Chinese-Owned Businesses in Australia Squeezed on Both Sides as Tensions Take Toll

SYDNEY—Three years ago, the Kilikanoon winery in Australia’s picturesque Clare Valley appeared to gain an export advantage when it was bought by Yantai Changyu Pioneer Wine Co. , China’s largest wine producer.

This year, it hasn’t sold a single bottle to China.

A worsening diplomatic and trade dispute has choked off exports of Australian wine to China, including the 350,000 liters of premium Shiraz and other varietals that Kilikanoon Wines Pty. Ltd. had been shipping to the country each year. China, angered by Australia’s call last year for an international investigation into the origins of the pandemic, has imposed tariffs and restrictions on wine and other commodities such as barley, coal and even lobster.

The trade tensions have accelerated a decline in Chinese investment into Australia and squeezed China-owned businesses in the country from both sides, as they grapple with the loss of one of their most profitable markets on the one hand and a gathering backlash from Australian consumers who mostly blame Beijing for the standoff on the other.

As Kilikanoon scrambled to bring back a consignment of 50,000 liters of Australian wine destined for China after the tariffs were imposed late last year, a call to boycott the winery and 40 other Chinese-owned Australian vineyards began spreading on social media locally. Travis Fuller, Kilikanoon’s general manager, said more than 10% of its wine club membership quit as a result of the campaign, hurting its sales locally.