- This is some of the stock that we've got
for the Chinese market.
- [Narrator] Mitchell Taylor's winery has been selling
Australian wine since the 1960s.
- It retails for approximately a thousand dollars a bottle.
- [Narrator] And in the past five years,
China has been his main focus.
- That's the back label there with all the Chinese details.
- [Narrator] But these bottles can now be three times
as expensive, because China has imposed new tariffs
of up to 212% on Australian wine.
- I was absolutely shocked, it really did hit me hard.
- [Narrator] Since May, Australia has been caught
in a tree dispute with China.
It isn't not just the wine industry,
but also coal, barley, lobster, and beef.
Some economists say as much as 6% of Australia's GDP
hangs in the balance.
- It's an attack on free countries everywhere.
- [Narrator] The bilateral trade dispute has gone global.
China hawks and lawmakers from across the political spectrum
and around the world, are taking Australia's side.
The White House National Security Council even tweeted
that it would serve Australian wine
at its holiday reception.
Politicians are jumping on China's wine tariff to draw
a global attention to what they see as Beijing's bullying.
And Australia's winemakers hope this new coalition can help
save their industry.
- It's a great initiative.
The coalition of partners can come together
and help us all put pressure on the Chinese regime.
- The virus began in China in Wuhan,
that's I think well understood.
- [Narrator] This statement is what sparked the dispute,
when back in April, the Australian government called
for an investigation into the origin
of the coronavirus pandemic.
Beijing, which has suggested that the virus came
from outside China, dispelled the criticism.
(speaks in foreign language)
- [Narrator] But this diplomatic tussle
is about more than the virus.
China has pointed out several grievances against Australia,
like when it banned Chinese telecom
from Huawei from its 5G network,
because it said to posed a national security threat,
even though Huawei said it has operated safely
in the country.
(crowd chanting)
And when Australia condemned China's
controversial national security law in Hong Kong,
which Beijing said is a domestic matter.
So in May, China slapped tariffs of up to 80% on barley,
followed by levies on other goods.
Timber exports were also stopped at Chinese customs.
For entrepreneurs like Mitchell Taylor,
these tensions threaten their businesses.
A safe bet big on China, and invested to expand production
by buying new land and upgrading facilities.
- Our current sales into the Chinese market
are about 10 to 15%.
We've been explaining our wines and matching them
with the very good Chinese cuisine.
- [Narrator] Taylor says sales in China have doubled
over the past four years, as drinking wine became
a status symbol for the Chinese middle-class.
To appeal to more Chinese drinkers,
Taylor adapted his product.
- The Chinese customers, they're fascinated with technology.
We have a microchip here that is a great security seal.
- Taylor also uses gold on labels,
which is perceived as a lucky color in China.
He created heavy wooden boxes that he said
Chinese customers associate with exclusivity,
and the company even produced wines that Taylor says
Chinese consumers like to have with hotpot.
Taylor's isn't the only winery in Australia
to have bet big on China.
Exports there have tripled in the past five years,
to hit $907 million in 2019.
Australia's economy as a whole has come to rely on China,
sending a third of its exports to the mainland.
- Australia has not had an economic recession
in about two decades,
and much of that is thanks to China's rise.
- [Narrator] Vicky Xu is an analyst who's been studying
Australia's increasingly tense relationship with China.
Despite the closer economic relationship
between both countries,
Australia's government has been raising its voice
on political issues sensitive to Beijing.
- People in the business community are very anxious
here in Australia.
And that the current administration is speaking out
assertively on issues like human rights.
But the question is, can we really stand up
for our values despite economic losses?
- We will not be bullied.
- This trade dispute, especially China's wine tariff,
has caught the attention of a new alliance
of more than a hundred lawmakers
from more than a dozen countries.
They say trade policies shouldn't be used
as a political tool.
- We are asking you all to join us in standing
against Xi Jinping's authoritarian bullying.
- By drinking a bottle or two of Australian wine.
- [Narrator] As trade disputes multiply
in a globalized economy, Vicky Xu says countries that share
political values could increasingly rely
on each other's market.
- [Vicky Xu] Everyone knows they will have help,
and they will have backup when they're also being punished
by Beijing for perceived indiscretion.
- We really do appreciate our allies
and friends coming together.
We've got an opportunity now to relaunch in the US market,
the UK and in Canada.
- [Narrator] But because consumers there are different
from the Chinese, Taylor is tweaking the marketing
around his lineup of more than 50 bottles.
- The labels in Chinese, we'll have to rip them off.
We'll have to rebottle it, and then repackage it.
- [Narrator] For the US market,
Taylor is using floral labels to appeal
to young urban consumers.
And will start exporting vegan wine
to cities like New York and Los Angeles.
And for the longterm,
he's planting more Shiraz and Grenache,
which are in popularity in the West.
Still, it will be difficult to make up for lost business.
Some Australia-based foreign policy analysts hope
with the incoming Biden administration,
like-minded countries could work together to confront China,
as the president-elect has said that he will seek
to strengthen global alliances.
- The idea that we're gonna be able to deal
with China's rogue behavior,
when we make up 25% of the world's economy.
Without bringing in the other 40% of our allies,
is not realistic.
- [Narrator] Meanwhile, China says it's committed
to free trade and that it's tariff measures are in line
with international customary practices.
And that it's now up to Australia
to repair the relationship.
Taylor knows he's closing out a tough 2020
without the same access to the China market.
But he says he's learned a lesson for next year.
- This whole incident has really taught us
not to get too focused on one customer,
you've just gotta diversify and do that.