With exports having grown by 151% (in value) over the past decade, China presents a highly attractive destination for European spirits. For the fifth consecutive year, China remains the second largest export market for European spirits – a remarkable fact given that imported spirits in China still represent only a tiny fraction of less than 1% of total domestic consumption. The largely untapped Chinese market holds great potential due to the sophistication of Chinese consumers, their changing consumption habits and tastes. In line with this, we expect the market share of European spirits to grow further thanks to increased consumer knowledge and appreciation of international spirits. In addition, new opportunities are likely to open in the on-trade thanks to the dynamic development of the cocktail culture.
At the same time, future developments will very much depend on market stability, transparency issues and government intervention. So far, we have witnessed a number of positive moves from the Chinese authorities. In November 2017, China decided to cut import tariffs on nearly 200 types of consumer goods in a bid to encourage domestic consumption. Both brandies and whiskies were covered by the decision, with an import tariff that shifted from 10% to 5%. In March, China announced to reduce VAT rates from 16% to 13% – a reduction that will equally apply to domestic and imported goods from today 1 April 2019. We had also welcomed the serious commitment by the General Administration of Customs to lift low-risk certificates for exporters. The commitment to achieve an ambitious EU-China Agreement on Geographical Indications (GIs) is a major prospect. And we hope further steps will be taken towards enhanced Intellectual Property (IP) protection through stronger enforcement.
We call on the positive and constructive dialogue between the two major trading blocs to continue to help exporters seize the plentiful opportunities in the respective markets and address the market access challenges that remain. At the Summit last year, EU and China agreed to consider ways of closer cooperation between EU and Chinese wine and spirits producers, and we look for further progress to be made in this regard.
We need and appreciate the continuous support of the institutions to help operators navigating in a complex regulatory system where laws and regulations are subject to varying interpretation. For economic operators to understand the rules that must be applied, it is necessary to clarify the legal structure and the interaction between the various rules. We also call on the Commission to continue the promotion of agri-food products abroad (“Enjoy, it’s from Europe”), and the trade visits as the one done in China in May last year. Beyond the economic and commercial perspectives, the visit gave us the chance to recognise the regulatory opportunities and challenges that European spirits face in this huge market and strengthen our relationship with Chinese spirits producers.
Let’s continue these discussion with China to ensure that, as Federica Mogherine put it, “European Union-China relations are set on a fair, respectful, balanced and mutually-beneficial course”.
