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St Pierre released by China customs
Don St Pierre Jr, manager of ASC Fine Wines in Shanghai, has been released following a three-week detention by Chinese customs.
ASC and other wine importers have been subjected to a China-wide inspection by customs focussing on potential discrepancies between the declared value and 'real value' of imported wines.
St Pierre and his colleague Carrie Xuan were held – along with the legal representatives of other wine importers – from 11 March to 8 April in a detention centre. St Pierre was released on April 8, free to return to work, along with all other ASC staff.
'If your company is being investigated and the total amount in contention exceeds the Renminbi (Chinese currency) equivalent of €25,000 [£20,000, US$40,000] then customs has the legal right to detain the person legally responsible for the company, and that is me,' St Pierre told decanter.com.
'This is the way things are done in China,' he added.
Customs ultimately fined ASC €220,000 (£180,000, US$350,000). St Pierre said this was the maximum possible discrepancy in ASC's declaration value for all the wines it has imported over the past two years.
He said this represents less than 1% of the total value of wines ASC has imported over the past year.
'From what we understand the investigation was launched because of the rapid increase in the volume of imported wines over the past one to two years,' said St Pierre. 'Customs was, and is, checking the valuation method companies used to declare imported wine.
St Pierre said he strongly supports the government's efforts to ensure all importers are declaring all their imported wine at the real value.
ASC, which has several offices throughout China, is the country's largest importer and distributor of quality wine from around the world, including all Bordeaux first growths and fine wines from California and Australia.
In China, the duty on wine imports is 14%, VAT is 17% and Consumption Tax is 10%.
By Maggie Rosen
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Don St Pierre Sr.:
The alleged value of ASC’s imported wine declarations under review is approximately RMB 2 million, or 180,000 euros (less than one day sales at ASC). In plain American talk that’s called ‘peanuts’.
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ASC Fine Wines would like to confirm that Don St. Pierre Jr., its Managing Partner, and Ms. Carrie Xuan, its VP of Logistics, Purchasing and Private Client business have been released by China Customs. China Customs is not holding any other ASC staff and have informed ASC that while the industry wide investigation will continue, the case against ASC will be settled shortly and the settlement will in no way whatsoever cause the company or any of its staff/owners, including Mr. St. Pierre Jr. or Ms. Xuan any future problems.
From the beginning of this industry wide investigation ASC Fine Wines has been fully cooperative and supportive and at no time did this investigation interfere with the day to day operations of the company, despite some of the malicious and unfounded rumors spread by various wine industry related people including Mr. Simon Tam a wine writer and educator from Hong Kong.
Biggest among the alleged offenders is ASC Fine Wines, which is facing a fine rumoured to be in the neighbourhood of 5 million euros and, according to some reports in this intensely competitive market, the potential deportation of some of its top executives including founder Don St Pierre Sr and his son, managing director Don St Pierre Jr.
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Chinese Authorities Detain Wine Importer
Don St. Pierre Jr. held as part of investigation into wine industry
One of the major figures in China's burgeoning wine industry—Don St Pierre Jr., managing partner of the import-distribution company ASC—has been detained and held without charge by customs authorities in Shanghai.
The detainment appears to be part of an extensive investigation of wine importers in the growing Chinese market. According to media reports, officials have been investigating several major importers for weeks, including ASC and Torres China, looking for evidence that the importers are understating the value of wines they bring into the country in order to evade high customs duties. (A spokesman for Torres China, owned by Miguel Torres, said officials checked their records and cleared the firm the same day.)
St. Pierre Jr., the company's managing partner, and ASC vice president Carrie Xuan are being held in a customs department building, though neither is officially under arrest. Officials are taking St. Pierre Jr. and Xuan through the company books, painstakingly looking for irregularities.
"The way the system works here is that they detain you while figuring out what to do," said his father, Don St. Pierre Sr., a 20-year veteran of doing business in China who 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. They have been going through them for three weeks now and found there is nothing wrong."
"We expect a swift and mutually satisfactory resolution to this issue and note that ASC's business of importing and selling wine continues without interruption," he added.
News of the arrest spread quickly through the Chinese wine industry, which has seen a huge influx of importers and distributors in recent years, and there was widespread speculation on why the authorities picked this particular time to haul in St. Pierre Jr. Some took it as a warning of the arbitrary nature of the Chinese legal system.
Some industry observers believe it is a routine root-out-corruption drive, conveniently staged while the National People's Congress was in session. St. Pierre Sr. and others believe the investigations are connected to the recent decision by Hong Kong's local government to abolish the territory's 40 percent wine duty, leading to a massive drop in prices and big sales increases. In mainland China, the total tax on wine, including duty and consumption tax is 48 percent. The decision to go through ASC's books with a fine-toothed comb may be a warning that authorities will be looking very careful at any undervaluing of wine to avoid customs duty, and keeping a careful lookout for any cases improperly shipped in or hand-carried from Hong Kong.
But the industry believes the downside of doing business in China, with its opaque rules, regulations and reliance on guanxi, or connections, is outweighed by the potential rewards. China imported 4.5 million cases of wine last year—more than double the amount shipped in 2006, according to the China Wines Information website.
ASC's sales figures reflect that phenomenal rise, with some 80 wineries now on its books, including Beringer, Kendall-Jackson, Wolf Blass and Penfolds. In 2006, it recorded turnover of $40 million, compared to a paltry $5 million in 2001.
St. Pierre Sr. was confident that his son would be released from custody by mid-April and allowed to rejoin his wife, Monica (a Chinese citizen he met at a wine event), and their two young children.
by Mark Graham
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China's customs inspectors target wine importers as sales of foreign vintages boom
SHANGHAI, China: Importers of wines and spirits in China have watched sales soar amid a fast-growing class of connoisseurs — but they're also attracting the attention of Chinese customs inspectors.
Shanghai customs agents have detained an executive of at least one major wine importer as part of a broad review of the industry.
Shanghai customs officials confirmed that an "audit" of wine importers was under way.
"We are cracking down on some wine importing companies that are suspected of falsifying prices and the case has been handed over to the Customs Smuggling Prevention Department," said Yin Zong, a spokesman for the Shanghai Customs office.
Don St. Pierre, Jr., managing partner of ASC Fine Wines, was taken into custody, his father Don St. Pierre, Sr., confirmed in an e-mail to The Associated Press.
Don St. Pierre, Sr., a Beijing-based businessman who once headed American Motors' joint venture Beijing Jeep Corp., said his son was among a number of "wine importer executives being held while the investigation continues."
Don St. Pierre Jr. was cooperating with authorities while being held under rules that allow the detention individuals for up to 30 days without charge, his father said.
"Don has not been charged with any crime and has not been arrested," he said.
Staff at the Shanghai offices of several other major wine importers said their companies had not been targeted, though word of the increased government attention was spreading.
"I did hear that some wine importers are facing a customs crackdown," said a manager at Aussino World Wines' office in Shanghai, giving only his surname, Li.
Li said his company, which has dozens of outlets around China, ships its wines from the southern city of Guangzhou and therefore is not dealing with Shanghai customs.
Staff at wine counters at two downtown supermarkets said a handful of foreign vintages were not available, though it was unclear if the customs inspection was the cause.
In any case, any crackdown is unlikely to stem the craze among newly affluent Chinese for wine tasting and collecting.
Wine imports have soared since Beijing slashed import tariffs to 14 percent from 65 percent several years ago. Boutique wine shops catering as much to local Chinese as to foreigners have opened in many of Shanghai's upscale neighborhoods and major supermarkets.
Customs figures show imports surging 52 percent in the first nine months of 2007 from the same period a year earlier, to 102 million liters, according to industry Web site 21food.com.
Those figures have not been fully reflected in increased customs revenues, due to underreporting of the value of imported products, some in the industry say.
St. Pierre said ASC and customs officials had agreed on a "minuscule" $250,000 discrepancy in ASC's imports over three years, equal to 1.1 percent of the $22 million the company paid in import duties during that time.
"Even the $250,000 alleged underpayment of duties is not clear as there are mitigating circumstances that I am discussing with Customs now," he said.
ASC runs a "Wine Residence" in a Shanghai historic mansion dedicated to educating and cultivating a love of fine wines among its local clientele.
Its program of wine tastings and seminars continues despite the customs inspection, St. Pierre said.
"Stepping back, I've been living and doing business here in China for 22 years now and have gone through lots of these kinds of things and survived," he said. "China is not for the weak hearted."
by The Associated Press
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ASC denies threat of fines under Chinese customs clam pdown
Chinese importer ASC Fine Wines has strongly denied it is facing hefty fines and the possible deportation of its directors for underpayment of duties.
In an article published on jancisrobinson.com, wine consultant Simon Tam, director of the International Wine Centre in Shanghai and Hong Kong, said ASC 'is looking at a fine rumoured to be in the neighbourhood of €5m, and the potential deportation of some of its top executives…'
According to Tam - who is not involved in selling wine - customs are cracking down on the 'subtle manipulation' of declared wine value, and the 'common practice' of undervaluing wine by up to 50%.
ASC spokesman Matthew Gong told decanter.com the report is 'based on rumour and lacks any evidence to support the allegation'.
The mention of a €5m fine and possible deportation is 'absolutely false', he said.
Gong added that the inspection was routine: 'Customs do it every year. Sometimes it is textiles, sometimes it is wine, sometimes another industry.'
In a statement ASC said it is 'cooperating fully and managing partner Don St Pierre Jr and vice president Ms Carrie Xuan are with Customs inquiries personnel now.'
ASC is China's leading importer of fine wines, representing more than 800 wines and 80 producers in 13 countries. Don St Pierre Jr featured in Decanter's 2007 Power List.
The statement added that 'the value of ASC's imported wine declarations under review is approximately 1.5 days business for ASC'.
Gong clarified this figure by saying, '1.5 days business simply means it is not a big deal.'
Another major importer, Shanghai- and Hong Kong-based importers Summergate Fine Wines, said it could not comment on the situation.
Meanwhile China industry insider Jim Boyce said on his Grape Wall of China blog that the investigation could be due to a number of factors, chief among them the abolition of wine taxes in Hong Kong prompting the mainland authorities to warn importers to abide by the law.
It could also be 'part of China's shift in numerous sectors toward an increasingly rules-oriented environment, a situation that would be bound to impact other sectors.'
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Chinese Customs continues to inquire into the import declarations of wine importers. Investigators, in what appears to be an industry-wide initiative, are looking for companies that under-declare the value of their imports.
ASC Fine Wines stated that its managing partner Don St. Pierre, Jr. and vice president Carrie Xuan are with Customs personnel, and that wine declarations worth 1.5 days of company revenue are under review.
ASC Chairman Don St. Pierre, Sr. told Grape Wall of China, “This is a ‘peanuts’ case blown out of all proportions.”
According to industry insiders, other wine importers also continue to be under investigation. I talked to Alberto Fernandez of Torres last week, who said Customs normally checks wine companies every year or two. He noted the quick growth of the industry - wine imports are up 400 percent over two years, major players are growing upwards of 50 percent per year, and many new importers have jumped into the market, he said. An increasing amount of money is at stake in the industry.
Fernandez said that Customs has checked and cleared Torres. Palette Wines also stated that its books have been found to be in order.
Such widespread investigations in China are sometimes routine and sometimes prompted by other issues. In terms of the latter, speculation is that the investigation is possibly due to one or more of the following:
- Part of China’s shift in numerous sectors toward an increasingly rules-oriented environment, a situation that would be bound to impact other sectors.
- A response to the sustained external pressure on China over product quality issues, from food safety to lead in toys.
- A result of the National People’s Congress being in session, which is a common time for campaigns against corruption.
- A warning shot, in the wake of Hong Kong abolishing its wine taxes, to mainland-based importers to abide by the law - many expect expensive wines to be smuggled from Hong Kong to the mainland, where importers pay up to 50 percent in duties.
- An acknowledgment of the growing value of the wine industry as a source of revenue for the government.
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To the Valued Customers and Suppliers of ASC Fine Wines:
As our valued business partners, we feel it is important to inform you about industry wide inquiries recently initiated by the Chinese Customs Bureau into the import declarations that has involved ASC Fine Wines. We firmly believe that this situation is either a misunderstanding or merely a routine industry by industry review of import practices.
ASC is cooperating fully and Managing Partner, Don St. Pierre Jr. and VP, Ms. Carrie Xuan are with Customs’’ inquiries personnel now. It is important to note that the value of ASC’s imported wine declarations under review is approximately 1.5 days business for ASC.
We expect a swift and mutually satisfactory resolution to this issue and note that ASC’s country wide business of importing and selling wine continues without interruption now.
Thank you for your continued support.
Sincerely,
Don St. Pierre, Sr.
Chairman, ASC Fine Wines
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