French cognac maker Hennessy has suspended a plan to bottle its brandy in China to avoid import tariffs, staff briefed by management said, 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, said Mathieu Devers, a Hennessy technician and employee representative.
Hennessy did not respond to requests for comment on the plan's suspension.
"We are satisfied with the suspension even if unfortunately it remains only a suspension," said Devers, noting that the plan could resume if political negotiations fail to make progress.
Second-Largest Export Market
China is the second-largest export market for cognac after the United States 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 Rémy Cointreau.
French President Emmanuel Macron urged 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, representative with the Force Ouvriere union which was briefed on the plans, cited management as saying at a meeting 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 it had formally brought the provisional anti-dumping measures imposed by China on imports of EU brandy to the World Trade Organisation.
