharan Africa also means exporters may face an uphill battle.

Despite its increasingly important role as an investor on the continent, China only signed its first free trade agreement with an African country, the Indian Ocean island nation of Mauritius, in January.

– Reuters