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Oenophiles, beware. The cost of your favourite tipple may go up very soon. A report by AP has uncovered that several wine importer executives are being detained while Shanghai customs officials conduct an "audit" of wine importers, including Don St Pierre Jr, of Shanghai-based ASC Fine Wines.
Yin Zong, a spokesman for the Shanghai Customs office, was quoted thus:
"We are cracking down on some wine importing companies that are suspected of falsifying prices and the case has been handed over to the Customs Smuggling Prevention Department... The case is under investigation."
The AP story revealed that the exponential growth of wine consumption in China has not been matched by similar rises in customs revenues due to under-reporting of the value of imported products. However, the AP reporter appeared unable to find other wine importers affected by the crackdown.
Don St. Pierre, Sr (father of the detained and founder of the company) revealed that:
ASC and customs officials had agreed on a"minuscule" $US250,000 ($275,000) discrepancy in ASC's imports over three years, equal to 1.1 per cent of the $US22 million the company paid in import duties during that time.
His son, he said, "has not been charged with any crime and has not been arrested" and was "co-operating fully" with authorities.
His parting shot in the story offers food for thought:
"Stepping back, I've been doing business here for 22 years now and have gone through lots of these kinds of things and survived... China is not for the weak-hearted."
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This story does not suggest that wine will go up in price. It's already way too expensive. What has been determined is that certain wine suppliers who were pricing their wines so high in part because of a supposed 48 percent duty weren't actually paying that duty, yet were selling their wines to account for this added cost.
Allegedly, by undervaluing bottles, ASC was making a lot more money than they should have been. Which was already a hell of a lot of money in the first place.
jiminycricket... I can assure you prices for wine will go up.
Most of the big wine distributors, ASC included, massively increased their prices (some wines by as much as 40%) at the beginning of the year. Watch out for a number of price increases at your local bar soon....
jiminycricket: Sure, they're making a lot more profit than they should by undervaluing bottles, but who says they're going to be so kind as to absorb all the higher taxes now that they've been caught red-handed? They're just going to pass on the higher costs on to consumers....
Vlad: They were already accounting for those tariffs in their pricing - trust me - they weren't passing on their illicit savings to consumers.
Tariffs have continued to decline, while competition has continued to increase. People are drinking more wine here, and if you look carefully on lists across town, prices are holding or falling and selection is increasing. Steven, if you are talking about Premiere Crus from Bordeaux you are correct - they have had a massive hike in prices here and worldwide (thanks, in part, to China's obsession with really f'ing expensive claret). But for the rest of us who don't gargle with Petrus, there hasn't been a better time to drink wine in China, ever. And one wine company getting nabbed isn't going to spoil the party.
The practice of over pricing imported wine has been going on since China started importing wine. When the Government dropped import duty to 14% the major importers did not pass on that saving. However, there is now much more competition and the smaller importers are being more realistic in order to try and gain market share. If you really want a decent drop at a reasonable price you should join the New Century Wine Club. This is a true wine lovers community not a mailing list. Realistic prices based upon the Australian model of Cellar Doors in the wine growing areas. Send an email to info@newcenturyclub.com for further information.