CHINA’S WINE PRODUCERS CALLED ON BEIJING TO PROVIDE MORE SUPPORT
By Tony Zhu
Source: China State Council
Chairmen of China’s two leading wineries have called on Beijing to provide support in brand building and cut tax to help producers who have faced severe difficulties in the past year due to pandemic and competition from imported wines.
Currently attending the annual National People’s Congress meeting in Beijing, Chairman of Changyu Pioneer, Zhou Hongjiang, and Chairman of Timing Group, Jiang Ming, hoped that the central government can cut consumption tax and VAT for domestic wines, or allow the wine industry to enjoy the same tax scheme as agricultural industry.
China levies 10 percent consumption tax and 13 percent VAT on domestic wines, while profitable wineries also have to pay profit tax of up to 25 percent.
Zhou said these tax bills are higher than their peers in most wine producing countries which often also receive agricultural subsidies from their governments.
In many cases, Zhou said, the production costs of domestic wines are higher than the prices of imported wines, making Chinese domestic wines very uncompetitive.
Of the 12 listed wineries in China, only four managed to make a profit in 2020, the other eight all made losses.
He also said between January and September 2021, the whole domestic wine industry in China made profits of just about RMB 220million (USD34.8m).
Taking into consideration that Changyu Pioneer made a profit of about RMB450m during this period, it means all other companies made a gross loss of about RMB240m.
Timing Group’s Jiang said the quality of Chinese domestic wines have improved substantially in recent years, yet most consumers are still not aware, he called on the central government to help with brand building and education to change the situation.
He said wine tasting and rating have long been dominated by the West, consumers always assumed that foreign wines are better than domestic wines without really trying.
He believed China has to develop its own wine tasting and rating system, ideally with the help from central government, to allow domestic producers to explain themselves better and to change consumers’ habits.
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