French cognac maker Hennessy has suspended a plan to bottle its brandy in China to avoid tariffs, staff briefed by management said on Tuesday.
Staff confirmed this change after hundreds of workers went on strike last week to protest the move.
Hennessy, owned by luxury group LVMH, had said it was exploring options to deal with antidumping measures imposed by Beijing last month, including shipping cognac to China for bottling to circumvent tariffs.
The company told unions and employee representatives on Monday it had dropped the plan after a meeting last week between the French and Chinese presidents in Brazil allowed talks on the issue to resume, according to Hennessy technician and employee representative Mathieu Devers.
Hennessy did not respond to requests for comment on the plan’s suspension.
Devers said, “We are satisfied with the suspension even if unfortunately it remains only a suspension.”
He also noted that the plan could resume if political negotiations fail to make progress.
High Costs
China is the second-largest export market for cognac after the US and the industry’s most profitable territory, accounting for $1.7 billion in exports last year.
Beijing has required deposits of 30% to 40% to be paid on imports of EU brandy since last month, hitting mainly French cognac producers like Hennessy, Pernod Ricard and Remy Cointreau.
French presidential Emmanuel Macron urged his Chinese counterpart Xi Jinping to drop the tariffs at the G20 meeting in Brazil, and said Prime Minister Michel Barnier would continue talks on the issue during a China trip early next year.
Frederic Merceron, a representative with the Force Ouvriere union which was briefed on the plans, cited management as saying at a meeting on Tuesday that Hennessy wants to strengthen its core markets and expand in areas where it is not yet present to offset the tariff impact.
The EU Commission said on Monday it had formally brought the provisional anti-dumping measures imposed by China on imports of EU brandy to the World Trade Organisation.
