China’s largest wine importer freed from custody over customs discrepancies

Posted by Reading Time: 2 minutes

SHANGHAI, April 14 – Don St. Pierre Jr., named the 37th most influential wine person globally, was recently released in Shanghai following a month-long detention and a major investigation of his firm’s wine importation business.

St. Pierre was being held as part of an extensive investigation of wine importers by the Chinese authorities looking for evidence that importers had been understating the value of wines they bring into the country in order to evade high customs duties in the growing Chinese wine market.

St. Pierre Jr., the company’s managing partner, and ASC vice president Carrie Xuan had been held in a customs department building, though neither was officially under arrest.

“The way the system works here is that they detain you while figuring out what to do,” said his father Don St. Pierre Sr. to the industry publication Wine Spectator. St. Pierre Sr., who has been doing business in China for 20 years, founded the company a decade ago with his son and currently serves as chairman. “There are 27 boxes of documents that have to be matched up with other pieces of paper to show that customs duty has been paid,” he said last week, prior to his son’s release. “They have been going through them for three weeks now and found there is nothing wrong.”

Many believe the investigation was connected to the recent abolition by the Hong Kong government of the territory’s 40 percent wine duty, which lead to a huge drop in prices and a resulting spike in sales. On the mainland, the total tax on wine, including duty and consumption tax is 48 percent.

China is currently going through a wine boom according to the China Wines Information website; imports last year rose to 4.5 million cases of wine, more than double the amount shipping in 2006. ASC recorded a turnover of US$40 million in 2006, up US$35 million from its 2001 sales figures.

On her popular wine blog, Jancis Robinson writes that the detention of St. Pierre Jr. has shocked the Chinese wine trade. “This is a sure sign,” she says, “that the authorities have decided that the Chinese wine scene must grow up.”

St. Pierre said ASC and customs officials had agreed on a “minuscule” US$250,000 discrepancy in ASC’s imports over three years, equal to 1.1 percent of the US$22 million the company paid in import duties during that time.

“We are all relieved Don Jr. is out,” said Chris Devonshire-Ellis, senior partner of Dezan Shira & Associates, ASC’s internal accountants. “It’s good this has finally been amicably resolved with the China customs.”

Related article
Hong Kong waives duties on alcohol