"This will add to their costs. But the government can offer subsidies to these factories."
The China Alcoholic Drinks Association (CADA) raised its concerns in a submission to China's investigation, warning tariffs "would hurt the interests of the beer industry and might also push up corn prices and increase trade uncertainty". Its concerns were rejected by China's Commerce Ministry.
Chinese brewers can source barley from other countries, such as the Ukraine and France, but the quality might not be as high.
Pass on costs
China's beer industry was booming until the coronavirus outbreak closed down bars and restaurants, hurting sales. However, the country's middle classes have developed an appetite for more expensive craft beer which some analysts believe would withstand price increases.
Cai Xuefei, a liquor industry analyst, said China's beer makers would still buy Australian barley even at inflated prices because they could pass the costs to consumers.
"It will impact china’s beer industry but it will not be significant," he said.
He said while Australian barley produced better-tasting malt, Chinese consumers were not as knowledgeable about beer production as they were with wine.
"The barley is important but the technology and transportation is important for the quality of the final product, not just barley on its own."
On Monday, China suspended imports from four Australian abattoirs over issues related to labelling and health certificate requirements, Chinese businesses with links to Australia have also been warned they might also be affected by trade actions.
"If China-US ties continue to deteriorate, the uncertainty surrounding China-Australia relations will also increase," the hawkish tabloid Global Times newspaper wrote on Tuesday.
"Such uncertainty will inevitably lead to economic repercussions. In this sense, it now seems necessary to advise Chinese people and companies to watch out for potential risks when it comes to doing business with or studying in Australia."
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May 12, 2020 at 02:30PM
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China's beer brewers bitter at Australian barley tariff plan - The Australian Financial Review
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