China seizes over 520,000 illegal Cognac bottles

Chinese customs officials have made four arrests after seizing more than 520,000 bottles of illegally imported Cognac worth 400 million yuan (HK$486m).

More than 520,000 bottles of illegally imported Cognac have been seized in China

The suspected smugglers were allegedly working for a Shenzhen-based trade company importing Louis Royer XO Cognac, according to reports by South China Morning Post.

A special investigation into the trading firm commenced in January after customs declaration applications were submitted to Luogang customs in Guangdong province – almost 150km from the firm’s Shenzhen head office.

Following four months of investigations, officials found evidence supporting suspicions the company had not been paying the required excise duty and VAT on the imported Cognac by declaring the goods at 30% lower than their actual value.

Customs officials worked with police to raid the firm’s warehouse in April where they discovered more than half a million Cognac bottles.

Details of the investigation were only released on Wednesday, but reports have not yet confirmed whether the four arrested men will stand trial.

Cognac sales have been suffering in China for the last two years, largely as a result of the Chinese Government’s crackdown on luxury spending and gifting.

In August 2014, reports revealed global Cognac sales dropped 10.2% by value in 2013/14 due to the continued austerity measures among government officials.

Cognac producers now have their work cut out trying to facilitate growth in China, with many taking a new approach to grow their brands “slowly and proficiently”.