Update: Chinese Customs investigating wine importers

By Jim Boyce

As reported last week, Chinese Customs continues to inquire into the import declarations of wine importers. Investigators, in what appears to be an industry-wide initiative, are looking for companies that under-declare the value of their imports.

ASC Fine Wines today stated that its managing partner Don St. Pierre, Jr. and vice president Carrie Xuan are with Customs personnel, and that wine declarations worth 1.5 days of company revenue are under review.

ASC Chairman Don St. Pierre, Sr. told Grape Wall of China, “This is a ‘peanuts’ case blown out of all proportions.”

According to industry insiders, other wine importers also continue to be under investigation.

I talked to Alberto Fernandez of Torres last week, who said Customs normally checks wine companies every year or two. He noted the quick growth of the industry – wine imports are up 400 percent over two years, major players are growing upwards of 50 percent per year, and many new importers have jumped into the market, he said. An increasing amount of money is at stake in the industry.

Fernandez said that Customs has checked and cleared Torres. Palette Wines also stated that its books have been found to be in order.

Such widespread investigations in China are sometimes routine and sometimes prompted by other issues. In terms of the latter, speculation is that the investigation is possibly due to one or more of the following:

– Part of China’s shift in numerous sectors toward an increasingly rules-oriented environment, a situation that would be bound to impact other sectors.

– A response to the sustained external pressure on China over product quality issues, from food safety to lead in toys.

– A result of the National People’s Congress being in session, which is a common time for campaigns against corruption.
– A warning shot, in the wake of Hong Kong abolishing its wine taxes, to mainland-based importers to abide by the law – many expect expensive wines to be smuggled from Hong Kong to the mainland, where importers pay up to 50 percent in duties.

– An acknowledgment of the growing value of the wine industry as a source of revenue for the government.

Look for more clarification and details on this story.

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