AIX-EN-PROVENCE, France (Reuters) – China’s investigation into dumping in Europe’s cognac industry is a tit-for-tat response to European Union tariffs on Chinese electric cars, the chief financial officer of Hennessy cognac owner LVMH said on Saturday.
China on Friday announced plans to hold a hearing on European brandy imports, escalating tensions on the same day that the European Commission’s temporary tariffs on Chinese-made electric cars came into effect.
“You can be a regional player with a very specific role in globalization, as is our case, and in any case find yourself hostage to a number of conflicts that have nothing to do with your activities,” said Jean-Jacques Guiony, the luxury group’s chief financial officer.
“Every time there is a stray bullet in a commercial conflict somewhere… there is a good chance that we will end up negotiating, having to explain that we are not flooding the market, and that the price of cognac is right,” said Guyoni.
He was speaking at a panel discussion on trade at an economic conference in the southern French city of Aix-en-Provence.
LVMH brands produce leather goods, clothing, alcoholic beverages and champagne mainly in France and Italy and export them all over the world.
Reuters reported on Friday that Hennessy and other European cognac producers will attend a hearing in Beijing on China’s anti-dumping investigation into the industry on July 18. French cognac accounts for the majority of China’s brandy imports.
China began investigating the dumping or artificially low prices of brandy in January after a complaint was filed by the China Alcoholic Beverage Association on behalf of the domestic brandy industry.
Trade wars have negative economic and political effects, Guioni said, but added that Europe must stand together, saying China currently sees the region as weaker than the United States.
“We should not be the sick man of globalization.”